Annual Report 2002 - Jaarverslag.com€¦ · Revenues 5,582 6,275 6,262 7,486 7,990 EBITDA 2,999 3,600 4,091 5,001 5,524 EBIT 1,517 1,987 2,345 3,178 3,659 Profit before taxation

MeinlEuropeanLand

Annual Report 2002

MEL-GB_engl » PDF 12.09.2003 11:22 Seite 1

Key Figures

1998 1999 2000 2001 2002

Income EUR000’s

Revenues 5,582 6,275 6,262 7,486 7,990EBITDA 2,999 3,600 4,091 5,001 5,524EBIT 1,517 1,987 2,345 3,178 3,659Profit before taxation -1,327 -975 -296 649 755Profit after taxation -1,554 -1,057 -269 449 353

Profitability in %

EBITDA margin 53.7 57.4 65.3 66.8 69.1EBIT margin 27.2 31.7 37.4 42.5 45.8

Cash Flowfrom Operations -1,264 1,116 1,359 1,294 2,179

2002

Share in EUR

EV* in EUR000’s 54,603Issued Shares in 000’s 7,000 Issued and paid-in Shares in 000’s 4,884 Share Price** 11.18 Par value 5.00 EV/Sales 6.83EV/EBITDA 9.88 EV/EBIT 14.92 Sales/share 1.64 EPS 0.07 * EV is based on total market capitalization calculated on issued and paid-in shares

at 30 December 2002

** Share Price as at 30 December 2002

Hungary Czech Republic Total

Number of Properties 45 25 70Lettable area in sq.m 47,340 90,100 137,440Proportion of Total in % 34.4 65.6Occupancy level in % 100.0 94.6 96.6Portfolio Book value* EUR 10,653,355 42,236,000 52,889,355Portfolio Market value** EUR 27,347,000 57,531,860 84,878,860* Book value based on historic values as recorded in subsidiary accounts

** Market value based on independent valuation performed in Spring 2003


Table of Contents

Financial Highlights

Statement from the Board of Directors

History

Market Environment

Investment Strategy

Portfolio Review

Operational Review

Projects for the Future

Directors’ Report

Financial Statements

Notes to the Financial Statements

Independent Auditor’s Report

Officers and Professional Advisors

4

6

8

12

16

18

22

26

31

32

36

49

50


10,000

8,000

6,000

4,000

2,000

1998 1999 2000 2001 2002

EBIT EBITDA Revenue

Average revenue growth of 9% p.a.Operating income growth of 25% p.a.

Profitability: EBIT/EBITDA/Revenuein EUR 000’s

11,60

11,50

11,40

11,30

11,20

11,10

11,00

10,50

Nov

. 200

2

Dec

. 200

2

Jan.

200

3

Feb.

200

3

Mar

. 200

3

Apr

il 20

03

May

200

3

Issue price EUR 11,10Year-end market price, 30th December, 2002 EUR 11,18Price on 23rd May, 2003 EUR 11,54Capital gain since issue date 3,96 %Capital gain on annualised basis 7,60 %

Performance Vienna Stock Exchange daily market price since issue date

FinancialHighlights


Result: profit before taxationin EUR 000’s

1,000

500

0

-500

-1,000

-1,5001998 1999 2000 2001 2002

Consistent cost management and economies of scale led to acontinuous improvement in operating margin and profit beforetaxation.

Stability and maturity necessary for stock exchange listing werereached after break even in 2001.

Profitability: EBITDA marginin %

70%

60%

50%

40%

30%

20%

10%

1998 1999 2000 2001 2002

Profitability: EBIT marginin %

50%

40%

30%

20%

10%

1998 1999 2000 2001 2002

5MEL-GB_engl » PDF 12.09.2003 11:22 Seite 5

Statementfrom the Board


d of Directors

Dear Shareholders,

This is the first annual report of Meinl European Land as a publiclytraded company. In this report, we would like to inform you ofrecent developments at Meinl European Land during the 2002financial year and at the same time provide you with an outline ofsome of our history and the outlook for the future.

Overall, 2002 proved to be yet another successful year for MeinlEuropean Land. We further improved the quality of the company’sreal estate portfolio and its corresponding income stream. Wecontinued to grow through the intensive management of ourexisting real estate, and at the same time we built up cashreserves to make acquisitions and investments in the portfolioas opportunities allow.

This year was also the occasion of a landmark event in thecompany’s history, the introduction of Meinl European Land as apublicly traded company on the Vienna Stock Exchange in late2002. The initial public offering was very well received by Austrianand international investors. Proceeds from the placing will beused to make high-yielding acquisitions in our target markets andseveral interesting prospects are currently under review,sometimes close to completion. The success of the offering ofthe shares strengthened our conviction that Meinl European Landhas a transparent winning business model that will guarantee thefuture performance of the company and ensure a continuousincrease in the value of its real estate portfolio. Management iscommitted to long-term capital appreciation for the company’sexpanded shareholder base.

We believe the present success of the company rests on twopillars: our long-term focus on the property markets of Central &Eastern Europe, and our specialization within that market on theretail sector.

Our investment strategy is concentrated on Central & EasternEurope because of the unique historical opportunities nowavailable in the region. The process of European Unionaccession, currently underway, is a once-in-a-lifetime event.Economies are being transformed rapidly, and the re-invigorationand modernisation of the property infrastructure is a fundamentalpre-requisite to this transformation.

We focus on retail property because this is the type of real estatethat is relatively most scarce at the moment. Large Western retailchains are seeking to establish leading market positions in theregion before convergence with Western European standards ofliving has gone so far that it would be too late or too costly forthem to secure a significant market presence. Our future strategyis not exclusively limited to the retail sector, but in our opinion wecan add most value in this market segment.

The support given to our business model by the capital markets,and the improved outlook for the property markets in EasternEurope, allow us to look forward to the years ahead with a highlevel of confidence.

The DirectorsJune 2003


History


9Meinl European Land first came into existence as the result ofa spin-off of properties in Central & Eastern Europe belongingto the Julius Meinl Group, a retailing conglomerate that had atradition as a leading player in the heart of Europe going backto 1862. Julius Meinl Group re-entered the food retailing marketsin Eastern Europe as the iron curtain came down after morethan 50 years in the late 1980’s, and became one of the firstWestern companies to establish itself as a leader in the region.Meinl European Land carries on Julius Meinl Group’s heritage buthas, since its establishment in 1997, defined its own operationalfocus: commercial real estate; concentrating as an independentcompany solely on operating, managing and developing retailproperties in Central & Eastern Europe.

In 1997 61 properties in the Czech Republic and Hungary with atotal letable area of approximately 123,000 square metres weretransferred to Meinl European Land and at that time Julius MeinlGroup was the only anchor tenant. However, the management ofMeinl European Land understood the importance of geographicaland anchor tenant diversification for the success of a propertyholding company. In the process of targeted acquisitions and acontinuous improvement of the tenant base, Meinl EuropeanLand has since bought eleven additional properties and sold two,while renting its properties to the leading international retailers inthe region such as Rewe, Tengelman, Louis Delhaize and Ahold.

The most important steps towards diversification were takenfrom 1999 onwards. During the 1999 financial year, the companystarted to convert and modernize its local shopping centers.The first two re-developments in Prague and Znojmo set a goodbenchmark for future projects with a typical 20 to 30 % increasein the total letable area and an improvement in rental yield by2 to 3 percentage points. Moreover, the company bought anoffice building in Prague, the only one in its portfolio, with aletable area of approximately 6,600 square metres.

Further acquisitions in the Czech Republic included asupermarket in Liberec for Dutch retail group Ahold, the marketleader in the Czech Republic; a shopping center in Podebradyalso anchored by an Ahold supermarket with an adjacentshopping mall; and a “Penny” discount market for Germanretailer Rewe in Neratovice, close to Prague. All investmentswere made at rental yields in excess of 10 % at the time.

The sale of Julius Meinl Group’s retailing activities in Hungaryto the Franco-Belgian Louis Delhaize group in 1999 was by itselfa decisive step towards the diversification of the tenant structureof the company. At the same time, Meinl European Landcontinued with its own expansion in Hungary; it financed andacquired five newly-built “Penny” discount markets for Germanretailer Rewe and one newly-built “Plus” discount markets for theGerman retailer Tengelmann. Meinl European Land’s localoperating subsidiary is also managing all of the Julius MeinlGroup’s remaining real estate in Hungary on a contract basis,enlarging the company’s managed portfolio to include shoppingcenters, office buildings and logistics areas.

In the first five years of operations, Meinl European Land couldrely on a stable shareholder and capital structure with JuliusMeinl Group controlling 55 % and UK based investment companyCaledonia Investments plc, through its subsidiary Caledonia Land& Property Ltd., owning 45 % of the company’s equity. Havingachieved the necessary degree of maturity and profitability to entera phase of more dynamic growth, the Board of Directors of MeinlEuropean Land in 2002 decided to move ahead with taking thecompany public. Market conditions in the capital markets and inthe retail property markets in the CEE region suggested a “windowof opportunity” to offer an attractive investment to a wide-spreadshareholder base while the Czech Republic and Hungary preparefor accession to the European Union. Following the successfulplacement the free float of the company will reach 34%.


Prague 10, Czech Republic

The "Cil” shopping center is located in a densely populatedresidential neighbourhood in Prague, where a natural catchmentarea for a district shopping center that does not directly competeagainst hypermarkets and out-of-town shopping exists. In lessthan two years, Meinl European Land was able to convert thedecaying premises of a formerly state-owned retail group into abustling local shopping center.

The property originally comprised two separate buildings along-side of each other with a strip of open land in between. Thecompany signed rent agreements with anchor tenants, such asJulius Meinl, Mountfield, a retailer for gardening supplies, andCeská sporitelna, the Czech savings bank now owned by ErsteBank AG, before starting reconstruction. In a first step, a steeland glass atrium was put across so as to facilitate indoorshopping on two levels. In the final step in 1999, a stylized shipwas constructed in the atrium making use of the space foradditional retailing areas and giving the center a distinct character.

Food and recreational areas were also added. In addition, MeinlEuropean Land bought the adjacent land for a parking lot with 96spaces, which had a positive impact on the overall occupancyrate and tenant satisfaction.

The tenant mix furthermore includes a drug store, a dry cleaner,a florist, a travel agency, a computer shop and a GSM provider,as well as cafés and a betting shop. The center is, despite theopening of a hypermarket less than a kilometre away, fully rentedat an average rent of EUR 7.17 per square metre.

Case Study I

Redevelopment of a

Shopping Center


Nyergesújfalu, Hungary

In the beginning of 1999, Meinl European Land developed itsfirst pre-let supermarket in Hungary. This project exemplifiesthe company’s strategy to engage in the field of pre-leaseddevelopments of stand alone supermarkets for international foodretailers.

A piece of land with a total area of 3,014 square metres wasacquired in the small industrial town of Nyergesújfalu, locatedapproximately 60 kilometres northwest of Budapest along theDanube river. It is situated close to the motorway that connectsBudapest from the Slovak border.

Prior to the acquisition of the land, the lease agreement wassecured with PLUS Diszkont Kft., a discount format of the Germanfood retailing group Tengelmann. The phase that consumesthe largest amount of time in Hungary is the collection of all the necessary construction permits, which were secured swiftlythanks to Meinl European Land’s regional experience andcontact base.

Less than 15 months later the building with a total area of893 square metres and a parking lot with 70 spaces was finished.The property was handed over to PLUS in April 2000, with thelease contract running until 2014. PLUS has reported an excellentsales development in this store due to the advantageouslocation of the supermarket. Traffic flow and shoppers’ frequencywere further increased as Meinl European Land added a roadconnection to the main street. Currently, this project brings a9.86 % yield for Meinl European Land.

Case Study II

Development of a

Supermarket


Market Environment


13Czech Republic

Economic OverviewFrom a macroeconomic perspective, the Czech Republicappears to be weathering well the current downturn in the globaleconomy. Despite the sluggish performance of its main tradingpartners and the negative impact from the August 2002 floods,the Czech statistical office expects a GDP growth of 2.5 % for theentire year 2002. Industrial production and consumer confidencehave also been on the rise, in particular in the later months of theyear. Foreign investor confidence was further bolstered when theCzech Republic finalized negotiations on the accession to theEuropean Union in December 2002, and by the steadystrengthening of the Czech crown reflecting a very low inflationrate of 1.8 % for the entire year. Foreign banks now control almost95 % of the banking assets in the Czech Republic makinginvestment financing, also for real estate projects, readilyavailable. It therefore comes as no surprise that foreign directinvestment inflows have grown significantly from EUR 5.5 billion in 2001 to an estimated record EUR 8.0 billion or 11.5% of GDP in2002. These inflows are also expected to be an important drivebehind GDP growth in 2003, which the OECD estimates to reach3.5 %, despite the economic slowdown in most other Europeancountries.

Retail Property MarketCzech retailing has undergone visible changes over the pastdecade. The fragmented retail network typical of the early 1990’shas evolved into a well-functioning sector, increasingly similar tothe Western European markets. Despite this rapid growth, theretail property market in the Czech Republic is still under-developed. Total shopping center stock is reported to havereached 650,000 square metres, which makes for approximately50 square metres for every 1,000 inhabitants, considerably lowerthan the European average of about 100 square metres per 1,000inhabitants.

In 2002, the retail market experienced continued growth andincreased activity both in development and investment. At theend of the year, approximately 260,000 square metres of newretail space had been completed or were under construction,primarily led by the hypermarket sector. As Prague is by far thelargest market in the Czech Republic, most retail centers tend tobe concentrated either in or around the capital city. Consequently,rents have remained stable throughout the year and the quality of tenant and retailing mix improved in primary as well as insecondary locations. The leading hypermarket operators, suchas Ahold, Tesco and Carrefour, keep up a fierce competition formarket share fueling increased demand for sites in Prague andregional towns. At the same time, retail warehousing and retailparks have emerged as a new trend on the market, driven byDIY stores, electronics and other specialist retailers who havedeveloped their own sites close to hypermarkets. Today there isa growing demand amongst other international retail chains totrade from such retail warehouses creating new opportunities forfuture expansion.


Hungary

Economic OverviewThe Hungarian economy, based on successfully implementedstructural reforms and skilful macroeconomic management,remains one of the best performing in the Central European regionand in Europe as a whole. Despite the global economic downturn,GDP growth remained robust at 3.8 % in 2001 and 3.3 % in 2002.Yet, the 2002 growth rate was the weakest since 1996, resultingmainly from depressed demand in Hungary’s major exportmarkets, particularly Germany, which absorbs around 35 % ofHungary’s exports. The successful implementation of themonetary policy framework introduced by the Hungarian Nationalbank in July 2001 led to a dramatic decrease in the inflationrate to 4.5 % by the end of 2002 compared to 9.2 % in 2001 andthe double digit levels in the 1990’s. Foreign direct investmentdeclined to EUR 1.3 billion in 2002, compared to EUR 2.4 billionthe year before. This trend is expected to turn in 2003, encouragedby lower inflation and higher growth perspectives, with foreigninvestment inflows forecast to reach EUR 2 billion. Overall, themoderate slowdown in the Hungarian economy is expected tohave come to an end, as the OECD projects a GDP growth of 3.9 %for 2003, supported by a relatively low unemployment level of 5.9 %.

Retail Property MarketSimilar to the Czech Republic, Hungarian retailing has undergonevisible changes over the past decade; yet there are some notabledifferences. Initially, the rapid growth in Hungary focused almostexclusively on large shopping centers leading to an oversupply inthis segment. Consequently, new developments of big shoppingcenters have been very limited since 1999, as developers havereacted to prevailing market conditions. Meanwhile hypermarket,retail warehousing and smaller secondary center developmentcontinues at full speed as a need to catch up with the Westernstandards still exists in these market segments. Hungary’s rising prosperity is encouraging consumer spending, and thepopulation’s disposable income grows faster than consumerprices. Retail sales increased by an estimated 5.4 % in 2001 andby 11.0 % between January and November 2002. Internationalfood retailers are well aware of these market trends: marketleaders Tesco and Auchan have announced plans to open afurther 12 and 17 new hypermarkets, respectively, within the nextyears mostly in smaller towns. Again, the company perceivesample new opportunities for future expansion emanating from thisdevelopment.


Investing in CEE Real Estate

Hungary and the Czech Republic are regarded as the two mostattractive markets among the first tier accession countries forforeign direct investment in general, and more specifically for realestate investment. In the past five years, both countries haveenjoyed a stable political environment, demonstrated seriouscommitment to a policy of sustainable growth and invested intomajor improvements of their infrastructure.

In the uncertain investment climate of 2002 and 2003, the realestate markets in Hungary and the Czech Republic have beenand will continue to be islands of relative calm and stability.Sophisticated foreign investors have realized several years agothat these two countries offer an especially attractive balance ofhigh returns, moderate risk and portfolio diversification. Thiswindow of opportunity still exists and Meinl European Land isdetermined to provide a suitable and attractive platform forinvestors interested in Central & Eastern European real estate andtaking advantage of this special situation. While the political andeconomic risks – stable democratic governments, low inflationrates, strong currencies – are close to those of Western Europe,the returns offered to investors are higher than those achievedin Western property markets. Coupled with high growthperspectives for Central Europe and a low interest environment,real estate investment in the region offers both high cash returnsas well as a significant upside potential.

15Moscow

Warsaw

Budapest

Prague

London

Brussels

Madrid

Barcelona

Berlin

Copenhagen

Stockholm

Dublin

2 4 6 8 10 12 14 16 18 20

18.1

10.3

10.3

10.0

7.4

7.1

7.1

7.0

6.8

6.8

6.5

6.1

Prime Shopping Center Yields in %

Source: Colliers International

Prague

Hamburg

Budapest

Moscow

Warsaw

Barcelona

Berlin

Lisbon

Madrid

London

Paris

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

280

465

470

490

505

510

1,010

1,410

1,500

1,800

3,450

Shopping Center Stock in '000 sq.m.

Warsaw

Stockholm

Budapest

Prague

Brussels

Madrid

Amsterdam

Copenhagen

Dublin

Berlin

Moscow

London

Paris

50 100 150 200 250 300 350 400 450 500

97

98

100

102

105

123

130

145

210

280

370

495

95

Monthly Prime Retail Rents - Unit Shop in EUR/sq.m.

Source: Jones Lang LaSalle

Source: Jones Lang LaSalle


InvestmentStrategy


Meinl European Land’s investment strategy is directed towards acontinuous and sustained increase in the value of the company.The following strategic principles that have guided the company’smanagement in the past, are even more relevant today for apublic company operating in a challenging market environment.Properties in the company’s ownership:

■ are commercial retail properties in Central & Eastern Europe;■ present attractive short and long-term yields;■ are in locations with an appeal to operators and their customers;■ will be adaptable and resilient to changing conditions;■ will be increasingly diversified in terms of anchor tenants

and geographic locations;

Management will aim to maximize occupancy, cash flows andearnings through sound property management and to improvethe long-term stability of the income stream. In order to achievethis goal, the company will manage its property portfolio toenhance tenant satisfaction and wherever possible work with itscustomers to help them prosper in Meinl European Land’s retailspace. The company will also dispose of any properties that donot offer flexibility to respond to changing occupational needs orappear not to add material value to the portfolio.

In implementing its investment strategy, the company traditionallyhas and will in 2003 continue to focus on the following types ofproperties:

Hypermarket / Retail warehouse projects for European majorsFor the coming years, management expects to see the majorgrowth in the retail sector in the hypermarket and retailwarehouse segments. Both formats normally offer between6,000 and 15,000 square metres of retail space, dependingprimarily on the catchment area that they are designed to serve.For new acquisitions Meinl European Land will concentrate onhypermarkets for international food retailers, and is currentlylooking at projects for Dutch Ahold group with its Hypernovaformat and for the Austrian Spar organization with its Intersparformat. While these opportunities are promising by themselves,they will also allow the company to further spread the riskbetween different sub-segments in the retail property area.

Supermarket and discount store projectsfor multi-format operatorsA number of European retailers such as Carrefour or Tescogenerally operate a variety of store formats – hypermarkets,supermarkets and discount stores – in more mature markets,but have so far established a presence in only one of thesesegments in the Czech Republic and Hungary. Mostly they haveset out with hypermarkets and have yet to launch or expand theirsupermarket and discount store formats. The property needs ofthese multi-format operators correspond to the profile ofproperties either currently owned by Meinl European Land oraligned with opportunities that have recently been presented toMeinl European Land.

“District Shopping Center” propertiesApart from looking for new investments, the company willcontinue to reconstruct and expand existing projects in orderto fortify its position in the ”District Shopping Center” segment.The concept for this kind of shopping center normally comprisesa food retailer, one or two other larger anchor tenants as wellas neighbourhood services like banking or a post office. Theshopping mall with amenities such as restaurants and cafes isthen created around this core, catering for the daily shoppingneeds of the surrounding neighbourhood. Experiences from themore mature retail markets in Western Europe show, that therewill always be a need for such convenience centers. Markettrends in the past appear to underline the growing demand forareas in such shopping centers from large international retailchains. From the investment point of view, such projects givehigh yields with a relatively small vacancy risk as large areasare taken up by well known retail chains as main tenants underlong-term rental contracts. In the case of new developments,these contracts are usually negotiated and signed before thedevelopment starts. Meinl European Land is determined tobecome a leading provider in this segment of retail space.


PortfolioReview


AcquisitionsDuring the five years of operations the total number of propertieshas increased from 61 to 70. Two properties were sold and elevenacquired. Activities were concentrated above all on commercialreal estate in Hungary and the Czech Republic, with an expansioninto Slovakia and possibly Romania planned for 2003.

The list of acquisitions includes the investments shown in thetable below. Yields have proven stronger in the Czech market andsome excellent opportunities continue to arise. Even though yieldsrealized on projects in Hungary were lower, these investmentswere necessary to spread the business risk in the portfolio.

RefurbishmentsAt the same time, management has spent considerable efforts toexpand and upgrade certain properties originally owned by MeinlEuropean Land. The decisive criteria for investment were yieldenhancement as well as the possibility to strengthen the marketposition of the properties.

All the refurbishments to date have been made in the CzechRepublic as the Hungarian portfolio leaves fewer opportunities forexpansion. The table below demonstrates that even relativelysmall investments significantly enhanced the performance of aproperty. In the Czech portfolio there is a number of furthercandidates for expansion, in several cases on a much biggerscale, that Meinl European Land plans to realize during thecoming years.

Tenant StructureMeinl European Land has always strived to diversify the businessrisk emanating from a dependence on individual tenants. Giventhe strong imbalance in the initial portfolio, the company has comea long way in achieving a healthy mix of tenants and formats.Julius Meinl continues to be the most important tenant of thegroup because of its strong position in the Czech Republic. Thesecond major tenant, Delhaize-Csemege creates a big exposurein Hungary but comes down to a much more acceptable level inthe overall portfolio. Generally, the company is not looking for newproperties and projects for either of the two major tenants unlessa very good opportunity arises. One quarter of the rental incomeoriginates from small local tenants that are of no important sizeand would not pose any risk to the company. They can bereplaced easily, in the event of their bankruptcy.

Currently, about 69 % of all rental income originates from rentalpayments of food retailers. With the planned refurbishmentsand expansions of some of the existing ”district shopping center”properties and the possible acquisition of retail warehousingspace, the share of income derived from non-food retailers isexpected to increase gradually.

4%1%

75%

20%

Delhaize-Csemege

Penny Market

Plus Market

others

19

New Properties AcquiredInvestment Letable area Rent p.a. Yield

Location Tenant EUR000’s in sqm EUR000’s in %

Prague, Liben Julius Meinl 4,857 6,651 506 10.41Neratovice Penny 677 1,087 89 13.13Liberec Ahold 1,892 2,193 215 11.36Podebrady Ahold 1,578 2,830 216 13.71Hradek nad Nisou Julius Meinl 754 1,202 93 12.27Sub total CZ 9,758 13,964 1,118 11.46Dunaföldvar Penny 831 867 79 9.47Tolna Penny 835 880 79 9.47Kalocsa Penny 829 970 79 9.47Paks Penny 921 900 87 9.47Hajduböszörmény Penny 871 980 86 9.86Nyergesújfalu Plus 778 893 77 9.86Sub total HU 5,066 5,490 486 9.60Grand Total 14,824 19,453 1,605 10.82

Properties redevelopedInvestments Rent p.a. Yield in %

EUR000’s EUR000’s Construction Property old Property new

Prague 10, Cil 575 62 10.73 10.60 10.62Znojmo 153 30 19.69 7.70 9.27Hradec Kralove 94 33 35.09 8.99 10.35Totals 821 125 15.18 9.80 10.36

20%

23%

7%3% 4%

43%

Julius Meinl

Delhaize-Csemege

Penny Market

Ahold

Erste Bank

others

Tenant Structure – Czech Republic

Tenant Structure – Hungary

Tenant Structure – Total

5%34%

47%

2%2% 3% 7%

Julius Meinl

Ahold

Erste Bank

The Drogerie

Mountfield

Penny Market

others


Currency MixIn Hungary, 100 % of rental income is paid in Euros and, ifindexed, linked to German or Euro-zone consumer price inflationdata. In the Czech Republic, only 53% of rental income is paid inEuros, the remaining 47 % being received in Czech Crowns. Thisis conditioned by the fact that Meinl European Land’s local costbase in the Czech Republic is higher due to a bigger staff inPrague, providing for a better hedge in the income to costrelationship. In total, more than two thirds of the company’sincome is received in Euros matching the financing structure.

Property Mix Stand alone retail stores currently make up the most significantpart of Meinl European Land’s portfolio. 58 % of the total letablearea in the Czech Republic and 82 % in Hungary are located infree standing retail units. The rest are district shopping centers. Inthe Czech Republic all of them are fully owned by the company;in Hungary they are mostly in joint ownership. Consequently,there is more development potential in refurbishment andexpansion in the Czech part of the portfolio unless full control ofsome of the properties in Hungary can be obtained.

Location Mix A significant difference in the composition of the Czech and theHungarian part of the portfolio is the location of properties in city centers as opposed to out of town locations. This is, ofcourse, an immediate consequence of the split between freestanding units and district shopping centers. Practically all of the Czech properties are located in urban city center or sub-urban residential areas; in contrast, two thirds of the Hungarianproperties are out of town free standing units, mostly largersupermarkets or discount formats.

Czech RepublicNumber of Properties 25Letable area (sq.m) 90,100Proportion of total in % 65.6Occupancy level in % 94.6Portfolio Book value* EUR 42,236,000Portfolio Market value** EUR 57,531,860

* Book value based on historic valuesas recorded in subsidiary accounts

** Market value based on independent valuation performed in spring 2003


KöszegBükk

CelldömölkSzombathely

VasvárKörmend

Zalaegerszeg

Nagykanizsa

Kaposvár

Györ

Tatabánya

Budapest

Nyergesújfalu

Esztergom

Dunaujváros

Dunaföldvár

Paks

Kalocsa

Tolna

Szekszárd

Pécs

Szeged

Miskolc

Eger

Gyöngyös

Nyiregyháza

Hajdúböszörmény

Debrecen

Novy Jicín

Ostrava

Zdár nad Sázavou

Vyskov

Brno

Znojmo

PelhrimovTabor

Praha

NeratovicePodebrady

Hradec Králové

Liberec Rochliche

Ustí nad Labem

21

HungaryNumber of Properties 45Letable area (sq.m) 47,340Proportion of total in % 34.4Occupancy level in % 100.0Portfolio Book value* EUR 10,653,355Portfolio Market value** EUR 27,347,000

* Book value based on historic valuesas recorded in subsidiary accounts

** Market value based on independent valuation performed in spring 2003


OperationalReview


23

Full integrationAs a holding and financing company, Meinl European Landoperates primarily through its two subsidiaries, ManhattanDevelopment a.s. in Prague, covering the Czech real estatemarket; and Manhattan Development Kft. in Budapest, coveringthe Hungarian, Slovak and South-East European real estatemarkets. Both subsidiaries are managed by local specialists inreal estate and can draw on in-house expertise in other relatedfields that are crucial to a successful pursuit of Meinl EuropeanLand’s strategies on each of the markets. Such other fieldsinclude legal and financial skills needed to isolate the riskinvolved in real estate transactions specific to these markets.In this respect Meinl European Land could be described as beinga fully integrated organization, from its investors and financingactivities to the level of investment analysis and the managementof its property portfolio. This allows for a hands-on approachthat is unique to this investment vehicle and that increases thechances for management to realize better investments for theshareholders.

During 2002, Meinl European Land continued its focused effortsto optimize and enhance the existing portfolio, and to furtherdiversify the leaseholder structure. As such, the 2002 financialyear has been one of the most successful years in the group’shistory to date.

Occupancy ratesDuring the year, the occupancy rate for the group reached an alltime high of 96.6 % as compared to 95.4 % in 2001. The increasecomes entirely from the Czech Republic where the occupancyrate has increased from 92.9 % to 94.6 %. About one third ofrental income in the Czech Republic comes from a variety of localtenants and this small tenant mix has been managed moreeffectively. Manhattan Development Kft in Hungary maintains its100 % occupancy rate, reflecting the high portion of standaloneretail units let under long term lease contracts not to expire before2007. The recession that has hit Western Europe last year has nothad the same impact on the Central European markets whichhave continued to grow at a healthy rate. This led to an increasein purchasing power, which in turn pushed demand for retailspace up and reduced vacancies.


Portfolio developmentGrowth and expansion in 2002 were financed entirely frominternal sources and the cash flow generated by the company.The major use of funds was investment in new properties, anAhold operated supermarket in Podebrady which had been linedup in 2001, and a Julius Meinl operated supermarket in Hradeknad Nisou. The latter is located on the main road connectingLiberec on the Czech side with the city of Zittau on the Germanside of the border and benefits from a catchment area on bothsides of the border. The influx of purchasing power from theGerman side is expected to make this project very successful.Moreover, there is adjacent land for possible future expansion.Above all, since the Hradek nad Nisou project was a newdevelopment, Meinl European Land is achieving a direct yield of12.27 % on the invested amounts.

Because of the relatively higher yields, most of the company’sactivities have been and are likely to continue to be in the Czechmarket. While individual projects have been reviewed on theHungarian market, a tradition of short lease structures and lowerdemand for letable space led management to decide notto make any investments in Hungary at present. In contrast, twoproperties located in the towns of Zalaegerzseg and Debrecenwere sold in Hungary. Both properties were small units with littleexpansion potential but not necessarily marked for sale. Theprocess was initiated by an investor offering prices above thevalue assigned by an external property valuation. Due to the smallsize of the transaction, in absolute terms, the company records amoderate profit.

In a new line of business, the company won a tender to managethe portfolio of Julius Meinl Group’s remaining real estate in theCzech Republic in 2002. Manhattan Development a.s. will beable to provide outside property management services drawingon its existing resources and infrastructure and generating astable income. While management is not actively pursuing anyfurther third-party management contracts at present, this field isconsidered interesting as a separate business area for the future.

Income During the 2002 financial year, the company has introducedseveral measures to monitor the performance of tenants in orderto be able to react more quickly to non-performers and to reducethe necessary provisions. The strong development of the Czechand Hungarian economies also contributed to the group’sdecrease in its reserves for non-performing debtors. In addition,in 2002 the Czech Republic passed a law that allows theappointment of an executor after a court decision to bring in un-paid debts, thus speeding up the collection process significantly.

The higher occupancy rate in combination with a 10.4 %appreciation of the Czech Crown against the Euro over the 2002financial year led to an increase of cash generated from existingproperties, accounting for about two thirds of the rise in revenues.At the same time, the Ahold supermarket in Podebrady that wasacquired in late 2001, was operational for most of the year,accounting largely for the remaining third of the revenue increase.Cash flow from investment activities was further stimulated by thesale of two properties in the Hungarian subsidiary.


25CostsThe high occupancy rate has a direct impact not only on rentalincome but also on utility and other related costs, that aregenerally charged on to tenants. Market conditions and marketpractice have in the past made it difficult for Meinl European Landto reinvoice the full amount of these expense items leaving about1.2 % of the total utility bill with the company. Due to the strongrental levels and an active effort by the company, this ratio hascome down from close to 4 % in previous years. While not highin absolute amounts, the company is determined to introducemechanisms that will allow it to run a surplus in this position inthe future, hence contributing directly to the bottom line.

Tight cost controls left total operating expenses in 2002 virtuallyunchanged from the year before. The company streamlined itsadministration and a new bookkeeping system that will permit amore effective management of tenants and credit risk wasintroduced. The new system went operational in early 2003 andwill also be an important factor in connection with the third-partyproperty management contracts taken over. The system changeand the preparation for outsourced property managementcontract work led to certain set up costs which were all expensedin 2002 and will not be recurrent in future years. The unchangedcost structure becomes more remarkable in view of thecompany’s going public in 2002, as the associated costs forlawyers, accountants and other advisers have been fullyabsorbed. The company expects a slightly increased cost basein the years to come as the evaluation and development of newprojects starts to become a much bigger part of the company’sbusiness following the listing.

Capital structureNo new dept financing was taken up by the Meinl European Landgroup during the 2002 financial year. As far as the internalfinancing between Meinl European Land and its subsidiariesManhattan Development a.s. and Manhattan Development Kft.is concerned, a capital reduction was explored for the Czechsubsidiary, replacing equity with parent company loans. However, new projects being developed in the Czech Republicmay eliminate the need for this rather complicated process asadditional necessary funding can be provided in such a way asto minimize the tax base. The successful sale of two propertiesin Hungary in 2002 has led to an increase in the Hungarian aswell as the overall tax charge, doubling the effective rate andemphasizing the need to work with the appropriate amountof leverage.


Projectsfor the Future


27Meinl European Land expects to raise EUR 25 to 30 mln inproceeds from the placing of the first tranche of shares followingthe listing on the Vienna Stock Exchange; this should becompleted by mid 2003. Meinl European Land also uses leveragein a ratio of two to one to equity to finance its investments.Consequently, the company has considerable funds available topursue diverse real estate investment opportunities.

Investment into existing properties.In 2003 two properties are coming up for reconstruction in theCzech Republic. The first property is located in the town ofPodebrady, with an Ahold supermarket as anchor tenant. Ahold isinterested in expanding its current premises, and Meinl EuropeanLand is planning a major enlargement of the total shoppingcenter at the same time. The total letable area should beexpanded from 2,800 square metres to 5,200 square metres andit is planned to enlarge the parking area as well. The secondproperty is a 4,900 square metre shopping centre located in anaffluent neighbourhood the Prague’s forth district with a JuliusMeinl Supermarket as anchor tenant. Various refurbishment plansentail an increase of the total letable area up to 9,000 squaremetres and the creation of additional parking facilities.

Another redevelopment project to start in 2003 is located in thecity of Brno, where Meinl European Land owns a 14,000 squaremetre plot of mostly undeveloped land in the city center; inaddition, Meinl European Land has an option to acquire aneighbouring plot of 8,000 square metres. The development willcomprise a multifunctional building situated on the entire cityblock with up to 10,000 square metres of retail space, up to 5,000square metres of office space and a parking lot with 700 spaces.

Acquisition and Development of New PropertiesMeinl European Land constantly explores market opportunities forthe acquisition of new properties and new development projectsthrough its contacts with various international retailing groups.During the first phase of expansion in Central & Eastern Europemost international retailers have developed their own sites inorder to achieve rapid growth. Currently, however, most retailershave entered into a consolidation phase and rather divest theirreal estate holding, often through long-term sale and lease backschemes. Following this trend, Meinl European Land foreseesnumerous investment opportunities; and the company is about toclose a deal on the acquisition of two smaller hypermarkets in theCzech Republic. Moreover, Meinl European Land regularlyreviews new pre-let development properties which are purposebuilt to the specifications of international retailers. The Group willconsider some of these projects, even though no immediate cashflow can be derived during the construction phase.

Apart from exploring investment opportunities in its existingmarkets, Meinl European Land also targets the real estatemarkets in Slovakia; and to a lesser extent in Poland andRomania.


FinancialStatements



Organizational Structure

Meinl European Land Limited

Caledonia Investments plc

Manhattan Development a.s. (Prague)

Free Float Meinl Bank AG

Manhattan Development Kft. (Budapest)

100% 100%

29% * 37% * 34% *

Registration Company Registration PragueForm of Incorporation Joint Stock CompanyYear of Incorporation 19th April 1995Headquarters Opletalova 23, 11000 Praha 1

Management BoardPer Hansson, Miroslav Ludvik, Eduard PrechtSupervisory BoardGeorg Josef Kucian, Peter Weinzierl, William Wyatt

* after IPO & placing of all 2,410,000 shares from the captal increase

Registration Company Registration BudapestForm of Incorporation Limited Liability CompanyYear of Incorporation 14th October 1997Headquarters Váci út 110, 1133 Budapest

Management BoardEduard Precht, Imre GyarakiSupervisory Boardnone


Directors’ Report

The directors submit their report and the audited financialstatements of the company and its subsidiaries for the yearended 31 December 2002.

IncorporationThe parent company was incorporated in Jersey on 8 December1997. The parent company resolved to change its name to MeinlEuropean Land Limited by a special resolution dated 10 October2002.

Principal ActivitiesThe principal activity of the group is the ownership, leasing,management and development of commercial real estate in theCzech Republic and Hungary. In the future the activities of thecompany will extend to Central & Eastern European region.

Reporting currencyFollowing the introduction of the Euro the parent companyadopted the Euro as its reporting currency with effect from 1January 2002. The comparative figures, which were in GermanMarks, have been restated in Euros using the fixed exchange rateof 1.95583 German Marks to the Euro.

ResultsThe results for the year are shown in the consolidated incomestatement on page 34.

DividendThe directors do not recommend the payment of a dividend(2001: DEM nil).

DirectorsThe directors of the parent company who served during the yearare as stated on page 50 with the exception of:

Michael Gerald Wyatt (resigned 4 April 2002)Johann Mantler (appointed 8 November 2002)William Wyatt (appointed 4 April 2002)Michael George Best (appointed 20 December 2002)Anthony Panayiotis Michael (appointed 20 December 2002)

Company secretaryDeutsche International Trust Corporation (C.I.) Limited resignedas company secretary on 26 November 2002 and was replacedby Dominion Corporate Services Limited.

Directors’ responsibilitiesThe directors are responsible for preparing financial statementsfor each financial year which give a true and fair view of the stateof affairs of the parent company and group and of the profit orloss for that year. In preparing those financial statements thedirectors are required to:

■ select suitable accounting policies and then applythem consistently;

■ make judgements and estimates that are reasonableand prudent;

■ state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

■ prepare the financial statements on the going concern basis (unless it is inappropriate to presume that the group will continue in business).

The directors are responsible for keeping proper accountingrecords which disclose with reasonable accuracy at any time thefinancial position of the parent company and to enable them toensure that the financial statements comply with the Companies(Jersey) Law 1991. They have general responsibility for takingsuch steps as are reasonably open to them to safeguard theassets of the group and to prevent and detect fraud and otherirregularities.

AuditorsA resolution for the reappointment of KPMG as auditors of thecompany is to be proposed at the forthcoming Annual GeneralMeeting.

The Directors12 June 2003


Financial Statements

Parent company balance sheet at 31 December 2002

2002 2001

Note EUR000’s EUR000’s Restated EUR000’s Restated EUR000’s

AssetsNon-current assetsInvestments in group undertakings 11 39,066 39,066Property, plant and equipment 111 116

39,177 39,182Current assetsOther receivables 12 22,318 22,732Cash and cash equivalents 14 2,920 273

25,238 23,005Total assets 64,415 62,187

Equity shareholders’ funds and liabilities Equity shareholders’ fundsIssued share capital 18 24,421 23Share premium 1,670 22,985Accumulated losses (7,728) (6,265)

18,363 16,747Non-current liabilitiesLong term borrowings 19 44,287 44,830

Current liabilitiesTrade payables 15 295 307Accrued expenditure 16 11 10Other payables 17 292 293Short-term borrowings 19 1,167 -

1,765 610Total equity shareholders’ funds and liabilities 64,415 62,187

The financial statements on pages 32 to 48 were approved by the Board of Directors on 12 June 2003and are signed on its behalf by Per Hansson, Director.


33

Consolidated balance sheet at 31 December 2002

2002 2001


AssetsNon-current assetsLand 10 9,913 10,048Buildings 10 55,385 57,729Assets in the course of construction 10 1,135 325Furniture, equipment and motor vehicles 10 128 103

66,561 68,205

Intangible assets 9 2Financial assets 5 4

66,575 68,211

Current assetsTrade receivables 372 480Other receivables 12 745 432Prepayments 13 252 355Cash and cash equivalents 14 3,632 441

5,001 1,708Total assets 71,576 69,919

Equity shareholders’ funds and liabilities Equity shareholders’ fundsIssued share capital 18 24,421 23Share premium 1,670 22,985Accumulated losses (7,528) (7,144)Currency translation (1,690) (1,067)

16,873 14,797Non-current liabilitiesLong term borrowings 19 46,247 48,086Deferred tax liabilities 20 4,879 4,692

51,126 52,778

Current liabilitiesTrade payables 15 1,034 170Accrued expenditure 16 186 476Other payables 17 645 698Short-term borrowings 19 1,712 1,000

3,577 2,344Total equity shareholders’ funds and liabilities 71,576 69,919

The financial statements on pages 32 to 48 were approved by the Board of Directors on 12 June 2003and are signed on its behalf by Per Hansson, Director.


Consolidated income statement for the year ended 31 December 2002

2002 2001


Revenue Rental income 2 6,600 6,212Profit on sale of property, plant and equipment 3 115 -Reinvoiceable utilities 4 1,119 1,118Consultancy income 5 122 67Other operating income 6 34 89

7,990 7,486

ExpensesRaw material and consumables used (33) (30)Staff costs including social contributions (379) (308)Reinvoiceable utilities (1,133) (1,164)Other operating expenses (921) (983)

(2,466) (2,485)

Profit before interest, taxation and depreciation 5,524 5,001Depreciation and amortisation (1,865) (1,823)Profit before interest and taxation 3,659 3,178Interest income 7 48 89Interest expense 7 (3,639) (3,653)Other financial income and expenses 8 687 1,035Profit before taxation 755 649Taxation charge for the year 9, 20 (402) (200)Profit after taxation for the year 353 449Basic & diluted earnings per share in EUR 25 0.07 0.10

Included in profit after taxation for the year is a loss of EUR 730,000 (2001: EUR 606,000) arising in the parent company.


35

Consolidated cash flow statement for the year ended 31 December 2002

2002 2001

EUR000’s EUR000’s Restated EUR000’s Restated EUR000’s

Cash Flows from operating activitiesNet profit/(loss) before taxation 755 649Adjustments for:Depreciation and amortisation 1,865 1,823Foreign exchange (gain)/loss (700) (892)(Profit)/loss on disposal of fixed assets (115) (5)Interest expense 3,639 3,707Interest income (48) (144)Operating cash flows before working capital changes 5,396 5,138(Increase)/decrease in trade and other receivables (205) (26)Decrease/(increase) in prepayments 103 (112)Increase/(decrease)in trade and other payables 811 (51)(Decrease)/increase in accrued expenditure (290) -Cash generated from operations 5,815 4,949Interest paid (3,629) (3,621)Corporation taxes paid (7) (34)Net cash generated from operating activities 2,179 1,294

Cash Flows from investing activitiesAdditions to tangible fixed assets (1,669) (3,785)Disposals of tangible fixed assets 1,025 1,778Interest received 56 144Movements in other financial assets 8 3Net cash used in investing activities (580) (1,860)

Net cash inflow/(outflow) before financing 1,599 (566)

FinancingProceeds from issuance of share capital 3,083 -Costs arising from issuance of share capital (737) -Net (repayment)/increase of bank borrowings (472) 515Net redemption of bonds (767) (767)Net cash used in financing activities 1,107 (252)

Effects of exchange rates on cash and cash equivalents 485 (163)

Net increase/(decrease) in cash and cash equivalents 3,191 (981)

Cash and cash equivalents at beginning of year 441 1,422

Cash and cash equivalents at end of year 3,632 441

Consolidated statement of changes in equityThe consolidated statement of changes in equity is contained in note 18 on page 43.


Notes to the Financial Statements

1. Principal accounting policiesThe following accounting policies have been applied in dealingwith items which are considered material in relation to the parentcompany and group’s financial statements:

Basis of consolidationThe consolidated financial statements incorporate the financialresults of the parent company and its material subsidiaries for theyear ended 31 December 2002.

Basis of preparationThe consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards(”IFRS”) and under the historical cost convention.

The comparative figures have been restated following a change inthe accounting policy adopted in relation to deferred tax. Deferredtax liabilities and assets are now recognized on differencesbetween the cost of the subsidiaries’ land and buildings and theirvalues for tax purposes and for all temporary differences betweenbalance sheet carrying amounts and the amounts attributed tothe assets/liabilities for tax purposes. Previously, deferred taxliabilities and assets were not recognized.

The comparative figures have been restated as follows:

Consolidated income statement 2001

Taxation change for the year EUR000’s

Under previous policy (95)Recognition of deferred tax assets and liabilities (105)Under new policy (200)

There was no impact on the profit of the parent company for theyear ended 31 December 2001.

Consolidated balance sheet Deferred tax liabilities Accumulated losses

2001 2001

EUR000’s EUR000’s

Under previous policy - (2,452)Recognition of deferredtax assets and liabilities 4,692 (4,692)Under new policy 4,692 (7,144)

The comparative figures have been restated following a changein the accounting policy adopted in relation to issuance costs ondebt. The cost of debt is now shown net of issuance costs.Previously, issuance costs were capitalized within prepayments.There was no impact on the profit of the group or the parentcompany for the year ended 31 December 2001.

The comparative balance sheet figures have been restated asfollows:

Consolidated balance sheet Long term borrowings Prepayments

2001 2001


Under previous policy (48,759) 1,028Reclassification of issuance costs on debt 673 (673)Under new policy (48,086) 355

Parent Company Long term borrowings Prepayments

2001 2001


Under previous policy (45,503) 673Reclassification of issuance costs on debt 673 (673)Under new policy (44,830) -

Adoption of the Euro and translation of comparativesFollowing the introduction of the Euro the group adopted theEuro as its reporting currency with effect from 1 January 2002.The comparative figures, which were in German Marks, havebeen restated in Euros using the fixed exchange rate of 1.95583.The reporting currency of the group has been chosen as Euro,due to the fact that the majority of the transactions of the groupare denominated in this currency.

Property, plant and equipmentProperty is classified as investment property and is stated atcost less accumulated depreciation. No depreciation is providedon freehold land. Plant and equipment is stated at cost lessaccumulated depreciation. Assets in the course of constructionare held on the balance sheet at cost until completion, at whichtime they are transferred to the relevant category of assets anddepreciated.

Depreciation is provided based, on cost in equal annualinstalments over the estimated useful lives of the assets.The rates of depreciation are as follows:

Buildings 35 yearsFurniture, equipment and motor vehicles 5 – 10 years

Depreciation is charged on an asset from its acquisition date toits date of disposal.


37

Subsidiary undertakingsThe parent company’s investments in subsidiary undertakings arestated at cost.

Cash and cash equivalentsCash and cash equivalents consist of cash in hand and balanceswith banks.

BorrowingsBorrowings are recognised at their principal amount lesspremium or discount on issue and any costs arising on issue. Anypremium or discount on issue is amortised over the period of theunderlying liabilities.

Issuance costs on capitalExternal costs incurred in relation to the issue of equity sharecapital, which would have otherwise been avoided, areaccounted for as a deduction from equity.

IncomeRental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Utility costs incurredby the group on properties that are leased to third parties arereinvoiced to the lessee, and the subsequent income and expenseis recognised on an accruals basis. All other significant operatingincome or expenses are recognised on an accruals basis.

Interest receivable and payableInterest receivable and payable is accounted for on an accrualsbasis.

Costs of restorationThe group is required to maintain the original condition of allinvestment properties. In all cases, investment properties havebeen let out to third parties, who have taken over this respon-sibility. Provision for restoration and dilapidation costs arerecognised when the responsibility for maintenance of theproperties belongs solely to the group.

Foreign exchangeTransactions in foreign currencies are translated into Euro at therates of exchange ruling at the dates of the transaction. Monetaryassets and liabilities denominated in foreign currencies aretranslated into Euro at the exchange rate ruling at the balancesheet date. Any foreign exchange differences arising are dealtwith in the consolidated income account. Exchange differencesarising on items which in substance form part of the netinvestment in a foreign entity are classified within equity until thedisposal of the net investment.

Financial statements of foreign subsidiaries are translated intoEuro as follows: Assets and liabilities are translated at exchange rates ruling onthe balance sheet date, with the exception of land and buildingswhich are included at their original valuation on the date theywere acquired. Subsequent additions are translated at theexchange rate on the date of acquisition. Profit and loss items aretranslated at an appropriate weighted average exchange rate forthe year.

CZK / EUR HUF / EUR

Income statement 30,695 242,073Balance sheet 31,600 235,893

TaxationThe taxation charge for the current year is based on local profits,adjusted for non-taxable items, and at tax rates prevailing in thecountries in which the group companies trade.

Deferred tax liabilities and assets are recognised on differencesbetween the cost of the subsidiaries’ land and buildings and theirrespective fair values and for all temporary differences betweenbalance sheet carrying amounts and the amounts attributed tothe assets/liabilities for tax purposes.

Segmental analysisThe group’s activities are based around the acquisition and leasingof investment property for commercial purposes. It operatesprincipally in two locations, the Czech Republic and Hungary, andhas a Jersey incorporated parent company that has issued debt.In presenting information on the basis of geographical segments,segmental revenue is based on the geographical location of thelessees. Segment assets and liabilities are based on thegeographical location of the assets and liabilities.

Earnings per shareEarnings per share are calculated by dividing profit after taxationfor the year by the weighted average number of ordinary sharesoutstanding during the year.


2. Rental incomeThe group has the following minimum lease rentals due undernon-cancellable operating leases in aggregate and for each ofthe following periods:

Group 2002 2001

EUR000’s Restated EUR000’s

Due within 1 year 6,754 6,516Due between 1 & 5 years 21,201 26,064Due in more than 5 years 4,421 31,099

Approximately 65 % of rental income emanates from the CzechRepublic, 35 % from Hungary. In the Czech Republic 53 % ofrental income is denominated in Euros while all of the rentalincome in Hungary is denominated in Euros.

3. Profit on sale of property,plant and equipment

Group 2002 2001


Profit on sale of property 99 -Profit on sale of motor vehicle 16 -Total 115 -

Manhattan Development Kft., the Hungarian subsidiary sold twoproperties in Debrecen and Zalaegerszeg for a total amount ofEUR 1,012,000.

4. Reinvoiceable utilitiesReinvoiceable utilities include payments received by the group for utilities and other services provided to tenants. Generally,reinvoiceable utilities are a pass through item for the group andthe corresponding outgoing payments are shown in a matchingexpense position reinvoicable utilities. The rental agreementsnormally specify which cost items are reinvoiceable for the groupand can be charged on to tenants. There are two differentcategories of reinvoiceable income and expenses:■ utilities such as gas, water, electricity or telephone services

which can be measured individually for each tenant. These services are invoiced and charged to tenants on an ongoing monthly basis.

■ fixed cost items such as center management, marketing, cleaning or security services which cannot be measured individually for each tenant. These costs are normally calculated on a pro rata basis per square metre occupied by each tenant, and are invoiced and charged to tenants two times a year inthe Czech Republic and once a year in Hungary.

Tenants are normally required to make a security deposit andmonthly pre-payments for the reinvoiceable utilities. Once a year,the pre-payments are netted against the actual cost and thedifference is settled between the group and the tenants. To theextent that there are vacancies in a property, the group has tobear the cost of covering the allocated and pro rata reinvoiceableutilities.

5. Consultancy income The group took over the management of the remaining real estateportfolio owned by Julius Meinl International in Hungary in 2001under a third-party management contract. In late 2002 the groupalso took over the management of the remaining real estateportfolio owned by Julius Meinl International in the CzechRepublic under a similar outsourcing arrangement. In addition,the group earned brokers’ fees in 2002 of EUR 46,000 forarranging the sale of real estate for third parties.

6. Other operating income

Group 2002 2001


Insurance income 1 -VAT 2 -Release of reserves 7 -Release of bad debt provisions - 89Other 24 -Total 34 89

7. Interest income and Interest expenseA significant part of the interest income (EUR 44,000) was derivedfrom a deposit of the purchase price for one property on anescrow account until registration of title in the real estate registerin the Czech Republic, which took substantially longer thanexpected. The company’s major interest expense (EUR 3,268,542)is the interest payable on the bonds issued in 1997 and due in2007. Interest is payable on an annual basis in November ofevery year.


39

8. Other financial income and expenses

Group 2002 2001


Foreign exchange gains and losses 700 1,046Bank costs and other financial expenses (13) (11)Total 687 1,035

9. Taxation

Group 2002 2001


Income tax: current year charge (228) (95)Deferred tax (174) (105)Total (402) (200)

The parent company has been granted Exempt Company statusin Jersey and is therefore liable to an annual fee of GBP 600. Thisis included as an expense in the consolidated income statementas it is not dependant on the parent company’s results.

There is no taxation effect from charging costs of issuing sharesto equity because these costs arose in the parent company (seeabove).

The subsidiary companies are subject to income taxes for thebusinesses operated in Hungary and the Czech Republic at therates prevailing in these jurisdictions. In the opinion of thedirectors, no taxes on income or capital are due in othercountries. A reconciliation between the income tax current yearcharge and the accounting profit before tax of the subsidiaryundertakings is shown below.

Group 2002 2001


Accounting profit 755 649Tax at the domestic rates applicableto profits in the country concerned 992 943Tax effect of expensesthat are not deductible for tax purposes 86 5Difference in tax rates (676) (748)Tax expense 402 200

On consolidation of the results of the individual companies, inter-company income and expenses are eliminated. These items maybe tax deductible or taxable in the jurisdictions in which they arerecognised. This has the effect of increasing the profits allocatedto the subsidiaries without a corresponding increase in the taxexpense.

The group is liable for taxation on taxable profits in the followingjurisdictions at the rates below:

2002 2001

Jersey 0% 0%Czech Republic 31% 31%Hungary 18% 18%


All land and buildings included in the initial portfolio acquired in1997 are shown at their initial cost. Property acquired by thegroup since 1997 are shown at cost.

The fair value of the land and buildings at 31 December 2002 isEUR 78,547,000. This valuation has been based on rental yieldsand has been undertaken by independent valuers in both CzechRepublic and Hungary. In Czech Republic, the valuer isnominated by the court in Prague for valuations of real estate. InHungary, the valuer holds a DANI Csaba National Judicial Expertof Fixed Assets Trade, Bronze Degree.

The initial portfolio of 61 properties was acquired by the group in1997. Formal valuations were undertaken by Healy and Baker,Chartered Surveyors, on acquisition of the initial portfolio, whichshowed a market value of EUR 58,461,114. Of the initial portfolio,two properties in Hungary were sold during 2002.

The current property portfolio consists of 45 properties in Hungaryand 24 properties in Czech Republic. A further property wasunder construction at 31 December 2002 in Czech Republic.

Pledged property, plant and equipmentThe initial portfolio of 61 buildings, including the land on which theystand, are pledged in favour of Deutsche International TrusteeServices (C.I.) Limited as trustee of the bonds listed on theLuxembourg Stock Exchange to an amount of EUR 46,016,269.Two properties in Hungary that formed part of the initial portfoliowere sold during 2002 and were replaced by a property in theCzech Republic.

A right of lien for a building and land in Praha-Liben, CzechRepublic exists in favour of Raiffeisen Zentralbank Osterreich AGas collateral for a loan provided to the group.

A right of lien for four properties and land in Hungary exists infavour of Raiffeisen Bank Budapest as collateral for a loanprovided to the group.

A right of lien for a building and land in Neratovice, CzechRepublic exists in favour of Raiffeisen Bank Praha as collateral fora loan provided to the group.

The loans are further secured by all future receivables arsing fromlease agreements to the real estate for which they were provided,except for the loan with Raiffeisen Zentralbank Osterreich AG.

10. Property, plant and equipment

Group Land Buildings Assets in course Furniture, equipment Total

of construction and motor vehicles

EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s

CostAt 1 January 2002 (restated) 10,048 64,285 325 203 74,861Translation difference - - 9 19 28Additions 5 242 1,334 88 1,669Disposals (140) (865) (558) (17) (1,580)Reclassification - - 25 (25) -At 31 December 2002 9,913 63,662 1,135 268 74,978

DepreciationAt 1 January 2002 (restated) - 6,556 - 100 6,656Translation difference - - - 2 2Charge for the year - 1,820 - 45 1,865Eliminated on disposal - (99) - (7) (106)Reclassification - - - - -At 31 December 2002 - 8,277 - 140 8,417

Net book valueAt 31 December 2002 9,913 55,385 1,135 128 66,561At 31 December 2001 (restated) 10,048 57,729 325 103 68,205


41

11. Investments in group undertakingsInvestment in subsidiary undertakings, amounts to EUR 39,066,000 for the year 2002, unchanged from 2001.Details of the parent company’s subsidiaries are as follows:

Name of subsidiary Place of incorporation and operation Proportion of ownership interest Principal activity

Manhattan Development a.s. Prague, Czech Republic 100% Property investmentManhattan Development Kft Budapest, Hungary 100% Property investmentJulius Meinl spol z.o.o Warsaw, Poland 100% Dormant

12. Other receivables

Group Parent Company2002 2001 2002 2001

EUR000’s Restated EUR000’s EUR000’s Restated EUR000’s

Amounts receivable from subsidiary undertakings - - 21,791 22,523Amounts receivable on behalf of subsidiary undertakings - - 527 200Amounts receivable from related undertakings - 153 - -Amounts receivable relating to flooding repair costs 327 - - -Amounts receivable relating to rent reduction 200 200 - -Deposits for utilities 177 29 - -Corporation tax 31 38 - -Other 10 12 - 9Total 745 432 22,318 22,732

The flooding in the Czech Republic led to repairs that werecovered by insurance as well as by tenants. At the end of the2002 financial year these repairs had not yet been invoiced and

consequently the group has, with the exception of partialprepayment, built up a receivable position against insurancecompanies and tenants, which will be settled after final invoicing.

The company’s subsidiary in the Czech Republic in some caseshas to make deposits for the utilities it estimates to be using overthe next six months. Such deposited amounts are usually

significantly smaller than the deposits received from tenantswhich are booked under other payables.

13. Prepayments



Deposits for utilities 141 213 - -Accrued income on utilities 46 132 - -Insurance payment for flood damages 41 - - -Other prepaid expenses 24 10 - -Total 252 355 - -


14. Cash and cash equivalents



Balances at banks 3,632 441 2,920 273

15. Trade payablesCosts related to the introduction of the parent company’s shares to listing and trading on the Third Market of the Vienna StockExchange led to an increase in trade payables. Out of these costs an amount of EUR 737,000 was charged directly against equity.

16. Accrued expenditure



Estimated payables for utilities 159 150 - -Prepaid utilities - 272 - -Accrued interest on long-term borrowings 11 11 - -Audit fee 10 6 11 10Other 6 37 - -Total 186 476 11 10

17. Other payables



Interest payable 290 290 290 290Amounts payable to Employees 23 - - -Interest free loans - 307 - -VAT 44 33 - -Deposit for utilities from tenants 269 - - -Other 19 68 2 3Total 645 698 292 293


43

As at 1 January 2002, the share capital was converted to Euros,by replacing 60,000 shares with a par value of DEM 1.00 eachwith 60,000 shares with a par value of EUR 0.51 each.

The parent company resolved by a written special resolution dated10 October 2002 to increase the share capital of the parentcompany to EUR 102,000,000, divided into 200,000,000 ordinaryshares with a par value of EUR 0.51 per share. Subsequently theparent company allotted 44,955,000 fully paid bonus shares to theexisting shareholders. This bonus share issue was made from theshare premium paid when the shares were initially subscribed for.

The parent company then changed the nominal value of the sharesfrom EUR 0.51 each to EUR 5.00 each and the number of shareswas adjusted accordingly.

On 7 November 2002 the parent company resolved to issue afurther 2,410,000 ordinary shares to Meinl Bank AG, under aPlacement and Market-maker Agreement, for subsequent placingwith investors, through a listing on the Third Market of the ViennaStock Exchange.

As at 31 December 2002, 294,155 shares out of the 2,410,000shares have been placed and are included within issued sharecapital.

18. Issued share capital

Group and Parent Company 2002 2001


Authorised:60,000 ordinary shares of DEM 1 each - 3120,400,000 ordinary shares of EUR 5 each 102,000 -Total 102,000 31

Group and Parent Company 2002 2001


Issued and fully paid45,000 ordinary shares of DEM 1 each - 234,884,156 ordinary shares of EUR 5 each 24,421 -Total 24,421 23

Issued share capital Share premium Capital redemption Accumulated losses Currency translation Total

EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s

Balance at 1 January 2002 23 22,985 - (7,144) (1,067) 14,797Cost of issuing shares - - - (737) - (737)Exchange differences arising on translation of overseas operations - - - - (623) (623)Net profit for the period - - - 353 - 353Bonus share issue 22,927 (22,927) - - - -Issue of share capital 1,471 1,612 - - - 3,083Balance at 31 December 2002 24,421 1,670 - (7,528) (1,690) 16,873

Balance at 1 January 2001 23 22,985 - (7,593) (175) 15,240Exchange differences arising on translation of overseas operations - - - - (892) (892)Net profit for the period - - - 449 - 449Balance at 31 December 2001 23 22,985 - (7,144) (1,067) 14,797


19. Borrowings



Bank loan 4,805 5,277 - -Bonds issued 43,154 43,809 45,454 44,830Total 47,959 49,086 45,454 44,830

The borrowings are repayable as follows:

Group Bonds issued Bank loans Total

EUR000’s EUR000’s EUR000’s

Due within one year 1,167 545 1,712In second year 1,167 523 1,690In third to fifth years inclusive 40,820 2,917 43,737After five years - 820 820Total 43,154 4,805 47,959Amount due within 12 months (included under current liabilities) 1,167 545 1,712Amount due after more than 12 months 41,987 4,260 46,247

Parent Company Bonds issued Bank loans Total

EUR000’s EUR000’s EUR000’s

Due within one year 1,167 - 1,167In second year 1,167 - 1,167In third to fifth years inclusive 43,120 - 43,120After five years - - -Total 45,454 - 45,454Amount due within 12 months (included under current liabilities) 1,167 - 1,167Amount due after more than 12 months 44,287 - 44,287


45

Interest bearing borrowings comprise a bond issued by theparent company on 28 November 1997. The nominal value of thebonds was EUR 46,016,269 issued at 98.5% of nominal, with afixed interest rate of 7.1%. The amounts above are shown net ofissuance costs, which are being amortised over the term of thebond (until 28 November 2007). The bonds are secured bymortgages registered on 60 properties of the group (see note 10).

The group has entered into three separate agreements whereby ithas granted certain bondholders an opportunity free of charge tosell up to a combined EUR 1,278,000 of their bonds per year back to theissuer. The price payable for bonds sold and purchased underthese agreements shall be the principal amount of the bonds plusaccrued interest of 7.1% per annum. During the year an amountof EUR 1,278,000 was repurchased by the group under thisagreement (parent company: EUR nil). As at 31 December 2002,EUR 8,692,000 of the bonds in issue remain subject to the aboveagreement.

In addition, during the year a nominal amount of EUR 511,000was resold by the group to third parties (parent company: EUR511,000), leaving a nominal amount in issue of EUR 43,715,000(2001: EUR 767,000 repurchased; EUR 44,482,000 in issue).

During 1999 a EUR denominated loan (originally DEMdenominated) was taken by the Czech subsidiary, ManhattanDevelopment a.s., for an amount of EUR 2,275,249. The loan wasgiven by Raiffeisen Zentralbank Osterreich AG, Vienna and issecured with a right of lien on real estate acquired by the loan toa maximum amount of EUR 2,853,009. This loan was increasedby EUR 787,389 during 2001. The loan carries interest at a fixedrate of 6.235% until March 2006 when it becomes due forrepayment. As at 31 December 2002 the loan balance was EUR2,244,549 (2001: EUR 3,011,509).

During 1999 a EUR denominated loan (originally DEMdenominated) was taken up by the Hungarian subsidiary,Manhattan Development Kft., for an amount of EUR 2,392,846.The loan was given by Raiffeisen Bank, Budapest and is securedwith a right of lien over four properties. The loan is further securedby all future receivables arising from lease agreements for theproperties for which the loan was provided. The loan carriesinterest at a fixed rate of 6.7539% until October 2009 when itbecomes due for repayment. As at 31 December 2002 the loanbalance was EUR 1,827,992 (2001: EUR 2,219,007).

During 2000 a further loan was taken up by the Czech subsidiary,Manhattan Development a.s., for an amount of CZK 17,000,000.The loan was given by Raiffeisen Bank Praha and is securedwith a right of lien on real estate in Neratovice. The loan isfurther secured by all future receivables arising from the leaseagreements for the properties for which the loan has beenprovided. The loan carries interest at a fixed rate of 8.8% untilDecember 2011 when it becomes due for repayment. At 31December 2002 the loan balance is EUR 440,134 (CZK13,908,000) (2001: EUR 504,134; CZK 16,116,000).

Fair valueIn the opinion of the directors, the fair value of the bondsoutstanding as at 31 December 2002 is EUR 44,808,000 (parentcompany: EUR 47,165,000). This valuation is based on the marketasking price on 31 December 2002.

The fair value of other borrowings cannot reasonably bedetermined. However, in the opinion of the directors, the fairvalue of other borrowings is not significantly different to theircarrying value.


20. Deferred tax

Group 2002 2001


Arising on difference betweencost of land and buildings andtheir value for tax purposes 4,215 4,001Other temporary differences 664 691Total 4,879 4,692

The movement for the year in the group’s deferred tax positionwas as follows:

Group 2002 2001


Brought forward 4,692 4,551Foreign exchange differenceson opening balances 13 36Charge/(credit) to income for the year 174 105Carried forward 4,879 4,692

21. Related party transactions andshareholdersThe largest shareholders in the parent company are Meinl BankAG and Caledonia Land & Property Limited, who held 2,550,000(52%) and 2,040,000 (42%) shares respectively at the balancesheet date. These shares are registered in the name of Oester-reichische Kontrollbank AG, as trustee for Meinl Bank AG andCaledonia Land & Property Limited. Consequently, Meinl BankAG and Caledonia Land & Property Limited are in a positionto exercise a direct controlling role over the parent company’smanagement (through their shareholding and the composition ofthe board of directors). As a result, Meinl Bank AG and CaledoniaLand & Property Limited have entered into a shareholders’agreement requiring the consent of both parties on certaininvestment decisions.

The parent company and Meinl Bank AG, a 52% shareholderin the group, entered into a Placement and Market-makerAgreement during 2002. Meinl Bank AG has been allocated anumber of ordinary shares under this agreement for subsequentplacing with investors through a listing on the Third Market of theVienna Stock Exchange.

The group holds two call accounts with Meinl Bank AG, Vienna.At 31 December 2002 EUR 2,920,000 (2001: EUR 273,000) isincluded in cash and cash equivalents.

During the year rental income of EUR 2,055,155 (2001: EUR1,983,812) was received from Julius Meinl a.s., a fellow groupcompany of Julius Meinl International AG who were 28% share-holders at the previous balance sheet date. At 31 December 2002EUR nil (2001: EUR nil) is included in trade and other receivables.

22. Employees

Group2002 2001

Average number of employees 27,0 23,5Hungary 3,0 2,5Czech Republic 24,0 21,0

23. Risk managementGeneral risk strategyGroup management constantly assess and report the riskexposures of individual companies and the group as a whole tothe board of directors. Together with monthly managementreporting, board meetings are held at least quarterly.

Financial RiskWhere a property is acquired through external financing, this isachieved through mortgages on the properties held. Repaymentsand interest rates are fixed for both the tenants of the respectivelease agreements and the financing. Through this, the directorsbelieve that they have adequately managed the financial risks.

Currency riskFinancing is largely denominated in the same currency as therental income flows from the financed projects. The groupcurrently has borrowings and rental income denominated inEuros and Czech Koruna (‘CZK’). Through this, the directorsbelieve that they adequately manage their exposure to adverseforeign exchange fluctuations. However, the group has a short tomedium term exposure to foreign exchange fluctuations betweenthe Euro and Czech Koruna and Hungarian Forint as theproperties acquired in the Czech Republic and Hungary havebeen largely financed by Euros.


47

Market riskThe directors consider their ability to rent out premises when theyassess the purchase of property. Currently, the group has notencountered any significant difficulties in renting empty premises.The total vacancy rate for the group is around 3% at 31December 2002, where 5% is considered to be normal for theindustry.

Risk policies specific to individual companies within the group aregiven below:

Meinl European Land LimitedThe majority of receivables and payables are in EUR and theparent company therefore has no exposure to any currency risk.The parent company pays 7.1 % fixed interest on the bonds inissue every year. The parent company is dependent on rentalincome earned through its subsidiary companies to continue tomeet its obligations on this debt.

Manhattan Development a.sThe company adheres to the “General risk strategy” describedabove.

Currency riskRental income of this company is denominated 53% in EUR and47% in CZK. This is generally matched to the expense streams ofthe company, whereby operational costs are in CZK, andfinancing costs are denominated in EUR, with the exception of theproperty financing on the Neratovice project where rental incomeand financing costs are denominated in CZK. Managementmonitor costs and income on a monthly basis.

Financial riskAll financing is mortgaged to the real estate. The repayment ofthe loans is fixed on the tenants of the respective lease agree-ment for the financed project as well as the interest rates. Thedirectors therefore believe that they have adequately managedtheir financial risk in this sense.

Business riskThe company earns 47% of its income from one tenant, JuliusMeinl a.s. Should this tenant default then the company would bereliant on support from fellow group members in order to meet itsobligation in the short term.

Market riskThe 47% that is rented to Julius Meinl a.s. are fixed in leaseagreements until 2007. The company’s other 53% is made up ofsmall to medium sized international and national tenants. Thereare a total 221 tenants in as many premises. There is therefore noother single significant credit exposure on these and the turnoveris relatively stable. The company has 5% vacant spaces in 2002,which is considered to be moderate compared to the industryaverage.

Manhattan Development Kft.The company adheres to the “General risk strategy” describedabove.

Currency riskAll the company’s income is EUR denominated. The company’scosts are to 43% in local currency. The proportion of the costs inlocal currency is equivalent to approximately 7% of the income,which the directors believe to be an acceptable risk level.

Financial riskAll financing is mortgaged to the real estate. The repayment ofthe loans is fixed on the tenants of the respective leaseagreement for the financed project as well as the interest rates.The directors therefore believe that they have adequatelymanaged their financial risk in this sense.

Business riskThe company earns 75% of its income from one tenant, Delhaize.Should this tenant default then the company would be reliant onsupport from fellow group members in order to meet itsobligations in the short term.

Market riskThe 75% that is rented to Delhaize is fixed in lease agreementsuntil 2007. The company’s other 25% is rented to REWE andTengelman until 2010 also capping the market risk on this part.The company has 0% vacant spaces in 2002.


24. Segmental analysis

2002 2001 Restated

Czech Rep. Hungary Jersey Total Czech Rep. Hungary Jersey Total

EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s

Rental income 4,470 2,130 - 6,600 4,044 2,168 - 6,212Profit on sale of property,plant and equipment - 115 - 115 - - - -Reinvoiceable utilities 943 176 - 1,119 943 175 - 1,118Consultancy income 33 43 46 122 - 11 56 67Other operating income 7 27 - 34 - 89 - 89Total 5,453 2,491 46 7,990 4,987 2,443 56 7,486Profit/(loss) before taxation 2,534 1,142 (2,921) 755 2,169 1,506 (3,026) 649Additions to property, plant and equipment 1,277 392 - 1,669 3,588 197 - 3,785Segment assets 43,274 24,743 3,559 71,576 41,229 27,918 772 69,919Segment liabilities (4,145) (292) (50,266) (54,703) (3,311) (1,692) (50,119) (55,122)

The above information reflects the consolidated position of thegroup as at 31 December 2002 and 31 December 2001, and itsresults for the years then ended.

As disclosed in the accounting policy, assets and liabilities aredisclosed according to their geographical location.

The major items of non-cash expenditure are depreciation andamortisation of the non-current assets held by the group, thepremium on the debt securities issued and the corporatemanagement fee incurred on issue of debt securities.Included within the results shown above are the following items:

25. Earnings per shareEarnings per share (‘EPS’) is calculated by dividing the profit aftertaxation for the year attributable to ordinary shareholders by theweighted average number of participating shares outstanding

of 4,597,216 (2001: 4,590,000) during the year. Diluted EPS is thesame as basic EPS.

2002 2001 Restated

Czech Rep. Hungary Jersey Total Czech Rep. Hungary Jersey Total

EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s EUR000’s

Non-current asset depreciation (1,177) (688) - (1,865) (1,120) (703) - (1,823)Amortisation of premiumon issuance of debt - - (70) (70) - - (70) (70)Amortisation of corporatemanagement fee on issuance of debt - - (41) (41) - - (41) (41)


49

We have audited the financial statements on pages 32 to 48.

This report is made solely to the company’s members, as a body,in accordance with Article 110 of the Companies (Jersey) Law1991. Our audit work has been undertaken so that we mightstate to the company’s members those matters we are requiredto state to them in an auditor’s report and for no other purpose.To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the company andthe company’s members, as a body, for our audit work, for thisreport, or for the opinions we have formed.

Respective responsibilities of directors and auditorsThe directors are responsible for preparing the financialstatements in accordance with applicable Jersey law andInternational Financial Reporting Standards. Our responsibilities,as independent auditors, are established in Jersey by law, theUK Auditing Practices Board, and by our profession’s ethicalguidance.

We report to you our opinion as to whether the financialstatements give a true and fair view and are properly prepared in accordance with the Companies (Jersey) Law 1991. Wealso report to you if, in our opinion, the directors’ report is notconsistent with the financial statements, if the company has notkept proper accounting records, or if we have not received allthe information and explanations we require for our audit.

We read the other information accompanying the financialstatements and consider whether it is consistent with thosestatements. We consider the implications for our report if webecome aware of any apparent misstatements or materialinconsistencies with the financial statements.

Basis of opinionWe conducted our audit in accordance with Auditing Standardsissued by the UK Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amountsand disclosures in the financial statements. It also includes anassessment of the significant estimates and judgements madeby the directors in the preparation of the financial statements, andof whether the accounting policies are appropriate to the group’scircumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonableassurance that the financial statements are free from materialmisstatement, whether caused by fraud or other irregularityor error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financialstatements.

Opinion In our opinion the financial statements give a true and fair viewof the state of affairs of the company and the group as at 31December 2002 and of the results of the group for the year thenended in accordance with International Financial ReportingStandards as promulgated by the International AccountingStandards Board, and have been properly prepared inaccordance with the Companies (Jersey) Law 1991.

KPMGChartered Accountants

14. June 2003

Independent Auditors’ Report to the members

of Meinl European Land Limited


Officersand Profession


Directors Georg Josef KucianPeter WeinzierlPer HanssonJohann MantlerWilliam WyattMichael George BestAnthony Panayiotis Michael

SecretaryDominion Corporate Services Limited47 The EsplanadeSt Helier, JerseyJE1 OBD

Administrator and RegistrarDominion Fund Administrators Limited47 The EsplanadeSt Helier, JerseyJE1 OBD

Auditors KPMGChartered Accountants45 The EsplanadeSt Helier, JerseyJE4 8WQ

Registered office47 The EsplanadeSt Helier, JerseyJE1 OBD

Investor RelationsMeinl Success Finanz AGBauernmarkt 21010 Wien, AustriaTel. +43-1-531 88-300www.meinlsuccess.com

Meinl Bank AGBauernmarkt 21010 Wien, AustriaTel. 43-1-531 88-0www.meinlbank.com

al Advisors

www.meinleuropeanland.com


Documents

Annual Report 2002 - Jaarverslag.com€¦ · Revenues 5,582 6,275 6,262 7,486 7,990 EBITDA 2,999 3,600 4,091 5,001 5,524 EBIT 1,517 1,987 2,345 3,178 3,659 Profit before taxation