Kimberly Enterprises Regulatory News (KBE)

21 Aug 2006 07:01

Engel East Europe N.V.21 August 2006 21 August 2006 Engel East Europe N.V. Maiden Interim Results for the six months ended 30 June 2006 Pipeline of approximately 12,000 residential units Engel East Europe N.V. ("Engel" or "the Company"), the AIM-listed Central andEastern European (the "CEE Region") residential property developer (EEE:L),today announces its maiden interim results. Highlights • Net assets increased to €54.5 million (31/12/2005: €43.7 million) • Revenues increased by 147% to €23.2 million (1-6/2005: €9.4 million) • Gross profit rose 496% to €13.7 million (1-6/2005: €2.3 million) • Net profit before tax of €12.1 million • Net profit after tax of €11.7 million • Net cash in hand of €36.1 million • Completion of an investment of €22.4 million by the JV partner, the Heitman Group ("Heitman") • Current pipeline of approximately 12,000 residential units, with projected sales of more than €1.2 billion • Interim dividend of €0.021 (gross) per share to be paid In H1 2006, Engel has: • Successfully bid to develop a substantial and prestigious MarinaDorcol project on the Danube in Belgrade with approximately 600 residentialunits, commercial centre, offices, a marina and shops. The company estimatesthat the project will have sales of €160 million • Signed an agreement to purchase approximately 54,000 sqm of land inWarsaw, Poland to develop about 300 residential units with projected sales ofapproximately €41 million • Signed an agreement to purchase approximately 7,170 sqm of land inBudapest, Hungary to develop approximately 230 residential units with projectedsales of approximately €23 million • Signed an agreement to purchase approximately 6,000 sqm of land inPrague, Czech Republic to develop approximately 120 residential units withprojected sales of approximately €21 million Since the period end, Engel has: • Signed a Memorandum of Understanding (MOU)* for 2 large-scale projectsin Romania • Signed an MOU* for an equity investment of €11.9 million in MarinaDorcol, the 95% owned subsidiary of Engel, for the project in Belgrade, Serbia • Signed an agreement to purchase approximately 23,000 sqm of land inBucharest, Romania to develop approximately 550 residential units with projectedsales of approximately €60 million • Is currently in negotiations to purchase more land in the CEE Regionfor the development of additional projects with a scope of thousands ofresidential units * Memorandum of Understanding - a final and binding agreement will be signed inthe future, subject to success of the due diligence process and/or otherconditions. Jacob Engel, founder and Executive Chairman, said: "We are delighted to announce a strong set of results for the first half of 2006with profits and EPS well ahead of expectations. Furthermore, Engel has signed some excellent and exciting deals in Serbia andRomania, new countries entered since floatation, as well in the countries we arealready active in and there are other projects in the pipeline which we expectto sign during the second half of the year. As a result of these new deals,Engel's pipeline has risen to approximately 12,000. In the second half of 2006,we will continue to focus on growing our business, both in countries where wecurrently operate as well as in new emerging markets." For further information, please contact: Engel East Europe N.V.Nir Netzer - Finance Director +972 (0)9 970 7024 Dawnay Day Corporate Finance Ltd - Nominated AdvisorGerald Raingold / Sandy Jamieson +44 (0) 20 7509 4570 Citigate Dewe RogersonSally Marshak / George Cazenove / Hannah Seward +44 (0)20 7638 9571 Notes to Editors Engel East Europe is an international residential property developerincorporated in The Netherlands. The Company operates in Central and EasternEurope and has various developments in Hungary, the Czech Republic, Poland,Bulgaria, Serbia and Romania, as well as operations in Germany and Canada.Engel is currently involved in the development of approximately 12,000residential units and is in negotiations to purchase land for the development ofadditional projects throughout the CEE Region. Engel East Europe was admitted to AIM on 15 December 2005, following a placingof 27.8 million new ordinary shares, which raised gross proceeds of £30 million. Based on the placing price of 108p per ordinary share, the market capitalisationof Engel East Europe on commencement of dealings was approximately £95 million.The Company's current market capitalisation is approximately £104.8 million. Dawnay Day Corporate Finance Limited is Nominated Adviser to the Company and KBCPeel Hunt Ltd is the broker. Financial Summary for the first six months ended 30 June (Unaudited) For the six month period ended 30 June 2006 2005 Thousands EuroRevenues 23,165 9,390Cost of revenues ( 9,451) ( 7,093)Gross profit 13,714 2,297As a % of Revenues 59.20% 24.46%Selling, general and administrative expenses ( 639) ( 431)Operating profit before financing costs 13,075 1,866As a % of Revenues 56.44% 19.87%Foreign exchange gains (losses) (1,087) 263Other financial income 970 222Other financial expenses (854) (521)Net Financing Costs (971) (36)Share in profit (loss) of associate 18 ( 23)Profit (loss) before tax 12,122 1,807As a % of Revenues 52.33% 19.24%Income taxes (tax benefit) ( 376) ( 330)Profit for the year 11,746 1,477 Attributable to:Equity holders of the parent 11,810 1,546Minority interest ( 64) ( 69) 11,746 1,477 E U R OBasic and diluted earnings per share (•) 0.134 0.026 Overview of Financial Results Revenues for the 6 months period to 30 June 2006 were €23.2 million up 147% onthe prior first half (1-6/2005: €9.4 million). This is attributable to thecompletion of phase 1 of Budapest - Sun Palace, completion of 1st part of Warsaw- Zabki Project and the equity investment in accordance with Heitman JVII. Gross profit for the period was €13.7 million, (1-6/2005: €2.3 million). Theincrease is attributable mostly to revenue from the Sun Palace 1st phase inBudapest, as well as for the results of the second transaction with HeitmanFund. Net financing costs amounted to €1 million in the period compared to almost nilin 1-6/2006. This rise reflects growth in the company's activities but mostlyexchange rate differences. Net profit before tax was €12.1 million for the six month period ended 30 June2006, reflecting an increase of 572% on the first half of last year (1-6/2005:€1.8 million). The increase is primarily as a result of phase 1 of Budapest -Sun Palace results and of the JVII with Heitman Fund. The tax expense in 1-6/2006 was €0.4 million, compared to €0.3 million in thefirst half of 2005. Profit for the first 6 months of 2006 amounted to €11.7 million, compared to€1.5 million in H1 2005, in line with the increases in revenues and operatingincome in 2006, as explained above. Basic and diluted earnings per share for the period are €0.134 per share (€0.026in 1-6/2005). The diluted amount reflects the options granted to senioremployees in the Group. An interim dividend will be paid for the first time of €0.021 (gross) per shareamounting to €1.9 million (gross) in total, which will be paid net ofwithholding tax on 3 November 2006 (dividend payment date) to shareholders onthe register on 6 October 2006 (record date). Dividends to UK shareholders willbe subject to a 15% rate of withholding tax upon confirmation of UK residencyof the shareholders from its tax authorities, otherwise the dividends will besubject to a 25% rate of withholding tax. Balance Sheet and Cash Flow Debt stood at €20.5 million on 30 June 2006 (31/12/2005 - €30.9 million)comprising loans from related parties which were substantially decreased overthe period and bank debt. The Company's net cash in hand decreased from €47.2 million as at 31 December2005, to €36.1 million as at 30 June 2006. This reflects investment in new andexisting projects, repayment of loans to shareholders and a decrease in accountspayable during the period, which was offset by the increase in the cash of theJV's. Business Review H1-2006 Partners Engel signed an agreement on 29 December 2005 with an affiliate of the HeitmanGroup, an American-based group of real estate investment funds, to invest in anumber of the Company's residential developments, including current projects aswell as future projects yet to be acquired. Heitman's investments frame is €26.4 million while Engel's estimated share inthe profits of the projects will vary between 50% and 60% depending on thefinancial results of the JV. In addition the Company will manage thedevelopment of the projects for a fee equal to 5% of the projects' costs.Another affiliate of the Heitman Group already cooperates with the Company inresidential projects in Central & Eastern Europe. Strategy Engel East Europe continues to look for opportunities in emerging Europeanmarkets and the Company's principal objectives are to continue expanding itsbusiness activities in these markets. Engel East Europe employs the followingstrategies to achieve these objectives: • Creating value for the company by adding strategic partners to invest equity into the projects; • Fixing costs and minimising risk in real estate development; • Exploiting the management team's experience to identify potential development sites with relatively low land costs and high profit margins, primarily in or within commuting distance of major population centres; • Adoption of flexible phased development plans, where the number of residential units in each phase is adjusted to the level of demand; • Employing mainly general contractors to construct the development projects on fixed price, ''turn-key'' contracts. Third party companies provide the majority of the sales and architectural work. This minimises overheads by enabling the Company to maintain a relatively small number of employees. The Company's streamlined operations enable it to adjust quickly to changing market conditions; • Aiming to acquire land once it has been zoned for residential use or subject to zoning; • Using established first class local sales agents, with local know-how, to sell our residential units; • Agreements with certain vendors, pursuant to which Engel East Europe undertakes to pay for the land through an agreed percentage of future project proceeds, instead of cash payment, thus substantially reducing the Company's development risks; and • The Company partners with large, international, financial institutions, such as the Heitman Fund and an entity of Lehman Brothers group. The Markets The Company expects the CEE Region to continue to offer attractive developmentopportunities for residential real estate due to the on-going rapid rise indisposable incomes. This results in growth in demand for modern and goodquality housing. Other factors which make the CEE Region attractive for development are low landand/or construction costs relative to developed countries, a fast-growinghousing mortgage market, with relatively low interest rates, the existence of asubstantial amount of Communist-era housing, which is typically of low quality,as well as higher rates of increase in house prices than local rates ofinflation. Taking into consideration additional relevant macroeconomics factors such as theprojected annual growth in the GDP and the residential units per 1,000 ofpopulation built per year in those countries, the management is confident thatthere continue to be significant residential development opportunities in thesemarkets. Combining its management experience, knowledge and expertise, Engel, asa leader in the CEE Region, will continue to identify and secure the mostattractive opportunities for real estate development throughout the region. Sales prices in many of the markets in which Engel operates have increasedrecently and the units' sales-rate in the majority of the projects in EasternEurope is in line with our expectations. Outlook The JVs mechanism, which creates value at the early stages of the projects, hasbecome an integral part of the company's business. The recent agreements andMOUs, signed with prestigious funds, demonstrate the trust that theinternational institutional investment entities have for our Company, itsbusiness model and its management. We are confident that our scope of activity will increase substantially in thenear future, having recently entered into new projects, markets and countries. Consolidated Income Statement For the six month period ended For the year ended 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Thousands Euro Revenues 23,165 9,390 10,574 Cost of revenues (9,451) *(7,093) *(7,350) Gross profit 13,714 2,297 3,224 Selling, general and administrative expenses (639) (431) (588) Operating profit 13,075 1,866 2,636 Foreign exchange gains (losses) (1,087) *263 *(124) Other financial income 970 *222 *395 Other financial expenses (854) *(521) *(1,067) Net financing costs (971) (36) (796) Share in profit (loss) of associate 18 (23) 155 Profit before tax 12,122 1,807 1,995 Income taxes (376) (330) (288) Profit for the period 11,746 1,477 1,707 Attributable to: Equity holders of the parent 11,810 1,546 1,781 Minority interest (64) (69) (74) 11,746 1,477 1,707 Earnings per share: Basic earnings per share (Euro) 0.134 0.026 0.029 Diluted earnings per share (Euro) 0.134 0.026 0.029 * Reclassified. Consolidated Balance Sheets 30 June 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Thousands Euro ASSETS Current assets Cash and cash equivalents 28,861 3,333 42,103 Restricted bank deposits and cash in escrow 7,225 3,943 5,132 Trade accounts receivable 4,645 206 63 Other accounts receivable 1,919 770 2,617 Loans and amounts to related parties and other 3,251 473 2,448 Inventories of housing units 36,616 17,560 32,663 82,517 26,285 85,026 Non-current assets Property and equipment 295 60 118 Deferred tax assets 208 587 274 Investment in associate 50 304 77 553 951 469 Total assets 83,070 27,236 85,495 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Interest-bearing loans from banks 8,124 8,695 11,312 Loans and amounts due to related parties and other 12,335 8,335 19,538 Trade accounts payable 2,373 878 2,330 Other accounts payable 5,073 4,832 8,520 Income tax payable 639 136 94 Total liabilities 28,544 22,876 41,794 Net assets 54,526 4,360 43,701 Equity Share capital 878 20 878 Share premium 39,298 - 39,298 Capital reserves (338) - - Retained earnings 15,055 4,187 3,842 Translation reserve (490) 20 (325) Equity attributable to equity holders of the parent 54,403 4,227 43,693 Minority interest 123 133 8 Total equity 54,526 4,360 43,701 Total liabilities and equity 83,070 27,236 85,495 Consolidated Statements of Cash Flows For the six month period For the year ended ended 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Thousands Euro Cash from (used in) operating activities: Net profit for the period 11,746 1,477 1,707 Adjustments necessary to reflect cash flows from operating activities: Depreciation 21 3 19 Unrealised foreign exchange losses (gains) 837 - (127) Finance expenses (income), net 971 (147) 923 Income taxes, net 235 (73) 97 Company's share in loss (profits) of associate (18) 23 (155) Capital loss on sale of property and equipment - 6 - Gain on sale of subsidiary - - (36) Share based payment 2 - - Increase in inventory (4,076) (354) (7,466) Deferred taxes 610 (30) 49 (Increase) decrease in trade accounts receivable (4,582) 64 174 Decrease in other accounts receivable (818) (130) (2,068) Increase (decrease) in trade accounts payable 52 (86) 1,335 Decrease in other accounts payable (2,806) (7,753) (6,413) Cash from (used in) operations: Interest received 197 294 466 Interest paid (363) (75) (400) Income taxes paid (374) (260) (382) Net cash from (used in) operating activities 1,634 (7,041) (12,277) Cash from (used in) investing activities Purchase of property and equipment (198) (34) (117) Proceeds from sale of property and equipment - 6 - Acquisition of subsidiaries, net of cash acquired (155) - 671 Loan granted to associate - (11) 364 Short term loans granted to (repaid by) related parties, (1,374) 322 (1,751) net Restricted cash (2,112) (2,060) (3,481) Net cash used in investing activities (3,839) (1,777) (4,314) Consolidated Statements of Cash Flows (continues) For the six month period For the year ended ended 30 June 31 December 2006 2005 2005 Unaudited Unaudited Audited Thousands Euro Cash from (used in) financing activities Issue of share capital - - 39,576 Short term loans from (repaid to) banks, net (3,145) 3,625 6,768 Short term loans received from (repaid to) related (7,136) 4,109 8,521 parties, net Dividend paid to minority shareholders - (229) (362) Dividend paid to shareholders (597) - - Net cash from (used for) financing activities (10,878) 7,505 54,503 Increase (decrease) in cash and cash equivalents during (13,083) (1,313) 37,912 the period Effect of exchange rate changes on cash (159) 8 (447) Cash and cash equivalents at the beginning of the period 42,103 4,638 4,638 Cash and cash equivalents at the end of the period 28,861 3,333 42,103 Notes to the consolidated financial information 1. Basis of preparation of the interim financial statements The interim financial information set out herein does not constitute fullfinancial Statements. The financial statements comprise the unaudited resultsof the Group for the 6 months ended 30 June 2006. The unaudited Group resultshave been prepared under the historical cost convention (as modified by therevaluation of certain properties), in accordance with international accountingstandards, and on the basis of the accounting policies set out in the AdmissionDocument dated 15 December 2005. The comparative results for the six months ended 30 June 2005 have not beenaudited. The financial information for the year ended 31 December 2005 has beenextracted from Group's Annual Report and Accounts for that period. Theindependent auditors' report in the Annual Report for the year ended 31 December2005 was unqualified. 2. Earnings per share The calculation of basic earnings per share is calculated by reference to theprofits after taxation divided by the weighted average number of ordinary sharesin issue during the period of 87.78 million, 60 million for the period of sixmonth ended 30 June 2005 and 61.2 million for the period of twelve month ended31 December 2005. The fully diluted earnings have been further adjusted by the dilutiveoutstanding share options and warrants resulting in a weighted average number ofshares of 87.82 million for the period of six month ended 30 June 2006 and thesame number of shares as been taken into account for the basic as for the restof the comparative periods 3. Dividend The interim dividend will be paid on 3 November 2006 (dividend payment date (toshareholders on the register on 6 October 2006 (dividend record date). Dividendsto UK shareholders will be subject to a 15% rate of withholding tax uponconfirmation of UK residency of the institutional shareholders from its taxauthorities, otherwise the dividends will be subject to a 25% rate ofwithholding tax. 4. The Interim Report This Interim Report for the six months ended 30 June 2006 was approved by thedirectors on 21 August 2006 and will be sent to all registered shareholdersduring September 2006. A copy can be obtained by the public from HolenderVentures B.V., Rapenburgerstraat 204, 1011 MN, Amsterdam, the Netherlands. END This information is provided by RNS The company news service from the London Stock Exchange