TIDMTBI
RNS Number : 7491Y
Trans Balkan Investments Ltd
31 December 2010
TRANS BALKAN INVESTMENTS LIMITED
(formerly Equest Investments Balkans Limited)
Interim Results
for the six months ended 30 June 2010
Trans Balkan Investments Limited ("TBIL" or "the Company"), a
holding company with subsidiaries investing in the Balkan region
(all together "the Group"), today announces its interim results for
the six months ended 30 June 2010.
Headlines for the Period
-- Consolidated revenue of EUR234.2 million for the six months
ended 30 June 2010 (30 June 2009: EUR239.5 million)
-- Operating loss of EUR7.9 million (30 June 2009: operating
loss of EUR30.2 million)
-- Pre-tax loss of EUR14.7 million (30 June 2009: loss of
EUR34.9 million)
-- Loss per share from continuing operations of EUR0.64 (30 June
2009: loss per share of EUR1.63)
-- Total net assets at 30 June 2010 of EUR99.8 million (31
December 2009: EUR116.8 million and 30 June 2009: EUR131.0
million)
-- Net asset value per share of EUR5.46 (31 December 2009:
EUR6.39 and 30 June 2009: EUR7.17)
-- TechnomarketDomo, TBIL's largest holding, consolidated sales
of EUR233.4 million (31 December 2009: EUR558.4 million and 30 June
2009: EUR239.5 million), EBITDA of EUR3.3 million (31 December
2009: EUR12.0 million and 30 June 2009: negative of EUR5.2 million)
and pre tax loss of EUR7.4 million (31 December 2009: pre tax loss
of EUR3.53 million and 30 June 2009: pre tax loss of EUR5.0
million).
-- Borovets Investments, TBIL's strategic stake in Rila Samokov
development project, valued at EUR31.91 million (31 December 2009:
EUR36.52 million and 30 June 2009: EUR37.09 million) by independent
valuers.
For further information please contact:
Trans Balkan Investments Ian Schmiegelow Tel: + 44 20 7630 3350
Limited Natalie Weedon
Collins Stewart - Nomad Stewart Wallace Tel: +44 20 7523 8322
Joint & Broker
KBC Peel Hunt Limited - Capel Irwin Tel: +44 20 7418 8900
Joint Broker
Financial Dynamics - PR Ed Gascoigne-Pees Tel: +44 20 7269 7132
adviser David Cranmer
Nick Henderson
CHAIRMAN'S STATEMENT
Overview and strategy
TBIL's interim results reflect the extremely challenging
environment which continues to affect the Balkan region. The
economic crisis has not faltered so far this year thereby
continuing to fuel the considerable drop in retail sales suffered
by the Group's major subsidiary, Technomarket Domo N.V ("TMD"), as
well as the fall in value of the Group's real estate
investments.
The overriding issue for the Company during the period has been
the ever present shortage of liquidity and the consequent need to
give unceasing attention to the ongoing sale of its remaining
assets and to the management of its major indebtedness and related
obligations to the State General Reserve Fund of Oman ("SGRF")
under the Commercial Agreement of July 2009. The chronology and
detail relating to this particular indebtedness and to the
Subsequent Amendment Agreement, finalised only in late October this
year, are set out at some length in Notes 11 and 12 to the
Financial Statements headed "Related Party Transactions" and
"Events after the end of the reporting agreement". Suffice it to
say here, as has been reported by the Board in a number of
announcements over the past 12 months that, while the support of
SGRF has been essential to the Company's continuation in business,
it has come at a price and has involved the Board in much difficult
deliberation and careful management.
The relentless pressure on liquidity, coupled with the stagnant
if not falling value of the Company's remaining property portfolio
during 2010, have led the Board to the regrettable conclusion that
the only realistic option for TBIL is to sell its 61.80% holding in
TechnomarketDomo N.V. ("TMD") as soon as it can reasonably be
achieved. To this end, on 3 June 2010, the Board announced that it
was in discussion with the minority shareholders of TMD concerning
an indicative offer from them to purchase TBIL's equity
shareholding of 61.8 % in TMD. Whilst giving suitable consideration
to this offer, the Board has also continued to consider other
realistic options in order to resolve most advantageously for all
the Company's shareholders the matter of raising sufficient funds
both to repay the EUR 17 million TBIL owes to SGRF as well as to
finance its continuing business. Consequently, the Board announced
on 4 August 2010 that it had engaged Entrea Capital of Sofia,
Bulgaria and Capital Partners of Bucharest, Romania, acting
jointly, to be its independent financial adviser to assist it in
respect to this offer as well as in reviewing other realistic
options, including the sale of TBIL's holding in TMD in whole or in
part to a third party. Furthermore, the Board confirmed that it had
also appointed Ernst & Young to prepare an independent fair
valuation of TBIL's holding in TMD.
An orderly process for the sale of TMD is now in hand which has
been made possible through the terms, admittedly onerous, of the
Amendment Agreement to which I have already referred and which, in
essence, and on some stringent conditions, permits TBIL a 12 month
period from its signature in October 2010 to sell its holding in
TMD. Also, by the terms of this Agreement, TBIL is to seek, subject
to shareholder approval, to delist its shares from AIM, at its next
Annual General Meeting or as soon as practicable thereafter.
Although the proposed sale of TMD is taking place as the Company
continues to face a challenging trading environment, it should be
appreciated how, despite this, both the businesses in Romania and
Bulgaria have increased their market share while, simultaneously,
achieving cost reductions, closing unprofitable stores and
otherwise refining operating efficiencies.
As to TBIL's other business interests, the Company, together
with its fellow shareholders, continues to review the steps which
need to be taken to progress the plans for the major Borovets
resort development. Even while weak market conditions persist there
is much preparatory work involving rezoning and concessions which
can be handled advantageously.
During 2010, the Company has continued to dispose of its
remaining non-core property holdings. In July the Board announced
the completion of the sale of Iztok, one of the three former cinema
sites, owned through Pelican. The sale of a second Evropa Palace
was completed in early November. Preliminary agreement for the sale
of the last cinema site, Urvich, was signed on the 6 October.
In respect to the summary termination of the Novera concessions,
which TBIL considers to be wholly unjustified, the Board continues
to investigate the options available to it in respect to pursuing a
complaint against the Bulgarian Government under the terms of the
relevant Bilateral Investment Treaty.
In general, the Board's major focus during the half year period
and beyond has been to continue the implementation of material cost
saving measures arising from the simplification of its corporate
structure, to arrange the sale of further non-core property assets,
to seek a rational resolution with the banks of the financial
problems of TBIL's property development subsidiary, Immofinance,
and, finally, to address the issues it has faced with SGRF in
respect to TMD and otherwise.
Results
In the six months to 30 June 2010, the Company had consolidate
revenue of EUR 234.2 million (30 June 2009: EUR 239.5 million),
made a pre-tax loss of EUR 14.7 million (30 June 2009 pre tax loss
EUR 34.9 million), and showed a loss per share including both
continuing and discontinuing operations of EUR 0.64 (30 June 2009:
loss per share EUR 1.76).
Total Assets of the Group at 30 June 2010 were EUR 342.4 million
(31 December 2009: EUR 366.1 million), and Total Net Assets of the
Company at 30 June 2010 were EUR 99.8 million (31 December 2009:
EUR 116.8 million).
Net asset value per share decreased 15% to EUR 5.46 per share at
30 June 2010 from EUR 7.17 per share at 31 December 2009.
Holdings
A detailed update for the six months to 30 June 2010 in respect
to TBIL's holdings are presented in the Management Review section
of this document, including a post period update.
Costs
The Board can report that the planned simplification of the TBIL
group's corporate structure, with its consequent reduction in
overall cost, progressed well in the first half of 2010. The number
of companies within the structure has been reduced from 43 to 28 by
way of merging or liquidating defunct entities and this is expected
to be reduced by a further 8 by the end of the year.
Moreover, the Company has continued to implement effective cost
control measures within its operating subsidiaries.
Going Concern
To date in 2010, TBIL's Board has actively managed its business
risk in the most challenging of economic environments. After making
suitable enquiries and giving proper consideration to factors which
could give rise to significant financial exposure, including asset
sales, the Board has a reasonable expectation that the Company has
adequate resources to both continue its operations for the
foreseeable future and meet its obligations as they fall due.
However, there cannot be certainty while the extremely difficult
market conditions prevail as they may impact adversely on planned
disposals in terms of price expectation and timing. Given this
position, the Company continues to adopt the going concern basis in
the preparation of these financial statements.
Outlook
The immediate outlook for the economies in South East Europe, in
particular Bulgaria and Romania, remain bleak with material
improvement not forecast before 2012. It is therefore anticipated
that the Company's major liquidity shortage will only be relieved
by the early sale of its holding in TMD, a process which is now
underway, and, with the exception of Borovets, the realisation of
its few remaining property investments.
Ian Schmiegelow
Non-Executive Chairman Trans Balkan Investments Limited
December 2010
MANAGEMENT REVIEW
While the effects of the global economic crisis were slow to
reach the South East European region, the impact was felt heavily
in the last quarter of 2009 and has continued throughout 2010.
TBIL's largest holdings are located in Bulgaria and Romania, where
in 2009, GDP contracted by 4.9% in Bulgaria and by 7.1% in Romania.
In the consumer growth driven industries this has resulted in a
significant drop in retail sales, varying from 20% to 40% compared
with previous years and trading within the TechnomarketDomo
companies was seriously affected. Land and property values have
suffered similarly as property development activity has virtually
ceased amidst a lack of available bank financing. The IMF forecast
for Bulgarian GDP in 2010 is currently for 0.0 % growth and a
decrease of 1.9% for Romanian GDP. No improvement in the market
conditions is expected this year and TBIL continues to focus on
disposing of its property holdings and the possibility of selling
its holding in TMD.
Financial review
Consolidated revenue for the six months ended 30 June 2010 from
continuing operations was EUR234.2 million (30 June 2009: EUR239.5
million). The underlying operating loss for the six months ended 30
June 2010 of EUR7.8 million (30 June 2009: operating loss of
EUR30.2 million) and the loss before tax from continuing operations
was EUR14.7 million (30 June 2009: loss of EUR34.9 million).
Review of TBIL Holdings
TechnomarketDomo
61.8 % HOLDING AS AT 30 June 2010
TechnomarketDomo Group NV (TMD) is the Dutch parent company for
the Company's investments in the retail electronics and white goods
sector in South East Europe, which include 100% of the Bulgarian
Technomarket retail and wholesale operations and 100% of the
Romanian Domo retail operations.
TMD is a leading player in the sector in the South East European
region with a consolidated turnover in the first six months of 2010
of EUR233.4 million (30 June 2009: EUR239.5 million), and a loss
before tax of EUR7.4 million (30 June 2009: loss of EUR5.0
million).
In view of the economic slowdown, management undertook a
detailed cost analysis of the operations and implemented a number
of recommendations in the first quarter 2010, including negotiating
rental decreases where possible and closing the majority of Domo
stores in Bulgaria with the remaining operations rebranded under
the Technomarket brand. At the end of the first six months of 2010
the TMD network consisted of 197 stores.
The consumer electronics and white goods retail market shrunk
during the first six months of 2010 in Bulgaria and Romania by an
estimated 10% on average. During this period the Bulgarian
operations gained market share which increased to 44% compared to
37% in the corresponding six month period ended 30 June 2009. The
Romanian operations also gained market share accounting for 28% of
the market by the end of June 2010, compared to 25% in the
corresponding month in 2009.
The major strategic objectives for TMD in 2010 has been to
accelerate the integration of the operations of the Technomarket
and Domo businesses, to eliminate continually unprofitable stores
as well as to reposition the business for fewer but more discerning
consumers within TMD and to achieve optimum sales growth.
Post Period End Event
As announced on 4 August 2010, TBIL has engaged financial
advisers to assist the Board in assessing and processing the
indicative offers received from minority shareholders of TMD to
purchase TBIL's shareholding in TMD as well as to review other
realistic options, including the sale of TBIL's interest in TMD in
whole or in part to a third party.
As reported on 22 October 2010, TBIL has entered into an amended
agreement with the State General Reserve Fund of the Sultanate of
Oman ("SGRF") which amends and supplements the terms of the
Commercial Agreement, details of which were announced on 16 July
2009. Under the Amendment Agreement, in exchange for the payment of
certain fees and other sums and on certain conditions, SGRF has
agreed to defer for 12 months from the date of the Amendment
Agreement, the exercise of its right to acquire the Company's
interest in TMD, which right SGRF has asserted it is entitled to
exercise immediately pursuant to the terms of the Commercial
Agreement.
Technomarket Serbia and Montenegro (Harwood Limited)
23% HOLDING IN HARWOOD AS AT 30 June 2010
During the first six months of 2010 the consolidated sales of
Harwood amounted to EUR29.2 million (30 June 2009: EUR43.6 million)
resulting in a negative EBITDA of EUR1.8 million (30 June 2009:
negative EUR2.0 million).
Technomobile
50% HOLDING AS AT 30 June 2010
The Company owns 50% of Technomobile Serbia, a chain of stores
selling GSM sets, small consumer electronic devices and
complementary services. During the first six months of 2010 sales
amounted to EUR3 million (30 June 2009: EUR3 million), through a
chain of 56 shops, resulting in a negative EBITDA of EUR0.1 million
(30 June 2009: negative EBITDA EUR1.1 million).
Borovets
33.5% HOLDING AS AT 30 June 2010
TBIL holds a 33.5% indirect investment in Rila Samokov 2004 AD,
which owns 1,977,131 square meters of land for resort development
in the Borovets mountain region, purchased for EUR25.9 million in
cash.
TBIL's stake is held through its 50% interest in Borovets Invest
BV, a holding company, which in turn owns 100% of Borovets
Investments EAD, which has an investment of 67% in Rila Samokov.
TBIL's partner in Borovets Invest BV is the State General Reserve
Fund of the Sultanate of Oman ("SGRF"). The other shareholders in
Rila Samokov are the Municipality of Samokov (25% shareholding) and
Bulgaria's leading construction company Glavbolgarstroy (8%
shareholding).
Currently the project is divided into six sub projects that can
be individually developed, thus lowering the development risk of
this large scale EUR800 million project. While no substantial
construction works have yet been undertaken, the project remains
debt free.
Review of TBIL Non Core Holdings
Pelican Retail Holdings
100% HOLDING AS AT 30 June 2010
Pelican has been the owner of three sites which were formerly
used as cinemas and are located in the city centre and densely
populated areas of Sofia, together with a small land plot in the
city of Pernik. All these Pelican properties are included in the
asset disposal programme.
Post Period Event
TBIL has successfully sold the former cinemas Iztok and Evropa
Palace. On 30 July 2010, the sale of Iztok was completed for the
net sale proceeds amounting to EUR1,428,000 in cash which has been
received. On 11 November 2010, the Evropa Palace was sold for the
consideration of EUR1,500,000 in cash which has been received. The
proceeds from the sale of Iztok and Evropa Palace cinemas were
utilised to fund the Company's liabilities and continuing
operations. The sale of the remaining Urvich cinema is at an
advanced stage and is expected to be completed by the end of the
year.
Immofinance AD
100% HOLDING AS AT 30 June 2010
Immofinance is a property development company focusing on first
and second homes in Bulgaria. Immofinance is in discussions with
the respective banks financing its two remaining development
projects, Sozopolis and Banya, as to the future of the projects.
The loan facilities are currently in default as a result of
breaches of covenants. The loans are secured on the relevant
developments and are on non-recourse basis to TBIL.
The Immofinance portfolio consists of the development projects
and land holding listed below.
1. Sozopolis is a complex of second home properties, a spa
centre, and several retail units including two restaurants on the
Black Sea coast. The construction started in November 2007 and the
first phase of the project, comprising 105 second home apartments,
was completed in 2009 but EUR7 million is still owed to the main
construction company and another EUR8 million is required for the
completion of the second phase of the project. Total gross floor
area for Immofinance in the project is 35,575 square meters, of
which 30,265 square meters is for residential apartments. Six units
(2,634 square meters) had been sold as at 30 June 2010 and none
completed since.
The marketing of the project coincided with the deterioration of
the Bulgarian economy and the near collapse in demand.
The project has been financed by a EUR8.2 million equity
investment by TBIL and a EUR38 million construction loan from Alpha
Bank. The current drawdown on the construction loan is EUR27.3
million (of which EUR1.5 million has been repaid) and there is an
additional EUR5 million VAT facility (of which EUR1.2 million has
been repaid).
TBIL is in discussions with Alpha Bank for restructuring the
facility and to determine the best course of action in respect of
this development project.
2. Banya Spa & Wellness Resort, a complex of residential
apartments, hotel, spa and sports facilities located in the
foothills of Pirin Mountain, was started in September 2006. The
gross floor area of the project is 20,277 square meters of which
12,572 square meters is for residential apartments (119 units) and
7,705 square meters for the hotel and spa.
The project has been financed by a EUR7.5 million equity
investment by TBIL and a EUR10.5 million construction loan from DSK
Bank of which EUR6.9 million has been drawn down. The loan is
currently in default and Immofinance is in discussions with the
bank on available options, including the rental of Banya Spa &
Wellness Resort to a tour operator, on condition that an agreement
on the funding of EUR3 million for the completion of the project is
achieved. Provided this additional financing can be secured, the
project is expected to be finalised within nine months.
Immofinance's partner in the project is the Municipality of Razlog
which holds a 4% equity interest in the Banya Spa & Wellness
project.
3. Boyana Diplomatic Club is a land plot adjacent to the Boyana
Diplomatic Club in Sofia which is designed for high end condominium
apartments, with a total gross floor area projected at
approximately 5 000 square meters. TBIL is actively marketing this
asset.
4. Embassy Apartments is a completed development in Sofia ,which
currently has just five apartments totalling 1,405 square meters
remaining to be sold.
Novera
94% HOLDING AS AT 30 June 2010
As previously announced, the remaining Concession Agreements for
the provision of waste management and street cleaning services in
Sofia held by three wholly owned subsidiaries of Novera AD were
terminated by the municipality of Sofia in March 2009. TBIL rejects
the basis of the termination of these Concession Agreements and has
had discussions with legal representatives of the Bulgarian
Government over the Municipal Council of Sofia's conduct in
relation to the Concession Agreements. The senior and mezzanine
lenders to Novera are working together with TBIL in these
discussions.
Novera is now in liquidation and the liquidator is handling all
of the necessary paperwork relating to the company's former
employees. The liquidator is also realising any remaining assets to
help cover the costs of the liquidation.
Loans and borrowings
The Group had EUR96.6 million in bank debt at the end of the
first six months of 2010 pledged against assets over which TBIL has
majority control. All debt as at 30 June 2010 was non-recourse to
TBIL.
The largest subsidiary bank debt is within TechnomarketDomo and
resulted from the use of debt to acquire of this holding. This debt
facility with an outstanding principal amount of approximately
EUR81 million as at 30 June 2009 with RZB has been reduced to
approximately EUR37.5 million as at 30 June 2010 (EUR56.2 million
as at 31 December 2009).
The table below summarises the Group's interest-bearing bank
loans and borrowings, the carrying amount of which are measured at
amortised cost.
31
30 June December
2010 2009
Carrying Carrying
amount amount
Nominal
interest Year of
Subsidiary Currency rate maturity EUR'000 EUR'000
Non-Current
Euribor +
TechnomarketDomo Euro 4% 2014 24 344 26 558
Euribor +
KKE Euro 3.5% 2014 8 255 9 005
------------------ ----------- ---------- --------- ---------- ----------
32 599 35 563
----------------------------------------- --------- ---------- ----------
Current
3m
Euribor
Immofinance EAD Euro + 5% 2013 30 857 29 838
Euribor +
TechnomarketDomo Euro 4% 2014 3 688 19 621
Euribor +
KKE Euro 3.5% 2014 1 251 1 001
3m
Euribor
Banya Holiday AD Euro + 2.8% 2013 7 922 7 354
Overdrafts Euro, RON 20 330 12 982
------------------ ----------------------- --------- ---------- ----------
64 048 80 305
----------------------------------------- --------- ---------- ----------
In December 2008, TMD and Axis Retail, K & K Electronics
EOOD ("KKE") and Domo Retail SA, as guarantors, entered into an
agreement with RZB pursuant to which TMD assumed EUR65 million of
the loans provided to TMD group of companies for the purposes of
acquiring holdings in operating subsidiaries (the "Refinancing
Loans"). RZB and KKE also executed an agreement for amendments of
the original EUR25 million loan facility originally granted in
2006. (The "KKE Loan" together with the Refinancing Loans, the "RZB
Loans"). Security for the RZB Loans includes a pledge by Axis
Retail of all of its shares in TMD to RZB. Axis Retail and Lyra, a
minority shareholder in TMD, also gave an undertaking to RZB (the
"Undertaking") to facilitate a prepayment of up to EUR40 million of
the Refinancing Loans. TBIL group had no other exposure under the
RZB Loans.
In 2009, following discussions between RZB, TMD and Axis Retail,
RZB agreed to accept prepayment of EUR40 million as EUR20 million
in cash and a bank guarantee from Citibank for the remaining EUR20
million in exchange for the release of the undertaking.
The repayment of EUR20 million by TMD was financed by an EUR8
million shareholder loan to TMD and a EUR12 million bridge facility
provided by Corporate Commercial Bank AD to TBIL repayable within
12 months. The bridge loan was drawn down on 15 July 2009 and
advanced by TBIL to TMD by a way of a shareholder loan.
The Citibank Guarantee provided that, if TMD was unable to
prepay another EUR20 million of the Refinancing Loans by 31
December 2009, RZB would be entitled to draw EUR20 million under
the Citibank Guarantee.
As part of these arrangements, SGRF agreed to indemnify Citibank
for losses to Citibank under the Citibank Guarantee and provided
Citibank with the collateral required by Citibank to secure SGRF's
indemnity obligations. TBIL agreed to indemnify SGRF against any
expenses or losses in connection with the Citibank Guarantee and
TBIL granted a fixed and floating charge in favour of SGRF over all
of TBIL's assets and undertakings (the "SGRF Security"). The SGRF
Security included a charge over TBIL's shares in Axis Retail, as
well as over TBIL's interests (or the proceeds thereof) in various
property holdings including Rodacar, Serdika, Axis-S Retail NV and
Immofinance. As from 31 December 2009, SGRF had the right to
exchange any unpaid indebtedness or liability of TBIL to SGRF for
TBIL's indirect 61.8% interest in TMD unless (i) certain conditions
related to TMD's business integration and further management
appointments at TMD are not satisfied by TBIL by 31 December 2009,
in which case, SGRF's exchange rights would be exercisable after 31
December 2009 or (ii) an event of default occurred under any of the
agreements with SGRF, in which case, SGRF's exchange rights would
become exercisable immediately. For the purposes of the exchange,
the value of 100% of TBIL's investment in TMD was fixed at EUR20
million.
On 31 December 2009 TBIL, through a wholly owned subsidiary,
repaid in full its the EUR12 million bridge facility granted by a
Corporate Commercial Bank together with all outstanding
interest.
Further in December 2009, Axis Retail, the parent of TMD, repaid
to RZB EUR3 million to reduce the amount of the Citibank Guarantee.
A balance of EUR17 million (plus accrued interest) due to be repaid
to RZB by 31 December 2009 was met by RZB calling the Citibank
Guarantee which, in turn, was covered by SGRF under the terms of
its related counter indemnity.
Through repayments and the arrangements described above, the
exposure to RZB in respect of TMD as at 30 June 2010, was reduced
from an outstanding principal amount of approximately EUR81 million
to approximately EUR37.5 million, with loan covenants waived until
31 December 2010 and final maturity extended from three to five
years, that is until 31 December 2014.
TBIL is in active discussions with the lending banks for all
remaining subsidiary debt in assets with TBIL majority control.
Cost Savings
The Company is continuing to achieve cost savings through
simplification of its corporate structure resulting from this asset
disposal programme and the planned reduction in the number of
intermediate BVI, NV and BV companies. The number of intermediary
companies had been reduced by five by the end of the half-year, and
by the year end, the number will be reduced by an additional six
intermediate or dormant companies.
TBIL Management
16 December 2010
Consolidated income statement Six months Six months
(unaudited) to to Year ended
for the six months ended 30 30 June 30 June 31 December
June 2010 2010 2009 2009
Unaudited Unaudited Audited
Restated
Note EUR'000 EUR'000 EUR'000
------------------------------- ----- ----------- ----------- ------------
Revenue 4 234 223 239 549 560 868
Cost of sales (195 872) (205 311) (469 871)
-------------------------------
Gross profit 38 351 34 238 90 997
Other operating income 6 59 388
Administration, selling and
distribution costs (40 448) (46 033) (85 869)
Impairment of assets (21) (22 311) (64 577)
(Loss) from fair value
adjustment on property
assets 6 (640) (1 378) (7 610)
Gain on sale of investments - 12 793 12 793
Share of post tax losses of
associates and joint
ventures 7 (5 099) (7 542) (10 028)
Operating (loss) (7 851) (30 174) (63 905)
Finance income 1 557 254 2 136
Finance costs (8 413) (4 991) (10 905)
------------------------------- ----- ----------- ----------- ------------
(Loss) before tax (14 707) (34 911) (72 675)
Taxation (51) 98 (863)
------------------------------- ----- ----------- ----------- ------------
(Loss) from continuing
operations (14 758) (34 813) (73 538)
(Loss)/profit on discontinued
operation, net of tax (15) (2 346) 25 308
-------------------------------
(Loss) for the period (14 773) (37 159) (48 230)
------------------------------- ----- ----------- ----------- ------------
Attributable to:
- The owners of the parent (11 674) (32 193) (46 143)
- Non-controlling interest (3 099) (4 966) (2 087)
(14 773) (37 159) (48 230)
------------------------------- ----- ----------- ----------- ------------
Earnings / (loss) per share
(basic and diluted):
- Continuing operations (0.64) (1.63) (3.91)
- Discontinued operations 0.00 (0.13) 1.39
Total (0.64) (1.76) (2.52)
------------------------------- ----- ----------- ----------- ------------
Consolidated statement of
comprehensive income Six months Six months
(unaudited) to to Year ended
for the six months ended 30 30 June 30 June 31 December
June 2010 2010 2009 2009
Unaudited Unaudited Audited
Restated
Note EUR'000 EUR'000 EUR'000
------------------------------- ----- ----------- ----------- ------------
(Loss) for the period (14 773) (37 159) (48 230)
------------------------------- ----- ----------- ----------- ------------
Other comprehensive income
Available for sale investment
valuation loss - (123) (123)
Exchange differences on
translation (2 576) (669) (3 692)
Share of other comprehensive
income in associates and
joint ventures 7 380 - -
Other comprehensive income for
the period, net of tax (2 196) (792) (3 815)
------------------------------- ----- ----------- ----------- ------------
Total comprehensive income for
the period (16 969) (37 951) (52 045)
------------------------------- ----- ----------- ----------- ------------
Attributable to:
- The owners of the parent (12 863) (32 913) (48 254)
- Non-controlling interest (4 106) (5 038) (3 791)
(16 969) (37 951) (52 045)
------------------------------- ----- ----------- ----------- ------------
Consolidated
statement of
changes in
equity for the
six months Foreign
ended 30 June Share Available-for-sale Warrant exchange Retained Non-controlling Total
2009 capital reserve reserve reserve earnings Total interest equity
---------------
restated restated restated restated restated restated restated restated
---------------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- --------- ------------------- --------- --------- --------- --------- ---------------- ---------
Balance at 1
January 2009 253 846 123 6 786 (11 665) (86 881) 162 209 2 233 164 442
--------------- --------- ------------------- --------- --------- --------- --------- ---------------- ---------
Profit /
(loss) for
the period - - - - (32 193) (32 193) (4 966) (37 159)
Available for
sale
investment
valuation
loss - (123) - - - (123) - (123)
Exchange
differences
on
translation - - - (230) - (230) (439) (669)
Total
comprehensive
income for
the period,
net of tax - (123) - (230) (32 193) (32 546) (5 405) (37 951)
--------------- --------- ------------------- --------- --------- --------- --------- ---------------- ---------
Settlement of
put option
liability - - - - - - 7 755 7 755
Non
controlling
interest
removed on
disposal of
subsidiary - - - - (585) (585) (2 615) (3 200)
Total
transactions
with owners - - - - (585) (585) 5 140 4 555
--------------- --------- ------------------- --------- --------- --------- --------- ---------------- ---------
Balance at 30 (119
June 2009 253 846 - 6 786 (11 895) 659) 129 078 1 968 131 046
--------------- --------- ------------------- --------- --------- --------- --------- ---------------- ---------
Consolidated
statement of
changes in
equity for the
six months Foreign
ended 31 Share Available-for-sale Warrant exchange Retained Non-controlling Total
December 2009 capital reserve reserve reserve earnings Total interest equity
---------------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Balance at 1 (119
July 2009 253 846 - 6 786 (11 895) 659) 129 078 1 968 131 046
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Profit /
(loss) for
the period - - - - (13 950) (13 950) 2 879 (11 071)
Exchange
differences
on
translation - - - (1 758) - (1 758) (1 265) (3 023)
Total
comprehensive
income for
the period,
net of tax - - - (1 758) (13 950) (15 708) 1 614 (14 094)
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Revaluation of
shareholder
loan - - - - (186) (186) - (186)
Total
transactions
with owners - - - - (186) (186) - (186)
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Balance at 31
December (133
2009 253 846 - 6 786 (13 653) 795) 113 184 3 582 116 766
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Consolidated
statement of
changes in
equity for the
six months Foreign
ended 30 June Share Available-for-sale Warrant exchange Retained Non-controlling Total
2010 capital reserve reserve reserve earnings Total interest equity
---------------
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Balance at 1 (133
January 2010 253 846 - 6 786 (13 653) 795) 113 184 3 582 116 766
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Profit /
(loss) for
the period - - - - (11 674) (11 674) (3 099) (14 773)
Exchange
differences
on
translation - - - (1 569) - (1 569) (1 007) (2 576)
Share of other
comprehensive
income in
associates
and joint
ventures - - - 380 - 380 - 380
Total
comprehensive
income for
the period,
net of tax - - - (1 189) (11 674) (12 863) (4 106) (16 969)
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Balance at 30 (145
June 2010 253 846 - 6 786 (14 842) 469) 100 321 (524) 99 797
--------------- -------- ------------------- -------- --------- --------- --------- ---------------- ---------
Consolidated statement of 30 June 30 June 31 December
financial position 2010 2009 2009
as of 30 June 2010 Unaudited Unaudited Audited
Note EUR'000 EUR'000 EUR'000
--------------------------- ----- ----------- ----------- --------------
ASSETS
Non-current assets
Property, plant and
equipment 17 592 27 070 19 158
Investment property 6 9 118 10 608 9 758
Goodwill and trademarks 73 429 102 829 75 051
Other intangible assets 868 919 869
Investments in
equity-accounted
associates 7 419 4 180 827
Investments in
equity-accounted joint
ventures 7 31 270 40 169 35 581
Other receivables 11 965 18 468 14 839
Deferred tax assets 386 534 388
--------------------------- ----- ----------- ----------- --------------
145 047 204 777 156 471
Current assets
Inventories 8 143 383 152 977 147 144
Trade and other
receivables 45 211 66 189 46 152
Tax receivables 203 2 421 283
Cash and cash equivalents 9 8 509 4 486 16 078
--------------------------- ----- ----------- ----------- --------------
197 306 226 073 209 657
Non-current assets
classified as held for
sale 8 6 145 7
---------------------------
Total assets 342 361 436 995 366 135
--------------------------- ----- ----------- ----------- --------------
LIABILITIES
Non-current liabilities
Other payables - 346 344
Loans and borrowings 10 49 443 58 355 52 111
Provisions 100 219 99
Deferred tax liability 6 371 7 409 6 675
---------------------------
55 914 66 329 59 229
Current liabilities
Trade and other payables 95 433 98 379 108 326
Loans and borrowings 10 90 568 105 057 80 305
Corporation tax liability 351 42 1 097
Provisions 271 365 370
---------------------------
186 623 203 843 190 098
Liabilities directly
associated with
non-current assets
classified as held for
sale 27 35 777 42
---------------------------
Total liabilities 242 564 305 949 249 369
----- ----------- ----------- --------------
TOTAL NET ASSETS 99 797 131 046 116 766
--------------------------- ----- ----------- ----------- --------------
EQUITY
Capital and reserves
attributable to equity
holders of the parent
Share capital 253 846 253 846 253 846
Warrant Reserve 6 786 6 786 6 786
Foreign exchange reserve (14 842) (11 895) (13 653)
Retained earnings (145 469) (119 659) (133 795)
--------------------------- ----- ----------- ----------- --------------
100 321 129 078 113 184
Non-controlling interest (524) 1 968 3 582
TOTAL EQUITY 99 797 131 046 116 766
--------------------------- ----- ----------- ----------- --------------
Total equity and
liabilities 342 361 436 995 366 135
--------------------------- ----- ----------- ----------- --------------
Consolidated cash flow Six months Six months
statement to to Year ended
for the six months ended 30 June 30 June 31 December
30 June 2010 2010 2009 2009
Unaudited Unaudited Audited
Restated
Note EUR'000 EUR'000 EUR'000
--------------------------- ----- ----------- ----------- --------------
Cash flows from operating
activities
Loss for the period (14 773) (37 159) (48 230)
Adjustments for:
- Share of (profit)/loss
in associates and joint
ventures 5 099 7 543 10 028
- Depreciation 2 298 5 547 6 820
- Amortisation and
impairment 22 22 442 65 005
- Change in fair value of
non-current assets 640 1 378 7 610
- Foreign exchange
differences 44 - 626
- Change in provision (98) - (195)
(Gain) / loss on sale of:
- Property, plant and
equipment - 9 (328)
- Available-for-sale
assets - 107 -
- Associates - (7 559) (7 559)
- Subsidiaries - (3 128) (30 541)
- Investment property - - (3 816)
Income tax 51 (85) 863
Net finance costs 6 856 6 735 8 769
--------------------------- ----- ----------- ----------- --------------
Cash inflow / (outflow)
from operating activites
before changes in working
capital 139 (4 170) 9 052
Changes in working capital
- (Increase)/decrease in
receivables (317) 3 580 17 911
- (Decrease)/increase in
payables (12 962) 15 585 (30 114)
- (Increase)/decrease in
inventory 3 746 (28 793) 14 411
--------------------------- ----- ----------- ----------- --------------
Cash outflow generated
from operations (9 394) (13 798) 11 259
Tax paid (1 265) (842) (1 388)
Interest paid (3 252) (5 088) (9 268)
Net cash outflow from
operating activities (13 911) (19 728) 603
--------------------------- ----- ----------- ----------- --------------
Cash flows from investing
activities
Proceeds from disposal of
subsidiary, net of cash
disposed - 4 058 4 058
Settlement of earn out
consideration - (3 592) (3 592)
Proceeds from disposal of
investment in associate - 8 501 8 501
(Increase) / decrease in
other loans receivable 3 067 2 228 896
Purchase of other
intangibles (371) (113) (300)
Purchase of other
property, plant and
equipment (2 356) (3 420) (3 420)
Proceeds from disposal of
other property, plant and
equipment 7 1 477 57
Investment in restricted
cash 1 470 -
Dividend received - - 1 639
Interest received 689 254 2 990
Proceeds from disposal of
investment property - - 9 566
Net cash inflow/(outflow)
from investing
activities 1 037 9 863 20 395
--------------------------- ----- ----------- ----------- --------------
Consolidated cash flow Six months Six months Twelve months
statement (continued) to to to
for the six months ended 30 June 30 June 31 December
30 June 2010 2010 2009 2009
Unaudited Unaudited Audited
Restated
Note EUR'000 EUR'000 EUR'000
--------------------------- ----- ----------- ----------- --------------
Cash flows from financing
activities
Proceeds from bank
borrowings 380 7 786 7 786
Proceeds from other loans - 7 200 7 200
Repayment of bank
borrowings (2 001) (16 591) (27 200)
Finance leases repaid (330) (1 419) (1 036)
Net cash (outflow)/inflow
from financing
activities (1 951) (3 024) (13 250)
--------------------------- ----- ----------- ----------- --------------
Net (decrease)/increase in
cash & cash equivalents (14 825) (12 889) 7 748
Cash & cash equivalents at
the beginning of the
period 3 103 (4 507) (4 507)
Foreign exchange losses on
cash and cash
equivalents (91) (38) (138)
Cash & cash equivalents at
the end of the period 9 (11 813) (17 434) 3 103
--------------------------- ----- ----------- ----------- --------------
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. General information
Trans Balkan Investments Limited (formerly known as Equest
Investments Balkans Limited), a company incorporated on 10 December
2003 in the British Virgin Islands, ("the Company") and its
subsidiaries (together "the Group") is an investment holding
company with a portfolio of retail and property development
investments in South East Europe. The registered number of the
company is 1069511.
The Company commenced operations on 14 April 2004. The shares of
the Company were first listed on the Irish Stock Exchange on 19
April 2004. On 20 December 2006 the shares of the Company were
listed on the AIM Market of the London Stock Exchange ('AIM'). The
Company delisted from the Irish Stock Exchange on 17 June 2009 as
part of the reorganisation of the management of the Company and the
transition of the Company from an investment fund to a
conglomerate.
The Company changed its name to Trans Balkan Investments Limited
on 9 March 2010.
2. Basis of preparation
The unaudited consolidated interim financial statements for the
half-year ended 30 June 2010 have been prepared in accordance with
IAS 34, 'Interim financial reporting'. The condensed consolidated
interim financial statements should be read in conjunction withthe
annual financial statements for the year ended 31 December 2009,
which have been prepared in accordance with IFRS as adopted by the
European Union.
The financial information presented herein does not represent
statutory accounts. The Group's statutory financial statements for
the year ended 31 December 2009 were prepared under IFRS as adopted
by the European Union. The auditors, Deloitte, reported on those
accounts and their report was qualified relating to the
recoverability of related party receivables amounted to EUR7.7
million and the recoverability of goodwill and trademarks. Further
Deloitte's report contained an emphasis of matter relating to
"going concern" and the uncertainties in the current market
conditions on the property market, which could reflect the fair
value of investment properties owned by the Group. A copy of their
report and the 2009 Annual Report and Accounts of the Company is
available on the Company's website
www.transbalkaninvestmentslimited.com.
These condensed consolidated interim financial statements have
not been audited or reviewed by the independent auditors pursuant
to the Auditing Practices Board guidance on the "Review of Interim
Financial Information".
In assessing the going concern basis of preparation of the
condensed consolidated financial statements for the six months
ended 30 June 2010, the Directors have taken into account the
status of current discussions on the sale of properties and
investments. The Group's forecasts and projections have been
prepared taking into account the economic environment and its
challenges. Subject to the considerable uncertainties inherent in
the circumstances outlined below, the Directors consider that the
Group will have sufficient facilities for its ongoing
operations.
As disclosed in note 11 'Related party transactions' the parent
company TBIL has entered into a commercial agreement (the
"Commercial Agreement") with its largest shareholder, the State
General Reserve Fund of the Sultanate of Oman ("SGRF"). According
to the Commercial Agreement TBIL is required to comply with certain
covenants, part of which have been asserted by SGRF as not having
been complied with as of 31 December 2009 and subsequently in case
of non-compliance, SGRF has the right to acquire TBIL's equity
interest in one of its subsidiaries "TechnomarketDomo N.V." ("TMD")
for EUR12.4 million. In February 2010 SGRF had notified the Group
that SGRF's exchange rights under the agreement had become
exercisable and that SGRF had reserved its position.
As further disclosed in note 12 'Events after the end of the
reporting period' in October 2010 TBIL entered into an amendment
agreement with SGRF (the "Amendment Agreement"). Under the
Amendment Agreement SGRF has agreed to defer for twelve months from
the date of the Amendment Agreement, the exercise of its right to
acquire TBIL's interests in TMD, which SGRF has asserted it is
entitled to exercise immediately pursuant to the terms of the
Commercial Agreement. The deferral of its right is provided by SGRF
so as to afford TBIL an opportunity to sell its interest in TMD and
to participate in the proceeds from such sale in exchange for the
payment of certain fees and other sums. If the net proceeds of the
sale of TBIL's indirect interest in TMD are insufficient to satisfy
the amounts due to SGRF, including those arising from the Amendment
Agreement by the end of the extended period as per the Amendment
Agreement, SGRF may exercise the right to acquire TBIL's indirect
interest in TMD and will continue to be entitled to the fee of
EUR8.5 million (see note 11 'Related party transactions'
below).
As disclosed in note 10 'Loans and borrowings' to the
consolidated interim financial statements, certain ring fenced
Group subsidiaries, were not able to repay the due principal and
interest per bank loans, provided by DSK Bank and Alpha bank. As a
result during 2009 the construction works on the two main real
estate projects (Sozopolis and Banya) were halted. The Directors
and the banks are in discussions in respect to the future of these
projects. Up to the date of authorisation of the accompanying
consolidated financial statements for the six months ended 30 June
2010 by the Directors, these discussions have not yet been
finalised. Consequently, the Group is restricted from selling its
main properties in Sozopolis and Banya by its bank creditors. Also,
according to the Commercial Agreement and the Amendment Agreement,
certain assets cannot be sold without prior written consent from
SGRF.
Accordingly, the Group's forecasts and projections are
substantially dependent on the expected proceeds from the sale of
TMD following the implementation of the Amendment Agreement. The
Directors have made assumptions in their financial forecasts
regarding the expected sale proceeds. However, there are material
uncertainties underlying these assumptions due to the current
testing economic conditions and challenging markets as well as the
conditions and the unpredictable nature of the expected sale
proceeds and the related costs of disposal. These material
uncertainties together with the time constraints imposed by the
Amendment Agreement could have a significant impact on the Group's
ability to continue as a going concern and, therefore it may be
unable to realise its assets and discharge its liabilities when
they fall due. As the Group do not meet the highly probable test
this is not a disposal group as at 30 June 2010. The material
uncertainties could have significant impact on the Group's goodwill
and may result in material adjustment to the carrying amount of the
goodwill within the next financial period. The Group is required to
test, on an annual basis whether goodwill, other intangibles and
non-financial assets have suffered any impairment.
The consolidated financial statements for the six months ended
30 June 2010 do not include any adjustments that may be required in
the event that the Group is unable to continue as a going
concern.
3. Accounting policies
The same accounting policies, presentation and methods of
computation are followed in these financial statements as applied
in the Group's latest annual audited financial statements, except
as described below.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to the expected total annual
earnings.
(a) New and amended standards adopted by the Group
The following new standards and amendments to standards are
mandatory for the first time for the financial year beginning 1
January 2010.
-- IFRS 3 (revised), 'Business combinations'
-- IAS 27 (amended), 'Consolidated and separate financial
statements'
-- IAS 28 (amended), 'Investments in associates'
-- IAS 31 (amended), 'Interests in joint ventures'
These amended and revised standards are effective prospectively
to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning
on or after 1 July 2009.
The revised standard continues to apply the acquisition method
to business combinations but with some significant changes compared
with IFRS 3. For example, all payments to purchase a business are
recorded at fair value at the acquisition date, with contingent
payments classified as debt subsequently re-measured through the
income statement. There is a choice on an
acquisition-by-acquisition basis to measure the non-controlling
interest in the acquiree either at fair value or at the
non-controlling interest's proportionate share of the acquiree's
net assets. All acquisition-related costs are expensed.
As the Group has adopted IFRS 3 (revised), it is required to
adopt IAS 27 (revised), 'Consolidated and separate financial
statements', at the same time. IAS 27 (revised) requires the
effects of all transactions with non-controlling interests to be
recorded in equity if there is no change in control and these
transactions will no longer result in goodwill or gains and losses.
The standard also specifies the accounting when control is lost.
Any remaining interest in the entity is re-measured to fair value,
and a gain or loss is recognised in profit or loss.
There has been some impact of IAS 27 (revised) in the current
period, as some of the non-controlling interests have a deficit
balance. There have been no transactions whereby an interest in an
entity is retained after the loss of control of that entity; there
have been no transactions with non-controlling interests.
(b) Standards, amendments and interpretations to existing
standards effective in 2010 but not relevant to the Group
-- IFRIC 17, 'Distributions of non-cash assets to owners',
effective for annual periods beginning on or after 1 July 2009.
This is not currently applicable to the Group, as it has not made
any non-cash distributions.
-- IFRIC 18, 'Transfers of assets from customers', effective for
transfer of assets received on or after 1 July 2009. This is not
relevant to the Group, as it has not received any assets from
customers.
-- 'Additional exemptions for first-time adopters' (Amendment to
IFRS 1) was issued in July 2009. The amendments are required to be
applied for annual periods beginning on or after 1 January 2010.
This is not relevant to the Group, as it is an existing IFRS
preparer.
(c) The following new standards, new interpretations and
amendments to standards and interpretations have been issued but
are not effective for the financial year beginning 1 January 2010
and have not been early adopted
-- IFRS 9, 'Financial instruments', issued in December 2009.
This addresses the classification and measurement of financial
assets and is likely to affect the Group's accounting for its
financial assets. The standard is not applicable until 1 January
2013 but is available for early adoption. The Group is yet to
assess IFRS 9's full impact. The Group has not yet decided when to
adopt IFRS 9.
-- Revised IAS 24, 'Related party disclosures', issued in
November 2009. It supersedes IAS 24, 'Related party disclosures',
issued in 2003. The revised IAS 24 is required to be applied from 1
January 2011. Earlier application, in whole or in part, is
permitted.
-- 'Classification of rights issues' (Amendment to IAS 32),
issued in October 2009. For rights issues offered for a fixed
amount of foreign currency, current practice appears to require
such issues to be accounted for as derivative liabilities. The
amendment states that if such rights are issued pro rata to all the
entity's existing shareholders in the same class for a fixed amount
of currency, they should be classified as equity regardless of the
currency in which the exercise price is denominated. The amendment
should be applied for annual periods beginning on or after 1
February2010. Earlier application is permitted.
-- 'Prepayments of a minimum funding requirement' (Amendments to
IFRIC 14), issued in November 2009. The amendments correct an
unintended consequence of IFRIC 14, 'IAS 19 - The limit on a
defined benefit asset, minimum funding requirements and their
interaction'. Without the amendments, entities are not permitted to
recognise as an asset some voluntary prepayments for minimum
funding contributions. This was not intended when IFRIC 14 was
issued, and the amendments correct the problem. The amendments are
effective for annual periods beginning 1 January 2011. Earlier
application is permitted. The amendments should be applied
retrospectively to the earliest comparative period presented.
-- IFRIC 19, 'Extinguishing financial liabilities with equity
instruments'. This clarifies the requirements of IFRSs when an
entity renegotiates the terms of a financial liability with its
creditor and the creditor agrees to accept the entity's shares or
other equity instruments to settle the financial liability fully or
partially. The interpretation is effective for annual periods
beginning on or after 1 July 2010. Earlier application is
permitted.
4. Segment information
The Group has adopted IFRS 8 'Operating Segments' with effect
from 1 January 2009. IFRS 8 requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segments and to assess
their performance.
As a result, following the adoption of IFRS 8, the
identification of the Group's reportable segments has been as
follows.
-- The chief operating decision maker has been identified as the
TBIL Board of Directors.
-- The Group operates in three business segments differentiated
by the specifics of the products and the services:
o Electronic (sale of electronic goods),
o Property development (for commercial and residential
purposes),
o Infrastructure (waste management business).
-- The organisation and monitoring of the information by
segments is based on financial reporting system for statutory IFRS
reporting purposes.
-- Respectively the accounting policies of the reportable
segments are the same as the Group's accounting policies.
-- The infrastructure segment has been classified as
discontinued.
-- Some of the Group's costs cannot be allocated to one of the
above segments and they are monitored at Group level.
The results of the Group, by segment, for the six months ended
30 June 2010 are set out below:
Continuing operations Discontinued operations
----------------------------------------------------- -----------------------------
Total Total
Property continuing discontinued
Electronics development Unallocated operations Infrastucture operations
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- ------------ ------------ ------------ ----------- -------------- -------------
Segment
revenue 233 360 863 - 234 223 - -
--------------- ------------ ------------ ------------ ----------- -------------- -------------
Segment
operating
profit/(loss) (1 131) (80) (901) (2 112) (14) (14)
Income/(loss)
of a capital
nature - (640) - (640) - -
Finance income 1 184 268 105 1 557 - -
Finance costs (4 642) (1 642) (2 129) (8 413) - -
Share of
losses in
equity
accounted
joint
ventures and
associates (785) (4 314) - (5 099) - -
--------------- ------------ ------------ ------------ ----------- -------------- -------------
(Loss)/profit
before tax (5 374) (6 408) (2 925) (14 707) (14) (14)
Tax expense (110) 60 (1) (51) (1) (1)
(Loss)/profit
for the
period (5 484) (6 348) (2 926) (14 758) (15) (15)
--------------- ------------ ------------ ------------ ----------- -------------- -------------
Segment assets and liabilities as at 30 June 2010 were as
follows:
Continuing operations Discontinued operations
----------------------------------------------------- -----------------------------
Total Total
Property continuing discontinued
Electronics development Unallocated operations Infrastucture operations
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------- ------------ ------------ ------------ ----------- -------------- -------------
Assets 268 203 39 387 3 075 310 665 8 8
Associates
and joint
ventures 283 31 405 - 31 688 - -
Total assets 268 486 70 792 3 075 342 353 8 8
------------- ------------ ------------ ------------ ----------- -------------- -------------
Total
liabilities (167 867) (48 347) (26 323) (242 537) (27) (27)
------------- ------------ ------------ ------------ ----------- -------------- -------------
The Group's secondary reporting format for reporting segment
information is geographic segments. The segmental analysis for the
six months ended 30 June 2010 is as follows:
External
revenue by Total assets Capital expenditure
location by location by location
of customers of assets of assets
EUR'000 EUR'000 EUR'000
------------------- -------------- ------------- --------------------
Bulgaria 159 633 229 351 552
Romania 74 590 113 010 591
Total liabilities 234 223 342 361 1 143
------------------- -------------- ------------- --------------------
5. Loss per share
Basic loss per share is calculated by dividing the net (loss)/
profit attributable to equity holders of the company by the
weighted average number of ordinary shares during the period.
1 January 1 January
to to to Year ended
30 June 30 June 31 December
2010 2009 2009
Unaudited Unaudited Audited
Restated
EUR'000 EUR'000 EUR'000
-------------------------------------- ----------- ----------- ------------
Basic and diluted loss
Total (loss) from continuing and
discontinued operation (11 674) (32 193) (46 143)
Less: (Loss) / profit from
discontinued operations (15) (2 346) 25 308
-------------------------------------- ----------- ----------- ------------
(Loss) from continuing operations (11 659) (29 847) (71 451)
-------------------------------------- ----------- ----------- ------------
Basic weighted average number of
shares 18 265 890 18 265 890 18 265 890
-------------------------------------- ----------- ----------- ------------
Basic and diluted earnings / (loss)
per share
Total (loss) per share from
continuing and discontinued
operation (EUR) (0.64) (1.76) (2.53)
Less: (Loss) / earnings per share
from discontinued operations (EUR) 0.00 (0.13) 1.39
--------------------------------------
(Loss) per share from continuing
operations (EUR) (0.64) (1.63) (3.92)
-------------------------------------- ----------- ----------- ------------
6. Investment property
As disclosed in note 12 'Events after the end of the reporting
period' of these condensed consolidated interim financial
statements in November 2010 the Board announced the completion of
the sale of Evropa Palace, one of the former cinema sites, owned
through Pelikan. This property has been classified as investment
property and measured at fair value in accordance with the Group's
accounting policies. As a result of the negotiations with the buyer
the Directors have estimated that the fair value of the property as
at 30 June 2010 was EUR1.50 million that was subsequently the price
actually achieved. As at 31 December 2009 the cinema site was
valued by the independent valuers at EUR2.14 million. As a result a
fair value loss amounting to EUR0.64 million has arisen and
recognised in the income statement for the six months to 30 June
2010.
The Group holds 33.5% of the 1,977,131 square meters land plot
for development in the large-scale Borovets mountain resort through
the Borovets BV joint venture .This land plot has been valued by
independent professionally qualified valuers CB Richard Ellis as at
30 June 2010. The valuation was prepared in accordance with RICS
Appraisal and Valuation Standards on the market value basis.
The management believes that there are no significant events
which may have materially affected the fair value of the investment
property during the six month period ended 30 June 2010, except as
stated above.
7. Investments in associates and joint ventures
The changes in the carrying amount of the Group's investment in
associates and joint ventures during the period have been as
follows:
Joint
Associates ventures
EUR'000 EUR'000
---------------------------------------------------- ----------- ---------
Carrying amount at 1 January 2010 827 35 581
Share of (loss) (788) (4 311)
Share of other comprehensive income for the period 380 -
---------------------------------------------------- ----------- ---------
Carrying amount at 30 June 2010 419 31 270
---------------------------------------------------- ----------- ---------
The majority of the share of losses in joint ventures is due to
the change in the fair value of underlying assets of Borovets
development resort.
The aggregated amounts related to associates and joint ventures
as at 30 June 2010 have been as follows:
Joint
Associates ventures
EUR'000 EUR'000
------------------- ----------- ----------
Total assets 50 006 107 641
Total liabilities (57 510) (14 279)
Revenues 29 189 2 603
Loss (3 427) (13 390)
The cumulative unrecognised losses exceeding the initial
investment in equity accounted joint ventures as at 30 June 2010
was EUR1 535 000.
There are no restrictions on dividend distributions for the
associates and joint ventures in the Group.
8. Inventories
The management believes that there are no significant events
which may have materially affected the net realisable value of the
inventories during the six month period ended 30 June 2010.
Therefore, neither write-down nor reversal of any previously
recognised write-down of inventories has been recognised during the
six months ended 30 June 2010.
9. Cash and cash equivalents
Cash and cash equivalents comprise the following:
30 June 30 June 31 December
2010 2009 2009
Unaudited Unaudited Audited
Restated
EUR'000 EUR'000 EUR'000
---------------------------------------- ---------- ---------- ------------
Cash available on demand 8 399 3 650 14 665
Restricted cash 54 836 53
Cash equivalents 56 - 1 360
---------------------------------------- ---------- ---------- ------------
Cash and cash equivalents held in
continuing operations 8 509 4 486 16 078
---------------------------------------- ---------- ---------- ------------
Cash and cash equivalents classified as
non-current assets held for sale 8 165 7
Cash and cash equivalents 8 517 4 651 16 085
---------------------------------------- ---------- ---------- ------------
Cash and cash equivalents for the purpose of the condensed
consolidated interim cash flow statement include the following:
30 June 30 June 31 December
2010 2009 2009
Unaudited Unaudited Audited
Restated
EUR'000 EUR'000 EUR'000
---------------------------------------- ---------- ---------- ------------
Cash availabale on demand 8 407 3 815 14 672
Restricted cash 54 836 53
Cash equivalents 56 - 1 360
Bank overdrafts (20 330) (22 085) (12 982)
---------------------------------------- ---------- ---------- ------------
Cash and cash equivalents at the end of
the period (11 813) (17 434) 3 103
---------------------------------------- ---------- ---------- ------------
10. Loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost.
31
30 June December
2010 2009
Carrying Carrying
amount amount
Nominal
interest Year of
Subsidiary Currency rate maturity EUR'000 EUR'000
Non-Current
Euribor +
TechnomarketDomo Euro 4% 2014 24 344 26,558
Euribor +
KKE Euro 3.5% 2014 8 255 9005
Related party
loans Euro Note 11 Note 11 15 740 15142
Finance lease Euro,
creditor BGN 1 104 1406
------------------ ----------------------- ---------- --------- ----------
49 443 52,111
----------------------------------------- ---------- --------- ----------
Current
3m Euribor
Immofinance EAD Euro + 5% 2013 30 857 29 838
Euribor +
TechnomarketDomo Euro 4% 2014 3 688 19621
Euribor +
KKE Euro 3.5% 2014 1 251 1001
Banya Holiday 3m Euribor
AD Euro + 2.8% 2013 7 922 7354
Related party
loans Euro Note 11 Note 11 25 639 8600
Finance lease Euro,
creditor BGN 881 909
Euro,
Overdrafts RON 20 330 12 982
------------------ ----------------------- ---------- --------- ----------
90 568 80 305
----------------------------------------- ---------- --------- ----------
On 11 January 2010 RZB received the balance of EUR17 million
(plus accrued interest) due to be repaid to it by 31 December 2009
by the Group by calling the Citibank, N.A., Sofia Branch guarantee
issued to RZB as part of the restructuring of TMD's debt facilities
during the summer of 2009 (see note 11 'Related party
transactions'). This amount, in turn, was met by SGRF, TBIL's
largest shareholder, under the terms of its counter indemnity
granted in respect to the Citibank Guarantee. The balance of the
payable of the Group to SGRF as at 30 June 2010 is EUR17 504,000
(31 December 2009: EUR893,000). The amount of EUR17,000,000
represents the Guarantee called and carried a fee of 17.5% per
annum.
The related party loans are unsecured and carry interest at a
fixed rate of between 5% and 12% (see note 11 'Related party
transactions').
Banya Holiday AD was in default of its obligation to DSK Bank AD
since 2009 and the total commitment may become immediately payable
on notice from the bank. The long term loan has been classified as
current in 2009. Banya shall pay penalty interest at a rate of 3m
Euribor plus a spread of 9.8%.
In November 2009 Immofinance EAD was in default of its
obligation to Alpha Bank and the total commitment may become
immediately payable on notice from the bank. The long term loan has
been classified as current in 2009. Immofinance EAD shall pay
penalty interest at a rate of 3m Euribor plus a spread of 7.5%.
The Directors and the banks are in discussions in respect to
restructuring of the loan facilities. Up to the date of
authorisation of the interim financial statements for the six
months ended 30 June 2010 the discussions have not yet been
finalized.
11. Related party transactions
SGRF Agreement
The Group through its wholly owned subsidiary Axis Retail N.V.
("Axis Retail"), owns 61.83% of the shares of TechnomarketDomo N.V.
("TMD"). The remaining shares are owned by: Lyra Investment Holding
NV (25.17%); Dominuse Management Ltd (12.74%) and Alexandru
Mnohoghitnei (0.26%).
On 16 July 2009, as part of the restructuring of loan agreements
(the "RZB Loan") between Axis Retail, TMD and its operating
subsidiaries, K & K Electronics EOOD and Domo Retail SA and
Raiffeisen Zentralbank Osterreich AG ("RZB"), Axis Retail was
required to repay RZB an amount of EUR20 million by 31 December
2009. To secure this repayment, a bank guarantee for EUR20 million
(the "Guarantee") was issued by Citibank, N.A. ("Citibank") in
favour of RZB. Pursuant to the terms of the Commercial Agreement
between SGRF and TBIL, SGRF provided credit support to TBIL (the
"SGRF Facility") to facilitate the issue of the Guarantee. As part
of the SGRF Facility, (i) SGRF made available to Citibank
collateral for any drawdown by RZB under the Guarantee, (ii) TBIL
indemnified SGRF for any loss it may incur in the event Citibank
made a drawdown on the Guarantee, and TBIL granted security to SGRF
over substantially all of TBIL's assets to secure its indemnity
obligation (the "SGRF Security"), and (iii) SGRF had the right,
subject to the satisfaction of certain conditions, to exchange any
unpaid indebtedness or liability of TBIL to SGRF for TBIL's
indirect interest in TMD, the value of 100% of TMD's shares being
fixed for this purpose at EUR20 million (the "TMD Right").
The SGRF Security included a charge over TBIL's shares in Axis
Retail and Axis S-retail, as well as over TBIL's interests (or the
proceeds thereof) in various property holdings including Rodacar,
Serdika and Immofinance. According to the Commercial Agreement, the
Group is restricted from selling its properties and equity
investments without the written consent of SGRF.
As from 31 December 2009, SGRF had the right to exchange any
unpaid indebtedness or liability of TBIL to SGRF for TBIL's
indirect 61.8% interest in TMD, which right was not exercisable
until after 31 December 2010 unless (i) certain conditions related
to TMD's business integration and further management appointments
at TMD were not satisfied by TBIL by 31 December 2009, in which
case, SGRF's exchange rights would be exercisable after 31 December
2009 or (ii) an event of default occurred under any of the
agreements with SGRF, in which case, SGRF's exchange rights would
become exercisable immediately.
SGRF has asserted that part of the covenants under the
Commercial Agreement was not satisfied by 31 December 2009.
The Group had repaid EUR3 million of the RZB loan in December
2009 and EUR17 million in January 2010. During January 2010 the
Citibank guarantee was called by RZB.
For the six months ended at 30 June 2010 the Group has
recognized EUR1 659,000 interest and other expenses. The balance of
the payable of the Group to SGRF as of 30 June 2010 was
EUR17,504,000. The amount of EUR17 000,000 represents the Guarantee
which has been called and carried a fee of 17.5% per annum.
Other related party transactions
As disclosed in the latest annual financial statements, TBIL has
received a loan from Rila Samokov in 2009 of EUR7.2 million with
repayment date at 31 July 2010. The maturity date is hereby
extended until 31 December 2011. The loan bears interest of 12% per
annum. For the six months ended at 30 June 2010 the Group has
recognised EUR428,000 interest expense on this loan.
As disclosed in latest annual financial statements, TBIL has
received a loan from Lyra Investment Holding N.V. of EUR17.72
million. The loan bears interest at a rate of 3m Euribor plus 1%
per annum and is payable in 2014. For the six months ended at 30
June 2010 the Group has recognised EUR604,000 interest expense on
this loan.
12. Events after the end of the reporting period
During October 2010, following negotiations between TBIL and
SGRF, an Amendment Agreement was signed, the principal terms of
which are as follows:
-- SGRF has agreed to defer exercising the right to acquire TMD
until the date falling 12 months after the date of the Amendment
Agreement (the "End Date") and, in consideration for that deferral,
TBIL has agreed to pay the following amounts:
o pay SGRF a fee of EUR8.5 million as soon as it has available
funds and no later than upon receipt of the proceeds of the sale of
its indirect interest in TMD or a sufficient part of them (the
"Completion Date") or the End Date (whichever is first to
occur);
o pay SGRF 15% of the net proceeds of the sale of its indirect
interest in TMD on the Completion Date;
o pay SGRF 30% of any part of the net proceeds of the sale of
its indirect interest in TMD payable as deferred consideration
after the Completion Date as and when received, but only in respect
of proceeds of the sale of its indirect interest in TMD in excess
of EUR45 million; and
o repay the loan of EUR7.2 million plus accrued interest to Rila
Samokov (the "Rila Loan") on or before the Completion Date or 31
December 2011 (whichever is first to occur).
-- If the net proceeds of the sale of TBIL's indirect interest
in TMD are insufficient to satisfy the foregoing amounts and other
amounts arising under the SGRF Facility by the End Date, SGRF may
exercise the TMD Right and will continue to be entitled to the fee
of EUR8.5 million set out above.
-- TBIL shall extend the existing security granted in favour of
SGRF to secure the timely payment of all amounts under the
Amendment Agreement, as well as timely repayment of the Rila Loan.
The existing security takes the form of a pledge over TBIL's
indirect interest in TMD and Harwood Holding BV (whether over
shares and shareholder loans in Axis Retail NV, Axis S - Retail NV
and/or over shares and shareholder loans in TMD at SGRF's option)
(ranking only after RZB's security interests and SGRF's second
ranking security) and a pledge over TBIL's bank accounts.
-- TBIL shall afford SGRF the opportunity, upon receipt of an
informal, indicative or formal offer (containing prescribed details
of such an offer) from a third party for its indirect equity
interest in TMD, within 10 days after that offer (and before TBIL
enters exclusivity with that third party), to submit a competing
offer in writing, whether informal, indicative or formal as SGRF
sees fit, and if SGRF chooses to submit an offer, TBIL shall
consider that offer and, if it thinks fit, pursue that offer
instead of pursuing the third party offer. TBIL shall pursue such
offer submitted by SGRF instead of a third party offer, if the
consideration offered by SGRF is, taken as a whole and in TBIL's
reasonable judgement, higher than the consideration in any
reasonably credible competing offer. Due account will be taken of
the risk inherent in offers involving third party finance or
deferred consideration (but this shall not preclude TBIL from
pursuing a subsequent third party offer from an existing bidder or
a new source, received before formal acceptance of SGRF's formal
offer, if the third party offer is higher in TBIL's reasonable
judgement taking into account those factors).
-- TBIL shall co-operate with the appointment by SGRF of
specialist advisers initially being Alvarez & Marsal or another
professional with relevant experience to advise in relation to TMD.
If and to the extent SGRF so requires, and provided it is not
contrary to the best interests of TBIL and TMD to do so, TBIL shall
exercise its powers as indirect holder of 61.83% of the shares of
TMD to cause (i) one or two officers of that specialist adviser to
be appointed to the board of TMD (provided that such candidate is
suitable and if found not to be suitable SGRF may propose a
replacement or replacements until a suitable candidate is found)
and (ii) TMD to join in the appointment of that specialist adviser
and (iii) TMD to implement the recommendations of that specialist
adviser. The reasonable fees and costs of such specialist advisers
may be allocated to TBIL (or if TMD joins in the appointment of the
specialist adviser to TMD) by SGRF and TBIL shall bear or, if TMD
joins in the appointment of the specialist adviser, exercise its
powers as indirect holder of 61.83% of the shares of TMD to seek to
cause TMD to bear those fees and costs.
-- Until the End Date (and subject to no Event of Default or
breach of the Amendment Agreement occurring) SGRF will take no
enforcement action in respect of Events of Default under the
Commercial Agreement (as amended) occurring before the date of the
Amendment Agreement of which it is aware.
-- TBIL shall seek, subject to shareholder approval, to delist
its shares from AIM, at its next Annual General Meeting or as soon
as practicable thereafter.
On 30 July 2010, the sale of Iztok, one of the three former
cinemas sites in Sofia, owned through Pelican was completed. The
net sale proceeds amounting to EUR1,428,000 in cash which has been
received and utilised to fund the Company's liabilities and
continuing operations.
On 30 July 2010, a revised repayment schedule was agreed with
Eurohold in connection with the sale of Auto Union. The outstanding
amount of EUR2,000,000 will now be paid in instalments the final
being on 15 February 2011. As at 30 June 2010, the amount of
EUR300,000 has been repaid.
On 10 November 2010, the sale of Evropa Palace, one of the
former cinema sites, was completed.
On 6 October 2010, the preliminary agreement for the sale of
Urvich, one of the former three cinemas sites, was signed
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFERFSLIVII
Trans Balk Inv (LSE:TBI)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Trans Balk Inv (LSE:TBI)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024