Woolworth (Cyprus) profits seen up

SFS expects positive results from golf investment

 

Woolworth (Cyprus) Properties Pcl (FWW) issued a positive profit warning indicating that the Group’s 2006 profitability will be significantly improved compared to the reported profitability in 2005, which amounted to EUR 3.9 mln.

According to the announcement, the improved profitability is mainly driven by the increase in share of profits from associated companies and the additional revenue from the agreement between Carrefour supermarkets and the shopping malls “Shacolas Emporium Park” and “Agora Engomis”.

In 9M06 the Company posted a net profit of CYP 2.8 mln yielding an EPS of 2.9 cent (EUR 0.05), while in 2005 FWW’s net profit amounted to CYP 2.3 mln (EUR3.9 mln).

Management expects profitability in 2006 to exceed EUR 5.2 mln.

In December 2006, FWW announced the acquisition of 100% of the issued share capital of N.K Shacolas (Merchants) Ltd. which is a full subsidiary of N.K Shacolas (Holdings) Ltd. N.K.

Shacolas (Merchants) Ltd. owns 11.73% stake in Cyprus Limni Resorts & Golfcourses

Plc. which owns property of around 2.8m square meters at Limni, Polis Chrisochous. According to the announcement, Cyprus Limni Resorts & Golfcourses will engage in the building and development of a golf course, a hotel, villas and apartments and other dwellings related to tourist development.

FWW is interested in investing in the aforementioned plan since it already engages in related operations in the area of property development and also anticipates a significant return on the specific investment.

Cyprus Limni Resorts & Golfcourses Plc. has already taken the preliminary actions for its listing on the Cyprus Stock Exchange (CSE). The acquisition cost is provisionally estimated at CYP10 mln or EUR17.4 mln while the final price will be set by a recognized Audit Firm in order to ensure that the transaction is executed at arm’s length. In the scope of this agreement, FWW will provide management and support services to Cyprus Limni Resorts & Golfcourses Plc. for an annual fee of CYP250k (EUR435k). According to FWW, this investment is estimated to generate over 12% annual return in the next 5-8 years while it will add value and diversification to the Company’s property portfolio.

Analysts at Sharelink Securities & Financial Ltd., a member of SFS Group Pcl (SFS) provisionally estimate that FWW’s investment in Cyprus Limni Resorts & Golfcourses Plc. will result in a net contribution in the Group’s profitability in the range of CYP 0.7 mln-CYP 0.9 mln (EUR1.2 mln-EUR1.6 mln) from 2007 and onwards and a contribution in the range of EUR0.10-EUR0.20 to FWW stock on a per share basis.