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Listed companies report 1 billion euro in gains from land revaluation

Approximately 50 companies floated on the Bucharest Stock Exchange have reported 2007 gains of over 1 billion euro as a result of the revaluation of their land and facilities.

The gains were computed based on the balance sheets of the companies as of end-2006 and end-2007. A 2007 property development boom triggered surges in the prices for land and structures located in the most important centres of Romania, which benefited many of the floated companies. This is said to have been visible on the stock exchange as well, with analysts and brokers arguing that the market rises of 2007 were greatly based on speculations with assets held by the floated companies. The companies are said to have hurried to increase the value of their assets to either get better loan terms, or to increase their attractiveness with stock investors. Topping the rankings on asset values rises was the newly privatised Electroputere Craiova (EPT) company, with a plus value in excess of 140 million euros and assets worth 175 million euros as of end-2007. The company was sold out in the autumn of 2007 for 120 million euros, half of which was made up of the company's outstanding debt. Chemical works Sinteza of Oradea (STZ) gained 41.5 million euros from asset revaluation, an amount that is four times the current market value of the company. Another company traded on the Bucharest Stock Exchange that stood to gain from asset revaluation was the Stirom Bucharest (STIB) glass packaging maker, which reported a surplus of 40.1 million euros from the revaluation process. The company's current market value is standing at 24.2 million euros. Business analysts say assets can contribute to business development thanks to their market realisation in order to create sources for the start off of business investments. Some of the analysts are warning about the real possibility of realising some assets owned by the companies traded on the BVB. At the same time, some brokers agree that revaluations might generate confusion among investors, given that the state of the real estate market in Romania is far from being well known. Although companies abroad are making a profit by assets revaluations, which are frequently conducted, the Romanian accountancy standards only require that the revaluation spreads be written down as reserves, which makes it that the companies only benefit from them when assets are actually realised, daily Ziarul financiar reports. Sursa: http://www.rompress.ro

Tags: companies assets million euros market which revaluation gains bvb euro

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