GAP Developments plc - Full-Year Results

Friday, August 24th, 2012

On 23 August, GAP Developments plc published its 2011 Annual Report revealing a loss of €3.98 million. Total revenue of €13.3 million was generated from an undisclosed number of apartment sales which were concluded during the year. However, cost of sales amounted to €16.98 million leading to a gross loss of €3.6 million.

The Directors explained that works on the 341 freehold apartments was at advanced stage of completion. The South block and East Blocks 1 & 2 are completed in all respects. Meanwhile only 16 apartments forming part of the West Block & Blocks East 3, 4 and 5 are still to be constructed whilst the finishes on the other apartments are underway.

The 2011 Annual report also reveals that the Directors do not expect to realize significant losses beyond those already recognized up to 31 December 2011.

The 2011 Annual Report also includes a number of important developments which are summarized below:

Changes in Share Capital & Shareholders’ Loans

During 2011, GAP Developments reduced its issued share capital by €7 million to offset most of the €7.67 million in losses incurred in December 2010 mainly relating to a €7.4 million write-down in the carrying amount of stock of development property.

Moreover, the Group capitalised €9 million of shareholders’ loans through the issuance of 6,800,000 ordinary “B” shares with a nominal value of €2.50 in favour of Tigne Skies Ltd. The latter is now the largest shareholder in GAP Developments plc with a 75% stake whilst the remaining 25% is held by the founding shareholders, namely GAP Holdings Ltd and George Muscat.

During the year, shareholders granted additional shareholders’ loans amounting to €7.2 million to GAP Developments.

Furthermore, shareholders have already committed to provide additional funding amounting to €12 million by March 2013. In fact, the shareholders have already provided €5.85 million in loans in 2012. This commitment was linked to an extension of the Group’s €37 million bank borrowings which now fall due in staggered payments over the course of 2012 and 2013.

Reserve Account

The 2011 Annual Report also provides an update on the Reserve Account set up to cover the redemption of the €29.8 million of outstanding bonds which mature on 30 April 2013 (8 months’ time). The Directors explained that due to delays in the issuance of development permits, the projections with respect to the Reserve Account (set out in the bond prospectus dated 21 March 2007), could not be reached. As at 31 December 2011, a total of €3.6 million were credited to the Reserve Account compared to the forecasted €34.9 million. Moreover, €2.2 million of these funds have already been utilized to buy back bonds on the secondary market.

Special Privilege

The main sub-contractor of the Fort Cambridge development registered a special privilege on the project for an amount of €8.1 million representing the balance due to this sub-contractor as at 11 June 2012. This special privilege is subordinated to the bank loans and the bonds.


GAP received a number of judicial letters from persons who had signed promise of sale agreements with the Company claiming a refund of the deposits made together with interest on the basis that the apartments had not been completed by the date of the stipulated agreements. However, the 2011 Annual Report fails to disclose the potential amount of such damages.

In addition, the Company has entered into a number of promise of sale agreements for which it has received payments. However, such payments will have to be refunded if the sale of these apartments in the Fort Cambridge project is not completed.


The 2011 Annual Report also reveals that GAP has outstanding commitments amounting to €14.25 million in relation to the emphyteutical grant entered into with the Government of Malta for the development of the Fort Cambridge area.

Suspension of Trading in GAP Bonds

Following the publication of the 2011 Annual Results, the Malta Financial Services Authority (MFSA) lifted the suspension on trading of GAP bonds since the Company has now rectified its position with respect to its reporting obligations.


Download a copy of the  GAP Developments plc 2011 Annual Report


2012 Half-Year Results

In a separate announcement published on 24 August, GAP Developments plc announced that its Board of Directors is scheduled to meet on 30 August to consider and approve the Group’s 2012 half-year results.



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