You are here

Hadjiioannou Farm: Interim Management Statement

The Board of Directors of Renos Hadjiioannou Farm Public Company Ltd approved the Interim Management Statement of the Company and its subsidiary for the period from 1/1/2015 – 25/5/2015, which has been prepared pursuant to the provisions of Article 11 of the Transparency Requirements Law 2007 (L.190(I)/2007) and has not been audited by the external auditors of the Company.

The main events and transactions during the period are as follows:

1. The Company focuses on the negotiations and legal procedures with the banks and the management of its real estate. There are lawsuits filed by banks against the Company and the Company against banks. With the publication of the preliminary results for 2014 it had been pointed out that the survival of the Company depends on the outcome of the procedures with the banks. Without undermining the importance of these processes there is a recent positive development. The House of Representatives passed a law which prohibits retrospectively unfair terms and limits the interest on arrears by 2%. Given that the Company has liquidity problems since 2004 and its bank accounts are loaded with overcharges, the implementation of the Law is expected to have a benefit of millions of euros from interest repayments. This would also reduce its total loans and the annual finance costs.

2. There is not any additional fact, revenue or expense during the period.

3. The Company has properties in areas that the value has fallen disproportionately compared with the urban areas. Some of its properties can be exploited or are close to residential or industrial areas. Many of its estates need repairs, but occasionally several projects with European funds for their upgrade are announced. However, there is lack of demand for the purchase of poultry premises and land in rural areas. There can be no prediction of how the value of land will fluctuate in areas that the Company has properties. The Company is exploring ways to upgrade some of its estates. Basically, the Company has much in common with land development companies with a stock of specific properties in a very bad market, with no evidence for brief recovery.

4. The Company cannot predict what will be the result in lawsuits against the banks. The Company with its lawyers does everything possible to present the best case, believes that in two cases it has a really strong case but in no way it can prejudge that the outcome will be such as to change the current negative situation. It is very likely to win the cases but the compensation to be awarded may not be that expected by the Company. In addition there is the possibility of appeal which means a delay of 3-4 years at the finality of the cases.

5. As seen from the Annual Financial Results of 2014, the Company is in a very difficult economic position, especially in terms of liquidity and shows a loss of €1.2 million from interest and amortization. Large losses before extraordinary income will continue in the coming years if the loans are not reduced or the interest overcharges are not repaid on time or not at all if the banks find a way to circumvent the new law.

6. The Company understands that it is uneconomic estates worth millions to remain inactive and to deteriorate over time. But with the hearing of enormous - compared to its size – amounts there is no another option but to await the developments. Recourse to courts was done as a last resort. The Company expects that the delay, contrary to what it previously announced, will ultimately be to its interest, following the enactment of the Law for overcharges and other laws that favour those who have transactions with banks. There is always a risk that banks will raise barriers or even challenge the law in the Supreme Court, but at least in theory the position of the Company is stronger than before in negotiations of extrajudicial settlement.

7. The Company - where could - reduced costs almost to zero to withstand until there is a result in the procedures with the banks and to be present to take advantage of favourable market conditions in the Cypriot economy if and when they arise.
Tuesday, 26 May, 2015 - 09:33