Orco reported its 1H05 revenues only, which came at EUR20.6m ahead of our forecast of EUR13.98m. The difference in our forecast and the yoy fall in sales has been caused by adoption of IAS2 accounting standards, which assume the booking of development revenues at the time of ownership transfer, which (i) makes forecast difficult and (ii) leads to timing effect - limited number of houses/flats which could be transferred given IPB Real’s limited pipeline in 2001-2003 (prior to acquisition by Orco). Most of Orco’s projects are to be completed towards the end of 2005, 2006 and 2007. Performance of Orco’s hotels and MMR (extended stay) developed better than expected. Recently acquired Suncani Hvar in Croatia should add EUR2/share in NAV and began to have impact on Orco’s figures in the 3q. Note that FY2004 NAV stood at EUR34/share. Orco reiterated its target of EUR63m in sales for the FY2005. Orco also announced other 3 prime area redevelopment projects while a new ‘build and lease’ contract with Radio Free Evropa should add annual net revenues of USD 5,400 as of 2007.
IFRS, EUR 000s 1h05A 1h04 % change Patria1h05E
Total 20,642 46,300 -55.4% 14,164
Development 11,924 40,200 -70.3% 6,525
Offices 1,299 800 62.4% 1,505
Residential 762 900 -15.3% 782
Retail 148 0 n.m. -
MMR 1,737 1,200 44.8% 1,365
Hotels 4,699 3,200 46.8% 3,717
Other 73 0 n.m. 87