Prague-traded Central European developer Orco Property Group slipped back into loss in 2011, largely due to foreign currency losses and the exceptional one-off boost to results in 2010 from a bonds restructuring operation.
Orco’s net loss for 2011 was €43 million compared with the net profit of €233 million a year earlier, the heavily indebted group announced on Thursday, citing unaudited figures. Revenues during the past year totaled €158 million, down from the €295 million in 2010. Operating income was stable at around €40 million in spite of past sell-offs cutting the group’s overall property portfolio.
While Orco cut interest payments on its large loans to €83 million from 2010’s €96 million, the debt burden on the group is still enormous. The ratio of group assets to its loans and other liabilities, the so-called loan-asset-ratio, actually worsened over the year to 69.9 percent from 67.9 percent at the end of 2010 when outstanding bonds are taken into consideration.
‘If the company is not successful in its restructuring, the going concern assumption might not be relevant any longer for the group or its components.’
A key strategic goal of the company is to cut the overall debt burden by converting some of the outstanding bonds to equity as well as sale of more assets. Orco said that it expects to conclude a bond-equity deal with some bondholders over the next days. Asset sales have become more difficult because of more conservative bank loan policies, it added in a statement.
“If the company is not successful in its restructuring, the going concern assumption might not be relevant any longer for the group or its components,” the company warned.
One of the major assets which Orco is seeking to cash in on is the large track of land in Prague’s Bubny district with residential and commercial developments.
Orco president and chief executive, Jean-François Ott described 2012 as “a turning point for the group.”