Kimberly Enterprises Regulatory News (KBE)

20 Aug 2007 16:04

Engel East Europe N.V.20 August 2007 Engel East Europe N.V Interim Results for the six months ended 30 June 2007 MONDAY, 20 August 2007 -- Engel East Europe N.V. ('Engel' or 'the Company') theAIM-listed Central and Eastern European residential property developer (EEE:L),today announces its interim results for the six month period ended 30 June 2007. Financial summary Figures in •'000 30 06 2007 30 06 2006 31 12 2006 6 months 6 months 12 months Net assets 51,058 54,526 55,881NAV/share (•) 0.58 0.62 0.64Revenues 7,292 23,165 24,961Revaluation of an investment property - - 4,704Gross Profit 2,087 13,714 18,709Operating profit 349 13,075 16,573Net financing costs 998 971 1,229Profit (loss) before tax (659) 12,122 15,373Profit (loss) after tax (959) 11,746 14,686Earnings (losses) per share (•) (0.011) 0.134 0.167 Key activities in H1 2007 • Operational highlights - A total of 1,001 units sold and taken to profit from the beginning of the Company's activities till 30 June 2007- 135 units sold and taken to profit during the first half of 2007 compared to 321 units sold and taken to profit during the first half of 2006- 911 units currently sold and reserved but not taken to profit at 30 June 2007- 1,548 units under construction and/or with valid building permit • Agreement signed for the purchase of 77,500 sq.m of land in Bucharest, Romania. The development will achieve approximately €100 million of sales from 1,000 residential units - Company is negotiating an increase in building rights for the project. • Land purchase agreement signed for a total land area of 9,954sq.m in Krakow, Poland. Following signing of the definitive agreement, the Company increased the building rights of the project that will allow the Company to build up to 300 residential units generating an estimated €45 million in sales. As part of the agreement signed in 2005, two of the Company's projects in Bucharest, Romania, were transferred to the 50% owned JV with the Heitman Fund. Negotiations regarding an additional project in Bucharest, Romania, which was under MOU, were discontinued as the Company was unable to negotiate terms that would result in an acceptable return for shareholders. • The company entered into negotiations with Lehman Brothers Real Estate Partners II ("Lehman Brothers"), its joint venture partner in the three projects in Montreal, Canada, to buy their share in two of the projects with an option to buy their share in the third project in the future. • Following the investment by Azorim Development and Construction Co. Limited in the Engel Group, Yeshayahu Boymelgreen, the Chairman of the Boymelgreen Group, and Sam Salman, the president of the Boymelgreen Group, were appointed to the Board of Engel as directors. Post period end • Sam Salman, a director of the Company, was appointed as Chairman of the Board of Directors effective from 1 September 2007 succeeding Jacob Engel. This is in line with the Company's previous announcement according to which Mr. Engel would be standing down as Chairman. • Eitan Padan, who joined the Company on 1 August 2007, will take over as Chief Executive Officer from Clair Satchi, from 1 October 2007 following shareholder approval at the EGM held in Amsterdam on 15 August 2007. • On 3 July 2007, the Company paid a final gross annual dividend for year 2006 of €0.053 per share in addition to the interim gross dividend of €0.021 per share paid during year 2006. Jacob Engel, founder and Executive Chairman, said: "The results for the first half of 2007 will be my last as Chairman of theCompany. We are well placed to take advantage of the many exciting residentialdevelopment opportunities in Central and Eastern Europe. "Under the leadership of Eitan Padan and Sam Salman, supported by YeshayahuBoymelgreen's group, and with an expanded and highly experienced top managementteam, the Company is in excellent hands and, although there are short-termchallenges, I am confident Engel will achieve great success in the future." Contacts Engel East Europe N.V.Nir Netzer, Finance Director Tel: +972 9970 7024 Dawnay, Day Corporate Finance Limited - Nominated AdviserGerald Raingold/Sandy Jamieson Tel: +44 (0) 20 7509 4570 Bankside ConsultantsSimon Bloomfield/Andy Harris/Marc Cohen Tel: +44 (0) 20 7367 8888 Overview of financial results Revenues for the 6 months period to 30 June 2007 were €7.3 million compared to€23.2 million for the same period last year, reflecting mainly the income fromJoint Venture partners in 2006. From the beginning of the Company's activities and till 30 June 2007, a total of1,001 units had been sold and taken to profit, including 135 units sold duringthe first half of 2007. In addition, 911 units have been sold - but not taken toprofit at 30 June 2007. 1,548 units are currently under construction and/or withvalid building permit. The key contributors to revenue for the period were the completion of the firstphase in the Zabki project in Poland and the completion of the first half ofphase one of the Safranka project in Czech Republic. In some cases, the handover of apartments to purchasers was deferred as a resultof unexpected construction delays and local bureaucratic procedures although thetotal anticipated profit from the projects remain in line with expectations. Net financing costs amounted to €1.0 million in the period (2006: €1.2 million)which includes a €1.2 million non-cash charge relating to the commercialcomponent of the Marina Belgrade Project. The foreign exchange profit mainlyreflects the strength of the Romanian Currency over the EURO. The tax expense in the first half of 2007 was €0.3 million, compared to €0.4million for the first half of 2006 reflecting a mix of tax rates in countries inwhich the Company operates and €0.1 million relating to prior year adjustments. The loss per share for the period was €0.011 (earnings per share for the firsthalf of 2006: €0.134). Net asset value per share was relatively stable at €0.58 (2006: €0.62). On 3 July 2007, the Company paid a final gross annual dividend for year 2006 of€0.053 per share in addition to the interim gross dividend of €0.021 per sharepaid during year 2006. Balance sheet and cash flow Interest bearing loans from banks stood at €24.8 million on 30 June 2007(compared with €12.6 million on 31 December 2006) in line with the advancedstage of additional projects coming to constructions phases and as well as debtfor financing parcels of land that have been purchased. The Company's total cash in hand increased to €27.3 million at 30 June 2007 from€23.8 million at 31 December 2006. Net cash decreased to €2.6 million at 30 June 2007 from €11.2 million at 31December 2006, mainly as a result of the increase in the inventory of theCompany. Inventory increased to €63 million at 30 June 2007 from €52 million at 31December 2006 in line with the progress in the projects in construction stageand the purchase of the project in Bucharest, Romania. Business Review During the first half of the financial year since Azorim Development andConstruction Co. Limited acquired control of the Company, a number managementchanges were made. Yeshayahu Boymelgreen, currently the Chairman of the Boymelgreen Group and SamSalman, President of Boymelgreen Holdings were appointed directors. Sam Salman has been appointed Chairman of the Board of Directors, taking overfrom Jacob Engel, with effect from 1 September 2007. Clair Satchi, who has successfully worked with the company for many years, hasdecided not to prolong her service agreement with the Company and will besucceeded as Chief Executive Officer by Eitan Padan from 1 October 2007.According to her agreement she will continue to advise and assist the Companyuntil the end of the year. Mr Padan has considerable experience and expertise inresidential development. He was previously the Chief Executive Officer ofHalamish Ltd, an Israeli propertymanagement and brownfield property development company. Significant investments during the period include the purchase of 77,500 sq.m ofland in Bucharest, Romania, for the development of approximately 1,000residential units with an estimated sales value of €100 million and where theCompany is negotiating with the local authorities to gain more building rights. Engel also signed an agreement to purchase a land area of 9,954 sq.m in Krakow,one of Poland's major cities. After signing a definitive agreement, the Companyhas increased the building rights of the project to allow the Company to buildup to 300 residential units generating an estimated €45 million in sales. Joint venture partnerships continue to form a key component of Engel's growthstrategy. Proceeds received from these partnerships in previous years are nowbeing invested in the development of each of the projects. Engel continues toseek joint ventures that will provide the Company with a significant share ofprofits from projects and a strong working relationship. As a result of the turmoil in the financial markets across the world and thepossibility that future cost of capital will increase for the Company, the Boardof the Directors has decided not to distribute an interim dividend and furtherreview the Company's dividend policy following its financial reports for yearend. Outlook Engel has established a high quality portfolio of residential property assetsacross Central and Eastern Europe where overall demand remains relatively firmdespite the recent turmoil in financial markets around the world. The continuingrise in land and construction costs has led the Board to adopt a more selectiveapproach to projects undertaken by the Company.Condensed consolidated interim balance sheet 30 June 31 December 2007 2006 2006 --------- --------- ---------- Thousands Euro -----------------------ASSETSCurrent assetsCash and cash equivalents 13,096 28,861 17,354Restricted bank deposits and cash in escrow 14,239 7,225 6,489Trade accounts receivable 1,826 4,645 1,180Other accounts receivable and prepayments 3,887 1,919 1,918Loans to related parties and other 3,395 3,251 2,346Inventories of housing units 63,065 36,616 52,046 --------- --------- ----------Total current assets 99,508 82,517 81,333 --------- --------- ----------Non-current assetsInvestment property under development - - 391Investment property 23,792 - 24,333Property and equipment 387 295 339Deferred tax assets - 208 -Investment in associate 39 50 51 --------- --------- ----------Total non-current assets 24,218 553 25,114 --------- --------- ----------Total assets 123,726 83,070 106,447 ========= ========= ========== LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesInterest-bearing loans from banks 24,741 8,124 12,625Current portion of finance lease liability 5,513 - 3,681Loans and amounts due to related parties andother 7,592 12,335 8,669Trade accounts payable 6,617 2,373 2,748Other accounts payable 13,199 5,073 7,202Income tax payable 330 639 405 --------- --------- ----------Total current liabilities 57,992 28,544 35,330 --------- --------- ----------Non-current liabilitiesFinance lease liability 14,064 - 14,794Deferred tax liabilities 612 - 442 --------- --------- ----------Total non-current liabilities 14,676 - 15,236 --------- --------- ----------EquityShare capital 878 878 878Share premium 39,298 39,298 39,298Capital reserves (322) (338) (326)Retained earnings 10,451 15,055 16,172Accumulated translation adjustment 570 (490) (214) --------- --------- ----------Equity attributable to equity holders of theparent 50,875 54,403 55,808Minority interest 183 123 73 --------- --------- ----------Total equity 51,058 54,526 55,881 --------- --------- ----------Total liabilities and equity 123,726 83,070 106,447 ========= ========= ========== Condensed consolidated interim income statement For the period For the year ended ended 30 June 31 December ---------- ---------- ---------- 2007 2006 2006 ---------- ---------- ---------- Thousands Euro --------------------------Revenues 7,292 23,165 24,961Change in fair value of investmentproperty - - 4,704Cost of revenues (5,205) (9,451) (10,956) ---------- ---------- ----------Gross profit 2,087 13,714 18,709 Selling, general and administrativeexpenses (1,738) (639) (2,136) ---------- ---------- ----------Operating profit 349 13,075 16,573 Foreign exchange profits (losses) 647 (1,087) 728Other financial income 389 970 1,423Other financial expenses (823) (854) (2,429)Financial expenses due to finance leaseliability (1,211) - (951) ---------- ---------- ----------Net financing costs (998) (971) (1,229) Share in profit (loss) of associate (10) 18 29 ---------- ---------- ----------Profit (loss) before tax (659) 12,122 15,373 Income taxes 300 376 687 ---------- ---------- ----------Profit (loss) for the period (959) 11,746 14,686 ========== ========== ========== Attributable to:Equity holders of the parent (1,069) 11,810 14,770Minority interest 110 (64) (84) ---------- ---------- ---------- (959) 11,746 14,686 ========== ========== ========== Earnings (losses) per share:Basic earnings (losses) per share (Euro) (0.011) 0.134 0.167 ---------- ---------- ----------Diluted earnings (losses) per share(Euro) (0.011) 0.134 0.167 ---------- ---------- ---------- Condensed consolidated interim statement of cash flows For the six month For the period year ended ended 30 June 31 December 2007 2006 2006 ---------- ---------- ---------- Thousands Euro --------------------------Cash from (used in) operating activities:Net profit (loss) for the period (959) 11,746 14,686Adjustments necessary to reflect cash flowsfrom operating activities:Depreciation 50 21 54Unrealised foreign exchange losses - 837 290Finance expenses, net 998 971 1,229Income taxes 512 235 477Company's share of loss (profits)of associate 11 (18) (29)Equity-settled share based payment 4 2 14Gain from sale of subsidiaries (43) - -Change in fair value of investmentproperty - - (4,704)Increase in inventory (14,685) (4,076) (16,851)Deferred taxes (212) 610 152Increase in trade accountsreceivable (629) (4,582) (1,117)Increase in other accountsreceivable (1,989) (818) (763)Decrease in trade accounts payable 4,021 52 411Decrease (Increase) in otheraccounts payable 2,035 (2,806) 469Cash from (used in) operations:Interest received 348 197 469Interest paid (260) (363) (1,212)Income taxes paid (543) (374) (401) ---------- ---------- ----------Net cash from (used in) operatingactivities (11,341) 1,634 (6,826) ---------- ---------- ---------- Cash from (used in) investing activities:Acquisition of property andequipment (98) (198) (275)Acquisition of subsidiaries, net ofcash acquired - - (2,713)Additional investment insubsidiaries - (155) (155)Disposal of subsidiaries 3,724 - -Short term loans granted to relatedparties (1,142) (2,431) (1,392)Short term loans repaid by relatedparties 93 1,057 1,498Restricted cash (7,659) (2,112) (1,344) ---------- ---------- ----------Net cash used in investingactivities (5,082) (3,839) (4,381) ---------- ---------- ---------- Condensed consolidated interim statement of cash flows (continued) For the six month period For the year ended ended 30 June 31 December ------------------ ---------- 2007 2006 2006 ---------- ---------- ---------- Thousands Euro --------------------------Cash from (used in) financing activitiesShort term loans received from banks 13,908 3,149 10,243Short term loans repaid to banks (786) (6,294) (9,014)Short term loans received from related parties 2,013 2,431 2,696Short term loans repaid to related parties (3,089) (9,567) (13,668)Payment of finance lease liability (125) - (1,572)Dividend received - - 139Dividend paid to minority shareholders - - (33)Dividend paid to shareholders - (597) (2,440) ---------- ---------- ----------Net cash from (used for) financing activities 11,921 (10,878) (13,649) ---------- ---------- ---------- Decrease in cash and cash equivalents duringthe period (4,502) (13,083) (24,856)Effect of exchange rate changes on cash 244 (159) 107Cash and cash equivalents at the beginning ofthe period 17,354 42,103 42,103 ---------- ---------- ----------Cash and cash equivalents at the end of theperiod 13,096 28,861 17,354 ========== ========== ========== This information is provided by RNS The company news service from the London Stock Exchange