prospectus - Orco Property Group

Transcription

PROSPECTUS
ORCO PROPERTY GROUP S.A.
Société anonyme
L-2535 LUXEMBOURG, 8, Boulevard Emmanuel Servais
RCS (Luxembourg) n° B 44996
(incorporated with limited liability under the laws of Luxembourg)
(the "Issuer" or "ORCO PROPERTY GROUP S.A.")
€ 24,169,193.39 5.5 per cent. Convertible Bonds due 2012 (the "Bonds")
Issue price: 100 per cent.
Represented by 928.513 bonds of 26.03 EUR each
The Bonds will mature on 30 June 2012. Interests will be paid annually.
The Issuer shall be required to redeem prior to maturity all, but not some only, of the
Bonds at any time at par plus accrued interest, only in the event of certain tax changes as
described under "Conditions of the Bonds - Redemption and Purchase". Application has
been made to list the Bonds on the EURO-MTF Market operated by the Luxembourg
Stock Exchange under part IV of the law dated July 10th, 2005 relating to the prospectus
for securities (“loi du 10 juillet 2005 relative aux prospectus pour valeurs mobilières”).
The Bonds will are represented by a permanent global bond without interest coupons
(the "Permanent Global Bond"), which was deposited on 30.06.2005 (the "Closing
Date") with a common depositary for Euroclear Bank S.A./N.V., as operator of the
Euroclear System ("Euroclear") and Clearstream Banking, société anonyme
("Clearstream, Luxembourg”). Interests in the Permanent Global Bond will be
exchangeable for definitive Bonds only in certain limited circumstances.
The date of this Prospectus is 20 December 2005.
All references in this document to “EUR”, "Euro", "euro" and "€'” refer to the currency
introduced at the start of the third stage of European economic and monetary union
pursuant to the Treaty establishing the European Community, as amended. “KEUR” or
any similar expression using “K” (for “kilo”, i.e. thousand) refers to thousand(s) of euro.
Table of contents
INFORMATION RELATING TO THE PERSONS RESPONSIBLE FOR THE
PROSPECTUS AND IN CHARGE OF THE AUDIT OF THE ANNUAL ACCOUNTS
______________________________________________________________________ 1
AUDIT OF THE ANNUAL ACCOUNTS ____________________________________ 1
CONDITIONS RELATING TO THE BOND ISSUE___________________________ 4
NEGATIVE PLEDGE ___________________________________________________ 5
INTEREST ____________________________________________________________ 7
PAYMENTS ___________________________________________________________ 8
CONVERSION ________________________________________________________ 10
REDEMPTION AND PURCHASE________________________________________ 10
PRESCRIPTION ______________________________________________________ 11
EVENTS OF DEFAULT ________________________________________________ 12
REPLACEMENT OF BONDS AND COUPONS_____________________________ 12
NOTICES ____________________________________________________________ 12
FURTHER ISSUES ____________________________________________________ 13
GOVERNING LAW AND JURISDICTION_________________________________ 13
SUMMARY OF PROVISIONS RELATING TO THE BONDS WHILE IN GLOBAL
FORM _______________________________________________________________ 13
USE OF PROCEEDS___________________________________________________ 15
DESCRIPTION OF THE ISSUER ________________________________________ 15
REGISTRATION ______________________________________________________ 16
CONSULTATION OF DOCUMENTS AND INFORMATION RELATING TO THE
COMPANY ___________________________________________________________ 16
THE GENERAL MEETINGS ____________________________________________ 17
INFORMATION RELATING TO THE BOARD OF DIRECTORS AND
MANAGEMENT ______________________________________________________ 19
Consolidated accounts 2003______________________________________________ 23
Social accounts 2003 ___________________________________________________ 43
Consolidated accounts 2004______________________________________________ 52
Social accounts 2004 ___________________________________________________ 76
Interim consolidated financial statements 30.06.05 ___________________________ 92
Balance sheet as at 30.09.05 (IFRS) ______________________________________ 130
Non audited consolidated net result as at 30 September 2005. (IFRS) ___________ 131
Cash flow 2003 _______________________________________________________ 131
Cash flow 2004 _______________________________________________________ 133
INFORMATION ON SUNCANI HVAR DD _______________________________ 137
1. INTRODUCTION __________________________________________________ 137
2. FACTS ON SHARES ________________________________________________ 138
3. RISK FACTORS____________________________________________________ 142
4. INFORMATION ON THE ISSUER ____________________________________ 144
5. SUBJECT OF BUSINESS OF THE ISSUER ____________________________ 145
6. FACTS ON ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFIT
AND LOSS __________________________________________________________ 147
7. LITIGATIONS _____________________________________________________ 150
8. INVESTMENT ACTIVITIES OF THE ISSUER__________________________ 152
9. AUDITOR OF FINANCIAL REPORTS_________________________________ 152
10. INTEREST OF MEMBERS OF THE BOARD AND AUDITING COMMITTEE
____________________________________________________________________ 153
11. GENERAL INFORMATION_________________________________________ 153
12. INFORMATION ON ACCOUNTABLE INDIVIDUALS __________________ 154
13. ABRIDGED BROCHURE MAKER ___________________________________ 158
14. LIST OF PARTICIPANTS __________________________________________ 158
15. SIGNERS OF THE ABRIDGED BROCHURE __________________________ 158
SUPPLEMENT ______________________________________________________ 159
INFORMATION RELATING TO THE PERSONS RESPONSIBLE FOR THE PROSPECTUS
AND IN CHARGE OF THE AUDIT OF THE ANNUAL ACCOUNTS
This Prospectus is issued under the responsibility of Mr Arnaud BRICOUT Director of
ORCO PROPERTY GROUP S.A. and Mr Luc LEROI, Director of ORCO PROPERTY
GROUP S.A. and can only be used for the purposes for which it has been published:
"To our knowledge, the information contained in this prospectus provides a true and fair
picture of the existing situation and is in accordance with the facts and contains no
omission likely to affect the import. It includes all information necessary to enable
bondholders to formulate an opinion concerning the assets, business, financial situation,
results and prospects of the companies ORCO PROPERTY GROUP S.A. and SUNČANI
HVAR d.d., as well as the rights attached to its bonds. It does not contain any omission
which could affect the validity of this document. No person is or has been authorised by
the Issuer to give any information or to make any representation not contained in or not
consistent with this Propectus or any other information supplied in connection with the
Bonds or their distribution and, if given or made, such information or representation
must be relied upon as having been authorised by the Issuer; Neither the delivery of this
Prospectus nor the issue, sale or delivery of any of the Bonds shall in any circumstances
imply that the information contained herein concerning the Issuer or the Group is correct
at any time subsequent to the date hereof or that an other information supplied in
connection with the Bonds or their distribution is correct as of any time subsequent to the
date indicated in the document containing the same.
Luxembourg, December 6th 2005
Luc LEROI
Director
Arnaud BRICOUT
Director
AUDIT OF THE ANNUAL ACCOUNTS
The annual accounts of December 31st, 2004 of ORCO PROPERTY GROUP S.A. have
been approved by the annual general meeting on April 28th, 2005.
Those accounts have been audited by the statutory auditors, PricewaterhouseCoopers s à
r l, Réviseur d’Entreprises 400 route d’Esch, Luxembourg and HRT Révision s à r l.
Réviseur d’Entreprises 23 Val Fleuri, Luxembourg
Report of the Statutory Auditors on the consolidated financial statements (year ended
December 31st, 2004):
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AUDITOR’S REPORT
To the Shareholders
Report of the Independent Auditors
1
Following our appointment by the General Meeting of Shareholders dated
April 27, 2004, we have audited the consolidated accounts of Orco Property Group
S.A. (the “Group”) and its subsidiaries for the year ended 31 December 2004 and
have read the consolidated management report. These consolidated accounts and
the consolidated management report are the responsibility of the Group’s Board of
Directors. Our responsibility is to express an opinion on these consolidated
accounts based on our audit and to check the consistency of the consolidated
management report with them.
2
We conducted our audit in accordance with International Standards on Auditing.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated accounts are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated accounts. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated accounts presentation.
We believe that our audit provides a reasonable basis for our opinion.
Opinion of HRT Révision S.à r.l.
3
In our opinion, the consolidated accounts give, in conformity with the Luxembourg
legal and regulatory requirements, a true and fair view of the consolidated financial
situation of Orco Property Group S.A. and its subsidiaries as at 31 December 2004
and of the consolidated results for the year then ended.
4
The consolidated management report is in accordance with the consolidated
accounts.
Opinion of PricewaterhouseCoopers S.à r.l.
5
During the previous year, the Group has recorded the sale of two real estate projects
realising a gain of EUR 3,500,000.00 whose booking in the 2003 consolidated
result was made on the basis of letters of intent whereas the legal contracts were
only signed in 2004.
6
HRT Révision S.à r.l., in its opinion dated 22 April 2004, was of the opinion that in
accordance with the principle of substance over form, even if the legal realisation
of these transactions was only finalised during the first quarter of 2004, the decision
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of the Board of Directors to include the profit in the 2003 profit and loss account
was adequate.
7
RSM Salustro, co-auditor with HRT Révision S.à r.l. in 2003, had expressed on
22 April 2004 an adverse opinion on the consolidated accounts of the Group as at
31 December 2003 based on the facts described in paragraph 5 which were leading
to an overstatement of the 2003 net consolidated result and of the consolidated net
assets of EUR 3,500,000.00.
8
As a result, the net consolidated result of the year ended 31 December 2004 is
underestimated by EUR 3,500,000.00 million.
9
In our opinion, except for the impact of the facts set out in paragraph 5, the
consolidated profit and loss account gives, in conformity with the Luxembourg
legal and regulatory requirements, a true and fair view of the consolidated result of
Orco Property Group S.A. and of its subsidiaries for the year ended 31 December
2004.
In our opinion, the consolidated balance sheet and related notes give, in conformity
with the Luxembourg legal and regulatory requirements, a true and fair view of the
consolidated financial position of Orco Property Group S.A. and of its subsidiaries
as at 31 December 2004.
10
The consolidated management report is in accordance with the consolidated
accounts.
11
Following our audit, some corrections and reclassifications have been made on
opening balances. Without qualifying the opinion expressed above, we would like
to draw your attention to note 12, which sets out the impact of these corrections and
reclassifications on the opening balances.
Luxembourg, 11 April 2005
HRT Révision S.à r.l.
Réviseur d’entreprises
Represented by
PricewaterhouseCoopers S.à r.l.
Represented by
Dominique Ransquin
Amaury Evrard
In year 2002 and 2003 accounts were audited by RSM Salustro Reydel, 8, Avenue
Delcassé, F-75378 Paris Cedex and and HRT, 23 Val Fleuri Luxembourg.
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CONDITIONS RELATING TO THE BOND ISSUE
The Euro 24,169,193.39 5.5 per cent Convertible Bonds due 2012 (the “Bonds, are
issued subject to and with the benefit of an Agency Agreement dated 30st June 2005
(such agreement as amended and/or supplemented and/or restated from time to time, (the
“Agency Agreement”) made between the Issuer and CACEIS Bank Luxembourg as
fiscal agent and principal paying (the “Fiscal Agent” and, together with any other paying
agents appointed from time to time, the “Paying Agents”, which terms shall include
successors).
The Bonds are issued pursuant to a resolution of the Board of Directors of the
Issuer adopted on 17th June 2005.
The Bonds were fully subscribed by private and institutional investors.
The statements in these Conditions include summaries of, and are subject to the
detailed provisions of and definitions in the Agency Agreement. Copies of the Agency
Agreement are available for inspection during normal business hours at the specified
office of each of the Paying Agents. The Bondholders and the Couponholders are entitled
to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the
Agency Agreement applicable to them. References in these Conditions to the Fiscal
Agent and the Paying Agents shall include any successor appointed under the Agency
Agreement.
Form, Denomination and title
(1)
Form, Denomination and Title
The Bonds are in bearer form, serially numbered, in the denomination of Euro
26.03 with Coupons attached.
Title to the bonds and to the Coupons will pass by delivery.
(2)
Holder Absolute Owner
The Issuer and any Paying Agent may (to the fullest extent permitted by applicable
laws) deem and treat the holder of any Bond or Coupon as the absolute owner for
all purposes (whether or not the Bond or Coupon shall be overdue and
notwithstanding any notice of ownership, trust or interest in it or writing on the
Bond or Coupon or any notice of ownership, trust or interest in it or writing on the
Bond or Coupon or any notice of previous loss or theft of the Bond or Coupon) and
no person will be liable for so treating the holder.
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Status
The Bonds and the Coupons are direct,unconditional and unsubordinated (subject
to the provisions of Conditions 3 (Negative Pledge)) obligations of the Issuer.
NEGATIVE PLEDGE
So long as any of the Bonds remains outstanding (as defined in the Agency
Agreement), the Issuer will not, and will ensure that none of its Principal
Subsidiaries will create or permit to subsist any Security Interest upon any of their
respective Assets, present of future, to secure any Relevant Debt or any guarantee
of indemnity in respect of any Relevant Debt other than a Permitted Security (all as
defined below) unless, at the same time or prior thereto, the Issuer’s obligations
under the Bonds are (a) equally and rateably secured therewith or (b) have the
benefit of such other security, guarantee, indemnity or other arrangement in
substantially comparable terms thereto.
For the purposes of this Condition:
(a)
“Affiliate” of any Person means any Subsidiary or holding company of that
Person, or any Subsidiary of any holding company, or any other Person in
which that Person or any such holding company or Subsidiary owns at least
20 per cent of share capital of the like;
(b)
“Asset(s)” of any Person means all or any part of its business, undertaking,
property, assets, revenues (including any right to receive revenues) and
uncalled capital, wherever situated;
(c)
“Existing Security on After-Acquired Subsidiaries” means any Security
Interest granted by any Person over its Assets in respect of any Relevant Debt
and which is existing at the time any such Person becomes, whether by the
acquisition of share capital or otherwise, a Principal Subsidiary of the Issuer
or whose business and/or activities, in whole or in part, are assumed by or
vested in the Issuer or any other Principal Subsidiary after the date of issue of
the Bonds (other than any Security Interest created in contemplation thereof);
(d)
“Group” means the Issuer and its Subsidiaries;
(e)
“Permitted Security” means:
(i)
any Security Interest granted in respect of or in connection with any
Project Finance Indebtedness; or
(ii)
any Existing Security on After-Acquired Subsidiaries;
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(f)
“Person” includes any individual, company, corporation, firm, partnership,
joint venture, undertaking, association, organisation, trust, state or Agency of
a state (in each case, whether or not having separate legal personality);
(g)
Issuer:
“Principal Subsidiary” means at any relevant time a Subsidiary of the
(i)
in respect of which the Issuer (1) owns more or controls, directly or
indirectly, the Relevant Percentage or more of the share capital and
voting rights and (2) has nominated a majority of the representatives
on its Board of Directors (or equivalent management body); and
(ii)
(x) whose total net sales (chiffre d’affaires) (or, where the Subsidiary in
question prepares consolidated accounts, whose total consolidated net
sales (chiffre d’affaires) attributable to the Issuer) represents not less
than one (1) per cent. of total consolidated net sales (chiffre d’affaires)
of the Issuer, all as calculated by reference to the then latest audited
accounts (or consolidated accounts, as the case may be) of such
Subsidiary and the then latest audited consolidated accounts of the
Issuer and its consolidated Subsidiaries or (y) to which is transferred all
or substantially all the assets and undertakings of a Subsidiary which
immediately prior to such transfer is a Principal Subsidiary;
(h)
“Project Finance Indebtedness” means any Relevant Debt incurred to
finance the construction development, operation and/or maintenance to
an asset of business (a Project) :
(i)
which is incurred by a single purpose Person (SPP) (whether or not any
such SPP is a member of the Group of a Subsidiary or an Affiliate of
such a member) all or substantially all of whose Assets relate to the
construction, development, operation and/or maintenance of the
Project, either directly or indirectly, through one or more other SPPs
incorporated solely for the purposes of, and or substantially all of
whose Assets relate to, the construction, development, operation and/or
maintenance of the Project (each a “Project Entity”); and
(ii)
in respect of which the holder(s) of such Relevant Debt (the “Lender”)
has no recourse to any member of the Group or a Subsidiary or an
Affiliate of such a member for the repayment of payment of any sum in
respect of such Relevant Debt other than recourse :
(A)
and/or
in respect of share capital (or equivalent) in a Project Entity;
(B)
to a Project Entity in respect of such sum limited to the aggregate
cash flow from the Project, and/or
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(C)
to a Project Entity for the sole purpose of invoicing any Security
Interest given to the Lender over the Assets constituting of
derived from the Project (or rights given by any shareholder or
equivalent in a Project Entity over its shares or equity equivalent
in the Project Entity) in order to secure that Relevant Debt,
provided that: (x) the extent of such recourse to a Project Entity is
limited solely to the amount of any recoveries made on any such
enforcement, and (y) the Lender is not entitled, by virtue of any
right or claim arising out of or in connection with such Relevant
Debt, to commence proceedings for the winding-up or dissolution
of a Project Entity or to appoint or procure the appointment of
any receiver, trustee of similar person or official in respect of a
Project Entity or any of its Assets (save for the Assets which are
the subject of such encumbrance); and/or
(D) to a Project Entity or a member of the Group or a Subsidiary or
Affiliate of such member, which recourse is limited to a claim for
damages (other that liquidated damages) for breach of
representation, warranty of obligation (not being a payment
obligation or an obligation to procure payment by another or an
indemnity in respect thereof) by the Person against whom
recourse is available; and/or
(E)
to any collateral or covenant to pay provided by any member of
the Group or a Subsidiary or an Affiliate of such a member in
exchange for the transfer to it of Assets in the form of cash of a
Project Entity provided that such collateral or covenant provided
in exchange for such Assets does not have a value greater that the
market value of such Assets at the time of transfer;
(i)
“Relevant Debt” means (i) any present or future indebtedness for borrowed
money in the form of, or represented by, bonds (obligations), notes or other
securities (including titres de créances négociables) which are for the time
being, or which are capable of being, quoted listed or ordinarily dealt in on
any stock exchange, over-the-counter market or other securities market and
(ii) any guarantee of indemnity of any such indebtedness;
(j)
“Relevant Percentage” means 51 per cent;
(k)
“Security Interest” means any mortgage, lien, charge, pledge or other form
of security interest (sûreté réelle).
INTEREST
(1)
Interest Rate and Interest Payment dates
The bonds bear interest from and including 1st July 2005 at the rate of 5.5 per cent
per annum, payable annually in arrear of each 1st July each year. The first payment
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of interest shall be made on 1st July 2006. The calculation will be done on a
365/365 basis.
(2)
Interest Accrual
Each Bond will cease to bear interest from and including its due date for
redemption unless, upon due presentation, payment of the principal in respect of
the Bond is improperly withheld or refused or unless default is otherwise made in
respect of payment. In such event, interest will continue to accrue until whichever
is the earlier of:
(a)
the date on which all amounts due in respect of such Bond have been paid;
(b)
five days after the date on which the full amount of the moneys payable in
respect of such Bonds has been received by the Fiscal Agent and notice to
that effect has been given to the Bondholders in accordance with Condition
11.
and
(3)
Interests in case of conversion
In case of conversion before due date, no interests are due for the period
between the last coupon payment and the conversion date.
PAYMENTS
(1)
Payment in respect of Bonds
Payments of principal and interest in respect of each Bond will be made against
presentation and surrender (or, in the case of part payment only, endorsement) of
the Bond, except that payments of interest due on an Interest Payment Date will be
made against presentation and surrender (or, in the case of part payment only,
endorsement) of the relevant Coupon, in each case at the specified office of any of
the Paying Agents.
(2)
Method of Payment
Payments will be made in Euro by credit or transfer to a Euro account (or any other
account to which Euro may be credited or transferred) specified by the payee or, at
the option of the payee, by Euro cheque.
(3) Missing Unmatured Coupons
Each Bond should be presented for payment together with all relative unmatured
Coupons, failing which the full amount of any relative missing unmatured Coupon
(or, in the case of payment not being made in full, that proportion of the full
amount of the missing unmatured Coupon which the amount so paid bears to the
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total amount due) will be deducted from the amount due for payment. Each amount
so deducted will be paid in the manner mentioned above against presentation and
surrender (or, in the case of part payment only, endorsement) of the relative
missing Coupon at any time before the expiry of 10 days after the relevant Date (as
defined in Condition 7 (Taxation)) in respect of the relevant Bond (whether or not
the Coupon would otherwise have become void pursuant to Condition 8
(Prescription) or if later, five years after the date on which the Coupon would have
become due, but not thereafter.
(4)
Payments subject to Applicable Laws
Payments in respect of principal and interest on Bonds and Coupons, respectively,
are subject in all cases to any fiscal or other laws and regulations applicable in the
place of payment, but without prejudice to the provisions of Condition 7
(Taxation).
(5)
Payments only on a Presentation Date
A holder shall be entitled to present a Bond or Coupon for payment only on a
Presentation Date and shall not except as provided in Condition 4 (Interest), be
entitled to any further interest or other payment if a Presentation Date is after the
due date.
“Presentation Date” means a day which (subject to Condition 8 (Prescription)):
(a)
is or falls after the relevant due date;
(b)
is a Business Day in the place of the specified office of the Paying Agent at
which the Bond or Coupon is presented for payment; and
(c)
in the case of payment by credit or transfer to a Euro account as referred to
above, is a Target Settlement Day.
In this condition:
(6)
(i)
“Business Day” means, in relation to any place, a day on which commercial
banks and foreign exchange markets settle payments and are open for general
business (including dealing in foreign exchange and foreign currency
deposits) in that place; and
(ii)
“Target Settlement Day System” means a day on which the Target System
is operating and “Target System” means the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System.
Initial Paying Agents
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(b) The names of the initial Paying Agents and their initial specified offices are
set out at the end of these Conditions. The Issuer reserves the right at any time to
vary or terminate the appointment of any Paying Agent and to appoint additional or
other Paying Agents.
Notice of any termination or appointment and of any changes in specified offices
shall be given to the Bondholders as soon as reasonably practicable by or on behalf
of the issuer in accordance with Condition 11 (Notices).
CONVERSION
As from July 1st 2010 until June 11th 2012, the bondholder has the possibility to
convert its bonds into existing Suncany Hvar shares owned by the Issuer under the
following conditions:
- One bond gives the right to receive one share
- No interest is paid for the period between the last coupon payment and the
conversion date
The following data were taken to fix the conversion ratio:
-
conversion price per Suncani Hvar share
EUR/HRK
ISIN code
190 HRK
7,3
HRSUNHRA0003
REDEMPTION AND PURCHASE
(1)
Redemption at Maturity
Unless previously redeemed, converted or purchased and cancelled as provided
below, the Issuer will redeem the Bonds at their principal amount on June 30th
2012.
(2)
Redemption for Taxation Reasons
(a)
The Bonds may be redeemed at the option of the Issuer in whole, but not in
part, at any time, on giving, not less that 30 nor more than 60 days’ notice to
the Fiscal Agent and, in accordance with Condition 11 (Notices), the
Bondholders (which notice shall be irrevocable), if on the occasion of the
next payment due under the Bonds, the Issuer has or will become obliged to
pay additional amounts as provided or referred to in Condition 7 (Taxation)
as a result of any change in, or amendment to, the laws or regulations of the
Grand Duchy of Luxembourg, or any change in the application or official
interpretation of such taxes or regulations, which change or amendment
becomes effective on or after July 1st 2012, provided that the due date for
redemption of which notice hereunder may be given shall be no earlier than
the latest practicable date on which the Issuer could make such payment
- 10 -
without withholding taxes for the Bondholders or if such date has passed, as
soon as practicable thereafter.
(b)
(3)
Bonds redeemed pursuant to this Condition will be redeemed at their
principal amount together with interest accrued to but excluding the date of
redemption.
Purchases
The Issuer or any of its Subsidiaries (as defined in Condition 3 (Negative Pledge))
may at any time purchase Bonds (provided that all unmatured Coupons
appertaining to the Bonds are purchased with the Bonds) in any manner and at any
price. If purchases are made by tender, tenders must be available to all Bondholders
alike.
(4)
Cancellations
All Bonds which are (a) redeemed, or (b) purchased by or on behalf of the Issuer
and all converted bonds by the bondholders will forthwith be cancelled, together
with all relative unmatured Coupons attached to the Bonds or surrendered with the
Bonds, and accordingly may not be reissued or resold.
TAXATION
The Luxembourg law of June 21st, 2005 implementing the Savings Directive
2003/48/CE into Luxembourg law (“Loi du 21 juin 2005 transposant en droit
luxembourgeois la directive 2003/48/CE du 3 juin 2003 du Conseil de l'Union
européenne en matière de fiscalité des revenus de l'épargne sous forme de paiement
d'intérêts ») has come into force on July 1st, 2005. This law provides that a
Luxembourg withholding tax shall apply on the income of savings in the form of
interest paid in Luxembourg to an effective beneficiary, such beneficiary being an
individual resident (« personne physique ») having his or her tax residence in another
EU member state.
(2)
Interpretation
In these Conditions, “Relevant Date” means the date on which the payment first
becomes due but, if the full amount of the money payable has not been received by
the Fiscal Agent on or before the due date, it means the date on which, the full
amount of the money having been so received, notice to that effect shall have been
duly given to the Bondholders by the Issuer in accordance with Condition 11
(Notices)
PRESCRIPTION
Bonds and Coupons will become void unless presented for payment within periods
of 10 years (in the case of principal) and five years (in the case of interest) from the
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relevant Date in respect of the Bonds or, as the case may be, the Coupons, subject
to the provisions of Condition 5 (Payments).
EVENTS OF DEFAULT
The holder of any Bond may give notice to the Fiscal Agent at its specified office
that the Bond is, and it shall accordingly forthwith become, immediately due and
repayable at its principal amount, together with interest accrued to the date of
repayment, if any of the following events (“Events of Default”) shall have occurred
and be continuing :
(a)
if default is made in the payment of any principal or interest due in respect of
the Bonds or any of them and the default continues for a period of 7 days in
the case of principal and 15 days in the case of interest;
(b)
if the Issuer fails to perform or observe any of its other obligations under
these Conditions and (except in any case where the failure is incapable of
remedy when no continuation or notice as is hereinafter mentioned will be
required) the failure continues for the period of 30 days next following the
service by any Bondholder on the Fiscal Agent at its specified office of
notice requiring the same to be remedied; or
(c)
(i) any other present or future indebtedness of the Issuer or any of its
Principal Subsidiaries for or in respect of moneys borrowed or raised
becomes due and payable prior to its stated maturity by reason of any actual
default or event of default, or (ii) any such indebtedness is not paid when due
or, as the case may be, within any applicable grace period, or (iii) the Issuer
or any of its Principal Subsidiaries fails to pay when due any amount payable
by it under any present or future guarantee for, or indemnity in respect of,
any moneys borrowed or raised, provided that the aggregate amount of the
relevant indebtedness, guarantees and indemnities in respect of which one or
more of the events mentioned above in this paragraph have occurred equals
or exceeds EUR 5,000,000.00 or its equivalent in any other currency.
REPLACEMENT OF BONDS AND COUPONS
Should any Bond or Coupon be lost, stolen, mutilated, defaced or destroyed it may
be replaced at the specified office of the Fiscal Agent, upon payment by the
claimant of the expenses incurred in connection with the replacement and on such
terms as to evidence and indemnity as the Issuer may reasonably require. Mutilated
or defaced Bonds or Coupons must be surrendered before replacements will be
issued.
NOTICES
All notices to the Bondholders will be valid if published in one daily newspaper
published in Luxembourg. It is expected that such publication will normally be
made in d’Wort. The Issuer shall also ensure that notices are duly published in a
- 12 -
manner which complies with the rules and regulations of any stock exchange on
which the Bonds are for the time being listed. Any such notice will be deemed to
have been given on the date of the first publication or, where required to be
published in more than one newspaper or on different dates, on the first date on
which publication is made. Couponholders will be deemed for all purposes to have
notice of the contents of any notice given to the Bondholders in accordance with
this Condition.
FURTHER ISSUES
The Issuer may from time to time without the consent of the Bondholders or
Couponholders create and issue further bonds, having terms and conditions the
same as those of the Bonds, or the same except for the amount of the first payment
of interest, which may be consolidated and form a single series with the
outstanding Bonds.
GOVERNING LAW AND JURISDICTION
The Agency Agreement, the Bonds and the Coupons are governed by, and will be
construed in accordance with the laws of Luxembourg.
The issuer irrevocably agrees for the benefit of the Bondholders and the
Couponholders that the courts of Luxembourg are to have jurisdiction to settle any
disputes which may arise out of or in connection with the Bonds or Coupons.
SUMMARY OF PROVISIONS RELATING TO THE BONDS WHILE IN GLOBAL FORM
The Bonds will initially be represented by a Global Bond, in bearer form without
Coupons which will be deposited on or about the Issue Date with a common depositary
for Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") and
Clearstream Banking, société anonyme ("Clearstream, Luxembourg”).
Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg
as the holder of a Bond represented by a Global Bond (each, a "Global Bond" and
together, the "Global Bond") must look solely to Euroclear and/or Clearstream,
Luxembourg for his share of each payment made by the Issuer to the bearer of such
Global Bond and in relation to all other rights arising under the Global Bonds, subject to
and in accordance with the respective rules and procedures of Euroclear and
Clearstream, Luxembourg. Such persons shall have no claim directly against the Issuer
in respect of payments due on the Bonds for so long as the Bonds are represented by
such Global Bond and such obligations of the Issuer will be discharged by payment to
the bearer of such Global Bond in respect of each amount so paid.
The Global Bond contain provisions which apply to the Bonds represented thereby while
they are in global form, some of which modify the effect of the terms and conditions of
the Bonds set out in this Prospectus. The following is a summary of certain of these
provisions:
(i)
Exchange
- 13 -
The Global Bond is exchangeable in whole but not in part (free of charge to the bearer)
at the request of the bearer for the corresponding Definitive Bonds described below: (i)
if the Global Bond is held on behalf of a clearing system and such clearing system is
closed for business for a continuous period of 14 days (other than by reason of holidays,
statutory or otherwise) or announces an intention permanently to cease business or does
in fact do so; or (ii) if any Bond becomes redeemable as set out in Condition 9.
In exchange for the Global Bond, the Issuer will deliver or procure the delivery of an
equal aggregate principal amount of duly executed and authenticated Definitive Bonds
corresponding thereto (having attached to them Coupons in respect of interest which has
not already been paid on the Global Bond), prepared in accordance with any applicable
legal requirements in or substantially in the form set out in the Agency Agreement.
(ii)
Payments
Payments of principal and interest in respect of Bonds represented by the Global Bond
will be made against presentation for endorsement and, if no further payment falls to be
made in respect of the Bonds represented thereby, surrender of the Global Bond to or to
the order of the Paying Agent. A record of each payment so made will be endorsed in
the appropriate schedule to the Global Bond, which endorsement will be prima facie
evidence that such payment has been made in respect of the Bonds.
(iii) Notice
So long as any Bonds are represented by the Global Bond and the Global Bond is held
on behalf of a clearing system, notices to Bondholders may be given by delivery of the
relevant notice to that clearing system for communication by it to entitled accountholders
in substitution for publication as required by the Conditions, provided that so long as the
Bonds are listed on the Luxembourg Stock Exchange and the rules of the Luxembourg
Stock Exchange so require, notices shall also be published in a leading newspaper
having general circulation in Luxembourg (which is expected to be the Luxemburger
Wort). Any such notice shall be deemed to have been given to the Bondholders on the
fifth day on which such notice is delivered to Euroclear and/or Clearstream, Luxembourg
(as the case may be) as aforesaid.
(iv) Meetings
The holder hereof shall, at any meeting of Bondholders whose Bonds are represented
thereby, be treated as having one vote in respect of each EUR 1,000.00 in principal
amount of Bonds which this Global Bond so held represents
(v)
Purchase and Cancellation
Cancellation of any Bond required by the Conditions to be cancelled following its
purchase will be effected by reduction in the principal amount of the Global Bond.
- 14 -
USE OF PROCEEDS
The net proceeds of the issue of the Bonds, amounting to € 24,169,193.39.- were
applied by the Issuer to finance the capital increase into Suncani Hvar d.d. The Issuer
has agreed to be charged for any expenses of the issue of the Bonds apart from the
proceeds of the issue. Accordingly, the gross proceeds received by the Issuer will not be
reduced by the amount of any expenses of the issue of the Bonds.
DESCRIPTION OF THE ISSUER
Information relating to the issuer and capital
1. Information relating to the issuer
Company and registered office
Company name: ORCO PROPERTY GROUP S.A.
Registered office: 8, Boulevard Emmanuel Servais – L-2535 Luxembourg
Legal form
A limited company (“société anonyme”) for an unlimited term governed by
Luxembourg law with a Board of Directors and capital of EUR 21,237,077.50.
Date of company’s founding and expiration
The company was created on September 9, 1993. The duration of the company is
unlimited.
Legislation
The company is a limited company for an unlimited term governed by Luxembourg
law. It is governed by the law of 10th August 1915 relating to corporate law (as
amended). French corporate law does not apply to the company.
The Company, however, is subject to certain provisions of French law, given its
listing on the Second Marché of the Paris Stock Exchange (Euronext). Such is the
case for the provisions on foreign issuers in the COB 98-07 regulation relative to the
obligation to inform the public, the COB 90-04 regulation as modified by the COB
98-03 regulation relative to the settlement of quotations, the COB 98-02 regulation
relative to the information to broadcast at the occasion of plans for the repurchase of
shares accepted for negotiations on a controlled market. In the same way, the COB
98-08 regulation relative to requests for the admission of new shares into trading is
applicable. Finally, the regulations relative to the Second Marché of the Paris Stock
Exchange are generally applicable
Other provisions of French stock-market law do not apply to the Company. Such is
the case with COB 88-02, regulating threshold limits as well as (in principle)
provisions relating to public takeover bids included in the law n°96-597 of 2nd July,
1996 and in COB 88-03 replaced by n°2002-04.
- 15 -
Corporate purpose
The Company seeks to acquire directly properties, take capital stakes in other firms and
make loans available to companies within the group.
Its activities may include:
•
•
•
investments in the real-estate sector entailing the purchase, sale, construction,
promotion, management and rental of buildings as well as property development
on its own or via one of its subsidiaries;
investments in the hotel business, such as buying, selling, building, developing,
managing and putting into operation hotels by the company itself or through its
subsidiaries;
the acquisition of equity interests in any form in any commercial enterprise,
whether industrial, financial or other, in Luxembourg or abroad, regardless of
whether they are part of the group, the acquisition of securities or rights through
equity purchase, capital contribution, subscription, equity interest, via direct
purchase or stock options, trading or any other means such as the acquisition of
patents or licenses, their management and development, granted to companies in
which it holds an equity stake or interest, whether directly or indirectly, any type
of help, loan, advance or guarantee, and any type of activity or operation which
may be directly or indirectly related to its purpose. (article 4 of the bylaws
Memorial, Recueil des Sociétés et Associations, n° 852, September 2005)
The issuer does not own directely any building. On a consolidated level, the group owns real estate
assets but none of them contributes for more than 10 % into the consolidated income.
Share capital
The share capital of the company amounts to 27.804.469,80 EUR, fully paid in, represented
by 6.781.578 shares. All the shares have equal rights there are no special voting rights. The
Board of Directors benefits from an authorised capital until 2009 to increase the capital up
to 50.000.000EUR.
See Note 19 of the June 2005 accounts for the potential capital.
REGISTRATION
RCS Luxembourg B 44 996
CONSULTATION OF DOCUMENTS AND INFORMATION RELATING TO
THE COMPANY
ORCO PROPERTY GROUP S.A.: 8, Boulevard Emmanuel Servais – L-2535
Luxembourg
The fiscal period
- 16 -
The fiscal period extends from January 1 to 31st December of the same calendar year.
Statutory distribution of profits and conditions of dividend payments
Once a year, at least one twentieth of net profits are put aside to constitute a legal reserve.
This amount is no longer required once the reserve funds have reached 10% of the issued
capital; however it becomes applicable again if the reserve falls below the level. The
General Meeting decides on the allocation and distribution of net profits.
The Board of Directors is authorized to pay interim dividends providing the legal conditions
stated below are fulfilled:
• a statement of accounts must be established showing that there are sufficient
funds available for distribution;
• the amount to be distributed must not exceed the amount of profits earned since
the end of the previous financial year for which accounts had been approved,
plus retained earnings, as well as withdrawals made from the reserves available
to this effect, less losses brought forward and the amounts to be put in reserve in
accordance with a legal or statutory obligation;
• the Board of Directors’ decision to distribute an interim dividend can only be
taken within two months of the closing of the above-mentioned statement of
accounts;
• the distribution cannot be decided upon within 6 months following the closure of
the previous fiscal year, nor before annual accounts of this period have been
certified;
• once an initial dividend payment has been made, the decision to make another
distribution cannot be taken within three months following the decision to make
the initial distribution;
• in their report to the Board of Directors, the auditor(s) is (are) to verify whether
or not the above-mentioned conditions have been fulfilled.
If interim dividends were to exceed the dividend amount decided later by the General
Meeting, they would in this case considered as partial payment for the subsequent dividend
(article 24 and 25 of the bylaws).
Payment of dividends related to the company’s ordinary shares will be centralized by
Natexis Banques Populaires and paid to shareholders with shares held in EUROCLEAR
through their authorized financial agent.
THE GENERAL MEETINGS
The annual General Meeting is empowered to meet at the registered address or at any
other place as specified in the meeting notifications. The Board of Directors and auditors
are entitled to call the General Meeting. They are obliged to call it and hold it within one
month, if shareholders representing one fifth of the share capital have demanded it in
writing specifying the agenda. Notifications include the agenda; they are made through
announcements placed twice at an interval of at least eight calendar days and eight
calendar days before the meeting in the "Luxembourg Memorial", a Luxembourg
newspaper as well as a French financial daily newspaper. Registered letters are
addressed, eight calendar days before the meeting, to the registered shareholders (article
20 of the bylaws). The company will convey the information regarding the General
Meetings directly to Natexis Banques Populaires acting as the institution responsible for the
securities and financial department. The latter will have to communicate at their earliest
- 17 -
convenience upon receipt the aforementioned information to the authorized financial agents
affiliated to EUROCLEAR who have made the request.
Unless otherwise stipulated, any shareholder has the right to vote directly or by proxy,
and can take part in the General Assembly proceedings (article 19 of the bylaws). To
exercise their right to vote, shareholders with EUROCLEAR shares will have to give, via a
proxy, voting instructions to their authorized financial intermediary which will transmit
them to Natexis Banques Populaires acting in its role as custodial service, which can be
named representative, and will have to justify their capacity with a voting rights certificate
made out by the authorized financial intermediary and holder of the shareholder’s account.
Shareholders possessing EUROCLEAR shares who wish to attend in the General Meeting
must notify the Board of Directors of that intention at least (5) working days before the
aforesaid meeting so that their name is put directly on the attendance sheet for the aforesaid
meeting. To exercise their right to attend meetings and vote, shareholders will also have to
present a voting rights certificate.
Having agreed to the annual accounts, the General Meeting then proceeds to a special
vote to discharge the board members (article 22 of the bylaws).
Only the Extraordinary General Assembly can modify the bylaws. Modifications relating
to the purpose or the form of the company must be approved by the Bondholders’General
Meeting (article 23 of the bylaws).
There is no right to a double vote.
Equity thresholds
Luxembourg law is applicable. Shareholders, however, modified the bylaws by adopting
more restrictive threshold limits. Henceforth, any shareholder, whether an individual or
legal entity, is obligated to simultaneously inform the company and Financial
Department Control Commission by mail within seven calendar days of exceeding or
falling below the threshold limits on voting rights set at 2.5%, 5%, 10%, 15%, 20%,
25%, 33%, 50% and 66% as well as to the percentage of voting rights he/she retains
following the transaction.
Liquidity and promotion contracts
During 2003, the Company had a liquidity contract with Amsterdams Effectenkantoor
B.V, Amsterdam (AEK), The Netherlands. The purpose of this liquidity contract is to
ensure better currency- and –share liquidity on the market.
Status of a Soparfi
Soparfi is a standard commercial enterprise benefiting from article 166 LIR
(Luxembourg’s income tax law). This article covers tax exemption on income earned
from large and stable investment stakes This article deals with tax exemption on income
from important, stable and detained interests. This article deals with tax exemption on
income from important, stable and detained interests held by the investor. This includes
dividends as well as capital gains on the sale or liquidation of these interests.
Dividends paid by a subsidiary to its Luxembourg parent company, a Soparfi, will be
exempted from any taxation as long as the Soparfi holds a minimum of 10% of the
subsidiary’s capital or if its purchase price is at least EUR 1,200,000.00. The Soparfi
must also hold this subsidiary for an uninterrupted 12-month period or, failing that, must
commit to holding it for at least 12 months.
- 18 -
Capital gains realised on the disposal or liquidation of holdings are exempted from any
taxation if the Soparfi owns, at least, 10% of the subsidiary's capital or if the acquisition
price amounts to a minimum of EUR 6,000,000.00. Moreover, the subsidiary must be a
resident company that is fully taxable at a rate equivalent to a corresponding corporate
income tax (minimum 15), or a company of the European Union covered by the EEC
Council directive of July 23. Disposed of equity shares are required to have been held by
the Soparfi during an uninterrupted 12-month period. Failing that, the Soparfi must
commit to holding a minimum 10% stake for an uninterrupted 12-month period.
INFORMATION RELATING TO THE BOARD OF DIRECTORS AND
MANAGEMENT
1. THE BOARD OF DIRECTORS AND MANAGEMENT
1.1. Composition of the Board of Directors
Managing Director:
Corporate Secretary:
Directors
Jean-François Ott
Managing Director
Remy Allemane
Director
Arnaud Bricout
Director
Pierre Cornet
Director
Patrick Ganansia
Director
Bernard Gauthier
Director
Luc Leroi
Director
Silvano Pedretti
Director
Ricardo Portabella Peralta
Director
Nicolas Tommasini
Director
Guy Wallier
Director
Orco Holding, represented by
Mr Luc Leroi, Director
Jean-François Ott
Luc Leroi
First
appointment/ratification
cooptation
Last appointment
28/04/05
09/09/03
End of term
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
28/04/05
28/04/05
27/04/06,
resigned June
2005
27/04/06
28/04/05
27/04/06
28/04/05
27/04/06
10/06/02
29/04/04
15/03/00
15/03/00
15/03/00
29/04/04
09/09/03
11/06/01
29/04/04
15/03/00
29/04/04
- 19 -
The appointments were approved at the General Meeting of 29th April 2004 and renewed
at the General Meeting that approved the accounts for fiscal year 2005. Their terms run
until the holding of the General Meeting that will be called to approve the accounts for
fiscal year 2005.
The Board of Directors consists of 11 Directors, six of which are outside Directors, i.e. they
carry out no operational position within the Company and have no family relation with
members of top management that might influence their independent judgment, nor do they
supply the Company with services or goods, which according to the Board of Directors,
could influence their judgment. The bylaws require that each Director hold at least one
ORCO PROPERTY GROUP S.A. share.
1.2. Other appointments of directors
1.2.1. Independent directors
Remy Allemane, Independent director
Chemin de Torry 7 CH-1295 Mies
Director of AAM Finance
Member of the Supervisory Board of PGO Automobiles
Pierre Cornet, Independent director
6, chemin des Ruettes F-18110 Fussy
Chairman of Cher Initiative
Director of Centre Capital Développement
Patrick Ganansia, Independent director
44, avenue de la Bourdonnais F-75007 Paris
Chairman of SOFII SA
Chairman of LA BOETIE PATRIMOINE
Director of MALA STRANA (formerly ORCO PARIS SA).
Manager of SARL INITIATIVES FINANCIERES
Manager of SARL INITIATIVES PATRIMONIALES
Manager of SARL NANELLE CREATIONS
Manager of SCI GINVEST
Silvano Pedretti, Independent director
Nad Perruskou 8a, CZ-12000 Prague 2
Director of AS 2000 (Czech Republic)
President of EC.s.a (Luxembourg)
Director of Euro-cafés (Luxembourg)
Director of Euro-franchise (Luxembourg)
Manager of euro-cafés cz (Czech Republic)
Manager of DB2004 cz (Czech Republic)
President of EC2009 (Czech Republic)
President of Union des Français de l’Etranger (UFE Czech Republic)
- 20 -
Guy WALLIER, Independent director
8, avenue Elysée Reclus F-75007 Paris
Chairman of the Compagnie Française de Participation Mobilière et Immobilière
(CFPMI).
Chairman of “L’action Sociale Immobilière”.
1.2.2. Other appointments of directors
Jean-François Ott, Chairman and CEO of the Orco Property Group.
120 boulevard Maurice Barrès F-92200 Neuilly sur Seine
Managing director of ORCO HOLDING S.A.
Managing director of ORCO HOTEL GROUP S.A.
Director of MaMaison Residences S.A.
Director of Orco Hotel Collection S.A.
Director of The Endurance Management Company S.A.
Manager of Kosic Sàrl
Manager of VINOHRADY (formerly ORCO PARIS SARL).
Managing director of Orco Aparthotel S.A.
Managing director of Orco Germany S.A.
Managing director of Prague Real Estate 1 S.A.
Outside the ORCO PROPERTY GROUP:
Director of MALA STRANA (formerly ORCO PARIS SA).
Manager of SCI LA PRAGUOISE
Manager of SCI OTTAN
Director of MANHATTAN SA
Arnaud Bricout, Vice President of the Orco Property Group
18, avenue de Villepreux F-94420 Vaucresson
Director of Prague Real Estate 1 S.A.
Luc LEROI, Director of the Orco Property Group and Secretary of the Board
28, rue des Genêts L-1620 Luxembourg
Director of ORCO HOLDING S.A.
Director of ORCO HOTEL GROUP S.A.
Director of MaMaison Residences S.A.
Director of ORCO HOTEL COLLECTION S.A.
Director of The Endurance Management Company S.A.
Manager of Kosic Sàrl
Director of Orco Aparthotel S.A.
Director of Orco Germany S.A.
Director of Prague Real Estate 1 S.A.
Nicolas Tommasini,, Vice President and CEO of the Orco Hotel Group
8, Varoseliegeti H-1068 Budapest
Managing Director of ORCO HOTEL GROUP S.A.
- 21 -
Managing Director of MaMaison Residences S.A.
Managing Director of ORCO HOTEL COLLECTION S.A.
Managing director of OrcoAparthotel S.A.
Managing Director of Orco Germany S.A.
Director of Orco Project Organization Rt.
Director of Orco Budapest Rt
Director of Residence Izabella Rt.
Director of Orco Hotel Rt.
Managing Director of Orco Hotel Management Kft.
Director of SIFT SA
Orco Holding, director
8, boulevard Emmanuel Servais L-2535 Luxembourg
Shareholder of the ORCO PROPERTY GROUP S.A.
There are no other appointments
1.3. Corporate governance
In January 2002, the ORCO PROPERTY GROUP signed a membership agreement to
join the Next Prime Segment of Euronext.
The ORCO PROPERTY GROUP has applied corporate governance principles in
accordance with the recommendations of Euronext since January 2002.
The Company has formed a compensation committee as well as an audit committee.
The remuneration committee provides recommendations to the Board of Directors on
remuneration and incentive programs offered to management and members of the Board
of Directors. It met once last year.
The audit committee regularly examines the preparation of the company's accounts,
internal audits and information communication methods as well as the quality and
faithfulness of the company's financial reports. It supervises the independence of the
Statutory Auditors and choice of reference standards. The audit committee met twice last
year.
2. The Statutory Auditors
During the Annual General Meeting called to approve the accounts for fiscal year 2003,
the appointments of the statutory auditors were approved for a period of three years
ending with the Annual General Assembly which will be called to approve the accounts
for fiscal year 2006
HRT Révision S.à.r.l represented by Mr. Dominique Ransquin
23, Val Fleuri, Luxembourg
Statutory auditors for the ORCO PROPERTY GROUP since June 2002.
PricewaterhouseCoopers S.à.r.l, represented by Mr. Amaury EVRARD
400, route d’Esch, L-1014 Luxembourg.
- 22 -
Consolidated accounts 2003
REPORT
OF THE STATUTORY AUDITORS ON THE CONSOLIDATED
ACCOUNTS
YEAR ENDED DECEMBER 31, 2003
In accordance with our appointment by your Shareholders’ General Meeting, we have audited the
accompanying consolidated accounts of ORCO PROPERTY GROUP for the year ended 31
December 2003.
The Board of Directors is responsible for the preparation of the consolidated accounts. Our role
is to express an opinion on these consolidated accounts based on our audit.
We conducted our audit in accordance with professional standards applicable in France. Those
standards require that we plan and perform the audit to obtain reasonable assurance that the
consolidated accounts are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in these accounts. An audit also includes
assessing the accounting principles used and significant estimates made, as well as evaluating the
overall presentation of the accounts. We believe that our audit provides a reasonable basis for our
opinion.
AUDIT OPINION OF HRT Révision S. à r.l.
During the course of our audit, we have noted the booking, on the basis of engagement
letters signed in December 2003, of a profit of 3,5 millions Euro on the creation of a joint
venture for the realisation of the KOSIC project and the sale of a company holding the
building n°2 of the Americka Park. Due to the complexity of these operations, their legal
realisation was only finalized during the first quarter of 2004. At the date of our report, the
operations were completely achieved and the proceeds received in agreement with the
maturity dates provided by the contracts.
- 23 -
We are of the opinion that in accordance with the principle of the priority of substance over
form, even if the legal realization of these transactions was only finalized during the first
quarter of 2004, the decision of the Board of Directors to include the profit in the 2003
profit and loss account is adequate.
At the date of our report, the analysis of the conversion difference included in the statement
of changes in equity accounts does not permit to verify the correct allocation between the
profit and loss account and the reserves of a loss on conversion of 485.000 Euro, currently
considered as being a part of the reserves.
In our opinion, the enclosed consolidated accounts give a true and faire view of the
consolidated assets and liabilities and of the consolidated financial position of ORCO
PROPERTY GROUP S.A. as at December 31, 2003 and, subject to the eventual effect of
the preceding remark, of the consolidated results for the year then ended.
Without to question the above opinion, we draw your attention on the following items:
-
notes 2c)iii (deferred taxes) and 11 to the consolidated accounts, on respectively,
the recognition of deferred tax assets and the Opera Business Centre litigation and
on the uncertainties of the estimates linked to these elements;
-
the change in the accounting method described in note 2a) to the consolidated
accounts.
OPINION OF RSM SALUSTRO REYDEL
During our audit, we noted the following matters which lead us to express an adverse opinion on the accounts:
- the formation of a joint venture relating to the Kosic project was accounted for in December 2003 on the
basis of a memorandum of understanding which involved no binding commitment, but gave rise to a 2.2
million EUR credit to the consolidated net profit. The definitive transaction, in the form of a contract for the
sale of the shares, took place only in February 2004.
-
the sale of a company holding Building n°2 of Americka Park was accounted for
in December 2003 based on a simple letter of intention, but giving rise to a 1.3
million EUR credit to the consolidated net profit. The definitive transaction, in
the form of a contract for the sale of the shares, took place only in February 2004.
The overall effect of these transactions is to overstate by 3.5 million EUR both the net profit for 2003 and the
net assets at December 31, 2003.
The analysis of the foreign currency translation differences included in the statement
of changes in shareholders’ equity does not enable us at present to verify their correct
allocation as between the profit and loss account and reserves.
In view of the above matters, in our opinion the consolidated accounts do not, in the light of French
regulations and accounting principles, give a true and fair view of the results of the group’s operations for the
year or of its financial position and assets at the end of the year.
Without calling into question the above opinion, we draw your attention to the following:
-
notes 2c)iii (deferred tax) and 11 to the consolidated accounts, relating to the
- 24 -
recognition of deferred tax assets and the Opera Business Center litigation
respectively, and the uncertainties affecting the estimates of these items;
-
the change in accounting method described in note 2a) to the consolidated
accounts.
Luxembourg and Paris, April 22, 2004
The Statutory Auditors
RSM SALUSTRO REYDEL
Dominique RANSQUIN
François BERNARD
- 25 -
Orco Property Group
CONSOLIDATED BALANCE SHEET
31 December 2003
(Denominated in thousand Euros)
ASSETS
31 December
2003
31 December
2002
1 628
1 924
108 650
85 162
138
0
56
1687
138
1 743
1 743
110 416
88 829
85 968
FIXED ASSETS
Intangible assets
Tangible assets
Financial assets
Non-consolidated investments
Loans to affiliates
Proforma
31-déc LIABILITIES and SHAREHOLDERS’ EQUITY
2002
SHAREHOLDER’S FUND
1 924 Subscribed share capital
Share premium account
82 301 Legal reserve
Non-distributable reserve
Consolidated reserve
56 Translation difference
1 687 Profit for the year
Minorities interest
Minorities reserves
PROVISIONS FOR RISKS AND CHARGES
CURRENT ASSETS
42 795
21 937
3 518
1304
3 518
1 304
Tax
Other debtors
8 102
8 621
81 455
3 383
3 787
11 992
3 383
3 787
11 992
TREASURY
PREPAYMENTS
TOTAL ASSETS
31 December
2002
Proforma
31-déc
2002
16 470
32 335
307
256
6 078
-2 729
252
11 844
17 997
45
140
2 398
-273
2 520
11 844
17 997
45
140
2 398
-3 172
2 558
-1 201
-622
51 146
34 671
31 810
7 579
437
437
2 812
11 225
49 729
126
16
4 116
2 812
11 225
49 729
126
16
4 116
969
3 202
2 599
74 794
969
3 202
2 599
74 794
46
151
151
215 255
110 053
107 192
LIABILITIES
Inventories
Trade debtors
Marketable securities
Cash
31 December
2003
391
16 160
16 551
4 962
3 304
8 266
6 833
966
215 255
110 053
- 26 -
Convertible bonds
Non-convertible bonds
Borrowings and overdrafts
Interests payable
Creditors on assets
Trade creditors
Customers prepayments
Tax liabilities
Amounts due to shareholders
Other creditors
4 962
3 304
8 266
966 ACCRUALS AND DEFERRED INCOME
107 192 TOTAL LIABILITIES
12 735
70 633
193
0
10 811
52 888
1 944
3 457
3 823
156 484
Orco Property Group
CONSOLIDATED PROFIT ANS LOSS ACCOUNT
31 December 2003
(Denominated in thousand Euros)
2003
2002
22 780
2 091
1 446
1 296
4 954
427
12 565
10 059
3 330
1 474
1 467
3 665
123
0
Proforma
Dec. 31, 2002
10 059
3 330
1 474
1 467
3 665
123
0
Capitalized production costs
1 068
1 360
1 360
Other operating income and transfer of charges
Gain on fixed assets disposal
Reversal of operating provisions
Other operating income
3 026
2 455
248
322
3 855
3 338
471
46
3 855
3 338
471
46
0
0
-5 207
-931
-346
-5 207
-931
-346
-414
-1 866
-633
-1 017
-3 360
-4
0
-414
-1 866
-633
-1 017
-3 360
-4
0
-135
-1 390
-1 048
-783
-1 231
-238
-993
-135
-1 390
-1 048
-783
-1 234
-238
-993
Sales
Offices
Residential
Aparthotels
Hotel
Other services
Yield from the sale of buildings in stock
Cost of sales
Purchases and outside services
Offices
Residential
Promotion
Aparthotels
Hotel
General charges on prospection
Operating general charges
Payroll costs
Offices
Residential
Promotion
Aparthotels
Hotel
General charges on prospection
Operating general charges
Other operating charges
Taxes
- 7 297
-646
-437
-171
-544
-2485
-1 367
-1 647
- 4 059
-2
0
-23
-188
-1 751
-1 119
-976
- 482
-184
-298
Amortization, depreciation and provisions
- 2 8 93
-2 380
-2 380
3 196
3 096
3 096
Financial income
Change profit
Financial charges
Net Financial profit
675
288
-6 638
-5 675
273
-14
-3 184
-2 925
273
24
-3 184
-2 887
Profit on ordinary activities before tax
-2 479
171
209
172
1 358
1 097
1 252
1 097
1 252
-949
2 520
2 558
0
0
-949
2 520
2 558
1 201
0
0
252
2 520
2558
0,9
0,86
0,91
0,86
Operating profit
Exceptional charges
Corporation tax
Consolidated profit after tax
Discount on NAV upon purchase of company
Net profit
Minority interests
PROFIT FOR THE PERIOD
Earning per share (in EUR)
Diluted earning per share (in EUR)
Orco Property Group
- 27 -
CONSOLIDATED CASH FLOW STATEMENT
Period ended 31st December 2003
(Denominated in thousands of Euros)
December
2003
December
2 002
December
2001
3 196
3 096
-304
Elimination of operating charges and income with no cash flow effect:
- Amortization, depreciation
- Gain on disposal
- Gain/(loss) on operating provisions
Gross operating cash flow
2 893
-2 455
-248
3 386
2 380
-43
-347
5 086
1 602
-2
-26
1 270
Change in working capital requirements
Net cash flow generated by operating activities
11 094
14 480
-7 703
-2 616
860
2 130
Other income and expenses:
- Interest expense
- Financial income
- Corporation tax
- Exceptional charges and income
Net cash flow generated by the business
-6 146
321
-625
-31
7 999
-2 957
273
-582
1 252
-4 630
-1 772
965
-45
31
1 309
-28 851
4 816
-24 035
-15 805
0
-15 805
-16 139
-17 531
-33 670
Cash flow from financing operations
Issue of share capital
Net debt issues
Net cash flow from financing operations
18 964
21 131
38 908
3 333
8 269
11 602
10 063
14 427
24 490
Change in cash position
Opening cash position
Closing cash position
22 872
-6 577
16 295
-8 833
2 256
-6 577
-7 871
10 127
2 256
Closing cash position ended December 31 :
- Net liquid assets from overdrafts
- Marketable securities except own shares
16 295
16 160
135
-6 577
-6 610
33
2 256
2 165
91
Cash flow from operations
Operating profit of consolidated companies
Cash flow from investing transactions
Acquisition of fixed assets
Impact of changes in consolidation structure
Net cash flow from investing transactions
NOTE 1 - GENERAL
•
•
Orco Property Group S.A. (the Company) was incorporated on September 9, 1993, in the form
of a limited company for an unlimited term.
The company’s business mainly focuses on the one hand on management of property
companies based in the Czech Republic, Hungary and Poland and on the other hand on
- 28 -
•
residential buildings promotion in the Czech Republic. The group diversified further with
hotel activities and hotel residences.
All amounts are expressed in thousands Euros (K€) except for information about
shares in issue and exchange rates.
NOTE 2 - CONSOLIDATION BASIS AND PRINCIPLES
a)
Change in method
The Czech, Polish and Hungarian subsidiaries of the group are now considered as having the euro as
operating currency. This change in method enables a more faithful image of the group’s accounts, thus
better accounting for the absence of exchange risk on its net assets:
• The main liabilities (bank loans) are expressed in euros
• According to a DTZ attestation, a real-estate company hired by the group to institute
its assets valuation, dated 29th September 2003, there is no exchange risk on the
group’s main assets (buildings), as the buildings price in euros, on the concerned
markets, is not affected by the exchange rates movements between euro and local
currency.
Therefore, the conversion of these businesses accounts is operated according to the historical rate
method, that is:
• Non-monetary elements, including own capital, are converted at their historical rate,
i.e. at the exchange rate on the date of entry of these elements in the consolidated
assets and liabilities;
• Monetary elements are converted at the exchange rate on the financial year closing
date;
• Income and charges are converted at the average rate over the period.
However, the depreciations recorded by amortization or deposit on assets elements converted at
historical rate are themselves converted at historical rate.
• Conversion differentials resulting from the application of this method, both on
monetary elements that appear in the balance sheet and on profit and loss accounts
elements, are included in the consolidated profit and loss accounts under “Financial
charges and income”.
The impact of this change has been accounted for in the reserves for a tax net amount of 5 304 K€.
Mainly it corresponds to the fact that:
• Latent exchange differentials on loans in euros, previously accounted for in local
accounts profit, are no longer recorded in the consolidated profit.
• Assets were reduced to their historical exchange rate
b)
Consolidation basis
The group’s consolidated financial statements include the accounts of the following subsidiaries:
Company
Country
Currency
- 29 -
% shareholding
Orco Budapest SA
Americka 17 SARL
(formerly Orco SARL)
Rybalkova 12 SARL
Americka 33 SA
Americka 1 SA
Machova-Orco SA
Americka-Orco SA
Orco-Property SA
Zahrebska 35 SARL
(formerly Lacsem SARL)
Anglicka 26 SARL
Belgicka – Na kozacce SARL
(formerly CIP I SARL)
Londynska 41
(formerly CIP II SARL)
Orco Asset Management
SA
Nad Petruskou
(formerly CIP III SARL)
Orco Prague SA
Londynska 26 SA
Orco Vinohrady SA
Manesova 28 SA
Orco Revay Rt
Orco Vagyonkeselo SARL
Orco Project Organization
SA (Project I)
Vinohrady (formerly Orco Paris
SARL)
Orco Warsaw SARL
Orco Hotel Group S.A.
OrcoAparthotel SA.
MaMaison Residences SA
Orco Hotel Rt Budapest SA
Résidence Mazaryk SA
(formerly Orco Budget Hotel
SA)
Résidence Izabella SA
(formerly Orco Project II SA)
Orco Property Start SA
Résidence Belgicka SA
(RIM Development SA)
Pachtuv Palac, sro (formerly
Telas SARL)
Orco Hotel Management
ORCO Hotel Development SA
Janackovo nabrezi 15 SARL
Orco Hotel Project SA
Orco Bratislava
HUF
31 December 31 December
2003
2002
100%
100%
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
CZK
CZK
CZK
CZK
CZK
CZK
CZK
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
100%
50%
Czech Republic
CZK
100%
100%
Czech Republic
CZK
100%
100%
Czech Republic
CZK
100%
100%
Czech Republic
CZK
100%
100%
Czech Republic
CZK
100%
100%
Czech Republic
CZK
100%
100%
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Hungary
Hungary
CZK
CZK
CZK
CZK
HUF
HUF
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Hungary
HUF
100%
100%
France
EUR
100%
100%
Poland
Luxembourg
Luxembourg
Luxembourg
Hungary
PLN
EUR
EUR
EUR
HUF
76,50%
76,50 %
70,92 %
70,92%
76,50 %
100%
76,50 %
Czech Republic
CZK
70,92%
76,50 %
Hungary
HUF
70,92%
76,50 %
Czech Republic
CZK
76,50 %
76,50 %
Czech Republic
CZK
70,92 %
76,50 %
Czech Republic
CZK
70,92%
76,50 %
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Slovakia
CZK
CZK
CZK
CZK
SLK
76,50 %
76,50 %
76,50 %
76,50 %
70,92 %
76,50 %
76,50 %
76,50 %
76,50 %
100 %
Hungary
Czech Republic
- 30 -
76,50 %
Orco Hotel Management
Hongrie
Orco Hotel Collection
Americka Park
IPB Real as
IPB Real sro
IPB Real Development
Centrum Agibor
1. Sportovni as
IPB Real Reality as
Jihovychodni Mesto as
Hungary
HUF
76,50 %
Luxembourg
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
EUR
CZK
CZK
CZK
CZK
CZK
CZK
CZK
CZK
50%
70,92%
100%
100%
100%
100%
100%
100%
100%
76,50 %
The core business of the consolidated companies is to manage property investments, to manage
financial investments, or provide services in the real-estate field.
The financial year of all the companies included in the consolidation ends on 31st December.
All companies, included in the consolidation are controlled solely by the parent company and
therefore fully consolidated except for Orco Property AS. This company that deals with the office part
of Luxembourg Plaza, was subject of a transfer. In the same way, based on the signature of a letter of
intent in December 2003 with the GE Group, the accounts on 31st December 2003 take into account
the economical transfer of 50% of Orco Hotel Collection SA (renamed in Kosic Sàrl in 2004); the
legal documentation and the effective transfer of shares having been finalised during the first quarter
2004.
MaMaison Residences SA also enters the scope of consolidation; it is a Luxemburgish daughter
company of Orco Hotel Group SA regrouping all hotel residences of the group. Orco Aparthotel also
enters the scope; it results from the split of Orco Hotel Group SA in two new companies: Orco
Aparthotel SA and Orco Hotel Group SA.
Lastly, Americka Park was created in the year 2003 in order to hold the new hotel residence; it is a
daughter company of MaMaison Residences SA.
During 2003, the group acquired the first Czech real estate promoter in the middle-range residential
market, IPB Real. This acquisition opens the scope of consolidation to the following companies: IPB
Real as, IPB Real sro, IPB Real Development, Centrum Agibor, 1. Sportovni as, IPB Real Reality as
and Jihovychodni Mesto as.
The total price for this acquisition is 13 179 KEUR.
The negative goodwill was 367 KEUR and was accounted for in consolidated reserves.
The acquisition of the IPB group affected the accounts on 31st December 2003, it is not necessary to
present pro forma accounts.
The following subsidiaries, without activity or significant nature within the group, as at December 31,
2003, are not consolidated:
2003
Orco Bucharest
96 %
- 31 -
%
Shareholding
2002
2001
96 %
96%
Orco Zagreb SARL
100%
100 %
Orco Hotel Development Poland
100%
100%
Orco Hotel Management Poland
100%
100%
100%
Endurance Management Company 50%
c)
Consolidation principles
The significant consolidation principles used to establish the consolidation financial statements can be
summarized as follows:
(i) Conversion of foreign subsidiaries’ accounts
cf a) change in method
(ii) Deferred taxes
Deferred taxes assets and liabilities are recorded to take account of temporary differences between the
accounting recognition of certain expenses and income, due to restatements in order to comply with
the applicable accounting rules and their inclusion in taxable income. Long term deferred tax basis
lead to the accounting for a deferred tax, except when the update reduces it to an insignificant amount.
Net deferred tax assets are recognised on the balance sheet if the Company is reasonably certain of
their recoverability. Deferred tax is accounted for using the liability method.
(iii) Acquisition goodwill
Entries in the scope of consolidation basis are registered to their true value. The difference between the
value upon entry in the consolidated balance sheet and the accounting value of the same element in the
balance sheet of the company under control represents goodwill on evaluation. The difference between
the acquisition cost of shares and the total evaluation of assets and liabilities identified on acquisition
date represents goodwill on acquisition.
This goodwill is mainly allocated to buildings, based on property valuations. So far, there is no
residual goodwill in the consolidated financial statements
No liabilities deferred tax has been recognised on evaluation goodwill. Indeed, all real-estate assets are
born by a specific subsidiary held by Orco Property Group or Orco Hotel Group, which have the
Soparfi status. Consequently, increases in value realized on the transfer or on the clearance sale of
interests are exonerated from all tax as long as the Soparfi holds a minimum of 10% of the
subsidiary’s capital or if its purchase price was at least 6 million EUR. Besides, the subsidiary must be
a resident company fully taxable on an equivalent to the corporate income tax (min. 15%), or an EU
company aimed at by the Directive of CEE Council dated July 1990. Transferred interest shares must
have been the Soparfi’s undisrupted ownership for a 12-month period and if not the Soparfi must
commit to hold for at least 12 months a minimum of 10% of the share’s capital.
(iv) Clearance of intercompany accounts
All intercompany accounts and intercompany transactions are eliminated.
(v) Leasing contracts
The only long-term rental agreement is operational and therefore is not retreated (see note 20).
Since 1.1.2002, one of the CR subsidiaries (ORCO Prague SA) has entered into financial leasing
agreement for purchase of new hardware for its CR sister companies. Leasing agreement is on three
- 32 -
years period, and includes equal instalments. Total value of equipment purchased is 78 K€. Leasing
booking has been retreated at consolidated level.
(vi) Minority interests
Minority interests are calculated on the basis of their share in share capital.
(vii) Capital increase cost
Flotation costs of Orco Property Group were registered in establishing costs for 1.148 K€ in accounts
for year 2000 and are spread over 4 years.
Capital increase costs, net of tax, are deducted from share premium account for 511 K€, as capital
increases of 2001 (385 K€), 2002 (126 K€) and 2003 (631K€), in accordance with advice of the
“Comité d’Urgence” no. 2000-D from December 21st, 2000.
NOTE 3 - MAIN ACCOUNTING POLICIES AND METHODS
General principles
The consolidated financial statements of Orco Property Group S.A. and its subsidiaries are based on
the accruals concept, the historical cost principle and generally accepted accounting principles.
The consolidated accounts have been established according to the new methodology approved by the
‘Comité de la Réglementation Comptable’ in April 1999 (n° 99-02 dated April 29th 1999).
Conversion of foreign currencies
Assets and liabilities of Czech, Hungarian and Polish subsidiaries denominated in currencies
other than the reporting currency of the subsidiary are converted into the currency of these
subsidiaries at the closing rates published by the Central Banks of these countries. Resulting
conversion differentials are recorded as profit in the annual accounts and discounted in the
consolidated accounts, as per the change in method exposed in note 2 a).
Intangible assets
Intangible assets are recorded at acquisition price or cost less amortization. Amortization is calculated
on a straight-line basis over the following period (based on estimated useful life):
Set-up costs
Software
4 years
4 years
A provision is made when the book value at the period end is higher than the audited value. On 31st
December 2003 no such provision was necessary.
Tangible fixed assets
The tangible fixed assets of the Company and its subsidiaries are recorded at purchase price plus
incidental expenses and, for buildings, renovation costs. Borrowing costs incurred during building
renovations, i.e. between purchase and completion, are included in the acquisition cost.
- 33 -
They mainly include buildings held by the Group and given or intended to be rented.
Tangible fixed assets are depreciated on a straight line basis over the following periods:
Buildings
Plant and machinery
Office equipment and IT hardware
45 years
4 - 15 years
3 - 4 years
A provision is made when the book value at the period end is higher than the market value. On 31st
Financial assets
Financial assets are recorded at the lower of cost and estimated market value. A provision is made
when the book value at the period end is higher than the market value of the investment, as far as realestate investments are concerned, the market value of latent and potential increases in value on begun
real estate projects is especially taken into account in the calculation.
Inventories
Inventories include buildings held and intended to be sold. They are recorded at their purchase costs
plus incidental expenses and renovation costs. Borrowing costs incurred during building renovations,
i.e. between purchase and completion, are included in the acquisition cost.
A provision is made when the book value at the period end is higher than the market value. On 31st
Debtors
Current asset debtors are recorded at nominal value. They are written down when their
estimated realisable value is less than their nominal value.
Earnings per share (EPS)
Earnings per share are calculated by dividing net profit attributable to ordinary shares by the weighted
average number of shares in issue each year.
To calculate diluted EPS, the number of shares in issue is adjusted to reflect the maximum impact
which would result from the conversion of financial instruments which will dilute the number of
ordinary shares, less own shares in possession at the closing date (convertible bonds – see note 11;
share options - see note 19).
Pension liabilities
No pension provision has been recorded since the Hungarian and Czech social security systems do not
impose pension obligations on companies.
Market risks (interest rate, shares)
ORCO PROPERTY GROUP is not particularly active on the markets, and especially not in the field
- 34 -
of new financial instruments.
The exchange rate risk only exists in relation to a possible appreciation of the local currency (CZK,
HUF and PLN) against Euro. That risk is not hedged.
On 31st December 2003 fixed rate debts represent 44,71% of the total debt and floating rate
debts 55,29%.
NOTE 4 – INTANGIBLE ASSETS
In K€
Start
up
costs
Acquisition values
Start of the period
Movement during the year:
- Acquisitions
- Disposals
- Change in consolidation structure
- Reclassification
End of the period
Software
Usable rights and Total
other intangible
assets
1 303
182
1 654 3 139
2
-10
294
296
-10
-371
-371
1 295
476
1 283 3 054
-241 -1 215
Amortization
Start of the period
Movement during the year:
- Charges
- Release
End of the period
-909
-65
-2
9
-902
-212
-277
-220
9
-247 -1 426
Net book value at the end of the period
393
199
1 036 1 628
Net book value at the end of the previous year
394
117
1 413 1 924
-6
NOTE 5 – TANGIBLE FIXED ASSETS
In K€
Acquisition values
Start of the period
Movement during the period:
- Acquisition
- Disposals
- Reclassification
- Conversion difference
End of the period
Lands
Buildings
Other
installations,
plant &
machinery and
furniture
Advances
paid and
construction
in progress
4 708
64 773
4 465
16 608
-2 328
1 355
-792
19 551
2 709
-546
18 831
-1 640
84 127
2 540
-773
156
-226
6 162
12 708 34 565
-1 220 -4 867
-18 235
2 107
-1 433 -4 091
10 039 119 879
-5 523
-1 480
-7003
-1 490
112
-1 515
53
-3 005
165
Amortization
Start of the period
Movement during the period:
- Acquisition
- Disposals
- 35 -
18 219
Total
92 165
- Reclassification
- Conversion difference
End of the period
-1 964
447
-8 418
54
77
-2 811
-1 910
524
-11 229
Accounting value at the end of the
19 551
period
75 709
3 351
10 039 108 650
Accounting value at the end of the
previous period
59 250
2 985
18 219
4 708
85 162
NOTE 6 – STOCKS
The stocks entry mainly corresponds to 50 % of the office part of the Luxembourg Plaza
project (an Orco Property company consolidated by proportional integration: cf. note 2 a),
intended to be sold after completion and to the promotion projects in development of the
subsidiary IPB Real acquired in 2003.
NOTE 7 - DEBTORS
Gross value
(K€)
2003
2002
29 364
1 411
2001
3 487
Provisions for doubtful debts
(K€)
2003
2002
2001
7 427
107
235
2003
21 937
Net value
(K€)
2002
1 304
All debtors are due in less than one year.
NOTE 8 - CURRENT ASSET INVESTMENT
In K€
Own bonds
31st
2003
December 31st
2002
December 31st
2001
December
0
3.583
-
135
-
91
Own shares
256
1.379
-
391
4.962
91
NOTE 9 - EQUITY
Change in equity
- 36 -
2001
3 252
Subscribed
share capital
(1)
K€
Share
premium
account (1)
K€
Legal
reserve (1)
K€
Nondistributable
reserve
K€
Situation on 31st December 2001
Appropriation of the profit (loss) of
the 2001 financial year
Changes in translation differences
Increases in share capital
Capital increase costs, net of tax
Own shares (3)
Consolidated profit for 2002
10.765
15.743
45
2.380
-126
-
11.844
1.079
Consolidated
reserves
K€
Translation
difference
K€
140
104
-
-
-
-
17.997
45
Consolidated
company
shares
K€
Profit/Loss
of the year
K€
Total
K€
-331
1.976
28.442
1.920
-
56
2
-
(1.976)
-
-
-
-
2.520
2
3.459
-126
374
2.520
140
2.024
-273
2.520
34.671
K€
374
Appropriation of the profit (loss) of
the 2002 financial year
Increases in share capital
Change of accounting method
Capital increase costs, net of tax
Own shares (3)
Changes in translation differences
Minority interests
Consolidated profit for 2003
Dividends
262
4.626
1.188
374
1.070
-2.520
-2.861
3.951
14.970
-632
116
16.470
32.335
307
256
374
212
1.827
1.188
2.646
-374
0
19.596
1.090
-632
116
-212
-485
0
-3.699
252
1.827
-3.699
52.969
(1)
As at 31st December 2003, the subscribed capital of the parent company was 16.469.999,30 EUR represented by 4.017.073 shares without a nominal
value. Share capital has been increased by 4.625 K€ (1.128.159 new shares) following stock options exercises (120.000 shares), the distribution of a
dividend in shares (30.659 shares) et therefore the conversion of reserves into capital and lastly the capital increase by public issue (977.500 shares).
(2)
In accordance with Luxembourg company law, the company is required to appropriate a minimum of 5 % of the annual net profit to a
(3)
legal reserve until the balance of such reserve equals 10 % of the issued share capital. The legal reserve is not available for distribution.
Orco Property Group shares on 31st December 2003 : 12.256 shares for an acquisition price of 256K€ classified in financial assets.
- 37 -
NOTE 10 - PROVISIONS FOR LIABILITIES AND CHARGES
The change in provisions for liabilities and charges is:
In K€
Provision for interests on bonds
Provision for Fortune tax
Provisions for garantees given
Provisions for litigation
Provision for repairs
Various
Total
31/12/2001 31/12/2002 Acquistions Disposals Transfers
196
416
199
-413
-202
135
4609
1360
525
224
21
463
-21
420
437
7291
-413
-223
31/12/2003
0
135
4609
1360
525
463
7092
The evolution of the other risks and litigation with which the group is confronted and not being subject
to a provision is the following:
• Opera Business Center (Budapest)
A subsidiary of Orco Property Group, Orco Budapest Rt, had litigation about the validity of the
ownership of a building it holds. An amicable settlement of this litigation had been negotiated during
the year. The full ownership of this building will be given back to Orco Budapest Rt in return of a
complementary payment of 1,5 million dollars. The court’s decision cancelling the appeals that each
party has against the other has been postponed to June 2004 and delays the final settlement of this
litigation. A comfort letter from Orco Holding to Orco Property Group guarantees any loss it could
therefore risk.
NOTE 11 – DEBTS
The residual debts terms are as follow:
2003
In K€
Non convertible bonds
Interest payable
Creditors on assets
Trade creditors
Tax liabilities
Partial payments received
Other creditors
Total
2002
In K€
Convertible bonds
Non convertible bonds
Interest payable
Creditors on assets
Trade creditors
Tax liabilities
Other creditors
Less than
1 year
2.735
15.391
1 year
More
to 5 years than 5 years
10.000
35.970
19.272
-
Total
-
-
12.735
70.633
6.349
4.462
1.944
3.457
52.888
6.646
91.288
45.970
19.272
156.530
Less than
1 year
2.812
1.225
11.756
126
16
4.116
969
3.202
2.599
1 year
to 5 years
More
than 5 years
-
6.349
4.462
1.944
3.457
52.888
6.646
- 38 -
10.000
12.025
-
25.948
-
Total
2.812
11.225
49.729
126
16
4.116
969
3.202
2.599
Total
26.821
2001
In K€
Convertible bonds
Interest payable
Creditors on assets
Trade creditors
Tax liabilities
Other creditors
Total
Less than
1 year
1.942
1.490
327
4.737
4.284
426
3.075
636
16.917
22.025
25.948
1 year
More
to 5 years than 5 years
4.661
33.706
609
5.270
33.706
74.794
Total
6.603
35.196
327
4.737
4.284
426
3.075
1.245
55.893
As at 31st December 2003, all borrowings and overdrafts, were guaranteed by mortgages on
the buildings and secured by the shares of the companies owning those buildings (note 20).
Bonds correspond to the following two issues:
Number of bonds
2 735
10 000
Interest rate
7%
5,5%
Maturity
09/2004
12/2006
Amount in K€
2 735
10 000
12 735
NOTE 12 – PREPAYMENT / DEFERRED INCOME
Prepayments consist mainly of rents paid in advance and of share premiums for bonds
amortized on the length of the loan.
Deferred income consists of future rents invoiced in advance
NOTE 13 – SALES TURNOVER
Geographical analysis of sales:
In K€
Czech Republic
Hungary
Slovakia
Luxembourg
Paris
TOTAL
2003
20.326
2.108
39
303
4
22.780
2002
8.351
1595
21
83
9
10.059
2001
7.482
461
41
15
7.999
2003
2.091
1.446
1.296
4.954
12.565
427
22.780
2002
4.804
5.132
1.467
3.665
123
10.059
2001
3.785
2.222
751
1.471
73
7.999
Analysis of sales by activity:
In K€
Rental (offices)
Residential
Hotel residences
Hotels
Promotion
Services
TOTAL
- 39 -
Analysis of operational result by activity:
In K€
Rental (offices)
Residential
Hotel residences
Hotels
Services
Promotion
TOTAL
2003
677
641
233
-642
-1.266
3552
3.196
2002
1.642
702
519
-477
710
2001
758
986
286
-348
-1.986
3.096
-304
NOTE 14 – CAPITALIZED PRODUCTION COSTS
The capitalized production costs correspond to the performance of contracts realised by the
group for its own behalf without margin (real-estate promotion for own behalf). The amount
of capitalized production costs also includes study costs incurred during the year when the
acquisition contract was signed.
NOTE 15 - OPERATIONAL RESULT
The financial result includes the transfer of 50% of the subsidiary Kosic SARL bearing the
project of Kosic promotion, this transaction was clinched under the signature of a letter of
intent in December 2003. The transaction was legally finalised during the first quarter 2004
but is considered as economically speaking being part of 2003. The buyer is a subsidiary of
GE Golubb Capital.
NOTE 16 - FINANCIAL RESULT
The financial result is represented by interests paid on bank loans and bonds increased by the
indemnity for prepayment following the credit refinancing linked to a group of buildings in
Prague. This indemnity amounted to 1.744 KEUR. The new credit conditions will positively
affect the following financial years in terms of lower financial charges but also in terms of
cash flow.
NOTE 17 – MINORITY INTERESTS
In opposition to the previous years, the consolidated accounts take into account the positive impact of
minority interests following Orco Hotel Group SA minority shareholders agreement to support the
negative results for 2003 and previous years. The rate held by these minority shareholders is 23,5% of
Orco Hotel Group SA.
The impact on reserves is -622KEUR and the charge for the loss amounts 1.201 KEUR having a
positive result on consolidated profit and loss account.
NOTE 18 – CORPORATE TAX
As at 31st December 2003, the accounted tax is constituted up to 2.118 K€ of the deferred tax assets,
and the due tax represents a charge of 760 K€.
NOTE 19 – DIRECTOR’S AND SHAREHOLDERS’ FEES
The remunerations paid to the directors and/or to the shareholders for 2003,
amount to 314 K€ in favour of Mr Ott and to 213 K€ in favour of Mr Pedretti.
NOTE 20 – OFF BALANCE SHEET COMMITMENTS
- 40 -
Stock-options:
The company has granted the following share options to 7 employees and / or directors:
1) 40.000 shares in four instalments of 10.000 shares each, to be exercised between 1999 and
2004 at prices increasing from EUR 18 to EUR 22,80 per share;
2) 80.000 shares to be exercised between 1999 and 2004 at EUR 12,65 per share, this option
has been fully exercised in 2003;
3) 80.000 shares to be exercised between 2001 and 2004 at EUR 12,65 per share, this option
has been exercised up to 40 000 shares in 2003;
4) 6.000 shares in three instalments of 2.000 shares each, to be exercised between 2001 and
2003 at prices increasing from EUR 20 to EUR 30 per share, this option has been cancelled
in February 2004;
5) 6.000 shares in three instalments of 2.000 shares each, to be exercised from 2002 at prices
increasing from EUR 20 to EUR 30 per share;
6) 6.000 shares in three instalments of 2.000 shares each, to be exercised between 2002 and
2004 at prices increasing from EUR 20 to EUR 30 per share;
7) 3.000 shares in two instalments, first instalment of 2.000 shares in year 2003 for 25 EUR
per share, and second instalment of 1.000 shares in year 2005 for 30 EUR per share.
8) 3.000 shares in two instalments, first instalment of 1.500 shares in year 2003 for 25 EUR
per share, and second instalment of 1.500 shares in 2004 for 30 EUR per share.
Guarantees granted:
The following bank loans have been taken out with first-rate banking establishments and
require two types of guarantees:
-
Mortgage on the buildings,
Pledge of shares of the companies owning those buildings.
- 41 -
Company
Prague:
Résidence
Masaryk
Residence
Belgicka
Americka
Park
Americka 33
Americka 33
Pachtuv
Palac
ORCO Hotel
Dev
Janackovo
nabrezi 15
Anglicka 26
Buidings
Borrowings and overdrafts in K€
31.12.2003
31.12.2002
31.12.2001
Maturity
Fixed rate F
Variable rate
V
Garantee
P Pledge M
Mortgage
Bank
Ceska
Sporitelna
Ceska
Sporitelna
Reinhyp AG
Jana Masaryk
40
Residence
Belgicka
Residence
Am Park
no building
no building
Pachtuv Palac
1075
821
863
2018
V
P+M
2543
2301
1490
2018
V
P+M
1752
2018
V
P+M
3615
5717
7791
7588
7588
2004
2007
2018
V
V
V
P
P
P+M
Hotel
Imperial
Hotel
Riverside
Anglicka 26
2725
2980
3220
2006
F
P+M
5007
3848
914
2008
F
P+M
172
3111
3430
2013
F
P+M
Orco
Vinohrady
Londynska
26 AS
Manesova 28
Belgicka 40
1612
1208
1249
2013
F
P+M
Londynska 26
1171
725
749
2013
F
P+M
Manesova 28
2354
2456
-
2012
F
P+M
Lond.41
Londynska 41
3154
3788
3965
2013
F
P+M
AmerickaORCO
Orco
Property S.A
Zahrebska
35
Belgicka-Na
kozacce
Nad
Petruskou
Americka 1
Americka 11,
Americka 13
Luxembourg
Plaza
Zahrebska 35
2404
1132
1256
2013
F
P+M
1530
1572
-
F
P+M
2201
2264
2461
2013
F
P+M
Na kozacce 1,
Belgicka 36
Nad
Petruskou
Americka 1
3855
1652
1764
2013
F
P+M
1963
1424
1499
2013
F
P+M
5607
1539
-
2018
V
P+M
Machova 18
841
260
260
2013
F
P
Aareal Bank
Izabella
2806
2942
-
2015
V
P+M
Rheinhyp AG
Hotel
Andrassy
Revay
4494
4719
3357
2011
F
P+M
Rheinhyp AG
1676
1848
-
2006
V
P+M
Raiffeisen Bk
Rt
Koscielna
4486
239
-
2013
V
P+M
Raiffeisen Bl
Pol
2007
F
Location
long terme:
Machova
Orco
Budapest:
Residence
Izabella
ORCO Hotel
Rt.
Orco Revay
Varsovie :
ORCO
Warsaw
Paris:
Vinohrady
sàrl
Other assets
Total
82
Cesloslovenska
Cesloslovenska
Ceska
Sporitelna
Depfa Bank
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Raiffeisenbank
as
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Raiffeisenbank
as
CGI
70633
The guarantees granted to the financial establishments remain fully valid until complete reimbursement of credits.
No part removal of pledge or mortgage has been provided for. No partial levying on pledge or mortgage has been
scheduled.
Long term leases:
42
The group has signed a long-term lease. It is an operating rather than a finance lease and it is for the following
building:
-
Machova 18 recorded in the accounts of Machova Orco.
Transfer of a building by Americka 1
On 31st December 2003, the company Americka 1 signed an agreement about the transfer
of a 12-apartment building, the building n°2 of the Americka project to the company Helmine
Entreprises Inc. (Helmine). The total cost of the transaction amounts 5,4 MEUR + VAT. The price
will be paid in several instalments during 2004; the first one of 2,8MEUR was paid on 23rd March
2004.
Orco Property Group (Orco) has been commissioned by Helmine to sell the apartments
separately. It has been agreed between the parties that profit or loss as compared to a global
transfer price of 5,8 MEUR will be subject to a division. If the total price of the sale of all the
apartments is less than 5,8MEUR, this difference will be spread out equally between Orco and
Helmine. If the total price of the sale of all the apartments is more than 5,8 MEUR, the division
will be as follows:
The first portion of 300.000 EUR above 5,8 MEUR will go directly to Helmine.
The second portion of 300.000 EUR (6,1 to 6,4 MEUR) will be divided equally between Orco
and Helmine.
Any amount above 6,4MEUR will be divided at the rate of 30% in favour of Helmine and 70%
in favour of Orco.
NOTE 21 – NUMBER OF EMPLOYEES
2003
308
30
11
5
1
6
361
Czech Republic
Hungary
France
Poland
Slovakia
Luxembourg
TOTAL
2002
192
45
6
2
1
1
247
2001
166
36
8
1
1
212
Social accounts 2003
To the Shareholders of
Luxembourg
AUDITORS’ REPORT
YEAR ENDED DECEMBER 31, 2003
Following our appointment by the General Meeting of the Shareholders, we have audited the
accompanying annual accounts of ORCO PROPERTY GROUP S.A. for the year ended December 31,
2003. The annual accounts are the responsibility of the Board of Directors. Our responsibility is to
express an opinion on these annual accounts based on our audit.
We conducted our audit in accordance with international standards on auditing. Those standards require
that we plan and perform the audit to obtain reasonable assurance that the annual accounts are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the annual accounts. An audit also includes assessing the accounting principles used
- 43 -
and significant estimates made by the Board of Directors, as well as evaluating the overall presentation
of the accounts. We believe that our audit provides a reasonable basis for our opinion.
AUDIT OPINION BY HRT REVISION SARL
During the course of our audit, we have noted the booking, on the basis of an engagement letter signed
in December 2003, of a profit of 2,2 millions Euro on the creation of a joint venture for the realisation of
the KOSIC project. Due to the complexity of this operation, its legal realisation was only finalized during
the first quarter of 2004. At the date of our report, the operation was completely achieved and the
proceeds received in agreement with the maturity dates provided by the contract.
We are of the opinion that in accordance with the principle of the priority of substance over form, even if
the legal realization of this transaction was only finalized during the first quarter of 2004, the decision of
the Board of Directors to include the profit in the 2003 profit and loss account is adequate.
In our opinion, the enclosed annual accounts give, in conformity with the Luxembourg legal and
regulatory requirements, a true and fair view of the financial position of ORCO PROPERTY GROUP S.A.
as of December 31, 2003 and of the results of its operations for the year then ended.
OPINION OF RSM SALUSTRO REYDEL
We qualify our opinion for the following matter:
- the formation of a joint venture relating to the Kosic project was accounted for in December 2003 on the
basis of a memorandum of understanding which involved no binding commitment, but gave rise to a 2.2
million EUR credit to net profit. The definitive transaction, in the form of a contract for the sale of the
shares, took place only in February 2004.
In consequence, the net profit for 2003 and the net assets at December 31, 2003 are both overstated by
2.2 million EUR.
Except for the inclusion of this transaction, in our opinion, by reference to French and Luxembourg
regulations and accounting principles, the annual accounts give a true and fair view of the results of the
company’s operations for the year and its financial position and assets at the end of the year.
HRT REVISION S.à r.l.
RSM SALUSTRO REYDEL
Dominique RANSQUIN
François BERNARD
Luxembourg and Paris, April 22, 2004
2003
2002
9.180,81
617.760,08
67.495.951,09
____________
68.122.891,98
10.738,81
2.900,69
44.296.475,80
____________
44.310.115,30
7.817.460,54
256.235,02
5.786.471,19
4.929.147,60
ASSETS
FIXED ASSETS
Intangible fixed assets (note 3)
Tangible fixed assets (note 3)
Financial fixed assets (note 4)
CURRENT ASSETS
Debtors (due within one year) (note 5)
Marketable securities (note 6)
- 44 -
Cash at banks and in hand
PREPAYMENTS
507.447,92
___________
8.581.143,48
1.610.804,36
___________
12.326.423,15
481.181,30
____________
468.968,42
___________
77.185.216,76
57.105.506,87
16.469.999,30
33.440.266,76
307.434,56
3.718.972,70
256.235,02
597.784,42
1.641.725,67
____________
56.432.418,43
11.844.547,40
18.469.793,76
45.135,83
38.770,55
140.326,21
597.784,42
5.245.974,68
___________
36.382.332,85
302.091,15
167.091,15
12.735.000,00
7.715.707,18
____________
20.450.707,18
14.037.161,46
6.518.921,41
___________
20.556.082,87
____________
____________
77.185.216,76
57.105.506,87
LIABILITIES
CAPITAL ACCOUNTS (note 7)
Share capital
Legal reserve
Other reserves
Reserve for own shares
Profit brought forward
Profit for the year
PROVISIONS FOR LIABILITIES AND CHARGES
Provisions for taxes (note 8)
CREDITORS (note 9)
Debenture loans
Other creditors
The accompanying notes form an integral part of these annual accounts.
2003
Management fees
External charges
Value adjustments in respect of tangible and intangible assets
(note 3)
2002
1.790.609,36
21.344,75
(4.045.833,81)
1.850.469,34
23.615,94
(3.339.612,53)
(37.375,50)
(53.337,45)
____________
(2.324.592,65)
(4.601,95)
(51.950,93)
____________
(1.522.080,13)
Financial result
1.707.767,62
133.252,53
(1.722.151,98)
____________
118.868,17
1.527.441,72
74.668,92
(647.011,52)
___________
955.009,12
Profit (loss) from ordinary activities
(2.205.724,48)
(566.981,01)
3.984.500,00
___________
3.984.500,00
(155.000,00)
6.061.955,69
____________
5.906.955,69
Operating result
Income from equity participations (note 10)
Other interest receivable and similar income
Interest payable and similar charges
Exceptional losses (note 11)
Exceptional profits (note 11)
Exceptional result
- 45 -
Profit before taxes
1.778.775,52
5.339.974,68
Taxes on income (note 8)
Other taxes (note 8)
(137.049,85)
___________
(94.000,00)
__________
Profit for the year
1.641.725,67
5.245.974,68
NOTE 1 - GENERAL
ORCO PROPERTY GROUP S.A. was incorporated under the Luxembourg Companies Law on
September 9, 1993 as a limited company (société anonyme) for an unlimited period of time.
The registered office of the company is established in Luxembourg.
The company has for object the taking of participating interests, in whatsoever form in other, either
Luxembourg or foreign companies, especially in real estate companies in Czech Republic, Hungary and
other countries of Eastern Europe and the management, control and development of such participating
interests. ORCO PROPERTY GROUP, through its subsidiaries, rents and manages real estate and
hotels properties composed of office building, apartments with services, luxury hotels and hotel
residences.
NOTE 2 - ACCOUNTING PRINCIPLES, RULES AND METHODS
General
The annual accounts are prepared in conformity with generally accepted accounting principles and in
agreement with the laws and regulations in force in the Grand-Duchy of Luxembourg.
ORCO PROPERTY GROUP S.A. prepares consolidated financial statements which can be obtained at the registered office.
The company maintains its accounting records in Euro (EUR) and the balance sheet and the profit and
loss account are expressed in this currency.
During the financial year the acquisitions and sales of tangible and intangible assets, equity participations
and marketable securities as well as income and charges in currencies other than EUR are converted into
EUR at the exchange rate prevailing at the transaction dates.
At the balance sheet date, the acquisition price of the tangible and intangible assets, equity participations
and marketable securities expressed in another currency than the EUR remains converted at the historical
- 46 -
exchange rate. All other assets expressed in a currency other than the EUR are individually converted at
the lower of the historical exchange rate or closing rate. All the liabilities expressed in another currency
than the EUR are converted into EUR at the higher of their historical rate or closing rate.
So, only realised exchange gains and losses and unrealized exchange losses are accounted for in the profit
and loss account.
Intangible and tangible fixed assets
Intangible and tangible assets are recorded at the acquisition prices and are depreciated on a straight
line basis over their estimated service life.
Equity participations
The equity participations are valued individually at the lower of their acquisition price or estimated
realisable value as determined by the board of directors on the basis of the financial statements of the
companies and any other available information and documentation.
Debtors
Loans and advances considered as financial fixed assets and current asset debtors are valued at their
nominal value. A value adjustment is carried out when the estimated realisable value is lower than the
nominal value.
Marketable securities are valued at the lower of their acquisition price or their market value at the
balance sheet date. The valuation is made individually and without any compensation between individual
unrealized gains and losses.
The acquisition price includes the buying price and the accessory fees. The result realised on the sale of
the marketable securities is based on the average cost.
Provisions for liabilities and charges
Provisions to be constituted in order to cover the foreseeable risks and charges are to be examined by
the Board of Directors at the end of each period by taking into account the prudence and fair view
principles. The provisions constituted during the preceding periods are reviewed and reversed if they are
no more necessary.
NOTE 3 – INTANGIBLE AND TANGIBLE FIXED ASSETS
Acquisition price, beginning of year
Additions
Acquisition price, end of year
Intangible
fixed assets
EUR
Tangible
fixed assets
EUR
15.623,81
2.400,00
_________
18.023,81
3.594,64
648.276,89
__________
651.871,53
- 47 -
Accumulated depreciation, beginning of year
Depreciation for the year
Accumulated depreciation, end of year
Net value, end of year
(4.885,00)
(3.958,00)
_________
(8.843,00)
__________
(693,95)
(33.417,50)
__________
(34.111,45)
___________
9.180,81
617.760,08
NOTE 4 - FINANCIAL FIXED ASSETS
Financial fixed assets consist of equity participations acquired by ORCO PROPERTY GROUP S.A., and
loans and advances to companies in which the company holds an interest, including interest receivable to
capitalise.
Financial fixed assets consist of:
2003
EUR
Loans and advances
Value adjustments
2002
EUR
10.732.268,54
56.918.682,55
(155.000,00)
_____________
9.298.652,34
35.153.423,46
(155.000,00)
____________
67.495.951,09
44.296.475,80
Movements during the financial year on equity participations are summarised as follows:
2003
EUR
2002
EUR
Additions
Deductions
9.298.052,34
1.775.971,89
(341.755,69)
____________
9.096.112,27
231.963,38
(30.023,31)
____________
10.732.268,54
9.298.052,34
Equity participations are detailed as follows:
Company
Orco Paris SARL
Americka 17 SARL (ancien. ORCO SARL)
Anglicka 26 SARL
Zahrebska 35 (ancien Lasem SARL)
Americka-Orco SA
Machova-Orco SA
Americka 1 SA
Americka 33 SA
Country
France
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Acquisition price
31.12.03
´000 EUR
8
178
308
286
780
1.177
1.567
345
%
held
100%
100%
100%
100%
100%
100%
100%
100%
Capital
accounts
31.12.03
´000
(local
currency)
22
(22.497)
8.207
(6.284)
2.749
(981)
36.074
1.612
Including
profit(loss)
for 2003
´000
(local
currency)
(3.578)
(3.041)
(15.075)
(463)
(1.162)
4.442
(4.659)
- 48 -
Belgicka-Nakozacce SARL (ancien CIP I SARL)
Londynska 41 SARL (ancien CIP II SARL)
Nad Petruskou SARL (ancien. CIP III SARL)
Rybalkova 12 SARL
Orco Hotel Group SA
Londynska 26 SA
Orco Property a.s.
Orco Asset Management SA
Orco Vinohrady SA
Orco Prague SA
Orco Bucharest SA
Orco Budapest SA
Orco Vagyonkezelo SARL
Orco Project Organization SA (project I)
Maestska Investieni SA
Agrohouse (Revay) SA
Orco Zagreb
Orco Hotel Collection Luxembourg
Endurance Management
Orco Strategy
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Luxembourg
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Roumania
Hungary
Hungary
Hungary
Czech Republic
Hungary
Croatia
Luxembourg
Luxembourg
Luxembourg
1.206
14
296
104
37
233
299
121
27
27
3
352
24
119
2.627
494
3
16
63
18
______
10.372
Total equity participations
100%
100%
100%
100%
76,5%
100%
50%
100%
100%
100%
96%
100%
100%
100%
100%
100%
100%
50%
100%
100%
9.511
(2.253)
(5.764)
(1.846)
14.561
(5.781)
718
2.292
(2.872)
(8.645)
NA
253.295
(34.847)
1.512
47.052
158.229
NA
31
NA
NA
1.010
(1.460)
(12.156)
721
(524)
(4.668)
(7.359)
1.068
(8.439)
(8.444)
NA
(50.981)
(40.413)
(8.158)
2.948
(63.347)
NA
NA
NA
NA: no significant activity.
NOTE 5 – DEBTORS
2003
EUR
Amounts owed by affiliated undertakings
Receivable on sales of equity participations
Other debtors
2002
EUR
1.664.143,89
5.000.000,00
1.153.316,65
___________
7.817.460,54
1.835.609,00
3.080.000,00
870.862,19
___________
5.786.471,19
NOTE 6 – MARKETABLE SECURITIES
2003
EUR
Own shares
Own Bonds (note 9)
2002
EUR
256.235,02
_________
256.235,52
1.346.147,60
3.583.000,00
___________
4.929.147,60
As at December 31, 2003, the company owns 12.916 own shares acquired to secure group employees
stock options (see note 12).
NOTE 7 – CAPITAL ACCOUNTS
Evolution of the capital accounts
Balance at 31.12.2002
2002 profit
Share capital
Share premium
Reserve for
own shares
Legal
reserve
Other
Profit brought
forwarde
EUR
(1)
EUR
(1)
EUR
(3)
EUR
(2)
EUR
EUR
11.844.547,40
18.469.793,76
140.326,21
45.135,83
38.770,55
597.784,42
5.245.974,68
- 49 -
Appropriation of 2002 profit
- Dividend
- Other
Capital increase
125.701,90
4.499.750,00
___________
357.223,00
14.613.250,00
___________
16.469.999,30
33.440.266,76
-
-
-
115.908,81
262.298,73
3.680.202,15
(1.187.564,99)
(4.058.409,69)
_________
_________
___________
____________
256.235,02
307.434,56
3.718.972,70
597.784,42
(1) As at December 31, 2003, the subscribed and fully paid-up capital of 16.499.999,30 (2002:
EUR 11.844.547,40) is represented by 4.017.073 shares (2002: 2.888.914) without nominal value.
(2) In accordance with Luxembourg company’s law, the company is required to appropriate a minimum of 5%
of the annual net profit to a legal reserve until the balance of such reserve equals 10% of the issued
capital. The legal reserve is not available for distribution.
(3) In accordance with Luxembourg company’s law, when the own shares are held and shown as assets, a
non distributable reserve of the same amount must be constituted by the company.
(4) As at December 31, 2003, the consolidated capital accounts amount to EUR 52.969.000 (2002:
EUR 34.674.000) compared to capital accounts as per annual accounts which amount to EUR 56.432.000
(2002: EUR 36.382.000). Taking into consideration the estimated value of the assets held by the
subsidiaries, the Board of Directors estimates that it is not necessary to reduce the statutory capital
accounts at their consolidated value.
NOTE 8 - PROVISIONS FOR TAXES
The company is fully taxable in Luxembourg for income tax and net worth tax. Final tax assessments
have been received until and including the fiscal year 1997 for income tax and until and including the
fiscal year 2000 for net worth tax. The amount of EUR 302.091,15 (2002: EUR 167.091,15) represent
the provisions, net of the advances paid, constituted for the fiscal year from which the final assessments
have not yet been issued.
In accordance with the fiscal law in force the 2002 and 2003 profits are not subject to income taxes as
they result from non taxable profits realized on sale of equity participations in the conditions provided by
law in matters of holding delay. The amount of EUR 135.000 (2002: EUR 94.000) corresponds to the
charge for net worth tax.
NOTE 9 - CREDITORS
Creditors are as follows:
2003
EUR
Due and payable within one year
Due and payable after more than one year
2002
EUR
10.450.707,18
10.000.000,00
____________
10.556.082,87
10.000.000,00
____________
20.450.707,18
20.556.082,87
Amounts owed to affiliated undertakings amount to EUR 6.738.054,41 (2002: EUR 5.324.102,26)
As at December 31, 2003 and 2002, debenture loans are detailed as follows:
- 50 -
Number of bonds
Conversion
price of share
Interest
Rate
Maturity
EUR
Number of shares to
issue in case of
conversion
2003
10.000
2.735
-
5,5
7
2005
2004
10.000.000,00
2.735.000,00
____________
12.735.000,00
7
6.5
10
5.5
2003
2003
2003
2005
1.287.671,29
1.524.490,17
1.225.000,00
10.000.000,00
____________
14.037.161,46
-
2002
18
1
1.225
10.000
(1)
(1) 18,03
(1) 24,00
-
71.411
63.520
_______
134.931
convertible bonds reimbursed during 2003
During the financial year 2002, the company issued two new bonds of EUR 1.225.000 and
EUR 10.000.000. As at 31 December 2002, the loan of EUR 10.000.000 issued at 92,5% was
subscribed for by third parties up to EUR 6.417.000 and by the issuer to the amount of EUR 3.583.000,
in order to sell these bonds on the market during 2003.
NOTE 10 – EQUITY PARTICIPATIONS
Income from participations is constituted by interest on loans and advances to subsidiaries.
NOTE 11 – EXCEPTIONAL LOSSES AND PROFITS
2003
EUR
Value adjustment on financial fixed assets (note 4)
Profits on sales of equity participations
Profit on sale of ORCO HOTEL GROUP S.A. shares to
ORCO HOTEL GROUP S.A. (Luxembourg) in order to
meet with a stock-options agreement signed with two
directors
-
2002
EUR
(155.000,00)
3.984.500,00
3.066.299,40
___________
3.984.500,00
2.995.656,29
___________
5.906.955,69
NOTE 12 – GUARANTEES AND COMMITMENTS
- 51 -
Stock-options:
The company has granted the following share options to 7 employees and/or directors:
-
40.000 shares in four instalments of 10.000 shares each, to be exercised between 1999 and 2004 at prices
increasing;
80.000 shares to be exercised between 1999 and 2004 at EUR 12,65 per share totally exercised during
2003;
80.000 shares to be exercised between 2001 and 2004 at EUR 12,65 per share of which 40.000 were
exercised during 2003;
6.000 shares in three instalments of 2.000 shares each, to be exercised between 2001 and 2003 at prices
increasing form EUR 20 to EUR 30 per share cancelled during February 2004;
6.000 shares in three instalments of 2.000 shares each, to be exercised between 2002 and 2004 at prices
6.000 shares in three instalments of 2.000 shares each, to be exercised from 2002 and 2004 at prices
3.000 shares in two instalments, first instalment of 2.000 shares in year 2003 for 25 EUR per share, and
second instalment of 1.000 shares in year 2005 for 30 EUR per share.
3.000 shares in two instalments, first instalment of 1.500 shares in year 2003 for 25 EUR per share, and
second instalment of 1.500 shares in 2004 for 30 EUR per share.
Other commitments:
Shares of certain equity participations are pledged for loans granted to subsidiary companies.
Consolidated accounts 2004
TABLE OF CONTENTS
Consolidated Group Management Report
Consolidated balance sheet
Consolidated profit and loss account
Notes to the consolidated accounts
CONSOLIDATED GROUP MANAGEMENT REPORT
FINANCIAL YEAR 2004 – CONSOLIDATED ACCOUNTS
11 APRIL 2005
COMPANY ACTIVITY
The consolidated profit of EUR 6,591,000.00 as at 31st December 2004 compared with a consolidated
profit of EUR 252,000.00 as at 31st December 2003 reflects a very good 2004 financial year for both the
shareholders and the company. The price per share has grown from EUR 19.90 on 01/01/04 to EUR
35.00 on 31/12/04, being an increase of 76% over 12 months, the closing price on 08/04/05 was EUR
43.60, that is a progression of 119% over 15 months. This reflects a very good 2004 year for the group.
- 52 -
Following the integration of IPB Real, Orco’s consolidated income has drastically changed. The group
has taken full advantage of the effect of the increase of the development activity both in terms of turnover
and margin.
2004 has also been marked by many acquisitions that reinforce both the property side with the acquisition
of a building in Prague 2 (Londynska 39), a future private clinic, the development activity portfolio
through the acquisition of several lands in the Czech Republic, two buildings in Budapest (Izabella and
Andrassy) intended for restoration into high range apartments and a building in Warsaw (Zlota). Finally,
Orco has acquired, on behalf of the Endurance Fund, an office complex in Budapest (Atronyx).
On the capital and corporate finance level, last September the parent company has successfully issued a
convertible bond amounting to EUR 32,450,000.00 expiring in 2011 and two short-term non-convertible
bonds amounting to EUR 4,000,000.00 to finance the growth. During the year, the parent company also
issued 605,751 shares out of which 231,003 gave rise to subscription in cash for a total amount of EUR
4,948,000.00 and out of which 374,748 shares were issued following Orco Hotel Group capital
restructuring and the payment of the 2003 dividend.
KEY FIGURES 2004
The financial year closes with a consolidated profit of EUR 6,591,000.00 compared to EUR 252,000.00
in 2003. The balance sheet total net assets amounts to EUR 243,266,000.00 compared to EUR
215,255,000.00 in 2003, which is an increase of 13% and the shareholders’ equity amount to EUR
63,639,000.00 KEUR compared to EUR 52,969,000.00 in 2003 being an increase of 20%.
TURNOVER
The consolidated turnover as at 31/12/04, including capitalized production costs, closes at EUR
73,102,000.00 compared to a consolidated turnover as at 31/12/03 of EUR 23,848,000.00. This increase
reflects the successful integration of the real-estate development activities of IPB Real acquired in
December 2003.
The contribution of each business line is the following:
Offices
Residential
Development and sites
Hotels
Hotel residences
Others
Capitalized production costs
TOTAL
2004
K€
2003
K€
1,898
1,752
57,052
7,993
2,529
1,878
73,102
2,091
1,446
12,565
4,954
1,296
428
1,068
23,848
Offices
Offices experienced another depressed market both in Prague and in Budapest. However, the sales
teams’ efforts improved the occupancy rates. The average occupancy rate over the year for the Prague
offices portfolio, consisting of 6 buildings offering a rental surface of 9 443 m², was 68% but it went
up to 90% in December 2004. The Budapest offices portfolio of only one building offering a rental
surface of 2 531 m² experienced an average occupancy rate over the year of 73%.
- 53 -
During 2004, 617 apartments have been delivered and recognised in turnover. The acquisitions and
the current projects will allow a significant increase in the apartments’ delivery as from the fourth
quarter of 2005.
Residential
The renting of apartments has evolved in a stable market. This business line is only represented in
Prague and consists of 9 buildings with a total capacity of 78 apartments over 10 139 m² with an
average occupancy rate over the year of 91%.
Hotels
Orco Hotel Collection includes 4 hotels, the Riverside Hotel in Prague, the Imperial Hotel in Ostrava,
the Andrassy Hotel in Budapest and the Regina Hotel, opened last summer, in Warsaw.
Over 2004, the hotels as a whole released an average RevPar of EUR 45.00. The opening of a new
hotel in Poland has weighed on the average income of this business line balanced by the success of
the Riverside Hotel. The average occupancy rate in 2004 reached 50%, which is a good performance
bearing in mind the opening of the Regina Hotel and the renovation works for the Andrassy Hotel.
The Riverside Hotel, a member of the “Small & Luxury Hotel” chain, counts 45 rooms. Its average
occupancy rate for 2004 reached 54% compared to 32% in 2003 with a RevPar at EUR 77.00 (EUR
49.00 for 2003).
The Imperial Hotel counts 154 rooms. It generated an average RevPar of EUR 37.00 in 2004 with an
average occupancy rate of 54%. The occupancy rate is stable as compared to the previous year, but
the RevPar progresses by 23%, which reflects then the increase of the ADR.
The Andrassy Hotel, a member of the “Small & Luxury Hotel” chain, counts 70 rooms. Its average
occupancy rate for 2004 was 53% with its RevPar at EUR 49.00. These figures are definitely
improving, as in 2003 the occupancy rate was 29% with a RevPar at EUR 28.00.
The Regina Hotel, also a member of the “Small & Luxury Hotel” chain, opened in June 2004, with 61
rooms. Its average occupancy rate was at 23% with a RevPar at 30 EUR, these figures not being
representative considering the opening date of the hotel.
Hotel residences
MaMaison Residences counts 4 residences in Prague: Masaryk with 15 apartments, Belgicka with 30
apartments, Americka Park with 16 apartments and Pachtuv Palace, opened last September, with 50
apartments. One residence in Budapest (Izabella with 38 apartments) and one hotel residence in
Bratislava opened last November (Residence Sulekova with 30 apartments) make up MMR’s
geographical coverage at the end of 2004.
MMR’s operational performances have improved over 2004. The average occupancy rate was 63%
compared to 50% in 2003 while the RevPar progressed from EUR 37.00 in 2003 to EUR 54.00 in
2004.
Residence Masaryk realised a nice performance in 2004 with an average occupancy rate increasing
from 43% up to 72%. The average RevPar rose to EUR 55.00 in 2004 compared to EUR 33.00 the
previous year.
- 54 -
Residence Belgicka also achieved a nice 2004 financial year. The average occupancy rate went from
42% in 2003 up to 72% in 2004 while the average RevPar progressed to EUR 55.00 in 2004 against
EUR 34.00 in the previous year.
Residence Americka Park performed well in 2004 with an average occupancy rate of 64% and an
average RevPar of EUR 67.00. The comparison with 2003 is not significant due to the opening of the
residence during 2003.
The Pachtuv Palace’s performance was not representative because the residence was opened only last
September. During the opening months, the average occupancy rate was 12% with the average
RevPar at EUR 15.00.
Residence Izabella achieved a very good performance in 2004 with an average occupancy rate
increasing from 62% up to 83%. The average RevPar considerably improved at EUR 67.00 in 2004
compared to EUR 43.00 in the previous year.
Residence Sulekova was opened last November. The first months were encouraging and confirmed
our forecasts of an occupancy rate of 53% and a RevPar of EUR 40.00 for 2005.
OPERATING RESULT
2004 closes with a positive operating result of EUR 17,490,000.00 compared to EUR 3,196,000.00 in
2003. This operating result is influenced by the reversal of a provision on the Benice land for EUR
10,144,000.00. Without taking into account this impact, the operating result would be reduced to EUR
7,346,000.00.
FINANCIAL INCOME
The 2004 financial result is EUR –4,718,000.00. The charge of EUR 5,274,000.00 corresponds to the
group’s global financing expenses originating from two sources; the first being bank loans with an
effective interest rate of 5.38%, the second being bonds issued by the parent company with an
effective interest rate of 6.11%, excluding underwriting fees and other costs amortized over the
duration of the loan.
The foreign exchange result corresponds to a loss of EUR 949,000.00; the group recorded a financial
profits of EUR 1,505,000.00 resulting from the cash management and the proceeds from the sale of
898 Orco Hotel Group S.A. shares.
EXCEPTIONAL RESULT
The exceptional result is a loss of EUR 403,000.00; it corresponds to the result of the positive and
negative adjustments on the opening balances of the consolidated companies.
DEBT
Orco’s financial debt including bonds issued amounts to EUR 115,828,000.00 as at 31st December
2004. The bank loans amount to EUR 69,128,000.00 which represents a decrease of EUR
1,505,000.00 compared to the previous year. The convertible bonds amount to EUR 46,700,000.00 as
at 31/12/2004.
The cash amount at year end was EUR 15,647,000.00 compared to EUR 16,160,000.00 as at
31/12/2003.
- 55 -
Excluding trade debtors, non-revalued assets composed of fixed assets, stocks and shares in affiliated
undertakings amount to EUR 192,985,000.00 in 2004 compared to EUR 153,211,000.00 in 2003. The
net debt ratio (EUR 100,181,000.00) compared to the non-revalued assets is 51.9% in 2004 compared
to 43.9% in 2003 (EUR 67,208,000.00 / EUR 153,211,000.00).
Compared to DTZ’ fixed assets valuation, debt has evolved as follows:
for 2004: EUR 100,181,000.00 / EUR 249,988,000.00 i.e. 40% compared to EUR 67,208,000.00 /
EUR 178,316,000.00 i.e. 38% in 2003.
Considering the level of the share price to date and the possibility that the company has to force the
conversion of the convertible bonds into capital, the ratios below can be reasonably recalculated as
follows based upon the following elements:
Net debt 2003 (bank + non convertible bonds – cash) : EUR 67,208,000.00
Net debt 2004 (bank + non convertible bonds – cash) : EUR 67,731,000.00
The debt ratio compared to non revalued assets in 2004 would be 51.9% compared to 43.9% in 2003.
The debt ratio compared to DTZ’ valuation would be 40% in 2004 compared to 38% in 2003.
Compared to the market capitalization as at 31/12/2004 of EUR 161,799,000.00, debt represents 62%
including bonds and 42% including convertible bonds.
REAL ESTATE PROPERTIES
The properties valuation as at 31st December 2004 excluding the minority interests, amounts to EUR
249,988,000.00 compared to EUR 178,316,000.00 in 2003.
This amount can be split up as follows:
Offices
Residential
Hotels
Hotel Residences
EUR 68,302,000.00
EUR 23,281,000.00
EUR 56,057,000.00
EUR 60,473,000.00
EUR 41,875,000.00
TRANSACTIONS ON OWN SHARES
Acquisition of own shares’ program
In compliance with the provisions of articles 241-1 to 241-7 of the General Regulations of the AMF
and with the provisions of the European regulation n°2273/2003 dated 22nd September 2003 pursuant
to the directive 2003/6/CE dated 28th January 2003 also known as the “Market abuse” directive that
came into force from 13th October 2004 onwards and to which it is bound, the company has issued an
information note relating to the renewal of the previous acquisition of own shares’ program, which
received the AMF visa n° 04-944 dated 2nd December 2004. The company has proceeded, as part of
the previous program to the acquisition of 45,610 own shares for a total amount of EUR 1,147,443.47,
and to the sale of 89,728 own shares for a total amount of EUR 1,901,725.00. In addition, during the
month of December 2004 it has sold, pursuant to the new regulation, 19,239 shares for a total amount
of EUR 660,041.17. On 31st December 2004, the company owned (directly and indirectly) 1,731
shares.
Jean-François OTT
- 56 -
Managing Director
To the Shareholders
1- Following our appointment by the General Meeting of Shareholders dated April 27, 2004, we have audited the
consolidated accounts of ORCO PROPERTY GROUP S.A. (the “Group”) and its subsidiaries for the year ended 31
December 2004 and have read the consolidated management report. These consolidated accounts and the consolidated
management report are the responsibility of the Group’s Board of Directors. Our responsibility is to express an opinion
on these consolidated accounts based on our audit and to check the consistency of the consolidated management report
with them.
2 - We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated accounts are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated accounts. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated accounts presentation. We believe that our audit provides a
reasonable basis for our opinion.
OPINION OF HRT RÉVISION S.À R.L.
3 - In our opinion, the consolidated accounts give, in conformity with the Luxembourg legal and regulatory
requirements, a true and fair view of the consolidated financial situation of ORCO PROPERTY GROUP S.A. and its
subsidiaries as at 31 December 2004 and of the consolidated results for the year then ended.
4 - The consolidated management report is in accordance with the consolidated accounts.
OPINION OF PRICEWATERHOUSECOOPERS S.À R.L.
5 - During the previous year, the Group has recorded the sale of two real estate projects realising a gain of EUR
3,500,000.00 whose booking in the 2003 consolidated result was made on the basis of letters of intent whereas the legal
contracts were only signed in 2004.
6 - HRT Révision S.à r.l., in its opinion dated 22 April 2004, was of the opinion that in accordance with the principle of
substance over form, even if the legal realisation of these transactions was only finalised during the first quarter of 2004,
the decision of the Board of Directors to include the profit in the 2003 profit and loss account was adequate.
7 - RSM Salustro, co-auditor with HRT Révision S.à r.l. in 2003, had expressed on 22 April 2004 an adverse opinion on
the consolidated accounts of the Group as at 31 December 2003 based on the facts described in paragraph 5 which were
leading to an overstatement of the 2003 net consolidated result and of the consolidated net assets of EUR 3,500,000.00 .
8 - As a result, the net consolidated result of the year ended 31 December 2004 is underestimated by EUR 3,500,000.00 .
9 - In our opinion, except for the impact of the facts set out in paragraph 5, the consolidated profit and loss account
gives, in conformity with the Luxembourg legal and regulatory requirements, a true and fair view of the consolidated
result of ORCO PROPERTY GROUP S.A. and of its subsidiaries for the year ended 31 December 2004.
In our opinion, the consolidated balance sheet and related notes give, in conformity with the Luxembourg legal and
regulatory requirements, a true and fair view of the
consolidated financial position of ORCO PROPERTY GROUP S.A. and of its subsidiaries as at 31 December 2004.
10 - The consolidated management report is in accordance with the consolidated accounts.
11 - Following our audit, some corrections and reclassifications have been made on opening balances. Without
qualifying the opinion expressed above, we would like to
draw your attention to note 12, which sets out the impact of these corrections and reclassifications on the opening
balances.
Represented by
Dominique Ransquin
Represented by
Amaury Evrard
- 57 -
Orco Property Group
CONSOLIDATED BALANCE SHEET
31 December 2004
(in thousand Euros) Lux GAAP
The notes refer to the appendices
31 December
2004
ASSETS
31 December
2003 SHAREHOLDER'S EQUITY AND LIABILITIES
31 December
2004
31 December
2003
1,628 Subscribed share capital
108,650 Legal reserve
Consolidated reserves
138 Translation difference
18 954
44 754
390
6
-3 541
-3 515
16 470
32 335
307
256
6 078
-2 729
- Profit for the year
138 TOTAL
Minority interests in the profit of the year
Minority reserves
110,416
PROVISIONS FOR RISKS AND CHARGES (note 13)
6 591
63 639
-472
2 132
252
52 969
-1 201
-622
2 696
6 957
46 700
69 128
26 939
20 473
7 063
4 687
174 990
12 735
70 633
52 888
10 811
2 566
3 457
4 016
157 106
281
46
243 266
215 255
FIXED ASSETS
Intangible assets (note 4)
Tangible assets (note 5)
Financial assets (note 6)
Shares in affiliated undertakings
Loans to undertakings with which the company is
linked by virtue of participating interests
SHAREHOLDER'S EQUITY (note 11)
1,835
124,451
506
2,122
2,628
128,914
CURRENT ASSETS
LIABILITIES (note 14)
Stocks (note 7)
Trade debtors (note 8)
Tax (note 20)
Other debtors
54,304
20,702
6,497
5,959
87,462
42,795
21,937
8,102
8,621
81,455
Shares in affiliated undertakings (note 9)
Cash at bank
9,767
167
15,647
25,581
391
16,160
16,551
1,309
6,833
Bonds
Customers prepayments
Trade creditors
Tax liabilities
Other creditors
Regularisation accounts (note 15)
Regularisation accounts (note 15)
TOTAL ASSETS
243,266
215,255 TOTAL LIABILITIES
- 58 -
Orco Property Group
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004
(in thousand Euros) Lux GAAP
31 December
2004
71,224
1,898
1,752
2,529
7,993
57,052
31 December
2003
22,780
2,091
1,446
1,296
4,954
428
12,565
1,878
1,068
13,084
405
11,418
1,261
3,026
2,455
248
323
-50,632
-16,244
Staff costs
-7,726
-4,059
Taxes
-2,636
-611
-2,025
-482
-184
-298
Amortisation, depreciation and provisions
-7,702
-2,893
Operating profit
17,490
3,196
Other interest and similar income
Foreign exchange (loss)/profit
Other interest and similar charges
Net Financial result (note 18)
1,505
-949
-5,274
-4,718
675
288
-6,638
-5,675
Profit on ordinary activities before tax
12,772
-2,479
-403
172
-6,250
1,358
6,119
-949
-472
-1,201
6,591
252
Sales (note 16)
Offices
Residential
Hotel Residences
Hotels
Other services
Work performed by the undertaking for its own
purposes and capitalised (note 17)
Gain on disposal of fixed assets
Reversal of operating provisions (note 24)
Cost of sales
Extraordinary (loss)/profit (note 22)
Corporate tax (note 20)
Consolidated (loss)/profit after tax
Minority interests (note 19)
PROFIT FOR THE YEAR – PART OF THE GROUP
- 59 -
NOTE 1 – GENERAL
ORCO PROPERTY GROUP S.A. (hereafter the “Company” or the “Group”) was incorporated on 9th
September 1993, in the form of a limited company for an unlimited term.
The company’s business mainly focuses on the one hand on management of property companies based in
the Czech Republic, Hungary, Slovakia and Poland and on the other hand on residential buildings
promotion in the Czech Republic. The group diversified further with hotel activities and hotel residences.
All amounts are expressed in thousand Euros (KEUR) unless otherwise stated.
NOTE 2 – CONSOLIDATION BASIS AND PRINCIPLES
a)
Consolidation scope
The group’s consolidated financial statements include the accounts of the following subsidiaries:
Company
Country
1. Sportovni, a.s.
Americka 1, a.s.
Americka 33, a.s.
Americka Park, a.s.
Americka-Orco, a.s.
Anglicka 26, s.r.o.
Belgicka - Na Kozacce, s.r.o.
Centrum Agibor, a.s.
IPB Real Development, a.s.
IPB Real Reality, a.s.
IPB Real, a.s.
IPB Real, s.r.o.
Iskola project 68 Kft.
Izabella 62-64 Kft.
Janackovo Nabrezi 15, s.r.o.
Jihovychodni Mesto, a.s.
Kosic S.à r.l.
Kosik Development, s.r.o.
Londynska 26, a.s.
Londynska 41, s.r.o.
Machova-Orco, a.s.
MaMaison Résidences S.A.
Manesova 28, a.s.
MMR Management, s.r.o.
Nad Petruskou, s.r.o.
Oak Mill, a.s.
Orco Alfa, s.r.o.
Orco Aparthotel S.A.
MaMaison Bratislava, s.r.o.
Orco Budapest Rt.
Orco Development Slovakia, s.r.o.
Orco Development, a.s.
Orco Development Kft.
Orco Estate Slovakia, s.r.o.
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Hungary
Hungary
Czech Republic
Czech Republic
Luxembourg
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Luxembourg
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Czech Republic
Luxembourg
Slovakia
Hungary
Slovakia
Czech Republic
Hungary
Slovakia
Currency
CZK
CZK
CZK
CZK
CZK
CZK
CZK
CZK
CZK
CZK
CZK
CZK
HUF
HUF
CZK
CZK
EUR
CZK
CZK
CZK
CZK
EUR
CZK
CZK
CZK
CZK
CZK
EUR
SKK
HUF
SKK
CZK
HUF
SKK
% of shareholding
31.12.04 31.12.03
100%
100%
100%
100%
100%
100%
81.38%
70.92%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
95%
76.50%
100%
100%
50%
50%
100%
100%
100%
100%
100%
100%
81.38%
70.92%
100%
100%
81.38%
100%
100%
50%
100%
81.38%
70.92%
81.38% 70.92%
100%
100%
100%
100%
100%
100%
- 60 -
Orco Estate, s.r.o.
Orco Germany S.A.
Orco Hospitality Services Sp. z o.o.
Orco Hotel Collection S.A.
Orco Hotel Development Sp. z o.o.
(Diana)
Orco Development Sp. z o.o.
Orco Hotel Development, a.s.
Orco Hotel Management Kft.
Orco Hotel Management, s.r.o.
Orco Hotel Project Sp. z o.o.
Orco Hotel Project, a.s.
Orco Hotel Rt.
Orco Hungary Kft.
Orco Investment, a.s.
Orco Investment Kft.
Orco Poland Sp. z o.o.
Orco Prague, a.s.
Orco Project Management, s.r.o.
(previously Americka 17)
Orco Project Sp. z o.o.
Orco Project Szervezo Rt.
Orco Asset Management, a.s.
Orco Property Sp. z o.o.
Orco Property Start, a.s.
Orco Property, a.s.
Orco Reality, a.s.
Orco Slovakia, s.r.o.
Orco Strategy, a.s.
Orco Strategy Sp. z o.o.
Orco Trade, s.r.o.
Orco Vagyonkezelo Kft.
Orco Vinohrady, a.s.
Orco Warsaw Sp. z o.o.
Pachtuv Palac, s.r.o.
Residence Belgicka, s.r.o.
Residence Izabella Rt.
Residence Masaryk, a.s.
Révay 10 Kft.
Rybalkova 12, s.r.o.
Vinohrady S.à r.l.
Zahrebska 35, s.r.o.
Czech Republic
Luxembourg
Poland
Luxembourg
CZK
EUR
PLN
EUR
100%
100%
95%
95%
100%
Poland
Poland
Czech Republic
Luxembourg
Hungary
Czech Republic
Poland
Czech Republic
Hungary
Hungary
Czech Republic
Hungary
Poland
Czech Republic
PLN
PLN
CZK
EUR
HUF
CZK
PLN
CZK
HUF
HUF
CZK
HUF
PLN
CZK
81.38%
100%
95%
95%
95%
95%
95%
95%
95%
100%
100%
100%
100%
100%
76.50%
76.50%
76.50%
76.50%
76.50%
76.50%
100%
Czech Republic
Poland
Hungary
Czech Republic
Poland
Czech Republic
Czech Republic
Czech Republic
Slovakia
Czech Republic
Poland
Czech Republic
Hungary
Czech Republic
Poland
Czech Republic
Czech Republic
Hungary
Czech Republic
Hungary
Czech Republic
France
Czech Republic
CZK
PLN
HUF
CZK
PLN
CZK
CZK
CZK
SKK
CZK
PLN
CZK
HUF
CZK
PLN
CZK
CZK
HUF
CZK
HUF
CZK
EUR
CZK
100%
100%
100%
100%
100%
95%
50%
100%
100%
100%
100%
100%
100%
100%
95%
81.38%
81.38%
81.38%
81.38%
100%
100%
100%
100%
100%
100%
100%
76.50%
50%
100%
100%
76.50%
70.92%
70.92%
70.92%
70.92%
100%
100%
100%
100%
The core business of the consolidated companies is to manage property investments, to develop real
estate properties, to manage financial investments and to provide services in the real-estate field.
The financial year of all the companies included in the consolidation scope ends on the 31st of
December.
- 61 -
All companies, included in the consolidation scope are controlled solely by the parent company and
therefore fully consolidated except for Orco Property, a.s., which is subject to a 50% Joint Venture
with Trigranit, Kosic S.à r.l. and Kosic Development, s.r.o., which are subject to a 50% Joint
Venture with GE Golub Capital, and Oak Mill, a.s., which is subject to a 50% Joint Venture with a
private Czech investor. These entities are proportionally consolidated.
The following subsidiaries, without activity and not significant for the group, as at 31st December
2004, are not consolidated:
% of shareholding
31.12.2004 31.12.2003 31.12.2002
- Orco Bucharest
100%
96%
96%
-
100%
100%
100%
100%
100%
100%
50%
100%
Orco Zagreb S.à r.l.
Endurance Management Cy
Prague Real Estate 1 S.A.
MMR Yugoslavia
Orco Yugoslavia
In addition, Atronyx Befektetési Kft, a company acquired with the intention of resale in the short
term to Endurance Fund, is not consolidated and is recorded as current asset under the heading
“shares in affiliated undertakings”.
b)
Consolidation principles
The significant consolidation principles used to establish the consolidated accounts can be
summarized as follows:
(i) Currencies conversion
a)
Functional currency and presentation currency
Elements included in the financial statements of each subsidiary of the Group are translated into
the currency of the economical environment in which each entity operates (the functional
currency). The consolidated accounts are presented in EURO, which is the functional and
presentation currency of the Company.
b)
Transactions and balances
Transactions in foreign currencies are converted into the functional currency using the exchange rate in
force on the dates of the transactions. Profits and losses resulting from the settlement of these operations
as well as from the conversion at period end exchange rate of monetary assets and liabilities denominated
in foreign currencies are recorded in the profit and loss account. Non-monetary items expressed in foreign
currencies are converted at historical exchange rate.
c)
Conversion of subsidiaries
Results as well as the financial situation of the Group’s consolidated subsidiaries whose functional
currency differs from the presentation currency are converted into the functional currency according to
the following rules:
-
Assets and liabilities are converted using the closing date exchange rate;
- 62 -
-
Income and charges are converted using the average rate for the period;
All conversion differences are included in the « translation difference » account in the shareholder’s
equity.
(ii) Deferred tax
Deferred tax assets and liabilities are recorded to take into account temporary differences between the
accounting of certain charges and revenues due to restatements for compliance with accounting rules and
their inclusion in the tax base. Deferred tax assets in excess of deferred tax liabilities or deferred tax
assets on losses carried forward are recorded in the balance sheet if the Company has a reasonable
assurance to recover it. The liability method of tax allocation is used.
(iii) Acquisition goodwill and evaluation goodwill
Entries in the scope of consolidation are registered at their fair value. The difference between the value
upon entry in the consolidated balance sheet and the accounting value of the same item in the balance
sheet of the Company under control represents goodwill on evaluation. Evaluation goodwill is mainly
allocated to buildings, based on property valuations. The difference between the acquisition cost of shares
and the total evaluation of assets and liabilities identified on acquisition date represents goodwill on
acquisition. Acquisition goodwill realised at the time of additional purchases of minority interests is
deducted from the reserves.
No deferred tax liabilities have been recognised on evaluation goodwill. Indeed, all real-estate assets are
held by a specific subsidiary owned by the Company or by one of its Luxembourg subsidiary, which are
fully taxable resident companies. Consequently, any capital gain realised on the sale of shareholdings are
exempted for tax purposes (according to the Grand-Ducal Decree of 21 December 2001) as long as the
Company or the Luxembourg subsidiary holds or undertakes to hold the respective participation for an
uninterrupted period of at least 12 months, and during this period the participation held does not fall
below 10% or an acquisition price of less than EUR 6,000,000.00. Furthermore, to qualify for the capital
gain exemption, the subsidiary has to be either a fully taxable joint-stock company that is fully liable to a
tax corresponding to the Luxembourg corporate tax (i.e. min 11% on a similar taxable basis) or a
company that is resident of a Member state of the European Union and falling under Article 2 of the
Parent / Subsidiary Directive dated July 1990. In case of liquidation of the subsidiary, the income derived
from this operation would be considered as dividend that could be tax exempted according to Article 166
of the Luxembourg Income Tax Law. The conditions that have to be fulfilled in order to benefit from the
tax exemption are the same than for the capital gain exemption regime except that the acquisition price
has to reach at least EUR 1,200,000.00 million.
(iv) Clearance of intercompany accounts and transactions
All intercompany accounts and intercompany transactions are eliminated.
(v) Minority interests
Minority interests are calculated on the basis of their share in the capital and in the profit and loss.
(vi) Capital increase costs
Capital increase costs, net of tax, are deducted from the share premium amount.
NOTE 3 - MAIN ACCOUNTING POLICIES AND METHODS
General principles
- 63 -
The consolidated accounts of the Company and of its subsidiaries are based on accounting principles
generally accepted in Luxembourg.
The consolidated annual accounts as at 31st December 2003 have been established according to generally
accepted accounting principles in France. This change in accounting framework did neither have any
impact on the financial situation as at 1st January 2004, nor on the presentation of the Group’s accounts.
Some minor reclassifications have been carried out in the 2003 accounts to ensure a better comparability
of the financial data.
Non monetary assets and liabilities of the subsidiaries denominated in currencies other than the reporting
currency of the subsidiaries are converted into the currency of these subsidiaries at the exchange rates
published by the National Banks of the respective countries at the beginning of the month of the
transaction.
Monetary assets and liabilities are converted at the closing date exchange rate.
Unrealized foreign exchange differences resulting from this conversion are recorded in the profit and loss
account. Transactions are converted at the exchange rate in force at the beginning of the month of the
transaction.
Intangible assets
Intangible assets are recorded at acquisition price or cost price less amortization. Amortization is
calculated on a straight-line basis over the following period based on the estimated useful life:
y Set-up costs
y Software
4 years
4 years
Tangible assets
The tangible assets of the Company and its subsidiaries are recorded at purchase price plus incidental
expenses and, for buildings, renovation costs. Borrowing costs incurred during building renovations, i.e.
between purchase and opening are included in the acquisition cost.
They mainly include buildings held by the Group and rented or intended to be rented.
They are depreciated on a straight-line basis over the following periods:
Usufruct on land
Buildings
Plant and machinery
Office equipment and IT hardware
99 years
45 years
4 - 15 years
3 - 4 years
A provision may be booked if the value at the end of the period is higher than the market value
determined by an expert.
Financial assets
Except for loans, financial assets are recorded at the lower of their acquisition cost or their fair value. A
provision is made when the book value at the period end is higher than the realisable value of the
investment.
Stocks
- 64 -
Stocks include real estate projects under construction and intended to be sold as well as buildings held
with the intention of resale. They are valued at their purchase price or their construction costs plus
incidental expenses, part of the general costs reallocated to these projects and renovation costs. Financial
costs incurred during building renovations, between purchase and completion, are booked in the
acquisition cost.
A provision is made when the book value at the closing date is higher than the estimated realisable value.
Debtors
Current assets debtors are recorded at nominal value. They are written down when their estimated
realisable value is lower than their nominal value.
Premiums on convertible bonds and other loans issues costs
Premiums on convertible bonds and other costs linked to the issue of loans are accounted for in accruals
and amortised over the period of the loan on a straight-line basis.
Marketable securities are accounted for at the lowest of their acquisition price and of their market value.
NOTE 4 – INTANGIBLE ASSETS
Formation
expenses
K€
Acquisition value
Beginning of the year
Movements during the year
- Acquisitions
- Reductions
- Translation differences
- Reclassification
End of the year
Softwares
Usable rights
and other
intangible assets
K€
K€
Total
K€
1,295
476
1,283
3,054
18
1,313
8
25
2
511
1,729
(1,015)
(23)
1,974
1,755
(1,015)
2
2
3,798
(902)
(277)
(247)
(1,426)
(389)
(1,291)
(62)
(339)
(86)
(333)
(537)
(1,963)
Net book value at the end of
the year
22
172
1,641
1,835
the previous year
393
199
1,036
1,628
Amortisation
- Amortisation
End of the year
NOTE 5 – TANGIBLE ASSETS
- 65 -
Lands
K€
Acquisition value
Acquisitions
Disposals
Reclassification
Translation difference
End of the year
Buildings
K€
Other
installations,
machinery
and
furniture
K€
Advances
paid and
construction
in progress
K€
Total
K€
19,551
84,127
6,162
10,039
119,879
1,133
(11,690)
29
9,023
27,701
(1,051)
(6,834)
616
104,559
3,080
(1,045)
403
348
8,948
8,342
(15,003)
9,989
13,367
40,256
(17,099)
(8,132)
993
135,897
-
(8,418)
(2,811)
-
(11,229)
(20)
(20)
(1,478)
1,131
507
(8,258)
(357)
(3,168)
-
(1,855)
1,131
507
(11,446)
the year
9,003
96,301
5,780
13,367
124,451
the previous year
19,551
75,709
3,351
10,039
108,650
Amortisation
Amortisation
Disposals
Reclassification
End of the year
The amount mentioned in the above table under “reclassification” mainly corresponds to the transfer of
the amount corresponding to the acquisition costs of the lands and buildings in construction, possibly
impacted by past value adjustments, from the tangible assets account to the stocks account according to
the classification linked to the intended use of the asset.
Lands include perpetual usufruct rights of EUR 909,000.00. These rights are amortised over 99 years, the
usufruct length.
NOTE 6 – FINANCIAL ASSETS
Financial assets are composed of participations in non-active subsidiaries which are not significant for the
Group (refer to the note 2 a) on the consolidation scope).
Loans related to participations are mainly composed of loans granted to subsidiaries that Orco Property
Group holds at 50% and that are consolidated according to the proportional method.
NOTE 7 – STOCKS
The stocks mainly correspond to on the one hand 50 % of the office part of the Luxembourg Plaza project
(the Orco Property company consolidated under proportional method: cf. note 2 a), and 50% of the
Dubovny Mlyn project, both intended to be sold after completion, and, on the other hand to the
development projects, including lands of the subsidiary IPB Real acquired in 2003.
- 66 -
Gross Value
K€
31/12/2004 31/12/2003
Raw material
inventories
Work in progress
Semi-finished products
Goods
Total - Inventories
Provisions
Net Value
K€
K€
31/12/2004 31/12/2003 31/12/2004 31/12/2003
129
108
-
-
129
108
59,429
3,552
391
63,501
46,067
8,080
539
54,794
(7,529)
(1,668)
(9,197)
(11,203)
(796)
(11,999)
51,900
1,884
391
54,304
34,864
7,284
539
42,795
NOTE 8– DEBTORS
Provisions for
Net value
doubtful debts
(K€)
(K€)
(K€)
31/12/2004 31/12/2003 31/12/2004 31/12/2003 31/12/2004 31/12/2003
28,475
29,364
(7,773)
(7,427)
20,702
21,937
Gross value
All debts are due within one year.
NOTE 9– SHARES IN AFFILIATED UNDERTAKINGS
The Company Atronyx Befektetési Kft was acquired for an amount of EUR 9,767,000.00 with the
intention to resale it in the short-term to Endurance Fund.
31 December 2004
K€
101
31 December 2003
K€
135
66
256
167
391
Own shares
The Group holds 1,926 own shares and 216 subscription rights as at 31st December 2004.
NOTE 11 – SHAREHOLDER’S EQUITY
Change in shareholder’s equity
Share
capital
(1)
Share
premium
account
Legal
reserve
(2)
K€
K€
K€
Reserve
for own
shares
(3)
K€
Consolidated
reserves
Translation
difference
Consolidated
company
shares
Profit/loss
for the
year
Total
K€
K€
K€
K€
K€
- 67 -
Situation as at
31st December
2002
Appropriation
of the profit
(loss) of the
2002 financial
year
Allocation to
reserves
Distribution of
dividends
Increases in
share capital
Change in
accounting
method
Capital
increase costs,
net of tax
Own shares
Transfers
Previous loss
supported by
minority
shareholders
Translation
difference
Negative
goodwill
Consolidated
profit for the
year 01.0131.12.03
Situation as at
31st December
2003
Appropriation
of the profit
(loss) of the
2003 financial
year
Increases in
share capital
Capital
increase costs,
net of tax
Correction of
mistakes
Translation
difference
Allocation to
reserves
Dividend
Goodwill on
acquisition
(see note 19)
Change in
consolidation
basis
Consolidated
profit for the
year 1.1.31.12.2004
Situation as at
31st December
2004
11,844
17,997
45
140
2,024
-273
374
2,520
262
4,626
2,520
-2,520
-
-1,188
-1,188
14,970
19,596
-2,861
-632
-632
116
-116
374
4,848
4,848
-374
-2,456
-2,456
739
32,335
307
256
83
2,484
-
-262
-2,861
16,470
34,671
6,078
739
-2 729
0
169
252
252
252
52,969
-252
0
12,649
15,133
-230
-230
-3,356
-1,507
-4,863
721
721
-250
0
250
18,954
44,754
390
6
-1,826
-2,631
-1,826
-2,631
-2,225
-2,225
-3,541
-3,515
0
6,591
6,591
6,591
63,639
- 68 -
As at 31st December 2004, the subscribed capital of the Company is EUR 18,953,578.40
represented by 4,622,824 shares without nominal value. Share capital has been increased in 2004
by EUR 2,483,579.10 (605,751 new shares). The authorised capital is EUR 50,000,000.00. [TBC]
In accordance with the Luxembourg company law, the Company is required to allocate a
minimum of 5 % of the annual net non-consolidated profit to a legal reserve until this reserve
equals 10 % of the issued share capital. The legal reserve is not available for distribution.
In accordance with the Luxembourg company law, the Company constituted a EUR 6,000.00
unavailable reserve related to the 216 own shares and by 216 subscription rights attached
classified in marketable securities and held by Orco Property Group.
(1)
(2)
(3)
NOTE 12 – RECLASSIFICATIONS AND CORRECTIONS OF ERRORS
Following the audit of the consolidated accounts as at 31st December 2004, reclassifications and
corrections of errors have been booked. They mainly concern:
- the consolidated reserves: transfer to the reserves of minority shareholders for
EUR - 2,473,000.00;
- the translation difference: correction linked to the application of the functional currency in 2003
of EUR –1,507,000.00;
- and the tangible assets and stocks: reclassification of buildings and lands in stocks based on their
final use, corrections of accumulated amortisation and impact of the application of the functional
currency.
NOTE 13 – PROVISIONS FOR RISKS AND CHARGES
The change in provisions for risks and charges is:
In K€
Provisions for guarantees given
Provisions for risks and litigation
Provisions for repairs
Other provisions
Total
31/12/03
4,609
1,360
525
463
6,957
Value
31/12/04
adjustments
(4,260)
349
(871)
489
(64)
461
934
1,397
(4,261)
2,696
The evolution of the risks and litigation that the Group is facing is the following:
-
Opera Business Center (Budapest)
A subsidiary of the Company, Orco Budapest Rt, had litigation about the validity of the ownership of a
building it holds. An out of court settlement had been negotiated during the year. This negotiation fetched
up during the first quarter 2005 with the payment of an amount of USD 1,000,000.00. This payment
comes in addition to the indemnification received in 2002 for an amount of USD 750,000.00 and
recognised in extraordinary result at the time. The addition of these two payments compensates the loss of
the asset recorded in the books as at 31st December 2004. Therefore the Group did not record any loss on
this litigation and does not have to ask for the guarantee given by Orco Holding S.A.
- Fortis Bank (Nederland) N.V.
Orco Property Group has a litigation with Fortis Bank (Nederland) N.V. about the settlement of fees
owed by the Company to Fortis as part of a mandate that the Company had concluded with them in 2002
for the setting up of a real estate fund and that the Company ended for services not rendered. This
litigation went to the court of arbitration “Netherlands Arbitration Institute”. The elements of the file and
the existence in the Company’s accounts of a payable to Fortis (EUR 120,000.00) allow the Group not to
record an additional provision for this litigation.
- 69 -
Other provisions
Following the agreement signed between the Company and GECGE KOSIK INVESTORS S.à r.l. dated
12th February 2004, the Company still has to subscribe, after 31 December 2004, to two capital increases
for a total amount of EUR 3,000.00 increased by a total share premium of EUR 3,000,000.00, GECGE
KOSIK INVESTORS S.à r.l. having to subscribe for EUR 3,000,000.00 without share premium. A
provision has been made regarding this planned dilution in order to compensate the gain of EUR
2,200,000.00 booked in 2003 for the sale of the Kosic S.à r.l. shares to Orco Property Group. During the
first quarter 2005, the Company proceeded to a further capital increase of EUR 2,500.00 and a share
premium of EUR 2,500,000.00.
NOTE 14 - DEBTS
The residual debts terms are as follows:
31/12/04 Less than
In K€
1 year
Bonds
14,000
Trade creditors
20,473
26,939
Tax liabilities
6,495
Other creditors
4,687
Total
72,594
1 year to More than
Total
5 years
5 years
250
32,450 46,700
16,117
53,011 69,128
- 20,473
- 26,939
568
7,063
4,687
16,935
85,461 174,990
31/12/03 Less than
In K€
1 year
Bonds
2,735
15,391
Debts on fixed assets
6,349
Trade creditors
4,462
52,888
Tax liabilities
2,566
3,457
Other creditors
4,016
Total
91,864
1 year to More than
Total
5 years
5 years
10,000
- 12,735
35,970
19,272 70,633
6,349
4,462
- 52,888
2,566
3,457
4,016
45,970
19,272 157,106
As at 31st December 2004, all borrowings and overdrafts were guaranteed by mortgages on the buildings
and/or secured by the shares of the companies owning those buildings or participations.
Interests payable on bonds and to credit institutions are included under the heading “other creditors”.
Bonds correspond to the following issues:
Type of bond
Non convertible
Non convertible
Non convertible
Non convertible
Convertible
Date of issue
12/2003
02/2004
04/2004
06/2004
09/2004
Number
Interest rate Maturity
of bonds
10,000
5.5 % 12/2005
3,000
6% 04/2005
1,000
5.5% 04/2005
250
6% 06/2006
32,450
5.5% 12/2011
31/12/04
in K€
10,000
3,000
1,000
250
32,450
- 70 -
46,700
NOTE 15 – REGULARISATION ACCOUNTS
“Assets” regularisation accounts mainly consist of prepayments made to suppliers regarding some
construction contracts and of premiums on issued bonds.
“Liabilities” regularisation accounts mainly consist of rents received in advance.
NOTE 16 - SALES
Geographical analysis of sales:
In K€
Czech Republic
Hungary
Slovakia
Poland
Luxembourg
France
TOTAL
NOTE 17 –
31/12/04
31/12/03
66,674
3,531
17
854
143
5
71,224
20,326
2,108
39
303
4
22,780
WORK PERFORMED BY THE UNDERTAKING FOR ITS OWN PURPOSES
AND CAPITALISED
The capitalised production corresponds to services performed by the Group for its own purpose without
margin (real-estate promotion for own purpose). This amount of capitalised production also includes
survey costs incurred during the year of signature of an acquisition contract.
NOTE 18 - FINANCIAL RESULT
The financial result is represented by interest paid on bank loans and bonds as well as realised and
unrealised foreign exchange translation results.
It also includes a net profit of EUR 335,000.00 realised on the sale of OHG shares to OHG as part of the
stock options exercised by one of the minority shareholders and a net profit of EUR 225,000.00 realised
on the sale of own shares and subscription rights.
NOTE 19 – MINORITY INTERESTS
As compared to 2003 and following the capital restructuration of the subsidiary Orco Hotel Group S.A.,
the Group’s holding percentage went up to 95%. This transaction gave rise to a goodwill on acquisition of
EUR 2,631,000.00 deducted from the reserves.
NOTE 20 – TAX
Current tax
K€
2004
(3,708)
K€
2003
(760)
- 71 -
Deferred tax
Tax profit/charge
(2,542)
(6,250)
2,118
1,358
Advances paid
Tax debts
Assets – deferred tax
Liabilities – deferred tax
Net tax debt/credit
K€
2004
4,209
(6,495)
2,288
(568)
(566)
K€
2003
2,058
(2,079)
6,044
(487)
5,536
As at 31st December 2004, the total tax charge is EUR 6,250,000.00 composed of a tax on profits mainly
realised through the IPB’s promotion activity in 2004. The tax rate in the Czech Republic on this taxable
profit is 28%. The balance is mainly composed of deferred tax assets written off due to their nonrecoverability.
NOTE 21 – DIRECTORS’ REMUNERATION
The remuneration paid to the directors for 2004 amounts to EUR 766,000.00. In addition, the board
members receive a EUR 500.00 fee for each board meeting they attend. The Company did not grant any
advance nor loans to the board members and does not finance any pension plan in their favour.
NOTE 22 –EXTRAORDINARY RESULT
The extraordinary result is composed of a net charge of EUR 403,000.00 mainly linked to the corrections
of errors in the opening balances of the consolidated companies.
NOTE 23 – OFF BALANCE SHEET COMMITMENTS
Stock-options:
The options granted to employees and not yet exercised are the following:
9)
6,000 shares in favour of Mr. Dragan Lazukic in three instalments of 2,000 shares each, to be
exercised between 2002 and 2005 at a price respectively of EUR 20.00 , EUR 25.00 and EUR 30.00
per share.
10) 6,000 shares in favour of Mr. Alès Vobruba in three instalments of 2,000 shares each, to be
exercised between 2002 and 2005 at a price respectively of EUR 20.00, EUR 25.00 and EUR 30.00
per share.
11) 3,000 shares in favour of Mr. Pavel Klimes in two instalments of 2,000 and 1,000 shares, to be
exercised between 2004 and 2006 at a price of respectively EUR 25.00 and EUR 30.00 per share.
12) 3,000 shares in favour of Mr. Verek Machuta in two instalments of 1,500 shares each, to be
exercised between 2004 and 2006 at a price of respectively EUR 25.00 and EUR 30.00 per share.
Guarantees given:
The following bank loans have been taken out with first ranking financial institutions and require two
types of guarantees:
-
Mortgage on the buildings,
- 72 -
-
Pledge of shares of the companies owning those buildings.
Company
Prague:
Residence
Masaryk
Residence
Belgicka
Americka Park
Buildings
Borrowings and Maturity Fixed Guarantee
overdrafts
rate F
in K€
in K€
Variable
P
as at
as at
Pledge
rate V
31.12.04 31.12.03
M
Mortgage
Bank
1,005
1,075
2018
V
P+M
2,391
2,543
2018
V
P+M
1,675
1,752
2018
V
P+M
Americka 33
Jana
Masaryk 40
Residence
Belgicka
Residence
Am Park
no building
-
3,615
2004
V
P
Ceska
Sporitelna
Ceska
Sporitelna
Raiffeisenbank
as
CSOB
Americka 33
no building
-
5,717
2007
V
P
CSOB
IPB Real AS
no building
6,101
-
2006
F
P
CSOB
Pachtuv Palac
Pachtuv
Palac
Hotel
Imperial
Hotel
Riverside
Anglicka 26
10,763
7,791
2018
V
P+M
2,903
2,725
2006
F
P+M
4,843
5,007
2008
F
P+M
168
172
2013
F
P+M
Belgicka 40
1,570
1,612
2013
F
P+M
1,140
1,171
2013
F
P+M
2,239
2,354
2012
F
P+M
3,072
3,154
2013
F
P+M
2,342
2,404
2013
F
P+M
Ceska
Sporitelna
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
Aareal Bank
AG
2,017
1,530
2018
F
P+M
VUB as
1,865
2,201
2013
F
P+M
3,755
3,855
2013
F
P+M
Aareal Bank
AG
Aareal Bank
AG
1,912
1,963
2013
F
P+M
2,681
5,607
2018
V
P+M
ORCO Hotel
Dev
Janackovo
nabrezi 15
Anglicka 26
Orco
Vinohrady
Londynska 26
AS
Manesova 28
Londynska
26
Manesova
28
Londynska 41 Londynska
41
Americka
Americka11,
ORCO
Americka
13
Orco Property Luxembourg
Plaza
S.A.
Zahrebska 35 Zahrebska
35
Na kozacce
Belgicka-Na
1, Belgicka
kozacce
36
Nad Petruskou Nad
Petruskou
Americka 1
Americka 1
Aareal Bank
AG
Raiffeisenbank
as
- 73 -
Oak Mill
Dubovy
732
-
2006
F
P+M
Raiffeisenbank
as
819
841
2013
F
P+M
Aareal Bank
Izabella
2,643
2,806
2015
V
P+M
Rheinhyp AG
Hotel
Andrassy
Revay
4,086
4,494
2011
F
P+M
Rheinhyp AG
1,478
1,676
2006
V
P+M
Raiffeisen Bk
Rt
1,499
-
2029
V
P+M
Slovenska
Sporitelna as
5,369
4,486
2013
V
P+M
Raiffeisen Bl
Pol
60
82
2007
F
69,128
70,633
Long term lease:
Machova Orco Machova 18
Budapest:
Residence
Izabella
ORCO Hotel
Rt.
Orco Revay
Slovakia :
Sulekova
MaMaison
Bratislava,
s.r.o.
Warsaw :
Koscielna
ORCO
Warsaw
Paris:
Vinohrady sàrl Other assets
Total
CGI
The guarantees given to the credit institutions remain fully valid until complete reimbursement of credits.
No partial waiver on pledge or mortgage has been scheduled.
Long term leases:
The group has signed a long-term lease which is to be considered as a simple renting contract and not a
finance lease and concerns the following building: Machova 18 booked in the accounts of Machova Orco.
Sale of a building by Americka 1
On 31st December 2003, the company Americka 1 signed an agreement regarding the sale of a 12apartments building, the building n°2 of the Americka project to the company Helmine Entreprises Inc.
(Helmine). The total value of the transaction amounted EUR 5,400,000.00 + VAT. The price was settled
in several instalments during 2004; the first one of EUR 2,800,000.00 was paid on 23rd March 2004.
In addition, the Company had been mandated by Helmine to sell the apartments separately. It has been
agreed between the parties that the profit or loss resulting from the sale compared to the global transfer
price of EUR 5,800,000.00 will be shared. If the total sale price of all the apartments is less than EUR
5,800,000.00 , this difference will be split equally between Orco and Helmine. If the total sale price of all
the apartments is more than EUR 5,800,000.00, the split will be as follows:
The first portion of EUR 300,000.00 over EUR 5,800,000.00 will go directly to Helmine.
The second portion of EUR 300,000.00 (EUR 6,100,000.00 to EUR 6,400,000.00) will be divided
equally between Orco and Helmine.
Any amount above EUR 6,400,000.00 will be divided at the rate of 30% in favour of Helmine and 70%
in favour of Orco.
As at 31st December 2004, bills of sale or provisional sales agreements have been signed for 9 apartments
out of 12. The total sale price up to date amounts to EUR 4,269,000.00. The transactions realised during
the first quarter 2005 allow the company to ensure a total price above EUR 5,800,000.00.
- 74 -
The sale agreement dated 31st December 2003 stipulates a sale option by which Helmine can sell
Americka 1, a.s. and Americka 1, a.s. has the obligation to buy from Helmine all the shares of the
company TQE Assets, the initial owner of the 12 apartments. Helmine can only activate this option if all
the apartments have been sold. The sale price of the shares must equal the net asset of the company.
Guarantees given:
MaMaison Résidences S.A. stands as guarantor towards Slovenska Sporitelna regarding the loan the bank
granted to its subsidiary MaMaison Bratislava. The loan can be split in a long-term loan of EUR
1,500,000.00 and overdraft facilities of 5,000 KSKK (EUR 125,000.00).
NOTE 24 – REVERSAL OF OPERATING PROVISIONS
This amount mainly includes the reversal of the provision on Benice land for an amount of EUR
10,144,000.00.
NOTE 25 – NUMBER OF EMPLOYEES
Czech Republic
Hungary
France
Poland
Slovakia
Luxembourg
TOTAL
31/12/04
280
59
8
59
8
8
422
31/12/03
308
30
11
5
1
6
361
NOTE 26 – SUBSEQUENT EVENTS
Since February 1, 2005, Orco Property Group’s share and convertible bonds are quoted on the Prague
stock exchange. Furthermore, ORCO PROPERTY GROUP S.A. is part of the PX50 index.
The company received the AMF Visa regarding the warrants issuance program (Bons d’émission
d’actions), entirely subscribed by Société Générale in Paris (SG). This program guarantees, on Orco’s
initiative, the subscription by SG of 1,000,000 new shares issued at a price of 95% of the share price on
the stock exchange at the time of execution.
Orco also acquired two residential buildings in Berlin for a total investment of EUR 3,200,000.00.
The Croatian Privatization Fund announced on 1st April 2005 that Orco Property Group’s offer had been
accepted regarding the open tender for the privatisation of the company “Suncani Hvar”. Orco is from
now on the exclusive negotiator of the Croatian government on this transaction.
- 75 -
Social accounts 2004
TABLE OF CONTENTS
Auditors’ report
ANNUAL ACCOUNTS
-
Balance sheet
-
Profit and loss account
-
Notes to the annual accounts
- 76 -
To the Shareholders of
Auditors’ report
1
Following our appointment by the General Meeting of the Shareholders, we have audited the accompanying
annual accounts of ORCO PROPERTY GROUP S.A. for the year ended December 31, 2004. The annual
accounts are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these
annual accounts based on our audit.
2
We conducted our audit in accordance with International Standards on Auditing. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the annual accounts. An audit also includes assessing the accounting principles used and
significant estimates made by the Board of Directors, as well as evaluating the overall annual accounts
presentation. We believe that our audit provides a reasonable basis for our opinion.
Opinion of HRT Révision S.à r.l.
3
In our opinion, the enclosed annual accounts give, in conformity with the Luxembourg legal and regulatory
requirements, a true and fair view of the financial position of ORCO PROPERTY GROUP S.A. as of
December 31, 2004 and of the results of its operations for the year then ended.
Opinion of PricewaterhouseCoopers S.à r.l.
4
During the previous year, the Company has recorded the sale of a real estate project realising a gain of EUR
2,200,000.00whose booking in the 2003 result was made on the basis of letter of intent whereas the legal
contract was only signed in February 2004.
5
HRT Révision S.à r.l., in its opinion dated 22 April 2004, was of the opinion that in accordance with the
principle of substance over form, even if the legal realisation of this transaction was only finalised during the
first quarter of 2004, the decision of the Board of Directors to include the profit in the 2003 profit and loss
account was adequate.
6
RSM Salustro, co-auditor with HRT Révision S.à r.l. in 2003, had expressed on 22 April 2004 a qualified
opinion on the annual accounts of the Company as at 31 December 2003 based on the facts described in
paragraph 4 which were leading to an overstatement of the 2003 net result and of the net assets of EUR
2,200,000.00.
7
As a result, the net result of the year ended 31 December 2004 is underestimated by EUR 2,200,000.00.
8
In our opinion, except for the impact of the facts set out in paragraph 4, the profit and loss account gives, in
conformity with the Luxembourg legal and regulatory requirements, a true and fair view of the result of Orco
Property Group S.A for the year ended 31 December 2004.
In our opinion, the balance sheet and related notes give, in conformity with the Luxembourg legal and
regulatory requirements, a true and fair view of the financial position of ORCO PROPERTY GROUP S.A.
as at 31 December 2004.
Luxembourg, April 11, 2005
Represented by
Represented by
Dominique RANSQUIN
Amaury EVRARD
- 77 -
2004
2003
4,672.81
573,672.14
115,118,610.30
_____________
115,696,955.25
9,180.81
617,760.08
67,495,951.09
____________
68,122,891.98
7,569,194.77
9,824,247.25
574,023.97
_____________
17,967,465.99
7,817,460.54
256,235.02
507,447.92
___________
8,581,143.48
791,893.43
_____________
134,456,314.67
481,181.30
____________
77,185,216.76
18,953,578.40
46,088,976.26
389,520.85
6,035.00
4,300,999.17
____________
69,739,109.68
16,469,999.30
33,440,266.76
307,434.56
256,235.02
4,316,757.12
____________
54,790,692.76
523,315.80
140,000.00
_________
663,315.80
302,091.15
_________
302,091.15
46,450,641.20
15,587,689.91
____________
62,038,331.11
12,735,000.00
7,715,707.18
____________
20,450,707.18
2,015,558.08
____________
134,456,314.67
1,641,725.67
____________
77,185,216.76
Lux GAAP
ASSETS
FIXED ASSETS
Intangible fixed assets (note 3)
Tangible fixed assets (note 3)
Financial fixed assets (note 4)
CURRENT ASSETS
Debtors (due within one year) (note 5)
Cash at banks and in hand
REGULARISATION ACCOUNTS (note 7)
LIABILITIES
CAPITAL ACCOUNTS (note 8)
Share capital
Share premium
Legal reserve
Profit brought forward
PROVISIONS FOR LIABILITIES AND CHARGES
Provisions for taxes (note 9)
Provisions for charges (note 10)
CREDITORS (note 10)
Debenture loans
Other creditors
PROFIT FOR THE YEAR
- 78 -
PROFIT AND LOSS ACCOUNT
For the year ended December 31, 2004
(in EUR)
2004
Lux GAAP
Management fees (note 11)
External charges (note 16)
2003
3,893,597.59
6,547.32
(4,560,397.87)
1,790,609.36
21,344,.5
(3,877,105.32)
(270,188.18)
(36,285.07)
_________
(306,473.25)
(151,267.37)
(17,461.12)
_________
(168,728.49)
(832,511.75)
(4,800.00)
___________
(1,804,037.96)
(37,375.50)
(53,337.45)
___________
(2,324,592.65)
5,067,133.58
52,236.63
1,707,767.62
127,850.53
298,864.29
(2,519,242.96)
___________
2,898,991.54
5,402,00
(1,722,151.98)
__________
118,868.17
Profit (loss) from ordinary activities
1,094,953.58
(2,205,724.48)
Extraordinary income (note 14)
1,164,142.10
___________
2,259,095.68
3,984,500.00
__________
1,778,775.52
Taxes on income (note 9)
Other taxes (note 9)
(243,537.60)
___________
(137,049.85)
__________
Profit for the year
2,015,558.08
1,641,725.67
Staff costs (note 16)
Wages and salaries
Social security costs
Value adjustments (note 12)
Operating result
Income from equity participations (note 13)
Other interest receivable and similar income
Gains realised on sales of marketable securities and own
shares (note 17)
Interest payable and similar charges
Financial result
Profit before taxes
79
NOTE 1 - GENERAL
ORCO PROPERTY GROUP S.A. was incorporated under the Luxembourg Companies Law on
September 9, 1993 as a limited company (société anonyme) for an unlimited period of time.
The registered office of the company is established in Luxembourg.
The company has for object the taking of participating interests, in whatsoever form in other, either
Luxembourg or foreign companies, especially in real estate companies in Czech Republic, Hungary,
Poland and other countries of Eastern Europe and the management, control and development of such
participating interests. ORCO PROPERTY GROUP, through its subsidiaries, rents and manages real
estate and hotels properties composed of office building, apartments with services, luxury hotels and hotel
residences.
ORCO PROPERTY GROUP S.A. prepares consolidated accounts, which can be obtained at the
registered office.
NOTE 2 - ACCOUNTING PRINCIPLES, RULES AND METHODS
General
The annual accounts are prepared in conformity with generally accepted accounting principles and in
agreement with the laws and regulations in force in the Grand-Duchy of Luxembourg.
The company maintains its accounting records in Euro (EUR) and the balance sheet and the profit and
loss account are expressed in this currency.
During the financial year the acquisitions and sales of tangible and intangible assets, equity participations
and marketable securities as well as income and charges in currencies other than EUR are converted into
EUR at the exchange rate prevailing at the transaction dates.
At the balance sheet date, the acquisition price of the tangible and intangible assets, equity participations
and marketable securities expressed in another currency than the EUR remains converted at the historical
exchange rate. All other assets expressed in a currency other than EUR are individually converted at the
lowest of the historical exchange rate or closing rate. All the liabilities expressed in another currency than
EUR are converted into EUR at the highest of their historical rate or closing rate.
Intangible and tangible fixed assets
Intangible and tangible assets are recorded at the acquisition price and are depreciated on a straight-line
basis over their estimated service life.
80
Equity participations are valued individually at the lowest of their acquisition price or estimated realisable
value as determined by the board of directors on the basis of the financial statements of the companies
and any other available information and documentation.
Debtors
Loans and advances considered as financial fixed assets and current asset debtors are valued at their
nominal value. A value adjustment is carried out when the estimated realisable value is lower than the
nominal value.
Marketable securities are valued at the lowest of their acquisition price or their market value at the
balance sheet date. The valuation is made individually and without any compensation between individual
unrealized gains and losses.
The acquisition price includes the purchase price and the accessory fees.
Provisions for liabilities and charges
Provisions to be constituted in order to cover the foreseeable risks and charges are examined by the Board
of Directors at the end of each accounting year by taking into account the prudence and fair view
principles. The provisions constituted during the preceding periods are reviewed and reversed if they are
no more necessary.
NOTE 3 – INTANGIBLE AND TANGIBLE FIXED ASSETS
Additions
Accumulated depreciation, beginning of year
Depreciation for the year
Accumulated depreciation, end of year
Net value, end of year
Intangible
fixed assets
EUR
Tangible
fixed assets
EUR
18,023.81
________
18,023.81
651,871.53
14,254.13
_________
666,125.66
(8,843.00)
(4,508.00)
________
(13,351.00)
________
(34,111.45)
(58,342.07)
_________
(92,453.52)
_________
4,672.81
573,672.14
The main component of intangible fixed assets is a software.
Tangible fixed assets are mainly composed of other fixtures and fittings, tools and equipment.
81
NOTE 4 - FINANCIAL FIXED ASSETS
Financial fixed assets consist of equity participations acquired or created by ORCO PROPERTY GROUP
S.A., and loans and advances to companies in which the company holds an interest.
Financial fixed assets consist of:
2004
EUR
Loans and advances
Value adjustments
22,446,846.34
93,576,374.97
(904,611.01)
115,118,610.30
2003
EUR
10,732,268.54
56,918,682.55
(155,000.00)
67,495,951.09
Value adjustments are detailed as follows:
2004
EUR
Participations
Orco Bucharest Ltd.
Orco Budapest Rt.
Orco Project Organization Rt.
Loans and advances
Orco Bucharest Ltd.
Orco Budapest Rt.
2003
EUR
3,254.52
351,780.74
110,000.00
_________
465,035.26
3,254.52
_______
3,254.52
151,745.48
287,830.27
_________
439,575.75
_________
151,745.48
_________
151,745.48
_________
904,611.01
155,000.00
Movements during the financial year on equity participations are summarised as follows:
2004
EUR
2003
EUR
Additions
Deductions
10,732,268.34
11,714,578.00
____________
9,298,052.34
1,775,971.89
(341,755.69)
____________
22,446,846.34
10,732,268.54
82
Equity participations are detailed as follows:
Company
Country
Czech
Republic
Czech
Americka 1, a.s.
Republic
Czech
Americka 33, a.s.
Republic
Czech
Americka - Orco, s.r.o.
Republic
Czech
Anglicka 26, s.r.o.
Republic
Czech
Belgicka - Na Kozacce, s.r.o. Republic
Endurance Real Estate
Management Company S.A. Luxembourg
Isabella 62-64 Kft.
Hungary
Americka 17, s.r.o.
Kosic S.à r.l.
Londynska 26, a.s.
Machova Orco, a.s.
Manesova 28, a.s.
Oak Mill, a.s.
Luxembourg
Czech
Republic
Czech
Republic
Czech
Republic
Czech
Republic
Czech
Republic
Czech
Republic
Luxembourg
Czech
Orco Alfa, s.r.o.
Republic
Czech
Orco Asset Management, a.s. Republic
Orco Bucharest Ltd.
Roumania
Orco Budapest Rt.
Hungary
Czech
Orco Development, a.s.
Republic
Orco Development Sp. z o.o. Poland
Orco Development Kft.
Hungary
Orco Development Slovakia,
s.r.o.
Slovakia
Czech
Orco Estate, s.r.o.
Republic
Acquisitio
n price
31.12.04
´000 EUR
%
held
178
100%
1,567
100%
345
780
308
1,206
125
314
4,992
14
233
CZK
23,564
-8,980
CZK
110,400
110,515
CZK
5,594
3,104
CZK
8,626
421
CZK
11,166
3,864
EUR
HUF
EUR
125(*)
-9,417
7,410
4,710
-105
CZK
3,696
9,569
CZK
-4,173
2,378
CZK
966
2,372
CZK
45,125
-1,925
CZK
1,885
5,593
CZK
27,804
-1,451
EUR
12,674
-1,939
CZK
162
-38
CZK
-125
-2,417
ROL
HUF
CZK
2.000 (*)
135.898
549
ns
-238,718
-51
PLN
HUF
SKK
38
2,200
129
-12
-800
-81
CZK
162
-38
100%
100%
100%
100%
99,92
%
100%
50,00
%
100%
100%
1,177
100%
2,627
100%
296
5,654
100%
49,98
%
94,60
%
6
100%
121
3
352
100%
96%
100%
19
12
12
100%
100%
100%
5
100%
6
100%
450
Local
Net
Profit
Currenc Equity
(Loss)
y
31.12.04 for 2004
´000
´000
(local
(local
currency) currency)
CZK
-26,299
-3,803
83
Orco Estate Slovakia, s.r.o.
Slovakia
Orco Germany S.A.
Orco Hungary Kft.
Orco Investment Kft.
Luxembourg
Hungary
Hungary
Czech
Orco Investment, a.s.
Republic
Vinohrady S.à r.l.
France
Orco Poland Sp. z o.o.
Poland
Czech
Orco Prague, a.s.
Republic
Orco Project Organization Rt. Hungary
Orco Project Sp. z o.o.
Poland
Czech
Orco Property, a.s.
Republic
Orco Property Sp. z o.o.
Poland
Prague Real Estate S.A.
Luxembourg
Czech
Orco Reality, a.s.
Republic
Révay 10 Kft.
Hungary
Slovakia
Czech
Orco Strategy, a.s.
Republic
Orco Strategy Sp. z o.o.
Poland
Czech
Orco Trade, s.r.o.
Republic
Czech
Republic
Orco Yugoslavia, d.o.o.
Serbia
Orco Zagreb, s.r.o.
Croatia
OVK Orco Vagyonkezelo Kft. Hungary
Czech
Rybalkova 12, s.r.o.
Republic
Czech
Republic
5
31
12
12
100%
99,97
%
100%
100%
19
8
10
100%
100%
100%
28
119
12
100%
100%
100%
299
12
50%
100%
99,97
%
31
19
494
5
100%
100%
100%
62
12
100%
100%
6
100%
28
5
3
24
100%
100%
100%
100%
103
100%
286
22,447
100%
SKK
EUR
128
7
-82
-24
HUF
HUF
CZK
2,195
2,203
551
-805
-797
-49
EUR
PLN
CZK
17
-580
-4,970
-3
-605
4,112
HUF
PLN
CZK
-9,463
38
6,738
-10,975
-12
6,470
PLN
EUR
13,138
31 (*)
32
-
CZK
549
-51
HUF
SKK
CZK
153,548
-92
1,851
-4,681
-302
-149
PLN
CZK
37
169
-13
-31
CZK
-926
2,766
CSD
HRK
HUF
CZK
397 (*)
208
-94,363
-2,356
ns
ns
-59,516
278
CZK
5,098
13,672
ns : no significant activity.
(*) : the net equity corresponds to the capital.
84
NOTE 5 – DEBTORS
Amounts owed by affiliated undertakings
Receivable on sales of equity participations
Other debtors
2004
EUR
2003
EUR
4,016,347.60
2,500,000.00
1,052,847.17
___________
1,664,143.89
5,000,000.00
1,153,316.65
___________
7,569,194.77
7,817,460.54
Amounts owed by affiliated undertakings consist of operational loans, repayable on demand and with
an annual interest rate of 9 %.
Participation Atronyx
Own shares
Other marketable securities, at acquisition cost
2004
EUR
2003
EUR
9,767,294.17
6,035.00
50.918,08
___________
256,235.02
_________
9,824,247.25
256,235.02
As at December 31, 2004, the company owns 216 own shares acquired to secure group employees
stock options (see note 15) and 216 subscription rights.
On October 20, 2004 the company has acquired 100% of the shares of Atro Hungrian Investment Fund
Ltd (Atronyx) for an acquisition price of EUR 9,767,294.17. This investment will be transferred at cost
to Endurance Real Estate Fund For Central Europe, a mutual investment fund launched by the
company in 2005.
NOTE 7 – REGULARISATION ACCOUNTS
Regularisation accounts consist of premium and issuing fees on bonds, amortized over the bonds’ life
(see note 10).
2004
EUR
Gross amount at the beginning of the year
Increase of the year
Gross amount at the end of the year
Amortization at the beginning of the year
Amortization of bond’s premium for the year(1)
Amortization of issuing fees for the year
Amortization at the end of the year
Net amount at the end of the year
2003
EUR
750,000.00
581,469.30
1,331,469.30
750,000.00
______
750,000.00
(268,818.70)
(250,706.50)
(20,050.67)
(539,575.87)
791,893.43
(18,818.70)
(250,000,.0)
___________
(268,818.70)
481,181.30
(1)
The amortization of bond’s premium is accounted for in the profit and loss account in interest
payable and similar charges.
85
NOTE 8 – CAPITAL ACCOUNTS
Evolution of capital accounts
Capital increase
Appropriation of 2003
profit
- Dividend
- Legal reserve
Movements on own
shares
Share capital
Share
premium
Reserve for
own shares
Legal
reserve
Profit brought
forward
EUR
(1)
EUR
EUR
(3)
EUR
(2)
EUR
16,469,999.30
2,483,579.10
33,440,266.76
12,648,709.50
256,235.02
307,434.56
4,316,757.12
1,641,725.67
82,086.29
(1,825,597.35)
(82,086.29)
250,200.02
(250,200.02)
___________
__________
_________
_________
__________
18,953,578.40
46,088,976.26
6,035.00
389,520.85
4,300,999.17
(5) As at December 31, 2004, the subscribed and fully paid-up capital of EUR 18,953,578.40
(2003: EUR 16,499,999.30) is represented by 4,622,824 shares (2003: 4,017,073) without
nominal value.
(6) In accordance with Luxembourg company’s law, the company is required to appropriate a
minimum of 5% of the annual net profit to a legal reserve until the balance of such reserve
equals 10% of the issued capital. The legal reserve is not available for distribution.
(7) In accordance with Luxembourg company’s law, when the own shares are held and shown as
assets, a non distributable reserve of the same amount must be constituted by the company.
NOTE 9 - PROVISIONS FOR TAXES
The company is fully taxable in Luxembourg for income tax and net worth tax. Final tax assessments
have been received until and including the fiscal year 2003 for income tax and until and including the
fiscal year 2003 for net worth tax. The amount of EUR 523,315.80 (2003: EUR 302,091.15) represents
the provisions, net of the advances paid, constituted for the fiscal year for which the final assessments
have not yet been issued.
In accordance with the fiscal law in force the 2003 and 2004 profits are not subject to income taxes as
they are composed of non taxable profits realised on sale of equity participations in accordance with
the conditions provided by law in matters of holding period. The amount of EUR 243,537.60 (2003:
EUR 137,049.85) recorded in the profit and loss account corresponds to the charge for net worth tax
for the year.
86
NOTE 10 - CREDITORS
Creditors are as follows:
2004
EUR
Due and payable within one year
Due and payable after more than one year
2003
EUR
29,587,689.91
32,450,641.20
____________
10,450,707.18
10,000,000.00
____________
62,038,331.11
20,450,707.18
Amounts owed to affiliated undertakings amount to EUR 14,037,632.99 (2003: EUR 6,738,054.41)
As at December 31, 2004 and 2003, debenture loans are detailed as follows:
Number of
bonds
Interest
Rate
%
Maturity
Amount
EUR
10,000
2,735
5,5
7
2005
2004
10,000,000.00
2,735,000.00 (1)
____________
12,735,000.00
3
1
10,000
1,001,563
6
5
5,5
5,5
2005
2005
2005
2011
3,000,000.00
1,000,000.00
10,000,000.00
32,450,641.20
____________
2003
2004
46,450,641.20
(1) bond reimbursed during 2004
During the financial year 2002, the company issued at 92,5% bonds for EUR 10,000,000.00. The
premium is amortized over the life of the bond and is shown in regularisation accounts for
EUR 230,474.80 as at December 31, 2004.
On September 22, 2004 the company issued quoted convertible bonds for EUR 32,450,641.20 at 5,5%
with a maturity date of December 24, 2011. The bonds are convertible with a ratio of one share for one
bond.
87
NOTES TO THE ACCOUNTS
December 31, 2004
- Continued -
In case of non-conversion, an additional interest is due. The prorata of this interest as at December 31,
2004 is estimated at EUR 140,000.00 and has been accounted for as provision for charges.
The fees supported for the issue of the bonds are accounted for in the regularisation accounts and are
amortized over the life of the bonds (see note 7).
NOTE 11 – MANAGEMENT FEES
Management fees are fees linked to services rendered to the subsidiaries of the company.
NOTE 12 – VALUE ADJUSTMENTS
2004
EUR
Value adjustment on intangible assets (note 3)
Value adjustment on tangible assets (note 3)
Value adjustment on financial assets (note 4)
Value adjustment on regularisation accounts (note 7)
2003
EUR
4,508.00
58,342.07
749,611.01
20,050.67
_________
3,958.00
33,417,50
________
832,511.75
37,375.50
NOTE 13 – EQUITY PARTICIPATIONS
Income from participations is composed of interest on loans and advances granted to subsidiaries.
NOTE 14 – EXTRAORDINARY INCOME
2004
EUR
Profit on sales of equity participations
Profit on sale of ORCO HOTEL GROUP S.A. shares to
ORCO HOTEL GROUP S.A. (Luxembourg)
-
2003
EUR
3,984,500.00
1,164,142.10
___________
___________
1,164,142.10
3,984,500.00
88
NOTE 15 – GUARANTEES AND COMMITMENTS
Stock-options:
The non exercised stock options plans that company granted to employees or
Directors are the following:
-
6,000 shares to Mr Dragan Lazukic in three instalments of 2,000 shares
each, to be exercised between 2002 and 2005 at prices increasing from EUR
20.00 to EUR 30.00 per share;
6,000 shares to Mr Ales Vobruba in three instalments of 2,000 shares each,
to be exercised from 2002 and 2005 at prices increasing from EUR 20.00 to
EUR 30.00 per share;
3,000 shares to Mr Pavel Klimes in two instalments, to be exercised form
2004 to 2006 at prices increasing from EUR 25.00 to EUR 30.00 per share;
3,000 shares to Mr Verek Machuta in two instalments, to be exercised form
2004 to 2006 at prices increasing from EUR 25.00 to EUR 30.00 per share.
The stock option plan granted to Mrs Patricia Lerouge was cancelled.
Other commitments:
1. Following the agreement signed between ORCO PROPERTY GROUP S.A. and
GECGE Kosik Investors S.à r.l. dated February 12, 2004, the company still has to
subscribe, after December 31, 2004, to two capital increases for a total amount of
EUR 3,000.00 increased by a total share premium of EUR 3,000,000 , GECGE
Kosik Investors S.à.r.l having to subscribe for EUR 3,000.00 without share
premium. In addition, a further capital increase of EUR 2,500.00 and a share
premium of EUR 2,500,000.00 have been paid by the company during the first
quarter of 2005.
2. Shares of equity participations hereunder are pledged in favour of banks in order
to guarantee loans granted to subsidiary companies:
Americka 1
Americka 33
Americka Orco
Anglicka 26
Belgicka Nakozacce
Londynska 41
Londynska 26
Machova Orco
Manesova 28
89
Nad Petruskou
Orco Property AS
Orco Revay
Orco Vinohrady
Zahrebska 35
90
NOTE 16 – DIRECTORS’ FEES
The remunerations paid to the directors for the year 2004 amount to EUR
766,000.00which are included in staff costs and in external charges in the profit and loss
account. Furthermore, the directors receive a fee of 500 EUR each time they are attending
a board meeting. The company did not grant any advances nor loans nor pension plans to
the directors.
NOTE 17 – TRANSACTIONS ON OWN SHARES
In accordance with the provisions described in articles 241-1 to 241-7 of the General
Regulations of the AMF and with the provisions of the European regulation n°2273/2003
dated 22nd September 2003 applying the directive 2003/6/CE dated 28th January 2003
also known as the “Market abuse” directive that came into force from 13th October 2004
onwards and to which it is bound, the company has issued an information note related to
the renewal of the previous redemption of own shares program, which received the AMF
visa n° 04-944 dated 2nd December 2004.
The main objectives of this own shares buy-back program are the following:
- ensure the liquidity of the security market;
- allocation of shares to employees benefiting from stock-options programs or any other
share allocation program;
- remittance of shares in payment or exchange in relation to possible external growth
transactions.
The company has proceeded as part of the previous program to the redemption of 45,610
own shares for a total amount of EUR 1,147,443.47 and to the sale of 89,728 own shares
for a total amount of EUR 1,901,725.00. The net realised gain on sales of these own
shares amounting to EUR 42,540.00 is included in the financial result in the profit and
loss account.
On 31st December 2004, the company owned 216 shares directly and 1,710 shares
indirectly. At that date, the nominal value of these owned shares amounted to EUR
7,897.00 which represented 0.04% of the subscribed capital.
NOTE 18 – SUBSEQUENT EVENTS
Since February 1, 2005, ORCO PROPERTY GROUP S.A. is quoted on the Prague stock
exchange. Furthermore, ORCO PROPERTY GROUP S.A. is part of the index PX 50.
In March 31, 2005, ORCO PROPERTY GROUP S.A. and Société Générale in Paris (SG)
have arranged a Step-up Equity Subscription (PACEO: Programme d’Augmentation de
Capital par Exercices d’Options). The PACEO has been filed with and approved by the
AMF (Autorité des Marchés Financiers) with the visa No. 05-201. It allows ORCO
PROPERTY GROUP S.A. to issue a maximum of 1 million new shares subscribed on the
demand of ORCO PROPERTY GROUP S.A. by SG. All subscriptions will be at an issue
price of 95% of the share price at the time of execution.
91
Interim consolidated financial statements 30.06.05
IFRS
Orco Property Group’s Board of Directors has approved on 14 September 2005 the interim consolidated
financial statements for the first-half 2005. All the figures in this report are presented in thousands of
Euros, except if explicitly stated.
I. Consolidated interim income statement
June
2005
6 months
June
2004
6 months
December
2 004
12 months
6
22 302
43 251
70 670
6
14 213
992
-17 965
-5 966
-945
-24
-1 838
5 790
264
-30 668
-3 682
367
0
-2 638
25 408
3 050
-51 723
-7 464
-6 220
0
-2 892
Operating result
10 769
12 684
30 829
Foreign exchange result
Net interest expenses
Other financial results
Financial result
1 043
-2 749
-796
-2 502
921
-2 208
-233
-1 520
509
-5 515
1 177
-3 829
8 267
11 164
27 000
-3 177
-5 282
-7 534
5 090
5 882
19 466
Note
Revenue
Net gain from fair value adjustment
on investment property
Cost of sale
Employee benefit
Amortization and impairments
Result from activities held for sale
Other operating expenses
19.4
Profit before income taxes
Income taxes
17
Net profit
Attibutable to minority interests
Attributable to the Group
784
-270
117
4 306
6 152
19 349
Basic earnings per share
18
0,80
1,52
4,61
Diluted earnings per share
18
0,78
1,30
3,32
92
II. Consolidated interim balance sheet
Assets
Note
NON-CURRENT ASSETS
Intangible assets
Investment property
7
Equity and liabilities
June
2 005
December
2 004
265 900
208 728
1 313
1 250
176 633
134 503
Note
EQUITY
Shareholders'equity
Minority interests
77 363
66 354
8
49 418
48 398
LIABILITIES
9
10
7 360
20 585
5 802
12 154
Financial assets
11
7 411
2 286
Non-current liabilities
Bonds
Financial debts
Provisions
Deferred tax assets
17
3 180
4 335
Property, plant and equipment
Hotels and own-occupied buildings
Fixtures and fittings
Properties under development
CURRENT ASSETS
Deferred tax liabilities
107 003
80 176
Inventories
13
30 521
31 778
Financial debt
Trade receivables
Other current assets
Cash and cash equivalents
14
19 444
13 575
43 463
22 145
10 511
15 742
Trade payables
Advance payments
Other current liabilities
12
27 271
20 054
400 174
308 958
Held for sale activities
TOTAL
16
16
Current liabilities
TOTAL
June
2 005
December
2 004
167 050
117 910
159 438
114 695
7 612
3 215
215 323
180 761
146 988
56 975
83 126
779
92 557
30 829
56 655
762
6 108
4 311
68 335
88 204
19 297
29 340
13 679
19 059
16 300
18 116
26 939
13 809
17 801
10 287
400 174
308 958
16
12
93
III. Consolidated interim statement of changes in equity
Share
Capital
Balance at 1 January 2004
16 470
Share
Translation Treasury Cashflow
premium
reserve
shares
hedge
33 440
Gains or losses for the period :
Translation differences
Profit of the period
0
-319
0
1 005
17 475
37 736
Capital increase
1 066
-5
1 479
8 353
-67
Convertible loan
Minority interests' transactions
18 954
46 089
Net changes in fair value
4 021
-72
0
215
-270
1 281
5 882
-1 826
-1 826
-1 826
5 301
5 301
5 684
38 143
114
1 210
1 324
34 441
90 713
5 134
95 847
13 197
2 955
13 197
1 029
387
3 984
13 584
-230
9 602
9 602
151
84
84
961
961
-2 817
-2 817
-3 335
-6 152
45 703
114 695
3 215
117 910
4 306
-273
953
4 306
453
784
-273
1 406
5 090
-3 498
-3 498
-3 498
42 738
42 738
-106
Stock option plan
24 638
84 232
4 974
-178
-273
961
-1 089
-404
Treasury shares
314
114
-273
Convertible loan
Balance at 30 June 2005
1 066
6 152
953
Dividends relating to 2004
Capital increase
6 152
2 955
Treasury shares
Balance at 31 December 2004
83 571
314
0
Equity
3 979
314
Minority
Interests
79 592
4 296
Treasury shares
Shareholders
Equity
30 001
1 066
Dividends relating to 2003
Capital increase
Other
reserves
-404
-404
-106
-106
1 393
1 393
-367
-367
3 160
2 793
1 393
46 045
159 438
7 612
167 050
Notes to the consolidated interim financial statements
1. General information
Orco Property Group SA (the Company) and its subsidiaries (together the Group) is a real estate group with a major
portfolio in Central Europe. It is principally involved in leasing out investment property under operating leases, in
asset management, in operating hotels and extended stay hotels and is also very active in development of properties
for its own portfolio or to be sold in the ordinary course of business.
The Company is a limited liability company for an unlimited term incorporated and registered in Luxembourg. The
address of its registered office is 8, Boulevard Emmanuel Servais – L – 2535 Luxembourg.
The Company has a dual listing on the EuroNext Paris stock exchange and on the Prague stock exchange.
These consolidated interim financial statements have been approved for issue by the Board of Directors on 14
September 2005.
94
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated interim financial statements are set
out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Orco Property Group’s consolidated interim financial statements have been prepared in accordance with
international financial reporting standards (IFRS) applicable as of January 1, 2005.
These June 2005 consolidated interim financial statements of the Group are for the six months ended 30
June 2005. With the exception of the consolidated interim cash flow statements and certain disclosures
required by IAS34 Interim Financial Reporting that will only be reported in the 2005 annual financial
statements, these consolidated interim financial statements have been prepared in accordance with IFRS
and are covered by IFRS 1, First-time Adoption of IFRS, because they are part of the period covered by
the Group’s first IFRS financial statements for the year ended 31 December 2005. The IFRS standards
and IFRIC interpretations that will be applicable at 31 December 2005, including those that will be
applicable on an optional basis, are not known with certainty at the time of preparing these consolidated
interim financial statements.
Orco Property Group’s consolidated interim financial statements were prepared in accordance with
Luxembourg’s Generally Accepted Accounting Principles (GAAP) until 31 December 2004.
Luxembourg GAAP differs in some areas from IFRS. In preparing the Group’s 2005 consolidated
interim financial statements, management has amended certain accounting, valuation and consolidation
methods applied in the Luxembourg GAAP financial statements to comply with IFRS. The comparative
figures in respect of 2004 were restated to reflect these adjustments, except as described in the
accounting policies. Reconciliations and descriptions of the effect of the transition from Luxembourg
GAAP to IFRS on the Group’s equity and its net income are presented in note 5.
These consolidated interim financial statements have been prepared under the historical cost convention,
as modified by the revaluation of investment property, available-for-sale financial assets, and financial
assets or financial liabilities (including derivative instruments) at fair value.
The preparation of consolidated interim financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise judgement in the process of applying the
Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated interim financial statements,
are disclosed in Note 4.
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of
an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any minority interests. The excess of the cost of acquisition over the fair
value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is
less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income
statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
95
(b) Joint-ventures
The Group’s interests in jointly controlled entities are accounted for by proportionate consolidation.
The Group combines its share of the joint ventures’ individual income and expenses, assets and liabilities and cash
flows on a line-by-line basis with similar items in the Group’s financial statements.
The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is
attributable to the other venturers. The Group does not recognise its share of profits or losses from the joint venture
that result from the Group’s purchase of assets from the joint venture until it resells the assets to an independent
party. A loss on the transaction is recognised immediately if it provides evidence of a reduction in the net realisable
value of current assets, or an impairment loss. Joint ventures’ accounting policies have been changed where
necessary to ensure consistency with the policies adopted by the Group.
2.3 Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to
risks and returns that are different from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that are subject to risks and returns that are
different from those of segments operating in other economic environments.
2.4 Foreign currency translation
The exchange rates against Euro used to establish these consolidated interim financial statements are the following
ones :
30 June 2005
Average
Closing
0.03330
31 December 2004
Average
CZK
0.03320
0.03133
HUF
0.00404
0.00404
0.00398
HRK
0.13680
0.13700
N.A.
PLN
0.24508
0.24752
0.22156
SKK
0.02590
0.02606
0.02493
Closing
0.03282
30 June 2004
Average
Closing
0.03085
0.03149
0.00407
0.00392
0.00395
N.A.
N.A.
N.A.
0.24565
0.21144
0.22016
0.02578
0.02472
0.02503
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the ‘functional currency’). The consolidated financial
statements are presented in euros, which is the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement.
(c) Group companies
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
(i)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
(ii)
income and expenses for each income statement are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions); and
(iii)
all resulting exchange differences are recognised as a separate component of equity.
When a foreign operation is sold, exchange differences arising from the translation of the net investment in foreign
entities are recognised in the income statement as part of the gain or loss on sale.
96
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate.
2.5 Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary/joint-ventures at the date of acquisition. Goodwill on acquisitions of
subsidiaries and joint-ventures is included in intangible assets. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
(b) Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised over their estimated useful lives (three to five years).
Costs associated with developing or maintaining computer software programs are recognised as an expense as
incurred. Costs that are directly associated with the production of identifiable and unique software products controlled
by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as
intangible assets. Direct costs include the costs of software development employees and an appropriate portion of
relevant overheads.
Computer software development costs recognised as assets are amortised over their estimated useful lives (3 to 5
years).
2.6 Investment property
Property that is held for long-term rental yields or for capital appreciation or both (including the land bank), and that is
not occupied by the Group, is classified as investment property.
Investment property comprises freehold land, freehold buildings, land held under operating lease and buildings held
under finance lease.
Land held under operating lease is classified and accounted for as investment property when the definition of
investment property is met.
Investment property is measured initially at its cost, including related transaction costs.
After initial recognition, investment property is carried at fair value. Fair value is based on active market prices,
adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is
not available, the Group uses alternative valuation methods such as recent prices on less active markets or
discounted cash flow projections. These valuations are performed annually by an independent expert, DTZ
Debenham Tie Leung. Investment property that is being redeveloped for continuing use as investment property or for
which the market has become less active continues to be measured at fair value.
The fair value of investment property reflects, among other things, rental income from
current leases and assumptions about rental income from future leases in the light of
current market conditions.
The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.
Some of those outflows are recognised as a liability, including finance lease liabilities in respect of buildings classified
as investment property.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to the income statement during
the financial period in which they are incurred.
Changes in fair values are recorded in the income statement.
97
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair
value at the date of reclassification becomes its cost for accounting purposes. Property that is being constructed or
developed for future use as investment property is classified as property, plant and equipment and stated at cost until
construction or development is complete, at which time it is reclassified and subsequently accounted for as
investment property.
If an item of property, plant and equipment becomes an investment property because its use has changed, any
difference resulting between the carrying amount and the fair value of this item at the date of transfer is recognised in
equity as a revaluation of property, plant and equipment under IAS 16. However, if a fair value gain reverses a
previous impairment loss, the gain is recognised in the income statement.
The lands on which are sitting buildings under construction that will qualify as investment property at construction
completion are from the beginning classified as investment property and hence recorded at fair value.
The land bank includes all plots of land held by the Group on which no construction or development has started at
the balance sheet date.
Investment property held for sale without redevelopment is classified under current assets as assets held for sale
under IFRS5.
2.7 Property, plant and equipment
Hotels and own-occupied buildings, Fixtures and fittings, Properties under development are classified as property,
plant and equipment.
All elements in this category are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the
financial period in which they are incurred.
Depreciation, based on a component approach, starts when construction or development is complete. The
depreciation is calculated using the straight-line method to allocate the cost over the asset’s estimated useful lives,
as follows:
•
Land
•
Buildings
80 years
•
3 to 20 years
Nil
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at least at each financial yearend.
An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater
than its estimated recoverable amount (Note 2.9).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
the income statement.
All borrowing costs are expensed except for the borrowing costs that are capitalized as part of the cost of that asset
when they are directly attributable to the acquisition, construction or production of a qualifying asset.
2.8 Leases
(a) A group company is the lessee
i)
Operating lease
Leases in which a significant portion of the risks and rewards of ownership are retained by another party,
the lessor, are classified as operating leases. Payments, including prepayments, made under operating
leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease.
ii)
Finance lease
Leases of assets where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value
of the leased property and the present value of the minimum lease payments. Each lease payment is
allocated between the liability and finance charges so as to achieve a constant rate on the finance balance
98
outstanding. The corresponding rental obligations, net of finance charges, are included in current and noncurrent borrowings. The interest element of the finance cost is charged to the income statement over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period. The investment properties acquired under finance leases are carried at their fair value.
(b) A group company is the lessor
i)
Operating lease
Properties leased out under operating leases are included in investment property in the balance sheet.
ii)
Finance lease
When assets are leased out under a finance lease, the present value of the lease payments is recognised
as a receivable. The difference between the gross receivable and the present value of the receivable is
recognised as unearned finance income.
Lease income is recognised over the term of the lease using the net investment method before tax, which
reflects a constant periodic rate of return.
2.9 Impairment of assets
Assets including goodwill that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use.
2.10 Inventories
Properties that are being developed for future sale are classified as inventories at their cost or deemed cost , which is
the carrying amounts at the date of reclassification from investment property. They are subsequently carried at the
lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business less cost to complete redevelopment and selling expenses.
2.11 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less.
2.12 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds in other reserves.
Orco Property Group’s shares held by the Group -Treasury shares- are measured at their acquisition cost and
recognized as a deduction from equity.Gains and losses on disposal are taken directly to equity.
2.13 Borrowings
The term Borrowings covers the elements recorded under the captions Bonds and Financial debts within the noncurrent liabilities and the caption Financial debts within current liabilities.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated
at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is
recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
2.14 Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
99
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and joint ventures,
except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Investment property
Deferred income tax is provided on temporary differences arising on fair value of buildings and lands held by the
Group as investment properties except when they are located in special purpose entities, which are themselves held
by a company based in Luxembourg. Each special purpose entity is meant to hold one specific project. Eventually,
should a special purpose entity be disposed off, the gains generated from the disposal will be exempted from any tax
(in accordance with the Grand-ducal rule of December 21, 2001), if the Luxembourg-based company holds or
commits itself to hold this stake for a minimum of a continuous 12-month period and, if, during this same period, the
stake amounts to at least 10% of the affiliate’s capital or the acquisition price amounts to at least Eur 6 million. The
Group is confident that all special purpose entites will comply with these conditions.
For investment properties, this holding structure has an influence on the deferred tax calculation because the Group
will recover its investment by selling its shares in the special purpose entity. Therefore deferred taxes have been
accounted for only on the temporary differences arising on the land bank (they are not meant to be sold in the
framework of a share transaction).
In note 17, you will find the influence on the Group’s financial position if the existing holding structure would not exist
or would not be used in the hypothesis of a sale of all investment properties.
2.15 Provisions
Provisions for legal claims are recognised when: the Group has a present legal or constructive obligation as a result
of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the
amount has been reliably estimated.
Where the Group, as lessee, is contractually required to restore a leased in property to an agreed condition, prior to
release by a lessor, provision is made for such costs as they are identified.
2.16 Derivatives
Derivatives are recognized in the balance sheet at their fair value, which is the market value at the balance sheet
date within other current assets or other payables.
Apart from embedded derivatives, the Group enters into derivatives as part of its strategy for hedging interest rate
risks. IAS39 subordinates the use of hedge accounting to initial documentation and demonstration of the effectivness
of the hedging relationship. If those restrictive conditions are not achieved, changes in their fair value are accounted
for through the income statement. If they are recognized as effective hedging instruments of future interest payments,
changes in their fair value are taken to equity.
If the derivative is designated as a hedging instrument, the method of recognizing the resulting gain or loss depends
on the nature of the item being hedged. The Group designates certain derivatives as either: (1) hedges of the fair
value of recognised assets or liabilities or a firm commitment (fair value hedge) or (2) hedges of highly probable
forecast transactions (cash flow hedges).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are
used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
(a)
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to
the hedged risk.
(b) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
are recognised in equity. The gain or loss relating to the ineffective portion is recognized immediately in the income
statement. Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item
will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast
100
transaction that is hedged results in the recognition of a non-financial asset (for example, inventory) or a liability, the
gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of
the cost of the asset or liability. When a hedging instrument expires or is sold, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately
transferred to the income statement.
Embedded derivatives that are not equity instruments -issued call options embedded in exchangeable bond- are
recognized separately and changes in fair value are accounted for through the income statement.
2.17 Revenue recognition
Revenue includes rental income, service charges and management charges from properties, and income from
property trading.
Rental income from operating leases is recognised in income on a straight-line basis over the lease term. When the
Group provides incentives to its customers, the cost of incentives are recognised over the lease term, on a straightline basis, as a reduction of rental income.
Service and management charges are recognised in the accounting period in which the services are rendered.
2.18 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in
the period in which the dividends are approved.
2.19 Interim measurement note
(a)
Current income tax
Current income tax expense is recognised in these interim consolidated financial statements based on
management’s best estimates of the weighted average annual income tax rate expected for the full financial year.
(b)
Costs
Costs that incur unevenly during the financial year are anticipated or deferred in the interim report only if it would also
be appropriate to anticipate or defer such costs at the end of the financial year.
(c)
Seasonality
Since IAS11 Construction contracts is not applicable to the Group, the sales revenue is only accounted when the
transfer of property is complete. Therefore and as an important part of the Group revenues is generated by the
development activites, revenues for the whole year cannot be extrapolated from the interim report.
Furthermore part of the operating result depends on the revaluation of investment properties and on the sales of
properties that are non-recurring events.
2.20 New accounting standards and IFRIC interpretations
Certain new accounting standards and IFRIC interpretations have been published that are mandatory for accounting
periods beginning on or after 1 January 2006. Most of these standards and interpretations will not affect the Group.
IFRIC 4, Determining whether an Asset Contains a Lease, is applicable to annual periods beginning on or after 1
January 2006. The Group has elected for early adoption. Implementation of IFRIC 4 has no impact on the accounting
for any of the Group’s current arrangements.
3. Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and price risk),
credit risk, liquidity risk and cash flow and fair value interest rate risk.
(a)
Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the CZK for the Czech Republic, the PLN for Poland and the HUF for
Hungary. Foreign exchange risk arises from recognised monetary assets and liabilities and net investments in
foreign operations. The Group does not hedge its foreign exchange risks. Salaries, overhead expenses, future
101
purchase contracts in the development sector, building refurbishment and construction costs are denominated
in local currencies. Loans, operating income and -except in the development activities- building sales are
denominated in Euros.
(ii) Price risk
The Group is exposed to property price and property rentals risk but it does not pursue any speculative policy.
Eventhough the Group’s activities are focused on one geographical area -Central Europe-, they are spread over
several business lines (residences, offices, hotels) and different countries that undergo specific cycles.
(b)
Credit risk
The Group has no significant concentrations of credit risk. Rental contracts are made with customers with an
appropriate credit history. Cash transactions are limited to high-credit-quality financial institutions. The amount of
credit exposure to any financial institution is limited.
(c)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to
the nature of its assets the Group is subject to a liquidity risk. However, over the medium and long term this risk is
remote. Furthermore most loans expire at the earliest in 2010.
(d)
Cash flow and fair value interest rate risk
The Group has no significant interest-bearing assets.
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the
Group to cash flow interest rate risk. The Group has now started to hedge some of its variable interest rates by
entering into swap transactions.
The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its
financial position and cash flows. Interest costs may increase as a result of such changes. They may reduce or
create losses in the event that unexpected movements arise.
4. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience as adjusted for current
market conditions and other factors.
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
(a)
Estimate of fair value of investment properties
The best evidence of fair value is current prices in an active market for similar lease and other contracts. In the
absence of such information, the Group determines the amount within a range of reasonable fair value estimates. In
making its judgement, the Group considers information from a variety of sources including:
i)
current prices in an active market for properties of different nature, condition or location (or
subject to different lease or other contracts), adjusted to reflect those differences;
ii)
recent prices of similar properties in less active markets, with adjustments to reflect any
changes in economic conditions since the date of the transactions that occurred at those
prices; and
discounted cash flow projections based on reliable estimates of future cash flows, derived
from the terms of any existing lease and other contracts and (where possible) from external
evidence such as current market rents for similar properties in the same location and
condition, and using discount rates that reflect current market assessments of the uncertainty
in the amount and timing of the cash flows.
iii)
102
b) Principal assumptions for management’s estimation of fair value
If information on current or recent prices of assumptions underlying the discounted cash flow approach
investment properties are not available, the fair values of investment properties are determined using
discounted flow valuation techniques. The Group uses assumptions that are mainly based on market
conditions existing at each balance sheet date.
The principal assumptions underlying management’s estimation of fair value are those related to: the
receipt of contractual rentals; expected future market rentals; void periods; maintenance requirements;
and appropriate discount rates. These valuations are regularly compared to actual market yield data,
and actual transactions by the Group and those reported by the market.
The expected future market rentals are determined on the basis of current market rentals for similar
properties in the same location and condition.
(c)
Income taxes
The Group is subject to income taxes in different jurisdictions. Significant estimates are required in determining the
provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is
uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional
taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
As stated in note 2.14, the calculation of deferred tax on investment properties is based on the assumption that they
will be realised through a share deal instead of an asset deal. Indeed as a result of the Group structure, the potential
capital gain will be exempted from any tax in the case of share deal.
4.2 Critical judgements in applying the Group’s accounting policies
Distinction between investment properties and owner-occupied properties
The Group determines whether a property qualifies as investment property. In making its judgement, the Group
considers whether the property generates cash flows largely independently of the other assets held by an entity.
Owner-occupied properties generate cash flows that are attributable not only to property but also to other assets
used in the production or supply process.
Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is
held for use in the supply of services or for administrative purposes. If these portions can be sold separately (or
leased out separately under a finance lease), the Group accounts for the portions separately. If the portions cannot
be sold separately, the property is accounted for as investment property only if an insignificant portion is held for use
in the supply of services or for administrative purposes. Judgement is applied in determining whether ancillary
services are so significant that a property does not qualify as investment property. The Group considers each
property separately in making its judgement.
5. IFRS transition
2005 is the first year in which accounts will be presented under IFRS. They will also include the accounts
as at 31 December 2004 restated for IFRS standards. Pursuant to the recommendation of the EFRAG, the
present document includes the following information :
•
Reconciliation between the balance sheet for the financial year ending December 2003, prepared
according to Luxembourg accounting standards, and the opening balance sheet at 1 January 2004,
prepared according to IFRS standards.
•
Reconciliation of the income statement for the year ending December 2004, prepared according to
Luxembourg accounting standards and IFRS standards.
103
The main standards having a significant impact on the transposition of Orco Property Group accounts into
IFRS are indicated as follows :
IFRS 1
First time adoption of IFRS
IAS 2
Inventories
IAS12
Income taxes
IAS 16
IAS 17
Leases
IAS 32 and 39 Financial instruments: disclosure and presentation and Financial instruments:
recognition and measurement
IAS 40
Investment property
IFRS1 applies to businesses presenting for the first time their financial statements under IFRS. This
standard provides for the retroactive application of all the rules and interpretations prevailing during the
transition period. The standard provides for exemptions and exceptions in certain cases.
Assets, liabilities and equity, recognized and evaluated according to IFRS, must also be classified
according to the same standards.
The Group has opted for the exemptions and exceptions as indicated below:
• Fair value is used as the deemed cost for all investment properties, own-occupied buildings, hotels
as well as assets to be sold as part of ordinary activities. Hotels under construction as at 1 January
2004 are accounted for at their historic cost as defined by IFRS.
•
Currency translations on all foreign entities are assumed to be equal to zero. Gains and losses on
the subsequent sales of foreign entities will exclude the currency translation differences generated
before the transition date to IFRS and will include the subsequent translation changes.
•
No retroactive application of the standard relating to business combinations. Transactions made
before January 1, 2004 are not restated.
104
Leasing
IAS 32 & 39
Provisions
Translation
Taxes
Others
NON-CURRENT ASSETS
Published
Deem ed cost
Assets
Transfer
Reconciliation between the balance sheet for the financial year
ending December 2003, prepared under Luxembourg accounting
standards, and the opening balance sheet at 1 January 2004,
prepared under to IFRS standards.
110 416
-1 425
41 951
804
0
0
0
2 331
4 866
158 943
1 628
-977
0
0
0
0
0
0
-282
369
108 650
-6 509
41 951
804
0
0
0
0
5 148
150 044
Intangible assets
Tangible assets
IFRS
92 857
32 764
3 398
21 025
Investment property
Hotel and own-occupied buildings
138
Financial assets
17
0
0
0
0
0
6 044
Deferred tax assets
0
155
0
2 331
8 375
104 839
1 442
-4 936
0
-800
-3 779
-242
-170
-8 863
87 492
Inventories
Trade receivables
Deferred tax assets
42 795
21 937
8 102
15 454
5 075
892
-8 102
3 577
-4 936
0
0
0
0
0
0
0
0
0
0
-481
-3 934
155
0
0
0
0
0
-242
0
0
0
-170
0
33
0
-8 896
39 001
23 017
0
9 242
16 551
0
0
0
-319
0
0
0
0
16 232
215 255
17
37 015
804
-800
-3 779
-242
2 161
-3 997
246 435
CURRENT ASSETS
Transfer
Deemed cost
Leasing
IAS 32 & 39
Provisions
Translation
Taxes
Others
TOTAL
51 146
17
37 016
0
-319
1 386
-613
-451
-4 611
83 571
Shareholders' equity
52 969
12
30 791
0
-319
1 392
-569
-2
-4 682
79 592
Minority interests
-1 823
5
6 225
0
0
-6
-44
-449
71
3 979
PROVISIONS
7 579
-7 579
0
0
0
0
0
0
0
0
LIABILITIES
156 530
7 579
0
804
-481
-5 164
371
2 611
614
162 865
Bonds
80 975
-7 374
0
804
-481
-5 441
371
2 611
0
71 465
12 735
-2 735
0
0
-481
0
0
0
0
9 519
Financial debts
67 018
-10 947
0
804
0
0
0
0
0
56 875
1 222
-1 159
0
0
0
0
0
-63
0
0
0
6 980
0
0
0
-5 441
371
0
0
1 910
EQUITY
Other debts
Provisions
Published
IFRS
0
487
0
0
0
0
0
2 674
0
3 161
Current liabilities
Financial debts
75 555
14 953
0
0
0
277
0
0
614
91 400
3 615
14 511
0
0
0
0
0
0
0
18 126
Trade payables
10 811
0
0
0
0
0
0
0
0
10 811
Advance payments
52 888
330
0
0
0
0
0
0
0
53 218
Debts towards shareholders
3 457
4 784
0
0
0
0
0
0
0
277
0
0
0
0
0
614
3 630
173
-61
215 255
17
37 016
804
-800
-3 778
-242
2 160
-3 997
246 435
TOTAL
Transfer
This column mainly consists of the transfer of IPB land sites (EUR 6.5 million) to inventories which will be
used for real-estate projects meant for sale as part of the ordinary activities of the business. All
105
5 615
development costs are capitalized and booked to the cost of goods sold at the time of the effective transfer
of the good.
The other reclassifications relate to the breakdown between current and non-current activities as well as the
transfer to previously unused captions.
Deemed cost
In terms of tangible fixed assets, an exemption to IFRS 1 is applicable. Fair value is used as the deemed
cost for all investment buildings, hotels and own-occupied buildings as well as assets to be sold as part of
ordinary activities.
In terms of inventories, a certain number of costs linked to IPB real-estate projects, which had earlier been
capitalized can no longer be so under IAS 2 (EUR 4.9 million before taxes; EUR 3.7 million net of taxes).
Leasing
The group holds two buildings via finance leases. As they were not booked previously, these buildings are
now booked to assets and to debt in liabilities.
The review of operating leases did not lead to a significant change in rental income.
Pursuant to the requirements of IAS 17, financial leases are valued at the present value of the minimum
payments for the lease (EUR 0.8 million).
IAS 32 & 39
The impact of the standards relating to financial instruments is limited to the reclassification of treasury
stock within Equity (EUR 0.3 million) and the premium on bond issues (EUR 0.5 million) now included in
the amortized cost of bonds.
Provisions
The sum of provisions which are not compliant with IAS 37 is booked to opening equity reserves
(EUR 1.4 million). An amount of EUR 4 million has been reclassified from provisions to the appropriate
assets/liabilities items.
Translation
Cumulative currency translations before January 1, 2004 are booked to the opening equity reserves
account.
Taxes
All adjustments to deferred taxes relate to the assessment of local taxes as well as to IFRS restatements
(EUR 0.7 million).
The Group has proceeded to a systematic review of the fiscal situation of each of its subsidiaries in order to
book correctly the deferred tax. All adjustments relating to parent-company accounts are booked net of
taxes when the standard is applicable.
Tax assets and liabilities were estimated using the tax rate and fiscal base that are consistent with the
expected method of recovery or settlement. Therefore, given the structure of the Group’s property-asset
base, most of the revaluations did not generate deferred tax.
Others
In terms of intangible fixed assets, this mainly entails the cancellation of start-up and research costs, which
cannot be capitalized under IFRS (EUR -0.3 million). The correction of other debtors mainly relates to the
disposal of 50% of Kosic to General Electric of which the transfer of risks and rewards, according to IFRS,
was not complete until 2004 (EUR 3.9 million). The capital gain on this operation is booked in 2004 under
IFRS and not in 2003.
106
Foreign exchange result
Net interest charges
Other financial results
Financial result
Translation
Taxes
Others
0
1 878
13 084
-50 631
-7 726
-7 702
-2 636
17 491
IAS 32 & 39
71 224
Leasing
Revenue
Fixed production
Cost of sale
Employee benefit
Amortization and impairments
Other operating expenses
Operating result
IAS 2, 16 & 40
Published
Transfer
Reconciliation of the income statement for the year ending December
2004 under Luxembourg accounting standards and IFRS.
0
0
0
0
0
0
-554
70 670
0 25 408
-271
0
-834 -10 693
-583 -1 169
262
0
1 274
-9
-235
-21
-387 13 516
0
0
0
44
0
0
0
44
0
0
0
230
0
0
0
230
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
-1 607
1 493
386
0
217
0
-65
25 408
0
3 050
-51 723
-7 464
-6 220
-2 892
30 829
IFRS
-949
-5 274
1 505
-4 718
0
141
987
1 128
0
0
0
0
0
-74
0
-74
0
-70
-151
-221
1 458
0
0
1 458
0
0
0
0
0
-238
-1 164
-1 402
509
-5 515
1 177
-3 829
Exceptional result
-403
-741
1 137
0
0
0
0
7
0
Profit before taxes
12 370
0 14 653
-30
9
1 458
0
-1 460
27 000
Income taxes
-6 250
Net profit
Attributable to minority interests
6 120
-472
6 592
0
0
0
0
-1 284
0
-7 534
0 14 653
0
-30
9
1 458
-1 284
-1 460
19 466
637
0
0
-263
184
32
117
0 14 016
0
-30
9
1 721
-1 468
-1 492
19 349
Transfer
The transfers mainly relate to the elimination of the notion of exceptional items, but also to the
reclassification of items that had previously been incorrectly allocated.
IAS 2, 16, 40
This column (EUR 14.7 million) mainly reflects the revaluation of land sites and buildings at their market
value as well as the correction of the inventory value of development projects booked as stock (EUR 1.2
million), the IFRS criteria for capitalization being different from those previously applied. The reversal of
the reduction in value of the Benice site, booked to the property asset reserve, is transferred to profit net of
revaluation (EUR 10.6 million).
The correction of exceptional result is attributable to changes in inventory value under IFRS 1 due to the
sale of assets during the year ended 31 December 2004.
Leasing
The group holds two buildings via finance leases. As they were not booked previously, these buildings are
now booked to assets and to debt in liabilities.
The review of operating leases did not lead to a significant change in rental income.
Pursuant to the stipulations of IAS 17, the contractual payments from financial leases are replaced by the
depreciation of capitalized buildings and interest charges.
IAS 32 and 39
This column includes the correction under the effective interest rate method for interest on the convertible
bond issued in September 2004 (EUR 0.1 million), the cancellation of capital-increase costs (EUR 0.2
million) and the cancellation of gains/losses on treasury-stock operations (EUR 0.2 million).
107
Currency translations
Under IFRS the Group has adopted as functional currency the local currency of each entity. The euro was
previously considered as the functional currency for certain entities.
Taxes
All adjustments to deferred taxes relate to the assessment of local taxes as well as to IFRS restatements.
The Group has proceeded to a systematic review of the fiscal situation of each of its subsidiaries in order to
book correctly the deferred tax. All adjustments relating to parent-company accounts are booked net of
taxes when the standard is applicable.
Tax assets and liabilities were valued using the tax rate and fiscal base that are consistent with the expected
method of recovery or settlement. Therefore, given the structure of the Group’s property-asset base, most
of the revaluations did not generate deferred tax.
Others
The other adjustment mainly concern:
-
The disposal of 50% of Kosik to General Electric of which the transfer of risks and rewards according
to IFRS took place in 2004. The capital gain on this operation was booked in 2004.
-
The restatement of acquisition deals of third-party interests.
-
The adjustment of inter-company transactions.
6. Segment reporting
6.1 Primary reporting format – business segments
The Group is organised on a European basis into four main segments determined in accordance with the type of
activity :
•
Leasing : leased out residences, offices or retail buildings, property management and asset management
and buildings under construction that are meant to be leased.
•
Extended stay hotels : includes all the MaMaison Residences activities.
•
Hotels : small luxury hotels.
•
Development : development of projects meant to be disposed off unit by unit, the land bank and project
management.
There are no material transactions between the business segments. Corporate expenses are allocated on the basis
of the revenue realised by each activity. Segment assets consist primarily of tangible assets, inventory and
receivables. Unallocated assets comprise deferred tax assets and cash and cash equivalents. Segment liabilities
include operating liabilities. Unallocated liabilities are essentially the aggregate of litigation provisions, taxation
liabilities and borrowings.
108
At 30 June 2005
Leasing
Extended stay
hotels
Hotels
Development
Total
Revenue
3 010
1 869
4 573
12 850
22 302
4 502
2 864
0
6 847
14 213
Segment result
3 671
2 345
-854
5 608
10 769
Finance costs - net
-2 502
Profit Before income taxes
8 267
Income taxes
-3 177
Net profit
5 090
784
Segment assets
4 306
122 026
68 027
59 123
99 910
Unallocated assets
51 088
Total assets
Segment liabilities
349 086
400 174
26 357
1 437
5 178
24 264
57 236
Unallocated liabilities
342 938
Total liabilities
400 174
At 30 June 2004
Revenue
Segment result
Leasing
Extended stay
hotels
Hotels
Development
Total
1 646
1 241
3 258
37 106
43 251
129
0
0
5 661
5 790
-839
103
-986
14 405
12 684
Finance costs - net
-1 520
Profit Before income taxes
11 164
Income taxes
-5 282
Net profit
5 882
270
6 152
109
6.2 Secondary reporting format – geographical segments
The Group’s four business segments operate in Central European countries among which the most activities are
presently generated in the Czech Republic, in Hungary and in Poland. With exception of these countries, no other
individual country contributed more than 10% of consolidated sales or assets. The location of the customers is the
same as the location of the assets.
June
2 005
June
2 004
18 357
41 794
Hungary
1 723
1 432
Poland
1 838
16
384
9
22 302
43 251
Czech Republic
Other Central European countries
Revenue
June
2 005
Czech Republic
227 088
Hungary
60 161
Poland
48 583
Other Central European countries
13 254
Unallocated assets
51 088
Total Assets
400 174
7. Investment property
Investment property
Buildings under
finance lease
Freehold
buildings
Land
1 511
38 633
3 660
32 583
16 470
92 857
-2
0
0
0
1
7 745
9 297
-6 361
0
306
2 424
0
0
0
-191
3 043
5 549
0
6 688
-664
12 198
9
0
0
1 604
25 408
14 855
-6 361
6 688
1 056
1 510
49 620
5 893
47 199
30 281
134 503
Revaluation
Investments / acquisitions
Asset sale
Transfer
0
0
0
0
5
915
8 167
-498
147
-3
3 587
0
0
0
-47
2 864
10 403
0
0
5
6 847
7 988
0
1 274
476
14 213
26 558
-498
1 421
436
1 515
58 348
9 433
60 471
46 866
176 633
Revaluation
Asset sale
Transfer
Extended stay Land bank
hotels
Variations in 2004
At 31 December 2003, the Group signed an agreement about the transfer of a 12-apartment building –the building
n°2 of the Americka project in Prague- to the company Helmine Entreprises Inc. The transfer of ownership occurred
in 2004 and has therefore been accounted for the same year under IFRS. The total transaction proceeds amounted
to EUR 5.4 millions.
110
Total
In August 2004, the Group completed the refurbishment of an extended stay hotel -The Pachtuv Palace- located in
Prague and transferred this item from properties under development to investment properties; the investments in
extended stay hotels also mainly relate to the same building.
At 31 December 2004, all the investment properties have been revalued while at 30 June 2005 only the properties for
which there were indications of a significative evolution were revalued. The valuation has been performed by DTZ
Debenham Tie Leung.
Variations in 2005
The Kosic project -a joint-venture with a subsidiary of General Electric- has been divided in three phases. The plots
of land relating to the two last phases have therefore been transferred from inventory to investment property until the
potential development starts.
In the first six months, the Group has invested EUR 26.5 millions in the following projects : a shopping center in Brno
for EUR 3.8 millions, two apartment buildings in Berlin for EUR 3.2 millions, two luxury apartments in Prague for EUR
1.0 million, an extended stay hotel in Warsaw for EUR 10.4 millions and different plots of lands in the Czech Republic
for EUR 8.0 millions. Most of these transactions occurred through the acquisition of special purpose vehicles in which
the properties have been revalued at the acquisition price on the first consolidation.
As its offices and shopping spaces are currently for rent, the Zlota City Center building located in the center of
Warsaw is fair valued at EUR 13.8 millions and is classified under the “Freehold buildings”. In the near future, the
Group is confident in obtaining a building permit to replace the existing building by a prestigious commercial and
residential tower of 192 meters. The acquisition cost of this building also includes a prepaid operating lease for the
land with an upfront payment in 2004 amounting to PLN 23.8 millions. The term of the lease is 99 years starting from
1991.
In 2005, the freehold buildings sale relates mainly to the finalisation of the sale of one apartment to a Board member
of the Group. The total transaction amounted to EUR 0.4 million and the Group did not record any material difference
compared to the last DTZ valuation.
111
8. Hotels and own-occupied buildings
Hotels and own-occupied
buildings
Own-occupied
buildings
Prepaid operating
leases
Hotels
TOTAL
5 005
837
27 048
32 890
Transfer and other movements
181
-340
312
1 366
113
133
2 391
10 447
1 699
3 938
10 220
2 144
5 158
2 449
41 585
49 192
5
-155
73
428
0
23
182
4
319
615
-151
415
5 081
2 900
42 090
50 071
109
17
0
126
Allowance
439
-78
7
7
0
1
294
0
-2
740
-78
6
477
25
292
794
Allowance
26
-356
6
10
0
1
171
0
1
207
-356
8
153
36
464
653
NET AMOUNT AT 30 JUNE 2005
4 928
2 864
41 626
49 418
Net amount at 31 December 2004
4 681
2 424
41 293
48 398
GROSS AMOUNT
AMORTIZATION
The prepaid operating leases relate to one building serving as an extended stay hotel in Bratislava that was acquired
in 2004 and the land on which the Regina hotel is located.
In 2004, most investments and transfer from properties under development concern the hotel Le Regina located in
Warsaw that was opened to the public at the end of that year. The Luxembourg Plaza in Prague is presently under
development and hence not classified under this caption yet.
112
9. Fixtures and fittings
Gross amount
Amortization
Net amount
At 1 January 2004
5 814
-2 415
3 399
Increase
Assets sales
3 670
-815
312
-1 321
703
-146
2 349
-112
166
At 31 December 2004
8 981
-3 179
5 802
Increase
Assets sales
2 536
-10
80
-1 027
0
-21
1 509
-10
59
11 587
-4 227
7 360
At 30 June 2005
The main investments of fixtures and fittings in 2004 were realised in Warsaw for the hotel Regina (EUR 1.7 Million),
in Prague for the extended stay hotel Pachtuv Palace (EUR 1.1 Million) and in Bratislava for the extended stay hotel
Sulekova. The same year, most sales of fixtures and fittings were realised by IPB (EUR 0.7 million).
In 2005, the Group has invested in two extended stay hotels : Diana Residence in Warsaw (EUR 1.2 Million) and the
Pachtuv Palace in Prague (EUR 0.5 million).
10. Properties under development
The caption Properties under development also includes advance payments for EUR 2.9 million (2004 EUR 1.3
million). The rest represents the buildings under construction that have known the following evolution :
Opening Balance
New projects and work in progress
June
2005
December
2004
10 803
18 805
6 919
6 935
Projects finished
Total
-14 937
17 722
10 803
In 2004, the major part of the investments have been dedicated to the Luxembourg Plaza in Prague (EUR 4.2
million). The same year, two projects have been finalized :the hotel Le Regina in Warsaw (EUR 8.7 millions) and the
Pachtuv Palace in Prague (EUR 5.0 millions).
In 2005, most investments have been allocated to the Luxembourg Plaza (EUR 5.6 million) which will be half
dedicated to offices and half to hotel premises and a hospital in Londyncka in Prague (EUR 1.2 million).
11. Financial assets
In 2004, the financial assets mainly relate to the non eliminated part of the joint-ventures’ long-term financing. The
increase in 2005 comes from the guarantee deposit (EUR 5.5 millions) made for the investment in Suncany Hvar dd.
113
12. Held for sale activities
The held for sale activities represent the net investment in the company previously denominated Atronyx kft holding
the Orco Business Park building in Budapest that is meant to be sold to the Endurance Fund before the end of this
year.
13. Inventories
June
2005
December
2004
Opening
31 778
39 000
Transfer to investment property
-2 542
0
1 285
-7 222
30 521
31 778
June
2005
December
2004
Trade receivables gross
25 238
29 918
Provision for impairment of receivables
-5 794
-7 773
Total
19 444
22 145
Other variations
Total
14. Trade receivables
As the Group has a large number of customers, there is no specific concentration of credit risk with respect to trade
receivables apart from the fact that most of them are located in the Czech Republic.
15. Minority interests’ transactions
The Group acquired during the second quarter of 2005, most of the minority interest present in the capital of Orco
Hotel Group increasing its shareholding to 99 %. This acquisition has been paid through the issue of 32 307 new
shares for an amount of EUR 1.4 million.
In the first quarter of 2005, the Group has been diluted in the capital of MaMaison Résidences through a capital
increase in cash of EUR 4.4 millions of MaMaison Résidences S.A. subscribed by the minority shareholder.
114
16. Borrowings
16.1 Borrowings maturity
The following tables describe the maturity of the Group’s borrowings. For most floating rates borrowings, the Group
takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position
and cash flows. Interests costs may increase or decrease as a result of such changes.
At 30 June 2005
Less than one year
1 to 5 years
More than 5 years
Total
Non-current
Bonds:
-
12 240
44 735
56 975
-
12 240
21 793
22 942
-
21 793
22 942
12 240
43 997
39 129
83 126
-
43 997
38 218
82 215
Fixed rate
Variable rate
-
10 445
33 552
20 565
17 653
31 010
51 205
Finance lease liabilities
-
-
911
911
-
56 237
83 864
140 101
13 914
-
-
13 914
Bank loan fixed rate
Bank loan variable rate
795
3 070
-
-
795
3 070
Others borrowings
1 518
-
-
1 518
19 297
-
-
19 297
Convertible bonds
Exchangeable bonds
Bonds
Financial debts
Bank loans :
Total
Current
Financial debts
Bonds
Total
115
At 31 December 2004
Less than one year
1 to 5 years
More than 5 years
Total
Non-current
Bonds:
-
250
30 579
30 829
-
250
30 579
-
30 579
250
13 931
42 724
56 655
-
13 931
41 818
55 749
Fixed rate
Variable rate
-
6 124
7 807
21 146
20 672
27 270
28 479
Finance lease liabilities
-
-
906
906
-
14 181
73 303
87 484
Convertible bonds
Bonds
Financial debts
Bank loans :
Total
Current
Financial debts
Bonds
13 767
-
-
13 767
Bank loan fixed rate
Bank loan variable rate
12 354
1 025
-
-
12 354
1 025
2 194
-
-
2 194
29 340
-
-
29 340
Others borrowings
Total
Bank loans include amounts secured by a mortgage on properties and a pledge on the shares of the companies
benefiting from the loan to the value of EUR 78.8 millions (December 2004 EUR 63.0 millions). Bank loans also
include amounts secured by a mortgage on properties to the value of EUR 7.3 millions (December 2004 EUR 6.1
millions). The guarantees granted to financial institutions remain fully valid until complete reimbursement of credits.
No partial waiver on pledge or mortgage has been scheduled.
The carriyng amount of the Group's borrowings are denominated in the following currencies :
June
2005
December
2004
Euro
152 168
110 722
CZK
7 230
6 101
159 398
116 823
Total
16.2 Convertible bond
Within the authorized capital, the Board of Directors decided on September 21, 2004 to issue a convertible bond
without preferential subscription rights with the following terms :
Nominal
EUR 32,450,641.20
Number of bonds
1,001,563
Issue price
at par value, €32.40
Redemption price if not converted
111.76% of par at EUR 36.21, i.e. a gross yield-to-maturity of
6.80%
Nominal interest rate
5.5 %
Conversion price
EUR 32.40
Conversion ratio
One new share for one bond
116
Issuance date
September 22, 2004
Conversion at the discretion of bondholder
From the issuance date until eight days later. The final
redemption date is on December 24, 2011
The issuer's call rights
As of April 1, 2006, i.e. the first day of the 19 month
following the issuance date, should Orco Property Group
share be at or above the price of EUR 40.50, bondholders
who have not converted after a 30-days call notification
period will receive, in addition to redemption of principal and
interests accrued, a redemption premium allowing them to
achieve a gross yield-to-maturity of 8%.
th
As at December, 2004, no bond had been converted. During the first half 2005, 290 499 rights of conversion have
been exercised leading to the creation of same amount of new shares.
In the IFRS accounts, the funds raised with this convertible bond have been at issuance divided into a long-term debt
component and an equity component. Furthermore, the costs linked to the issuance of the bond are deducted from
funds raised. The equity component, classified in other reserves, represents the market value on the date of issue of
the call options embedded in the bond. The difference between the debt component and the par value of the bond
will be taken in profit and loss accounts using the effective interest method.
Debt component on issue
30 487
Interest accumulated in 2004
91
30 578
Interest accumulated during the period
113
Conversion rights exercised
-8 898
21 793
16.3 Exchangeable bond
The acquisition of Suncani Hvar dd is financed by a private placement of an exchangeable bond issued by the
Company under the following terms :
Nominal
EUR 24,169,193.39
Issue price
26.03 EUR (190 KN)
Issue date
30 June 2005
Nominal interest rate
5.5 %
Exchange at the discretion of bondholder
between 1 July 2010 and 11 June 2012 in Suncani Hvar dd
share, one share for one bond.
Repayment date
the non exchanged bonds will be reimbursed in cash on 30
June 2012
ISIN
XS 0223 58 64 20
Listing
Luxembourg stock exchange as from November 2005
As at 30 June 2005, no bond had been converted.
In the IFRS accounts, the funds raised with this exchangeable bond have been at issuance divided into a long-term
debt component and a derivative component. Furthermore, the costs linked to the issuance of the bond are deducted
from the funds raised. The derivative component, classified in other current liabilities, represents the market value on
the date of issue of the call options embedded in the bond. This derivative will be revalued at its market value at each
closing through the income statement. The difference between the debt component and the par value of the bond will
be taken in profit and loss accounts using the effective interest method.
117
The Debt component on issue
EUR 23 047 thousands
Derivative component on issue
EUR 799 thousands
16.4 Average effective interest rates
June 2005
EUR
December 2004
CZK
EUR
CZK
Bonds
6,11%
-
6,04%
-
Bank borrowings
5,61%
4,43%
5,27%
4,88%
16.5 Undrawn borrowing facilities
June
2005
December
2004
Expiring within one year
3 706
4 727
Expiring after one year
17 684
21 918
Total
21 390
26 645
16.6 Minimum lease payments
More than 5 years
Future finance charges on finance leases
Present value of finance lease liabilities
2 005
June
2 004
December
4 032
4 002
-3 121
-3 096
911
906
17. Income taxes
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes of one entity relate to the same fiscal
authority. All deferred taxes are assumed to be recoverable after more than 12 months. The offset amounts are as
follows :
Deferred tax assets
4 335
-4 311
24
Income statement charge
-2 851
-101
-2 928
Deferred tax assets
3 180
-6 108
The net balance at 30 June 2005 is generated by the following temporary differences :
118
June
2 005
Tangible assets
-9 844
Recognized tax losses
2 434
Inventories
3 472
Financial assets
1 069
Others
Total
-59
-2 928
As stated in note 2.14, deferred income tax liabilities are provided on temporary differences arising on fair value of
buildings and lands held by the Group as investment properties except when they are located in special purpose
entities, which are themselves held by a company based in Luxembourg.
In the income statement, at 30 June 2005, would the Group not take the holding structure into account, an income
tax expense of EUR 1.6 millions should have been recognized on the investment properties’ revaluations in excess of
the EUR 1.6 millions already recognized on the change in fair value of the land bank.
On the face of the balance sheet, at 30 June 2005, would the Group not take the holding structure into account,
income tax liabilities amounting to EUR 11.0 millions should be recognized in excess of the EUR 6.1 millions already
recognized.
The Group has an amount of EUR 20.1 millions of tax losses on which no deferred tax assets were recognized.
As at 30 June 2005, the amount of income tax recognized in the income statement includes current income taxes of
EUR 326 thousands (EUR 3.2 millions as at 30 June 2004).
119
18. Earnings per share
June
2 005
June
2 004
December
2 004
4 620 898
4 622 824
-1 926
4 004 157
4 017 073
-12 916
4 004 157
4 017 073
-12 916
768 442
761 378
6 069
995
39 867
27 177
12 690
192 917
181 927
10 990
Weighted average outstanding shares for the
purpose of calculating the basic earnings per share
5 389 340
4 044 024
4 197 074
Dilutive potential ordinary shares
Share subscription rights
Convertible bond
Employee stock options
PACEO
2 015 553
398 287
711 064
6 202
900 000
1 012 952
1 012 952
-
2 013 751
1 012 188
1 001 563
-
Weighted average outstanding shares for the
purpose of calculating the diluted earnings per share
7 404 893
5 056 976
6 210 825
Net profit attributable to the Group
4 306
6 152
19 349
Effect of assumed conversions / exercises
Share subscription rights
Convertible bond
PACEO
1 460
174
622
664
442
442
-
1 272
883
389
-
Net profit attributable to the Group
after assumed conversions / exercises
5 766
6 594
20 621
At the beginning of the period
Shares issued
Treasury shares
Weighted average movements
Issue of new shares for cash
Issue of new shares in acquisitions
Treasury shares
Basic earnings per share is calculated by dividing the profit attributable to the Group by the weighted average
number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Group and held as
treasury shares.
Diluted earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The potential dilutive ordinary shares are described
hereafter.
120
19. Equity
19.1 Share capital
Number
of shares
Capital
Share
premium
4 017 073
16 470
33 440
80 000
1 003
150 000
319 984
54 764
328
4
615
1 312
225
997
19
2 985
7 683
965
4 622 824
18 954
46 089
8 000
613 901
290 499
300 000
100 000
32 307
41 654
33
2 517
1 191
1 230
410
132
171
167
11 603
8 221
11 970
3 515
1 243
1 424
6 009 185
24 638
84 232
Exercise of employee stock options
Exercise of Share subscription rights
Share private placement
Acquisition of minority interests
Dividend paid in shares
Exercise of employee stock options
Exercise of Share subscription rights
Conversion of convertible bonds
Share private placement
Exercise of PACEOs
Acquisition of minority interests
Dividend paid in shares
The Extraordinary Shareholders’ Meeting of April 29, 2004 renewed the authorization granted by shareholders to the
Board of Directors on May 18, 2000, in accordance with article 32-3 (5) of Luxembourg corporate law. The Board of
Directors was granted full powers to proceed with the capital increases within the authorized capital of EUR 50 000
000, under the terms and conditions it will set, with the option of eliminating or limiting the shareholders’ preferential
subscription rights as to the issuance of new shares within the authorized capital.
The Board of Directors has been authorized and empowered to carry out capital increases, in a single operation or in
successive tranches, through the issuance of new shares paid up in cash, capital contributions in-kind,
transformation of trade receivables, the conversion of convertible bonds into shares or, upon approval of the Annual
General Shareholders’ Meeting, through the capitalization of earnings or reserves, as well as to set the time and
place for the launching of one or a succession of issues, the issuance price, terms and conditions of subscription and
payment of new shares. This authorization is valid for a five-year period ending on April 29, 2009.
A total of EUR 19 924 134,50 has been used to date under this authorization. As such, the Board of Directors still has
a potential of EUR 30 075 865,50 at its disposal. Considering that all new shares are issued at the par value price of
EUR 4.10, a potential total of EUR 7 335 576 new shares may still be created.
19.2 Share subscription rights
th
The Board of Directors decided, in its meeting on November 5 , 2003, to initiate the issue of rights allowing their
bearer to subscribe to new shares to be issued by the Company, shareholders having waived their preferential
subscription right on the basis of new shares likely to be created following rights exercise.
Rights have been granted free of charge to all the shareholders who composed the capital of the Company on the
day of issue. One share subscription rights has been granted free of charge for one Orco Property Group share held
th
at the end of day 14 November 2003.
Three share subscription rights allow to subscribe to one new share to be issued at the unit price of EUR 23. The
th
exercise period spreads from 17 November 2003 to 16 November 2006 included. At issuance, the maximum
number of shares that can be created this way amounts 1 013 191. The remaing number of rights not subscribed at
30 June 2005 amount to 398 287.
19.3 Convertible bonds
121
See note 16.2
19.4 Employee stock options
nd
A new stock option plan was granted to employees on May 2 2005 under the following conditions:
Exercise price:
Exercise period:
Beneficiary:
35 EUR/share
nd
from May 2 2005 until 30 April 2010
Orco Holding
45 000
Arnaud Bricout
20 000
Steven Davis
20 000
Nicolas Tommasini
20 000
Ales Vobruba
20 000
Gilbert Irondelle
5 000
Pavel Klimes
5 000
Dragan Lazukic
5 000
Andy Smith
5 000
In total, the outstanding stock option plans gives right to subscribe to 145 000 shares as at June 30 2005. In
accordance with IFRS 2 Share-based payments, the total theoretical and non cash cost of Eur 1 393 thousands has
been estimated and accounted for in the first half of 2005 under the Employee benefit caption. This fair value was
determined using the Black-Scholes valuation model. The significant input into the model were share price of EUR
38.9 at grant date, exercise price as stated above, risk-free interest rate EURIBOR, dividend increase of 7.5% a year,
long term standard deviation of expected share price return of 22%.
As at 30 June 2005, none of these employee share options have been taken into account in the diluted earnings per
share calculation because their exercise price as defined by IAS33 is higher than the average market price over the
period.
Apart from the new plan, 8 000 options granted to employees in the past have been exercised since the start of the
year with an exercise price of EUR 25 a share. The other outstanding employee stock options are the following ones
:
•
6 000 shares in favour of Mr. Ales Vobruba in three instalments of 2 000 shares each, to be exercised
between 2002 and 2005 at the price of EUR 20; EUR 25 and EUR 30 per share.
•
1 000 shares in favour of Mr. Pavel Klimes in one instalment of 1 000 shares, to be exercised between
2004 and 2006 at the price of EUR 30 per share.
•
3 000 shares in favour of Mr. Verek Machuta in two instalments of 1 500 shares each, to be exercised
between 2004 and 2006 at the price of EUR 25 and EUR 30 per share.
As at 31 December and 30 June 2004, none of these employee share options have been taken into account in the
diluted earnings per share calculation because their exercise price as defined by IAS33 is higher than the average
market price over the period.
19.5 PACEO
On March 31, 2005, Orco Property Group S.A. and Société Générale in Paris (SG) have arranged a Step-up Equity
Subscription (PACEO: Programme d’Augmentation de Capital par Exercices d’Options). The PACEO has been filed
with and approved by the AMF (Autorité des Marchés Financiers) with the visa No. 05-201. It allows Orco Property
Group S.A. to issue a maximum of 1 million new shares subscribed on the demand of Orco Property Group S.A. by
SG. All subscriptions will be at an issue price of 95% of the share price at the time of execution. As at 30 June 2005,
the Company has exercised 100 000 options for a total proceeds of EUR 3 925 000.
20. Dividends per share
The dividends paid in 2005 and 2004 were EUR 3.5 million (EUR 0.58 per share) and EUR 1.8 million (EUR 0.39 per
share) respectively.
122
21. Contingencies
The Group has given guarantees in the ordinary course of business : see note 16
22. Capital commitments
Orco Property Group issued a bank guarantee in favour of the Croatian Privatization Fund amounting to EUR 5.5
millions in connection with the capital increase of Suncani Hvar dd to which Orco Property Group has subscribed in
July 2005. Orco Property Group is committed to subscribe to 2 000 000 shares of Suncani Hvar dd at a share price
of 100 Kn per share. Additionally to this subscription, Orco Property Group will receive 500 000 shares for free. The
participation of Orco Property Group in Suncani Hvar dd corresponds to 47 % of the capital. This commitment
amounts to EUR 27.7 millions.
Orco Property Group has the right to launch a take over bid on the Suncani Hvar shares in the market. Orco
Property Group will benefit from the Privatization Fund of one free share for 3 shares bought in the market, this take
rd
over bid is to take place in the 3 quarter 2005.
The construction of the Luxembourg Plaza in Prague is split in two different projects. In the first part the group
intends to develop office space to be leased out. This project is a 50% joint venture and the capital commitments of
the Group amount to EUR 7.6 millions. The other part of the development will be dedicated to an hotel activity. The
Group’s capital commitment for this second part amount to EUR 6.9 millions.
23. Related party transactions
As at 30 June 2005, the Company has a debt of EUR 4 467 thousands towards Atronyx that is a 100% subsidiary of
the Company that is held for sale see note 12.
The global consideration given as employee benefit to the members of the Executive Committee amounted to EUR
888 thousands as at 30 June 2005 (EUR 637 thousands at 30 June 2004). Besides, Board Members receive a EUR
500 fee for each board they attend. The Company did not grant any advance or credit to board members nor to
members of the Executive Committee and does not finance any pension plan in their favour. The stock options
granted to members of the Executive Committee is detailed in note 19.4.
In 2005, the Group finalized the sale of one apartment to a Board member of the Group. The total transaction
amounted to EUR 0.4 million and the Group did not record any material difference compared to the last DTZ
valuation.
24. Events after the balance sheet date
These financial statements were authorized for issue on 14 September 2005.
Orco Property Group launched a take over bid (TOB) on Suncani Hvar dd.
The Group has finalised the subscription to 2 000 000 ordinary shares of Suncani Hvar dd (ISIN HRSUNHRA0003)
for a total price of HRK 200 000 000 (EUR 27 322 404). Suncani Hvar dd is a croatian company, listed on the Zagreb
Stock Exchange, that owns hotels and other assets in the city of Hvar on the island of Hvar. According to the
shareholders agreement in force with the Croatian Privatization Fund, the Company will receive 500 000 additional
shares for free. Since August the Company is the owner of 2 500 000 shares at HRK 80 average cost price per share
out of a total 5 331 097 shares representing 46.89 % of the share capital.
The Company owns also rights to pursue another reserved capital increase of 1 000 000 shares at HRK 100 per
share. The Group will conduct a complete renovation or reconstruction of the hotels and other assets over the next 5
years. It is intended that most of the future investments will be financed by bank loans at local level.
This acquisition was partially financed by a private placement of an exchangeable bond issued by the Company (see
note 16.3).
The Endurance Real Estate Fund for Central Europe
Beginning of July, the Company has entered into a subscription agreement of EUR 7 000 000 representing 7% of the
funds under subscription. The Group is the promoter and the manager of this fund and is also the sole shareholder
of the management company.
123
Radio Free Europe
End of July 2005, an exclusive "build-to-lease" agreement has been signed with Radio Free Europe/Radio Liberty.
Radio Free Europe will be relocating its headquarter to the Hagibor district of Prague 10. Annual rental of USD 5.4
millions.
The contract concerns a 15-year lease of 22 000 sqm. This new development is to be located between Vinohradska
and Izraelska street, with an option to extend by a further 30 years. The project is estimated for completion in
approximately 2.5 years.
25. List of the fully consolidated subsidiaries
Company
Country
Currency
Activity
% shareholding
30.06.05
31.12.04
30.06.04
1. Sportovni, a.s.
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
Americka 1, a.s.
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Americka 33, a.s.
Czech Republic
CZK
100,00%
100,00%
100,00%
Americka Park, a.s.
Czech Republic
CZK
Leasing
Extended
stay
70,65%
81,38%
65,54%
Americka-Orco, a.s.
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Anglicka 26, s.r.o.
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Belgicka - Na Kozacce, s.r.o.
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
BP Servis, sro
Czech Republic
CZK
Leasing
100,00%
-
-
Brno Centrum, sro
Czech Republic
CZK
Development
100,00%
-
-
Byty Podkova, as
Czech Republic
CZK
75,00%
-
-
Diana Development, Sp.Zo.o.
Poland
PLN
Development
Extended
stay
70,65%
-
-
IPB Real Development, a.s.
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
IPB Real Reality, a.s.
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
Company
Country
Currency
Activity
% shareholding
30.06.05
31.12.04
30.06.04
IPB Real, a.s.
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
IPB Real, s.r.o
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
Iskola project 68 Kft
Hungary
HUF
Development
100,00%
100,00%
-
Izabella 62-64 Kft.
Hungary
HUF
Development
100,00%
100,00%
100,00%
Janackovo Nabrezi 15, s.r.o.
Czech Republic
CZK
Hotel
99,57%
95,00%
76,50%
Jihovychodni Mesto, a.s.
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
Londynska 26, a.s.
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Machova-Orco, a.s.
Czech Republic
CZK
100,00%
100,00%
100,00%
MaMaison Bratislava
Slovakia
SKK
Leasing
Extended
stay
70,65%
81,38%
65,54%
MaMaison Residences S.A.
Luxembourg
EUR
Extended
70,65%
81,38%
65,54%
124
stay
Manesova 28, a.s.
Czech Republic
CZK
100,00%
100,00%
100,00%
70,65%
81,38%
65,54%
EUR
Leasing
Extended
stay
Extended
stay
MMR Management, s.r.o.
Czech Republic
CZK
MMR Russia, SA
Luxembourg
70,65%
-
-
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Nove Medlanky, as
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
Orco Alfa sro
Czech Republic
CZK
100,00%
100,00%
-
Orco Aparthotel S.A.
Luxembourg
EUR
Development
Extended
stay
70,65%
81,38%
65,54%
Orco Budapest Rt.
Hungary
HUF
Development
100,00%
100,00%
100,00%
Orco Commercial Sp. Zo.o.
Poland
PLN
Development
100,00%
-
-
Orco Construction Sp. Zo.o.
Poland
PLN
Development
100,00%
-
-
Orco Croatia, SA
Luxembourg
EUR
Holding
100,00%
-
-
Orco Development Slovakia
Slovakia
SKK
Development
100,00%
100,00%
-
Orco Development a.s.
Czech Republic
CZK
Development
100,00%
100,00%
-
Orco Development Kft
HUF
Development
100,00%
100,00%
-
Orco Development Sp. Zo.o
Hungary
Poland
PLN
Development
100,00%
100,00%
-
Orco Estate Slovakia
Slovakia
SKK
Development
100,00%
100,00%
-
Orco Estate sro
Czech Republic
CZK
Development
100,00%
100,00%
-
Orco Germany SA
Orco Hospitality Services Sp.
Zo.o
Luxembourg
EUR
Leasing
100,00%
100,00%
-
Poland
PLN
Hotel
99,57%
95,00%
-
Orco Hotel Collection S.A.
Orco Hotel Development Sp.
Zo.o
Luxembourg
Poland
EUR
99,57%
95,00%
100,00%
PLN
Holding
Extended
stay
70,65%
81,38%
76,50%
Orco Hotel Development, a.s.
Czech Republic
CZK
Hotel
99,57%
95,00%
76,50%
Luxembourg
EUR
Holding
99,57%
95,00%
76,50%
Orco Hotel Management Kft.
Hungary
HUF
Hotel
99,57%
95,00%
76,50%
Orco Hotel Management, s.r.o.
Czech Republic
CZK
Hotel
99,57%
95,00%
76,50%
Orco Hotel Project Sp. Zo.o.
Poland
PLN
Hotel
99,57%
95,00%
76,50%
Orco Hotel Project, a.s.
Czech Republic
CZK
Hotel
99,57%
95,00%
76,50%
Orco Hotel Rt.
Hungary
HUF
Hotel
99,57%
95,00%
76,50%
Orco Hungary Kft
Hungary
HUF
Development
100,00%
100,00%
-
Company
Country
Currency
Activity
% shareholding
30.06.05
31.12.04
30.06.04
Orco Immobilien GmbH
Germany
EUR
Leasing
100,00%
-
-
Orco Investment a.s.
Czech Republic
CZK
Development
100,00%
100,00%
-
Orco Investment Kft
Hungary
HUF
Development
100,00%
100,00%
-
125
Orco Investment Sp. Zo.o
Poland
PLN
Development
100,00%
-
-
Orco Poland Sp. zo.o.
Poland
PLN
Development
100,00%
95,00%
76,50%
Orco Prague, a.s.
Orco Project Management,
s.r.o.
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Czech Republic
CZK
Development
100,00%
100,00%
100,00%
Orco Project Organization Rt.
Hungary
HUF
Development
100,00%
100,00%
100,00%
Orco Project Sp zoo
Orco Property Management ,
a.s.
Poland
PLN
Development
100,00%
100,00%
-
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Orco Property Sp zoo
Poland
PLN
Development
100,00%
100,00%
-
Orco Property Start, a.s.
Czech Republic
CZK
Hotel
99,57%
95,00%
76,50%
Orco Reality a.s.
Czech Republic
CZK
Development
100,00%
100,00%
-
Orco Residential Sp. Zo.o.
Poland
PLN
Development
100,00%
-
-
Slovakia
SKK
Development
100,00%
100,00%
-
Orco Strategy a.s.
Czech Republic
CZK
Development
100,00%
100,00%
-
Orco Strategy Sp zoo
Poland
PLN
Development
100,00%
100,00%
-
Orco Trade sro
Czech Republic
CZK
Development
100,00%
100,00%
-
Orco Vagyonkezelo Kft.
Hungary
HUF
Leasing
100,00%
100,00%
100,00%
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
Orco Warsaw Sp. zo.o.
Poland
PLN
99,57%
95,00%
76,50%
Pachtuv Palac, s.r.o.
Czech Republic
CZK
Hotel
Extended
stay
70,65%
81,38%
65,54%
Prague Real Estate II SA
Luxembourg
EUR
100,00%
-
-
Residence Belgicka, s.r.o.
Czech Republic
CZK
70,65%
81,38%
65,54%
Residence Izabella Rt.
Hungary
HUF
70,65%
81,38%
65,54%
Residence Masaryk, a.s.
Czech Republic
CZK
Holding
Extended
stay
Extended
stay
Extended
stay
70,65%
81,38%
65,54%
Révay 10 Kft.
Hungary
HUF
Leasing
100,00%
100,00%
100,00%
Seattle, sro
Czech Republic
CZK
Development
100,00%
-
-
TQE Asset
Czech Republic
CZK
Leasing
100,00%
-
-
Vinohrady s.à r.l.
France
EUR
Holding
100,00%
100,00%
100,00%
Czech Republic
CZK
Leasing
100,00%
100,00%
100,00%
126
26. List of the joint ventures
26.1 Kosic s.a.r.l.
The Group has 50% interest in a joint venture, Kosic s.a.r.l. The company is a holding based in
Luxembourg and is the sole shareholder of Kosic sro. The following amounts represent the Group's
50% share (50% in 2004) of assets and liabilities, and sales and results of the joint venture. They are
included in the balance sheet and income statement :
June
December
2005
2004
-
-
Current assets
1 184
289
Assets
1 184
289
-
-
Current liabilities
41
-1 993
Liabilities
41
-1 993
June
December
2005
2004
1
3
Expenses
-55
-56
Profit after income tax
-54
-53
Non-current assets
Income
26.2 Kosic sro
The Group has 50% interest in a joint venture, Kosic s.r.o, which is active in the development sector and holds the
Kosic project in the Czech Republic.The following amounts represent the Group's 50% share(50% in 2004) of assets
and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income statement
:
June
December
2005
2004
Non-current assets
2 767
15
Current assets
4 110
3 628
Assets
6 877
3 643
6
2
Current liabilities
2 272
166
Liabilities
2 278
168
Income
2 653
1 871
-1 648
-1 656
1 005
215
Expenses
127
26.3 Orco Property a.s.
The Group has 50% interest in a joint venture, Orco Property a.s., which is active in the leasing sector and holds the
office part of the Luxembourg Plaza project in the Czech Republic. The following amounts represent the Group's 50%
share (50% in 2004) of assets and liabilities, and sales and results of the joint venture. They are included in the
balance sheet and income statement :
June
December
2005
2004
12 600
5 768
324
256
12 924
6 024
4 991
2 078
Current liabilities
1 238
1 581
Liabilities
6 229
3 659
June
December
2005
2004
3 669
34
-74
-369
3 595
-335
Non-current assets
Current assets
Assets
Income
Expenses
26.4 Oak Mill
The Group has 50% interest in a joint venture, Oak Mill, which is active in the development sector and holds the
Dobovy Mlyn project in the Czech Republic. The following amounts represent the Group's 50% share (50% in 2004) of
assets and liabilities, and sales and results of the joint venture. They are included in the balance sheet and income
statement:
June
December
2005
2004
Current assets
2 806
2 087
Assets
2 806
2 087
1 316
836
113
271
1 429
1 107
June
December
2005
2004
9
15
-17
-24
-8
-9
Non-current assets
Current liabilities
Liabilities
Income
Expenses
128
129
Balance sheet as at 30.09.05 (IFRS)
Assets
KEUR
September
2 005
December
2 004
369 819
208 728
751
1 250
7
202 863
134 503
157 660
66 354
8
123 243
48 398
LIABILITIES
9
10
7 224
27 193
5 802
12 154
Financial assets
11
4 629
2 286
Bonds
Financial debts
Provisions
Deferred tax assets
17
3 916
4 335
Note
NON-CURRENT ASSETS
Intangible assets
Investment property
Hotels and own-occupied buildings
CURRENT ASSETS
KEUR
Note
EQUITY
Shareholders'equity
Minority interests
130 812
80 176
Inventories
13
35 958
31 778
Financial debt
Trade receivables
14
20 651
15 095
59 108
22 145
10 511
15 742
Trade payables
Advance payments
12
27 271
20 054
527 902
308 958
TOTAL
16
16
Current liabilities
TOTAL
16
12
September
2 005
December
2 004
237 817
117 910
188 764
114 695
49 053
3 215
272 284
180 761
190 595
57 434
117 377
1 019
92 557
30 829
56 655
762
14 765
4 311
81 689
88 204
25 753
29 340
16 895
15 464
23 577
18 116
26 939
13 809
17 801
10 287
527 902
308 958
130
Non audited consolidated net result as at 30 September 2005. (IFRS)
KEUR
Revenues
Net gains on fair value adjustments
Operating expenses
Operating result
Financial result
Profit before income taxes
Income taxes
Net profit
Basic earnings per share
Diluted earnings per share
September
2005
9 months
36 128
27 256
1 169
-39 483
25 070
-2 036
23 034
-2 608
20 426
2 442
17 984
3.18
2.63
June
2005
6 months
22 302
14 213
992
-26 738
10 769
-2 502
8 267
-3 177
5 090
784
4 306
0.80
0.78
December
2004
12 months
70 670
25 408
3 050
-68 299
30 829
-3 829
27 000
-7 534
19 466
117
19 349
4.61
3.32
Cash flow 2003
131
132
Cash flow 2004
Consolidated Cash Flow Statement
December 31, 2004
(expressed in eur)
2004
2003
Cash flow from operations
Operating profit of the company
Elimination of operating charges and income with no cash flow
- Amortization, depreciation
- Gain on disposal
- Gain/Loss on operating provisions
Gross operating cash flow
Change in working capital requirements
Net cash flow generated by operating activities
19 582
-
7 702
405
11 418
15 461
-
15 436
7 727
-
Other income and expenses:
- Interest expense
- Financial income
- Corporation tax paid
- Exceptional charges and income
Net operating cash flow
-
9 114
54
1 542
2 565
2 464
Cash flow from investing transactions
Acquisition of fixed assets
Impact of changes in consolidation structure
Net cash flow from investing transactions
-
42 466
470
42 936
Cash flow from financing operations
Issue of share capital
Dividends paid
Net debt issues
Effect of FX changes
Net cash flow from financing operations
Change in cash position
-
-
14 903
1 826
32 461
786
44 752
-
16 295
15 647
Closing cash position ended December 31:
- Net liquid assets from overdrafts
- Marketable securities except own shares
15 647
167
2 893
2 455
248
3 386
11 094
14 480
-
-
-
648
Opening cash position
Closing cash position
difference
3 196
6 146
321
625
31
7 999
28 851
4 816
24 035
18 964
1 187
21 131
38 908
22 872
-
6 577
16 295
-
SUBSCRIPTION AND SALE
The issue has been directly sold by the Issuer to investors.
At the date of this prospectus, the issue has been entirely subscribed and paid for at the
issue price of EUR 24,169,193.39.
133
GENERAL INFORMATION
Authorisation
1.
Authority to issue bonds was duly granted by a resolution of the Board of Directors
of the Issuer on 17th June 2005.
Listing
2.
Application has been made to list the Bonds on the Luxembourg Stock Exchange. .
The global note was signed by Luc Leroi, Director and CFO of the Issuer.
Clearing Systems
3.
The Bonds have been accepted for clearance through Euroclear and Clearstream,
Luxembourg. The ISIN for the issue of the Bonds is XS 0223586420 and the
Common Code is 022358642.
No significant change
Save as disclosed in this Prospectus, there has been no significant change in the financial
or trading position of the Issuer or the Group since 31st December 2004 and there has
been no material adverse change in the financial position or prospects of the Issuer or the
Group since 31st December 2004 in each case which is material in the context of the issue
of the Bonds. The share capital of the Issuer as at December 6 2005 amounts to
27.804.469,80
EUR represented by 6.781.578 shares. The potential number of shares that can be
issued pursuant to the convertible bonds, the BEA, the BSA, the BSAR and the stock
options programs amounts to 2.492.053 shares.
Litigation
5.
Neither the Issuer nor any other member of the Group is involved in any legal or
arbitration proceedings (including any proceedings which are pending or threatened
of which the Issuer is aware) which are material in the context of the issue of the
Bonds.
Accounts
6.
The auditors of the Issuer are PricewaterhouseCoopers and HRT Révision.
Documents available
134
7.
Copies of the following documents will be available from the registered office of the
Issuer and from the specified office of the Paying Agent for the time being in
Luxembourg so long as any of the Bonds remains outstanding:
(a) the statuts of the Issuer ;
(b) the audited consolidated annual financial statements of the Issuer in respect
of the financial years ended 31st December 2002, 2003, 2004; the audited
consolidated semi annual financial accounts of the Issuer as at June 2003 and
2004 ;
(c) the most recently published audited annual consolidated financial statements
of the Issuer and the most recently published audited consolidated semiannual accounts;
(d) the prospectus; and
(e) the Agency Agreement (for inspection, only).
European Withholding Taxation
8. The Luxembourg law of June 21st, 2005 implementing the Savings Directive
2003/48/CE into Luxembourg law (“Loi du 21 juin 2005 transposant en droit
luxembourgeois la directive 2003/48/CE du 3 juin 2003 du Conseil de l'Union
européenne en matière de fiscalité des revenus de l'épargne sous forme de
paiement d'intérêts ») has come into force on July 1st, 2005.
9. This law provides that a Luxembourg withholding tax shall apply on the income
of savings in the form of interest paid in Luxembourg to an effective beneficiary,
such beneficiary being an individual resident (« personne physique ») having his
or her tax residence in another EU member state.
10. The rate of the withholding tax amounts to 15.00% until July 1st, 2008.
THE ISSUER
SOCIETE ANONYME
L-2535 LUXEMBOURG, 8, BOULEVARD EMMANUEL SERVAIS
RCS (Luxembourg) n° B 44996
135
FISCAL AND PAYING AGENT AND LISTING AGENT
CACEIS Bank Luxembourg
39, Allée Scheffer
L- 2520 Luxembourg
AUDITORS
PricewaterhouseCoopers s à r l
HRT Révision s à r l
136
INFORMATION ON SUNCANI HVAR DD
SUNČANI HVAR d.d
SUNČANI HVAR d.d.
Hvar, Dolac bb
SUMMARY
According to the decision of the General Assembly of the company SUNČANI HVAR d.d., held on July
17th 2005, the stock capital of this company (further in the text: Issuer) was increased by issuing new stocks
by private offer.
The stock capital is increased by issuing 2,000,000 new registered stocks, each one with nominal value of
100.00 KN, of the total nominal value of 200,000,000.00 KN, which amounts to 37.65% of the capital
stock after its increase. By issuing the new shares, together with the shares that were issued before, the
Issuer will have a total of 5,310,971 ordinary registered shares, each of the nominal value of 100.00 KN, of
the total nominal value of 531,097,100.00 KN, which is equal to the capital stock amount after the increase.
The issuing of 2,000,000 new shares represents a private issue which excludes the priority rights of the
shareholders at the time of the registration of all of them. All the newly issued shares will be registered by
ORCO PROPERTY GROUP S.A. from Luxembourg.
The newly issued shares will be unmaterialized – in the form of electronic recordings stored in the
depository of the Central depository agency d.d., unrestrictedly negotiable, with the extended equal rights
as the earlier issued shares of the same Issuer, and will be marked: SUNH-R-A.
The shares of the new issue will be included in the quotation of the public limited companies of the
Varaždin stock market d.d., just as the earlier issued shares of the Issuer.
1. INTRODUCTION
Members of the auditing committee and the board of the company SUNČANI HVAR d.d. (further in the
text: Issuer), whose names are listed in this Abridged brochure take full responsibility for its contents.
In conviction and congruous with cognition and all the facts which are available to the signers of this
brochure, they declare that all the facts in the brochure constitute a complete and truthful presentation of
the assets and liabilities, profits and loss, financial position and business activities of the Issuer, rights
contained in the shares relevant to them, and that the facts which could effect the completeness and
truthfulness of this brochure were not left out (item 11.4.).
According to the Stock Market Regulation (Narodne novine no. 84/2002 – further in the text: Regulation)
and the By-laws on the contents of the request and appendices for approving the brochure and the abridged
137
brochure (Narodne novine no. 118/2003), this abridged brochure is approved by the Share committee of
Republic of Croatia. Thereby it is confirmed that it contains all the facts stipulated by law and regulations
of the Republic of Croatia, and can be published.
Issuer Auditor is the company AUDITOR d.o.o. from Kaštel Sućurac, Z. Frankopanska 13, which
published the audit of the financial reports for the year 2004. A positive opinion of the auditor was given
for the financial reports, and it is contained, together with financial reports and notes, in the appendix of the
Abridged brochure.
Since it a private offer of the new issue of shares of the Issuer, this Abridged brochure will not be made
public, but the Issuer will submit it to the potential investor – company ORCO PROPERTY GROUP S.A.,
with the head office in Luxembourg, 8 Boulevard Emmanuel Servais, Great Dutchy of Luxembourg.
The abridged brochure was composed by the company RAST d.o.o., with the head office in Varaždin,
Ruđera Boškovića 20, based on the information submitted by the Issuer.
This abridged brochure must not be regarded as a recommendation for the acquisition of shares of the
Issuer, and the potential investor is advised to make an independent evaluation of the financial position and
business activities of the Issuer, and to make an independent evaluation of the risk of investment.
2. FACTS ON SHARES
2.1. Historic facts on shares of the Issuer
The Issuer has, from the day of transformation from a socially-owned enterprise into a joint stock company,
changed the amount of the capital stock, the amount and nominal value of the issued ordinary registered
shares, and the currency in which they were nominated.
1. On the day of transformation of the Issuer into a stock company (February 28th 1994) the capital stock of
the Issuer amounted to 81,359,000.00 DEM, and was divided into 813,590 ordinary registered shares, of A
series, each of the nominal value of 100.00 DEM.
2. By the decision of the general assembly on December 3rd 1994 the capital stock was increased from
81,435,000.00 DEM for 6,000,000.00 DEM and amounted to 87,435,000.00 DEM. For the increased
capital stock 60,000 new ordinary registered shares were issued, of B series, each of the nominal value of
100.00 DEM.
3. In the process of bringing into conformity with the Company Regulation, based on the decision of the
general assembly of the Company from December 16th 1995, the capital stock of the Company is
denominated in the amount of 87,435,000.00 DEM, increased for the paid-in 3,939,331.15 DEM in the
capital stock of 338,971,356.26 KN, which is increased at the expense of the reserves for the amount of
41,643.74 KN in the new stock capital in the amount of 339,013,000.00 KN. The new stock capital, by the
decision of the general assembly of the Issuer, is considered the capital of the Company.
The capital in the amount of 339,013,000.00 was divided into 3,021,410 ordinary registered shares of A
series, each of the nominal value of 100.00 KN, into 222,582 ordinary registered shares of B series, each of
the nominal value of 100.00 KN and 146,138 ordinary shares of C series, each of the nominal value of
100.00 KN. The newly issued shares, nominated in kunas, have replaced all the earlier issued shares of the
Issuer nominated in DEM.
4. To cover the losses in business in 1995, by the decision of the general assembly of the Issuer on June 14th
1996 a decrease of the stock capital is carried out from 339,013,000.00 KN for 7,915,900.00 KN to the
amount of 331,097,100.00 KN.
The decrease of the capital stock is carried out in the way that 140,976 ordinary registered shares of A
series, each of the nominal value of 100.00 KN and 17,159 ordinary registered shares of B series, each of
the nominal value of 100.00 KN, are replaced by 79,159 ordinary registered shares of D series, each of the
138
nominal value of 200.00 KN. The cover of loss is carried out so that the nominal amount of all the D series
shares is decreased from 200.00 KN to 100.00 KN. Thereby the total nominal value of the D series shares
is decreased for the amount of 7,915,900.00 KN, which equals to the amount of the loss which is covered.
With the described changes the stock capital of the Issuer in the amount of 331,097,100.00 KN is divided
into:
- 2,880,434 ordinary registered shares of A series, each of the nominal value of 100.00 KN,
- 205,240 ordinary registered shares of B series, each of the nominal value of 100.00 KN,
- 146,138 ordinary registered shares of C series, each of the nominal value of 100.00 KN, and
- 79,159 ordinary registered shares of D series, each of the nominal value of 100.00 KN.
On transfer of data from the book of shares of the Issuer in the depository of the Central depository agency
(further in the text: CDA), and stipulation of the contract on membership in the CDA, all of the 3,310,971
A, B, C, and D series of shares, which are of the same kind and type, and of the equal nominal value, were
replaced by the same number of ordinary registered shares of the unique series A (mark SUNH-R-A).
2.2. Type of shares and mark of the series
Based on the decision of the general assembly of the Issuer on June 17th 2005, the capital stock will be
increased from the amount of 331,097,100.00 KN for 200,000,000.00 KN to the amount of 531,097,100.00
KN by issuing 2,000,000 ordinary registered shares, each of the nominal value of 100.00 KN, of the total
nominal value of 200,000,000.00 KN. The decision completely excludes the priority rights of the
shareholders at the registration of the new issue of shares. The newly issued shares have the same nominal
value and are associated with the same rights as the earlier issued shares of the Issuer.
2,000,000 newly issued shares will be entirely registered and paid in with money (100%) by the ORCO
PROPERTY GROUP S.A. The registration of the shares and the payment will be executed at the latest
within 30 days of reaching the decision by the general assembly of the Issuer on the increase of the capital
stock (until July 18th 2005).
The newly issued shares are in an unmaterialized form – in the form of electronic recording in the computer
system of the Central depository agency d.d. and will be marked SUNH-R-A.
The capital stock of the Issuer after the increase, in the amount of 531,097,100.00 KN, will be divided into
5,310,971 ordinary registered shares, each of the nominal value of 100,00 KN.
2.3. Company, head office and the address of the Issuer
For the information on the company, head office and the address of the Issuer refer to item 4.1. of the
abridged brochure.
2.4. The place where records are kept on shares and shareholders
All the shares are kept in the accounts of their shareholders in the depository of the Central depository
agency d.d., Zagreb, Ksaver 200.
2.5. The mark of shares
The shares have a shortened mark of the Issuer, kind and the unique mark of all of the series:
SUNH-R-A.
ISIN mark is: HRSUNHRA0003.
2.6. Place and date of issuing shares
139
All the shares of the Issuer are issued in Hvar. The dates of issue of each series of shares are described in
item 2.1., and the date of the newly issued 2,000,000 shares will be determined by the day of registration of
the increase of the stock capital, according to the decision of the general assembly dated June 17th 2005, in
the register of companies of the Commercial Court in Split.
2.7. The rights of the shareholders and the obligations of the Issuer
The shareholder of the Issuer has the right of vote in the general assembly of the Issuer, the right to
participate in the division of profits (dividend) and the right to the remains of the bankruptcy estate, i.e.
salvage value. Each share gives the right to one vote. The shareholder has the right to be informed about the
activities of the Issuer, and other management and ownership rights according to the Companies
Regulations.
If the general assembly reaches the decision to pay the dividend, the Issuer disburses it to the shareholder in
cash on his/her address, on the cash desk of the Issuer or on his account in a bank, and on Issuer’s decision
another institution can carry out this in the name of the Issuer. The shareholder decides whether disbursing
the dividend will be made in cash or on his account in a bank. A share in profits is proportional to the
number of shares of the shareholders in reference to the total number of shares of the Issuer which have the
right to dividend, under the condition that there is no burden on the shares, by which the right to dividend is
transferred to the creditor.
The Issuer is obligated to convene the general assembly at least once a year, without delay if it is noted that
the Issuer is running the business with loss. The Issuer is obligated to inform the shareholders about its
business dealings, and all other facts relevant to decision making.
The Issuer has not yet paid the dividend for the shares SUNH-R-A.
Statutory changes, dividends paid have to be publish in „Narodne Novine“
Financial figures are to be announced to Croatian stock (quarterly)
No dividends have been paid by SH so far.
2.8. Dividend taxation
The dividend that is realized by domestic physical persons, and which would refer to the profit made in the
period between 2000 and 2004, is taxed at the rate of 15%. Depending on the permanent address of the
shareholder, local taxes at the rate determined by the municipality, i.e. the town of the permanent address of
the shareholder are added to the calculated tax. For foreign legal persons the dividend is taxed with profit
tax as withholding tax at the rate of 15% unless the Republic of Croatia made a contract on avoiding double
taxation with the state where the permanent address of the shareholder is.
The dividend, which would refer to the profits of the Issuer realized before year 2000 and after year 2004 is
not taxed.
For domestic legal persons the tax on the dividend is not calculated.
2.9. Taxation for selling shares
Sale and other use of shares is not taxed.
2.10. Capital profits taxation
Capital profits are not separately taxed. With physical persons – taxpayers in the Republic of Croatia,
capital profits are not part of the basis for income tax and are not taxed.
With legal persons capital profits make part of the basis for profit tax which is taxed at the rate of 20%.
140
2.11. Institutions through which the Issuer settles the liability towards the shareholders
Financial obligations towards the shareholders the Issuer settles directly or through its accounts in
PRIVREDNA BANKA ZAGREB d.d. Zagreb, Račkoga 6:
-
domestic currency account: 2340009-1100021934,
foreign currency account: 70010-currency code-252584
2.12. Limitations in shares transfer
There are no limitations as far as the rights of the shareholders to transfer shares are concerned (sale,
donating, inheriting, fiduciary transfer). The shares can freely be burdened with all types of burden that a
creditor accepts, except for 404,304 shares reserved with the Croatian fund for privatization. Namely, by
the ruling of the Croatian Privatization Fund on consent for transformation of the Issuer from a sociallyowned enterprise into a stock company, from February 28th 1994, in item 4 it is determined that the amount
of 11,150,000.00DEM i.e. 111,500 ordinary registered shares, each of the nominal value of 100.00 DEM, is
to be reserved at the Croatian Fund for privatization because the Issuer has not submitted substantial
evidence of ownership or right of disposal or use of a part of the real estate, and evidence that the real
estate is on the market according to the Law on ban of transfer (nationalized and confiscated assets), and
whose value is part of the original capital of the Issuer and later stock capital. After the changes in stock
capital of the Issuer, and the denomination, merger and replacement of the shares, described in item 2.1.,
the shareholder Croatian fund for privatization on June 10th 2005 holds reserved 404,304 ordinary
registered shares. The disposal of these shares is limited to the purpose they were reserved for.
2.13. Price and ways of determining the price of shares
The market price of shares is changeable, and its rate is determined on the market/stock market. The shares
of the Issuer are traded on the Zagreb and Varaždin stock market.
On the Zagreb stock market 327,117 shares at the rate of 43.00 to 150.00 KN a share, were traded in the
past year (from June 21st 2004 to June 21st 2005). A total turnover of 29,186,120.23 KN was realized.
On the Varaždin stock market 900 shares at the rate of 46.00 to 104.55 KN a share were traded in the past
year. A total turnover of 46,353.20 KN was realized.
The following graph shows the rate movement and the solvency of the share SUNH-R-A in the past year on
Zagreb stock market.
141
GRAPH
SUNH-R-A (ZSE) SUNČANI HVAR D.D.
21st June 2005
TR assessment
Price (KN)
Amount 000 pcs
copyright 2005 Rast d.o.o. All rights reserved.
Of all the shares of the Issuer in the stock market quotations. The suspension is explained by the need to
protect the participants of the capital market from possible manipulations of the price of the shares of the
Issuer in the time between stipulating the agreement between the Croatian Fund for privatization and
On June 20th 2005 the Shares Committee of the Republic of Croatia has reached a decision which
determines that the conditions for re-inserting all the shares of the Issuer in the stock market quotation are
met, and therewith the earlier suspension was cancelled.
3. RISK FACTORS
3.1. Safety risk
The business activities of the Issuer depend on the willingness of tourists to travel and to spend their
vacation outside their country, i.e. permanent address. In year 2004 79% of guests of the Issuer were
foreigners, and 21 domestic tourists1. Political and economic stability of the country where the guest comes
from, and the general safety conditions (especially in air traffic), on the global and regional level, are an
important factor in decision making of potential tourists about the place of vacation, which has a direct
effect on business results of the Issuer.
3.2. Ecological risk
1
Calculated based on the realized number of nights in the year 2004
142
The interest of the guests in the services of the Issuer is in correlation with the quality of the sea and coast
where they sojourn and spend their vacation. Possible sea pollution and coast pollution of larger
proportions (for example tanker damage – oil spills, chemical pollution and similar), water bloom as
consequence of pollution and climatic conditions, can have a direct effect on the number of guests, i.e.
business results of the Issuer.
3.3. Tourist sector risk
Tourism, as a branch of industry, has a seasonal character. Unevenness of the intensity of business during
the year has as consequence that the business in the part of the year (part of autumn and spring, and winter)
is not productive, which diminishes the results accomplished during the season. The Issuer has not yet
substantially developed programmes and organization to prolong the season, enrich the offer and similar.
Therefore, in relation to the other branches of industry, the available resources of the Issuer are not
optimally used.
The specific quality of the Issuer is the fact that it is located on an island, which presents a handicap as far
as the existing level of traffic and other communal infrastructure development is concerned (for the arrival
and commodity of tourists, for the level of expenses of acquisition of goods, price of external services,
water supply, stabile electricity supply etc.).
Business capacity of the Issuer, foremost the hotels, are linked to the communal and energetic infrastructure
of the city of Hvar and the County. Their insufficient abilities and engagement in creating infrastructural
conditions for the development of tourism is a limiting factor in the possibility of development and
expansion of the capacity of the Issuer.
3.4. Macroeconomic developments risk
Macroeconomic developments in the Republic of Croatia, especially the rate trends of kuna in relation to
the most important foreign currencies, tax policy, and the price of goods and services reflect indirectly on
the competitiveness of the Issuer on the tourist market and they influence the decisions of guests on the
place of vacation.
The obligation to pay up the credits used by the Issuer, stipulated with the currency clause, in the intensity
of the burden of business of the Issuer is dependent on the rate trends of kuna in relation to EURO and on
trends of interest rates. Negative aspects of the rate differences in credits is compensated by the fact that
most profits of the Issuer are realized in the same currency (EURO).
3.5. Unfinished privatization risk
Republic of Croatia, as a shareholder of the Issuer with a majority of shares 75.16% of shares (through its
institutions Croatian Privatization Fund and DAB), in the past period, has been looking for a person who
would, based on acquisition of shares, i.e. partnership with the State, make the necessary investments and
start the developmental and business processes. This seeking has been unsuccessful so far with the
consequence of unused possibilities of the Issuer on realistically growing tourist market.
The project of the public-private partnership of the State with the company ORCO PROPERTY GROUP
S.A. has been so far the most integral project of the continuation of the privatization of the company
SUNČANI HVAR d.d. The implementation of the project, stipulated by the agreement of two parties, is
conditioned by fulfilling the obligations of their bearers in the content-related and dynamic sense. Each of
these activities carries the risk of successfulness of implementation, which makes the whole project seem
risky as far as reaching the set goals is concerned.
3.6. Capital market risk
Investing in shares, as securities, is more risky than investing in other securities, especially debt securities.
However, it offers the possibility of making more profits than debt securities.
143
The rate of a share on the market reflects the successfulness of the activities of the Issuer in competing
market conditions. However, the rate also reflects other developments, in the local and global surroundings,
which the Issuer cannot influence, and which are difficult or impossible to predict.
The stock market in the Republic of Croatia is still underdeveloped. Primarily this relates to its (in)solvency
and possibility of timely access to relevant information and information which relates to the issuers.
4. INFORMATION ON THE ISSUER
4.1. Company, head office and legal form
The company of the Issuer is: SUNČANI HVAR, joint stock company for hotel industry, catering, and
tourism. Shortened company name is: SUNČANI HVAR d.d.
The company of the Issuer in English is: SUNČANI HVAR, joint stock company for hotel industry,
catering and tourism. Shortened company name is: SUNČANI HVAR, PLC.
The head office of the Issuer is in Hvar, Dolac bb.
Contacts with the Issuer are possible by:
-
telephone: (021) 741 026, 741006, 741 046, 741 066
telefax: (021) 741 169, 741 816, 742-014
email: suncani-hvar@st.htnet.hr
Information on the Issuer can be found on its web pages on the internet: www.suncanihvar.hr
The Issuer is organized as a joint stock company according to the law of the Republic of Croatia.
4.2. Incorporation
The Issuer is incorporated in the register of the Commercial court in Split MBS 060004796.
4.3. The amount of the subscribed, paid-in and allocated stock capital
The amount of the registered stock capital is 331,097,100.00 kuna2. Stock capital is fully paid in. The
amount of the credit allocation, according to the last (old) statute is 82,774,200.00 kuna3.
4.4. Information on the superior company
According to the stipulations of art. 475 of the Companies law, the Issuer does not have a company which
is its superior company.
4.5. Number of votes in the general assembly of the Issuer and the number of its shares
The Issuer on June 10th 2005 has 3,310,971 ordinary registered shares issued. The Issuer has no promissory
shares. Number of votes in the general assembly equal the number of issued shares (3,310,971 votes).
2
Based on the decision of the general assembly of the Issuer, on June 17th 2005, the stock capital will be
increased for 200,000,000.00 kuna – to the amount of 531,097,100.00 kuna by payment in money (see item
2.1.5.) on the day of registration of the increase in the commercial register.
3
As stipulated in art. 9 of the new Statute, passed on the general assembly on June 17th 2005, the amount of
credit allocation is determined to 100,000,000.00 kuna. On September 1st 2006, the board is authorized,
with the consent of the Auditing committee, to reach the decision on the increase of stock capital to the
stated amount, as one instance or in more instalments. The new Statute enters into force on the day of
incorporation, which was not published by the time of conclusion of the abridged brochure.
144
After the registration and payment of the newly issued 2,000,000 shares, and the registration of the increase
of capital stock of the Issuer in the commercial register, the number of issued shares of the Issuer will
increase from 3,310,971 for 2,000,000 to 5,310,971. At the same time the number of votes in the general
assembly of the Issuer will increase to the same number (5,310,971 votes).
4.6. Number of shareholders with rights of vote, list of shareholders with the largest number of votes
The Issuer, on June 10th 2005, has 1,935 shareholders with the right of vote in the general assembly. On the
same day only two shareholders had more than 5% of the votes in the general assembly:
1.
2.
GOVERNMENT AGENCY FOR SECURING SAVINGS DEPOSITS AND FINANCIAL
REHABILITATION OF BANKS with1,359,396 votes, i.e. 41.06% of the total number of
votes,
CROATIAN PRIVATIZATION FUND with 1,129,694 votes, i.e. 33.12% of the total number
of votes in the general assembly.
The list of 10 shareholders with the largest number of votes in the general assembly was given on June 10th
2005, and is presented in the following table:
No.
1
2
3
4
5
6
7
8
9
10
Shareholder
GOVERNMENT
AGENCY
FOR
SECURING
SAVINGS
DEPOSITS
AND
FINANCIAL
REHABILITATION OF BANKS
CROATIAN PRIVATIZATION FUND
VUK IVAN
PBZ D.D./CAPITAL FUND D.D.
ŽUPANOVIĆ ANTE
PBZ D.D./NEW BANK OF LJUBLJANA
TVRDEIĆ ANTE
CAPITALIS D.O.O.
HUIS ANTUN
ZAGREBAČKA
BANK
D.D./
(COLLECTIVE
TUTELARY ACCOUNT)
TOTAL (1 – 10)
Amount of shares
Percentage of votes
1,359,396
1,129,693
102,157
34,967
10,008
8,809
6,716
6,116
5,448
41.06
34.12
3.08
1.06
0.30
0.27
0.20
0.18
0.16
4,992
2,668,302
0.15
80.58
4.7. Number of employees and qualification structure
The Issuer, on December 31st 2004, had 318 permanently employed workers.
Qualification structure of the permanently employed workers on December 31st 2004:
Qualification
University
2-year
postsecondary
school
highly
skilled
training
secondaryschool
skilled
training
semiskilled
training
lower
educational
background
nonqualified
Total
No.
of
employees
10
18
13
104
73
15
55
30
318
Number of employees in 2004, based on the number of working hours, was 448 workers (seasonal workers
included).
5. SUBJECT OF BUSINESS OF THE ISSUER
5.1. Goals of business
145
The goal of business of the issuer is the increase of its assets and the realization of good financial results,
and thereby the increase of the value of shares for the shareholders. The realization of this goal is achieved
by investments and participating in the activities related to hotel, catering and tourist services.
The strategy of the development of the Issuer is directed in three main areas:
- working during the whole calendar year,
- exclusivity in the offer of services,
- reconstruction and expansion of capacity (reconstruction and modernization of hotel
capacities)
5.2. Basic information on the Issuer
During the 90s the Issuer had many difficulties in business, which is a consequence of lack of guests (due
to the war) and giving shelter to a large number of exiles and refugees (about 3,800 persons). To illustrate
this, in year 1990 366,926 overnights of guests were realized in 1990, 48,441 in 1991, and only 14,453 in
1992. From 1995 the number of overnights constantly increases, but it still has not reached the level of
1990 (in 2004 there were 291,466 overnights).
Damage incurred by the Issuer due to the events of war and the period after the war, are estimated to about
EUR 7,500,000.00.
The described situation cause the loss in business during the 90s, and incurring debts which reflects on
current business as well (see figures in item 6.).
The Issuer disposes of 10 hotels one of which is out of function (hotel GALEB), on capacities of which it
basis its business activity:
Hotel AMFORA (three stars) has 343 rooms, 659 beds, of total construction area of 25,133 m2, land surface
of 37,237 m2, built in 1970, renovated a number of times (in 1995, 1998 and 2001).
Hotel PALACE (three stars) has 76 rooms, 147 beds, net construction area of 4,558 m2, land surface of
2,221 m2, built in 1901, adapted in 1970 and 1992, renovated in 1996.
Hotel ADRIATIC (three stars) has 58 rooms, 126 beds, construction area of 4,558 m2, land surface of 2,319
m2, built in 1967, renovated in 1998,
Hotel SLAVIJA (two stars) has 57 rooms, 117 beds, construction area of 929 m2, built in 1986,
Hotel PHAROS (two stars) has 182 rooms, 402 beds, net construction area 6,517 m2, land surface 15,618
m2, built in 1963, renovated in 1997,
Hotel DALMACIJA (one star) has 63 rooms, 116 beds, net construction area 2.424 m2 (with an annex),
land surface 655 m2, built before WWII.
Hotel SIRENA (one star) has 148 rooms, 316 beds, net construction area 10,425 m2, land surface 38,451
m2, built in 1970-71.
Hotel DELFIN (two stars) has 56 rooms, 112 beds, net construction area 2,635 m2, land surface 2,913 m2,
built in 1967.
Hotel BODUL (two stars) has 150 rooms, 300 beds, net construction area 6,291 m2, land surface 9,265 m2,
built in 1968, renovated in 1995.
Hotel GALEB has 34 rooms, net construction area 2,261 m2, land surface 2,271 m2, built in 1970 – hotel is
out of function.
The Issuer disposes of camp Vira (II category) with 800 camp places. The camp is out of function.
146
Except the above mentioned, the Issuer also disposes of coffee bar Kavana Pjaca (128 seats), Buffet For (50
seats) and restaurant Plaža (140 seats). Buffet For is out of function.
In 2004 the guests of the Issuer realized 291,466 overnights, which is 2.6% more than in 2003. Foreign
guests realized 231,232 overnights (79.3%), and domestic 60,234 (20.7%) overnights.
5.3. Activities
The Issuer has registered at the Commercial Court in Split the following activities:
-
Provides services of a travel agency, tourist guide, attendant, animator, representative,
provides services in nautical, rural, health-care, congressional, sport, hunting and other forms
of tourism, providing other tourist services;
Preparing food and providing catering services, preparing and serving drinks and beverages,
preparing food for consumption in another location and supplying that food – catering and
providing accommodation;
Acquiring and selling goods;
Act as commercial mediators on domestic and international market;
Sport recreation;
Passenger and cargo transport in domestic and international road transport;
Exchange activities;
Construction, design and supervision of construction;
Breeding and production of breeding-worthy animals;
Breeding, protection, hunting and use of game and its parts;
Transport by sea and coast;
Renting boats;
Production of bread, crisp bread and buns;
Production of fresh pasta;
Production of cakes and cookies;
Maintenance and repair of motor vehicles;
Repair of objects for personal use and household;
Real-estate trade;
Promotional activities (publicity and propaganda);
Washing and dry-cleaning of textiles and fur products;
Hairdressers’ and beauty parlours;
Representing foreign companies;
International shipping;
Financial loaning (leasing);
Entertaining activities (organizing dance school, organizing cultural performances).
5.4. Dependence on borrowed patents and licences
The Issuer does not use patents and licences of others, and does not have other similar contractual
obligations towards third parties.
6. FACTS ON ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFIT AND LOSS
In the period between 1991 and 2001 the Issuer has incurred losses in doing business. The reason for that is
the lack of guests and substantial decrease in business activities in all the segments of business, caused by
war. In this period the Issuer incurred credit debts, so payment of interests and returning the capital sum,
which is partly reprogrammed, burdens the current activities. In the second half of the 90s, each year, the
Issuer increased the profits and, at the same time, relatively decreased operating expenses. What follows
are financial reports for the year 2004 and period I-III of 2005.
6.1. Balance
(in 000 kunas)
147
ASSETS
A) RECEIVABLES FOR ENTERED, BUT UNPAID
CAPITAL
B) LONG-TERM ASSETS
Intangible assets
Tangible assets
Financial assets
Receivables
C) SHORT-TERM ASSETS
Inventories
Receivables from buyers
Other receivables
Financial assets
Money on a bank account and till money
D) PAID EXPENSES FOR FUTURE PERIOD AND
OUTSTANDING COLLECTION OF INCOME
EARNINGS
E) LOSS BEYOND THE AMOUNT OF CAPITAL
ASSETS IN ALL
LIABILITIES
A) CAPITAL AND RESERVES
Entered capital
Reserves
Profit/loss of the current year
B) MINORITY INTERESTS
C) LONG-TERM RESERVES FOR RISKS AND
EXPENSES
D) LONG-TERM LIABILITIES
E) SHORT-TERM LIABILITIES
Liabilities towards suppliers
Short term financial liabilities
Other short term liabilities
F) DEFERRED PAYMENT OF EXPENSES AND REVENUE OF
FUTURE PERIODS
TOTAL LIABILITIES
Off balance assets
31/12/2004
347,993
31/3/2005
348,069
17,278
330,715
18,139
329,930
22,759
6,439
8,403
6,933
18,298
6,338
4,379
6,486
984
1,095
370,752
366,367
262,020
331,097
72
-69,149
255,066
331,097
72
-76,103
76,484
32,248
3,906
25,671
2,671
75,857
35,444
3,840
29,165
2,439
370,752
167
366,367
167
6.2. Profit and loss account
2004
INCOMES
A. Incomes
Incomes from sale in the country
Incomes from sale abroad
Other incomes
B) Financial incomes
Positive rate differences
Interests and other financial incomes
62,915
18,414
43,736
765
115
114
1
(in 000 kunas)
I-III 2005
1,556
1,246
310
0
148
C) Extraordinary
5,336
237
68,366
1,793
58,432
7,358
14,173
767
27,317
5,198
incomes
TOTAL INCOMES
EXPENSES
D) Reduction
of value of inventories of
unfinished production and finished
products
E) Expenses
Material expenses and costs of sold goods
Personnel expenses
3,328
Amortization
Value adjustment and reserving
13,614
1,393
9,256
1,332
Other expenses from basic activity
F) FINANCIAL
EXPENSES
745
Negative rate differences
8,511
1,332
291
57
67,979
8,747
387
-6,954
387
-6,954
387
-6,954
Interests and other financial expenses
G) EXTRAORDINARY
EXPENSES
TOTAL EXPENSES
PROFIT OR LOSS
Profit or loss before taxing*
Profit tax
Profit or loss after taxing
Minority interests
Net profit or loss
149
6.3. Money flow report for the year 2004 (indirect method)
I
1
2
3
4
5
6
7
8
9
10
11
II
1
2
3
III
1
2
MONEY
FLOW
FROM
BUSINESS
ACTIVITIES
Profit/loss
Amortisation
Increase of inventories
Increase of receivables from buyers
Increase of receivables from government
institutions
Increase of receivables from employees
Increase of other receivables
Increase of liabilities towards suppliers
Increase of liabilities for received advances
Increase of liabilities towards employees
Increase of liabilities towards government
institutions
NET MONEY FLOW FROM BUSINESS
ACTIVITIES
MONEY FLOW FROM INVESTMENT
ACTIVITIES
Increase of value of long term assets
- Investing in immaterial assets 265,574 kn
- Investing in land 2,614 kn
- Investing in buildings 1,732,253 kn
- Investing in equipment 8,294,600 kn
- Investing in material assets in preparation
131,610 kn
Increase of value of the facility by revalorisation
Decrease of value of long term assets
- expenses and sale (net value)
NET MONEY FLOW FROM INVESTMENT
ACT.
MONEY FLOW FROM FINANCIAL
ACTIVITIES
Increase of value of long-term credit liabilities
Increase of value of short-term liabilities towards
credit institutions
NET MONEY FLOW FROM FINANCIAL
ACT.
Money at the beginning of the period
Money at the end of the period
TOTAL NET MONEY INCREASE
(in 000 kunas)
I-III 2005
2004
422
3,327
(366)
(399)
7
-6,954
266
(34)
(2,922)
27
121
(1,176)
240
14,120
-2,943
-2, 790
(724)
(1,192)
101
-582
(10,426)
(3,273)
9
(13,690)
0
(2,813)
17,583
14,769
0
629
983
354
984
2,176
1,192
The auditor’s opinion on reality and objectivity of financial reports for year 2004, as well as notes with
financial reports, can be found in the annex to this abridged brochure.
7. LITIGATIONS
The Issuer is involved in 39 lawsuits on Croatian courts of the total value of 4,942,477.65 KN, as plaintiff
in 15 litigations of the value of 883,484.00 KN, and as defendant in 24 litigations of the value of
4,058,993.00 KN.
150
In litigations whose value is less than 100,000.00 KN, 6 verdicts were returned in favour of the Issuer in the
value of 167,194.65 KN, while other litigations are still progress. Complaints were filed for all 6 verdicts.
In litigations whose value is less than 100,000.00, 2 verdicts were returned against the Issuer in litigations
whose total value is 47,900.oo KN. In both cases the Issuer filed a complaint. The other litigations are still
in progress.
The Issuer has a total of 4 litigations in administrative procedure. 3 suggestions for insuring the nonmonetary receivables were instituted against the Issuer at the Municipal court in Stari Grad, by determining
a temporary ban of alienation and burden.
The Issuer is involved in a total of 15 litigations on Croatian courts, the value of each exceeds 100,000 KN
and the total value amounts to 4,561,933.00 KN.
In 6 litigations the Issuer is the plaintiff with claims in the amount of 804,000.00 KN:
1.
This year, at the Municipal court of Stari Grad the Issuer started litigation against Mr. Sergio
Bracanović for establishing and correcting the registration in the amount of 251,000.00 KN. The
procedure is still in progress.
2.
At the Municipal court in Stari Grad the Issuer is engaged in litigation (P.334/03) against Mr.
Novak Cvjetko for the return of a part of real estate and establish the prior status in the amount of
150,000.00 KN. The procedure is in progress.
3.
At the Municipal court in Stari Grad the Issuer is engaged in litigation (P.221/03) against the city
of Hvar for establishing and correction of registration in the amount of 101,000.00 KN. The
verdict of first degree was returned in the favour of the Issuer, but the plaintiff filed a complaint.
4.
interested party is Mrs. Domančić Radojka. The verdict of first degree was returned in the favour
of the Issuer, but a complaint was filed.
5.
interested parties for the plaintiff is Mr. Novak Ivan, and for the defendant Mrs Kovačević
Desanka and others. The verdict of first degree was returned in the favour of the Issuer, but a
complaint was filed.
6.
At the Municipal court in Stari Grad the Issuer is engaged in litigation (P.277/00) against Mrs.
Carić Tonka for establishing property rights and registration in the land register in the amount of
100,000.00 KN. The first degree verdict was returned in the favour of the Issuer, but the defendant
filed a complaint.
In 8 litigations of the total value of 3,102,208.00 KN, the Issuer is the defendant:
1.
At the Commercial court in Split plaintiffs, Brassco d.o.o. and Mr. Krešić Vicko, are engaged in
litigation (P.1150/03) against the Issuer for the payment in the amount of 823,488.00 KN. By the
first degree verdict the litigation claim in the amount of 89,640.00 KN with the legal default
interests since June 1st 1998 was partially sustained. Both, the plaintiff and the defendant, filed a
complaint.
2.
At the Municipal court in Stari Grad the plaintiff, Republic of Croatia, is engaged in litigation (P.
58/03) against the Issuer for establishment and acting. The value of the litigation amounts to
200,000.00 KN. The procedure is still in progress.
151
3.
At the Municipal court in Stari Grad the plaintiff, Republic of Croatia, is engaged in litigation
(P.137/03) against the Issuer for establishment and acting. The value of the litigation is 120,000.00
KN. By the first degree verdict the litigation claim was partially sustained. A complaint was filed.
4.
At the Municipal court in Stari Grad, the plaintiff, Monastery of Benedictine nuns, is engaged in
litigation (P.170/02) against the Issuer for conveyance into possession. The value of the litigation
amounts to 101,000.00 KN. The procedure is in progress, and the Issuer filed a counterclaim.
5.
At the Municipal court in Stari Grad the plaintiff, the Monastery of S.S. Anthony and John the
Baptist, is engaged in litigation (P.157/03) against the Issuer for attainment without grounds. The
value of the litigation amounts to 1,536,720.00 KN. The procedure is interrupted until the finality
of the procedure number P.170/02.
6.
At the Municipal court in Stari Grad the plaintiff, Mr. Maričić Prosper and others, are engaged in
litigation (P. 420/02) against the Issuer for the return of real estate. The value of the litigation
amounts to 100,000.00 KN. The procedure is in progress.
7.
At the Municipal court in Stari Grad the plaintiff, Republic of Croatia, is engaged in litigation
(P.97/03) against the Issuer for establishment and registration. The value of the litigation amounts
to 120,000.00 KN. The procedure is still on.
8.
At the Municipal court in Stari Grad the plaintiff, Degustatio d.o.o., is engaged in litigation
(P.98/03) against the Issuer and Mr. Novak Ivan because of the infringement of pre-emption
rights. The value of the litigation amounts to 101,000.00 KN. The hearing was concluded and the
verdict is attended.
In one litigation the Issuer is the opponent of insurance:
1.
At the Municipal court in Stari Grad the proposer of insurance, Monastery of S.S. Anthony and
John the Baptist, filed a suggestion for insuring a monetary claim in the amount of 655,725.00 KN
(Ovr.195/04). The court hearing is concluded.
8. INVESTMENT ACTIVITIES OF THE ISSUER
The Issuer is planning larger investments by the end of the year 2005. Investments in the hotels PALACE,
ADRIATIC and SLAVIJA.
The hotels PALACE and ADRIATIC will be reconstructed into 5-star hotels, and hotel SLAVIJA into a
3.5-star hotel.
The means the Issuer will gather by the new issue of shares, will be used for financial consolidation of
business capacities of the Issuer.
9. AUDITOR OF FINANCIAL REPORTS
The audit of the business activities of the Issuer in 2002 was performed by the company AUDITOR d.o.o.
from Kaštel Sućurac, Z. Frankopanska 13.
The audit of the business activities of the Issuer in 2003 and 2004 was performed by the company
REVIZORSKA TVRTKA d.o.o. K.SUCURAC, Z. FRANKOPANSKA 13
The opinion of the authorised auditor on the reality and objectivity of the basic financial reports for the year
2004 is part of this abridged brochure.
The manager of the company AUDITOR d.o.o. is Anita Alfirević Petričević B. Econ.
152
10. INTEREST OF MEMBERS OF THE BOARD AND AUDITING COMMITTEE
The only member of the board – manager of the Issuer Pero Pavičić owns 409 shares, and his wife Mirjana
Pavičić owns 355 shares of the Issuer.
Member of the auditing committee Karlo Jakovčević owns 1,160 shares of the Issuer.
Member of the auditing committee Sergio Bracanović owns 725 shares, and his wife Neva Bracanović 4
shares of the Issuer.
11. GENERAL INFORMATION
11.1. Changes in the financial and business position
At the knowledge of the board and the auditing committee of the Issuer after December 31st 2004 there
were no major changes in the financial and business position of the Issuer. Changes are expected after the
recapitalization according to the decision of the general assembly on June 17th 2005 and the beginning of
realization of the business plan of the new – majority shareholder of the shares of the Issuer – company
11.2 Options
On the date of publishing this Abridged brochure there were no options on the shares of the Issuer.
11.3. Burdens – mortgages
The insight into registered burdens on the real estate of the Issuer is described in detail in the notes of the
auditor (pp. 17-19) which are attached to this brochure.
Except the mentioned, on May 25th 2005 a Contract on a short-term credit was made with Privredna banka
Zagreb d.d., contract no. 5010080046, account and party 5001200-5010080046, for the amount of
4,400,000.00 KN. For the insurance of credit a lien was registered on the plot 3775/3, land registry street
2120 cadastral county Hvar (hotel Bodul).
11.4. Joint ventures and offers for takeover
The Issuer was informed on July 5th 2005, by the ORCO PROPERTY GROUP S.A. on the existence of a
joint venture, according to art. 8 of the Law on take-over of joint stock companies, with the Croatian
privatization fund and the city of Hvar. All the three parties, in their joint venture, dispose of 2,489,549
shares, which make up 75.19% of the capital stock, and give the right to 2,489,549 votes or 75.19% of the
total number of votes given by the shares of the Issuer with the right to vote. Based on the mentioned,
ORCO PROPERTY GROUP S.A. will publish the offer for take-over by the deadline and in the way
stipulated by Law on take-over of joint stock companies.
11.5. Issuing agent, guarantee of fulfilling the obligations from the shares
As this is an issue of shares by private offer, there is no issuing agent, or a person who would issue a
guarantee for the fulfilment of obligations of the Issuer.
11.6. The statement of the members of the board and auditing committee
By signing this Abridged brochure the members of the board and auditing committee of the Issuer state the
following:
“According to our belief and in conformity with all our knowledge and information at our disposal,
we declare that all the information in this brochure present a whole and truthful presentation of
assets and liabilities, losses and profits, financial position and business activities of the Issuer, rights
153
included in the bonds they refer to, and that facts that could effect the completeness and truthfulness
of this brochure were not left out.”
11.7. Documents available for the potential investor
The documents listed below are submitted to the potential investor for the insight:
1. Abridged brochure
2. Statute
3. Register of companies certificate
12. INFORMATION ON ACCOUNTABLE INDIVIDUALS
12.1. Auditing committee
1.
JAKŠA BARBIĆ, personal citizen identification number 1212936330054, Zagreb,
Pavlinovićeva 3 – president of the auditing committee.
Born on December 12th 1936 in Zagreb where he finished elementary school, high school and Faculty of
Law of the University in Zagreb, where he graduated, as full time student, in 1960.
After military service, he worked as a law clerk of the County court in Jastrebarsko and District court in
Zagreb until September 1961 when he started working at the Higher commercial court of Croatia in Zagreb.
He passed the bar exam on March 27th 1963, and since May 1st 1963 he was appointed for court officer at
the Municipal court I in Zagreb. He passed the public notary exam. He came to the Faculty of Law in
Zagreb as assistant on August 1st 1963.
He defended his doctoral dissertation entitled “Contract on consulting engineering” in front of the doctoral
committee of the Faculty of Law in Zagreb, and was promoted into a doctor of science in the are of
commercial law.
In December of 1973 he was chosen for the senior lecturer for the subject “Commercial law”, and in March
1978 for the associate professor. He was chosen for the full professor for the same subject on February 28th
1978.
He is a lecturer on Post-graduate studies in commercial law and companies law on the Faculty of Law in
Zagreb, he taught and/or teaches on other post-graduate studies on faculties of law in Zagreb, Split,
Ljubljana, Maribor, Skopje, Novi Sad and Beograd, and on the Faculty of Economy in Zagreb.
In academic years 1975/76 and 1976/77 he was the Vice-Dean of the Faculty, and since 1981 till 1984 the
president of the Council. He was elected dean of the Faculty for the first time in the academic year 1993/94,
and for the second time in the academic year of 1995/96 and 1996/97.
He is a supervisor at the Post-graduate studies in commercial law on the Faculty of Law in Zagreb from
January 1st 1985. Since 1981 he is the head of the Department for commercial (commercial, now companies
and commercial law) law. He introduced the Companies law as a separate branch of law in Croatian law
education.
He was elected as associate member of the Croatian Academy of Arts and Sciences in 2002, and for the full
member in 2004. He is full member and member of the presidency of the Croatian Academy of Law
Sciences. He won the CAAS award in 2003 for his scientific work “Companies law”, books I, II, and III,
for the scientific contribution of permanent value for the Republic of Croatia.
He is the member of presidency and arbiter of the Permanent arbitration court with the Croatian
Commercial Chamber in Zagreb. He acted as arbiter in many arbitrary disputes in domestic and
international arbitrations (Paris, Zurich, Stockholm, Vienna, Zagreb, Ljubljana, Beograd). He is on the list
of arbiters of the prestigious International centre for settling investment disputes in Washington.
154
Since the foundation (1993) the president of the Lawyers club of Zagreb, where he organized and led about
a hundred monthly forums, he started and is supervising the Bulletin Forums and the Annual Forums. He
was a member of the editorship of the magazine “Commerce and Law” (now “Law in commerce) for many
years, and he was and still is a member of the editorship of the Anthology of Faculty of Law, University in
Zagreb. He is the president of the publishing committee of the magazine “Croatian Law Review” and a
member of the publishing committee of the magazine “Law and Taxes” and the paper “New informer”. He
organized and/or led and/or participated in reports on more than a hundred scientific and professional
consultations and seminars in the country and abroad and he held numerous public lectures.
He was a member of the National scientific committee. He is a scientific counsellor of the Constitutional
court of the Republic of Croatia and government counsellor in the Ministry of Law of the Republic of
Croatia.
For the contributions in science he was decorated with the order of Croatian Danica with the image of
Ruđer Bošković.
The average gross monthly salary of Mr. Jakša Barbić with the Issuer, in the period I-VI in 2005, amounted
to 6,436.80 kunas.
2.
ZORAN DOMANČIĆ, personal citizen identification number 2207961381801, Hvar,
Stambena II – vice president of the auditing committee.
He was born on July 22nd 1961 in Split, and since birth he lives in Hvar except for the period of education
in Zagreb. He finished the mathematic-informatics school in Zagreb and he obtained the profession of
information scientist.
From the beginning of 1991 he participated actively in the War of Independence (member of the command
of the Squad of public protection of the city of Hvar, a second-in command of the ZNG for the island of
Hvar, member of the command of the Mixed squad of marine corps). He participated in military operations
in hinterland of Zadar in 1993, and on Velebit in 1994. He was demobilized with the rank of reservelieutenant after the action Oluja in 1995.
In 1998 he starts his own business as the co-owner and manager of the company PARSAIN d.o.o.
(commerce and real-estate trade). He was the manager until 2001, and he owned share portions of the
company since 2004.
He started participating in the political life of the local self-government before the elections for the City
council of the City of Hvar in 1993 as one of the bearer of the independent lists and becomes a councillor in
the City Council. From 1993 to 1997 he is member of the City government of the City of Hvar and the
vice-president of the City council until 1996, when he was elected member and president of the City
Council and performed this duty until April 2001. After local elections of 2001 he was elected mayor of the
City of Hvar, and he performed this duty until June 10th 2005.
He has been a member of the Croatian Peasant Party from 1995 and vice-president of the County
organization of the Croatian Peasant Party.
Mr. Zoran Domančić, as the mayor of the City of Hvar, has no salary with the Issuer based on the Law on
preventing conflict of interests in carrying out public functions (Narodne novine 163/03 and 94/04).
3.
FRANO BIBIĆ, personal citizen identification number 2605962381819, Hvar, Križna luka –
member of the auditing committee.
He was born on May 26th 1962 in Zadar. He graduated from the Faculty of Law in Split.
155
He worked as a magistrate, as the president of sub-district of Hvar and he was a clerk in the County office
for tourism in Hvar. For the past few years he owns a fishing trade “Sirena”.
He is married and father of two children.
The average gross monthly salary of Mr. Frano Bibić with the Issuer, in the period I-VI of 2005, amounted
to 4,291.18 kunas.
4.
SERGIO BRACANOVIĆ, personal citizen identification number 2702949381805, Hvar,
Burak – member of the auditing committee.
He was born on February 27th 1949 in Hvar. He finished elementary school in Hvar, and high school in
Split. He graduated from the Faculty of philosophy in Zagreb (Croatian language and literature and
comparative literature teacher). He is a Master of human sciences.
He is fluent in English, Italian and French.
Since the 70s until 1993 he was employed as a receptionist, and then a head of RJ Private accommodation
RO Sunčani Hvar. In the High school centre Hvar he teaches Croatian part-time. Since 1993 he is the
principle of Highs School of Hvar.
He is the president of Croatian Democratic Union of City of Hvar, vice-president of the Central Croatian
Cultural and Publishing Society, member of Lyons club, member of the Association of educational
workers, and so on.
He is married and father of two daughters.
The average gross monthly salary of Mr. Sergio Bracanović with the Issuer, in the period I-VI 2005
amounted to 4,291.18 kunas.
5.
KARLO JAKOVČEVIĆ, personal citizen identification number 1607927380027, Split,
Lovretska 23, member of the auditing committee.
He was born on July 5th 1927 in Gornje Selo on Šolta.
He is a bachelor of economy and spent all his working years in the Service of public bookkeeping –
affiliate Split on control.
He retired on July 1st 1987.
He is a permanent expert witness for bookkeeping, finances and foreign currency dealings.
He is not a member of any political party.
On the assembly of the company Sunčani Hvar, held on October 25th 2002 he was elected member of the
auditing committee as a representative of the Association of small shareholders of the Company.
Average gross monthly salary of Mr. Karlo Jakovčević with the Issuer in the period I-VI 2005 amounted to
4,291.18 kunas.
6. ZDENKO MIČIĆ, personal citizen identification number 1908964383915, Zadar, I. Tijardovića
2 – member of the auditing committee.
He was born on August 19th 1964 in Zadar. He finished elementary and secondary economic school in
Zadar and graduated from Faculty of hotel-keeping in Opatija (bachelor of economy for tourism and hotelkeeping).
156
He worked as the vice sales and marketing manager in the Hotel company Borik d.d., as teacher at the
Hotel-keeping – tourist school in Zadar, he was a marketing director of the company Turisthotel d.d. from
Zadar and director of the apartment complex Zaton.
Since November 2001 he is vice minister of tourism in the Government of Republic of Croatia. Since
December 2003 he is the secretary of state for tourism in the Ministry of sea, tourism, traffic and
development.
He is the president of auditing committees of the companies Park Prevlaka, Adriatic Club and Liburnia
Riviera Hotels, and a member of the auditing committees in the companies Hotels Koločep and Sunčani
Hvar d.d.
He is the member of the National committee for competitiveness.
He is married and father of two children.
Mr. Zdenko Mičić, as secretary of state in the Ministry of sea, tourism, traffic and development, has no
salary with the Issuer based on the Law on preventing conflicts of interests in performing public functions
(Narodne novine 163/03 and 94/04).
7.
KUZMA TUDOR, personal citizen identification number 3011943381804, Hvar, Dolac bb –
member of the auditing committee.
He was born on October 30th 1943 in Malo Grablje, where he finished elementary school, and eight-year
school in Hvar. He finished Catering school, direction waiters, in Split.
After two years of military service in the navy, he spent almost all his working years (more than 37) in
Sunčani Hvar in different positions and buildings, and since 1971 in hotel Amfora.
While working, he finished the Catering school in Split since when he worked as the chief of lunch-room of
the hotel Amfora. He speaks English, German and Italian.
He is the representative of workers in the auditing committee of the Issuer.
He is married and father of two daughters.
Average gross monthly salary of Mr. Kuzma Tudor with the Issuer in the period I-VI 2005 amounted to
9,517.53 kunas (salary and compensation for membership in the auditing committee).
12.2. The board – manager
PERO PAVIČIĆ, personal citizen identification number 1201951381801, Hvar, Šamoreta Dolac –
manager.
He was born on January 12th 1951 in Poljice on the island of Hvar.
He finished the Catering school in Hvar, school for skilled trained employees in Opatija and Two-year
college on the Faculty for foreign trade – hotel-keeping and tourism.
Some of the more important functions: he was a member of the Executive committee of the Municipality of
Hvar, director of Sunčani Hvar holding and director of the joint stock company Sunčani Hvar since 1990 to
present.
He is a member of many associations, specially connected with commerce and tourism.
157
He won many recognitions and medals for the services in commerce.
The average gross monthly salary of Mr. Pero Pavičić with the Issuer in the period I-VI 2005 amounted to
31,684.57 kunas.
13. ABRIDGED BROCHURE MAKER
This abridged brochure was composed by a brokerage company RAST d.o.o., based on the information
submitted by the Issuer, with the head office in Varaždin, Ruđera Boškovića 20.
The accountable person – director of the company RAST d.o.o. is MLADEN OSTRIČKI, personal citizen
identification number 2201950320004, from Varaždin, Zagrebačka street 212.
14. LIST OF PARTICIPANTS
Publisher:
SUNČANI HVAR d.d., Joint stock company for hotel-keeping, catering and tourism
21450 Hvar, Dolac bb
Tel. (021) 741 026; Fax (021) 741 169; E-mail: suncanihvar@st.tel.hr
web: www.suncanihvar.hr
Auditor:
AUDITOR d.o.o.
Auditing company
21212 Kaštel Sućurac, Zrinsko-Frankopanska 13
Tel. (042) 231 605; Fax: (042) 231 611; E-mail: rast@rast.hr; web: www.rast.hr
15. SIGNERS OF THE ABRIDGED BROCHURE
1.
Jakša Barbić – president of the auditing committee
(the signature is illegible)
2.
Zoran Domančić – vice-president of the auditing committee
3.
Frano Bibić member of the auditing committee
4.
Sergio Bracanović – member of the auditing committee
5.
Karlo Jakovčević – member of the auditing committee
6.
Zdenko Mičić – member of the auditing committee
7.
Kuzma Tudor – member of the auditing committee
8.
Pero Pavičić – manager of the Issuer
9.
Mladen Ostrički – manager of RAST d.o.o.
158
SUPPLEMENT
THE AUDITOR’S OPINION
ON THE REALITY AND OBJECTIVENESS OF 2004 FINANCIAL STATEMENTS
WITH REPORTS AND NOTES
159
auditor
AN AUDIT COMPANY Ltd.
K. Sućurac, Z. Frankopanska 13
K. Sućurac, May 14, 2005
SUNČANI HVAR d.d. Hvar
Attn. Shareholder’s Assembly and Supervisory Board
The Opinion of the Authorized Auditor on the Reality and Objectivity of Key Financial
Statements
1. We have carried out an audit of key financial statements of the joint stock company SUNČANI HVAR Hvar In the period
from November 1, 2003 to May 14, 2005, as follows:
Financial Statement as of December 31, 2004; Profit and Loss Account for 2004; Money Flow Account, Reports on changes to
the principal, accounting policy and Notes accompanying financial statements for 2004, presented from page 5 through page
11.
2. The auditing was carried out in compliance with the International Auditing Standards, the Law on Accounting, the Law on
Auditing, the International Accounting Standards and other applicable regulations in the Republic of Croatia.
The auditing procedure included a test of internal accounting control, the List of Assets Study as of December 31, 2004, we
have carried out independent confirmation of the balance and testing of materially important items presented in financial
statements as well as other procedures which we have deemed necessary for providing an unambiguous opinion on the
objectivity and the reality of key financial statements.
The responsibility for authentic presentation of financial statements is on the Management of the Company, while our
responsibility is shown in an independent opinion based on evidence collected during the auditing procedure.
3. According to our opinion, key Financial Statements are real and objective in presenting financial status of the Joint Stock
Company SUNČANI HVAR d.d. Hvar as of December 2004, and operating results for the year in question are in compliance
with the International Accounting Standards, the Law on Accounting and other statutory regulations.
Certified Auditors:
Manager:
Anita Alfirević Petričević
Anita Alfirević Petričević, B.Econ
Nela Kezmić
Predrag Petričević
160
Insurance Policies
1. The assets of the Company were insured with the insurance company Croatia Osiguranje d.d., Zagreb, Branch Office Split.
Insurance Policy
- 045291001330
(PBZ bound)
(HBOR bound)
- 04591002170
(PBZ bound)
no. 045291001531
(HBOR bound until
May 10, 2004)
- no. 045291002202
(Croatia osiguranje
bound)
- 045291001891
- no. 015291000138
- no. 045291001894
- no. 045291001898
- no. 045291001896
- no. 045291001890
(HBOR bound)
- no. 45291001888
(HBOR bound)
- no. 045291001897
- no. 045291001892
- no. 045291001893
- no. 045291001899
- no. 045291001889
Against
fire, water and
sewerage discharge
01.01.04-01.01.05
fire, water and
sewerage discharge
01.01.04-01.01.05
fire and water and
sewerage discharge
01.01.04-01.01.05
fire
01.01.04-01.01.05
Hotel
Amfora:
equipment
fire and water
discharge
01.01.04-01.01.05
fire and water
discharge
01.01.04-01.01.05
fire
01.01.04-01.01.05
burglary and
robbery
01.01.04-01.01.05
other buildings and equipment
equipment damage
01.01.04-01.01.05
fire, water
discharge
01.01.04-01.01.05
fire
01.01.04-01.01.05
burglary and
robbery
01.01.04-01.01.05
civilian fire
01.01.04-01.01.05
fire
01.01.04-01.01.05
burglary
01.01.04-01.01.05
fire, water
discharge,
equipment damage
01.01.04-01.01.05
1. Total
- 012904428747
- 012904336842
Facility
03.07.04-03.07.05
29.05.04-29.05.05
buildings
and
Amount of
Premium
in KN
59,200.39
Hotel Palace: buildings
7,617.22
Hotel Slavija: buildings
8,072.91
business building
1,708.31
supplies, class 3 and 6 from books
132,519.90
12,895.08
money and money values in all
238.24
facilities
hotels Pharos, Adriatic, Palace, 10,801.88
Amfora, Slavija, Delfin, Dalmacija,
Sirena, Bodul, Coffee House Pjaca,
Restaurant Plaža, General Services:
furniture with tables and appliances
equipment, electronic equipment, PC 334,184.41
and digital switchboard
Motor camp VIRA
3,127.08
(gas filling station, sewerage, road,
supermarket, restaurant, playground
Hotel Bodul
11,424.71
cashier’s money in all facilities
Plant, parks and trees and plants
(greenhouse, steam boiler and burner)
supplies of flowers, inventory and
tools for park and decoration unit
manipulation cash in all facilities
equipment without cars and vessels
Hotel Amfora
Buildings, equipment and
supplies
Bus ST601DV Iveco Turbo
Freight vehicle Citroen Furgon
4,837.86
716.30
736.44
190.30
10,625.65
598,896.68
KN
6,015.30 KN
3,178.35 KN
161
- 012904428720
01.07.04-10.07.05
- 012904428879
Automobile
liability insurance
01.07.04-21.07.05
All-risk insurance
29.05.04-29.05.05
Passenger
insurance
03.04.04-03.09.05
10.08.04-10.08.05
- 04290031370
(HLCroatien bound)
- 027290000881
- no. 023291000282
2. Total
3. Total 1 + 2
- 04870 -4877
-6060
4. Total
15.08.03-15.08.04
15.08.04-15.08.05
Personal life
insurance
01.04.04-01.04.05
01.03.04-30.11.04
2,521.35 KN
3,477.30 KN
Citroen Furgon chassis no. 82858
1,708.93 KN
Insurance of persons
1,575.00 KN
Accidents in motor vehicles
Property insurance
comprehensive
collective insurance
- no. 026291000045
- no. 026291000223
ST720-LB
Freight vehicle Citroen Furgon
ST724-LB
MAN /freight vehicle ST 195FS
- in case of illness, death,
permanent disability, serious
illness
122,451.00 KN (10,204.25/m)
117,408.90 KN (9,784.90/m)
187.20 KN
18,663.43 KN
617,560.11
KN
40,817.00 KN
44,028.45 KN
134,457.51
KN
19,734.65 KN
Employee insurance
5. Total (3 + 4)
Car insurance with the insurance company Euroherc osiguranje d.d., Branch Office Split:
Policy
0818383133
07.08.04 - 07.08.05
Tractor
Group passenger
insurance
Policy
0818358568
07.04.04 - 07.04.05
Bus ST 848 CL
Total
239,037.61
KN
856,597.72
KN
645.79 KN
2,811.38 KN
7,806.56 KN
11,263.73 KN
In 2004, the registered costs for the insurance of assets and persons were in the amount of 832,855.00 KN.
Croatia osiguranje approved compensation of damages to the Company in the amount of 343,924.00 KN, following the request
for compensation.
State of liabilities declared as of the date of the financial statement has been adjusted with the insurers.
MORTGAGES ON COMPANY ASSETS
The Company has taken out a lien over the assets in favour of:
I Privredna banka Zagreb d.d. – over the assets registered with the Land Registry entry no. 1516, Land District Hvar, plot of
land 58/3, 73/10 and 76/1, part of the Hotel Amfora.
1) An Agreement on Lien and Immediate Enforcement, dated April 27, 1999, in the amount of 5,630,000.00 KN, the counter
value of 1,450,000.00 DEM, under the long-term loan no. 60/99.
2) An Agreement on Lien and Immediate Enforcement, dated October 17, 2001, in the amount of the loan of 15,956,000.00
KN, for long-term loan S II-206/01 insurance, dated October 8, 2001 (priority rank for Z 435/98).
3) An Agreement on Lien and Immediate Enforcement, dated October 17, 2001, in the amount of the loan of 1,493,000.00 KN,
for long-term loan S II-208/01 insurance, dated October 8, 2001 (priority rank for Z 435/98).
162
6) An Agreement on Lien and Immediate Enforcement, dated October 17, 2001, in the amount of the loan of 600,000.00 KN,
8) Privredna banka Zagreb d.d. - over the assets registered with:
- Land Registry entry no. 1516, Land District Hvar; plot of land 58/3, 73/10 and 76/1, Hotel Amfora;
- Land Registry entry no. 915, Land District Hvar; building plot 81, 83, 66/1, 66/2, 66/3, 67/2; plot of land 224, 226/2, 226/1,
Hotel Palace.
1) An Agreement on Lien and Immediate Enforcement, dated October 17, 2001, in the amount of the loan of 24,623,759.00
KN, for long-term loan S II-213/01 insurance, dated October 8, 2001.
for long-term loan S II-207/01 insurance, dated October 8, 2001.
3) 2.) An Agreement on Lien and Immediate Enforcement, dated July 8, 2004, in the amount of the loan of 3,250,000.00 Euro,
for short-term loan no. 5110045503 insurance, dated June 28, 2004.
Note: A request was given for the release of mortgage under the following Agreements: Agreement dated October 2, 2003, for
a short-term loan in the amount of 8,000,000.00 KN; Agreement dated June 1, 2004, for a short-term loan in the amount of
170,000.00 Euro; Agreement dated January 21, 2004, for a short-term loan in the amount of 6,000,000.00 KN.
II Croatian Bank for Reconstruction and Development, Zagreb – over the assets registered with:
- Land Registry entry no. 1516, Land District Hvar, plot of land 58/3, 73/10 and 76/1, part of the Hotel Amfora; and annex to
the Hotel Dalmacija, plot of land 3899/1/2 and 3896, Land District Hvar, a lien-mortgage created pursuant
1.) The Agreement on Lien over Assets for the Security of Claims under long-term loan DT-9/00, dated July 4, 2000, in the
amount of 8,000,000.00 KN.
Croatian Bank for Reconstruction and Development, Zagreb – over the assets registered with:
- Land Registry entry no. 2794, Land District Hvar, plot of land 819/8, 819/10, 819/12, 819/11 – Motor Camp Vira,
registration of the transfer of property (equity) under
2) the Agreement on Monetary Claim Insurance under the loan DT-6/02, dated July 3, 2002, in the amount of 2,560,000.00
KN.
- Land Registry entry no. 2794, Land District Hvar, plot of land 819/8, 819/10, 819/12, 819/11 – Motor Camp Vira,
registration of the transfer of property (equity),
- Land Registry entry no. 1516, Land district Hvar, plot of land 58/3, 73/10 and 76/1 – part of the Hotel Amfora and the annex
to the Hotel Dalmacija, plot of land 3899/1/2 and 3896, Land District Hvar, a lien-mortgage created pursuant
3) the Agreement on the Extension of Property Right and Creation of Lien for Monetary Claim Insurance for the loan DT-7/03,
dated July 9, 2003, in the amount of 2,000,000.00 KN.
- Land Registry entry no. 2120, Land District Hvar, plot of land 3775/3 – Hotel Bodul – the building, surface area 1,811 m2;
parking lot, surface area 1,875 m2; rocky ground surface area 2,426 m2 and court-yard, surface area 2,070 m2.
4) Agreement on Monetary Claim Insurance for loan DT-3/04, dated February 10, 2004, in the amount of 10,000,000.00 KN,
with foreign currency clause.
III Tourist Agency KOMPAS d.d. Ljubljana, Slovenia
An Agreement on Creation of Lien over Assets for Monetary Claim Insurance no. Ov.-139/2000.-01, dated August 17, 2000,
was concluded under the Contract on Lease and Business Cooperation.
Registration of the mortgage over the property on the plot of land 58/3, 73/10, 76/1 – Hotel Amfora, in the amount of
2,500,000.00 DEM.
IV. Ugo Oprema d.o.o. Zagreb, Savska cesta 165
Agreements on long-term loan on goods no. 0146/01 and 0146/01, dated March 15, 2001, were concluded and the Agreement
on Lien over Assets for Claim Insurance in the amount of 1,355,303.00 DEM, counter value in kunas, over part of the property
of the Hotel Amfora.
Loan on goods is used for:
Contract no. 0146 for the reconstruction of the annex to the Hotel Amfora, amount 300,000.00 DEM;
163
Contract no. 0147 for the reconstruction of conference hall, coffee-house, main south entrance to the Hotel Amfora, amount
1,055,303.00 DEM.
V. Croatia osiguranje d.d. Zagreb
On April 22, 2004, a Loan Contract no. 291000104 was concluded with CROATIA OSIGURANJE d.d., Branch Office Split,
for the amount of 1,500,000.00 KN, loan insurance: registration of lien over Company’s business premises registered with the
Land Registry of the Municipal Court in Stari Grad, plot of land 606/1, which in fact is administrative building with net
building area of 263 m2 and court-yard of 17 m2, all registered with the Land Registry entry no. 592, Land District Hvar.
2. BASIS FOR FINANCIAL STATEMENT
Amounts from financial statements presented on pages 5 through 11 included, have been taken from Company’s financial
statements and bookkeeping records.
Financial statements have been made according to applicable legal regulations and International Accounting Standards.
Joint Stock Company adopted Accounting Policy which was applied in preparation of financial statements.
In 1997, the Company introduced computer processing of data, instead of manual processing. Computer processing included
financial bookkeeping, material stock records, subledger recording of capital assets, payroll accounts, invoicing.
During 2004, the following were performed manually: reception desk records, standards for kitchen consumption in all
facilities except in the Hotel Amfora.
Hotel Amfora records are kept on computer while records for all other facilities are kept manually.
The auditing also included 2004 Study on the List of Assets.
Stock-taking was performed in compliance with the applicable legal regulations.
3. ACCOUNTING POLICY ELEMENTS
Elements of the accounting policy of the Company, applied in preparation of the 2004 annual account, are in compliance with
the International Accounting Standards.
Pursuant the decision of the Management Board, an estimated value of the Company was registered on January 1, 1994, by
converting the value of the capital and material assets to the mean exchange rate of the National Bank of Croatia for DEM on
the date of issuing the Decision on Conversion Implementation.
(DEM : KN = 1 : 3.595).
Pursuant the decision of the Management Board, accounting policy for material assets write-off was adopted, as follows:
- Decision to write off the goodwill value in 40 years with the approval of the Supervisory Board ;
- Decision to write off small inventory, applied since 2001.
- Company’s Management Board decided on the adjustment of fixed assets – Hotel Slavija – construction facility, in 2003; the
adjustment effects were recorded as income of that period.
- Company’s Management Board decided on the adjustment of fixed assets – Hotel Palace – construction facility, in 2004; the
adjustment effects were recorded as income of that period.
4.
NOTE APPENDED TO BALANCE DATED DECEMBER 31ST 2004
______FIXED ASSETS_______________________________________________________
4.1.
Intangible Assets
The Company's intangible assets on the balance date are as follows:
2004
2003
Amount in KN
Amount in KN
- acquisition value
26,057,217.00 KN
25,765,414.00 KN
- value adjustment
7,917,984.00 KN
7,057,184.00 KN
- net value
18,139,233.00 KN
18,708,230.00 KN
The intangible assets consist of the following:
Acquisition value
2004
2002
Amount in KN
25,765,446.00 KN
6,287,018.00 KN
19,478,428.00 KN
2003
164
- goodwill
- project documentation
- project documentation for Hotel Adriatic
(2000)
- project documentation for Hotel Amfora and
Bodul
- technical documentation for interior design
and air conditioning in Hotel Amfora
Total
23,055,531.00 KN
520,103.00 KN
178,262.00 KN
23,055,531.00 KN
520,103.00 KN
178,262.00 KN
902,537.00 KN
902,537.00 KN
1,400,816.00 KN
1,109,013.00 KN
26,057,217.00 KN
25,765,414.00 KN
During 2004, the value of intangible assets was increased by 291,803.00 KN, as follows:
- Supervision for installing air conditioning in rooms, front desk and public areas in Hotel Amfora, in the amount of
200,000.00 KN (Konzalting Split),
- Preliminary design for the reconstruction of the left wing of Hotel Amfora in the amount of 91,803.00 KN (GMT Rijeka).
The value adjustment for the intangible assets on December 31st 2004 was 7,917,984.00 KN.
The intangible assets depreciation in 2004 is 860,800.00 KN.
4.2.
Tangible Assets
The Company used the straight-line method in writing off assets.
The calculated depreciation of the Company's fixed tangible assets was as follows:
2004
3,327,712.00 KN
2003
3,006,746.00 KN
2002
3,423,933.00 KN
The depreciation charges for 2004 amounted to 3,327,712.00 KN.
Review of changes in tangible and intangible assets in 2004 is given in Table 1.
4.2.1.
Land
The value of land as of December 31st amounts to 75,740,620.00 KN.
Based on the Transformation Plan, the Company is in possession of 208,031 m2 of land.
During 1999, the land was reduced by 6,665 m2, and it equals 201,366 m2 on the date of the balance.
Upon the decision by the Privatization Fund delivered on March 21st 2000, the size and value of the land was adjusted by
Facilities.
During 2000, the land was reduced by 2,000 m2, with book value of 1,200,000.00 KN, by selling the Jerolim facility.
On the balance date of December 31st 2000, the Company books showed 199,366 m2 of land, with book value of
74,540,620.00 KN.
During 2001, the following Facilities, including the land, were sold:
Facility
Size in m2
Book value
Restaurant PALMIŽANA
474 m2
199,800.00 KN
Restaurant EX BOBIS
81 m2
43,200.00 KN
Restaurant STIPANSKA
2,000 m2
1,200,000.00 KN
Total
2,555 m2
1,443,000.00 KN
The land was reduced by 2,555 m2 in size and 1,443,000.00 KN in book value.
As of December 31st 2001, the Company is in possession of 196,811 m2 of land, with book value of 73,097,620.00 KN
Changes in land made in 2002
Based on the Plan of Land and Construction Facility Value Appraisal made by the authorized appraiser Roko Mijanović, land
value adjustment was made for Hotel Palace, Hotel Adriatic, Hotel Dalmacija, Hotel Slavija, and Sports Center, whereby the
total value of land was kept unchanged, and the changes were made for individual Facilities as follows:
Facility
Amount in m2
Value in KN prior
Value in KN
Value in KN
to appraisal
after appraisal
Adjustment
Hotel Adriatic
2,319
1,391,400.00
3,111,400.00
+1,720,000.00
Hotel Palace
2,221
1,332,600.00
2,927,693.00
+1,595,093.00
165
Hotel Dalmacija
Hotel Slavija
Sports Center
2,701
929
45,798
1,620,600.00
557,400.00
6,869,700.00
3,049,194.00
1,661,826.00
1,021,587.00
+1,428,594.00
+1,104,426.00
-5,848,113.00
During 2002, registration of title was carried out for Hotel Pharos land which includes the plots 82/2, 82/5, 92, 94/2, 89/1,
89/4, 93, 94/1, 82/3, cadastral district of Hvar, surface area of 6,165 m2, at which time capital transfer tax was paid in the
amount of 46,312.00 KN, which was added to the land value.
On December 31st 2002, the book value of the land equaled 73,143,932.00 KN.
During 2003, registration of title for land was carried out for the following Facilities:
Facilities
Plots
Tax amount
Hotel Amfora
- Land Registry file no. 1154,
Cadastral District of Hvar, building
parcel 557 (50m2)
Hotel Pharos
- LR file no. 478, CD Hvar, plot no.
89/3, in 2/12 portion (317 m2),
- plot no. 84/1 and 88/1, in
630/2200 portion (3,334 m2),
81/2 and 3KO Hvar (1,186 m2),
- LR file no. 1296, CD Hvar, plot
no. 84/1 and 2; 88/1KO Hvar
(3,334 m2),
89/3, in 5/6 portion (317 m2).
Hotel Adriatic
- building parcel 567, plot no.
168/5,6,7,8 and 12, all in CD Hvar
(3,005 m2)
Total
12,174.00 KN
20,138.00 KN
22,537.00 KN
54,850.00 KN
The land value was increased in 2003 by 54,850.00 KN.
In 2003 the value of land was decreased by 1,021,587.00 KN, which covers the plot no. 9/82, CD Hvar, with surface area of
45,798 m2, and represents the sports and recreational center (detailed through sale of Facilities in 2003).
On December 31st 2003, the land value in the Company books was 72,177,195.00 KN, which covers 150,450 m2 of land.
Based on the registration of title for land in 2003, the Tax Authorities charged a capital transfer tax in the amount of 2,614.00
KN, which the Company added to the land value.
On December 31st 2004, the land value in the Company books is 72,179,809.00 KN.
4.2.2.
Buildings
The acquisition value of buildings on December 31st 2004 is 267,541,525.00 KN, with value adjustment of 25,327,256.00 KN
and net value of 242,214,269.00 KN.
The amount of depreciation for buildings is 1,374,004.00 KN.
The following is a review of investments made in buildings by years:
- 1995
14,732,922.00 KN
- 1996
814,959.00 KN
- 1997
6,246,928.00 KN
- 1998
5,028,734.00 KN
-1999
46,883.00 KN
- 2001
12,557,208.00 KN
- 2002
1,715,019.00 KN
- 2003
1,066,070.00 KN
- 2004
1,732,253.00 KN
Total
43,949,076.00 KN
Here is a review of the value increase for buildings from 1995 to 2004, with the total amount of the increase being
43,940,076.00 KN.
166
- Hotel Bodul
- Hotel Sirena
- Hotel Pharos
- Hotel Palace
- Cafe Pjaca
- Hotel Amfora
- Hotel Amfora-Plaža
- Hotel Dalmacija
- Hotel Slavija
- Hotel Delfin
- Hotel Adriatic
- Hotel Galeb
- Mala Grčka access way
- Laundry
- Office building
Total
2004
180,096.00 KN
14,820.00 KN
146,137.00 KN
47,218.00 KN
2003
158,900.00 KN
92,315.00 KN
155,792.00 KN
368,585.00 KN
2002
21,233.00 KN
46,350.00 KN
483,385.00 KN
902.00 KN
682,769.00 KN
190,945.00 KN
16,956.00 KN
1,044,607.00 KN
68,161.00 KN
569,933.00 KN
26,450.00 KN
30,648.00 KN
12,270.00 KN
13,210.00 KN
21,165.00 KN
17,246.00 KN
29,320.00 KN
50,811.00 KN
1995-2001
5,594,908.00 KN
324,279.00 KN
5,159,740.00 KN
1,281,818.00 KN
214,750.00 KN
66,713.00 KN
4,468,746.00 KN
23,119.00 KN
1,732,253.00 KN
1,066,070.00 KN
1,715,019.00 KN
46,883.00 KN
39,426,734.00 KN
A total of 1,732,253.00 KN was invested in buildings, which is detailed in the table below.
Facility
Description
Amount in KN
Contractor
Hotel
- servicing of the swimming pool filter
16,260.00 KN - Termorad Zagreb
Amfora
station
- signs and markings in hallways, main
37,900.00 KN - Calluna Split
entrance, floors
- construction work on installing
55,640.00 KN - Mark Ing Split
marmet at hotel entrance; works on
transformer station
- reconstruction of supporting wall
57,504.00 KN -U.O. Svirče (M. Carić)
- construction and laying of pipeline on
107,000.00 KN - Dubina Split
the head of the Hotel Amfora pier
- partial reconstruction of the Hotel
11,700.00 KN -Ocinje M Dubrovnik
Amfora flat roof
- paint work on hotel facade and
23,600.00 KN - Ukras Slivno
swimming pool ceiling
- floor work in restaurant and rooms
298,420.00 KN - Astra com.Podstrana
- floor work
39,900.00 KN - GMT Rijeka
- installing curtains at front desk and in
restaurant
34,850.00 KN
Total
682,774.00 KN
Hotel
- work performed on heat-lines to
55,781.00 KN - Termorad
Adriatic
boiler room
station
- construction work on reconstructing
20,000.00 KN U.O. Svirče (M. Carić)
the swimming pool sewage system
- floor work - carpets in hallways,
rooms, mounting gypsum partitions,
paint work, installing curtains and
covers,
- carpentry, mounting of aluminum
window shutters,
- stone floor,
- carpeting in rooms and kindergarten
- paint work on walls, doors, furniture
Total
569,928.00 KN
Hotel
11,350.00 KN - Termorad
Palace
station
- floor work in restaurant
35,868.00 KN - Astra com.Podstrana
Total
47,218.00 KN
Hotel
- paint work in rooms
8,840.00 KN - Ukras Slivno
Bodul
- floor work - carpeting in hallways,
167
Hotel
Delfin
Hotel
Pharos
Hotel
Sirena
Laundry
ceramic tiles
Total
- works performed on pipelines to
boiler room
- construction work - covering heat
pipelines to boiler room
- floor work - carpeting in hallways
Total
Phase II of works on Boiler room
- paint work - facade and rooms
- floor work - carpets in hallways
Total
- floor work - carpets
- reconstruction of the boiler
180,096.00 KN
43,281.00 KN
15,000.00 KN
9,880.00 KN
68,161.00 KN
120,591.00 KN
1,440.00 KN
24,106.00 KN
146,137.00 KN
14,820.00 KN
23,119.00 KN
- Termorad
- U.O. Svirče (M. Carić)
- GMT Rijeka
- Termorad
- Ukras Slivno
- GMT Rijeka
- GMT Rijeka
- Kotlovi Slavonski
Brod
TOTAL
1,732,253.00 KN
Value increase for buildings - Hotel Palace through value adjustment
Based on the Appraisal Plan for the value of buildings made by the authorized appraiser Roko Mijanović for Hotel Palace, the
Company Board adopted a decision on December 31st 2004 to reevaluate the building by 3,273,361.24 KN.
The effect of reevaluation was charged to the 2004 extra income.
4.2.3. Equipment
Acquisition value
Value adjustment
Net value
Dec 31st 2004
33,338,212.00 KN
18,056,789.00 KN
15,281,423.00 KN
Dec 31st 2003
25,436,151.00 KN
17,349,478.00 KN
8,096,873.00 KN
Dec 31st 2002
25,044,295.00 KN
16,060,328.00 KN
8,983,967.00 KN
Equipment depreciation for 2004 equals 1,092,908.00 KN
Equipment procured in 2004, as follows:
Supplier
Amount in KN
Description
Instaling Split
7,799,502.00 KN - air-conditioning for Hotel Amfora:
installation of air-conditioning facility for rooms, front desk,
public areas (construction, installation and handicraft works)
Termorad Split
26,311.00 KN Piston compressor
Liesna Hvar
1,393.00 KN 300L tank, stainless steel
Spektar RS Hvar
8,250.00 KN Branch cutter, chain saw
Stifa Hvar
2,967.00 KN Refrigerator, 510L tank, stainless steel
Interugos Sv. Ivan
49,921.00 KN Vacuum cleaners - 17, toasters - 2, stump, office chairs - 3
Zelina
Antoana Hvar
552.00 KN Chair and crib
KSU Company,
5,509.00 KN Fax machines - 4, telephones - 4
V. Gorica
TBK Karlovac
2,930.00 KN Cash register
Podravina Zagreb
21,178.00 KN Freezers - 2, large dishes - 5, sofas - 6, TV set, microwave
oven
Ital-invest Zagreb
5,350.00 KN Cart, large dishes - 3
Apfel Makarska
119,906.00 Kn Scale, salami-cutting devices - 3, plastic chairs - 156, mixer,
carts for room attendants - 7, refrigerators - 3, children's
chairs - 5, potato peelers - 2, three-level furnace, badminton
stand, mounting post, stump, chest, heated table
Falcon Split
8,358.00 KN Computer, printer, VCR
Trycon Lepoglava
74,171.00 KN Rattan chairs - 190
Grunacom Split
21,226.00 KN Plastic tables - 168, plastic chairs - 150
Ercom Split
9,240.00 KN Restaurant chairs - 22, Pjaca
Senkanar
52,156.00 KN Reconstruction of tunnel line and ironing machine, Laundry
GMT Rijeka
85,680.00 KN Half-armchairs - 126
Total procurement for
8,294,600.00 KN
2004
The newly procured equipment is distributed among hotels as follows:
168
Hotel Amfora
Hotel Adriatic
Hotel Palace
Cafe Pjaca
Hotel Bodul
Hotel Dalmacija
Hotel Delfin
Hotel Pharos
Hotel Sirena
Hotel Slavija
Hotel Galeb
Laundry
Parks
Procurement
Direction
Total
7,858,220.00 KN
95,060.00 KN
23,663.00 KN
17,200.00 KN
25,890.00 KN
65,210.00 KN
9,060.00 KN
31,085.00 KN
37,817.00 KN
24,620.00 KN
5,135.00 KN
80,900.00 KN
8,250.00 KN
4,960.00 KN
7,540.00 KN
8,294,600.00 KN
Equipment write-off
The Company wrote off 378,153.00 KN worth of equipment at acquisition value, with value adjustment of 371,211.00 KN.
The unwritten-off amount of 6,942.00 KN was charged to 2004 expenditures.
Equipment write-off by Facilities:
Facility
Acquisition value in
KN
Hotel Amfora
68,994.00
Hotel Adriatic
11,171.00
Hotel Palace
1,990.00
Cafe Pjaca
203,069.00
Hotel Bodul
1,700.00
Hotel Galeb
103.00
Hotel Dalmacija
4,680.00
Hotel Delfin
24,124.00
Hotel Pharos
6,341.00
Hotel Sirena
6,108.00
Hotel Slavija
196.00
Direction
47,744.00
Others
1,933.00
Total
378,153.00
.
Sale of equipment
Value adjustment in
KN
68,994.00
4,450.00
1,990.00
203,069.00
1,700.00
103.00
4,680.00
24,049.00
1,195.00
6,108.00
196.00
47,744.00
1,933.00
371,211.00
The Company sold 10,186.00 KN worth of equipment at acquisition value. The following items were sold: 27 tables, 49 room
chairs for the amount of 2,280 KN, a table and a sink for 4,000 KN. 23 tables and 65 chairs from the Hotel Adriatic children's
corner were donated.
Planned Tangible Assets
Planned tangible assets on December 31st 2004 equaled 167,777.00 KN.
Review of planned tangible assets:
- Hotel Delfin project documentation
33,167.00 KN
- Hotel Palace project documentation
32,787.00 KN
- Restaurant Plaža interior design
19,144.00 KN
- Preliminary design for Hotel Dalmacija
48,500.00 KN
Annex reconstruction and addition
- Interior design for the Camp Vira
21,700.00 KN
restaurant lower terrace, including
changing the use
- Hotel Adriatic documentation
9,479.00 KN
Total
164,777.00 KN
GMT Rijeka - Preliminary design for
(26,229.00 KN)
reconstruction of Hotel Amfora left wing 169
112,000 KN (activated in 2004)
FINANCIAL ASSETS
4.3.
Other long-term investments
Hvar Airport
Public utility company
Sućuraj
TOTAL
Dec 31st 2004
13,800.00 KN
50.00 KN
Dec 31st 2003
13,800.00 KN
50.00 KN
Dec 31st 2002
13,800.00 KN
50.00 KN
13,850.00 KN
13,850.00 KN
13,850.00 KN
The amount of investment in the Hvar Airport is 13,800.00 KN, while the non-reevaluated investment in the public utility
company Sućuraj is 50.00 KN.
CURRENT ASSETS
4.4.
Inventories
- inventories of food, beverages,
technical and operating supplies
- small inventory on stock
- small inventory in use
- small inventory value
adjustment
- merchandize inventory
Total
Dec 31st 2004
956,053.00 KN
Dec 31st 2003
851,066.00 KN
Dec 31st 2002
895,825.00 KN
177,111.00 KN
5,308,140.00 KN
(3,565.00)KN
229,982.00 KN
4,998,190.00 KN
(8,180.00)KN
223,407.00 KN
4,459,400.00 KN
(85,537.00)KN
780.00 KN
6,438,519.00 KN
1,395.00 KN
6,072,453.00 KN
1,395.00 KN
5,494,490.00 KN
Inventories of food, beverages, technical and operating supplies on stock, by Facilities:
Dec 31st 2004
Total
Warehouse
Facilities
Food
295,167.00 KN
152,685.00 KN
142,483.00 KN
Beverages
276,983.00 KN
125,178.00 KN
151,805.00 KN
Operating supplies
118,843.00 KN
75, 873.00 KN
42,970.00 KN
Office supplies
90,855.00 KN
90,855.00 KN
Inventories
of
tech.
174,205.00 KN
70,848.00 KN
103,357.00 KN
supplies
Total
945,053.00 KN
515,437.00 KN
440,616.00 KN
The above inventories are recorded in the books at procurement costs.
The above inventories are recorded in the Company central warehouse and auxiliary Facility stocks.
Inventory is taken off the stock at average weighted prices.
At taking inventory, the Company followed the Bylaw on ullage, breakage and waste.
Inventory of food and beverages is taken quarterly.
During 2004, the stock of food was 24,467.00 KN short of the allowed ullage level, with surplus being 3,694.00 KN and
shortage 70.00 KN, VAT included.
The alcoholic beverages stock showed a shortage of 1,721.00 KN, and a surplus of 1,494.00 KN.
The non-alcoholic beverages stock showed a shortage of 1,546.00 KN, and a surplus of 1,567.00 KN.
The Company recorded the surpluses as income, and shortages as current expenditures.
A special commission was appointed to take stock of evident packaging.
The value of packaging as determined by taking stock was 166,670.00 KN. The evident packaging is recorded off the balance.
The packaging expenditure shows an amount of 51,420.00 KN.
Review of stock transactions in 2003 (amounts in KN):
Description
Dec 31st 2002
IN
950 Food
136,477.00
8,157,606.00
960 Beverages
113,777.00
1,598,756.00
980 Operating Supplies
81,233.00
2,342,606.00
990 Technical supplies
80,777.00
503,589.00
Total
412,365.00
12,602,457.00
OUT
8,165,825.00
1,583,991.00
2,335,417.00
505,762.00
12,590,995.00
Dec 31st 2003
128,258.00
128,542.00
88,422.00
78,064.00
423,826.00
170
Description
Dec 31st 2003
IN
950 Food
128,258.00
8,413,933.00
960 Beverages
128,542.00
1,590,697.00
980 Operating Supplies
88,422.00
2,925,777.00
990 Technical Supplies
78,064.00
500,457.00
Total
423,826.00
13,430,864.00
OUT
8,389,507.00
1,594,061.00
2,938,327.00
508,213.00
13,430,108.00
Dec 31st 2004
152,684.00
125,178.00
75,872.00
70,848.00
424,582.00
Review of food, beverages, operating and technical supplies inventories on December 31st 2004, by Facilities (auxiliary
stocks):
Facility
Food
Beverages
Operating
Technical
Total
(KN)
(KN)
Supplies (KN) Supplies (KN)
(KN)
Hotel Amfora
81,677.00
77,590.00
1,888.00
57,060.00
218,215.00
Hotel Adriatic
14,418.00
3,369.00
6,540.00
24,327.00
Hotel Palace
37,036.00
25,582.00
6,419.00
3,180.00
72,217.00
Cafe Pjaca
2,718.00
14,733.00
4,685.00
22,109.00
Hotel Bodul
1,031.00
7,213.00
18.00
8,262.00
Hotel Dalmacija
632.00
3,067.00
3,699.00
Hotel Delfin
9,818.00
3,353.00
1,735.00
6,360.00
21,226.00
Hotel Pharos
1,443.00
1,340.00
2,783.00
Hotel Sirena
74200
5,476.00
23,680.00
29,898.00
Hotel Slavija
11,234.00
12,281.00
7,805.00
6,518.00
37,840.00
Total
142,483.00
151,805.00
42,970.00
103,356.00
440,616.00
The following is a list of larger suppliers who supplied food, beverages and operating supplies during the year:
Supplier
2004 Volume
2003 Volume
- Bross Trade Split
714,053.00 KN
1205349.00 KN
- Pivac Vrgorac
2,698,675.00 KN
1,779,692.00 KN
- Jakić Magda IVAN Hvar
1,096,993.00 KN
1,067,227.00 KN
- Podravka Koprivnica
1,021,563.00 KN
758,231.00 KN
- Konzum Zagreb
701,400.00 KN
- Petason Solin
830,300.00 KN
- Antoana Hvar
240,189.00 KN
272,804.00 KN
- Veterinarska stanica SG
307,900.00 KN
198,438.00 KN
- Kođoman Klas Hvar
815,300.00 KN
566,517.00 KN
- Hvarske vinarije Stari Grad
600,804.00 KN
375,817.00 KN
- Coca-Cola Beverages Croatia
168,820.00 KN
239,289.00 KN
- Stifa Hvar
382,970.00 KN
145,152.00 KN
- Bili Commerce
266,954.00 KN
414,892.00 KN
- Ledo Zagreb
380,520.00 KN
297,520.00 KN
- Vindija Varaždin
462,385.00 KN
140,155.00 KN
- Lura Zagreb
583,200.00 KN
449,249.00 KN
- Frna Hvar
480,011.00 KN
- Jamnica
272,370.00 KN
193,529.00 KN
- Mils mljekara Split
448,335.00 KN
228,568.00 KN
- Jambo Metković
221,483.00 KN
- Zvijezda Zagreb
327,122.00 KN
160,776.00 KN
- Saponija Osijek
437,200.00 KN
311.182.00 KN
- Banestra Zadar
221,800.00 KN
- MHS Lučko
441,400.00 KN
- Dalmeso Klis
246,200.00 KN
- DI bruc Hvar
746,076.00 KN
The Company selects suppliers for procurement of food, beverages and operating supplies through public bidding.
171
Small Inventory
- small inventory on stock
- small inventory in use
- small inventory in use value
adjustment
Total
Dec 31st 2004
177,111.00
5,308,140.00
(3,565.00)
Dec 31st 2003
229,982.00
4,998,190.00
(8,180.00)
Dec 31st 2002
223,408.00
4,459,400.00
(85,538.00)
5,481,686.00
5,219,992.00
4,597,270.00
Small inventory is recorded in the books at procurement costs.
Small inventory is credited to the small inventory account (970) and the work apparel and linens account (995).
After being taken off the stock, it is credited to Facilities, except for linens which go in use by crediting the Laundry (890).
Stock
Description
Dec 31st 2002
970
- small inventory
75,253.00
995
- linens and work
148,155.00
clothes
Total
223,408.00
Stock
Description
Dec 31st 2003
970
- small inventory
96,190.00
995
- linens and work
133,792.00
clothes
Total
229,982.00
IN
538,903.00
744,891.00
OUT
517,966.00
759,254.00
Dec 31st 2003
96,190.00
133,792.00
1,283,794.00
1,277,220.00
229,982.00
IN
464,902.00
522,900.00
OUT
493,167.00
547,506.00
Dec 31st 2004
67,925.00
109,186.00
987,802.00
1,040,673.00
177,111.00
The value of small inventory, work clothes and linens procured in 2004 is 1,037,257.00 KN.
Small inventory, linens and work clothes worth 1,040,673.00 KN were put in use; 49,465.00 KN worth of work clothes were
written off the 995 stock; 287.60 KN worth of small inventory was written off the stock.
Small inventory procured in 2004 (970):
Supplier
Amount in KN
Grunacom Split
31,931.00 KN
Apffel Makarska
104,824.00 KN
Podravina Zagreb
134,245.00 KN
Description
- easy chairs - 50, sponges - 12, key chains - 285,
Hotel Palace 73, bowls - 10, banana bowls - 30,
ice cream glasses - 20, fruit salad glasses - 24,
Pjaca, pizza knives - 48 sets (16 pieces in a set),
forks - 48 sets
- knives - 500, forks - 500, spoons - 300, spoons 1500, /warehouse/, pillows - 100, Pharos;
pillows - 30 Sirena;
- mattress - 80 Adriatic, mattress - 10 Pharos;
mattress - 30 Sirena, easy chairs - 30, easy
chairs - 57,
- glasses tina25 - 996, tina31 - 492, champagne
glasses - 48, ashtrays - 504, 0.1 glasses - 48,
pitchers - 294, golding glasses - 396, sugar
containers - 50, dozers - 3, fans - 6,
- easy chairs - 20, sport nets, balls, rackets
- spoons - 804, bowls - 9, glasses 0.2 - 504, 0.1
glasses - 194, bowls - 10, ice cream scoops - 2,
- cups - 1,124, 15cm plates - 1,121, meat plates logo 1,717, soup plates - 416, meat plates 1,122, bowls 1,008,
- meat tongs - 8, spaghetti tongs - 16, salad tongs 6,
dessert tongs - 22, glass bowl - 36, oil & vinegar - 20,
bowls - 60, pitchers - 10, pots - 4, serving trays - 5,
openers - 15, thermos bottles 2, dippers - 50, bread
baskets - 5, frying pans - 8, spatulas - 20, bowls - 10,
corks - 6, pans - 12, scoops - 20, thema - 10, bowls - 10,
meat forks - 5, strainers - 2, hammers - 5, moulds - 6
- table spoons - 180, forks - 180, knives - 180, dessert
spoons - 176, dessert forks - 180, dessert knives - 180, fish
172
Pastor Zagreb
Ital invest Zagreb
14,500.00 KN
21,073.00 KN
6,681.00 KN
Stifa Hvar
Cetina Trade Split
Santel Split
Astra com.Podstrana
Elektra Trade Split
Corona copy
K. Sućurac
Interugos Sv. I. Zelina
Nino com Split
5,122.00 KN
1,470.00 KN
1,750.00 KN
2,963.00 KN
2,832.00 KN
2,475.00 KN
7,072.00 KN
55,172.00 KN
Tekstil promet
Total
Mattress price adjustment
Other suppliers
Small inventory
procurement - total
22,576.00 KN
414,686.00 KN
20,157.00 KN
30,059.00 KN
464,902.00 KN
Work clothes and linens procured in 2004 (995):
Supplier
Amount in KN
Tekstil promet
14,045.00 KN
19,986.00 KN
Total
Jadrankamen Sesvete
/Uzor Split/
Work clothes - total
14,580.00 KN
6,600.00 KN
55,211.00 KN
24,200.00 KN
forks - 60, spoons - 200,
spoons - 42,
- trash cans - 11, banana split bowls - 50, umbrella stand 25,
- bicycles - 6, umbrella + stand - 50, rolls - 6,
helmets 6,
-fire extinguishers - 60
- classic t31 glasses - 336, t32 - 96, t20 - 1,200, t25 - 528,
0.3 glass set of 12 - 13 sets, 0.2 sava
glasses - 402,
carts - 4, shower curtain - 60,
large dishes - 3, salt
shaker set of 12 - 13 sets,
- shower curtains - 40,
- pitchers - 204, classic t25 glasses - 1,296, t31 - 528, 0.3 198, ashtrays - 1,008, dispensers - 60,
glass set - 25,
glasses -17,
- grinder, mixer - Pharos,
- cake moulds, trays, cake decoration syringes, - 2, plastic
table top - Pjaca,
- space heater, radiator - Laundry,
- curtains and kitchen inventory - Adriatic,
- hair drier - Delfin,
- grater, egg-beater - 2, scoops - 2, spatula Dalmacija
- ice cream spoon,
- batteries, coasters, rugs,
- cable, meat knife, ashtrays - 20, Pjaca
- plastic table tops, bowls, knife, troughs - 6,
pitchers 40, children's mattress, Sirena
- spoons - 50, trays - 6, bowl, strainer, scissors,
- meter, grinder, hammer, scissors, tools
- plastic hangers - 210
- remote control TV - 25
- carpeting for Adriatic and Slavija
- floor lamps - 10,
- calculators - 5,
- linen liners - 18, wheel - 100, board,
- curtain conf. 600x265 - 50, Bodul,
- curtain conf. 130x265 - 18, Sirena,
- curtain conf. 600x265 - 3, al. profile - 9, ribbon for
curtains - 6, wall mounting - 3,
- seats - 30, tablecloths - 510,
Description
- men's T-shirts - 200, men's shirts - 54, men's trousers 37,
- trousers - 22, men's shirts - 22, men's trousers - 15, men's
shirts - 30, kerchiefs - 4, shawls - 26,
ties - 34,
- women's blouses - 40, skirts - 95,
- men's waistcoats - 30, women's waistcoats - 25,
- men's work coats - 10, women's work coats - 15,
women's blouses - 30, cook trousers - 10, men's
cook blouses - 15, cook caps - 20, women's cook
coats - 5, aprons - 20, cook kerchiefs - 40,
women's
cook caps - 20, men's cook trousers 60, women's
cook trousers - 20, women's work coats - 65,
79,411.00 KN
173
Grunacom Podstrana
232,838.00 KN
125,887.00 KN
64,020.00 KN
Total
Apfel Makarska
Astra com. Podstrana
Trycom Lepoglava
Linens - total
Clothes and linens total
Vjekoslav Stipica, artist
Total procured
Linen write-off at stock
In-Stock Total
422,745.00 KN
3,623.00 KN
45,960.00 KN
3,730.00 KN
476,058.00 KN
554,469.00 KN
16,886.00 KN
572,355.00 KN
(49,455.00)KN
522,900.00 KN
- towels 50x100 - 4158,
- towels 70x130 - 6540,
- napkins white damask - 4500,
- tablecloths white damask - 1000,
- tablecloth tops - 1040,
- sheets white 160x241 - 603, 160x265 - 637,
162, 240x265 - 158,
- napkins white damask - 500,
- tablecloths white damask - 2000,
240x242 -
- pillows - 140,
- mattresses - 120,
- seat pillows - 130,
paintings - 13
(recorded as a cancellation entry)
Small inventory write-off at stock
Upon inventory taken on December 31st 2004, 49,455.00 KN worth of items was written off the work clothes stock (995).
Small inventory in use (KN) in 2003
Description
Dec 31st 2002
- 890 linens in laundry
1,188,383.00
- small inventory in
3,267,452.00
Facilities
Total
1,445,835.00
- car tires
3,565.00
Total
4,459,400.00
Small inventory in use (KN) in 2004
Description
Dec 31st 2003
- 890 linens in laundry
1,385,275.00
- small inventory in
3,609,350.00
Facilities
Total
4,994,625.00
- car tires
3,565.00
Total
4,998,190.00
IN
598,447.00
603,010.00
OUT
401,555.00
261,112.00
Dec 31st 2003
1,385,275.00
3,609,350.00
1,201,457.00
8,337.00
1,209,794.00
662,667.00
8,336.00
671,003.00
4,994,625.00
3,565.00
4,998,190.00
IN
572,355.00
510,934.00
OUT
382,507.00
390,833.00
Dec 31st 2004
1,458,651.00
3,845,923.00
1,083,289.00
1,083,289.00
773,340.00
773,340.00
5,304,574.00
3,565.00
5,308,139.00
Items are taken off the stock at average prices.
As of the year 2001, the accounting policy is changed, and based on the decision by the Board, small inventory is written off at
the time of being expended.
Small inventory in use:
Description
351 - acquisition value
357 - value adjustment
Net unwritten-off value
Dec 31st 2004
5,308,139.00 KN
(3,565.00)KN
5,304,574.00 KN
Dec 31st 2003
4,998,190.00 KN
(8,180.00)KN
4,990,010.00 KN
Dec 31st 2002
4,459,400.00 KN
(85,538.00)KN
4,373,862.00 KN
During 2004, after taking stock of the small inventory in use, the following breakage, shortage, destruction and write-off:
Destruction
Shortage
Write-off
Expenditure
write-off
during 2004
2004
Dec 31st 2004
Small inventory in Facilities
286,212.00 KN
104,621.00 KN
390,833.00 KN
Small inventory in Laundry
382,507.00 KN
382,507.00 KN
Small inventory in use -total
286,212.00 KN
487,128.00 KN
773,340.00 KN
Small inventory on stock -clothes
49,455.00 KN
49,455.00 KN
Total write-off
335,667.00 KN
487,128.00 KN
822,795.00 KN
174
The value of 822,795.00 KN of small inventory written-off is increased by the value adjustment for car tires in the amount of
6,014.00 KN, which totals 828,809.00 KN.
Review of write-offs and breakage, including quantities and amounts in KN:
2004
2003
Quantity
Amount in KN
Quantity
Amount in KN
- glass
10,885.00
45,824.00
7,919.00
36,766.00
- porcelain
6,832.00
63,697.00
7,622.00
71,853.00
- utensils
2,611.00
8,864.00
4,074.00
10,487.00
- linens
971.00
349,650.00
2,976.00
401,555.00
468,035.00
520,661.00
Quantity
12,968.00
9,597.00
4,427.00
2,522.00
2002
Amount in KN
55,311.00
89,136.00
13,224.00
351,293.00
508,964.00
The linens were written off during the year in the amount of 382,507.00 KN, while the surplus stands at 32,857 on the balance
date.
Inventories of merchandize
Dec 31st 2004
780.00 KN
Dec 31st 2003
1,395.00 KN
Dec 31st 2002
1,395.00 KN
In the Company books, merchandize is recorded at retail prices, with VAT included.
4.5.
Claims from customers
- claims from domestic customers
- claims from foreign customers
Total
Dec 31st 2004
3,324,062.00 KN
5,079,219.00 KN
8,403,281.00 KN
Dec 31st 2003
2,502,646.00 KN
5,501,623.00 KN
8,004,269.00 KN
Dec 31st 2002
3,018,545.00 KN
4,358,494.00 KN
7,377,039.00 KN
4.5.1. Claims from domestic customers
On December 31st 2004, claims from domestic customers amounted to 3,324,062.00 KN.
Until May 5th 2005, 50% of claims were collected - 1,641,778.00 KN.
The claims included in the Dec 31st 2004 balance and not collected until May 5th 2005 total 1,071,540.00 KN.
1.1. Litigated claims
346,396.00 KN
1.2. Doubtful non-litigated claims
363,968.00 KN
1.3. Claims not collected until May 5th 2005
1,071,540.00 KN
1.4. Advances received for New Year's festivity
(99,620).00KN
1.5. Claims collected until May 5th 2005
1,641,778.00 KN
Total
3,324,062.00 KN
1.1. Litigated claims from customers (not charged to expenditures)
Customer
Amount in KN
Kvarner express Opatija
2,141.00
Kei tours Zagreb
56,935.00
Bes tours Zagreb
8,363.00
Maričić Aljoša Almar Hvar
8,000.00
TKD Turizam Samobor
130,999.00
Ronilačke usluge d.o.o. Vela Luka
24,761.00
WAMS Zagreb
21,831.00
Rem in Zagreb
5,589.00
Dal uma Split
4,218.00
ETC Zagreb
30,084.00
Udruga mediteran festival Zagreb
53,475.00
Total
346,396.00
Litigated claims that were collected during 2004 amounted to 593,781.00 KN (Adrijana Internacional, Idatours Pula, Faculty
of Political Sciences, Amfora Metković).
The claims written-off were charged to the 2004 expenditures in the amount of 255,747.00 KN.
1.2. Doubtful non-litigated claims
Customer
Amount in KN
175
Hrvatska lutrija
Židovska kult. scena Zagreb
Fieri co Hvar
Milenijum promocija Zagreb
Croatian Tourist Board
Ban tours
Visković Ivo
Grand tours
Miličič Nikša
Alga
Jaska turizam Jastrebarsko
Former employee housing
Total
2,612.00
41,374.00
166,448.00
10,297.00
2,747.00
1,570.00
3,740.00
4,797.00
9,620.00
2,702.00
102,245.00
15,816.00
363,968.00
Customer
Amount in KN
Splitska banka - Visa center
7,882.00
PBZ American Express
10,694.00
PBZ - Master
8,726.00
PBZ - Maestro
2,592.00
Cosimo Hvar
57,588.00
Geografika Rijeka
37,483.00
DDA Hvar
26,648.00
Jelsa dd Jelsa
4,820.00
Kon Tiki Tours Zagreb
4,540.00
Bracanović Ante
3,457.00
Hvar Tourist Board
114,430.00
Stipica Vjekoslav
12,178.00
Croatian Heritage Museum
10,984.00
Elite travel Cavtat
134,880.00
Spektar putovanja Zagreb
102,628.00
Dom zdravlja Hvar
3,692.00
Generalturist Zagreb
63,738.00
PAN turist plus Osijek
82,477.00
Atlas Dubrovnik
11,398.00
Zagreb tours Zagreb
72,367.00
Adriatic Warsaw
7,647.00
Borovac Metković
2,624.00
Croatia osiguranje
37,320.00
Eco cian
5,109.00
Geobiro
15,165.00
SEM Marine
87,473.00
Dado tours
6,621.00
Strategija
20,215.00
Panorama imobiliare i turismo
9,626.00
Navigator tours
42,228.00
Konzum Zagreb
9,626.00
Club travel Pula
2,629.00
Kompas
5,921.00
A.T.I.
9,990.00
Croatian Technical Society
10,350.00
EKO Sunčani otoci Hvar
2,265.00
Dujmović Morana
6,368.00
Others
17,152.00
Total
1,071,540.00
Remark
Card operator
Card operator
Card operator
Card operator
IOS certified
IOS certified
Rental bill 2004
IOS certified
IOS certified
IOS certified
IOS certified/ Invoice 2002/3
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
IOS certified
4.5.2. Claims from foreign customers
1.1. Doubtful claims
1.3. Claims collected until May 5th 2005
1,718,275.00
1,091,858.00
2,309,683.00
176
1.4. Advances received for 2005
Total
2.1. Doubtful claims from abroad
Customer
TDK Turizam Samobor
Great Tours Budapest
Cagidemetrio Italy
Aria Turistik Dusseldorf
Potapljačko društvo Maribor
Agentur Jentsch Menden
Globus Mostar
Transum travel Ukraine
Atlas Adriatic Praha - bankrupt
Total
(40,597.00)
5,079,219.00
Amount in KN
7,928.00 KN
108,179.00 KN
1,479,924.00 KN
14,692.00 KN
24,232.00 KN
25,059.00 KN
2,198.00 KN
1,630.00 KN
54,433.00 KN
1,718,275.00 KN
Amount in currency
1,037.00 EUR
14,159.00 EUR
208,858.00 EUR
1,923.00 EUR
3,170.00 EUR
3,280.00 EUR
692.00 EUR
83.00 EUR
7,124.00 EUR
240,326.00 EUR
The most significant uncollected claim is the claim from the customer Cagidemetrio, Ancona, in the amount of 1,479,924.00
KN (which covers 86% of all doubtful external claims), which is based on a contract concerning fixed bed rental in Hotel
Pharos. We believe that claim will not be collected.
During 1997, the Cagidemetrio agency sent guests over based on the said contract, bringing our claims for accommodation
services supplied to a total of EUR 13,089.90, claims for unused capacity to a total of EUR 159,307.00, and claims for
contractual penalties to a total of EUR 36,461.10, which all combined amounts to EUR 208,858.00 (1,479,924.00 KN).
Customer
Amount in KN
Geografika Rijeka (agent)
208,741.00
Guliver travel Dubrovnik
2,973.00
Columbus Genoa
13,895.00
I Viaggi pros. Milan
102,907.00
Croliday reis. Ludvigsburg
20,152.00
Adriatic line Jablonec
66,075.00
Mana Novo Mesto
14,341.00
Adriatic Warsaw
299,536.00
Horizonttrans Nova Gorica
1,613.00
Kompas Ljubljana
45,402.00
Novak Kuzma Graz
98,026.00
Atlas airtours (agent)
99,004.00
Marsans transtours Paris
3,097.00
Interalfa Zadar (agent)
3,087.00
Benextours France
2,634.00
Globtour Praha
22,779.00
Guliver travel
13,026.00
Miramare travel and yachting
11,622.00
Rego-bis Poland
39,981.00
Euro tours Ljubljana
13,980.00
Others
8,987.00
Total
1,091,858.00
2.3. Advance payments received for 2005
Customer
Globtour Ljubljana
Kompas Postojna
La Grotta hol. Budapest
Novella Fernando Italy
Total
4.6.
Other claims
- claims from govt. institutions
- claims from employees
- other claims
Amount in KN
5,780.00
4,378.00
13,903.00
16,536.00
40,597.00
Dec 31st 2004
128,416.00 KN
701,518.00 KN
95,705.00 KN
Amount in EUR
27,322.00
390.00
1,819.00
13,470.00
2,638.00
8,649.00
1,877.00
39,206.00
211.00
5,943.00
12,831.00
12,959.00
405.00
454.00
345.00
2,981.00
1,705.00
1,521.00
5,233.00
1,830.00
1,176.00
142,965.00
Amount in EUR
Dec 31st 2003
136,294.00 KN
968,473.00 KN
61,523.00 KN
756.00
573.00
1,819.00
2,146.00
5,294.00
Dec 31st 2002
196,406.00 KN
1,093,815.00 KN
37,323.00 KN
177
Total
925,639.00 KN
1,166,289.00 KN
1,167,544.00 KN
1. Claims from government institutions amount to 128,416.00 KN, and are in connection with salary compensations for
employees' sick leaves, which are claimed from the Croatian Health Insurance Institute.
2. Claims from employees amount to 701,518.00 KN and are in connection with their liabilities for New Years' festivities - bar,
kitchen, front desk.
3. Other claims total 95,705.00 KN and are in connection with the following: VAT paid for advance payments received
(62,352.00 KN), claims for interests from PBZ (2,081.00 KN), funds deposited with Hypo-Adria Bank (31,272.00 KN).
4.7.
Money in bank and cash
Money in banks and cash on December 31st:
Money in bank account
Cash
Cash in exchange office
Foreign currency money
Total
Dec 31st 2004
236,356.00 KN
112,686.00 KN
61,837.00 KN
573,106.00 KN
983,985.00 KN
Dec 31st 2003
339,746.00 KN
124,269.00 KN
115,901.00 KN
49,274.00 KN
629,190.00 KN
Dec 31st 2002
1,326,176.00 KN
219,723.00 KN
100,537.00 KN
411,088.00 KN
2,057,524.00 KN
Bank accounts balances denominated in foreign currencies are stated in KN at HNB (Croatian National Bank) mean rate of
exchange in effect on December 31st 2004.
4.8.
Calculated future period expenses
Deferred expenses of the future period amount to 6,007,608.00 KN and are in connection with the reevaluation of the loan
from Privredna banka Zagreb for refinanced loans (detailed under 4.13. and 4.14).
CAPITAL AND RESERVES
4.9.
Capital Stock
On November 26th 1996, the Company entered in the register of companies, under code Tt96/6564-2, the capital stock in an
amount of 331,097,100.00 KN.
On December 31st 2004, the Company books show a capital stock of 331,097,100.00 KN.
4.10. Reserves
On December 31st 2004, the reserves total 72,078.00 KN.
4.11. Deferred Losses
Deferred uncovered loss:
- loss in 1996
- loss in 1997
- loss in 1998
- loss in 1999
- loss in 2000
- loss in 2001
Total
13,097,347.00 KN
7,760,938.00 KN
16,303,034.00 KN
15,983,628.00 KN
12,821,290.00 KN
3,946,359.00 KN
69,912,596.00 KN
4.12. Deferred Profit
The 2002 profit amounted to 137,907.00 KN and the 2003 profit was 203,720.00 KN, which is a total of 341,627.00 KN.
4.13. Current-Year Profit
The 2004 profit is 422,180.00 KN and is detailed through Notes appended to the Profit and Loss Statement.
______LONG-TERM LIABILITIES_____________________________________________
4.14. Long-Term Liabilities for Commodity Loans
Long-term liabilities for commodity loans:
178
Dec 31st 2004
1) Boman Zg, Zagreb
2) Boman Ag, Vaduz
3) Springer Austria
4) Kompas Slovenia
5) Ugo oprema Zagreb
6) Hypo Alpe Adria - Leasing
Total
Dec 31st 2003
184,662.00 KN
4,625,882.00 KN
1,336,459.00 KN
87,217.00 KN
7,234,220.00 KN
1,690,684.00 KN
374,156.00 KN
6,200,262.00 KN
3,316,250.00 KN
111,139.00 KN
11,629,491.00 KN
Dec 31st 2002
2,485.00 KN
1,803,321.00 KN
374,157.00 KN
7,823,812.00 KN
4,253,364.00 KN
14,257,139.00 KN
Under 3) Agreement on loan and business cooperation with Springer & Sohne, tourist agency in Kagenfurt, Republic of
Austria.
Amount in KN
Loan no. 1
Interest
Loan no. 2
Principal
Interest
Total
EUR
Amount in KN
EUR
-
-
1,488,689.00 KN
192,804.14 EUR
184,662.00 KN
21,736.00 KN
206,398.00 KN
25,435.50 EUR
2,917.70 EUR
28,353.20 EUR
374,157.00 KN
62,388.00 KN
1,925,234.00 KN
50,870.99 EUR
8,488.25 EUR
252,163.38 EUR
3.1.) The purpose of the loan is to finance the reconstruction and redecoration of Hotel Adriatic in Hvar.
The Springer agency supplied financial resources in the amount of 10,000,000.00 ATS by making a payment to a Company's
foreign currency account on January 14th 1998, which amounted to 4,998,350.00 KN.
The Company would be repaying the loan over the course of 6 years through providing accommodation in Hotel Adriatic,
starting from May 1st 1998. (150 ATS for 79,095 room/nights in the period from April 1st to October 31st every year, and 115
ATS for 27,965 room/nights in the period from October 1st to March 31st every year)
According to the contract, the loan is fully repaid after a total of 15,080,225.00 ATS worth of accommodation is provided
(average annual interest rate of 8.35%).
According to Article 6, the Company gives Springer an exclusive right to sell 70 Hotel Adriatic beds in the Austrian market at
a price determined by the Company. The Company maintains the right to sell its remaining capacities in other markets.
The accommodation capacities were agreed to be provided at an ALL-INCLUSIVE basis.
The following is the completed repayment schedule for the loan no. 1:
- 1997 - Principal
10,000,000.00 ATS
Principal repayment:
- 1998
1,357,574.00 ATS
- 1999
1,767,550.00 ATS
- 2000
2,002,978.00 ATS
- 2001
3,101,253.00 ATS
- 2002
1,770,645.00 ATS
Principal repayment
(726,728.34 EUR)
1998-2002 - total
10,000,000.00 ATS
Interest liability
5,080,225.00 ATS
1998-2004
(369,194.35 EUR)
Interest paid - 2002
67,914.21 EUR
108,476.00 EUR
192,804.14 EUR
Liability on Dec 31st 2004
0
4,998,350.00 KN
708,494.00 KN
975,214.00 KN
1,103,883.00 KN
1,675,896.00 KN
534,863.00 KN
4,998,350.00 KN
2,811,396.00 KN
509,963.00 KN
812,744.00 KN
1,488,689.00 KN
0
3.2. On February 7th 2001, the Company entered into Agreement on loan and business cooperation with Helmut Springer from
Klagenfurt. The purpose of the loan is to finance the reconstruction of the Hotel Adriatic swimming pool. Springer supplied
financial resources in the amount of 1,400,000.00 ATS by making a payment to a Company's bank account on February 22nd
2001, which amounted to 783,720.00 KN. The Company would be repaying the loan over the course of 4 years through
providing accommodation in Hotel Adriatic, starting from 2001 through 2004.
The annuity is EUR 25,435.49, which makes a total of EUR 128,386.37, including a 6.55% interest rate.
The following is the repayment schedule for loan no. 2:
Year
Principal
Interest
2001
25,435.49 EUR
10,174.20 EUR
2002
25,435.49 EUR
7,981.95 EUR
2003
25,435.49 EUR
5,570.55 EUR
2004
25,435.50 EUR
2,917.70 EUR
179
Total
101,741.97 EUR
Principal repayment liability:
Debt balance
1,400,000.00 ATS
Exchange rate differential
Balance on Dec 31st 2001 - 1,400,000.00 ATS
Total repaid in 2002
Payment on March 22nd 2004
Total repaid
Balance on Dec 31st 2004
26,644.40 EUR
101,741.97 EUR
50,870.98 EUR
25,435.49 EUR
76,306.47 EUR
25,435.50 EUR
783,720.00 KN
-32,862.00 KN
750,858.00 KN
376,701.00 KN
189,494.00 KN
566,195.00 KN
184,662.00 KN
During 2002, the principal was repaid in the amount of EUR 50,870.98 (376,701.00 KN), plus EUR 18,156.15 (136,170.00
KN) for interest.
During 2003 no payments were made (principal and interest) in regard to the loan no. 2.
During 2004, the principal was repaid in the amount of EUR 25,435.49 (189,494.00 KN), plus EUR 5,574.45 (41,500.00 KN)
for interest.
Liability for undue and outstanding principal on December 31st 2004 is EUR 25,435.50 (184,662.00 KN), and EUR 2,917.70
for undue and outstanding interest.
Under 4) On August 11th 2000, the Company entered into Agreement on loan and business cooperation with Kompas d.d., a
Ljubljana-based tourist agency.
The purpose of the loan is to finance the reconstruction, redecoration and adaptation of the third wing of Hotel Amfora in
Hvar.
Kompas loans financial resources in the amount of EUR 1,273,372.43, by directly crediting a Company's foreign currency
account.
The Company will be repaying the loan over the course of 7 years, including the 8% annual interest charges - in 2001 only the
interest portion is payable, while equal annuities will be payable in the period from 2002 through 2007, in the amount of EUR
275,912.48 and due on the 30th of November every year of the said period.
The loan will be repaid from the fixed room rental contracted with Kompas, covering 77 days in the period from June 23rd
through September 7th each year of the said 7-year period.
For the purpose of providing security for the loan repayment, the parties to the contract signed an agreement on establishing
lien over the property on which Hotel Amfora was built - plot no. 73/10 and 76/1, both included in Land Registry file no. 1516,
Cadastral District of Hvar.
Use of the loan:
Loan disbursement
2000 Total
2001 Total
Total on Dec 31st 2001
Principal balance Dec 31st 2000
2001 loan disbursement
Currency adjustment
Principal repaid - 2002
Total repaid
Currency adjustment
Amount in EUR
179,965.00 EUR
1,093,407.43 EUR
1,273,372.43 EUR
1,273,372.43 EUR
212,228.74 EUR
212,228.74 EUR
213,038.00 EUR
637,495.48 EUR
635,876.95 EUR
Amount in KN
1,377,639.00 KN
8,375,400.00 KN
9,753,039.00 KN
1,377,639.00 KN
8,375,400.00 KN
-355,551.00 KN
9,397,488.00 KN
1,573,676.00 KN
1,623,550.00 KN
1,610,567.00 KN
4,807,793.00 KN
36,186.00 KN
4,625,882.00 KN
The interest accrued and paid in 2004 was 67,913.20 EUR (513,424.00 KN), and was charged to current expenditures.
Liability for interest - total
476,777.80 EUR
97,450.00 EUR
719,164.00 KN
101,869.80 EUR
755,365.00 KN
84,891.50 EUR
649,420.00 KN
67,913.20 EUR
513,424.00 KN
Total paid
352,124.50 EUR
3,637,373.00 KN
Liability for undue and outstanding
124,653.30 EUR
interest
Dec 31st 2004
180
5. Ugo oprema Zagreb
Principal
5.1.) Contract no. 146
5.2.) Contract no. 147
Total
Dec 31st 2004
523,397.00 KN
1,813,061.00 KN
2,336,458.00 KN
Dec 31st 2003
721,764.00 KN
2,594,486.00 KN
3,316,250.00 KN
5.1.) On March 15th 2001, the Company entered into contract no. 146/01 concerning a long-term commodity loan with Ugo
oprema Zagreb, in the amount of EUR 153,452.68 (1,144,296.00 KN).
The purpose of the loan is to settle the liabilities from the Contract regarding construction works on the Hotel Amfora annex
dated October 20th 2000.
Loan terms: repayment period 7 years - 2-year grace period and equal annuities for the remaining 5 years.
The first annuity is due on November 30th 2002; the last is due on November 30th 2006; the annual interest rate is 8% plus
VAT; during the grace period, the interest is accrued on the entire loan amount.
The annuity is EUR 38,416.90,, which includes interest without VAT. The total liability for the loan and interest is EUR
192,084.50.
Loan security: 25 blank bills and mortgage on the Hotel Amfora building.
Capitalized interest was calculated for the period from October 20th 2000 through December 31st 2001 in the amount of EUR
14,546.00 (108,972.00 KN), VAT excluded. The interest was paid in full in 2001.
Loan no. 146 - balance
Principal
153,452.68 EUR
1,144,296.00 KN
Exchange differential
-12,296.00 KN
1,132,000.00 KN
Paid on Nov 29th 2002
26,157.00 EUR
194,366.00 KN
Paid on Nov 25th 2003
28,237.57 EUR
215,870.00 KN
Paid on Dec 8th - 10th 2004
30,495.50 EUR
195,988.00 KN
Total paid
84,890.07 EUR
606,224.00 KN
Currency adjustment
-2,378.00 KN
Principal - balance on Dec 31st 2004
68,563.61 EUR
523,397.00 KN
Loan no. 146 - balance
Interest
Total interest paid
Liability for undue and outstanding interest Dec 31st 2004
12,259.90 EUR
10,259.90 EUR
7,921.40 EUR
30,360.64 EUR
91,221.00 KN
77,818.00 KN
59,410.00 KN
228,449.00 KN
8,352.76 EUR
64,925.00 KN
In 2004, the Company paid the EUR 38,416.90 annuity (255,398.00 KN), EUR 30,495.50 of which is the principal and EUR
7,921.40 is the interest.
The liability for undue and outstanding principal and interest on December 31st 2004 was EUR 76,916.37.
5.2.) On March 15th 2001, the Company entered into contract no 147/01 regarding long-term commodity loan with Ugo
oprema d.o.o. Zagreb in the amount of EUR 539,568.00 (4,059,424.00 KN).
The purpose of the loan is to settle the outstanding debt to the contractor Ugo oprema d.o.o., based on the contract no. 107/01
dated January 27th 2001, which covers the reconstruction work performed on the congress hall, cafe, main and south Hotel
Amfora entrance and Hotel Adriatic swimming pool, with a total value of EUR 770,783.80 (1,507,576.00 DM).
According to the contract no. 107/01, the agreed payment terms are as follows: 30% in advance (EUR 231,216.80) and 70% to
be loaned (EUR 539,568.00 ).
The EUR 539,568.00 loan repayment terms are regulated by the contract no. 147/01.
Loan terms: repayment period 6 years, 1-year grace period; equal quarterly annuities the first of which is due on January 27th
2002 and the last on October 27th 2006; 8% interest rate plus VAT; annuity is 246,889.33 KN, including interest without VAT.
The total liability for principal and interest is 4,937,780.00 KN.
Loan security: 25 blank bills and mortgage on Hotel Amfora.
Capitalized interest was calculated for the period from January 27th 2001 through December 31st 2001 in the amount of
294,074.00 KN, VAT excluded. The interest was paid in full.
Principal
Loan no. 147
Principal liability on Dec 31st 2003
Principal paid - 2004
Interest
2,620,157.00 KN
807,069.00 KN
180,461.00 KN
181
Loan balance on Dec 31st 2004
1,813,061.00 KN
0
During 2004, annuities 9-12 for loan contract no. 147 were settled in the total amount of 897,557.00 KN.
Under 6) On May 27th 2003, the Company signed the contract no. HR0241870 concerning the operating leasing on the motor
vehicle Citroen jumper wagon 35LS 2,8HDI, with HYPO-Leasing Kroatien, financing company, Split branch, in the leasing
amount of EUR 15,950.40 net, (EUR 19,459.20 with VAT), as calculated in KN based on the Hypo Alpe Adria Bank mean
rate of exchange in effect on the payment date.
Leasing terms: leasing period 60 months; monthly leasing payment EUR 265.84 net (324.32 with VAT); first payment due on
June 1st 2003, last on May 2nd 2008; payments are due on the first work day of the month - for payments received after the 15th
of the month default interest is accrued; lease receiver is required to insure the subject of leasing with full coverage in the name
of lease giver; lease receiver is to be charged a one-time calculation fee in the amount of EUR 187.15.
Leasing security: security payment of EUR 4,158.80 (31,272.00 KN), which the Company records in the balance as a deposit,
vehicle title, original full coverage insurance policy in the name of lease giver, liability insurance policy, two Company bills
and one promissory note.
The supplier Citroen Auto centar Ivančić d.o.o. Split issued the invoice for the vehicle to HYPO Leasing Kroatien d.o.o. Split
in the amount of 125,206.91 KN (152,752.43 KN with VAT).
Sunčani Hvar d.d. paid the 31,272.00 KN security deposit and recorded the 125,206.91 KN amount as liability to HYPO AA
Bank.
During 2003, 7 monthly payments were made, totaling 14,067.00 KN plus VAT, including the bank fee in the amount of
1,409.00 KN.
- vehicle value
- security
- net liability
- leasing amount 60x265.84 EUR
16,635.21 EUR
4,158.80 EUR
12,479.41 EUR
15,950.40 EUR
125,207.00 KN
31,302.00 KN
94,594.00 KN
120,904.00 KN
The liability balance on December 31st 2003, as shown in the Company books, was 111,140.00 KN.
During 2004, monthly payments 8-19 were settled in the total amount of 3,190.08 EUR (23,923.00 KN).
The liability balance on December 31st 2004, as shown in the Company books, was 87,217.00 KN.
4.15. Long-term Liabilities to Credit Institutions
Dec 31st 2004
Dec 31st 204
Privredna banka Zagreb d.d.
Amount in
Foreign currency
KN
amount
1) 941300 part165571
contract no. 60/99
2,186,244.00 308,918.00 EUR
I PBZ Total
2,186,244.00 308,918.00 EUR
2) 941600 HBOR part19008
7,000,000.00 920,003.00 EUR
contract no. T-9/00
3) 941200 HBOR part26105
2,616,081.00 346,600.00 EUR
contract no. DT-6/02
4) 941100 HBOR part26119
2,000,000.00 263,084.00 EUR
contract no. DT-7/03
5) 941000 HBOR
10,070,148.00 1,334,176.00 EUR
II HBOR Total
21,686,229.00 2,863,863.00 EUR
Refinanced PBZ loans:
1) 941110 part10595 c. 206 12,218,110.00 1,668,929.00 EUR
2) 941210 part11518 c. 207
4,217,077.00 595,753.00 EUR
3) 941410 part14936 c. 208
1,194,802.00 163,204.00 EUR
4) 941420 part14845 c. 209
2,320,780.00 317,006.00 EUR
5) 941520 part15097 c. 211
314,949.00
43,020.00 EUR
6) 941510 part10687 c. 210
4,361,467.00 576,030.00 EUR
7) 941800 part10777 c. 212
2,543,661.00 347,451.00 EUR
8) 941050 part14753 c. 213 18,293,535.00 2,433,977.00 EUR
III Refinanced loans total
45,464,381.00 6,145,370.00 EUR
TOTAL I+II+III
69,336,854.00 9,318,151.00 EUR
Dec 31st 2003
Amount in
KN
Dec 31st 2003
Foreign currency
amount
3,126,982.00
3,126,982.00
7,000,000.00
432,484.00 EUR
432,484.00 EUR
920,003.00 EUR
2,560,000.00
346,600.00 EUR
1,908,313.00
251,114.00 EUR
11,468,313.00 1,517,717.00 EUR
14,156,830.00 1,925,687.00 EUR
4,886,225.00 687,407.00 EUR
1,384,288.00 188,312.00 EUR
2,689,033.00 365,776.00 EUR
364,924.00
49,639.00 EUR
5,053,527.00 664,650.00 EUR
2,947,279.00 400,905.00 EUR
21,614,836.00 3,040,112.00 EUR
53,078,746.00 7,322,488.00 EUR
67,674,041.00 9,272,68.00 EUR
1) Loan taken from Privredna banka Zagreb, contract no. 60/99 (party 165571) dated April 22nd 1999, with currency clause,
from HBOR (Croatian Bank of Reconstruction and Development) financial resources (credit program intended for 1999 tourist
182
season preparation, based on loan contract no. T-43/99 made between PBZ and HBOR), in the amount of 5,630,000.00 KN
(1,450,000.00 DM).
Loan purpose: procurement of capital assets in the amount of 2,815,000.00 KN and current assets in the amount 2,815,000.00
KN.
Repayment term and method: 24 equal quarterly installments (6 years), with first falling due on September 30th 2001.
Interest: variable rate, 9% per year at time of contract signing; one-time 1% loan processing fee; default interest to be charged
at Bank's discretion.
Interest is accrued quarterly on the disbursed portion of the loan, and is due for payment on the last day of the quarter, upon
principal due date. Proportional method is to be used for calculation.
Offset: Bank maintains the right to offset the debt due based on this contract against any claim from Sunčani Hvar, without
prior consent thereof.
Loan security: 30 blank promissory notes, registration of lien on part of Hotel Amfora built on plot no's. 58/3, 73/10 and 76/1,
Land Registry file no. 1516, Cadastral District Hvar (insurance policy for the said property vinculated in favor of the Bank).
The Company recorded the liability for the above loan in 2004 as follows:
Principle - balance on Dec 31st 2003
3,126,982.00 KN
- Loan repayment:
Mar 31st 2004 - from foreign c. account
234,595.00 KN
Jun 30th 2004 - from short-term loan
234,595.00 KN
Sep 30th 2004 - from short-term loan
234,595.00 KN
Dec 31st 2004 - from short-term loan
236,977.00 KN
Total
940,738.00 KN
Principal - balance Dec 31st 2004
2,186,244.00 KN
Interest accrued in 2004:
- Interest due part.165571
- Interest accrued
- Jan 1st - Mar 31st (7%)
- Apr 1st - Jun 30th (7%)
- Jul 1st - Sep 30th (7%)
- Oct 1st - Dec 31st (7%)
- Interest total - 2004
- Interest paid - 2004
Liability balance - Dec 31st 2004
(settled on Feb 3rd 2005)
Amount in EUR
7,646.55 EUR
7,099.93 EUR
6,625.40 EUR
6,072.79 EUR
27,444.67 EUR
21,371.88 EUR
6,072.79 EUR
432,484.00 EUR
30,892.00 EUR
30,892.00 EUR
30,892.00 EUR
30,892.00 EUR
123,566.00 EUR
308,918.00 EUR
Amount in KN
58,069.00 KN
53,915.00 KN
50,312.00 KN
46,586.00 KN
208,882.00 KN
161,295.00 KN
46,586.00 KN
The interest amount of 224,636.00 KN was charged to 2004 financing expenditure.
HBOR Loans
Under 1) HBOR loan, contract no. T-9/00 dated June 23rd 2000, approved based on the 2000 tourist season preparation direct
crediting program, in the amount of 8,000,000.00 KN with currency clause (2,056,421 DM, EUR 1,051,431.36).
Loan purpose: procurement of capital assets in the amount of 1,000,000.00 KN and current assets in the amount 7,000,000.00
KN.
Repayment term and method: 16 equal semiannual installments (8 years), with first falling due on August 31st 2002 and last on
February 28th 2010.
Interest: variable rate, 7% per year, accrued and payable quarterly; one-time 0.5% loan processing fee; reservation fee of
0.25% annually on undisbursed loan amount; capitalized interest rate equal to the regular interest rate on the disbursed portion
of the loan - quarterly accrual.
Default interest rate is equal to the regular interest rate plus a percentage determined by the Bank.
Loan security: 10 blank promissory notes drawn and accepted, 8 blank due bills for the amount of 1,000,000.00 KN,
registration of lien on part of Hotel Amfora built on plot no's. 58/3, 73/10 and 76/1, Land Registry file no. 1516, Cadastral
District of Hvar, and Hotel Dalmacija annex built on plot no's. 3899/1/2 and 3896, Cadastral District of Hvar.
On September 16th 2003, the Company signed with HBOR an amendment (Amendment I) to the contract no. T-9/00 dated June
23rd 2000.
Amendment I delays repayment of the principal, which amounted to EUR 920,002.65 on September 5th 2003 (one installment
of EUR 65,714.47 due and EUR 854,288.18 outstanding).
Repayment term and method: 12 semiannual installments, with first falling due on August 31st 2004 and last on February 28th
2010.
A 0.2% processing fee for Amendment I is payable on the amount granted, which amounts to EUR 1,840.01.
On October 20th 2004, the Company signed with HBOR Amendment II to the contract no. T-9/00 dated June 23rd 2000.
Amendment II delays repayment of the principal, which amounted to EUR 920,002.65 on September 30th 2004 (one
installment of EUR 76,666.89 due and EUR 843,335.76 outstanding).
183
Repayment term and method: 11 semiannual installments, with first falling due on February 28th 2005 and last on February 28th
2010.
A 0.2% processing fee for Amendment II is payable on the amount granted.
T-9/2000 Loan principal balance (part.5501393-19008):
Loan balance - Dec 31st 2001
1,051,431.42 EUR
- Repayment in 2002
65,714.30 EUR
- Repayment in 2003
65,714.47 EUR
Balance - Dec 31st 2004
920,002.65 EUR
8,000,000.00 KN
500,000.00 KN
500,000.00 KN
7,000,000.00 KN
- Interest due
Amount in EUR
Amount in KN
- Interest accrued
- Dec 1st - Feb 29th (7%)
16,278.93
123,861.00
- Mar 1st - May 31st (7%)
16,457.83
125,222.00
- Jun 1st - Aug 31st (7%)
16,457.93
125,222.00
- Sep 1st - Nov 30th (7%)
15,623.01
135,252.00
- Interest total - 2004
62,817.60
509,557.00
- Interest paid - 2004
62,817.60
509,557.00
Liability balance - Dec 31st 2004
0
0
The regular interest in the amount of 509,557.00 KN was charged to the 2004 expenditures.
Under 2) HBOR loan, contract no. DT-6/02 dated July 3rd 2002, approved based on the 2002 tourist season preparation direct
crediting program, in the amount of 2,560,000.00 KN with currency clause (346,599.94 EUR).
Loan purpose: procurement of capital assets in the amount of 1,792,000.00 KN and current assets in the amount 768,000.00
KN.
Repayment term and method: 16 semiannual installments (8 years), with first falling due on December 31st 2004.
Interest: variable rate, 5.5% per year, accrued and payable quarterly.
One-time 1% loan processing fee on the amount approved; reservation fee of 0.25% annually on undisbursed loan amount;
capitalized interest rate equal to the regular interest rate on the disbursed portion of the loan - quarterly accrual.
Default interest rate is equal to the regular interest rate plus a percentage determined by the Bank.
Loan security: 10 blank promissory notes drawn and accepted, 3 blank due bills for the amount of 1,000,000 KN, Company
account seizure agreement, registration of title transfer for purpose of securing (fiduciary) claims on plot no's. 819/8, 819/10,
819/12 and 819/11, Auto-camp Vira, Land Registry file no. 2794, Cadastral District of Hvar.
On December 31st 2004, the Company signed with HBOR an amendment (Amendment I) to the contract no. T-6/02 dated
December 13th 2000.
Amendment I delays repayment of the principal, which amounted to EUR 346,599.94 on November 29th 2004.
Repayment term and method: 15 semiannual installments, with first falling due on June 30th 2005.
A 0.2% processing fee for Amendment I is payable on the amount granted.
Loan use:
- loan disbursement (to account)
Currency adjustment
Aug 6th 2002 Sep 30th 2002
Capitalized interest accrued in 2004:
Base
Period
346,599.94 EUR
Nov 30 - Feb 29 04
Apr 1 - May 31 04
Jun 1 - Aug 31 04
Sep 1 - Sep 30 04
Sep 1 - Dec 31 04
Total
Int. rate
5.5%
2,560,000.00 KN
346,599.94 EUR
2,560,000.00 KN
56,081.00 KN
2,616,081.00 KN
346,599.94 EUR
Paid
Mar 4
Jun 8
Aug 27
Sep 27
Jan 11 05
346,599.94 EUR
Amount in EUR
4,818.71
4,992.21
4,875.78
1,588.58
4,887.41
21,162.69
Amount in KN
36,650.00
36,872.00
36,013.00
11,733.00
37,669.00
158,937.00
The interest amount of 121,268.00 KN was charged to the 2004 expenditures.
Under 3) HBOR loan, contract no. DT-7/03 dated July 9th 2003, approved based on the tourism sector support program, in the
amount of 2,000,000.00 KN with currency clause (EUR).
KN.
Repayment term and method: 16 semiannual installments (8 years), with first falling due on June 30th 2006.
184
Interest: variable rate, 2.0% per year, accrued and payable quarterly on the disbursed loan amount; proportional method to be
used.
One-time 1% loan processing fee on the amount approved, which amounts to 20,000.00 KN; reservation fee of 0.25% annually
on undisbursed loan amount; capitalized interest rate equal to the regular interest rate on the disbursed portion of the loan quarterly accrual.
Default interest rate is equal to the regular interest rate plus 50% of the percentage determined by the Bank.
Loan security: 10 blank promissory notes drawn and accepted, 2 blank due bills for the amount of 1,000,000 KN, Company
account seizure agreement, registration of expansion of title for purpose of securing (fiduciary) claims (title transfer already
registered based on contract no. DT-6/02) on plot no's. 819/8, 819/10, 819/12 and 819/11, Auto-camp Vira, Land Registry file
no. 2794, Cadastral District of Hvar.
On September 9th 2003, the Company signed with HBOR an amendment (Amendment I) to the contract no. DT-7/03 dated
July 9th 2000.
Amendment I additionally regulates the loan security:
- Loan receiver is required to implement the security by establishing mortgage on Hotel Dalmacija Annex as a 2nd-line
mortgage below the mortgage registered in favor of HBOR based on contract no. DT-9/00, plot no. 3899/1 pasture, 1,072m2,
plot no. 3899/2 pathway, 70m2, plot no. 3896 garden, 853m2, Land Registry file no. 1207, Cadastral District of Hvar,
- Loan receiver is required to implement the security by establishing mortgage on Hotel Amfora as a 14th -line mortgage.
Loan use:
Sep 29th 2003
Oct 14th 2003
Nov 3rd 2003
Nov 4th 2003
Nov 21st 2003
Feb 22nd 2004
600,000.00 KN
500,455.00 KN
339,995.00 KN
77,603.00 KN
390,260.00 KN
91,686.00 KN
2,000,000.00 KN
Base
Period
Int. rate
Paid
251,113.72 EUR
Jan 1 - Feb 20 04
2%
Apr 14
263,083.72 EUR
Feb 20 - Mar 31 04
Apr 14
Apr 1 - Jun 30 04
Jul 15
Jul 1 - Sep 30 04
Sep 27
Sep 1 - Dec 31 04
Jan 11 05
Total
79,292.98 EUR
65,879.92 EUR
44,765.25 EUR
10,223.86 EUR
50,951.71 EUR
11,970.00 EUR
263,083.72 EUR
Amount in EUR
699.83
575.05
1,308.23
1,322.61
1,322.61
5,228.33
Amount in KN
5,244.00
4,342.00
9,945.00
10,022.00
10,147.00
39,700.00
Under 4) HBOR loan, contract no. DT-3/04 dated February 10th 2004, approved based on the tourism sector support program,
in the amount of 10,000,000.00 KN with currency clause (EUR).
KN.
Repayment term and method: 16 semiannual installments (8 years), with first falling due on December 31st 2006.
Interest: variable rate, 2.0% per year, accrued and payable quarterly on the disbursed loan amount; proportional method to be
used.
One-time 1% loan processing fee on the amount approved, which amounts to 100,000.00 KN; reservation fee of 0.25%
annually on undisbursed loan amount; capitalized interest rate equal to the regular interest rate on the disbursed portion of the
loan - quarterly accrual.
Default interest rate is equal to the regular interest rate plus 50% of the percentage determined by the Bank.
Loan security: 10 blank promissory notes drawn and accepted, 10 blank due bills for the amount of 1,000,000.00 KN,
registration of mortgage for purpose of debt security, on plot no. 3775/3 Hotel Bodul, Land Registry file no. 2120, Cadastral
District of Hvar.
Loan use:
- fee
Mar 10th 2004
Mar 31st 2004
May 26th 2004
Jun 30th 2004
Jun 30th 2003
Bank alignment
Base
Period
Int. rate
3,347,468.00 KN
100,000.00 KN
300,000.00 KN
84,606.00 KN
6,167,926.00 KN
70,148.00 KN
10,070,148.00 KN
Paid
442,965.65 EUR
13,232.86 EUR
40,622.97 EUR
11,486.27 EUR
825,863.37 EUR
1,334,176.12 EUR
Amount in
Amount in
185
1,334,176.12 EUR
Mar 10 - Mar 30 04
Apr 1 - Jun 30 04
Jul 1 - Sep 30 04
Sep 1 - Dec 31 04
2%
Apr 14
Jul 15
Sep 27
Jan 11 05
Total
EUR
983.52
5,311.13
6,707.33
6,707.33
19,709.31
KN
7,370.00
39,808.00
49,744.00
50,707.00
147,629.00
REFINANCED LONG-TERM LOANS
Review of refinanced PBZ loans:
Refinanced PBZ loans:
1) 941110 part10595 c. 206
2) 941210 part11518 c. 207
3) 941410 part14936 c. 208
4) 941420 part14845 c. 209
5) 941520 part15097 c. 211
6) 941510 part10687 c. 210
7) 941800 part10777 c. 212
8) 941050 part14753 c. 213
III Refinanced loans total
Dec 31st 2004
Amount in KN
12,218,110.00
4,217,077.00
1,194,802.00
2,320,780.00
314,949.00
4,361,467.00
2,543,661.00
18,293,535.00
45,464,381.00
Dec 31st 2004
Dec 31st 2003
Dec 31st 2003
Amount in EUR Amount in KN
Amount in EUR
1,668,929.00
14,156,830.00
1,925,687.00
595,753.00
4,886,225.00
687,407.00
163,204.00
1,384,288.00
188,312.00
317,006.00
2,689,033.00
365,776.00
43,020.00
364,924.00
49,639.00
576,030.00
5,053,527.00
664,650.00
347,451.00
2,947,279.00
400,905.00
2,433,977.00
21,614,836.00
3,040,112.00
6,145,370.00
53,078,746.00
7,322,488.00
Under 1) Contract no. S-II-206/01 (party 10595) concluded on October 8th 2001
Contract between PBZ d.d. and Sunčani Hvar d.d. on long-term loan with currency clause, in the amount of 4,150,994.64 DM
(15,956,000.00 KN).
This loan is used to refinance the loan no. 14/98 (party 164331) in the amount of 4,000,000.00 DM (15,539,864.00 KN).
Loan terms: variable interest rate - 5% annually, calculated in currency and payable in KN, quarterly accrual, capitalized
interest rate 5%, default interest to be determined by the Bank.
Repayment period: 16 semiannual installments (8 years), first falling due on Dec 31st 2003.
Loan processing fee is 1% on the loan amount approved.
Loan security: 10 blank signed promissory notes, including statement, 3 account seizure representations, mortgage on Hotel
Amfora, vinculated insurance policy.
Repayment
Dec 30th 2003
Repayment
Nov 30th 2004
Dec 31st 2004
2,054,066.55 EUR
128,379.16 EUR
1,925,687.39 EUR
128,379.16 EUR
128,379.16 EUR
1,668,929.07 EUR
15,138,534.00 KN
981,704.00 KN
14,156,830.00 KN
953,894.00 KN
984,826.00 KN
12,218,110.00 KN
The loan balance on September 30th 2004 was aligned with the Bank.
Principal repayment installments due, totaling EUR 256,758.32 (1,938,720.00 KN), were settled by means of a short-term loan
(party 5110045503).
On December 31st 2004, the undue and outstanding portion of the principal was EUR 1,668,929.00 (12,218,110.00 KN).
Base
Period
Int.
Paid
Amount in
Amount in
rate
EUR
KN
1,925,687.39 EUR Jan 1 - Mar 31 04
5%
Apr 13 - Apr
24,383.55
180,904.00
19
Apr 1 - Jun 30 04
Jul 14
24,320.72
180,710.00
1,797,308.23 EUR Jul 1 - Sep 30 04
Oct 10
22,965.61
173,341.00
Oct 1 - Dec 31 04
Feb 18 05
22,948.78
176,038.00
Total
94,573.66
710,993.00
Contract between PBZ d.d. and Sunčani Hvar d.d. on long-term loan with currency clause, in the amount of EUR 733,235.00
(5,461,000.00 KN).
This loan is used to refinance the loan (party 163576) in the amount of 1,377,000.00 DM (5,349,598.00 KN).
186
Palace and Hotel Amfora, vinculated insurance policy.
Repayment
Dec 30th 2003
Repayment
Jun 30th 2004
Repayment
Dec 31st 2004
733,234.79 EUR
45,827.17 EUR
687,407.62 EUR
45,827.17 EUR
45,827.17 EUR
595,753.28 EUR
5,225,060.00 KN
338,835.00 KN
4,886,225.00 KN
329,236.00 KN
339,912.00 KN
4,217,077.00 KN
Principal repayment installments due, totaling EUR 91,654.34 (669,148.00 KN), were settled by means of a short-term loan
(party 5110045503).
On December 31st 2004, the undue and outstanding portion of the principal was EUR 595,753.28 (4,217,077.00 KN).
Base
Period
Int.
Paid
Amount in
Amount in
rate
EUR
KN
687,407.62 EUR Jan 1 - Mar 31 04
5%
Apr 9
8,688.07
64,577.00
Apr 1 - Jun 30 04
Jul 14
8,681.71
64,507.00
641,580.45 EUR Jul 1 - Sep 30 04
Oct 5
8,197.97
61,877.00
Oct 1 - Dec 31 04
Jan 10 05
8,191.60
62,840.00
Total
33,759.35
253,801.00
(1,493,000.00 KN).
This loan is used to refinance the loan no. 114/99 (party 16652) in the amount of EUR 567,207.00 (4,309,833.00 KN).
Repayment
Dec 30th 2003
Repayment
Jun 30th 2004
Repayment
Dec 31st 2004
200,865.98 EUR
12,554.12 EUR
188,311.86 EUR
12,554.12 EUR
12,554.12 EUR
163,203.62 EUR
1,480,388.00 KN
96,000.00 KN
1,384,388.00 KN
93,281.00 KN
96,305.00 KN
1,194,802.00 KN
(party 5110045503).
On December 31st 2004, the undue and outstanding portion of the principal was 163,203.62 EUR (1,194,802.00 KN).
Base
Period
188,311.86 EUR
Jan 1 - Mar 31 04
175,757.74 EUR
Apr 1 - Jun 30 04
Jul 1 - Sep 30 04
Oct 1 - Dec 31 04
Int.
rate
5%
Paid
Mar 31-Apr
29
Jul 14
Oct 5
Jan 12 05
Total
Amount in
EUR
2,380.05
Amount in
KN
17,690.00
2,278.31
2,245.79
2,244.05
9,148.20
17,671.00
16,951.00
17,215.00
69,527.00
187
Under 4) Contract no. S-II-208901 (party 14845) concluded on October 8th 2001
(2,900,000.00 KN).
Loan processing fee is 1% on the loan amount approved, which amounts to 29,000.00 KN.
Repayment
Dec 30th 2003
Repayment
Jun 30th 2004
Repayment
Dec 31st 2004
390,161.63 EUR
24,385.10 EUR
365,776,53 EUR
24,385.10 EUR
24,385.10 EUR
317,006.33 EUR
2,875,504.00 KN
186,470.00 KN
2,689,033.00 KN
181,188.00 KN
187,065.00 KN
2,320,780.00 KN
(party 5110045503).
Base
365,776.53 EUR
341,391.43 EUR
Period
Jan 1 - Mar 31 04
Apr 1 - Jun 30 04
Jul 1 - Sep 30 04
Oct 1 - Dec 31 04
Int.
rate
5%
Paid
Apr 9
Jul 13
Oct 5
Jan 11 05
Total
Amount in
EUR
4,623.01
4,619.63
4,362.22
4,358.83
17,963.69
Amount in
KN
34,362.00
34,325.00
32,925.00
33,438.00
135,050.00
(600,000.00 KN).
Repayment
Dec 30th 2003
Repayment
Jun 30th 2004
Repayment
Dec 31st 2004
52,948.14 EUR
3,309.26 EUR
49,638.88 EUR
3,309.26 EUR
3,309.26 EUR
43,020.36 EUR
390,229.00 KN
25,306.00 KN
364,924.00 KN
24,589.00 KN
25,386.00 KN
314,949.00 KN
(party 5110045503).
On December 31st 2004, the undue and outstanding portion of the principal was EUR 43,020.36 (314,949.00 KN).
Base
49,638.88 EUR
Period
Jan 1 - Mar 31 04
Apr 1 - Jun 30 04
Int.
rate
5%
Paid
Apr 7
Jul 13
Amount in
EUR
627.38
626.92
Amount in
KN
4,663.00
4,658.00
188
46,329.62 EUR
Jul 1 - Sep 30 04
Oct 1 - Dec 31 04
Oct 5
Jan 10 05
Total
591.99
591.54
2,437.83
4,468.00
4,538.00
18,327.00
(5,450,000.00 KN).
Repayment period: 16 semiannual installments (8 years), first falling due on December 31st 2003.
Loan processing fee is 1% on the loan amount approved, which amounts to 54,500.00 KN
Repayment
Dec 30th 2003
Repayment
Jun 30th 2004
Repayment
Dec 31st 2004
708,960.39 EUR
44,310.02 EUR
664,650.37 EUR
44,310.02 EUR
44,310.02 EUR
576,030.33 EUR
5,403,963.00 KN
350,436.00 KN
5,053,527.00 KN
340,509.00 KN
351,551.00 KN
4,361,467.00 KN
(party 5110045503).
Paid
Amount in
Amount in
Base
Period
Int.
rate
EUR
KN
664,650.37 EUR Feb 1 - Apr 30 04
5%
May 14
8,308.13
62,590.00
May 1 - Jun 30 04
Jul 31
8,295.83
61,640.00
620,340.35 EUR Jul 1 - Jul 31 04
Aug 1 - Oct 31 04
Nov 8
7,926.57
59,373.00
Total
24,530.53
183,603.00
(3,309,000.00 KN).
This loan is used to refinance the loan no. 115/99 in the amount of EUR 430,000.00 (3,211,311.00 KN).
Repayment
Dec 30th 2003
Repayment
Jun 30th 2004
Repayment
Dec 31st 2004
427,631.54 EUR
26,726.97 EUR
400,904.57 EUR
26,726.97 EUR
26,726.97 EUR
347,450.63 EUR
3,151,658.00 KN
204,379.00 KN
2,947,279.00 KN
198,589.00 KN
205,029.00 KN
2,543,661.00 KN
(party 5110045503).
Base
Period
Int.
Paid
Amount in
Amount in
rate
EUR
KN
189
400,904.57 EUR
374,177.60 EUR
Jan 1 - Mar 31 04
Apr 1 - Jun 30 04
Jul 1 - Sep 30 04
Oct 1 - Dec 31 04
5%
Apr 9
Jul 13
Oct 5
Jan 13 05
Total
5,066.99
5,063.28
4,781.16
4,777.45
19,688.88
37,662.00
37,622.00
36,087.00
36,649.00
148,020.00
Contract between PBZ d.d. and Sunčani Hvar d.d. on long-term loan with currency clause, in the amount of EUR 3,440,000.00
(25,456,000.00 KN).
This loan is used to refinance the following loans:
Contract no. 56/97 party16386
36,112,714.89 ATS
19,466,480.00 KN
Contract no. D-II-73/01 party 1095
2,350,000.00 KN
Contract under guarantee no. 2301/97
741,539.43 DM
2,843,268.00 KN
party 82760
Total
24,659,748.00 KN
Repayment period: 7 annual unequal, first falling due on September 30th 2002 and last on September 30th 2008.
Installment amounts as percentages of total debt, as follows: 1st installment - 2%, 2nd - 10%, 3rd, 4th and 5th - 15%, 6th 20%, and 7th - 23%.
Amfora and Hotel Palace, vinculated insurance policy.
Loan balance - Sep 29th 2003
under Amendment II
Installment Repayment
Sep 30th 2003
Installment Repayment
Sep 30th 2004
Alignment with Bank
Dec 31st 2004
3,265,750.53 EUR
24,070,680.00 KN
333,239.85 EUR
2,455,844.00 KN
498,533.89 EUR
3,758,945.00 KN
437,644.00 KN
2,433,976.79 EUR
18,293,535.00 KN
On July 7th 2003, Amendment I was concluded to the long-term loan contract no. S2-213/01, by means of which the title,
amount, currency and interest rate were altered, as follows:
The main contract is a long-term loan contract for the amount of 24,623,759.00 KN, with regular interest rate equal to the
three-month ZIBOR, plus 3.45% annually, variable; quarterly accrual on the last day of the quarter, or upon principal due date;
payment period is ten days after accrual.
Loan security: 3 blank accepted bills with statement certified by a notary public, 3 account seizure representations.
On September 29th 2003, Amendment II was concluded to the long-term loan contract no. S2.213/01, by means of which a part
of the security instruments were altered (7c of the main contract):
- Registration of mortgage on properties: Hotel Amfora and Hotel Palace.
- Article 2 of Amendment II stipulates transformation of the loan from a long-term loan with currency clause into a long-term
loan in kuna, which becomes effective on September 29th 2003. The outstanding debt is established at EUR 3,265,750.53,
which amounts to 24,558,443.99 KN, as calculated at PBZ mean rate in effect on September 29th 2003.
Principal repayment installment due on September 30th 2004, totaling EUR 498,533.89 (3,758,954.00 KN), was settled by
means of a short-term loan (party 5110045503).
On December 31st 2004, the undue and outstanding portion of the principal was EUR 2,433,976.79 (18,293,535.00 KN).
Base
Period
22,052,480 KN Jan 1 - Mar 31 04
Apr 1 - Jun 30 04
18,293,535 KN Jul 1 - Sep 30 04
Oct 1 - Dec 31 04
Total
Paid
Apr 19 - May 13
Jul 14 - Jul 23
Jul 23
Feb 28 05 Mar 15 05
Int. rate
9.70%
11.87%
9.19%
10.69%
Amount in KN
531,850.00 KN
650,831.00 KN
508,480.00 KN
491,566.00 KN
2,182,727.00 KN
190
The interest amount of 2,230,329.00 KN was charged to the 2004 expenditures.
______SHORT-TERM LIABILITIES____________________________________________
4.15. Liabilities to Suppliers
Liabilities to domestic suppliers
Total
Dec 31st 2004
3,919,421.00 KN
3,919,421.00 KN
Dec 31st 2003
6,841,992.00 KN
6,841,992.00 KN
Dec 31st 2002
5,079,909.00 KN
5,079,909.00 KN
On December 31st 2004, liabilities to suppliers total 3,919,421.00 KN.
Until May 5th 2005, 1,135,613.00 KN was paid, which makes 29% of the total liabilities to suppliers.
Payments made on pro forma invoices total 114,696.00 KN.
The remaining unsettled liabilities on December 31st 2004 amount to 2,898,504.00 KN.
1. Liabilities settled before May 5 2005
2. Liabilities not settled before May 5 2005
3. Advances made for 2005
Total
1,135,613.00 KN
2,898,504.00 KN
(114,696.00)KN
3,919,421.00 KN
Supplier
Public utility operator Hvar
Controlmatic
Croatia osiguranje
HEP
Hvarski vodovod Jelsa
TO Ivan Hvar
Pivac Vrgorac
Banestra Zadar
Stanić d.o.o.
Bon-ton Zagreb
Antoana Hvar
Dalmacijavino Split
Petason Split
Kodžoman Klas Hvar
Saponija Osijek
Konzum Zagreb
Town of Hvar
Others
Total
Amount in KN
581,043.00 KN
28,594.00 KN
52,042.00 KN
96,712.00 KN
497,688.00 KN
101,589.00 KN
866,590.00 KN
67,219.00 KN
50,000.00 KN
92,232.00 KN
28,401.00 KN
58,146.00 KN
152,706.00 KN
92,813.00 KN
26,686.00 KN
46,421.00 KN
57,605.00 KN
2,018.00 KN
2,898,504.00 KN
4.16. Short-term Liabilities to Credit Institutions
Short-term debt:
PBZ d.d.
1. Short-term loan
contract no. 5010013934
2. Short-term loan
contract no. 5110045503
3. Short-term loan Croatia osiguranje
4. PBZ/contract for exchange office
Total
Dec 31st 2004
Dec 31st 2003
-
8,000,000.00 KN
24,083,750.00 KN
1,500,000.00 KN
50,000.00 KN
25,633,750.00 KN
50,000.00 KN
8,050,000.00 KN
Under 1a) Contract no. 5010013934 (party 13934) concluded on July 4th 2003
Contract between PBZ d.d. and Sunčani Hvar d.d. on short-term loan for the purpose of settling liabilities due to the Bank, in
the amount of 8,000,000.00 KN.
Loan terms: variable interest rate equal to six-month ZIBOR plus 4% annually, accrued monthly on the last day of the month,
due for payment within ten days after accrual date; default interest to be determined by PBZ.
Repayment period: 4 monthly installments, first falling due on August 31st 2004, and last on December 31st 2004.
Loan processing fee is 0.2% on the loan amount approved; loan utilization fee is 1%.
Amendment I to the contract dated July 4th 2003 was concluded on September 25th 2003 for the purpose of contract
modification in regard to loan security - registration of mortgage on Hotel Palace and Hotel Amfora.
191
The loan was repaid by means of a short-term loan (party 5110045503), and request was submitted to clear the mortgage off
the properties mentioned.
Repayment
Repayment
1,068,235.53 EUR
272,479.56 EUR
795,755.97 EUR
8,000,000.00 KN
2,000,000.00 KN
6,000,000.00 KN
0
Base
Period
Int. rate
8,000,000 KN
Jan 1 - Jun 30 04
10.25%
6,000,000 KN
Jul 1 - Jul 31 04
10.44%
Interest total
Sep 1 - Sep 30 04
10.44%
Paid in 2004
The interest amount of 5,999,445.00 KN was charged to the 2004 expenditures.
Amount in KN
548,671.00 KN
50,774.00 KN
599,445.00 KN
599,445.00 KN
Under 1b) Contract no. 5010025458/03 (party 25458) concluded on December 23rd 2003
Contract between PBZ d.d. and Sunčani Hvar d.d. on short-term loan for the purpose of procuring current assets, in the amount
of 6,000,000.00 KN.
Loan terms: variable interest rate 7.3% annually, accrued monthly on the last day of the month, due for payment within ten
days after accrual date; default interest to be determined by PBZ.
Repayment period: 4 monthly installments, first falling due on August 20th 2004, and last on November 30th 2004.
Loan processing fee is 0.2% on the loan amount approved; loan utilization fee is 0.6%.
Loan security: registration of mortgage on Hotel Amfora.
the property mentioned.
Loan use and repayment
Feb 6 04 - Mar 4 04
Repayment - Aug 31 04
Repayment - Sep 30 04
Repayment - Sep 30 04
806,969.56 EUR
136,612.02 EUR
272,479.56 EUR
397,877.98 EUR
6,000,000.00 KN
1,000,000.00 KN
2,000,000.00 KN
3,000,000.00 KN
0
Base
Period
Int. rate
Interest accrued
Feb 6 - Sep 30 04
7.30%
Paid in 2004
Amount in KN
263,578.00 KN
263,578.00 KN
Under 1c) Contract no. 5110043859/04 (party 43859) concluded on May 24th 2004
Contract between PBZ d.d. and Sunčani Hvar d.d. on short-term loan for the purpose of procuring current assets, in the amount
of EUR 170,000.00 (1,251,200.00 KN).
Loan terms: variable interest rate equal to three-month EURIBOR plus 5.15% annually and not lower than 7.30%; accrued
monthly on the last day of the month, due for payment within ten days after accrual date; default interest to be determined by
PBZ.
Repayment period: deadline December 31st 2004.
Loan security: registration of mortgage on Hotel Amfora.
the property mentioned.
Loan use and repayment
Jun 8th 2004
Alignment with Bank
Repayment - Dec 31st 2004
Base
Interest accrued
Paid in 2004
170,000.00 EUR
172,239.79 EUR
Period
Jun 8 - Dec 31 04
1,251,200.00 KN
56,100.00 KN
1,307,300.00 KN
0
Int. rate
7.30%
Amount in KN
52,888.00 KN
52,888.00 KN
192
Under 2) Contract no. 5110045503/04 (party 45503) concluded on June 28th 2004
Contract between PBZ d.d. and Sunčani Hvar d.d. on short-term loan for the purpose of settling liabilities to the Bank for loan
principals falling due in the period from June 30th 2004 through December 31st 2004, in the amount of EUR 3,250,000.00
(24,083,750.00 KN).
Loan terms: variable interest rate equal to three-month EURIBOR plus 5.15% annually; accrued monthly on the last day of the
month, due for payment within ten days after accrual date; default interest to be determined by PBZ.
Repayment period: deadline June 30th 2005.
Loan security: 3 blank signed promissory notes, including statement, 3 account seizure representations, registration of
mortgage on Hotel Amfora and Hotel Palace, vinculated insurance policy.
Loan use
- Jun 30th 2004
- Aug 31st 2004
- Aug 31st 2004
- Aug 31st 2004
- Sep 30th 2004
- Dec 31st
322,280.37 EUR
136,612.02 EUR
272,479.56 EUR
272,479.56 EUR
1,723,279.69 EUR
492,009.41 EUR
2,946,661.05 EUR
2,355,869.00 KN
1,000,000.00 KN
2,000,000.00 KN
2,000,000.00 KN
12,993,529.00 KN
3,734,352.00 KN
24,083,750.00 KN
Base
Period
Int. rate
Interest accrued
Jun 1st - Dec 31st 04
7.30%
Paid in 2004
Amount in KN
454,927.00 KN
324,523.00 KN
Under 3) Contract no. 291000104/04 concluded on April 22nd 2004
Contract between Croatia osiguranje d.d. Zagreb, Split branch, and Sunčani Hvar d.d. on short-term loan provided from nonlife insurance funds, in the amount of 1,500,000.00 KN.
Loan terms: variable interest rate 8.00% annually; accrued quarterly, due for payment within 8 days after accrual date;
Repayment period: deadline April 22nd 2005.
Loan processing fee is 0.5% on the loan amount approved.
Loan security: 2 blank signed promissory notes, including statement, registration of mortgage on the Office building, built on
plot no. 606/1, Land Registry file no. 592, Cadastral District of Hvar, vinculated insurance policy.
Base
Period
Int. rate
Interest accrued
Apr 22nd - Dec 31st 04
8.00%
Paid in 2004
Amount in KN
75,786.00 KN
53,225.00 KN
Under 4) On December 31st 2004, the liability to PBZ amounts to 50,000.00 KN, for exchange office operations.
4.17. Liabilities for Advances Received
On December 31st 2004, the liabilities for net advances received total 51,108.00 KN, and cover the advance payments made by
customers invoiced in 2005.
4.18. Liabilities to Employees
The liabilities to employees total 1,296,349.00 KN, which covers employees' wages and salaries for the month of December
2004.
4.19. Liabilities to Government Institutions
The liabilities to government institutions total 1,260,302.00 KN, and are as follows:
- forest contribution liabilities
47,881.00 KN
- Tourist board contribution liabilities
12,720.00 KN
- sojourn tax liabilities
593,183.00 KN
193
- VAT liabilities
- monument tax
- liabilities for contributions on employee wages and
salaries and personal income tax
- consumption tax liabilities
125,565.00 KN
21,093.00 KN
449,004.00 KN
856.00 KN
5.
NOTES ACCOMPANYING PROFIT AND LOSS ACCOUNT
5.1.
Operational Revenue
Operational revenue of the Company amounts to:
Revenue Structure
2004
2003
2002
Revenue from sale of room and board
services
50,850,225.00 KN
49,257,631.00 KN
48,512,312.00 KN
Revenue from sale of food and
beverages
10,147,924.00 KN
8,329,723.00 KN
7,719,266.00 KN
182,500.00 KN
177,954.00 KN
205,057.00 KN
86,500.00 KN
88,845.00 KN
92,215.00 KN
497,674.00 KN
510,676.00 KN
679,526.00 KN
99,360.00 KN
80,496.00 KN
104,336.00 KN
61,864,183.00 KN
58,445,325.00 KN
57,312,712.00 KN
1,553,760.00 KN
1,578,298.00 KN
1,328,705.00 KN
TOTAL (1+2)
63,417,943.00 KN
60,023,623 KN
58,641,417.00 KN
Revenue in 2003
Room and board services
Sales of food
Sales of beverages
Total
At home
15,345,553.00 KN
795,691.00 KN
964,707.00 KN
17,105,951.00 KN
Abroad
33,912,078.00 KN
2,530,189.00 KN
4,039,136.00 KN
40,481,403.00 KN
Total
49,257,631.00 KN
3,325,880.00 KN
5,003,843.00 KN
57,587,354 KN
Revenue in 2004
Room and board services
Sales of food
Sales of beverages
Total
At home
14,518,778.00 KN
1,295,424.00 KN
1,447,735.00 KN
17,261,937.00 KN
Abroad
36,331,447.00 KN
3,388,503.00 KN
4,016,262.00 KN
43,736,212.00 KN
Total
50,850,225.00 KN
4,683,927.00 KN
5,463,997.00 KN
60,988,149.00 KN
Number of room/nights per facility:
Facility
Domestic guests
2004
2003
2002
Amfora
21,201
25,242
19,450
Adriatic
3,768
2,974
2,538
Palace
3,144
4,042
4,824
Bodul
5,167
8,264
5,033
Dalmacija
4,214
6,000
6,009
Delfin
4,754
5,292
4,933
Pharos
9,397
10,266
10,510
Foreign guests
2004
2003
80,570
77,611
20,008
19,372
22,918
20,474
21,663
16,352
6,582
4,774
6,353
5,581
38,566
36,512
2002
86,790
16,852
22,233
21,721
4,727
5,843
39,216
Other revenue from services
Revenue from exchange office
commission
Revenue from lease
Revenue from sales of cigarettes and
souvenirs
1) Total
2) Other Revenue
Total
2004
101,771
23,776
26,062
26,830
10,796
11,107
47,963
2003
102,853
22,346
24,516
24,616
10,774
10,873
46,778
2002
106,240
19,390
27,057
26,754
10,736
10,776
49,726
194
Sirena
Slavija
6,414
2,175
60,234
6,312
4,263
72,655
4,673
3,232
61,202
18,435
16,137
231,232
18,110
12,608
211,394
Number of room/nights according to Company's statement:
2004
Domestic guests
60,234
Foreign guests
231,232
Total
291,466
22,081
11,906
231,369
24,849
18,312
291,466
24,422
16,871
284,049
2003
26,754
15,138
292,571
2002
72,655
211,394
284,049
61,202
231,369
292,571
Available capacity and its occupancy rate in 2004:
Facility
Amfora
Adriatic
Palace
Bodul
Dalmacija
Delfin
Pharos
Sirena
Slavija
Number of
beds
659
126
147
300
116
112
402
316
117
2,295
Days of
work
221
323
252
113
109
121
148
121
185
177
Possible
room/night
145,639
40,698
37,044
33,900
12,644
13,552
59,496
38,236
21,645
402,854
Realized
room/night
101,771
23,776
26,062
26,830
10,796
11,107
47,963
24,849
18,312
291,466
Capacity
utilization %
70
58
70
79
85
82
81
65
85
72
Days of total
capacity
utilization
154
189
177
89
93
99
119
79
157
127
On the average, the hotels were open 177 days or 6 months; total capacity utilization was achieved on 127 days or 4 months.
Occupancy rate with relation to real number of days of work was 72 %.
Number of room/nights for foreign guests, breakdown by country:
Country
2004
2003
Austria
10,971
12,607
Czech Republic
25,317
24,989
Italy
36,910
39,247
Germany
27,468
25,417
Hungary
2,691
4,093
Poland
17,638
18,589
Slovenia
35,047
40,078
Great Britain
17,878
11,557
France
8,660
7,954
Sweden
11,807
2,334
Norway
9,682
774
Other
27,163
23,755
Total
231,232
211,394
Revenue from room and board services:
2004
50,850225.00
18,856,923.00
5,515,227.00
5,149,406.00
3,680,242.00
1,591,134.00
1,693,515.00
6,689,099.00
3,156,736.00
2,669,835.00
626,966.00
108,025.00
317,873.00
16,517.00
2,203.00
15,463.00
72,010.00
51,708.00
678,980.00
10,887
28,496
37,584
29,993
7,470
37,815
39,617
11,524
4,044
23,939
231,396
2003
49,257,631.00
Revenue from room and board, food and beverages in 2003, by facility:
Room and
Food not included
Facility
board services
in room and board
Beverages
Amfora
Adriatic
Palace
Bodul
Dalmacija
Delfin
Pharos
Sirena
Slavija
2002
1,403,953.00
130,612.00
472,239.00
205,440.00
50,288.00
51,708.00
393,448.00
182,105.00
749,325.00
2002
48,512,312.00
Total
20,887,842.00
5,753,864.00
5,939,518.00
3,902,199.00
1,643,625.00
1,760,686.00
7,154,557.00
3,390,549.00
4,098,140.00
Share of
percentage
36.27
9.99
10.31
6.78
2.85
3.06
12.42
5.89
7.12
195
Restaurant
Plaža
Coffee House
Pjaca
Galeb
(seasonal
workers)
Total
-
665,190.00
456,556.00
1,121,746.00
1.95
-
770,945.00
908,169.00
1,679,114.00
2.91
255,514.00
-
-
255,514.00
0.45
49,257,631.00
3,325,880.00
5,003843.00
57,587,354.00
100.00
Revenue from room and board, food and beverages in 2004, by facility:
Room and
Food not included
Facility
board services
in room and board
Beverages
Amfora
Adriatic
Palace
Bodul
Dalmacija
Delfin
Pharos
Sirena
Slavija
Restaurant
Plaža
Coffee House
Pjaca
Galeb
(seasonal
workers)
Total
Total
19,547,688.00
5,828,852.00
5,067,488.00
3,749,740.00
1,963,044.00
1,761,381.00
6,802,178.00
3,458,976.00
2,405,209.00
-
920,820.00
97,388.00
419,415.00
73,401.00
6,846.00
24,632.00
123,740.00
79,742.00
1,405,727.00
713,606.00
1,578,000.00
142,275.00
501,906.00
227,175.00
81,941.00
60,628.00
400,538.00
177,631.00
1,066,507.00
408,381.00
22,046,508.00
6,068,515.00
5,988,809.00
4,050,316.00
2,051,831.00
1,846,641.00
7,326,456.00
3,716,349.00
4,877,443.00
1,121,987.00
Share of
percentage
36.14
9.95
9.82
6.64
3.36
3.03
12.01
6.09
8.00
1.84
-
818,610.00
819,015.00
1,637,625.00
2.68
265,669.00
-
-
265,669.00
0.44
50,850,225.00
4,683,927.00
5,463,997.00
60,998,149.00
100.00
Major tourist agencies that contributed to the occupancy of Company's capacity:
Turnover of major agencies with domestic guests (VAT included)
Description
2004
2003
Atlas, Dubrovnik
273,400.00 KN
178,970.00 KN
Atlas, Dubrovnik, tour operator
184,061.00 KN
Atlas Airtours, Zagreb
326,600.00 KN
594,595.00 KN
Atlantis Travel Zagreb
401,000.00 KN
Adriaturs, Zagreb
212,214.00 KN
417,683.00 KN
Generalturist, Zagreb
1,065,300.00 KN
2,906,706.00 KN
Spektar putovanja, Zagreb
590,000.00 KN
717,940.00 KN
RTA Zagreb-Oktogon
137,550.00 KN
284,814.00 KN
Kompas, Zagreb
1,092,800.00 KN
896,944.00 KN
Kolumbo Travel
410,730.00 KN
567,915.00 KN
Panturist plus Osijek
335,550.00 KN
1,079,678.00 KN
Elite travel Cavtat
513,200.00 KN
307,840.00 KN
Turnover of major agencies with foreign guests:
Description
2004
Vitkovice Tours, Czech Republic
345,000.00 KN
Springer Helios, Graz, Austria
887,400.00 KN
Kompas d.d. Ljubljana, Slovenia
2,896,510.00 KN
Adriatic, Warszawa, Poland
1,146,300.00 KN
Bemex, France
Atlas Adriatic Praha, Czech Republic
Globtour, Ljubljana, Slovenia
Ten Tours, Domžale, Slovenia
Missir Essen, Germany
Relax Muta, Slovenia
Adriatic Line Jablonec, Czech Republic
762,700.00 KN
501,500.00 KN
719,000.00 KN
2003
250,953.00 KN
978,570.00 KN
3,265,447.00 KN
1,878,556.00 KN
890,195.00 KN
353,173.00 KN
453,385.00 KN
326,560.00 KN
603,560.00 KN
100,968.00 KN
432,205.00 KN
2002
191,400.00 KN
301,326.00 KN
566,600.00 KN
277,475.00 KN
1,263,430.00 KN
745,360.00 KN
404,000.00 KN
952,967.00 KN
645,895.00 KN
58,389.00 KN
2002
267,700 KN
1,157,862 KN
2,513,000 KN
3,345,500.00
KN
469,200.00 KN
371,300.00 KN
946,400.00 KN
432,200.00 KN
751,300.00 KN
619,000.00 KN
325,800.00 KN
196
Columbus Genova, Italy
Riva Tours Munich, Germany
Transun Travel, Ukraine
TUI Service, Germany
914,864.00 KN
811,056.00 KN
475,667.00 KN
52,458.00 KN
1,022,931.00 KN
Kompas, Makarska, tour operator
1,537,965.00 KN
1,358,842.00 KN
Geografika, Rijeka, tour operator
1,197,900.00 KN
1,107,700.00 KN
421,600.00 KN
679,107.00 KN
77,393.00 KN
4,561,200.00 KN
1,260,050.00 KN
Atlas Airtours, Zagreb, tour operator
612,750.00 KN
832,870.00 KN
Adriatic Travel, Split, tour operator
Inter, Mission Board, Richmond, USA
Generalturist, Zagreb, tour operator
477,100.00 KN
491,843.00 KN
764,500.00 KN
626,868.00 KN
Globtur, Split, tour operator
Elite Travel, Cavtat, tour operator
7,104,300.00 KN
279,795.00 KN
6,507,421.00 KN
Guliver Travel Dubrovnik
Relax Turisam Dravograd
Alltours Flugreisen, Duisburg
Milupa, Milan
Panorama, Italy
Turicum Tours, Zurich
Rego-bis, Poland
384,000.00 KN
2,304,550.00 KN
151,000.00 KN
539,400.00 KN
1,105,800 KN
594,000 KN
484,900 KN
Katarina Line, Opatija, tour operator
Metropol tours, Zagreb, tour operator
Atlas, Dubrovnik, tour operator
862,800.00 KN
317,000.00 KN
764,800.00 KN
381,200.00 KN
411,800.00 KN
1,410,000.00
KN
1,446,500.00
KN
1,303,700.00
KN
837,300.00 KN
1,107,100.00
KN
2,118,500.00
KN
1,407,000.00
KN
702,000.00 KN
671,800.00 KN
1,385,000.00
KN
679,000.00 KN
5,762,700.00
KN
545,293.00 KN
1,791,882.00 KN
387,953.00 KN
515,645 KN
Other revenue from services amount to 182,500.00 KN, and they include telephone service in the amount of 172,243.00 KN
and games of chance in the amount of 10,257.00 KN.
Revenue from lease in 2004
Contracts on the lease of facilities with the following:
Facility
1.
2.
3.
Aerials on hotels Amfora and Bodul
Aerials on hotels Amfora and Delfin
Train/Sv. Klement
4.
5.
Business premises
Amfora – beach
6.
7.
8.
9.
10.
11.
12.
Amfora (souvenir shop)
Amfora – bowling-alley
Amfora - gymnasium
13.
14.
15.
Ex Bobis
Berth in the bay Mala Grčka
Gallery – Hotel Amfora
Gallery – Hotel Adriatic
Service plant
External space
Service plan
Other
16.
17.
18
Hotel Galeb, Hotel Sirena
Lease-holder
T COM
VIP-NET GSM Zagreb
Tomić Andre
Bracanović Vjekoslav, Luviji
Privredna banka Zagreb
DDA d.o.o. Hvar /diving club
J.R. Garstecki, Germany
TO ČIBE/Čibarić Z.
Ortoid d.o.o.
Primary school
Secondary school
Basket ball club
Handball club
NEREJIDA d.o.o. Hvar, for
diving club (P.J. Stos, Krakow,
Poland)
Degustacio Sinj /Domazet/
Stipica Vjekoslav, Zagreb
DI BRUC
Vodoprivreda Imotski,
for 01-06/2004
Lease of gymnasium and hall,
Revenue
Amount in KN
18,132.00 KN
50,000.00 KN
9,815.00 KN
9,815.00 KN
72,854.00 KN
20,820.00 KN
13,278.00 KN
6,557.00 KN
24,098.00 KN
6,656.00 KN
11,360.00 KN
8,336.00 KN
39,910.00 KN
132,133.00 KN
15,576.00 KN
9,836.00 KN
6,000.00 KN
42,498.00 KN
197
other
Total
497,674.00 KN
Revenue from the sales of cigarettes and souvenirs, for each facility:
Facility
2004
2003
Amfora
41,462.00 KN
32,474.00 KN
Palace
4,867.00 KN
7,518.00 KN
Delfin
464.00 KN
Pharos
21,148.00 KN
20,205.00 KN
Sirena
22,675.00 KN
12,135.00 KN
Amfora – beach
9,208.00 KN
7,700.00 KN
Total
99,360.00 KN
80,496.00 KN
2002
56,716.00 KN
5,110.00 KN
22,390.00 KN
20,120.00 KN
104,336.00 KN
Other revenues amount to 1,553,760.00 KN, and they include other revenue according to journal entry (trips, bus transfers,
laundry and ironing services, use of pool and gymnasium, hairdresser's services) and re-invoiced costs to lease-holders in the
amount of 1,054,871.00 KN, damage compensation from insurance in the amount of 343,924.00 KN, revenue from previous
years in the amount of 70,826.00 KN and other revenue in the amount of 84,139.00 KN.
5.2.
Material expenditure
Material expenditure was as follows:
- Costs for food and beverages
- Cleaning and maintenance material
- Small inventory write-off
- Power supply costs
- Fuels and lubricants costs
1. Total
2. Sold goods costs
- Transportation, telephone costs
- advertising costs
- Investment and regular maintenance
costs
- Municipal service (water supply, waste
disposal, local rates)
- Other service costs (commissions to
offices, fee for music)
3. Total
TOTAL (1+2+3)
2004
9,752,452.00 KN
1,665,656.00 KN
880,231.00 KN
1,428,787.00 KN
1,752,216.00 KN
15,479,342.00 KN
123,325.00 KN
479,208.00 KN
513,858.00 KN
1,103,446.00 KN
2003
9,716,295.00 KN
1,786,396.00 KN
698,686.00 KN
1,168,837.00 KN
1,302,870.00 KN
14,673,084.00 KN
92,280.00 KN
523,198.00 KN
698,697.00 KN
938,779.00 KN
2002
9,742,281.00 KN
1,827,611.00 KN
672,736.00 KN
1,221,178.00 KN
1,377,456.00 KN
14,841,262.00 KN
116,044.00 KN
476,325.00 KN
454,196.00 KN
889,374.00 KN
3,192,668.00 KN
3,282,468.00 KN
2,747,534.00 KN
851,229.00 KN
910,216.00 KN
1,071,303.00 KN
6,140,409.00 KN
21,743,076.00 KN
6,353,318.00 KN
21,118,682.00 KN
5,638,732.00 KN
20,596,038.00 KN
Costs for food and beverages in 2003, for each facility:
Amount in KN
Facility
Food
Alcoholic
Soft drinks
Total
drinks
Amfora
2,572,678.00
212,868.00
122,948.00
2,908,494.00
Adriatic
883,816.00
137,964.00
134,836.00
1,156,616.00
Palace
706,097.00
112,304.00
29,391.00
47,792.00
Bodul
620,311.00
23,289.00
23,059.00
666,659.00
Dalmacija
238,257.00
9,244.00
5,286.00
252,787.00
Delfin
234,944.00
7,382.00
9,198.00
251,524.00
Pharos
1,030,834.00
48,437.00
35,324.00
1,118,595.00
Sirena
672,240.00
23,392.00
16,794.00
712,426.00
Slavija
657,254.00
121,414.00
67,637.00
846,305.00
Restaurant
371,762.00
63,614.00
53,202.00
488,578.00
Plaža
Coffee House
214,086.00
134,971.00
90,949.00
440,006.00
Pjaca
Joint services
18,767.00
7,746.00
26,513.00
Total
8,202,279.00
913,646.00
600,370.00
9,716,295.00
Costs for food and beverages in 2004, for each facility:
Facility
Food
Alcoholic
Soft drinks
Amount in KN
Total
Share
percentage
29.93
11.90
8.73
6.86
2.60
2.59
11.52
7.33
8.71
5.03
4.53
0.27
100.00
Share
198
Amfora
Adriatic
Palace
Bodul
Dalmacija
Delfin
Pharos
Sirena
Slavija
Restaurant
Plaža
Coffee House
Pjaca
Joint services
Total
2,559,860.00
809,840.00
654,035.00
612,327.00
254,673.00
230,990.00
937,098.00
650,657.00
861,611.00
371,233.00
drinks
227,213.00
142,293.00
132,007.00
23,477.00
26,492.00
10,225.00
58,154.00
21,834.00
186,817.00
54,713.00
113,600.00
113,571.00
25,400.00
12,297.00
8,553.00
5,293.00
33,148.00
13,362.00
88,663.00
48,865.00
2,900,673.00
1,065,704.00
811,442.00
648,101.00
289,718.00
246,508.00
1,028,400.00
685,853.00
1,137,091.00
474,811.00
percentage
29.10
10.92
8.32
6.64
3.00
2.52
10.54
7.03
11.66
4.87
229,542.00
140,429.00
76,302.00
44,273.00
4.58
8,171,866.00
10,834.00
1,034,488.00
7,044.00
546,098.00
17,878.00
9,752,452.00
0.2
100.00
2. Advertising costs amount to 513,858.00 KN, and they include:
Supplier
Amount in KN
Net media
4,800.00 KN
MISS of the Adriatic event
26,182.00 KN
HRT Radio Split
Lions club Hvar
2,016.00 KN
Hotel Amfora
2,500.00 KN
Tiskara Malenica, Šibenik
143,256.00 KN
Franjo Kluz, Omiš
SEM Marine
Mihovilčević, Brusje
EX Alta, ow. by Goran Rihtarić,
Zagreb
B&CO Hvar
Other
Total
75,900.00 KN
26,560.00 KN
2,975.00 KN
207,474.00 KN
1,445.00 KN
15,639.00 KN
513,858.00 KN
3. Current maintenance costs amount to 1,103,446.00 KN:
Contractor
Amount in KN
Staklo okvir Hvar
20,788.00
ITI Computers Dubrovnik
128,872.00
Otis dizala Zagreb
72,306.00
Corona copy K. Sućurac
10,852.00
Elektrokovina split
2,612.00
Melcomp Varaždin
5,842.00
Termorad Zagreb
147,717.00
Trade vin Rijeka
Pentagram Zagreb
LBM com. Rijeka
Elnat Metković
5,941.00
5,410.00
10,215.00
161,861.00
GMT Rijeka
Iveta Varaždin
Anima prom
Santel Split
Kružnica Dugo Selo
Calluna Split
MR Sistemi Zagreb
Conrolmatic Šibenik
M. Petričević Hvar
208,625.00
12,830.00
51,882.00
14,900.00
16,094.00
18,950.00
16,090.00
25,636.00
12,757.00
Plinoservis T. Boras Metković
18,490.00
Description
Web site
Organization, commercial
Greeting cards
Accommodation and food for advertising
Printing of advertisements, brochures,
catalogues
Printing of folders
Visits to fairs in Milan, Berlin
Lavender for advertising purposes
Organization of tourist campaign
Accessories for campaign
Description
Repair of glass and mirrors
Maintenance of IT systems
Elevator servicing
Photocopier servicing
Electrical engine repair
IT equipment repair
Pool servicing, reconstruction of boiler house
and hot water equipment
Repair of exchange office devices
Repair of IT equipment and switchboard
Dish washer repair
Servicing of cooling devices and coffee
machines
Carpeting
Repair of chairs and arm-chairs
Chemical treatment of channels
Installation of CATV, repair of TV
Electrical vehicle servicing
Manufacturing of advertisements and boards
Boiler-house repair
Vaccuum regulator servicing
Repair of electrical installations, ship
Galešnik
Gas consumers servicing
199
Vaga uteg Zagreb
Oštrić Vlado K. Lukšić
Other
Total
16,155.00
24,109.00
94,512.00
1,103,446.00
Servicing and calibration of balances
Servicing of fire extinguishers
4. Municipal costs amount to 3,192,668.00 KN and they include water supply costs in the amount of 1,006,821.00 KN, water
drainage charges in the amount of 517,202.00 KN, charges for protection of water in the amount of 182,715.00 KN, municipal
charges in the amount of 196,061.00 KN, sewerage and waste disposal in the amount of 1,172,690.00 KN, pest control in the
amount of 117,179.00 KN.
5. Other costs amount to 851,229.00 KN, commission to card issuers 398,610.00 KN, music royalties and compensation to
performers in the amount of 318,671.00 KN (HDS-ZAMP Zagreb, 76,058.00 KN; HRT subscription 8,630.00 KN; New Song
Split, 228,378.00 KN; other 5,605.00 KN), other various services (advertisements, copies, films, museum tickets, guard
service, etc.) amounts to 133,948.00 KN.
5.3. Personnel costs
Personnel costs include: net wages, contributions and taxes for and from wages:
2004
2003
- Net wages
17,553,380.00 KN
15,919,715.00 KN
- Contributions, taxes
9,711,072.00 KN
9,886,637.00 KN
TOTAL
27,264,452.00 KN
25,806,352.00 KN
2002
15,379,262.00 KN
8,337,331.00 KN
23,716,593.00 KN
5.4. Depreciation of fixed assets
Depreciation of fixed assets is described in Notes AD 4.1. and Table 1.
2004
2003
3,327,712.00 KN
3,006,746.00 KN
2002
3,423,933.00 KN
5.5. Other operating costs
1. Costs for per diems, transport of
employees and other
2. Insurance costs
3. Contribution and membership costs
4. Costs for entertainment,
registration, lease and various
unforeseen services
5. Bank fees
6. Other non-productive services
Total
2004
1,710,538.00 KN
2003
1,494,934.00 KN
2002
1,432,784.00 KN
832,855.00 KN
336,932.00 KN
2,876,694.00 KN
1,136,190.00 KN
302,243.00 KN
2,530,879.00 KN
354,173.00 KN
255,282.00 KN
2,740,855.00 KN
461,917.00 KN
169,651.00 KN
6,388,587.00 KN
299,120.00 KN
146,610.00 KN
5,909,976.00 KN
467,517.00 KN
118,379.00 KN
5,368,990.00 KN
1. Costs for per diems and transport during business trip of employees, support and severance compensation for employees
amount to:
2004
2003
2002
- Per diems and transportation costs
187,263.00 KN
185,113.00 KN
207,914.00 KN
- Compensation for utilization of
29,400.00 KN
24,038.00 KN
30,056.00 KN
personal car for official purposes
- Transport to and from work
132,383.00 KN
108,119.00 KN
120,976.00 KN
- Severance compensations
120,000.00 KN
88,000.00 KN
120,000.00 KN
- Annual rewards
186,000.00 KN
127,300.00 KN
109,450.00 KN
- Gift certificates
340,166.00 KN
177,328.00 KN
234,495.00 KN
- Other compensations and rewards
423,810.00 KN
471,841.00 KN
348,834.00 KN
- Payment to Supervisory Board (gross)
291,516.00 KN
313,195.00 KN
261,059.00 KN
Total
1,710,538.00 KN 1,494,934.00 KN
1,432,784.00 KN
2. Costs for insurance in Company books for 2004 are declared in the amount of 832,855.00 KN.
3. Costs for contributions and membership amount to:
2004
2003
2002
200
- Contribution for forests
- Contribution to Tourist Board
- Membership to associations, CTC,
contribution for the preservation of cultural
inheritance
Total
47,881.00 KN
171,005.00 KN
118,046.00 KN
46,494.00 KN
166,051.00 KN
89,698.00 KN
42,818.00 KN
152,920.00 KN
59,544.00 KN
336,932.00 KN
302,243.00 KN
255,282.00 KN
4. Costs for entertainment, vehicle registration, lease and other non-productive services amount to:
2004
2003
2002
- entertainment costs, study groups and
1,007,573.00 KN
1,054,891.00 KN
1,110,715.00
discounts
KN
- vehicle registration
16,397.00 KN
16,003.00 KN
15,436.00 KN
- lease and rent
444,645.00 KN
477,787.00 KN
427,107.00 KN
- costs for health services
161,753.00 KN
122,449.00 KN
60,691.00 KN
- seminar costs, counselling service
12,279.00 KN
1,054.00 KN
10,428.00 KN
- public area utilization costs
109,881.00 KN
168,164.00 KN
110,961.00 KN
- professional literature
14,926.00 KN
14,297.00 KN
15,872.00 KN
- taxes and court costs
186,499.00 KN
189,481.00 KN
184,686.00 KN
- temporary service contract costs
511,839.00 KN
313,178.00 KN
375,439.00 KN
- book of shares
74,776.00 KN
63,060.00 KN
46,762.00 KN
- auditing
54,000.00 KN
74,000.00 KN
53,939.00 KN
- adjustment of receivables by value
255,748.00 KN
13,170.00 KN
87,231.00 KN
- fines
1,092.00 KN
2,800.00 KN
- subsequently established costs
26,378.00 KN
21,583.00 KN
238,788.00 KN
Total
2,876,694.00 KN
2,530,879.00 KN
2,740,855.00
KN
5. Costs of bank commissions and money transfers amount to 461,917.00 KN.
6. Other non-productive services amount to 169,651.00 KN; they include: company tax 22,000.00 KN; charity, support
64,000.00 KN; other costs 74,581.00 KN; undepreciated value of written-off assets 9,070.00 KN.
5.6. Financial revenue
In 2004, the Company realized financial revenue in the amount of 142,171.00 KN from currency adjustment and interests.
5.7. Financial expenditure
In 2004, the Company realized financial expenditure in the amount of 9,255,974.00 KN from interests on loans and currency
adjustment.
5.8. Contingency revenue
In 2004, contingency revenue amounts to 4,841,867.00 KN and it includes revaluation revenue in the amount of 3,273,361.00
KN and liability write-off in the amount of 1,568,506.00 KN.
5.9. TOTAL REVENUE
In 2004, the Company realized operating revenue in the amount of 63,417,943.00 KN, financial revenue in the amount of
142,171.00 KN, contingency revenue in the amount of 4,841,867.00 KN, which in total amounts to 68,401,981.00 KN.
5.10. TOTAL EXPENDITURE
In 2004, the Company realized operation expenditure in the amount of 58,723,827.00 KN, financial expenditure in the amount
of 9,255,974.00 KN, which in total amounts to 67,979,801.00 KN.
5.11. PROFIT BEFORE TAX
The balance from the revenue and the expenditure amounts to 422,180.00 KN, which represents Company’s profit for 2004.
Description
Dec. 31, 2004
Dec. 31, 2003
Dec. 31, 2002
Operating revenue
63,417,943.00 KN
60,023,623.00 KN
58,641,417.00 KN
Operating expenditure
58,723,827.00 KN
55,841,756.00 KN
53,105,554.00 KN
Profit
4,694,116.00 KN
4,181,867.00 KN
5,535,863.00 KN
Financial revenue
142,171.00 KN
80,846.00 KN
355,027.00 KN
Financial expenditure
9,255,974.00 KN
6,732,375.00 KN
7,924,879.00 KN
Loss
9,113,803.00 KN
6,651,529.00 KN
7,569,852.00 KN
Contingency revenue
4,841,867.00 KN
6,315,914.00 KN
2,171,896.00 KN
201
Contingency expenditure
Profit
Business year profit
6.
4,841,867.00 KN
422,180.00 KN
3,642,532.00 KN
2,673,382.00 KN
203,720.00 KN
2,171,896.00 KN
137,907.00 KN
NOTES ACCOMPANYING MONEY FLOW STATEMENT
Money flow statement for 2004 was made by indirect method.
Net money increase amounts to
1) Net money flow from business activities shows outflow in the amount of
2) Net money flow from investment activities shows outflow in the amount
of
3) Net money flow from financial activities shows inflow in the amount of
354,795.00 KN
(724,256.00) KN
(13,690,943.00) KN
14,769,994.00 KN
1) The analysis of business activities money flow allows for the following conclusions:
- the outflow is shown for the following items: stock value increased by 366,066.00 KN; receivables increased by 399,012.00
KN, increased other claims by 34,182.00 KN; decreased liabilities towards suppliers in the amount of 2,922,571.00 KN;
decreased liabilities towards government institutions in the amount of 1,176,132.00 KN.
- the inflow is shown for the following items: claims from government institutions decreased by 7,875.00 KN; claims from
employees decreased by 266,955.00 KN; liabilities for received advance payments increased in the amount of 27,396.00 KN;
liabilities towards employees increased by 121,589.00 KN.
From current operations, the Company realized profit in the amount of 422,180.00 KN, while the value of calculated
depreciation amounts to 3,327,712.00 KN (inflow).
2.) The analysis of investment activities money flow shows the following:
- the outflow in the amount of 10,426,651.00 KN which refers to the investment into buildings and procurement of new
equipment as well as the increase of the value of buildings due to the value adjustment in the amount of 3,273,362.00 KN;
- the inflow is the result of the equipment write-off in the amount of 9,070.00 KN.
3) Financial activities result in the inflow in the amount of 14,769,994.00 KN, as follows:
- the outflow in the amount of 2,813,755.00 KN, which refers to the decrease of value of long-term loan liabilities;
- the inflow in the amount of 17,583,749.00 KN is the result of the increase of value of short-term liabilities towards credit
institutions.
Money inflow from financial activities – short-term loans was used partly for repayment of long-term due liabilities towards
credit institutions and for financing the investment into fixed assets.
The structure of liabilities – loan sources shows that the share of liabilities for long-term loans decreased (from 22.05 % to
20.65 %) while the share of short-term loans increased (from 2.27 % to 6.92 %).
7.
ANALYSIS OF FINANCIAL STATEMENTS
Analysis of balance sheet figures by the method of cutting balance sheet (classification of assets and liabilities according to the
liquidity and term of payment), along with the indicators for the liquidity, indebtedness, activity and profitability, allows for
the following conclusions:
ASSETS
FIXED ASSETS
Amount in KN
347,993,361.00
LIABILITIES
Amount in KN
CAPITAL AND 338,591,463.00
LONG-TERM
LIABILITIES
Material and financial
assets
347,993,361.00
Capital, reserves, profit,
loss
Long-term loans
262,020,389.00
76,571,074.00
CURRENT
ASSETS
22,759,032.00
CURRENT
LIABILITIES
32,160,930.00
Supplies
Customers
Receivables – other
Financial assets
Money
6,438,519.00
8,403,281.00
925,639.00
Suppliers
Short-term loans
Other liabilities
3,919,421.00
25,633,750.00
2,607,759.00
983,985.00
202
Calculated costs
6,007,608.00
ASSETS
TOTAL
370,752,393.00
LIABILITIES
TOTAL
370,752,393.00
The assets structure shows the share of fixed assets of 93.86 %, share of short-term assets of 6.14 %.
The fixed assets structure: share of land is 20.74 %, share of building facilities is 69.60 %, share of equipment is 4.39 %, and
share of intangible property is 5.27 %.
The share of currents assets: share of supplies is 28.29 %, share of receivables is 36.92 %, share of other claims is 4.07%, share
of the money in the bank and cash office is 4.32 %; share of calculated costs is 26.40 %.
The liabilities structure: share of capital + reserves + gain – loss carried forward is 70.67 %; share of long-term liabilities is
20.65 % and the share of short-term liabilities is 8.67 %.
Short-term liabilities structure: share of liabilities towards suppliers is 12.19 %, share of liabilities under short-term loans is
79.70 %; share of other liabilities is 8.11 %.
Important material items are active: long-term tangible property 83.86 %, receivables 2.23 %, supplies 1.74 %, and calculated
costs 1.62 %.
Important material items are passive: capital + reserves – loss + gain 70.67 % and long-term liabilities 26.65 %.
The Company does not finance long-term tied resources entirely from long-term sources:
(347,993,361.00 KN – 338,591,463.00 KN = 9,401,898.00 KN value of net operating capital).
The ratio of own fund sources and employed assets from others is:
261,598,209.00 KN / 108,732,004.00 KN.
1.
Liquidity indicators
1.
Coefficient of current liquidity
DESCRIPTION
Short-term assets
Short-term liabilities
CCL
2004
16,751,424.00
32,160,930.00
0.52
2003
15,872,199.00
18,526,899.00
0.86
2002
16,256,597.00
9,738,361.00
1.66
It is generally pointed out that the value of this indicator should not be above 2.
2.
Coefficient of rapid liquidity
DESCRIPTION
Short-term assets – supplies
Short-term liabilities
CRL
2004
10,312,905.00
32,160,930.00
0.32
2003
9,799,746.00
18,526,899.00
0.53
2002
10,762,107.00
9,738,361.00
1.10
It is generally pointed out that the value of this indicator should not be below 1.
3.
Coefficient of financial stability
DESCRIPTION
Long-term assets
Capital + long-term liabilities
CFS
2004
347,993,361.00
338,591,463.00
1.03
2003
337,630,130.00
340,983,038.00
0.990
2002
338,434,801.00
350,915,645.00
0.964
It is generally pointed out that the value of this indicator should be below 1.
2.
Indebtedness indicator
4.
Coefficient of indebtedness
DESCRIPTION
Total liabilities
Total assets
CI
Coefficient of own financing
DESCRIPTION
Own capital – loss
Total assets
COF
2004
108,732,004.00
370,752,393.00
0.29
2003
97,911,728.00
359,509,937.00
0.27
2002
99,304,517.00
360,699,006.00
0.27
2004
262,020,389.00
370,752,393.00
0.71
2003
261,598,209.00
359,509,937.00
0.73
2002
261,394,489.00
360,699,006.00
0.72
5.
203
6.
Coefficient of financing
DESCRIPTION
Total liabilities
Own capital – loss
CF
2004
108,732,004.00
262,020,389.00
0,41
2003
97,911,728.00
261,598,209.00
0,37
2002
99,304,517.00
261,394,489.00
0,38
Coefficient of indebtedness indicates that the indebtedness increased in 2004 with reference to 2003 (from 0.37 in 2003 to 0.41
in 2004).
Coefficient of own financing decreased by 0.04.
In 2004, 0.41 unit of borrowed capital is used per unit of own capital.
3.
Indicators of activity
7.
Coefficient of total assets turnover
DESCRIPTION
Total revenue
Total assets
CTAT
2004
68,401,981.00
370,752,393.00
0.18
2003
66,420,383.00
359,509,937.00
0.18
2002
61,168,340.00
360,699,006.00
0.17
Coefficient of short-term assets turnover
DESCRIPTION
2004
Total revenue
68,401,981.00
Short-term assets
16,751,424.00
CSAT
4.08
2003
66,420,383.00
15,872,199.00
4.18
2002
61,168,340.00
16,256,597.00
3.76
2004
68,401,981.00
6,438,519.00
10.62
2003
66,420,383.00
6,072,453.00
10.94
2002
61,168,340.00
5,494,490.00
11.13
2004
68,401,981.00
9,328,920.00
7.33
2003
66,420,383.00
9,170,556.00
7.24
2002
61,168,340.00
8,704,583.00
7.03
8.
9.
Coefficient of supplies turnover
DESCRIPTION
Total revenue
Supplies
CST
10.
Coefficient of claims turnover
DESCRIPTION
Total revenue
Claims
CRT
11.
Duration for payment of claims
DESCRIPTION
Number of days
CRT
DPC
2004
2003
2002
365
7.33
50 days
365
7.24
50 days
365
7.03
52 days
Cost-effectiveness of total business operation
DESCRIPTION
2004
Total revenue
68,401,981.00
Total expenditure
67,979.00
TCE
1.01
2003
66,420,383.00
66,216,663.00
1.00
2002
61,168,340.00
61,030,433.00
1.00
Cost-effectiveness as operating revenue and expenditure ratio
DESCRIPTION
2004
2003
Operating revenue
63,417,943.00
60,023,623.00
Operating expenditure
58,723,827.00
55,841,756.00
Co
1.08
1.07
2002
58,641,417.00
53,105,554.00
1.10
4.
Cost-effectiveness indicators
12.
13.
14.
Cost-effectiveness of financing
DESCRIPTION
2004
2003
2002
204
Financial revenue
Financial expenditure
Cf
142,171.00
9,255,974.00
0.02
80,846.00
6,732,375.00
0.01
355,027.00
7,924,879.00
0.04
205
ISSUER
Orco Property Group SA
8, boulevard Emmanuel Servais
L-2535 Luxembourg
AGENT / PAYING AGENTS / LISTING AGENT
CACEIS Bank Luxembourg
39, allée Scheffer
L-2520 Luxembourg
AUDITORS
PricewaterhouseCoopers s à r l,
Réviseur d’Entreprises
400 route d’Esch
Luxembourg
HRT Révision s à r l.
Réviseur d’Entreprises
23 Val Fleuri
Luxembourg
206

prospectus - Orco Property Group

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