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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bulgarian Prop. | LSE:BPD | London | Ordinary Share | GB00B058TT05 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 16.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:5519I
Bulgarian Property DevelopmentsPLC
27 November 2007
FOR RELEASE 07.00 27 November 2007
BULGARIAN PROPERTY DEVELOPMENTS PLC
("BPD" or "the Group")
PRELIMINARY ANNOUNCEMENT
RESULTS FOR THE YEAR ENDED 30 JUNE 2007
2007 2006
Turnover (including joint ventures) #483,000 #-
Profit/ (loss) on ordinary activities before
taxation #(979,000) #38,000
(Loss) for the financial year #(1,060,000) #(65,000)
Basic earnings per share (1.46p) (0.17p)
Key Points
* Revenues only from undeveloped properties due to early stage of Group's
development
* Loss before taxation includes currency losses of #295,000 and a property sale
cancellation payment of #404,000 treated as an expense. Balance of #361,000
in line with expectations and growth in Group's business
* Successfully raised #21,920,000 in June 2007 through a placing of 34,250,000
shares
* New sites acquired at Vidin, Ruse and Sandanski
* #26 million cash currently available for expansion
* Colliers' valuation as at 26th November 2007 resulting in
- NAV of 75p per share on Current Value basis
- NAV of between 84p and 88p per share on discounted Gross Development Value
basis
* If successful, BPD's application for an increase in density at the Sofia
Central Commercial site would result in
- NAV of 90p on Current Value basis
- NAV of between 89p and 98p per share on discounted Gross Development Value
basis
Outlook
* Further investment opportunities under consideration
* Optimistic about the prospects for the current year
Enquiries:
Bulgarian Property Developments
Ivo Hesmondhalgh ( Joint Chief Executive) +44 (0) 20 7243 1336
Matrix Corporate Capital LLP (Nominated Adviser)
Ken Vere Nicoll +44 (0) 20 7925 3388
Cubitt Consulting Ltd
James Verstringhe +44 (0) 20 7367 5100
Brian Coleman-Smith
Notes to Editor:
Bulgarian Property Developments (BPD) was incorporated in May 2004 and admitted
to AIM on 4 January 2005, having raised #4.2 million (after expenses). BPD
subsequently assembled and acquired a number of strategic sites in Sofia.
In January 2006 the Group raised a further #32.9 million (after expenses) in new
equity to enable it to acquire further and larger sites with a geographical
spread involving the major cities in Bulgaria enabling BPD to acquire land and
properties in Sofia, Plovdiv, Varna and Pleven. By June 2007 these funds were
effectively fully invested and BPD raised a further #21 million (after expenses)
for the initial phases of the development and construction of the existing
projects and for the acquisition of new projects in BPD's pipeline. Since June
the Group has acquired sites in Sandanski and Ruse.
The Group's projects are all (with one exception) for commercial development.
They will be developed for a variety of commercial uses including warehousing,
retail centres, offices and business parks.
http://www.bpdplc.com
BULGARIAN PROPERTY DEVELOPMENTS PLC
PRELIMINARY ANNOUNCEMENT
RESULTS FOR THE YEAR ENDED 30th JUNE 2007
CHAIRMAN'S STATEMENT
It gives me great pleasure to report the Group's results for the year ended 30
June 2007.
It has been another good year with the Group growing both organically and
through successfully raising further funds for expansion. In June 2007 the Group
successfully completed a placing of 34,250,000 shares at a price of 64 pence per
share. The #21,920,000 (gross) raised will be used to further expand the Group's
portfolio and to provide equity to develop the Group's existing sites.
The Group is in its early stage of development and revenues are currently only
earned on undeveloped properties. The results for the year show a loss after tax
of #1,060,000 this is higher than last year's loss of #65,000. This was
partially due to a one-off payment of Euros 600,000 (#404,000) in connection
with the reversal of the conditional sale of Ring Road Site Two. Following
re-zoning and future consideration of its development potential, your Board
decided to retain this site. The cancellation payment has been treated as an
expense in the accounts. There were also currency losses of #295,000 in the
year. The balance of #361,000 is line with the Board's expectation having regard
to the growth of the Group's business.
The Directors do not propose to declare a dividend.
The Group has accumulated an excellent portfolio of properties, which have both
increased considerably in value since purchase and have substantial development
potential. The Group currently has some #26 million in cash available for
expansion.
Your Board believes that its existing portfolio and the potential for
acquisitions should produce good returns for Shareholders over the next few
years.
On 19 September 2007 Windsorville Investments Limited announced that it was
considering making an offer for the Group's shares and that any offer would be
at not less than 64p per share.
As a result of the Windsorville announcement, BPD appointed Colliers CRE to
value the Group's portfolio on two different bases: firstly, on Current Value
and, secondly, on Gross Development Value. On a Current Value basis Colliers CRE
have valued the Group's property portfolio at Euros 75 million (as at 26
November 2007). Were the Group's assets to be shown on a revalued basis in the
Group's accounts (which they are not as such assets are carried as trading
stock) this valuation would give a NAV per ordinary share of 75p (after
including cash, other assets and liabilities of the Group as at 31 October 2007,
as estimated by the Board). The Gross Development Value of the Group's portfolio
has been calculated by Colliers CRE at Euros 412 million which would (after
deducting costs and applying discount rates of 14.0% and 12.5% p.a.
respectively) give a Net Present Value of between Euros 111 million and Euros
119 million. Adjusting for cash, other assets and liabilities, this equates to a
NAV per share of between 84p and 88p. The Gross Development Value does not take
into account future appreciation in the value of land and buildings and has, in
the Board's view, been prepared on the basis of conservative assumptions as to
rental yields and re-zoning.
The Valuation included planning consent for the Group's major Sofia Central
Commercial site of 130,000 square metres and the Group has applied for an
increase to 250,000 square metres, which your Directors are confident will be
forthcoming. Colliers consider that such planning consent would increase the
current value of the site by Euros 21.4 million. This would have the effect of
increasing the NAV per share on a Current Value basis to 90p and the NAV on the
basis of the discounted Gross Development Value (after deducting costs and
applying discount rates of 14.0% and 12.5% pa respectively) to between 89p and
98p.
A summary of the valuation is set out in the Appendix to this Announcement. A
valuation report is being prepared in accordance with Rule 29 of the City Code
on Takeovers and Mergers and will be published shortly.
The Sofia Central Commercial Site
The most significant development in the Group's portfolio during the year was
the acquisition, on 1 February 2007, of approximately 87,000 square metres of
land and buildings in the capital, Sofia, at a price of Euros 24,653,000. The
Group intends to develop this site as a business park and shopping mall. The
site is situated adjacent to the upmarket residential district of Lozenets.
Approximately 2/3rds of the site is occupied by run down industrial buildings.
These are fully occupied on short term leases by some 90 tenants and following
rental increases the property currently yields approximately 3.7% on the
purchase cost.
CHAIRMAN'S STATEMENT (continued)
for the year ended 30 June 2007
Since the financial year end the Group has acquired one neighbouring plot that
it already partly owned and has exchanged preliminary contracts for the purchase
of another. It intends to acquire other adjacent plots that can add value to the
site.
The Group plans to develop the site in stages, commencing with those parts of
the site that are vacant. As mentioned earlier, the Group has applied for
permission to increase the construction area for the site from 130,000 square
metres to 250,000 square metres.
The Varna Logistics Park
On 4 October 2006 the Group completed the purchase of 50% of the shares of Varna
Logistics AD for a consideration of Euros 6,366,000. The other 50% of the shares
was simultaneously purchased by FairPlay International AD at the same price. The
sole asset of Varna Logistics AD is a 132,500 square metres income producing
industrial site in the city of Varna, the third largest city in Bulgaria. The
site is partly occupied by a number of run down industrial buildings, which are
tenanted and produce a net return of 5.3 per cent per annum.
The Group has started the development of the vacant portion of the site with the
construction of two warehouses. The first of these should be completed early in
2008 and the second shortly thereafter. The Group has binding letters of intent
from tenants for the majority of the space in both buildings.
Once these two warehouses are completed and let, the Group intends to demolish
the existing run down buildings and construct further warehouses. It also
intends to provide retail outlets for wholesalers on the site. The Group
anticipates achieving an annual yield in excess of 15% from the developed site.
Since 30 June 2007, the Joint Venture has entered into a Euros 22 million bank
facility to finance its Varna development, of which Euros 7.9 million was
available for draw down on 1 August 2007 to finance the current building
programme.
Sofia Ring Road
The Group has two main sites on the Ring Road. Re-zoning of these was delayed
pending finalisation of the Sofia masterplan. This has now been approved by the
Bulgarian Parliament.
Ring Road Site One
This is a site of approximately 92,000 square metres. Prices in the area have
continued to rise and there are indications that, following other developments
in the area, the site could be used for a mixture of retail and warehousing
rather than just warehousing, which should enhance the site's value.
Ring Road Site Two
Ring Road Site Two which is approximately 20,000 square metres has received
re-zoning from agricultural use to commercial use for the front half of the
site, which is adjacent to the ring road. Re-zoning of the rear portion of the
site is underway and is expected in January 2008.
The Group had conditionally contracted to sell this site. However, as mentioned
earlier, following re-zoning and further consideration of its development
potential, the Group decided to retain and develop this site. In order to cancel
the sale, the Group agreed to pay the purchaser Euros 600,000 (#404,000) to take
account of the increase in value since the sale contract was signed. Under
Financial Reporting Standards, this payment has been charged to the Profit and
Loss Account as an expense.
The Group intends to build a warehouse and associated offices of approximately
11,000 square metres on the site. It has received a letter of intent from a
major international distribution group to lease half of the proposed building.
Sofia Airport
The Group owns two sites near the airport in Sofia, totalling 38,000 square
metres (approx. 9.4 acres). The masterplan for the airport area has still to be
completed and this has delayed the re-zoning of the sites. However, the new
airport terminal is now operational and work has now commenced on an adjacent
site belonging to Tishman and GE. These factors have contributed to a
significant growth in values in this area.
CHAIRMAN'S STATEMENT (continued)
for the year ended 30 June 2007
Bansko
The Group has now obtained full planning permission and building permission for
the site. Having carefully considered its options, the Group has decided that as
this is the only residential site in the Group's portfolio, it would not make
sense for it to develop the site itself. It has, therefore, commenced marketing
the site as a development opportunity with the benefit of the various
permissions. The Group expects to achieve a price in excess of Euros 1,200,000
for the site.
Plovdiv
Progress on this site has been slower than expected. However, an offer has been
received for part of the site from an international retailer at an attractive
price which the Board is considering. Such a sale should enhance the value of
the remainder of the site due to the proximity of the purchaser. Development
plans for the site will be affected by whether or not the Group decides to
accept the offer.
Pleven
The Group is part of a consortium that purchased a plot of 36,500 square metres
from the municipality of Pleven in October 2006 for Euros 1,618,000. 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.
Detailed plans are in the process of being finalised and negotiations are
nearing completion with an anchor tenant for the site.
NEW SITES
Vidin
The Group purchased a 50% stake on 19 June 2007 in the proposed development of a
shopping centre in Vidin, north west Bulgaria from Fairplay International for
Euros 1,555,000. The shopping centre will be developed in partnership with
Fairplay International (one of the largest property investors and developers in
Bulgaria) who retain the other 50% of the project. The size of the site is just
under 12,000 square metres and is located close to the centre of Vidin.
Vidin is a regional hub for this part of Bulgaria. The Group believes that the
prosperity of the town will be enhanced by the construction of a new bridge
across the Danube adjacent to Vidin, which will make Vidin one of the main entry
points for traffic coming from the rest of Europe to Bulgaria.
The Group has acquired the following sites since 30 June 2007:
Ruse
The Group purchased a 53,676 square metre plot of land in Ruse at a total price
of Euros 1,396,000.
Ruse is located in northern Bulgaria at a point where the strategically
important Pan European Transport Corridor 9 crosses the river Danube by a rail
and road bridge. The transport corridor connects Romania and north-eastern
Europe with Bulgaria, Turkey, and eastern Greece. This makes Ruse an excellent
location for distribution warehousing.
The plot is in the new Ruse Industrial Park, approximately one kilometre from
the bridge, and has already been provided with modern infrastructure by the
municipality of Ruse. This will reduce the cost of any development on the site.
The Group intends to construct approximately 20,000 square metres of warehousing
and associated offices on the site over the next two years.
Sandanski
The Group purchased a 50% stake in the proposed development of a shopping centre
in Sandanski, south west Bulgaria, from FairPlay Commercial EAD for Euros
588,000. The shopping centre will be developed in partnership with FairPlay
Commercial which retains the other 50% of the project.
CHAIRMAN'S STATEMENT (continued)
for the year ended 30 June 2007
Sandanski is a prosperous small city and a regional hub for this part of
Bulgaria.
The site is approximately 19,000 square metres and is located on the E79 (the
main highway from Sofia to Greece) almost immediately opposite the turning from
the highway into Sandanski. It is currently zoned for agricultural purposes but
is in an area where several commercial and residential developments have been
proposed so the Group does not foresee significant problems in obtaining
re-zoning.
The site's location makes it convenient for both the inhabitants of Sandanski
and neighbouring towns, as well as road traffic passing through to Sofia or
Greece.
Construction is anticipated to commence in mid to late 2008.
PIPELINE OF PROJECTS
The Group has been actively looking for further investment opportunities and has
a number under consideration. The Group will keep shareholders fully informed as
and when these are purchased. The Group has considerable cash resources which
should enable it to take advantage of opportunities in the current unsettled
market conditions.
BULGARIAN OFFICE MOVE
During the year, the Group moved its Bulgarian offices to a building within the
site of the new Sofia Central Commercial Site. This enables it to maintain a
close watch on its most significant development project. The Group has continued
to recruit new head office staff to enable it to competently manage its new,
enlarged, portfolio. I wholeheartedly thank all staff for their hard work and
diligence during the past year.
Your Board looks forward to continued progress and is optimistic of the
prospects of your Group in the year ahead.
Christian Williams
Chairman
26 November 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2007
Notes Group #'000 Year ended 30 Total #'000 Year ended 30
June 2007 June 2006 #'000
Interests in
joint ventures
#'000
--- ------- --
Turnover 1 237 246 483 -
------ ------- ------ ---------
Gross profit 237 246 483 -
Administrative
expenses (1,596 ) (133 ) (1,729 ) (633 )
Administrative
expenses -
exceptional
item 2 (404 ) - (404 ) -
------ ------- ------ ---------
Operating
profit/(loss) 2 (1763 ) 113 (1,650 ) (633 )
--- ------- --
Share of
operating
profit in
joint ventures 10 113 -
------ ---------
Total
operating
loss: (1,650 ) (633 )
Group and
share of joint
ventures
Interest
receivable:
Group 760 671
Joint ventures - -
------ ---------
760 671
Interest
payable: 8
Group - -
Joint ventures (89 ) -
------ ---------
(89 ) -
(Loss)/profit )
on ordinary ------ ---------
activities
before tax (979 38
Tax on
profit/(loss)
on ordinary
activities: 3
Group (65 ) (103 )
Joint ventures (16 ) -
------ ---------
(81 ) (103 )
------ ---------
Loss for the
financial year (1,060 ) (65 )
------ ---------
Loss per share
- basic and
diluted 7 (1.46p ) (0.17p )
The profit and loss account has been prepared on the basis that all activities
are continuing.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED
GAINS AND LOSSES
for the year ended 30 June 2007
Year ended Year ended
Notes 30 June 2007 30 June 2006
#'000 #'000
Loss for the financial year (1,060 ) (65 )
Currency translation differences on
foreign currency net investments 16 5 (6 )
-------- --------
Total recognised gains and losses
for the year (1,055 ) (71 )
-------- --------
CONSOLIDATED BALANCE SHEET
At 30 June 2007
30 June 2007
Interests in
Notes Group joint ventures Total 30 June 2006
#'000 #'000 #'000 #'000
Fixed assets
-- ------- --
Tangible assets 9 9 16 25 -
Investments in
joint ventures 10 7,653 (7,653 ) - -
Current assets
Stock 11 21,040 7,562 28,602 3,494
Debtors 12 1,252 80 1,332 505
Unpaid share
capital 15 21,239 - 21,239 -
Cash at bank 6,039 14 6,053 33,162
------- ------- ------- --------
49,570 7,656 57,226 37,161
Creditors: amounts
falling due
within 1 year 13 (382 ) (19 ) (401 ) (336 )
------- -- ------- -- --------
Net current
assets 49,188 36,825
------- --------
Net assets 56,850 36,825
------- --------
Represented by:
Capital and reserves
Share capital 15 26,698 18,135
Share premium
account 16 31,351 19,035
Equity shares
to be issued 16 201 -
Profit and
loss account 16 (1,400 ) (345 )
------- --------
Shareholders'
funds 17 56,850 36,825
------- --------
The financial statements were approved by the Board of Directors and signed on
its behalf by:
Christian Williams Keith Springall
Chairman Director
COMPANY BALANCE SHEET
At 30 June 2007
Notes 30 June 2007 30 June 2006
#'000 #'000
Fixed assets
Investments 10 20,225 2
Current assets
Debtors 12 12,402 4,865
Unpaid share capital 15 21,239 -
Cash at bank 4,871 32,689
-------- ---------
38,512 37,554
Creditors: amounts falling due
within one year 13 (222 ) (306 )
-------- ---------
Net current assets 38,290 37,248
-------- ---------
Net assets 58,515 37,250
-------- ---------
Represented by:
Capital and reserves
Share capital 15 26,698 18,135
Share premium account 16 31,351 19,035
Equity shares to be issued 16 201 -
Profit and loss account 16 265 80
-------- ---------
Shareholders' funds 17 58,515 37,250
-------- ---------
The financial statements were approved by the Board of Directors and signed on
its behalf by:
Christian Williams Keith Springall
Chairman Director
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2007
Year ended Year ended
Notes 30 June 2007 30 June 2006
#'000 #'000
Net cash outflow from operating
activities 18 (20,057 ) (1,977 )
Returns on investments and servicing of
finance
Interest received 760 671
-------- --------
Net cash inflow from returns on
investments and servicing of
finance 760 671
Taxation paid (83 ) -
Capital expenditure
Payments to acquire tangible fixed
assets (12 ) -
Acquisitions and disposals
Acquisition of joint ventures (7,653 ) -
-------- --------
Net cash outflow before financing (27,045 ) (1,306 )
Financing
Issue of ordinary shares - 35,000
Less: issue costs (78 ) (2,082 )
-------- --------
Net cash (outflow) / inflow from
financing (78 ) 32,918
-------- --------
(Decrease)/increase in cash in the
period (27,123 ) 31,612
Cash and cash equivalents at the
beginning of the year 33,162 1,550
-------- --------
Cash and cash equivalents at the
end of the year 19 6,039 33,162
-------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2007
1 ACCOUNTING POLICIES
Accounting convention
The accounts have been prepared in accordance with applicable accounting
standards under United Kingdom Generally Accepted Accounting Practise. A summary
of the more important accounting policies adopted are described below.
Basis of accounting
The accounts have been prepared under the historical cost convention.
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. The Company has taken advantage of s230 of the
Companies Act and consequently the profit and loss account of the parent company
is not presented as part of these accounts. All subsidiaries are consolidated
using the acquisition method. The Bulgarian Property Developments Group includes
Bulgarian Property Developments plc its 100% Bulgarian subsidiary, Bulgarian
Property Developments EOOD and its 100% subsidiaries Bulgarian Property
Developments 1 EOOD, Bulgarian Property Developments 2 EOOD and Bulgarian
Property Developments Bansko EOOD.
Joint ventures
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 the 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.
Deferred taxation
Deferred tax is provided for on a full provision basis on all timing differences
which have arisen but not reversed at the balance sheet date. No timing
differences are recognised in respect of (i) property revaluation surpluses
where there is no commitment to sell the asset; (ii) gains on sale of assets
where those assets have been rolled over into replacement assets; and (iii)
additional tax which would arise if profits of overseas subsidiaries are
distributed except where otherwise required by accounting standards. A deferred
tax asset is not recognised to the extent that the transfer of economic benefit
in future is uncertain. Any assets and liabilities recognised have not been
discounted.
Investment in subsidiary
Investments in subsidiary undertakings are shown at cost, less any provision for
impairment.
Turnover
Turnover is stated net of VAT and represents rental income and proceeds from
property sales. Rental income in respect of properties rented out under
operating leases is recognised on a straight line basis over the term of the
lease. Lease incentives granted are recognised as an integral part of the total
rental income over the term of the lease. The Group derives income from one
country, Bulgaria.
Share based payments
In accordance with FRS 20, share based payments are reflected within these
accounts at fair value with reference to the services provided by the entities
to which they are granted. These options are classified as equity shares to be
issued until they are exercised, at which point they become called up share
capital.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
1 ACCOUNTING POLICIES (continued)
Stocks
Stock represents land and buildings acquired for resale and is valued at the
lower of cost and net realisable value. Cost comprises direct materials and,
where applicable, direct costs that have been incurred bringing the stock to its
present location and condition. Such costs include all statutory and
professional fees relating to the acquisition of a property, obtaining planning
consents, legal fees in relation to the granting of new leases together with the
costs of construction and redevelopment. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
Land being held for resale or developed for that purpose may from time to time
be acquired with existing tenants. Rent from such existing tenants is incidental
to the main purpose of the acquisition of such land and buildings, which is to
develop it for sale.
Foreign currency
Transactions in foreign currencies are recorded at the rate of exchange on the
date that the transaction occurs. Monetary assets and liabilities denominated in
a foreign currency are reported at the rate of exchange ruling on the balance
sheet date.
The results of overseas operations are translated at the average rates of
exchange during the period and their balance sheet rates ruling at the balance
sheet date. Exchange differences arising on translation of the opening net
assets and results of overseas operations are reported in the statement of total
recognised gains and losses. All other exchange differences are included in the
profit and loss account.
Fixed assets
Depreciation is provided on all tangible fixed assets, at rates calculated to
write off the cost, less estimated residual values, of each asset evenly on a
straight line basis over its expected useful life:
Fixtures and fittings 4 years
Plant and equipment 4 years
Motor vehicles 3 years
2 OPERATING PROFIT/(LOSS)
2007 2006
#'000 #'000
The operating profit/(loss) is stated after charging:
Foreign exchange losses 295 100
Depreciation 3 -
Auditors' remuneration
- audit 46 14
Other Services provided by the Auditors:
- taxation services 28 11
- corporate finance 34 -
Exceptional item (amount paid to reverse the conditional sale
to a third party of the Ring Road 2 site) 404 -
------ ------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
3 TAX ON LOSS ON ORDINARY ACTIVITIES
2007 2006
#'000 #'000
Group
Analysis of charge for the year
Current tax:
UK corporation tax at 30% 71 103
Less: Prior year adjustment (20 ) -
------ ------
51 103
Bulgaria Corporation Tax at 10% 30 -
------ ------
81 103
------ ------
The standard rate of tax for the year, based on the UK standard rate of
corporation tax is 30% (Bulgaria: 10%). The actual tax charge for the current
year varies from the standard rate for reasons set out in the following
reconciliation:
2007 2007 2007 2006
#'000 #'000 #'000 #'000
Bulgaria UK Total
FRS 19 reconciliation of
current tax charge
Profit/(loss) on ordinary
activities before tax (1,215 ) 236 (979 ) 38
Tax on profit/(loss) on
ordinary activities at
standard UK corporation tax
rate of 30%
(Bulgaria: 10%) (122 ) 71 (51 ) 11
Effects of:
Expenses not deductible for tax
purposes - - - 11
Unrelieved tax losses 152 - 152 -
Utilisation of tax losses - - - (9 )
Overseas losses not available
for - - 90
relief
Prior year adjustment - (20 ) (20 ) -
------ ------ ------ ------
30 51 81 103
------ ------ ------ ------
No deferred tax asset is recognised by the Group from tax losses arising in
Bulgaria.
The tax year in Bulgaria is the calendar year. The tax losses carried forward as
at 31 December 2006
available to the Group are Lev 1,741,000.
4 SEGMENTAL ANALYSIS
Substantially all of the Group's operations have occurred in Bulgaria and are in
the same business sector.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
5 STAFF COSTS AND DIRECTORS EMOLUMENTS
The average monthly number of employees, together with executive and
non-executive directors, during the year was:
2007 2006
Office and management: Group 17 10
Joint ventures 24 -
------ ------
------ ------
41 10
------ ------
2007 2006
#'000 #'000
Staff costs:
Wages and Salaries 113 15
------ ------
Directors' remuneration:
Directors'emoluments 140 71
Directors emoluments paid under Management
Agreements (see note 21) 622 420
------ ------
762 491
------ ------
No director was in receipt of any pension contributions. The Company does not
maintain a pension scheme. The wages and salaries incurred by Bulgarian Property
Developments EOOD are offset against the annual administration fee payable by
Bulgarian Property Developments plc to Bulgarian Property Management Limited
(see note 21).
6 PARENT COMPANY PROFIT AND LOSS ACCOUNT
The profit after tax for the year dealt with in the financial statements of the
parent company was #185,000 (2006: #234,000). As permitted by section 230 of the
Companies Act 1985, no separate profit and loss account is represented for the
parent company.
7 EARNINGS PER SHARE
The calculation of earnings per share is based on the loss for the financial
year of #1,060,000 (2006: #65,000) and the weighted number of shares in issue of
72,822,164 (2006: 38,070,801). 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".
8 INTEREST PAYABLE
Interest payable represents the Company's share of interest charged to joint
ventures by the joint venture's third party shareholders.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
9 FIXED ASSETS
Group
Plant & Fixtures
equipment and fittings Total
#'000 #'000 #'000
Cost
Balance as at 1 July 2006 - - -
Additions 2 10 12
------- ------- -------
Balance as at 30 June 2007 2 10 12
------- ------- -------
Depreciation
Balance as at 1 July 2006 - - -
Charge - 3 3
------- ------- -------
Balance as at 30 June 2007 - 3 3
------- ------- -------
Net book value
At 1 July 2006 - - -
------- ------- -------
At 30 June 2007 2 7 9
------- ------- -------
10 FIXED ASSET INVESTMENTS
Company
#'000
As at 1 July 2006 2
Additions 20,223
-------
As at 30 June 2007 20,225
-------
The Company's investments at the balance sheet date are in the share capital of
unlisted companies, all of which are involved in the purchase and sale of
properties, property management and development.
Country of
Incorporation % holding
Owned directly by Bulgarian Property Development Plc
Bulgarian Property Developments EOOD Bulgaria 100
Owned/(held) directly by Bulgarian Property
Developments EOOD
Bulgarian Property Developments Bansko EOOD Bulgaria 100
Bulgarian Property Developments 1 EOOD Bulgaria 100
Bulgarian Property Developments 2 EOOD Bulgaria 100
Trakia Retail Centre OOD Bulgaria 50
Varna Logistics AD Bulgaria 50
Vidin Retail Centre OOD Bulgaria 50
Pleven Retail Centre OOD Bulgaria 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
10 FIXED ASSET INVESTMENTS (continued)
Group
Joint ventures
a) As at 30 June 2007, the Group had the following interests in joint ventures:
% holding
Trakia Retail Centre OOD 50
Varna Logistics AD 50
Vidin Retail Centre OOD 50
Pleven Retail Centre OOD 38
All joint ventures are involved in property development and property trading in
Bulgaria.
The Group's share of the results of its joint venture operations was as follows:
Trakia Vidin Pleven Group
Retail Varna Retail Retail Share in
Centre Logistics Centre Centre Joint Ventures
#'000 #'000 #'000 #'000 #'000
Summarised
profit and
loss account
for the year
ended 30 June
2007
Turnover -
rent
receivable - 246 - - 246
Administrative
expenses (22 ) (104 ) - (7 ) (133 )
------ ------ ------ ------ --------
Operating
(loss)/profit (22 ) 142 - (7 ) 113
Interest
payable (86 ) (3 ) - - (89 )
------ ------ ------ ------ --------
Profit on
ordinary
activities
before tax (108 ) 139 - (7 ) 24
------ ------ ------ ------ --------
Tax on
ordinary
activities - (16 ) - - (16 )
------ ------ ------ ------ --------
Retained
(loss)/profit
for
the period (108 ) 123 - (7 ) 8
------ ------ ------ ------ --------
Summarised
balance sheets
as at 30 June
2007
Fixed assets
Tangible - 16 - - 16
assets
Current assets
Stock 1,547 4,548 1,048 419 7,562
Debtors 10 69 - 1 80
Cash at bank 10 2 - 2 14
------ ------ ------ ------ --------
1,567 4,619 1,048 422 7,656
------ ------ ------ ------ --------
Creditors:
amounts
falling due
within one (1 ) (18 ) - - (19 )
year ------ ------ ------ ------ --------
Net assets 1,566 4,617 1,048 422 7,653
------ ------ ------ ------ --------
Represented
by:
Capital and
reserves 1,566 4,617 1,048 422 7,653
------ ------ ------ ------ --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
10 FIXED ASSET INVESTMENTS (continued)
Amounts owed by the joint venture operations to Bulgarian Property Developments
EOOD as at 30 June 2007 were:
#'000
Trakia Retail Centre 1,586
-------
Varna Logistics 206
-------
Vidin Retail Centre -
-------
Pleven Retail Centre 428
-------
All the joint ventures have statutory accounting periods ending on 31 December.
The Group's share of results has been based on the joint ventures interim
audited accounts for the period ended 30 June 2007.
11 STOCK
2007 2006
#'000 #'000
Land for resale/development - excluding joint venture
operations 21,040 3,494
------- -------
The land held as trading stock is valued in the financial statements at the
lower of cost and net realisable value.
12 DEBTORS
Group Company Group Company
2007 2007 2006 2006
#'000 #'000 #'000 #'000
Amounts owed by group undertakings - 12,357 - 4,697
Other debtors 1,145 21 368 5
Prepayments 107 24 137 163
------- ------- ------- -------
1,252 12,402 505 4,865
------- ------- ------- -------
13 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group Company Group Company
2007 2007 2006 2006
#'000 #'000 #'000 #'000
Trade creditors 70 - 11 -
Other taxation and social security 71 6 6 6
Accruals 170 145 216 197
Corporation tax 71 71 103 103
------- ------- ------- -------
382 222 336 306
------- ------- ------- -------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
14 FINANCIAL INSTRUMENTS
The Group's financial instruments comprise some cash and liquid resources and
various other items, such as trade creditors, which directly arise from its
operations. The main purpose of these financial instruments is to raise finance
for its operations. Trade and other short term debtors and creditors are not
discussed further in this note.
The main risks arising from the Group's financial instruments are interest rate
risk, liquidity risk and foreign exchange risk. The policies for managing each
of these risks adopted during the period of the report are summarised below.
These policies have remained unchanged throughout the period covered by the
report.
Interest rate risk
The Group finances its operations through the cash derived from its issue of
equity shares. It does not enter into any interest rate derivative transactions
to manage interest rate risk.
Liquidity risk
As regards liquidity, the Group's policy has been to retain cash surpluses not
required for day-to-day operations in interest bearing deposit accounts.
Foreign currency risk
The Group operates in Bulgaria, whose local currency has been pegged to the Euro
since its introduction, at a fixed rate equivalent to Euro1 to Lev 1.9558. The loan
from the Group company to the Bulgarian subsidiary is denominated in #'s
Sterling. The Group had no forward currency contracts in the year.
Interest rate risk profile of financial assets and financial liabilities
Financial assets
The Group has no financial assets, excluding short term debtors other than cash
deposits, which are held as part of the Group's financing arrangements. Cash
deposits are held in overnight and term interest bearing deposit accounts.
Financial liabilities
The Group has no financial liabilities excluding short term creditors.
Currency exposures
The table below shows the Group's currency exposures; in other words, those
transactional exposures that give rise to the net currency gains and losses
recognised in the profit and loss account. Such exposures comprise the monetary
assets and monetary liabilities of the Group that are not denominated in the
operating currency of the operating unit involved.
As at 30 June 2007, these exposures were as follows:
2007 2006
#'000 #'000
Functional currency of Group operations is the Bulgarian LEV
Sterling equivalent of net monetary liabilities 179 31
------- -------
Maturity of financial liabilities
2007 2006
#'000 #'000
The maturity profile of the Group's financial liabilities at
30 June 2007 was as follows:
In one year or less, or on demand 401 336
------- -------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
15 CALLED UP SHARE CAPITAL
As at 30 June As at 30 June
2007 2006
Ordinary Share Capital of 25p Nominal Value:
Authorised (number) 200,000,000 200,000,000
-------- --------
Authorised (value) #50,000,000 #50,000,000
-------- --------
Allotted, issued and fully paid (number) 72,540,657 72,540,657
Allotted issued and unpaid (number) 34,250,000 -
-------- --------
106,790,657 72,540,657
-------- --------
Value #26,698,000 #18,135,000
-------- --------
On 28 June 2007, 34,250,000 ordinary shares of 25p each were issued and allotted
at 64p per share, in order to facilitate the development of the Group's
activities. The total consideration of #21,239,000 (#21,920,000 net of issue
costs of #681,000) was fully paid on 3 July 2007.
Under an agreement dated 15 September 2004, the Company granted Matrix
Securities Limited the right to subscribe for 175,530 ordinary shares of 25p in
the Company at an exercise price of 50p. On 13 September 2007, these options
were exercised.
Under an agreement dated 20 December 2005, the Company granted Fairfax I.S.
Limited the right to subscribe for 1,272,727 ordinary shares of 25p in the
Company at an exercise price of 55p. This option may be exercised in whole or in
part at any time up to 17 January 2011.
16 RESERVES
Share premium Profit and loss
account account Total
#'000 #'000 #'000
Group - 2006
Balance at 1 July 2005 2,026 (274 ) 1,752
Premium on issue of shares 19,091 - 19,091
Costs of issue (2,082 ) - (2,082 )
Loss for the financial year - (65 ) (65 )
Currency translation
differences on
foreign currency net - (6 ) (6 )
investments
-------- -------- --------
Balance at 30 June 2006 19,035 (345 ) 18,690
-------- -------- --------
Share premium Profit and loss
account account Total
#'000 #'000 #'000
Company - 2006
Balance at 1 July 2005 2,026 (154 ) 1,872
Premium on issue of shares 19,091 - 19,091
Costs of issue (2,082 ) - (2,082 )
Profit for the financial year - 234 234
-------- -------- --------
Balance at 30 June 2006 19,035 80 19,115
-------- -------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
16 RESERVES (continued)
Share premium Equity shares Profit and loss Total
account to be issued account #'000
#'000 #'000 #'000
Group - 2007
Balance at 1
July 2006 19,035 - (345 ) 18,690
Premium on
issue of
shares 13,357 - - 13,357
Costs of issue (840 ) - - (840 )
Share based
payments (201 ) 201 - -
Loss for the
financial year - - (1,060 ) (1,060 )
Currency
translation
differences on
foreign
currency net
investments - - 5 5
-------- -------- -------- -------
Balance at 30
June 2007 31,351 201 (1,400 ) 30,152
-------- -------- -------- -------
Share premium Equity shares Profit and loss Total
account to be issued account #'000
#'000 #'000 #'000
Company - 2007
Balance at 1
July 2006 19,035 - 80 19,115
Premium on
issue of
shares 13,357 - - 13,357
Costs of issue (840 ) - - (840 )
Share based
payments (201 ) 201 - -
Profit for the
financial year - - 185 185
-------- -------- -------- -------
Balance at 30
June 2007 31,351 201 265 31,817
-------- -------- -------- -------
The #201,000 equity shares to be issued represents the fair value of the
services provide by Matrix Securities Limited and Fairfax I. S. Limited (see
note 15).
17 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group Company
#'000 #'000
Year ended 30 June 2006
(Loss)/profit for the year (65 ) 234
Currency translation differences on foreign currency net
investments (6 ) -
New shares issued 32,918 32,918
-------- --------
Net additions to shareholders' funds 32,847 33,152
Opening shareholder's funds 3,978 4,098
-------- --------
Closing shareholders' funds 36,825 37,250
-------- --------
Year ended 30 June 2007
(Loss)/profit for the year (1,060 ) 185
Currency translation differences on foreign currency net
investments 5 -
New shares issued 21,080 21,080
-------- --------
Net additions to shareholders' funds 20,025 21,265
Opening shareholder's funds 36,825 37,250
-------- --------
Closing shareholders' funds 56,850 58,515
-------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the year ended 30 June 2007
18 RECONCILIATION OF OPERATING LOSS TO NET OPERATING CASH OUTFLOW
2007 2006
#'000 #'000
Operating loss (1,763 ) (633 )
Depreciation 3 -
Increase in stocks (17,546 ) (1,085 )
Increase in debtors (747 ) (439 )
(Decrease)/increase in creditors (4 ) 180
------- -------
Net cash outflow from operating activities (20,057 ) (1,977 )
------- -------
19 ANALYSIS AND RECONCILIATION OF NET FUNDS
At 30 June Cash flow At 30 June
2006 #'000 2007
#'000 #'000
Cash at bank and in hand 33,162 (27,123 ) 6,039
------- ------- -------
Net funds 33,162 (27,123 ) 6,039
------- ------- -------
#'000
Reconciliation of net cashflow to
movement in funds
Net funds at 30 June 2006 33,162
Change in net funds resulting from
cash flows (27,123 )
-------
Net funds at 30 June 2007 6,039
-------
20 CAPITAL COMMITMENTS
On 13 June 2007, Bulgarian Property Developments EOOD entered into a preliminary
agreement to purchase 32% of the share capital of Sofia Invest Development EOOD
from Sofia Estates Edno EOOD at the price of Euro384,000.
On 30 June 2007 a contract was signed by Varna Logistics AD and Devnia Trade OOD
for the amount of BGN 1,563,000 for the construction of Building A1 which is
part of Phase 1 of the construction of Varna Logistics Park.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
21 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, the Company entered into a Management Agreement with
Bulgarian Property Management LLP, to provide certain management services to the
Company in consideration of 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 for 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 15
September 2004. This agreement was amended on 19 December 2005 to provide for a
change to the annual performance fee, where the hurdle rate was raised from the
average 3 month Euribor rates to be a flat 8% per annum.
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 (as amended).
Bulgarian Property Management LLP and Bulgarian Property Management Limited are
controlled by Ivo Hesmondhalgh and Philip Pashov, who are both directors of the
Company.
In the year to 30 June 2007, the Company was charged #622,352 by these two
management entities (in the period to 30 June 2006, #420,150 was charged). As at
30 June 2007, an advanced payment of #24,000 has been made to Bulgarian Property
Management Limited.
Bulgarian Property Developments EOOD entered into agreements in Bulgaria with
Galchev and Co, 100% owned by Nikolay Galchev and Brisk Consulting, which is
100% owned and managed by Galchev and Co. Nikolay Galchev is a director of the
Company.
Transactions
#'000
Design and re-zoning fees under a contract with Galchev & Co EOOD 99
Design and re-zoning fee under a contract with Brisk Consulting 34
--------
For amounts owed by the Group's joint venture operations to Bulgarian Property
Developments EOOD as at 30 June 2007, please refer to Note 10. These balances
represent short term loans, together with accrued interest on those loans.
22 SUBSEQUENT EVENTS
On 3 July 2007, Bulgarian Property Developments EOOD entered in an agreement
with FairPlay International AD for the purposes of the acquisition of 50% of the
share capital of Sandanski Retail Centre EOOD at a price of BGN 416,000 to form
a 50:50 joint venture with Fairplay International AD.
On 20 July 2007, Sofia City Court repaid to Bulgarian Property Developments EOOD
the amount of BGN 1,500,000 which had been withheld in respect of the Radino
property deal which was finalised at the beginning of 2007, with Bulgarian
Property Developments EOOD assuming title on the land and buildings.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2007
22 SUBSEQUENT EVENTS (continued)
On 1 August 2007, Unicredit Bulbank AD agreed to provide to Varna Logistics AD
investment credit to the amount of Euro6,400,000 with the purpose of financing
88.3% of Phase 1 of the capital costs for a logistics park, as well as a
revolving credit line of Euro1,500,000.
On 18 September 2007, Bulgarian Property Developments EOOD agreed to purchase
from Rousse Municipality, property for the amount of BGN 2,625,000 with the
purpose of developing a logistics park within a 17-month period and with the
commitment of Bulgarian Property Development EOOD for capital investments of BGN
17,736,000 and the hiring of 36 people.
23 CONTINGENT LIABILITIES
There are court claims raised with respect to the title over certain plots of
land acquired by BPD 2 EOOD. As at the date of these financial statements, the
outcome of the claims cannot be estimated reliably. The contingent liability
related to these claims is securitised by an amount of Euro400,000 in escrow as
part of BPD 2 EOOD's purchase price of the land.
24 PRELIMINARY ANNOUNCEMENT
This preliminary announcement was approved by the Board on 26 November 2007. The
financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 30 June 2006 and 30 June 2007.
The statutory accounts for the year ended 30 June 2006 have been delivered to
the Registrar of Companies and those for the year ended 30 June 2007 will be
delivered in due course. The auditors' report on the accounts for the year ended
30 June 2006 and 30 June 2007 was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis without
justifying their report and did not contain a statement under s237 (2) or (3)
Companies Act 1985.
APPENDIX
Net Asset Value (NAV) based on the valuation of the Group's portfolio
Currency: #' 000 Undeveloped BPD Share NPV NPV
value of
(BPD Share GDV 14.0% 12.5%
only)
Sofia Central Commercial Site 26,270 159,782 38,654 42,440
Bansko 836 9,451 2,516 2,644
Pleven (38% BPD Ownership) 614 6,611 1,003 1,141
Ruse 933 7,580 2,077 2,160
Sandanski (50% BPD Ownership) 323 4,586 1,009 1,072
Sofia Ring Road 1 4,930 33,581 8,454 9,151
Sofia Ring Road 2 873 6,349 1,937 2,020
Varna (50% BPD Ownership) 10,177 27,806 11,409 11,966
Vidin (50% BPD Ownership) 782 6,230 1,636 1,713
Airport 1 2,480 10,951 3,499 3,705
Airport 2 1,715 7,835 2,427 2,573
Plodiv 2,685 14,489 3,572 3,856
Other undeveloped properties 1,354 1,354 1,354
---------- --------- ------- -------
Total Properties 53,973 295,252 79,548 85,795
Total cash incl options
exercised 26,852 26,852 26,852
Other assets 956 956 956
Costs/Expenses and Tax (16,544) (17,671)
---------- --------- ------- -------
Total Discounted Cash flow 81,781 90,811 95,933
========== ========= ======= =======
Fully Diluted NAV per share 75.4p 83.8p 88.5p
========== ========= ======== ========
Fully Diluted NAV per share
========== ========= ======== ========
(assuming planning consent
given 89.6p 88.7p 98.2p
on Sofia Central Commercial Site)
========== ========= ======== ========
Notes: The Euro/# Exchange rate used is 1.39 as of 23 November
Cash is as at 31 October 2007 and adjusted to reflect proceeds from the exercise
of currently unexercised options
Other Assets represent net working capital and fixed assets as of 30 June 2007,
being the Board's best estimate of the position as of valuation date
This information is provided by RNS
The company news service from the London Stock Exchange
END
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