RNS Number:4728T
Bulgarian Property DevelopmentsPLC
22 March 2007
FOR RELEASE 7.00AM 22 MARCH 2007
BULGARIAN PROPERTY DEVELOPMENTS PLC
("the Group")
(The Group is primarily focussed on the development of commercial property and
in particular building pre-let warehousing, distribution centres and offices)
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
Main points
* Turnover, including joint ventures, of #91,000
* Loss before tax #320,000
* Loss per share 0.46p
* Building works have commenced at Varna Logistics Centre
* Value of land portfolio has increased by 48% over cost as at February 2007
* Equity raised in February effectively fully invested
* Purchase of a 87,000 square metres (21.5acres) site near Lozenets in
Sofia, for the Sofia Commercial Centre, completed after the period end in
February 2007.
Enquiries:
Bulgarian Property Developments
Ivo Hesmondhalgh (Joint Chief Executive) +44 (0) 20 7243 1336
Philip Pashov (Joint Chief Executive) + 359 2 8199 205
Matrix Corporate Capital Limited
Ken Vere Nicoll +44 (0) 20 7925 3300
Fairfax I.S. Limited
James King +44 (0) 20 7598 5368
Cubitt Consulting
Brian Coleman-Smith / Allison Reid / Leanne Denman +44 (0) 20 7367 5100
BULGARIAN PROPERTY DEVELOPMENTS PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
CHAIRMAN'S STATEMENT
The most significant step for the Group since the announcement of results for
the year ended June 2006 has been the purchase of 21.5 acres or approximately
87,000 square metres ('sm') near Lozenets, one of the better residential areas
of Sofia. The purchase took place on 1st February 2007 so is not reflected in
the Group's interim results. I have set out greater details of this site and the
Directors' intentions for it later on in this statement. This acquisition means
that the Group is effectively fully invested.
The other main noteworthy event over the course of the last six months is that
Bulgaria has joined the European Union. Whilst this was widely predicted,
Bulgaria's accession should guarantee the county's political stability and
further stimulate the growth of its economy. The EU has promised a wide range of
grants to Bulgaria and many of these are aimed at improving the infrastructure
of the country.
The results for the six months to 31st December 2006 show a loss before tax of
#320,000. The directors do not propose to declare a dividend.
I have set out below the current status of the Group's main sites.
Sofia Airport Sites
Although it has taken longer than anticipated, progress has been made towards
obtaining planning permission for the Group's sites in the area around the
airport. The Group's advisers are now confident that rezoning will be achieved
imminently. Colliers have valued the sites at Euro3,356,000 against current costs
of Euro2,188,000.
Sofia Ring Road Sites
The Group has two main sites on the western ring road. The Group exchanged
contracts for the sale of one of these sites in October 2005, subject to
rezoning being achieved. Rezoning for this site has now been granted and notice
to complete has been served on the purchaser. Completion is due to take place in
early April and will produce a profit, before tax, of approximately Euro370,000 for
the Group.
Rezoning of the other site has been slower than anticipated, mainly due to the
preparation of the Sofia development master-plan. Following the rezoning of the
Group's other site (mentioned above) which is immediately opposite, on the other
side of the ring road, the Group is now optimistic that rezoning will be
achieved for this site, although it may take several months.
Sofia Commercial Centre
As I mentioned at the beginning of my statement, the Group has completed the
purchase of an 87,000 sm site adjacent to Lozenets in Sofia which is
approximately halfway between the southern section of the Sofia ring road and
the city centre and is adjacent to the proposed Sofia inner city ring road. Your
directors understand that the construction of the inner city ring road is one of
the main priorities of the Sofia municipality. The site has full commercial
zoning and lends itself to a mixed development of offices and retail.
Approximately one third of the site is vacant and the remaining two thirds
consists of run down offices and warehousing, which are rented out and produce a
yield in the region of 3% per annum on the purchase cost.
The Group intends to apply for a greater density development than exists at
present. Once this is achieved, it intends to first develop the vacant part and,
when the new buildings are occupied and income producing, to develop the rest of
the site. The Group anticipates being able to start building works in 2008.
Plovdiv - Trakia Retail Centre
As I reported on 29 July 2006 the Group, in a 50/50 joint venture with Fairplay
International AD, completed the purchase of a 21,800 sm land plot in the Trakia
district of Plovdiv (Bulgaria's second biggest city) at a price for the site of
Euro4,431,000. Following a feasibility study completed by Colliers International,
it is intended that it should be developed as a retail centre and the directors
are actively seeking an anchor tenant.
Varna Logistics Park
On 4 October 2006 the Group purchased 50% of the shares of Varna Logistics AD
for Euro6,366,000, the other 50% of the shares being purchased simultaneously by
Fairplay International AD at the same price. The sole asset of Varna Logistics
AD is a 132,500 sm income producing industrial site in the city of Varna, which
is on the Black Sea and is the third largest city in Bulgaria. Approximately one
third of the site is vacant. The rest of the site has a number of run down
industrial buildings on it. These are tenanted and produce a net return of 5.3
per cent per annum.
A master-plan has been prepared, showing a mixed development of warehousing,
medium grade offices, retail (on the road frontage) and a supermarket. The plan
envisages development being conducted in phases, with Phase One being the
development of the vacant portion of the site. Once completed Phase One will
have two warehouses (each of approximately 5,000 sm) together with associated
offices, a multi storey car park and a parade of shops with offices above.
Initial building works on this part of the site have just begun.
The existing run down buildings remain occupied and should not be affected by
the Phase One building works. Once the new buildings are occupied and let, it is
intended to redevelop the rest of the property. This phased approach should mean
that there should always be an income stream to help service any debt.
Pleven Retail Park
The Group is part of a consortium that purchased a plot of 36,500 sm from the
municipality of Pleven in October 2006 for a total cost of Euro1,595,000. The Group
has a 38% share of the consortium. Pleven is a busy town of 120,000 inhabitants
in the north of Bulgaria. The site already has planning permission for retail
use.
A master-plan has been prepared and Colliers International have produced a
feasibility study for the site. The consortium is actively seeking anchor
tenants and once at least one anchor tenant has been signed up, the consortium
will commence development.
Values
The Directors have instructed Colliers International to carry out a valuation of
all of its principal properties. The table below sets out the result of these
valuations. The completion of the purchase of the Sofia Commercial Centre only
happened in February 2007 and it has, therefore, been shown at cost. In a few
other cases involving small plots of land, the Directors have not asked Colliers
to value them and these have also been shown at cost.
Property Area Date of Value Uplift Value Uplift Value %
(sm) Purchase Un-zoned on Feb on cost Feb
(note Cost cost 2007 (%) 2007 Uplift
6) Euro's (%) Rezoned Rezoned Euro's on Cost
(note 2) Euro's (note 2) Feb 2007
Varna 66,250 13.10.06 6,717 N/A N/A 8,002 19.1 8,002 19.1
(50%)
Plovdiv 10,915 31.07.06 2,296 N/A N/A 3,378 47.1 3,378 47.1
(50%)
Pleven 13,876 11.10.06 606 N/A N/A 736 21.4 736 21.4
(38%)
Sofia Ring 92,510 2004-2006 2,171 4,688 117.8 7,272 235 4,688 117.8
Road One
Sofia Ring 19,649 13.12.04 395 N/A N/A 786 98.9 786 98.9
Road Two
(note 3)
Misc small 42,740 2004-2006 1,077 1,529 41.9 2,087 93.8 1,529 42.0
sites
(note 4)
Airport 22,951 2005 1,264 2,075 64.2 3,080 143.7 2,075 64.2
Site 1
Airport 14,900 2005 924 1,281 38.6 1,869 102.3 1,281 38.6
Site 2
Bansko 6,094 13.04.05 506 N/A N/A 1,082 63.7 1,082 63.7
SUB TOTAL Pre 31 15,956 23,557 47.6
Dec 2006
Sofia 87,003 01.02.07 24,836 N/A N/A N/A N/A 24,836 0
Commercial
Centre
TOTAL 376,888 40,792 N/A N/A N/A N/A 48,393
1. All valuations carried out by Colliers International.
2. The value or cost shown is the value or cost of BPD's % of site as
appropriate.
3. Contracts for sale of Ring Road Site Two exchanged. Completion notice served
on purchaser. Value shown is sale price.
4. Colliers have not valued all of these plots. Where they have not valued them,
the total cost to date is shown as their value.
5. Figures are in Euro's and shown in thousands.
6. Area shown is BPD % of site not total area of site.
7. 31 December 2006 exchange rate: #1 : Euro1.4852.
All the Group's properties are held as trading assets and, in accordance with
the Group's accounting policies, such assets are not revalued in its accounts.
Adjusting for the rezoned revaluation surplus shown by Colliers' valuation and
equivalent to 6.9p per share, the Group's NAV per share as at 31 December 2006
would have been equivalent to 57.03p per share.
Your board looks forward to continued progress and is optimistic as to the
prospects of your Group in the years ahead.
Christian Williams
Chairman
Bulgarian Property Developments Plc
Consolidated Profit and Loss Account for the six months ending 31 December 2006
Unaudited
6 month
Audited period
year ended 31
ended 30 December
June 2005
Unaudited 6 month period ended 31 2006
December 2006
Group Interests Total Group Group
in joint
ventures
#'000 #'000 #'000 #'000 #'000
Turnover - 91 91 - 2
Cost of sales - - - - -
Gross profit - 91 91 - 2
Administrative expenses (832) (33) (865) (633) (186)
Operating profit/(loss) (832) 58 (774) (633) (184)
Share of operating profit
in Joint ventures 58 - -
Total operating loss: (774) (633) (184)
Group and share of joint ventures
Interest receivable:
Group 495 671 19
Joint ventures - - -
495 671 19
Interest payable:
Group - - -
Joint ventures (41) - -
(41) - -
Profit/(loss) on ordinary
activities before tax (320) 38 (165)
Tax on profit/(loss) on *
ordinary activities (15) (103) -
Retained loss for the period (335) (65) (165)
Loss per share (0.46p) (0.17p) (2p)
* Tax relates to the following: Parent and subsidiaries (7)
Joint ventures (8)
Bulgarian Property Developments Plc
Consolidated Statement of Total Recognised Gains and Losses for the six months
ending 31 December 2006
Unaudited
6 month
Audited period
year ended 31
ended 30 December
June 2005
Unaudited 6 month period ended 31 2006
December 2006
Group Interests Total Group Group
in joint
ventures
#'000 #'000 #'000 #'000 #'000
Loss on ordinary
activities after taxation (335) (65) (165)
Currency translation
differences on
foreign currency
net investments 11 (6) (20)
Total recognised
gains and losses
for the period (324) (71) (185)
Bulgarian Property Developments Plc
Consolidated Balance Sheet
30 31
June December
31 December 2006 2006 2005
Group Interests Total Group Group
in joint
ventures
#'000 #'000 #'000 #'000 #'000
Fixed assets
Tangible Assets 2 35 37 - -
Investments in
Joint Ventures 6,395 (6,395)
6,397 37 - -
Current assets
Stock 4,266 6,474 10,740 3,494 3,161
Debtors 1,180 12 1,192 505 26
Cash at bank 24,792 156 24,948 33,162 682
30,238 6,642 36,880 37,161 3,869
Creditors: amounts
due within 1 year (134) (282) (416) (336) (85)
Net current assets 30,104 36,825 3,784
Net assets 36,501 36,825 3,784
Represented by:
Share Capital 18,135 18,135 2,226
Share Premium
account 19,035 19,035 2,017
Profit and loss
account (669) (345) (459)
Shareholders funds 36,501 36,825 3,784
Bulgarian Property Developments Plc
Consolidated Cash Flow Statement for the six months ending 31 December 2006
Unaudited Unaudited
6 month 6 month
period Audited period
ended year ended ended
31December 30 June 31 December
2006 2006 2005
#'000 #'000 #'000
Net cash outflow from operating
activities (2,487) (1,977) (857)
Returns on investments and
servicing of finance
Interest received 495 671 19
Interest paid - - -
Net cash inflow from returns on
investments and servicing of
finance 495 671 19
Acquisitions and disposals
Payments to acquire tangible
fixed assets (3) - -
Investment in Joint Ventures (6,395) - -
Net cash outflow from
acquisitions and disposals (6,398) - -
Net cash outflow before
financing (8,390) (1,306) (838)
Financing
Issue of ordinary shares - 35,000 -
Less: issue costs - (2,082) (9)
Net Cash inflow/(outflow) from
financing - 32,918 (9)
(Decrease)/Increase in cash in
the period (8,390) 31,612 (847)
Cash and cash equivalents at the
beginning of the period 33,162 1,550 1,550
Translation differences 20 - (20)
Cash and cash equivalents at the
end of the period 24,792 33,162 683
Reconciliation of operating loss #'000 #'000 #'000
to net operating cash outflow
Operating loss (832) (633) (184)
Depreciation 1 - -
(Increase) in stocks (772) (1,085) (751)
(Increase)/decrease in debtors (675) (439) 40
Increase/(decrease) in creditors (209) 180 38
(2,487) (1,977) (857)
Bulgarian Property Developments Plc
Notes to the Interim financial Statements
for the six months ended 31 December 2006
1. The financial information contained in this document has been prepared in
accordance with Generally Accepted Accounting Principles in the United
Kingdom and with AIM rules and does not constitute statutory accounts within
the meaning of section 240 of the Companies Act 1985. This interim statement
has not been audited but has been reviewed by the Company's auditors, Nexia
Smith & Williamson.
Statutory accounts for the year ended 30 June 2006 have been filed with the
Registrar of Companies. The auditors have reported on those accounts; their
report is unqualified and did not contain a statement under either Section 237
(2) or Section 237 (3) of the Companies Act 1985.
2. Comparatives
The comparative periods represent audited results for the year ended 30th June
2006 and interim unaudited results for the period ended 31 December 2005.
3. Accounting policies
The interim statement has been prepared on the basis of the accounting policies
set out in the Group's audited accounts for the year ended 30 June 2006. The
main policies are noted below:
Basis of Consolidation
The consolidated accounts incorporate the accounts of the company and all its
subsidiary undertakings. Where subsidiaries are acquired or sold during the year
the group profit and loss account includes the results for the part of the year
for which they were subsidiaries. All subsidiaries are consolidated using the
acquisition method. Joint ventures are included using the gross equity method in
accordance with FRS 9. The gross equity method includes, within the consolidated
balance sheet, the Group's share of the assets which it jointly controls and its
share of the liabilities for which it is jointly responsible. The consolidated
profit and loss account includes the Group's share of the income and expenses of
the jointly controlled entity. Joint Ventures are those entities over whose
activities the Group has joint control, established by contractual agreement and
requiring unanimous consent of shareholders for strategic, financial and
operating decisions.
Stock
Stock represents land acquired for resale and is valued at the lower of cost and
net realisable value.
4. Loss per ordinary share
The loss per ordinary share is based on the losses for the 6 months ended 30
December 2006 of #335,000 and the weighted average number of ordinary shares in
issue during the period of 72,540,657 (30 June 2006: loss of #65,000 for the
year ended 30 June
2006 and weighted average number of ordinary shares of 38,070,801; 31 December
2005: loss of #165,000 for the six months ended 31 December 2005 and weighted
average number of ordinary shares of 8,904,000).
The diluted loss per share is identical to that used for basic loss per share as
the exercise of options would have the effect of reducing the loss per share and
therefore is not dilutive under Financial Reporting Standard 22 "Earnings per
Share".
5. Post balance sheet events
On 1st February 2007, a wholly owned subsidiary, Bulgarian Property Developments
2 EOOD, completed the purchase of a site of approximately 87,003 square metres
(21.5 acres) in Sofia, the capital of Bulgaria, for which contracts were
exchanged on 7 July 2006, at a price of Euro 23.5 million. The site is close to
Lozenets (an upmarket residential district in Sofia) and is half way between the
southern section of the outer ring road and the centre of Sofia. It is adjacent
to the proposed inner city ring road and is well located for a business and
retail development.
6. Related Party Transactions
The company has taken advantage of the exemption in FRS 8 Related Party
Transactions in respect of disclosure of transactions with group companies.
On 15 September 2004, a management agreement with Bulgarian Property Management
LLP Limited, a company controlled by Ivo Hesmondhalgh and Philip Pashov, was
entered into by the Company, in consideration for the payment by the company of
an annual administration fee and an annual performance fee. These obligations
also include the provision of services to fulfil the company's executive
functions. These fees represent the executive requirements of the company. The
details of this arrangement was fully disclosed both in the admission document
when the company was admitted to AIM and in the offer for subscription document
dated 15th September 2004.
On 27 March 2006, the agreement with Bulgarian Property Management LLP was
terminated and a management agreement with Bulgarian Property Management Limited
was entered into on the same terms and conditions as the agreement with
Bulgarian Property Management LLP.
The fees paid in the six months to 31 December 2006 were #323,000. As at 31st
December 2006 there were no fees outstanding.
Bulgarian Property Developments EOOD entered into agreements in Bulgaria with
Galchev and Co, a company 100% owned by Nikolay Galchev and with Building and
Construction Group EOOD, which is 40% owned and managed by Galchev and Co.
Fees of #3,718 were charged in the six month period to 31st December 2006
relating to these agreements.
Independent review report to Bulgarian Property Developments plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 December 2006 which comprises the Chairman's statement,
the Consolidated Profit and Loss Account, the Consolidated statement of Total
Recognised Gains and Losses, the Consolidated Balance Sheet, the Consolidated
Cashflow Statement and the related notes 1 to 6. We have read the other
information contained in the interim report and considered whether it contains
any apparent misstatements or other material inconsistencies with the financial
information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the AIM
rules of the London Stock Exchange which require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of the group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly, we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2006.
Nexia Smith & Williamson 25 Moorgate
Chartered Accountants London
Registered Auditors EC2R 6AY
Date: 21 March 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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