LAMDA Development: Fiscal year 2005 financial results in accordance with International Financial Reporting Standards (IFRS)


March 20,2006

LAMDA Development: Fiscal year 2005 financial results in accordance with International Financial Reporting Standards (IFRS)

2005 was a benchmark year for LAMDA Development Group of Companies as it marked the successful completion – from both technical and commercial perspectives – of the two major investments in LAMDA Olympia Village S.A. and PYLEA S.A. Furthermore, during the year the Group made significant progress towards focusing on its core business as well as on the completion of sales of smaller size developments.

LAMDA Development consolidated turnover reached €72.703 thousand showing a slight decrease of 2,54% compared to €74.600 thousand in 2004. Group turnover was affected by LAMDA Shipyards’s sales reduction and the exclusion from the consolidated results in the 2nd half of 2005 of Swissport LAMDA Hellas S.A. after its disposal.

Consolidated gross operating results amounted to a loss of €–1.687 thousand compared to a gain of €12.723 thousand in 2004, mainly due to the conservative treatment of significantly increased lease payments in LAMDA Technol Flisvos Marina S.A. and the substantial profit margin deterioration in LAMDA Shipyards S.A. Profit after taxes for the Group amounted to €88.034 thousand vs €8.023 thousand in 2004. The major contributor to this significant improvement is the recognition of property valuation gains from the appraisal of investment properties, in accordance with IFRS (IAS 40), after the commencement of operations in the two shopping and leisure centers “The Mall Athens” and “Mediterranean Cosmos”. Total group equity capital after minority interests reached €263,4 mil. vs €178,9 mil. in 2004, an increase of 47%.

Parent company LAMDA Development S.A. profits after taxes of €5.478 thousand are attributed to the profitable sale of its participations in certain subsidiaries and associated companies. Specifically, the company sold its total participation in Swissport LAMDA Hellas S.A. and Zenon S.A. and a percentage of the company’s participation in EFG Eurobank Properties. A warehouse property in Krioneri Attikis was also sold. In addition, LAMDA Estate Development S.A. sold its total participation in GI & KATASKEVI (Xylokastro-residential development).

Regarding the company’s investment in LAMDA Olympia Village S.A. (shopping & leisure centre "The Mall Athens", office building and residential development property) it should be noted that the equity capital related to this development was reduced by approximately €46 mil. in the consolidated financial statements of fiscal years 2003 and 2004, due to IFRS first implementation. In addition, the project was negatively affected by significant delays in its completion, attributed to a variety of reasons. It is therefore emphasized as a noticeable achievement that from year-end 2005 LAMDA Development shareholders appear to gradually recover the initially invested capital, as shown in the following table:

Table of total capital invested in LAMDA Olympia Village S.A. as of 31-12-2005

(Amounts in Million Euros)

Total cost of development436,8
Interest cost of equity capital (at 5% p.a.)18,0
Total cost of investment454,8
Property valuation475,3
Less deferred taxation27,2
Net property valuation448,1
Consolidated investment result- 6,7

The above outcome is due to the revaluation surplus incurred from the investment properties appraisal to fair market value on 31/12/2005, as dictated by IFRS. This surplus can be attributed not only to the international trend of improved capitalization rates in Real Estate but also to the successful commercialization of “The Mall Athens”. As a result, the company’s profit after taxes for 2005 amounted to €61.564 thousand.

PYLEA S.A. profits after taxes reached €29.368 thousand based on the Mediterranean Cosmos shopping center appraisal from international independent appraisers that took place for the first time. The revaluation gain produced is also attributed to the reasons mentioned above.

LAMDA TechnOL Flisvos Marina S.A. losses totaled €7,1mil. due to the temporary suspension of the construction works by the Council of State and the pending issues with the Tourism Development Company (ETA) regarding lease payments which are to be determined by the official arbitration process that is currently in progress. It should be emphasized that, by applying the principle of prudence as dictated by the IAS, the company charged its financial results by the full amount of lease payments requested by ETA, despite the fact that the final arbitration decision has not been issued yet.

LAMDA Shipyards S.A. losses of €2,9mil. are due to the significant turnover decrease. The company continues its intense efforts to reduce its operating costs.

The company will not distribute any dividends due to accumulated losses.

Summary consolidated financial information:

(amounts in  € ‘000)F.Y. 2005F.Y. 2004Change
Gross operating results-1.68712.723-
Investment property revaluation gains