Armatura - declining revenues and loss in the middle of the year

Armatura Cluj, a company whose shares are suspended from trading following a decision taken based on incorrect information, achieved declining revenues in the first half of the year, but a smaller loss than in the first six months of 2024, according to a report by the issuer published yesterday on the Bucharest Stock Exchange (BVB) website.

The company reported revenues of 0.71 million lei, 24% below those in the January-June period of last year. On the other hand, personnel expenses amounted to 0.28 million lei, 38% below those in the first half of last year, while expenses for depreciation and amortization of fixed assets fell by 65%, to 0.14 million lei. Expenses for services provided to third parties increased by 46%, to 0.41 million lei. From operational activities, Armatura reported a loss of 0.21 million lei, lower than that of the first six months of last year, of 0.92 million lei.

Armatura shares were suspended from trading by the executive management of BVB on July 21 of this year, following a meeting of the company's shareholders at which it was decided to dissolve the company, initiate the liquidation procedure, and suspend and withdraw the securities from trading. According to documents published on the BVB website, the dissolution and liquidation of the company were motivated by the decrease in net assets below half of the value of the subscribed share capital, as well as the impossibility of carrying out the object of activity, according to the provisions of the commercial companies law. The report prepared by the auditor Noa Tax Advisors stated that the net assets (equity) of the issuer had decreased in 2024 to 6.9 million lei - below 50% of the subscribed and paid share capital, in the amount of 18.1 million lei. However, the issuer's annual report for 2024 indicates a share capital of 4 million lei, so the legal condition regarding the decrease in net assets below half of the share capital was not met.

The company's management claims that the amount of 18.1 million lei was the result of a material translation error between the Romanian and English versions of the report prepared by Noa Tax Advisors, an error that was not reported before the adoption of the EGMS decisions. According to the company, the respective amount comes from IFRS adjustments made in 2012 and does not reflect the real share capital, which is 4 million lei, according to the 2024 financial statements.

From the convening of the EGMS until the suspension of shares from trading, Armătura shares depreciated by 43%, generating losses for minority shareholders. And after the trading halt on July 21, investors only had the prospect of liquidating the company to recover part of their investment. The Board of Directors of Armatura has summoned the shareholders for September 17, in order to revoke the decision of June 24, which decided to dissolve the company due to the reduction of net assets below half of the value of the share capital. However, the dissolution and initiation of the liquidation procedure will be put to a vote again, based on the impossibility of carrying out the object of activity, according to the provisions of the commercial companies law. The suspension and withdrawal from trading of Armatura shares are other items on the agenda of the meeting on September 17.

The Austrian company Herz Armaturen owns 86.2% of the company, whose stock market valuation amounts to five million lei.