Riga, Latvia, 2015-04-30 08:40 CEST (GLOBE NEWSWIRE) -- Acme Corporation SIA (hereinafter - ‘the Company’ or ‘Acme Corporation’) and its subsidiaries (hereinafter - ‘the Group’) invest in the operation and management of rental real estates (offices, retail and land development) in Latvia. As at 31 December 2014 Acme Corporation was the parent for four Latvian registered limited liability companies - Apex Investments SIA (grocery anchored retail real estate), Neatkarīgā patentu aģentūra SIA (office anchored real estate), Tukuma Projekts SIA (DIY anchored retail real estate) and Big Truck SIA (logistic development). As of the date of approval of this report Acme Corporation no longer holds shares of Apex Investments SIA and Tukuma Projekts SIA (see below section ‘Sale of investments’).
In both office and retail segments rents appear to have stabilized. Delinquent rents are being well managed at the moment by our property manager.
For the year ended 2014 the Latvian statistics service report inflation at 0.6%. Currently all of the Euro Zone is threatened with a deflationary spiral. The European Central Bank (ECB) has started a quantitative easing program of EUR 60 BILLION per month to stimulate economy in Europe, inclusive of Latvia. For the first time in history rates at the short end of the curve have gone negative. The US Federal Reserve as expected ended their QE policy, the borrowing rate remains at a historical low however, the US Fed is anticipated to raise rates during 2015. The rate differential between Europe and the USA has created significant pressure on the Euro to USD exchange rate.
Retail
Property at Vienibas Gatve has now stabilized. All indications are that traffic has increased significantly.
Property at Slokas iela has been re-let to Cita Santehnika. A separate company SIA Slokas 161 for the Slokas property was established early in January 2015 since management does not want to mix grocery anchored retail with other anchored retail. Transfer of Slokas property from Apex Investments to Slokas 161 took place in January 2015. In 2015 management intends to invest up to EUR 200 000 in to the Slokas asset as a further refurbishment with the goal of attracting a ground floor tenant.
Office
The office sector has a minor vacancy of 400 meters at the Citadeles iela asset due to TecHub vacating the space. For our offices gross rent has settled to a market rate of €11.00 to €12.00 per square meter per month. There are some historical outliers to the current market rate pulling the offices average below current market.
Land
Management has engaged an architectural firm to prepare the detailed planning for the property. Detailed planning is expected to be complete during 2015.
DIY
The K-Rauta in Tukums traded as expected in 2014. We continue to make some improvements to the structure, additional cost are expected to be less than €50,000.
Bond
Whilst the bond is listed, it continued to demonstrate a significant level of illiquidity in 2014.
Acme Corporation has made the first repayment of principal to bondholders of record with the January 2015 payment.
Acme Corporation has made all coupon payments on the bonds to date. Funds have been reserved for settlement of coupon and principal due on 30 April 2015.
Senior Debt
Borrowings from Swedbank mature in July 2015. In March 2015 the debt pertinent to continuing operations was extended until February 2018.
At the time of writing one month EURIBOR is quoted at approximately minus 0.03%. The historical low in Euribor is a clear indication of the European Central Banks concern for the stability of the sovereign debt crisis faced by the majority of European nations. These rates are unprecedentedly low rate; movements up in interest rates will have a dramatic impact on the Group’s cash flows and, inter-alia, Acme Corporation’s ability to repay bondholders.
Sale of investments
In October 2014 management signed a share purchase agreement (SPA) for the sale of Apex Investments SIA and Tukums Projekts SIA to Hili Properties BV. Management believes that the sale offers a significant monetary benefit to the company. Management intends to use the majority of proceeds to deleverage from Swedbank. The delivering will greatly reduce an asymmetrical risk associated with the current portfolio bondholders and equity positions that is amplified in the event of increased interest rates and reductions in gross revenue. The sale concluded on 30 January 2015.
The Group does not plan on issuing any additional debt or acquiring any assets in 2015, but is focused on conserving its cash flow and internally developing its portfolio. Management’s goal is to further streamline and improve operations and pay down bank debt.
Financial result in the consolidates annual accounts for the year 2014, differ in the amount of Euro 451 685 from un-audited condensed consolidated Interim Financial Statements for the year ended 31 December 2014, which was published on 02 March 2015, because of continuing operations deferred corporate income tax expenses.
| Attributable to the equity holders of the Company | ||||
| Share capital | Accumulated deficit | Profit/ (loss) for the year | Total equity | |
| EUR | EUR | EUR | EUR | |
| Balance at 31 December 2012 | 2 846 | (11 665 591) | (1 142 863) | (12 805 608) |
| Transfer to accumulated deficit | - | (1 142 863) | 1 142 863 | - |
| Profit for the current financial year | - | - | 62 999 | 62 999 |
| Balance at 31 December 2013 | 2 846 | (12 808 454) | 62 999 | (12 742 609) |
| Transfer to accumulated deficit | - | 62 999 | (62 999) | - |
| Difference on denomination of share capital from LVL to EUR paid out to shareholders | (2) | - | - | (2) |
| Profit for the current financial year | - | - | 2 218 944 | 2 218 944 |
| Rounding difference | - | (2) | - | (2) |
| Balance at 31 December 2014 | 2 8424 | (12 745 457) | 2 218 944 | (10 523 669) |
| Note | 31.12.2014 | 31.12.2013 | |
| EUR | EUR | ||
| ASSETS | |||
| Non-current assets | |||
| 5 | Property, plant and equipment | 104 492 | 115 456 |
| 6 | Investment property | 13 005 544 | 20 779 203 |
| 7 | Loans | 8 860 | 12 365 |
| Other financial assets | 4 000 | - | |
| 13 122 896 | 20 907 024 | ||
| Current assets | |||
| 4 | Assets held for sale | 10 070 803 | - |
| Inventory | - | 1 219 | |
| 8 | Trade receivables | 8 543 | 71 260 |
| Current income tax assets | - | 3 499 | |
| 7 | Loans | 3 876 | 3 843 |
| 9 | Other debtors | 49 660 | 176 064 |
| 10 | Cash and cash equivalents | 170 150 | 481 486 |
| 10 303 032 | 737 371 | ||
| Total assets | 23 425 928 | 21 644 395 | |
| EQUITY | |||
| Capital and reserves attributable to equity holders of the Group | |||
| 11 | Share capital | 2 844 | 2 846 |
| Accumulated deficit | (12 745 457) | (12 808 454) | |
| Profit/ (loss) for the year | 2 218 944 | 62 999 | |
| Total equity | (10 523 669) | (12 742 609) | |
| LIABILITIES | |||
| Non-current liabilities | |||
| 12 | Borrowings | 6 498 609 | 32 124 928 |
| 13 | Deferred income tax liabilities | 993 972 | 709 440 |
| Other liabilities | - | 22 140 | |
| 7 492 581 | 32 856 508 | ||
| Current liabilities | |||
| 4 | Liabilities held for sale | 16 814 795 | - |
| 12 | Borrowings | 9 275 886 | 931 502 |
| 14 | Trade and other payables | 316 199 | 598 994 |
| Current income tax liabilities | 50 136 | - | |
| 26 457 016 | 1 530 496 | ||
| Total liabilities | 33 949 597 | 34 387 004 | |
| Total equity and liabilities | 23 425 928 | 21 644 395 |
Office administrator Alona Romanova alena@rbm.lv Phone: +37167333504
