Final Results
October 16 2006 - 3:01AM
UK Regulatory
RNS Number:4801K
Bulgarian Property DevelopmentsPLC
16 October 2006
FOR RELEASE
7.00am
16 October 2006
BULGARIAN PROPERTY DEVELOPMENTS PLC
("BDP" or "the Group")
(The Group is primarily focussed on the development of commercial property and
in particular building distribution centres and offices in Bulgaria)
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2006
2006 2005
Turnover - -
Profit/(loss) on ordinary #38,000 #(273,000)
activities before taxation
(Loss) for the financial year #(65,000) #(273,000)
Basic earnings per share ( 0.17p) (5.3p)
Highlights
* Additional #32.9m net raised in January radically transformed BPD in
terms of size and scale of project
* Strategy to purchase small plots of land and consolidate them into
larger sites suitable for commercial development continues
* Additional strategy to buy larger sites with zoning for commercial
development to allow faster turnaround of developments implemented
* Value of BPD sites in Sofia increased in value
* Permission granted for change of land use from agricultural to
residential on BPD's site in the ski resort of Bansko
* BPD and Fairplay International AD ("Fairplay") have formed a 50/50
joint venture and acquired Varna Logistics AD, whose only asset is
a 130,000 square metre commercial site in Varna to create a business
park
* Purchase of a 22,000 square metre site in Plovdiv (the second largest
city in Bulgaria) in a 50/50 joint venture with Fairplay to create a
retail park
* Contracts exchanged for the purchase of a commercial site of
approximately 87,000 square metres in Sofia to create a business
and retail park
* Purchase of a 36,500 square metre site in Pleven (north Bulgaria) as
part of a consortium consisting of BPD (38%), Fairplay (38%) and
Sofia Estates (24%) to create a retail park
Outlook
* BPD in negotiations to purchase a number of other properties
* Optimistic about the prospects for the current year
Enquiries:
Bulgarian Property Developments
Ivo Hesmondhalgh (Joint Chief Executive) +44 (0) 20 7243 1336
Bulgarian Property Developments
Philip Pashov (Joint Chief Executive) +359 (0) 963 13 59
Cubitt Consulting
Brian Coleman-Smith / Nia Thomas / Allison Reid +44 (0) 20 7367 5100
Notes to Editor:
Bulgarian Property Developments:
Bulgarian Property Developments floated on AIM in January 2005, raising #4.2
million net. A further #32.9 million net was raised in January 2006. BPD is
primarily focused on commercial property development as opposed to residential.
Inheritance Laws in Bulgaria have given rise to fragmented land ownership. There
are therefore considerable difficulties in assembling commercially viable sites
exist. BPD has taken advantage of this opportunity to consolidate small land
plots into larger ones for commercial development and had previously acquired 33
plots in the Sofia area the majority of which have been consolidated into four
sites for commercial development.
Following the fund raising in January 2006, BPD has been seeking to acquire
larger sites for commercial development.
A strong management team with cultural knowledge and connections in Bulgaria has
facilitated has been requited.
Background on the Bulgaria and the Property Market:
Bulgaria is in a transitional period, moving from a command to a market economy.
Bulgaria is joining the European Union in 2007, which should be favourable for
the Bulgarian property market. Bulgaria joined NATO in 2004. The Bulgarian
economy is growing strongly and Bulgaria is a politically stable country. It
continues to develop with GDP growth estimated for 2005 of 5.4%. The Lev has
been pegged to the Deutsche Mark since 1997 and the Euro since the Euros
introduction as Euro 1: Lev 1.9558.
BULGARIAN PROPERTY DEVELOPMENTS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2006
CHAIRMAN'S STATEMENT
The key highlight of the year was the successful placing that was undertaken
towards the end of 2005 and completed in January 2006, resulting in raising an
additional #32.9 million (net of expenses). This has radically transformed the
company, both in terms of size and the scale of projects that it can undertake.
I welcome our new shareholders and look forward to keeping all shareholders
informed of progress and to deliver some very worthwhile results in the years
ahead.
Another significant highlight is the recent decision by the European Community
confirming that Bulgaria will join the Community as predicted on 1st January
2007, thus accelerating harmonisation, which is likely to provide further
stimulus for the Bulgarian property market.
The results for the year show a loss after tax of #65,000. This is lower than
last year's loss of #273,000 due to operating costs being offset by interest
earnings derived from the proceeds of the injection of additional funds referred
to above. The majority of these additional funds are now earmarked for
utilisation in further suitable property investments in larger sites and in
geographically diverse situations. The directors do not propose to declare a
dividend.
During the year, the company has proceeded with its strategy of purchasing small
plots of land and consolidating them into large sites suitable for commercial
development. It has now completed the consolidation of its main site on the Ring
Road of Sofia, which totals 92,500 square metres (approx. 23 acres). Re-zoning
of this site is expected to be completed in early 2007. The total cost to the
company of this site is Euro 2,152,000. Colliers International, in a valuation
dated 18 September 2006, have valued the land without re-zoning at Euro 49psm,
which would value the site at Euro 4,532,000.
The value of the company's two sites near the airport in Sofia, totalling 38,000
square metres (approx. 9.4 acres), have also seen a significant uplift. These
sites have been consolidated from 22 land purchases and have, so far, cost the
company Euro 2,151,000. The two plots have been valued by Colliers International
without re-zoning at Euro 3,260,000. Rezoning of these sites is expected to be
completed early in 2007.
Rezoning permission has been granted on the company's site in the ski resort of
Bansko to change the use of the land from agricultural to residential. Outline
planning permission has also been granted on the site, which permits a
development of approximately 11,000 square metres above ground. Detailed
planning permission is scheduled to be approved in the next few months and
building work is planned to begin in Spring 2007.
In July, the company entered into a 50/50 joint venture with Fairplay
International AD for the development of a retail centre in Plovdiv, Bulgaria's
second largest city. On 25 July 2006, the company purchased 50% of the capital
of Trakia Retail Centre EOOD ("TRC") for Euro 127,823. Both the company and
Fairplay International AD injected loans of Euro 2,300,000 each into TRC in
order that TRC might purchase a 21,800 square metre land plot on the Trakia
district of Plovdiv on 29 July 2006 at a price of Euro 4,431,000. The site is in
the densely populated Trakia district of Plovdiv and has planning permission for
development as a retail centre. The company is actively seeking an anchor tenant
for this site. Once an anchor tenant has been secured, the company will proceed
with the development of the site. Fairplay International AD a property investor
and developer is a company managed and controlled by its Chairman Mario
Zachariev, who has been an advisor to Bulgarian Property Developments plc since
its inception. The company anticipates achieving an annual yield in excess of
15% from the completed development.
The company achieved a significant high point on 4 October 2006 when it
purchased 50% of the shares of Varna Logistics AD for a consideration of Euro
6,366,000. The other 50% of the shares were 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 company intends to develop the vacant portion of the
site for warehousing and offices and, once these are completed then relocate the
existing tenants. The existing run down buildings would then be demolished and
more warehousing and offices built. The company also intends to provide retail
outlets for wholesalers on the site. The company anticipates achieving an annual
yield in excess of 15% from the developed site.
On 11 October 2006, a consortium, of which BPD EOOD owns 38%, purchased a plot
of land of 36,500 sq.m in the City of Pleven. BPD EOOD's share of the purchase
price was Euro 620,000. Pleven is a busy town of 100,000 inhabitants in the
north of Bulgaria. The site has planning permission for retail use and the
consortium is already seeking anchor tenants. Once at least one anchor tenant
has been signed up, the consortium will commence the development of the site.
On 7 July 2006, the company signed a preliminary contract for the purchase of
approximately 87,000 square metres of land and buildings in the city of Sofia,
at a price of EUR 21,540,000. The site is near the upmarket residential area of
Lozenets. It paid a deposit of EUR 1,000,000 currently held in an escrow
account. Completion did not take place on the due date of 7 October 2006
following failure by the vendor to deliver title. The company is taking legal
advice.
The company is in negotiations with a number of other vendors and expects to be
able to announce their acquisition in the next few months. If the purchase of
all of the properties which are under negotiation or subject to contract are
completed, the company will effectively be fully invested. The balance of the
funds available to it will be approximately Euro 8,000,000 which will provide
seed capital for the development of the sites and for working capital.
Having regard to the increased size of the company, the number of staff in Sofia
was enlarged with the appointment of business development managers, negotiators,
a finance manager and administrative staff. The company also relocated into
larger offices.
Keith Springall was appointed as Finance Director on 31 May 2006. His financial
skills and international experience will complement and strengthen an already
excellent management team.
I would like to thank all our staff for their hard work and diligence during the
past year.
Your board look forward to continued progress and are optimistic of the
prospects of your company in the year ahead.
Christian Williams Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 June 2006 Notes 2006 2005
#'000 #'000
Turnover - -
Administrative Expenses (633) (318)
___________________
Operating loss (633) (318)
___________________
Interest receivable and similar income 671 45
___________________
Profit/(Loss) on ordinary activities
before taxation
3 38 (273)
Tax on loss on ordinary activities 3 (103) -
___________________
(Loss) for the financial year 3 (65) (273)
___________________
Basic and fully diluted earnings per share 2 (0.17)p (5.3)p
All of the above results derive from continuing activities.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 June 2006
2006 2005
#'000 #'000
Loss on ordinary activities after taxation (65) (273)
Currency translation differences on foreign (6) (1)
currency net investments
___________________
Operating (loss) (71) (274)
___________________
CONSOLIDATED BALANCE SHEET
For the year ended 30 June 2006 2006 2005
#'000 #'000
Fixed assets - -
Investments
___________________
Current assets
Stocks 3,494 2,409
Debtors 505 66
Cash at bank 33,162 1,550
___________________
37,161 4,025
Creditors: amounts falling due within one year (336) (47)
___________________
Net current assets 36,825 3,978
___________________
Total assets less current liabilities 36,825 3,978
___________________
Capital and reserves
Called up share capital 18,135 2,226
Share premium 19,035 2,026
Profit and loss account (345) (274)
___________________
Shareholders' funds 36,825 3,978
___________________
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 30 June 2006 2006 2005
#'000 #'000
Net cash outflow from operating activities (1,977) (2,747)
Returns on investments and servicing of finance
Interest received 671 45
____________________
Net cash inflow from returns on investments 671 4
Net cash outflow before financing (1,306) (2,702)
Financing
Issue of ordinary shares 35,000 4,452
Less: issue costs (2,082) (200)
____________________
Net cash inflow from financing 32,918 4,252
____________________
Increase in cash 31,612 1,550
____________________
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation and financial information
The financial information in this preliminary announcement has been prepared in
accordance with the accounting policies set out in the financial statements of
Bulgarian Property Developments for the financial year ended 30 June 2006.
The financial information in this document does not constitute the company's
statutory accounts for the financial year ended 30 June 2006 or financial year
2005, but is derived from those accounts. Statutory accounts for 2005 have been
delivered to the Registrar of Companies and those for 2006 will be delivered
following the company's Annual General Meeting. The auditors have reported on
these accounts: their reports were unqualified and did not contain statements
under sections 237 (2) or (3) of the Companies Act 1985.
2. Earnings per share
The calculation of earnings per share is based on the loss for the financial
year of #65,000, and the weighted number of shares in issue of 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".
3. Tax on Loss on Ordinary Activities
2006 2005
#'000 #'000
Analysis of charge for the year
Current tax
UK corporation tax at 30% 103 -
____________________
The standard rate of tax for the year, based on the UK standard rate of
corporation tax is 30%. The actual tax charge for the current year is less than
the standard rate for reasons set out in the following reconciliation:
2006 2005
#'000 #'000
FRS 19 reconciliation of current tax charge
Profit/(loss) on ordinary activities before tax 38 (273)
Tax on loss on ordinary activities at
standard CT rate of 30% 11 (82)
Effects of:
Expenses not deductible for tax purposes 11 39
Unrelieved tax losses - 7
Utilisation of tax losses (9) -
Overseas losses not available for relief 90 36
____________________
103 -
____________________
4 RECONCILIATION OF OPERATING PROFIT TO NET OPERATING CASH OUTFLOW
2006 2005
#'000 #'000
Operating loss (633) (318)
Increase in stocks (1,085) (2,409)
Increase in debtors (439) (66)
Increase in creditors 180 46
____________________
Net cash outflow from operating activities (1,977) (2,747)
____________________
This information is provided by RNS
The company news service from the London Stock Exchange
END
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