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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Madara | LSE:MBF | London | Ordinary Share | JE00B1VN4914 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.125 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Madara Bulgarian Property Fund
28 September 2007
28 September 2007
Madara Bulgarian Property Fund Limited
Unaudited results for the period from 28 April 2006 to 30 June 2007
Madara Bulgarian Property Fund Limited (the 'Fund') announces unaudited results for the period from 28 April 2006 to 30
June 2007.
Key Highlights
Financial highlights
*NAV per share at Euro1.37
*Euro15.8m of new equity capital raised
Corporate highlights
*Land acquired at Byala
*Options to acquire land at Borovets
*Currently fully invested
*Admission of the Fund's ordinary shares to AIM in June 2007
*Pipeline of potential new investments in place
Commenting on the results, Timothy Chadwick, Non-Executive Chairman of the Fund, said:
"We are delighted to announce our maiden results as an AIM listed company. We believe that
the combination of the continued growth of the Bulgarian property market and the Fund's existing assets, investment
opportunities and development programme provide a sound platform for investors looking for access to the Bulgarian
market."
Further information:
Timothy Chadwick, Chairman +44 (0)20 7534 3338
Madara Bulgarian Property Fund Limited
Scott Perkins, Chief Executive +44 (0)20 7534 3338
Madara Capital LLP
Jonathan Gollins/Marylene Guernier +44 (0)20 7153 1269
M:Communications
Richard Wood/Tom Griffiths +44 (0) 20 7012 2000
Arbuthnot Securities Limited
Unaudited results for the period from 28 April 2006 to 30 June 2007
Chairman's statement
Introduction
I am pleased to present Madara Bulgarian Property Fund's unaudited results for
the period from 28 April 2006 to 30 June 2007 and its first as a quoted company.
This has been a very eventful period during which the Fund has achieved several
important milestones in its development. Significant advances have been made
both in building the Fund's base of real estate assets for development in
Bulgaria and in terms of the Fund's structure and funding.
Listing on AIM
The Fund's ordinary shares were admitted to trading on AIM on 18 June 2007. As
well as creating a more liquid market for our shareholders, the Board believes
that the listing raises the profile of the Fund and gives us the ability to
raise additional equity capital to fund our continuing acquisition and
development programme.
The structure and objectives of the Fund
The Fund is a Jersey incorporated, limited liability, closed ended investment
fund established in April 2006. The Fund's purpose is to make investments in
Bulgaria's property market, primarily in acquiring land capable of development
in prime coastal, mountain resort or city locations. The strategy is
subsequently to develop such acquired land in accordance with its consented
(regulated) use or to profitably trade the acquired land with the benefit of
such consent. The Fund's investment objective is to generate total returns,
primarily through appreciation in the capital value of its property investments.
The Fund aims to provide shareholders with a total return, which is expected to
comprise primarily capital growth with the potential for dividends over the
medium to long term. The level of any dividend which might become payable will
depend on, inter alia, the rental and other income (including realised capital
gains) generated by the investments made by the Fund. The timing and amount of
any rental or other income cannot be predicted, therefore there can be no
guarantee as to the amount or timing of any dividend declaration by the Fund.
The Fund will be dissolved and its affairs wound up no later than 30 June 2016
unless its life is extended by the passing of a Special Resolution by
Shareholders. Following the end of the tenth year of the Fund, or such later
date to which its life may be extended by Special Resolution of Shareholders,
the proceeds of the sale of the property portfolio will be returned to
Shareholders in such manner as is determined by the Directors.
Dividend policy
The Fund does not currently intend to pay dividends for the first five years of
its life, during which period profits will be reinvested into further property
investments. However, thereafter the Directors will consider the payment of
dividends subject to the prevailing market conditions at the time and dependent
upon the availability of distributable reserves of the Fund and on the
availability of sufficient cash resources.
The investment adviser
Madara Capital LLP is investment adviser to the Fund. It is a limited liability
partnership incorporated in England with its head office located in London. The
Investment Adviser comprises seven principals (four executives and three
non-executives), five of whom are Bulgarian nationals and residents. The four
executives of the investment adviser possess wide-ranging local knowledge and
contacts and have over 35 years' collective real estate related experience in
Bulgaria.
Real estate investments acquired
The Fund has already acquired, or committed to acquire potential development
land in Bulgaria as detailed further below. The aggregate cost of these land
purchases is Euro35.5 million (including taxes, fees and VAT) which has been, or is
to be, satisfied by way of a combination of cash payments and the issue of Ordinary Shares at a
price of Euro1 each. As at the balance sheet date, the vendor of this land holds
18,721,205 Ordinary Shares, representing 49.79% of the issued share capital of
the Fund.
The Fund currently owns land totalling 408,341 square metres located near Byala
on the central Black Sea coast, south of Varna. The land is virgin land with no
current use but has Regulated Land status. A master plan has been completed by a
firm of UK architects for a residential and leisure development, comprising,
inter alia, several thousand residential units. We expect a detailed design to
be complete in Q4 2007. The land was purchased for a total consideration of
Euro27.3 million (including taxes, fees and VAT) via a number of separate
agreements entered into between the Fund and the vendor between September 2006
and March 2007.
The Byala Land was revalued as at 14 June 2007 by Savills at Euro39.9 million.
The Fund has entered into a conditional agreement to acquire three separate
blocks of virgin, unregulated land, totalling approximately 124,000 square
metres close to the centre of the established ski resort of Borovets. The
Borovets Land is to be purchased by the Fund for a total consideration of Euro8.2
million (including Transfer Tax).
This site has been revalued as at 14 June 2007 by Savills at Euro13.6 million.
Valuation of the Fund's real estate investments
The Fund has appointed Savills (L & P) Limited as Valuer to provide a full open
market valuation of its property portfolio on a semi-annual basis. Based on this
valuation, the unaudited Net Asset Value per Ordinary Share at 30 June 2007 was
Euro1.37.
Conclusion
As Chairman, I am delighted with the progress the Fund has made since my
appointment earlier this year. I am confident that we have very strong
management teams in place at both the Fund and the investment adviser. We have
the right blend of skills and experience required to take advantage of
identified opportunities to expand the Fund's assets and to generate returns
which match or exceed the 20% minimum IRR target set out in our AIM admission
document published on 14 June 2007.
Timothy Chadwick
Non-Executive Chairman
28 September 2007
Investment Advisors Statement
We are delighted with the progress of the Fund over this period. The Fund has
managed to secure good quality assets as well as a listing on AIM for
shareholders. Furthermore, we are excited at the prospect of the coming months,
not only in terms of the development of the existing assets, but also the
potential future investments of the Fund.
Existing Assets
Since acquiring the land in Byala we have been working towards a General Master
Plan for the area. A firm of UK architects were appointed to work with us, our
advisors and our co-developer to determine the optimal design for the site. All
relevant parties have approved the design and the General Master Plan has now
been successfully completed. Work has started on the next design stage, the
Detailed Master Plan relating to the land owned by the Fund. This phase is due
to be finalised within the next couple of months and its completion will be
formally announced in due course. The Fund intends to begin construction and
start marketing units to residential buyers in the first half of 2008, depending
on market conditions.
We are also in negotiations to acquire an option to purchase some or all of the
remaining land that forms part of the General Master Plan, subject to further
funds being raised.
Discussions with banks have been initiated relating to the financing of the
construction costs and this process is continuing.
Completion on the acquisition of the Borovets site is expected to take place
within the next few weeks, providing the land is granted regulated status
(essentially, planning permission) and will be announced in due course.
Investment Opportunities
We currently have a well developed pipeline of investments under appraisal,
which match the Fund's investment criteria. Negotiations are also under way in
respect of further potential development acquisitions.
There is no guarantee that any of these potential opportunities will result in
actual investments. Potential investors should also note that additional equity
financing may be required to enable these potential investment opportunities to
be completed by the Fund.
Bulgarian Economy
Economic data continues to support the long-term investment thesis for Bulgaria.
GDP growth in 2006 was 6.1%, up from 5.5% in 2005. The trend continues with
provisional GDP growth for H1 2007 estimated at 6.4% year on year.
Inflation is a slight concern for the economy, despite tight wage policies from
the Bulgarian government. The IMF recently increased its 2007 inflation forecast
from 4.5% to 8%. However, this was primarily due to floods and a drought which
have had a significant impact on crops, leading to increases in food prices. The
IMF therefore forecasts that inflation will recede to a more comfortable 4% in
2008, once food prices return to normal.
As a consequence of high inflation in 2007, Bulgaria is unlikely to meet its
official inflation target for 2007, set at 3.1%, a requirement for joining the
ERM II euro "waiting room". The country currently aims to join the Euro in
2010-2011.
Unemployment remains on a downward trend at 7.0% in August 2007, having fallen
from 7.3% in July 2007 and 8.7% in August 2006.
Tourism
Official statistics for 2006 show an annual increase in tourist numbers visiting
Bulgaria of 6.6% to around 5.2 million, coming mostly from the UK, Ireland,
Scandinavia, Russia and Romania.
Although official figures are not yet available for the 2007 season, preliminary
data for the year to June 2007 show a flat growth rate. Interestingly, however,
the mix continues to change with a decline in the number of UK visitors being
substituted by those from other Western European countries. Furthermore, growth
in the number of Romanian visitors is accelerating, underlining the value
proposition represented by holidays in Bulgaria.
New low-cost flight routes are due to be opened later this year which will
continue to improve accessibility and, we believe, to support the growth in
tourism in Bulgaria.
Property Market
The National Statistical Institute in Bulgaria began to run a series of data on
the Average Market Prices for Dwellings in 2006. Despite certain inconsistencies
in its methodology the statistics provide a useful benchmark for house prices.
The latest figures reveal that the Average Market Prices for dwellings increased
by 14.7% in 2006 year-on-year. The preliminary data for Q2 2007 show an increase
of 5.4% on the quarter, the equivalent of an annualised rate of 23.4%.
Furthermore, strong anecdotal evidence suggests that demand for high-end
properties is particularly strong from the Russian market, amongst others. We
believe that this is positive for the existing assets of the Fund and its
pipeline of potential investments.
Conclusion
Despite some negative press, the socio-economic climate in Bulgaria continues to
provide a sound platform for investment in the region. The combination of
relatively low property prices and the steady development of tourism in the
country continue to support the Fund's investment strategy. It is also
encouraging that Bulgaria's popularity as a holiday destination is growing among
a diverse range of European nationalities.
The next twelve months will be crucial for the development of the Fund. We
believe that Madara Bulgarian Property Fund is well positioned to take advantage
of the growing attractions of Bulgaria's real estate markets, and we have the
foundations in place to move onto the next stage in the Fund's development.
Scott Perkins, Chief Executive
Madara Capital LLP
28 September 2007
Consolidated Income Statement
for the period 28 April 2006 to 30 June 2007 (unaudited)
28 April 2006
to 30 June 2007
(Unaudited)
Note Euro
------ ------------
Continuing operations
Expenses
Administrative costs 960,555
Admission to AIM 1,261,531
------------------------ ------ ------------
Total operating expenses 2,222,086
------------------------ ------ ------------
Loss from operating activities (2,222,086)
------------------------ ------ ------------
Finance income 56,116
Finance expense -
------------------------ ------ ------------
Net finance income 56,116
Loss before tax (2,165,970)
Corporate income tax expense -
------------------------ ------ ------------
Current ordinary loss for the period (2,165,970)
------------------------ ------ ------------
Net loss per ordinary share (Euro) 7 (0.16)
The accompanying notes form an integral part of the financial statements.
Consolidated Statement of Changes in Equity
for the period 28 April 2006 to 30 June 2007 (unaudited)
Stated
Capital Retained
Account Earnings Total Equity
Euro Euro Euro
-------- -------- --------
Issue of Share Capital 40,414,105 - 40,414,105
Expenses of share issues (241,000) - (241,000)
Repurchase of shares for
cancellation (2,800,000) - (2,800,000)
Loss for the period - (2,165,970) (2,165,970)
-------------------- --------- -------- ---------
Balances at 30 June 2007 37,373,105 (2,165,970) 35,207,135
-------------------- --------- -------- ---------
The accompanying notes form an integral part of the financial statements.
Consolidated Balance Sheet
as at 30 June 2007 (unaudited)
As at
30 June 2007
(unaudited)
Notes Euro
------ ----------
ASSETS
Non-current assets
Land acquired for development 2 27,345,632
Land acquisitions yet to complete 3 8,061,771
Development costs 4 80,332
------------------------- ------ ----------
Total non-current assets 35,487,735
------------------------- ------ ----------
Current assets
Cash and cash equivalents 2,898,835
Other receivables 60,610
------------------------- ------ ----------
Total current assets 2,959,445
------------------------- ------ ----------
Total assets 38,447,180
------------------------- ------ ----------
SHAREHOLDERS' EQUITY AND LIABILITIES
Equity
Stated capital account 6 37,373,105
Retained earnings (2,165,970)
------------------------- ------ ----------
Total equity 35,207,135
------------------------- ------ ----------
Current liabilities
Other liabilities and payables 3,240,045
------------------------- ------ ----------
Total current liabilities 3,240,045
------------------------- ------ ----------
Total equity and liabilities 38,447,180
------------------------- ------ ----------
Net asset value per Ordinary share (Euro) 7 0.94
The accompanying notes form an integral part of the financial statements.
Consolidated Cash Flow Statement
for the period 28 April 2006 to 30 June 2007 (unaudited)
28 April 2006
to 30 June 2007
(unaudited)
Euro
-----------
Loss from operating activities (2,222,086)
Changes in working capital:
Other payables 1,394,489
Other receivables (48,210)
------------------------- -----------
Net cash outflow from operating activities (875,807)
Investing activities
Land acquisition and development expenditure (9,370,974)
Interest received 56,116
------------------------- -----------
Net cash outflow from investing activities (9,314,858)
------------------------- -----------
Financing activities
Proceeds of issues of share capital 15,880,500
Repurchases of share capital (2,716,000)
Expenses of share issues (75,000)
------------------------- -----------
Net cash inflow from financing activities 13,089,500
------------------------- -----------
Net increase in cash and cash equivalents 2,898,835
------------------------- -----------
Cash and cash equivalents at start of period -
------------------------- -----------
Cash and cash equivalents at end of period 2,898,835
------------------------- -----------
The accompanying notes form an integral part of the financial statements.
Notes to the Condensed Unaudited Consolidated Financial Statements
for the period 28 April 2006 to 30 June 2007
1. Principal accounting policies
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs and IFRIC interpretations) issued by the
International Accounting Standards Board (IASB).
The financial statements have been prepared under the historical cost
convention.
The principal accounting policies are set out below.
Consolidation
Where the Company has the power, either directly or indirectly, to govern the
financial and operating policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary. The consolidated
financial statements present the results of the Company and its subsidiaries
("the Group") as if they formed a single entity. Intercompany transactions and
balances between Group companies are therefore eliminated in full.
Business combinations
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the consolidated balance sheet, the
acquiree's identifiable assets, liabilities and contingent liabilities are
initially recognised at their fair values at the acquisition date. The results
of acquired operations are included in the consolidated income statement from
the date on which control is obtained.
Land acquisitions and development costs
Expenditure on acquiring land for development, including acquisitions yet to
complete, and costs of development are shown at the lower of cost and net
realisable value.
The Directors are of the opinion that net realisable value is approximately
equal to market value and have engaged the services of an independent company of
chartered surveyors, Savills, to establish market value, which is defined as the
estimated amount for which an asset should exchange on the date of valuation
between a willing buyer and a willing seller in an arm's length transaction
after proper marketing wherein the parties has each acted knowledgeably,
prudently and without compulsion. Having established the market value of the
land acquired and in the course of acquisition, the directors are of the opinion
that the market values are in excess of cost and that such land may therefore be
included in the accounts at cost in accordance with the above accounting policy.
Foreign exchange
(i) Functional and presentation currency
The financial information is presented in Euros. Euros are the functional
currency of the Group, as this is the primary currency of the economic
environment in which the entity operates.
(ii) Transactions and balances
Transactions undertaken in foreign currencies are translated into Euros at the
rate ruling on the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated into Euros at the rate ruling
on the balance sheet date. Profits and losses on exchange are taken directly to
profit and loss.
(iii) Translation
On consolidation, the results of overseas operations are translated into Euros
at rates approximating to those ruling when the transactions took place. All
assets and liabilities of overseas operations are translated at the rate ruling
at the balance sheet date. Profits and losses on translation are taken directly
to profit and loss.
Financial instruments
The Group classifies its financial assets into one of the following categories,
depending on the purpose for which the asset was acquired. Financial assets are
recognised when the Group becomes party to the contractual obligations of the
instrument. The Group's accounting policy for each category is as follows:
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts.
(iii) Other receivables
Other receivables are recognised at fair value on initial recognition.
Appropriate allowances for estimated irrecoverable amounts are recognised in
profit or loss when there is objective evidence that the asset is impaired.
(iv) Equity instruments
An instrument is an equity instruments if it includes no contractual obligation
to transfer cash or other assets to the holder. Such instruments issued by the
Company are recorded at the proceeds received.
Operating income and expenditure
All operating income and expenditure is accounted for on an accruals basis.
There were no employees within the Group as at 30 June 2007. There were no
significant cases of judgement or estimates in producing the financial
information as at 30 June 2007.
2. Land acquired for development
As at
30 June 2007
(unaudited)
Euro
----------
Additions at cost 27,345,632
------------ ----------
As at 30 June 2007 27,345,632
------------ ----------
The above amount includes the fair value of consideration already transferred to
Moran Trade & Investments Inc ("Moran"), a related party (see note 8), for the
acquisition of land at Byala by a subsidiary of the Company.
3. Land acquisitions yet to complete
As at
30 June 2007
(unaudited)
----------
Euro
----------
Land in the course of acquisition, at cost 8,061,771
--------------------- ----------
As at 30 June 2007 8,061,771
--------------------- ----------
The above amount includes the fair value of consideration already transferred in
pursuance of the acquisition of land from Moran, a related party (see note 8). A
subsidiary of the Company has entered into a contractual agreement with Moran to
acquire 124,000 square metres of land at Borovets, subject to Moran first
obtaining title to this land, then taking the steps necessary for it to be
granted Regulated Land status.
4. Development expenditure
As at
30 June 2007
(unaudited)
Euro
----------
Additions at cost 80,332
------------ ----------
As at 30 June 2007 80,332
------------ ----------
The above expenditure consists of professional fees incurred in the preparation
of initial designs and planning permission application charges.
5. Investments in subsidiary companies
The details of the subsidiaries are as follows:
Proportion of
ownership
Country of Principal and control
Name Date of acquisition incorporation Activities %
Madara Holdings
Limited 16 June 2006 Malta Holding company 100
Madara Byala EAD* 5 December 2006 Bulgaria Property development 100
Madara Borovets
EAD* 8 February 2007 Bulgaria Property development 100
* Held by Madara Holdings Limited
All of the above subsidiaries were specially incorporated in pursuance of the
Group's intended operating structure.
6. Stated capital account
Ordinary shares of no par value As at 30 June 2007
Number Euro
-------------- --------- ------- -------------- ------------
Authorised
-------------- --------- ------- ------------------------
Number Euro
-------------- --------- ------- -------------- ------------
Issued and fully paid
Proceeds of issue of 40,411,705 shares 40,411,705 40,414,105
Expenses of share issues (241,000)
Cost of buying back 2,800,000 shares for
cancellation (2,800,000) (2,800,000)
-------------- --------- ------- -------------- ------------
Total issued 37,611,705 37,373,105
-------------- --------- ------- -------------- ------------
7. Earnings per Ordinary share and net asset value per Ordinary
share
(a) Earnings per ordinary share
The calculation of unaudited earnings per Ordinary share for the period to 30
June 2007 was based on the loss attributable to shareholders of Euro 2,165,970 and
a weighted average number of Ordinary shares in issue of 13,724,292.
(b) Net asset value per ordinary share
The calculation of unaudited net asset value per Ordinary share as at 30 June
2007 was based on the net consolidated assets attributable to shareholders of Euro
35,207,135 and the 37,611,705 Ordinary shares in issue as at 30 June 2007.
(c) Pro forma restatement of net asset value per ordinary share
Land acquired or in the course of acquisition by the Group at Byala and Borovets
was valued by Savills (L&P) Limited on 14 June 2007. Their valuations were
calculated after providing for Transfer Tax. These revaluations have not been
included in the financial statements since this would not accord with the Group'
s accounting policy to carry development land at the lower of cost and net
realisable value. However, the effect of such revaluations of land on the net
asset value per Ordinary share is set out below on a pro forma basis.
Shares in issue NAV per share
Euro Euro
Net consolidated assets
attributable to 35,207,135 37,611,705 0.94
shareholders as stated in (b)
above
Upward revaluations of land from
cost
- Byala 12,474,036
- Borovets 5,538,229
Taxation at 10% on potential
profit if land is sold at new
valuations
- Byala (1,247,404)
- Borovets (553,823)
-------------------- ---------
51,418,173 37,611,705 1.37
-------------------- ---------
8. Related party transactions
As referred to in notes 2 and 3, the Company has entered into transactions with
Moran Trade & Investments Inc ("Moran") for the acquisition of land in Bulgaria.
These involved issuing 24,521,205 Ordinary shares to Moran and also making cash
payments of Euro 2,100,000 to them. The Company also repurchased 2,800,000 Ordinary
shares from Moran. As at 30 June 2007, Moran holds 18,721,205 of the 37,601,705
shares in issue of the Company, which represents a holding of 49.79% of the
issued share capital. As such, Moran is the ultimate controlling party of the
Company.
Scott Perkins and Mark Smith, who are Directors of the Company, are also
partners of Madara Capital LLP, the investment advisor to the Company. Madara
Capital LLP also holds 1,300,000 of the issued shares of the Company. During the
period, Madara Capital LLP charged asset and property advisory fees of Euro 288,001
to the Company, of which Euro 213,616 was outstanding at 30 June 2007. Madara
Capital LLP also advanced interest-free loans to the Company during the period
of which Euro 80,000 was outstanding as at 30 June 2007.
Nigel Le Quesne, Philip Burgin and Stephen Burnett, who are Directors of the
Company, are all shareholders and directors of JTC Group Limited of which JTC
Management Limited is a wholly-owned subsidiary. JTC Management Limited, which
is Company Secretary and a provider of administration services to the Company,
charged fees totalling Euro 302,873 during the period, of which Euro nil was
outstanding at 30 June 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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