Last checked at 28 Sep 2012 07:00
Date: | 28 September 2012 |
On behalf of: | Carpathian PLC ("Carpathian", the "Company" or the "Group") |
Embargoed until: | 0700hrs |
Carpathian PLC
Interim results for the six months ended 30 June 2012
Carpathian PLC (AIM: CPT), the commercial property investment company, today announces its interim results for the six month period ended 30 June 2012.
Financial Highlights
§ Profit after tax of €4.9 million (six months to 30 June 2011: €6.6 million)
§ Earnings per share of 2.1 euro cents (six months to 30 June 2011: 2.9 euro cents)
§ Net asset value per share of 2.7 euro cents (0.6 euro cents as at 31 December 2011)
§ Total cash of €9.2 million as at 30 June 2012 (€110.9 million as at 30 June 2011)
Operational Highlights
§ The Company sold its last investment property and its last development property during the first half of 2012
§ As announced on 20 March 2012, the Group disposed of its various interests held in the Galleria shopping centre in Riga, Latvia for a cash consideration of €2.3 million
§ The Group sold its interest in the Baia Mare development land in Romania for a gross consideration of €0.3 million on 26 June 2012
§ The Group settled its construction dispute in Poland in relation to the Promenada shopping centre on 11 May 2012
§ The Group continues to merge, sell or liquidate its subsidiary undertakings and to repatriate cash to the IOM holding company pending a further and final distribution to shareholders
Rory Macnamara, Non-executive Chairman of Carpathian, said:
"In line with key objectives, we have reached a stage where the Company no longer owns any investment or development assets. We are working towards maximising cash delivery back to our shareholders before the end of 2012, while retaining reserves to cover all known outstanding actual or contingent liabilities."
-Ends-
Enquiries:
Carpathian PLC | |
Rory Macnamara, Non-executive Chairman | Via Redleaf Polhill |
Carpathian Asset Management Limited | 020 7917 9572 |
Paul Rogers/Balazs Csepregi | ir@carpathianam.com |
Canaccord Genuity Limited | 020 7523 8350 |
Bruce Garrow | |
Redleaf Polhill | 020 7566 6720 |
Henry Columbine / Hannah Fensome | carpathian@redleafpolhill.com |
Notes to Editors
- | Carpathian was created in 2005 for the purpose of investing in Central and Eastern European commercial real estate. |
- | Carpathian sold all of its investment and development properties and has returned the vast majority of cash from sale proceeds back to shareholders. |
- | Carpathian was admitted to trading on AIM in July 2005. |
- | Carpathian Asset Management Limited (''CAM'') is the Property Investment Adviser to Carpathian. |
Chairman's Statement
By the end of 2011, we successfully delivered the key objectives set out following the conclusion of the Strategic Review in January 2010.
During the first part of 2012 and since then, we continued our focus on selling the Group's interests in the final two property assets together with simplifying our corporate structure and concluding settlements on actual and contingent liabilities.
Financial Results
The Company has continued to present its Consolidated Statement of Comprehensive Income in accordance with International Financial Reporting Standard 5 ('IFRS 5'), with all operations now classified as discontinuing - please refer to the Going Concern note below.
Profit after tax for the period was €4.9 million, while during the first six months of 2011 the Group generated a profit of €6.6 million. Earnings per share are 2.1 euro cents (2011: earnings per share of 2.9 euro cents).
The Group had a loss of €1.1 million from net rental and related income, while for the same period in 2011 it realised €7.6 million of income. In the first six months of 2012, the Group had no income producing assets.
The profit on disposal of subsidiary companies was €7.9 million (six months to 30 June 2011: €0.6 million). The Company's various interests in the Galleria shopping centre in Riga, Latvia were sold in March 2012 for an aggregate consideration of €2.3 million, while reversal of related liabilities increased the net asset value of the Group by approximately €7.8 million in total.
The accounting profit on disposal of investment property of €0.5 million for the period resulted from the settlement of the Locher construction dispute in Warsaw, Poland (as announced on 11 May 2012). For the first six months of 2011, the profit was €13.2 million.
All expected liquidation costs and other expenses expected to be incurred up to the completion of the liquidation of the Group's subsidiary undertakings by the end of 2012 (and beyond, where necessary) have been provided for in the Consolidated Balance Sheet as at 31 December 2011. The total amount accrued was some €2.0 million and has been reviewed and adjusted in detail in the Consolidated Balance Sheet as at 30 June 2012. Administrative expenses for the period were €0.7 million (2011: €2.9 million), in line with expectations and the revised terms agreed with the Company's Property Investment Adviser.
The Distributed Capital Payout payable to the Property Investment Adviser, based on the performance measures set out in the Strategic Review and updated in December 2011, is also fully accrued for its full term expiring on 31 December 2012. This is at €1.5 million for the year 2012, while this was €10.5 million up to the end of 2011.
The Group's net asset value per share is 2.7 euro cents as at 30 June 2012 (as at 30 June 2011: 41.9 euro cents and as at 31 December 2011: 0.6 euro cents).
Total Group cash was €9.2 million as at 30 June 2012 (€110.9 million as at 30 June 2011). As at 31 August 2012, the Group had in excess of €3.0 million in cash at holding company level in Isle of Man and Luxembourg and the balance after deductions for normal operating expenses and provisions for local liabilities is in the process of being converted into euro and up streamed to holding company level.
In addition, as at 30 June 2012, the Group has trade and other receivables of €2.7 million (as at 30 June 2011: €14.6 million and as at 31 December 2011: €7.0 million); and current assets, and trade and other payables of €5.8 million (as at 30 June 2011: €43.6 million and as at 31 December 2012: €30.5 million).
Key operational matters for the period
The Group's last two properties were sold in the first half of 2012. The sale of the various interests in Galleria shopping centre in Riga, Latvia is described above. The Group also sold its interest in the Baia Mare development land in Romania (its last development property asset) for a gross consideration of €0.3 million on 26 June 2012.
We also continued to focus on settling liabilities within the Group.
The Dawnay, Day Group settlement was completed on 24 January 2012, as announced. This transaction was fully provided for at 31 December 2011 in the Consolidated Financial Statements.
The Group also settled the Locher construction dispute in Poland in relation to the Promenada shopping centre. Since the announcement on 11 May 2012, the Company has made a contribution of €0.4m towards the full and final settlement of this litigation, as a consequence of which the litigation was discontinued and became non-appealable. The Company's local subsidiaries recovered the cash of approximately €4.8 million that had been reqiured to be deposited at court as security. In addition, further cash reserves held in one of the local entities of €0.85 million were able to be released.
The Group continued to simplify its corporate structure completing mergers, liquidations and sales of more than 40 entities combined. The Company (through the Property Investment Adviser) is managing approximately 10 entities at present and continues to further streamline the corporate structure.
Note on going concern and outlook
The financial statements of the Group and Company have been prepared under the historical cost convention. The Company intends to either seek shareholders' approval to de-list its shares from the Alternative Investment Market of the London Stock Exchange and to implement a members' voluntary liquidation or to find a new investment group seeking a shell (without any cash). Discussions are continuing in this regard and a further announcement is expected to be made in the near future. The Directors will provide further detail on these proposals in due course. Adequate cash reserves will be retained for all applicable actual and contingent liabilities. Any net surplus from sales and other recoveries in 2012 and cash released as a result of the release of any unrealised liabilities will be distributed to shareholders before the year end of 2012.
The Directors therefore do not consider the Company to be a going concern and have prepared the financial statements on a break up basis. All expected liquidation costs and expenses expected to be incurred post year end until eventual liquidation have been accrued for, in line with management's best estimates.
Rory Macnamara
Chairman
28 September 2012
Unaudited Consolidated Statement of Comprehensive Income | ||||||
for the six months ended 30 June 2012 | ||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | ||||
Note | 2012 | 2011 | 2011 | |||
Discontinuing | Total | Total | ||||
€'000 | €'000 | €'000 | ||||
Gross rental income | 4 | - | 10,591 | 12,470 | ||
Service charge income | - | 3,861 | 4,267 | |||
Service charge expense | - | (4,540) | (5,208) | |||
Property operating expenses | 5 | (1,301) | (3,122) | (3,809) | ||
Other property income | 203 | 855 | 1,217 | |||
Net rental and (expense) / related income | (1,098) | 7,645 | 8,937 | |||
Changes in fair value of investment property | - | - | (2,960) | |||
Profit on disposal of investment property | 7 | 530 | 13,151 | 6,396 | ||
Profit on derecognition of investment property | - | - | 3,421 | |||
Profit on disposal of subsidiary companies | 8 | 7,869 | 586 | - | ||
Distributed capital payout | 9 | (1,473) | (9,451) | (10,507) | ||
Impairment of goodwill | - | (228) | 60 | |||
Legal settlement | - | - | 3,382 | |||
Impairment of loans receivable | - | - | (150) | |||
Changes in fair value of derivative assets and liabilities | - | 1,676 | (566) | |||
Net foreign exchange gain / (loss) | 79 | (230) | 136 | |||
Administrative expenses | (716) | (2,900) | (6,835) | |||
Net operating profit before net financing expense | 5,191 | 10,249 | 1,314 | |||
Financial income | 305 | 498 | 840 | |||
Financial expenses | (550) | (6,562) | (7,673) | |||
Changes in fair value of interest rate swaps | - | 2,980 | 2,977 | |||
Net financing expense | 10 | (245) | (3,084) | (3,856) | ||
Net profit / (loss) before tax | 4,946 | 7,165 | (2,542) | |||
Tax expense | (54) | (518) | (1,000) | |||
Profit / (loss) for the period and total comprehensive income for the period | 4,892 | 6,647 | (3,542) | |||
Attributable to: | ||||||
Equity holders of the Company | 4,892 | 6,647 | (3,542) | |||
Basic and diluted earnings per share for profit attributable to the equity holders of the | ||||||
Company during the period | ||||||
(expressed as cents per share) | ||||||
Basic earnings per share | 11 | 2.1 c | 2.9 c | (1.4) c | ||
Diluted earnings per share | 11 | 2.1 c | 2.9 c | (1.4) c | ||
Unaudited Consolidated Statement of Changes in Equity | |||||
for the six months ended 30 June 2012 | |||||
Share capital €'000 | Share premium€'000 | Retained earnings€'000 | Total€'000 | ||
Balance as at 1 January 2011 | 2,321 | 91,477 | (3,059) | 90,739 | |
Total comprehensive income for the period | |||||
Profit for the period | - | - | 6,647 | 6,647 | |
Balance as at 30 June 2011 | 2,321 | 91,477 | 3,588 | 97,386 | |
Balance as at 1 January 2012 | 2,309 | 42,522 | ( 43,529) | 1,302 | |
Total comprehensive income for the period | |||||
Profit for the period | - | - | 4,892 | 4,892 | |
Balance as at 30 June 2012 | 2,309 | 42,522 | (38,637) | 6,194 | |
Unaudited Consolidated Statement of Financial Position | ||||
as at 30 June 2012 | ||||
30 June | 30 June | 31 December | ||
Note | 2012 | 2011 | 2011 | |
€'000 | €'000 | €'000 | ||
Assets | ||||
Current assets | ||||
Trade and other receivables | 2,720 | 14,587 | 6,995 | |
Assets held for sale | 12 | - | 88,500 | 2,790 |
Cash and cash equivalents | 9,230 | 110,917 | 49,948 | |
Deferred income tax assets | - | 149 | - | |
Financial assets | - | 5,498 | - | |
11,950 | 219,651 | 59,733 | ||
Total assets | 11,950 | 219,651 | 59,733 | |
Equity | ||||
Issued capital | 13 | 2,309 | 2,321 | 2,309 |
Share premium | 13 | 42,522 | 91,477 | 42,522 |
Retained earnings | (38,637) | 3,588 | (43,529) | |
Total equity | 6,194 | 97,386 | 1,302 | |
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | 5,756 | 43,615 | 30,510 | |
Bank loans | - | 75,674 | - | |
Provisions | - | 992 | 63 | |
Dividends payable | - | - | 13,793 | |
Repurchase of shares | - | - | 14,065 | |
Deferred income tax liabilities | - | 1,623 | - | |
Financial liabilities | - | 361 | - | |
5,756 | 122,265 | 58,431 | ||
Total liabilities | 5,756 | 122,265 | 58,431 | |
Total equity and liabilities | 11,950 | 219,651 | 59,733 | |
Unaudited Consolidated Statement of Cash Flows | |||||
for the six months ended 30 June 2012 | |||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||
Note | 2012 | 2011 | 2011 | ||
€'000 | €'000 | €'000 | |||
Cash flows from operating activities | |||||
Cash (used in) / generated from operations | 14 | (15,351) | 9,444 | (15,239) | |
Income taxes received / (paid) | (54) | 574 | (818) | ||
Net cash (used in) / generated from operating activities | (15,405) | 10,018 | (16,057) | ||
Cash flows from investing activities | |||||
Cash received on disposal of investment property | 2,790 | 227,050 | 274,024 | ||
Cash conceded on derecognition | - | - | (367) | ||
Loans to unconsolidated entities | - | - | (150) | ||
Interest received | 305 | 514 | 840 | ||
Net cash generated from investing activities | 3,095 | 227,564 | 274,347 | ||
Cash flows from financing activities | |||||
Interest paid | (550) | (7,189) | (7,673) | ||
Repayments of borrowings | (14,065) | (146,249) | (169,405) | ||
Repurchase of share capital | - | - | (34,901) | ||
Dividends paid | (13,793) | - | (23,136) | ||
Net cash used in financing activities | (28,408) | (153,438) | (235,115) | ||
Net (decrease) / increase in cash and cash equivalents | (40,718) | 84,144 | 23,175 | ||
Cash and cash equivalents at the beginning of the period | 49,948 | 26,773 | 26,773 | ||
Cash and cash equivalents at the end of the period | 9,230 | 110,917 | 49,948 | ||
Notes to the Unaudited Consolidated Financial Statements | |||||||||||||
1 | General information | ||||||||||||
Carpathian PLC (the "Company") is a company domiciled and incorporated in the Isle of Man on 2 June 2005 for the purpose of investing in the retail property market in Central and Eastern Europe. On 24 July 2009 the Company re-registered as a company governed by the Isle of Man Companies Act 2006 and redenominated the par value of its Ordinary Shares from Pounds Sterling 0.01 to Euro 0.01. | |||||||||||||
The Interim Report of Carpathian PLC for the six months ended 30 June 2012 comprises the Company and its subsidiaries (together referred to as the "Group"). | |||||||||||||
The consolidated financial statements include the share capital of the Company denominated in Euro. The share capital was converted from Pounds Sterling to Euro on 24 July 2009 based on the exchange rate prevailing on that date. | |||||||||||||
The Company's registered address is IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP. | |||||||||||||
The Company was admitted to the AIM of the London Stock Exchange and commenced trading its shares on 26 July 2005. The Company raised approximately £140 million at listing and a further £100 million in May 2007 (before admission costs). | |||||||||||||
2 | Going concern | ||||||||||||
The financial statements of the Group have been prepared under the historical cost convention. The Company intends to seek shareholders' approval to de-list the Company from the Alternative Investment Market of the London Stock Exchange and in due course thereafter to commence and implement an orderly members voluntary liquidation. The Directors therefore do not consider the Company to be a going concern and have prepared the financial statements on a break up basis and therefore all operations are presented as discontinuing operations. There has been no financial impairment of the Group's and Company's assets as a result of a break up basis of valuation, as there is no remaining asset held for sale. All expected liquidation costs and expenses expected to be incurred post year end until eventual liquidation have been accrued for, in line with management's best estimates. | |||||||||||||
3 | Significant accounting policies | ||||||||||||
The interim report for the six months ended 30 June 2012 is unaudited and has been prepared based on the accounting polices set out in the statutory accounts for the year ended 31 December 2011. There are no new or revised accounting policies implemented in this report. | |||||||||||||
4 | Gross rental income | ||||||||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Gross rental income | - | 10,951 | 12,470 | ||||||||||
The Company disposed of all of its income producing investments during 2011. | |||||||||||||
5 | Property operating expenses | ||||||||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Property operating expenses | 1,301 | 3,122 | 3,809 | ||||||||||
Property operating expenses comprise of property taxes and fees of €0.9 million relating to Promenada. | |||||||||||||
6 | Operating segments
All income producing investments were disposed of in 2011 and the Group is no longer a going concern; all operations are therefore considered discontinued and, as a result, it is determined that there is only one operating segment.
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7 | Profit on disposal of investment property | ||||||||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Profit on disposal of investment property | 530 | 13,151 | 6,396 | ||||||||||
The accounting profit €0.5 million for the six months period ended 30 June 2012 has arisen as result of the settlement reached in relation to the construction dispute in Warsaw, Poland (as announced on 11 May 2012). | |||||||||||||
8 | Profit on disposal of subsidiary companies | ||||||||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Profit on disposal of investment property | 7,869 | 586 | - | ||||||||||
On 20 March 2012, the Group disposed of its various interests held in the Galleria shopping centre in Riga, Latvia for an aggregate consideration of €2.3 million. As disclosed in the Audited Financial Statements of the Group for the year ended 31 December 2011, the significant interests included in the Statement of Financial Position were other investments (note 17: €nil), loans receivable (note 18: €nil), assets held for sale (note 21: €2.7 million) and related party payables (note 26: €8.7 million). The Group's subsidiary, Stringybark SIA, was also included in the disposal. The overall impact of the disposal is an increase in the Group net asset value of approximately €7.8 million. Further details are set out in note 12.
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9 | Distributed Capital Payout | ||||||||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Distributed Capital Payout | 1,473 | 9,451 | 10,507 | ||||||||||
Carpathian Asset Management Ltd acts as the Company's Property Investment Adviser (''adviser''); its contract will automatically terminate on 31 December 2012. The adviser is entitled to receive a distributed capital payout as per the revised Property Management Agreement.
The Distributed Capital Payout amount accrued for the six months ended 30 June 2012 represents the estimated full Distributed Capital Payout amount payable to the adviser before 31 December 2012.
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10 | Net financing expense | ||||||||||||
6 months ended 30 June | 6 months ended 30 June | Year ended 31 December | |||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Interest income from financial institutions | 305 | 498 | 840 | ||||||||||
Net interest expenses on bank borrowings | (550) | (5,241) | (6,778) | ||||||||||
Finance costs amortised | - | (291) | (496) | ||||||||||
Unwinding of unrealised direct issue costs of borrowings | - | (1,030) | (399) | ||||||||||
(550) | (6,562) | (7,673) | |||||||||||
Changes in fair value of interest rate swaps | - | 2,980 | 2,977 | ||||||||||
Net financing expense | (245) | (3,084) | (3,856) | ||||||||||
11 | Earnings per share | ||||||||||||
Basic and diluted earnings per share | |||||||||||||
The calculation of basic earnings per share at 30 June 2012 was based on the profit attributable to ordinary shareholders of €4,892,007 and a weighted average number of ordinary shares outstanding during the six months ended 30 June 2012 of 230,957,973, calculated as follows: | |||||||||||||
Profit / (loss) attributable to ordinary shareholders | 30 June | 30 June | 31 December | ||||||||||
2012 | 2011 | 2011 | |||||||||||
€'000 | €'000 | €'000 | |||||||||||
Profit / (loss) attributable to ordinary shareholders | 4,892 | 6,647 | (3,542) | ||||||||||
Weighted average number of ordinary shares | |||||||||||||
1 January | 230,957,973 | 232,148,175 | 232,148,175 | ||||||||||
Weighted average number of ordinary shares | 230,957,973 | 232,148,175 | 248,048,735 | ||||||||||
30 June / 31 December | 230,957,973 | 232.148,175 | 230,957,973 | ||||||||||
Basic and diluted earnings per share | 2.1 €, c | 2.9 €, c | (1.4) €, c | ||||||||||
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| 12 | Assets held for sale | |||||||||||
| 30 June | 30 June | 31 December | ||||||||||
| 2012 | 2011 | 2011 | ||||||||||
| €'000 | €'000 | €'000 | ||||||||||
| |||||||||||||
| Assets held for sale | - | 88,500 | 2,790 | |||||||||
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| On 20 March 2012, the Group disposed of its investment property, as part of its various interests held in the Galleria shopping centre in Riga, Latvia for an aggregate consideration of €2.3 million. The Group's subsidiary was included in the disposal. The net assets disposed of are detailed below: | ||||||||||||
|
| ||||||||||||
| Riga | ||||||||||||
| €'000 | ||||||||||||
| Assets | ||||||||||||
| Assets held for sale | 2,700 | |||||||||||
| Cash | 0 | |||||||||||
| Total assets | 2,700 | |||||||||||
| |||||||||||||
| Liabilities | ||||||||||||
| Trade and other payables | 1,868 | |||||||||||
| Related party payables | 8,676 | |||||||||||
| Total liabilities | 10,544 | |||||||||||
| |||||||||||||
| Net liabilities | (7,844) | |||||||||||
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| 13 | Share capital and share premium | |||||||||||
| Number of Shares | €'000 | |||||||||||
| Authorised: | ||||||||||||
| At 31 December 2010 and 30 June 2011 | ||||||||||||
| Ordinary Shares of 1 euro cent each | 350,000,000 | 3,500 | ||||||||||
| Unclassified Shares of 0.01 euro cent each | 285,703,650 | 29 | ||||||||||
| Total at 30 June 2012 and 31 December 2011 | 3,529 | |||||||||||
| |||||||||||||
| Number of shares issued and fully paid | Share capital€'000 | Share premium€'000 | ||||||||||
| Issued: | ||||||||||||
| At 31 December 2011 and 30 June 2012 | ||||||||||||
| Ordinary Shares of 1euro cent each | 230,957,973 | 2,309 | 42,522 | |||||||||
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14 | Notes to the Cash Flow Statement | |||
30 June | 30 June | 31 December | ||
2012 | 2011 | 2011 | ||
Cash generated from operations | €'000 | €'000 | €'000 | |
Profit / (loss) for the period | 4,892 | 6,647 | (3,542) | |
Adjustments for: | ||||
Increase / (decrease) in fair value of financial instruments | - | (4,707) | (2411) | |
Unwinding of unrealised direct issue costs of borrowings | - | 615 | - | |
Net other finance income | 245 | 6.064 | 6,833 | |
Decrease in fair value of investment and development property | - | - | 2,960 | |
Provisions | - | (5) | - | |
Legal settlement | - | - | (3,382) | |
Impairment of loans receivable | - | - | 150 | |
Impairment of goodwill | - | 6,564 | (60) | |
Income tax (credit) / expense | 54 | (1,009) | 1,000 | |
Profit on disposal of investment property | - | (10,915) | (9,817) | |
Operating cash flows before movements in working capital | 5,191 | 3,254 | (8,269) | |
(Increase) / decrease in receivables | 4,275 | (5,967) | (155) | |
Increase / (decrease) in payables | (24,817) | 12,157 | (6,815) | |
Cash (used in) / generated from operations | (15,351) | 9,444 | (15,239) |
15 | Subsequent Event |
The Company's local subsidiaries recovered the cash of approximately €4.8 million in total in two instalments on 26 June 2012 and 07 September 2012 that had been required to be deposited at court as security. In addition, further cash reserves held in one of the local entities of €0.85 million were able to be released on 07 September 2012.
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