TIDMBPD
RNS Number : 4200P
Bulgarian Property DevelopmentsPLC
25 March 2009
FOR RELEASE
07.00 m
25 MARCH 2009
BULGARIAN PROPERTY DEVELOPMENTS PLC
("BPD", "the Company" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
Key Points
* Portfolio valued at GBP54.8 million as at 27 February 2009
* NAV per share 65.1p at 31 December 2008
* EUR6.0m sale of Trakia Retail Centre
* Failure by Fairplay to complete EUR15 million purchase of BPD 50% stake in Varna
Logistics
* Special dividend of 19p per share (GBP21 million) paid 17 July 2008
Enquiries:
Bulgarian Property Developments
Ivo Hesmondhalgh (Joint Chief Executive) +44 (0) 20 7243 1336
Matrix Corporate Capital LLP (Nominated Adviser)
Stephen Mischler+44 (0) 20 3206 7203
Cubitt Consulting Ltd
James Verstringhe +44 (0) 20 7367 5100
Brian Coleman-Smith
Background Note:
BPD, which was incorporated in May 2004 and floated on AIM in January 2005, is
an owner and developer of land for commercial use across Bulgaria, in particular
for building distribution centres, retail centres and offices.
BPD's portfolio currently includes properties in Sofia, Plovdiv, Vidin, Ruse,
Burgas and Sandanski
http://www.bpdplc.com
Company No. 05118060
BULGARIAN PROPERTY DEVELOPMENTS PLC
REPORT OF THE DIRECTORS AND
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended
31 December 2008
CONTENTS
+----------------------------------------------------------+--------------------+
| | Page |
+----------------------------------------------------------+--------------------+
| Company Information | 3 |
+----------------------------------------------------------+--------------------+
| Chairman's Statement | 4 |
+----------------------------------------------------------+--------------------+
| Report of the Directors | 6 |
+----------------------------------------------------------+--------------------+
| Independent Auditors' Report | 9 |
+----------------------------------------------------------+--------------------+
| Consolidated Income Statement | 11 |
+----------------------------------------------------------+--------------------+
| Consolidated Statement of Changes in Equity | 12 |
+----------------------------------------------------------+--------------------+
| Consolidated Balance Sheet | 13 |
+----------------------------------------------------------+--------------------+
| Consolidated Cash Flow Statement | 14 |
+----------------------------------------------------------+--------------------+
| Company Statement of Changes in Equity | 15 |
+----------------------------------------------------------+--------------------+
| Company Balance Sheet | 16 |
+----------------------------------------------------------+--------------------+
| Company Cash Flow Statement | 17 |
+----------------------------------------------------------+--------------------+
| Notes to the Financial Statements | 18 |
+----------------------------------------------------------+--------------------+
COMPANY INFORMATION
for the year ended 31 December 2008
+---------------+----------------+
| | |
+---------------+----------------+
| DIRECTORS: | C D L |
| | Williams |
| | (Non-Executive |
| | Chairman) |
+---------------+----------------+
| | I L G |
| | Hesmondhalgh |
| | (Executive |
| | Director) |
+---------------+----------------+
| | P A |
| | Pashov |
| | (Executive |
| | Director) |
+---------------+----------------+
| | K J |
| | Springall |
| | (Finance |
| | Director) |
+---------------+----------------+
| | J S |
| | Mackay |
| | (Non |
| | Executive) |
+---------------+----------------+
| | N K |
| | Galchev |
| | (Non |
| | Executive) |
+---------------+----------------+
| | R N |
| | Galtcheva |
| | (Alternate) |
+---------------+----------------+
| | |
+---------------+----------------+
| SECRETARY: | C R |
| | Delacombe |
+---------------+----------------+
| | |
+---------------+----------------+
| REGISTERED | 443 |
| OFFICE: | Stroude |
| | Road |
+---------------+----------------+
| | Virginia |
| | Water |
+---------------+----------------+
| | Surrey |
| | GU25 4BU |
+---------------+----------------+
| | |
+---------------+----------------+
| REGISTERED | 05118060 |
| NUMBER: | (England |
| | and |
| | Wales) |
+---------------+----------------+
| | |
+---------------+----------------+
| NOMINATED | Matrix |
| ADVISER: | Corporate |
| | Capital |
| | LLP |
+---------------+----------------+
| | One Vine |
| | Street |
+---------------+----------------+
| | London |
| | W1J OAH |
+---------------+----------------+
| | |
+---------------+----------------+
| TAX | Smith & |
| ADVISERS: | Williamson |
| | Limited |
+---------------+----------------+
| | 25 |
| | Moorgate |
+---------------+----------------+
| | London |
| | EC2R 6AY |
+---------------+----------------+
| | |
+---------------+----------------+
| SOLICITORS: | Field |
| | Fisher |
| | Waterhouse |
+---------------+----------------+
| | 35 Vine |
| | Street |
+---------------+----------------+
| | London |
| | EC2N 2AA |
+---------------+----------------+
| | |
+---------------+----------------+
| BANKERS: | Clydesdale |
| | Bank plc |
+---------------+----------------+
| | 88 Wood |
| | Street |
+---------------+----------------+
| | London |
| | EC2V 7QQ |
+---------------+----------------+
| | |
+---------------+----------------+
| REGISTRARS: | Neville |
| | Registrars |
| | Limited |
+---------------+----------------+
| | Neville |
| | House |
+---------------+----------------+
| | 18 |
| | Laurel |
| | Lane |
+---------------+----------------+
| | Halesowen |
| | |
+---------------+----------------+
| | West |
| | Midlands |
| | B63 3DA |
+---------------+----------------+
| | |
+---------------+----------------+
| AUDITORS: | Nexia |
| | Smith & |
| | Williamson |
+---------------+----------------+
| | Registered |
| | Auditors |
+---------------+----------------+
| | 25 |
| | Moorgate |
+---------------+----------------+
| | London |
| | EC2R 6AY |
+---------------+----------------+
| | |
+---------------+----------------+
| STOCKBROKERS: | Matrix |
| | Corporate |
| | Capital |
| | LLP |
+---------------+----------------+
| | One Vine |
| | Street |
+---------------+----------------+
| | London |
| | W1J 0AH |
+---------------+----------------+
CHAIRMAN'S STATEMENT
for the year ended 31 December 2008
Windsorville now majority shareholder
Before commenting upon the Group's results, I should say how saddened I am that
our recommendation to shareholders to reject Windsorville's cash offer has
largely been ignored. The cash offer of 16p per BPD share, valued the Company at
just GBP17.3 million as compared with an adjusted net asset value of 56p per BPD
share or GBP61 million (as per the defence document dated 3 March 2009), of
which cash represented GBP11.6 million including GBP2.9 million held in escrow.
We certainly live in unusual times.
Windsorville is now not just the largest shareholder but owns a majority of the
shares in the Company. I pointed out in my recent circular to shareholders the
risk of remaining as a shareholder in a Company that may well be delisted and
taken private. Given the risks associated with remaining a minority shareholder
in an unquoted company, your Directors advised shareholders on 20 March 2009 to
accept the Offer, as indeed they have done, or intend to, in respect of their
own shareholdings amounting to 967,936 BPD shares, representing approximately
0.9% of the issued share capital of the Company.
Windsorville has stated its intention to honour the existing employment rights
of all employees of the Bulgarian Property Developments Group. Windsorville
intends to seek the resignation or removal of all or the majority of the BPD
directors and the appointment of such other persons as directors of Bulgarian
Property Developments Plc ("BPD") as Windsorville considers appropriate.
Group Results
The results for the year ended 31 December 2008 show a loss after tax of
GBP357,000 which is in line with expectations. This result includes increased
rental income of GBP1.1 million (2007: GBP0.5 million) from the existing
buildings at the Sofia Central Commercial Site and at Varna. Depreciation on the
existing buildings has been charged in the year for the first time resulting in
a GBP1.4 million charge to expenses. Offsetting this were realised exchange
gains of GBP2.4 million from the conversion of Euros held back into Sterling in
order to pay for the GBP21 million Special dividend. Sterling weakened from
EUR1.36 as at 31 December 2007 to EUR1.02 as at 31 December 2008.
Payment of Special dividend of GBP21 million
Following the cancellation of the Company's share premium account and the
Company having complied with its undertaking to the Court regarding creditor
protection, BPD paid a dividend of 19p per share on 17 July 2008 to shareholders
who were on the share register on 11 July 2008.
Portfolio and Net Asset Value ("NAV")
The portfolio was valued on 31 December 2008 by Colliers CRE at GBP66.2 million.
However, as required under the Takeover Panel rules, BPD had its portfolio
revalued by Colliers CRE as at 27 February 2009 and the valuation at that date
was GBP54.8 million.
The effect of this is that the NAV at 31 December 2008 was 65.1p per share.
Full details of the portfolio are contained within the notes to the financial
statements.
CHAIRMAN'S STATEMENT (continued)
for the year ended 31 December 2008
Sale and purchase of properties with FairPlay and subsequent legal dispute
As shareholders will be aware, FairPlay Commercial EAD ("FPC") has failed to
complete its purchase of our 50% stake in Varna Logistics at the agreed price of
EUR15 million and has launched a court case either to have the contract declared
void and recover the EUR3.9 million deposit that it paid or to have the contract
price unilaterally reduced to EUR9.3 million. Full details of this dispute are set
out in note 25 of the financial statements. Suffice it to say, we are vigorously
resisting these actions and are hopeful of success.
The Sofia Central Commercial Site
This is the Group's most important asset and represents almost half of the value
of the Group's portfolio.
The Group has applied for permission to increase the permitted build area on the
site from 130,000 square metres to in excess of 290,000 square metres. The
rezoning process is substantially complete. The directors believe that
permission should be granted for the increase in density by the end of 2009. The
effect of such an increase in density would be that the value of the site would
increase from the value ascribed to it by Colliers in December 2008 of GBP32.6
million to GBP62.4 million, the increase being equivalent to approximately 27.5p
per BPD share (at year end exchange rate of GBP1: EUR1.026) or, using Colliers'
February valuation, from GBP26.8 million to GBP47.9 million, an increase of
GBP21.1 million or 19.5p per BPD share (at 27 February 2009 exchange rate of
GBP1: EUR1.121).
Sandanski Retail Centre OOD ("SRC")
The Group has acquired the 50% of shares of SRC, which it did not own for a
consideration of EUR900,000.
Trakia Retail Centre OOD ("TRC")
BPD purchased FairPlay International AD's 50% shareholding in TRC, which owned a
site in the city of Plovdiv for EUR3 million (GBP2.9 million) and then sold the
whole site for EUR6 million (GBP5.8 million) realising a gain of GBP0.7 million.
Christian Williams
Chairman
24 March 2009
REPORT OF THE DIRECTORS
for the year ended 31 December 2008
The directors present their report with the financial statements of the Group
for the year ended 31 December 2008.
Principal activity
The principal activity of the Group in the period under review was that of
property development and property trading in Bulgaria. The development of the
Group's business and future prospects are considered in the Chairman's statement
on page 4.
Results and dividends
The audited financial statements for the year ended 31 December 2008 are set out
on pages 11 to 54. The consolidated income statement showing the results for the
period is set out on page 11. Bulgarian Property Developments Plc paid a
dividend of 19p per share on 17 July 2008 to shareholders who were on the share
register on 11 July 2008.
Business review
Review of the Group's development and performance
The Chairman's Report on the preceding page 4 gives a comprehensive review and
assessment of the Group's activities during the period and its position at 31
December 2008 and prospects for the forthcoming year.
Business risk
The Group's returns may be subject to the risks associated with the development
of real estate projects. These risks include: risks relating to project
financing, that a developer becomes unable to fulfil its obligations, that a
suitable developer may not be available, that planning consents are delayed or
not obtained, that the management services from Bulgarian Property Management
Limited and the Group's management teams cease to continue, events affecting any
Joint Venture partner or difficulties in identifying and securing attractive
property investments in Bulgaria.
Other risks identified by the Group include: geographical and political risks
associated with Bulgaria, financial risks such as lack of available funds to
meet the Group's needs, interest rate risk and currency risk (See note 1).
The Group views effective risk management as integral to the day-to-day business
decisions and encourages all its managers to assess risk on a continuous basis.
Future development
Since 5 March, Windsorville is the controlling shareholder of BPD. It is the
current intention of the board of Windsorville that, now that the Offer becomes
unconditional in all respects, will explore options to raise additional capital
for BPD, which may be raised all or in part from Windsorville. The Group will
develop and improve its existing property portfolio.
Environment
The Group is committed to effective environmental management, and regards
regulatory compliance as a minimum standard. In the light of best practice in
the property development industry, the Group will seek to set policies that
match the Groups operations with the increasing need to manage environmental
performance of existing and new developments; including energy and water
consumption, waste management, water and air pollution, and contractor and
tenant awareness.
Key performance indicators (KPI's)
The Group's success is principally measured in terms of the adjusted Net Asset
Value per share. This is based upon the market value of the Group's property
portfolio as valued by a third party valuer, Colliers, London. This allows the
Group's management to monitor the growth in value created as projects are
developed.
The adjusted Net Asset Value is arrived at with reference to the Group's
property assets as valued by Colliers, London, reflecting the actual percentages
held by the Group. To this figure is added its non property assets minus its
total liabilities. In calculating the adjusted Net Asset Value, no provision is
made for tax that may arise on a sale at that value. Please refer to the
Chairman's statement for details of the Group's performance in respect of this
KPI.
REPORT OF THE DIRECTORS (continued)
for the year ended 31 December 2008
Directors
The directors during the period were:
C D L Williams
I L G Hesmondhalgh
P A Pashov
K J Springall
J S Mackay
N K Galchev
R N Galtcheva (alternate)
Following Windsorville Investments Limited becoming the owner of the majority of
the shares in the Company, it is expected that Mr. Richard McGuire and Mr. Marek
Piwek will be appointed as directors of the Company and that all, or the
majority, of the current board will step down. In accordance with the Company's
articles of association, it is expected that both Mr. Richard McGuire and Mr.
Marek Piwek will retire from office at the Annual General Meeting, being the
first such meeting following their appointment and, being eligible, each will
offer themselves for re-appointment.
The interests of the directors holding office at 31 December 2008 in the issued
share capital of the Company are as follows:
+---------------------------------------------+----------------+----+----------------+
| | 31 December | | 31 December |
| | 2008 | | 2007 |
+---------------------------------------------+----------------+----+----------------+
| | Ordinary 25p | | Ordinary 25p |
| | shares | | shares |
+---------------------------------------------+----------------+----+----------------+
| | | | |
+---------------------------------------------+----------------+----+----------------+
| C D L Williams | 125,000 | | 50,000 |
+---------------------------------------------+----------------+----+----------------+
| I L G Hesmondhalgh | | 383,375 | | 200,001 |
+---------------------------------------------+----------------+----+----------------+
| P A Pashov * | 212,001 | | 212,001 |
+---------------------------------------------+----------------+----+----------------+
| K J Springall | - | | - |
+---------------------------------------------+----------------+----+----------------+
| J S Mackay | 50,000 | | 50,000 |
+---------------------------------------------+----------------+----+----------------+
| N K Galchev | - | | - |
+---------------------------------------------+----------------+----+----------------+
| R N Galtcheva (alternate) | - | | - |
+---------------------------------------------+----------------+----+----------------+
| Of the above, 88,423 are held by family trusts or by Mrs Hesmondhalgh. * Of
the above, 12,000 are held in a family trust of which there are 4 trustees, one
of whom is the wife of Mr Pashov.
Related party transactions
For details of related party transactions, including transactions with
directors, please refer to note 24 of the financial statements.
Statement of directors' responsibilities
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and Group and of the profit or loss of the Company and Group for that
period. In preparing those financial statements, the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgments and estimates that are reasonable and prudent;
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company and Group will continue in business;
and
* state where applicable accounting standards have been followed, subject to any
material departure disclosed and explained in the financials statements.
The directors are responsible for ensuring that the directors' report and other
information included in the annual report is prepared in accordance with law in
the United Kingdom. They are also responsible for ensuring that the annual
report includes information required by the AIM rules.
REPORT OF THE DIRECTORS (continued)
for the year ended 31 December 2008
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
entity and to enable them to ensure that the financial statements comply with
the Companies Act 1985. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Corporate governance
The directors are aware of the principles underlying the provisions of Section 1
of the Combined Code. The Company has an audit and remuneration committee and it
will continue to implement requirements of the Combined Code as the Company
develops. During the year, at the Board's request, KPMG Bulgaria resigned as
auditors of Bulgarian Property Developments EOOD and Ernst & Young Audit OOD was
appointed.
Financial risk management
Details of the Group's financial risk management objectives and policies and
their exposure to risks associated with the use of financial instruments are
disclosed in notes 1 and 21 to the financial statements.
Directors' and officers' liability insurance
The Company carries appropriate insurance cover in respect of possible legal
action being taken against its directors and senior employees.
Supplier payment policy
The Company's normal policy, which is also applied by the Group, is to pay
suppliers at the end of the month following that in which the supplier's invoice
is dated. This policy is made known to all suppliers on request. The creditor
days for the Company at 31 December 2008 were 21 days (31 December 2007: 68
days).
Subsequent events
For details of all subsequent events, please refer to note 25 to the financial
statements.
Charity
The Group supports the Bulgarian charity One Life (Year to 31 December 2008:
EUR10,000, Period to 31 December 2007: GBP5,000). One Life helps children
suffering from life shortening and life threatening diseases in Bulgaria. The
One Life Bulgaria charity is registered in Bulgaria in accordance with the Law
for Charitable Organisations Act in Sofia City Court File number 13378/2004,
BULSTAT 131359582.
Disclosure of information to the auditors
Each of the directors of the Company have confirmed that, in fulfilling their
duties as a director, they have:
* taken all necessary steps in order to make themselves aware of any information
relevant to the audit and to establish that the auditors are aware of that
information; and
* so far as they are aware, there is no relevant audit information of which the
auditors have not been made aware.
Auditors
A resolution to re-appoint the auditors, Nexia Smith & Williamson, will be
proposed at the next Annual General Meeting.
ON BEHALF OF THE BOARD:
Keith Springall
Director 24 March 2009
INDEPENDENT AUDITORS' REPORT
To the shareholders of Bulgarian Property Developments Plc
We have audited the Group and the parent company financial statements of
Bulgarian Property Developments Plc for the year ended 31 December 2008, which
comprise the Consolidated Income Statement, the Consolidated and Company Balance
Sheets, the Consolidated and Company Cash Flow Statements, the Consolidated and
Company Statement of Changes in Equity and the related notes 1 to 27. These
financial statements have been prepared under the accounting policies set out
therein.
This report is made solely to the Company's members, as a body, in accordance
with Section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the Company's members those matters we are required to
state to them in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union applied
in accordance with the provisions of the Companies Act 1985 are set out in the
Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We report to you whether in our opinion the information given in the
Directors' Report is consistent with the financial statements. The information
given in the Directors' Report includes that specific information presented in
the Chairman's Statement that is cross-referred from the Business Review section
of the Directors' Report. We also report to you if, in our opinion, the Company
has not kept proper accounting records, if we have not received all the
information and explanations we require for our audit, or if the information
specified by law regarding Directors' remuneration and transactions with the
Company is not disclosed.
We read other information contained in the Annual Report and consider whether it
is consistent with the audited financial statements. This other information
comprises only the Chairman's Statement and the Directors' Report. We consider
the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the financial statements. Our responsibilities
do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the Group's and Company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
INDEPENDENT AUDITORS' REPORT (continued)
To the shareholders of Bulgarian Property Developments Plc
Opinion
In our opinion:
* the financial statements give a true and fair view, in accordance with IFRSs as
adopted by the European Union applied in accordance with the provisions of the
Companies Act 1985, of the state of the Group's and Company's affairs as at 31
December 2008 and of the Group's loss for the year then ended; and
* the financial statements have been properly prepared in accordance with the
Companies Act 1985 and
* the information given in the Directors' Report is consistent with the financial
statements.
+-----------------------------------------+-----------------------------------------+
| Nexia Smith & Williamson | 25 Moorgate |
+-----------------------------------------+-----------------------------------------+
| Chartered Accountants | London |
+-----------------------------------------+-----------------------------------------+
| Registered Auditors | EC2R 6AY |
+-----------------------------------------+-----------------------------------------+
24 March 2009
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2008
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | Year ended 31 December | | Six months ended 31 |
| | | 2008 | | December 2007 |
+--------------------------+-----------+------------------------------------------------+-+-----------------------------------------------+
| | Notes | Group | | Interests | | Total | | Group | | Interests | | Total |
| | | | | in joint | | | | | | in joint | | |
| | | | | ventures | | | | | | ventures | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Revenue | | 1,139 | | 517 | | 1,656 | | 347 | | 110 | | 457 |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Personnel expenses | 9 | (558) | | (92) | | (650) | | (256) | | (28) | | (284) |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Management fees | 9 | (738) | | - | | (738) | | (400) | | - | | (400) |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Depreciation | | (1,433) | | (33) | | (1,466) | | (3) | | (1) | | (4) |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Other expenses | 3 | (1,473) | | (173) | | (1,646) | | (1,240) | | (83) | | (1,323) |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Other revenue | 4 | 841 | | - | | 841 | | - | | - | | - |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Impairment of investment | 5 | (499) | | (558) | | (1,057) | | (75) | | (819) | | (894) |
| properties | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Foreign exchange | | 2,437 | | (6) | | 2,431 | | 1,201 | | - | | 1,201 |
| gains/(losses) | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Operating loss | | (284) | | (345) | | (629) | | (426) | | (821) | | (1,247) |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Investment revenues | 12 | 729 | | 2 | | | | 727 | | - | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Finance costs | 12 | - | | (167) | | | | - | | (74) | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Loss from joint ventures | 14 | (518) | | - | | | | (903) | | - | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Loss before tax for the | | (73) | | (510) | | | | (602) | | (895) | | |
| period | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Taxation | 7 | (284) | | (8) | | | | (380) | | (8) | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Loss for the period | | (357) | | (518) | | | | (982) | | (903) | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Attributable to: | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Equity holders of the | | | | | | | | | | | | |
| parent | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| company | | (357) | | | | | | (982) | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
| Loss per share - basic | 11 | (0.33p) | | | | | | (0.92p) | | | | |
| and diluted | | | | | | | | | | | | |
+--------------------------+-----------+-------------+-+---------------+--+-------------+-+-------------+-+---------------+-+-------------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
At 31 December 2008
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| | | Share | | Share | | Special | | Equity | | Reserve | | Own | | Retained | | Total |
| | | capital | | premium | | reserve | | shares | | for | | shares | | earnings | | equity |
| | | | | | | | | to be | | exchange | | reserve | | | | |
| | | | | | | | | issued | | differences | | | | | | |
| | | | | | | | | | | on | | | | | | |
| | | | | | | | | | | translation | | | | | | |
| | | | | | | | | | | of foreign | | | | | | |
| | | | | | | | | | | operations | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Balance at 30 June | | 26,698 | | 31,351 | | - | | 201 | | 5 | | - | | (1,405) | | 56,850 |
| 2007 | | | | | | | | | | | | | | | | |
+ +---------------------+ +-+ +-------+ +-+ +--------+ +-+ +-------+ +-+ +
| | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Exchange | | - | | - | | - | | - | | 2,740 | | - | | - | | 2,740 |
| differences on | | | | | | | | | | | | | | | | |
| translation of | | | | | | | | | | | | | | | | |
| foreign operations | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Loss for the six | | - | | - | | - | | - | | - | | - | | (982) | | (982) |
| months to 31 | | | | | | | | | | | | | | | | |
| December 2007 | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Total recognised | | - | | - | | - | | - | | 2,740 | | - | | (982) | | 1,758 |
| income and expense | | | | | | | | | | | | | | | | |
| for the period | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Share based | | - | | 26 | | - | | (26) | | - | | - | | - | | - |
| payments | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Issue of equity | | 44 | | 44 | | - | | - | | - | | - | | - | | 88 |
| share capital | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Costs of issue | | - | | (5) | | - | | - | | - | | - | | - | | (5) |
| | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Balance at 31 | | 26,742 | | 31,416 | | - | | 175 | | 2,745 | | - | | (2,387) | | 58,691 |
| December 2007 | | | | | | | | | | | | | | | | |
+ +---------------------+ +-+ +-------+ +-+ +--------+ +-+ +-------+ +-+ +
| | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Exchange | | - | | - | | - | | - | | 10,507 | | - | | - | | 10,507 |
| differences on | | | | | | | | | | | | | | | | |
| translation of | | | | | | | | | | | | | | | | |
| foreign operations | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Loss for the year | | - | | - | | - | | - | | - | | - | | (357) | | (357) |
| to | | | | | | | | | | | | | | | | |
| 31 December 2008 | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Total recognised | | - | | - | | - | | - | | 10,507 | | - | | (357) | | 10,150 |
| income and expense | | | | | | | | | | | | | | | | |
| for the period | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Movement in respect | | - | | - | | - | | - | | - | | (140) | | - | | (140) |
| of employee share | | | | | | | | | | | | | | | | |
| scheme | | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Share based | | - | | 175 | | - | | (175) | | - | | - | | - | | - |
| payments | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Issue of equity | | 318 | | 382 | | - | | - | | - | | - | | - | | 700 |
| share capital | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Transfer to | | - | | (31,973) | | 31,973 | | - | | - | | - | | - | | - |
| distributable | | | | | | | | | | | | | | | | |
| reserves following | | | | | | | | | | | | | | | | |
| restructure | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Special Dividend | | - | | - | | (20,565) | | - | | - | | - | | - | | (20,565) |
| paid ^ | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Balance at 31 | | 27,060 | | - | | 11,408 | | - | | 13,252 | | (140) | | (2,744) | | 48,836 |
| December 2008 | | | | | | | | | | | | | | | | |
+ +---------------------+ +-+ +-------+ +-+ +--------+ +-+ +-------+ +-+ +
| | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Attributable to: | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
| Equity Holders of | | 27,060 | | - | | 11,408 | | - | | 13,252 | | (140) | | (2,744) | | 48,836 |
| the parent company | | | | | | | | | | | | | | | | |
+---------------------+---------------------+-------------+-+--------------+-------+--------------+-+-------------+--------+-------------+-+---------+-------+--------------+-+----------+
* At a General Meeting of the Company held on 7 April 2008 a special resolution
to cancel the Company's Share Premium account was approved. An application to
the Courts was then made to create a Special reserve which will be treated as
distributable. The Court Order became effective on 28 May 2008 subject to funds
equal to outstanding creditors on 22 May 2008 being set up in a blocked trust
bank account. As at 31 December 2008 the blocked funds amounted to GBP202,139.
| Own shares reserve represents Company shares held in the Employment Benefit
Trust to meet the future requirements of employee share scheme.
^ The Special Dividend represents a dividend of 19p per share paid on 17 July
2008.
CONSOLIDATED BALANCE SHEET
At 31 December 2008
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | 31 December 2008 | | 31 December 2007 |
+-------------------------------+-----------+-----------------------------------------------+-+-----------------------------------------------+
| | Notes | Group | | Interests | | Total | | Group | | Interests | | Total |
| | | | | in joint | | | | | | in joint | | |
| | | | | ventures | | | | | | ventures | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Non-current assets | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Plant and equipment | 13 | 42 | | 34 | | 76 | | 9 | | 17 | | 26 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Investment in joint ventures | 14 | 7,346 | | (7,346) | | - | | 8,181 | | (8,181) | | - |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Investment properties | 15 | 33,336 | | 11,148 | | 44,484 | | 24,777 | | 7,932 | | 32,709 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Assets under construction | 14 | - | | - | | | | - | | 621 | | 621 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Total non-current assets | | 40,724 | | | | | | 32,967 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Current assets | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Inventories | 16 | - | | - | | - | | - | | - | | - |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Trade and other receivables | 17 | 698 | | 449 | | 1,147 | | 575 | | 102 | | 677 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Current Tax Asset | | 178 | | - | | 178 | | - | | - | | - |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Restricted Cash | 20 | 3,125 | | - | | 3,125 | | - | | - | | - |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Cash and cash equivalents | 19 | 8,665 | | 68 | | 8,733 | | 26,479 | | 19 | | 26,498 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Total current assets | | 12,666 | | 517 | | 13,183 | | 27,054 | | 121 | | 27,175 |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Current liabilities | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Trade and other payables | 18 | (4,136) | | (751) | | (4,887) | | (948) | | (210) | | (1,158) |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Current tax liabilities | | (418) | | - | | (418) | | (382) | | (11) | | (393) |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Total current liabilities | | (4,554) | | (751) | | (5,205) | | (1,330) | | (221) | | (1,551) |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Net current assets | | 8,112 | | | | | | 25,724 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Non-current liabilities | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Financial liabilities | | - | | (3,602) | | (3,602) | | - | | (289) | | (289) |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Net assets | | 48,836 | | | | | | 58,691 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Represented by: | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Equity | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Share capital | 22 | 27,060 | | | | | | 26,742 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Share premium | | - | | | | | | 31,416 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Special reserve | | 11,408 | | | | | | - | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Equity shares to be issued | | - | | | | | | 175 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Own shares reserve | | (140) | | | | | | - | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Reserve for exchange | | 13,252 | | | | | | 2,745 | | | | |
| differences on translation of | | | | | | | | | | | | |
| foreign operations | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Retained earnings | | (2,744) | | | | | | (2,387) | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| | | | | | | | | | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
| Total equity | | 48,836 | | | | | | 58,691 | | | | |
+-------------------------------+-----------+-------------+-+---------------+-+-------------+-+-------------+-+---------------+-+-------------+
The financial statements were approved by the Board of Directors on 24 March
2009 and signed on its behalf by:
+------------------------------------------+-----------------------------+-----------------------------+
| Christian Williams | Keith Springall | |
+------------------------------------------+-----------------------------+-----------------------------+
| Chairman | Directo | Date: 24 March 2009 |
+------------------------------------------+-----------------------------+-----------------------------+
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2008
+-----------------------------------------+-----+-----------------+--+----------------+
| | | Year ended | | Six months |
| | | | | ended |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | 31 December | | 31 December |
| | | 2008 | | 2007 |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | GBP'000 | | GBP'000 |
+-----------------------------------------+-----+-----------------+--+----------------+
| Operating activities | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Operating loss | | (284) | | (426) |
+-----------------------------------------+-----+-----------------+--+----------------+
| Investment revenues | | 729 | | 727 |
+-----------------------------------------+-----+-----------------+--+----------------+
| Taxation | | (284) | | (380) |
+-----------------------------------------+-----+-----------------+--+----------------+
| Profit/(loss) after tax | | 161 | | (79) |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Adjustments for: | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Depreciation | | 1,433 | | 3 |
+-----------------------------------------+-----+-----------------+--+----------------+
| Impairment of investment property | | 499 | | 75 |
+-----------------------------------------+-----+-----------------+--+----------------+
| Impairment of investment | | 204 | | 261 |
+-----------------------------------------+-----+-----------------+--+----------------+
| Investment revenue | | - | | - |
+-----------------------------------------+-----+-----------------+--+----------------+
| Income expense | | - | | - |
+-----------------------------------------+-----+-----------------+--+----------------+
| Taxation | | (142) | | 311 |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Operating cash flow before working | | 2,155 | | 571 |
| capital changes | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| (Increase)/decrease in trade and other | | (161) | | 786 |
| receivables | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Increase in trade and other payables | | 3,147 | | 551 |
+-----------------------------------------+-----+-----------------+--+----------------+
| (Increase) in restricted cash | | (3,125) | | - |
+-----------------------------------------+-----+-----------------+--+----------------+
| Net cash flows from operating | | (139) | | 1,337 |
| activities | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Investing activities | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Acquisition of investment | | (204) | | (261) |
+-----------------------------------------+-----+-----------------+--+----------------+
| Disposal of joint ventures | | 2,992 | | (726) |
+-----------------------------------------+-----+-----------------+--+----------------+
| Payments to acquire property, plant and | | (39) | | (2) |
| equipment | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Payments to acquire investment property | | (3,047) | | (1,906) |
+-----------------------------------------+-----+-----------------+--+----------------+
| Net cash flows from investing | | (298) | | (2,895) |
| activities | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Effects of exchange rates on cash and | | 333 | | 105 |
| cash equivalents | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Financing activities | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Special dividend paid | | (20,565) | | - |
+-----------------------------------------+-----+-----------------+--+----------------+
| Proceeds from issue of shares | | 700 | | 21,327 |
+-----------------------------------------+-----+-----------------+--+----------------+
| Less issue costs | | - | | (5) |
+-----------------------------------------+-----+-----------------+--+----------------+
| Net cash flows from financing | | (19,865) | | 21,322 |
| activities | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| (Decrease)/increase in cash and cash | | (17,814) | | 20,440 |
| equivalents | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Cash and cash equivalents at beginning | | 26,479 | | 6,039 |
| of year | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
| Cash and cash equivalents at end of | | 8,665 | | 26,479 |
| year | | | | |
+-----------------------------------------+-----+-----------------+--+----------------+
COMPANY STATEMENT OF CHANGES IN EQUITY
At 31 December 2008
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| | | Share | | Share | | Special | | Equity | | Own | | Retained | | Total |
| | | capital | | premium | | reserve | | shares | | shares | | earnings | | equity |
| | | | | | | | | to be | | reserve | | | | |
| | | | | | | | | issued | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| | | GBP'000 | | GBP'000 | | GBP | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
| | | | | | | '000 | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Balance at 30 June | | 26,698 | | 31,351 | | - | | 201 | | - | | 265 | | 58,515 |
| 2007 | | | | | | | | | | | | | | |
+ +----------------------+ +-+ +-------+ +-+ +---------+ +--+ +--------+ +
| | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Profit for the six | | - | | - | | - | | - | | - | | 50 | | 50 |
| months to | | | | | | | | | | | | | | |
| 31 December 2007 | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Total recognised | | - | | - | | - | | - | | - | | 50 | | 50 |
| income and expense | | | | | | | | | | | | | | |
| for the year | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Share based payments | | - | | 26 | | - | | (26) | | - | | - | | - |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Issue of equity | | 44 | | 44 | | - | | - | | - | | - | | 88 |
| share capital | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Costs of issue | | - | | (5) | | - | | - | | - | | - | | (5) |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Balance at 31 | | 26,742 | | 31,416 | | - | | 175 | | - | | 315 | | 58,648 |
| December 2007 | | | | | | | | | | | | | | |
+ +----------------------+ +-+ +-------+ +-+ +---------+ +--+ +--------+ +
| | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Profit for the year | | - | | - | | - | | - | | - | | 816 | | 816 |
| to | | | | | | | | | | | | | | |
| 31 December 2008 | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Total recognised | | - | | - | | - | | - | | - | | 816 | | 816 |
| income and expense | | | | | | | | | | | | | | |
| for the year | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Movement in respect | | - | | - | | - | | - | | (140) | | - | | (140) |
| of employee share | | | | | | | | | | | | | | |
| scheme | | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Share based payments | | - | | 175 | | - | | (175) | | - | | - | | - |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Issue of equity | | 318 | | 382 | | - | | - | | - | | - | | 700 |
| share capital | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Transfer to | | - | | (31,973) | | 31,973 | | - | | - | | - | | - |
| distributable | | | | | | | | | | | | | | |
| reserves following | | | | | | | | | | | | | | |
| restructure | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Special Dividend | | - | | - | | (20,565) | | - | | - | | - | | (20,565) |
| paid ^ | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Balance at 31 | | 27,060 | | - | | 11,408 | | - | | (140) | | 1,131 | | 39,459 |
| December 2008 | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Attributable to: | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
| Equity holders of | | 27,060 | | - | | 11,408 | | - | | (140) | | 1,131 | | 39,459 |
| the parent company | | | | | | | | | | | | | | |
+----------------------+----------------------+-------------+-+--------------+-------+--------------+-+-------------+---------+-------------+--+--------------+--------+--------------+
* At a General Meeting of the Company held on April 7 2008 a special resolution
to cancel the Company's Share Premium account was approved. An application to
the Courts was then made to create a Special reserve which will be treated as
distributable. The Court Order became effective on 28 May 2008 subject to funds
equal to outstanding creditors on 22 May 2008 being set up in a blocked trust
bank account. As at 31 December 2008 the blocked funds amounted to GBP202,139.
| Own share scheme reserve represents Company shares held in the Employee
Benefit Trust to meet the future requirements of the employee share scheme.
^ The Special Dividend represents a dividend of 19p per share paid on 17 July
2008.
COMPANY BALANCE SHEET
At 31 December 2008
+----------------------------------------+-------+----------------+--+-----------------+
| |Notes | 31 December | | 31 December |
| | | 2008 | | 2007 |
+----------------------------------------+-------+----------------+--+-----------------+
| | | GBP'000 | | GBP'000 |
+----------------------------------------+-------+----------------+--+-----------------+
| | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Non-current assets | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Investments | 14 | 31,782 | | 31,782 |
+----------------------------------------+-------+----------------+--+-----------------+
| | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Current assets | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Trade and other receivables | 17 | 1,952 | | 2,665 |
+----------------------------------------+-------+----------------+--+-----------------+
| Current tax asset | | 178 | | - |
+----------------------------------------+-------+----------------+--+-----------------+
| Restricted cash | 20 | 202 | | - |
+----------------------------------------+-------+----------------+--+-----------------+
| Cash and cash equivalents | 19 | 5,829 | | 25,370 |
+----------------------------------------+-------+----------------+--+-----------------+
| Total current assets | | 8,161 | | 28,035 |
+----------------------------------------+-------+----------------+--+-----------------+
| | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Current liabilities | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Trade and other payables | 18 | (137) | | (739) |
+----------------------------------------+-------+----------------+--+-----------------+
| Current tax liabilities | | (347) | | (430) |
+----------------------------------------+-------+----------------+--+-----------------+
| Total current liabilities | | (484) | | (1,169) |
+----------------------------------------+-------+----------------+--+-----------------+
| | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Net current assets | | 7,677 | | 26,866 |
+----------------------------------------+-------+----------------+--+-----------------+
| | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Net assets | | 39,459 | | 58,648 |
+----------------------------------------+-------+----------------+--+-----------------+
| | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Represented by: | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Equity | | | | |
+----------------------------------------+-------+----------------+--+-----------------+
| Share capital | 22 | 27,060 | | 26,742 |
+----------------------------------------+-------+----------------+--+-----------------+
| Share premium | | - | | 31,416 |
+----------------------------------------+-------+----------------+--+-----------------+
| Special reserve | | 11,408 | | - |
+----------------------------------------+-------+----------------+--+-----------------+
| Equity shares to be issued | | - | | 175 |
+----------------------------------------+-------+----------------+--+-----------------+
| Own shares reserve | | (140) | | - |
+----------------------------------------+-------+----------------+--+-----------------+
| Retained earnings | | 1,131 | | 315 |
+----------------------------------------+-------+----------------+--+-----------------+
| Total equity | | 39,459 | | 58,648 |
+----------------------------------------+-------+----------------+--+-----------------+
The financial statements were approved by the Board of Directors on 24 March
2009 and signed on its behalf by:
+--------------------------------------+----------------------+----------------------+
| Christian Williams | Keith Springall | |
+--------------------------------------+----------------------+----------------------+
| Chairman | Director | Date: 24 March 2009 |
+--------------------------------------+----------------------+----------------------+
COMPANY CASH FLOW STATEMENT
for the year ended 31 December 2008
+------------------------------------------+-------+----------------+--+----------------+
| | | Year ended | | Six months |
| | | | | ended |
+------------------------------------------+-------+----------------+--+----------------+
| |Notes | 31 December | | 31 December |
| | | 2008 | | 2007 |
+------------------------------------------+-------+----------------+--+----------------+
| | | GBP'000 | | GBP'000 |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Operating activities | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Net result after taxation | | 816 | | 50 |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Adjustments for: | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Tax | | (261) | | 359 |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Operating flow before working capital | | 555 | | 409 |
| changes | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| (Increase) in trade and other | | (173) | | (10) |
| receivables | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| (Decrease)/increase in trade and other | | (602) | | 588 |
| payables | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| (Increase))/decrease in restricted cash | | (202) | | - |
+------------------------------------------+-------+----------------+--+----------------+
| Net cash flows from operating activities | | (422) | | 987 |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Investing activities | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Investment in subsidiary | | - | | - |
+------------------------------------------+-------+----------------+--+----------------+
| Loans and advances to subsidiary | | 746 | | (1,810) |
+------------------------------------------+-------+----------------+--+----------------+
| Net cash flows from investing activities | | 746 | | (1,810) |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Financing activities | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Dividend paid | | (20,565) | | - |
+------------------------------------------+-------+----------------+--+----------------+
| Proceeds from issue of shares | | 700 | | 21,327 |
+------------------------------------------+-------+----------------+--+----------------+
| Less issue costs | | - | | (5) |
+------------------------------------------+-------+----------------+--+----------------+
| Net cash flows from financing activities | | (19,865) | | 21,322 |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| (Decrease)/increase in cash and cash | | (19,541) | | 20,499 |
| equivalents | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Cash and cash equivalents at beginning | | 25,370 | | 4,871 |
| of year | | | | |
+------------------------------------------+-------+----------------+--+----------------+
| Cash and cash equivalents at end of year | | 5,829 | | 25,370 |
+------------------------------------------+-------+----------------+--+----------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2008
1ACCOUNTING POLICIES
The principal accounting policies are summarized below. They have been applied
consistently throughout the period covered by these financial statements.
Basis of accounting
The financial information has been prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union applied
in accordance with the provisions of the Companies Act 1985.
The financial statements have been prepared under the historical cost
convention.
Basis of consolidation
The Group financial statements incorporate the financial statements of the
Company and entities controlled by the Company (its subsidiaries) prepared to 31
December each year with effect from 1st July 2007. Control is achieved where the
Company has the power to govern the financial and operating policies of an
investee entity so as to obtain benefits from its activities. In assessing
control, potential voting rights that are presently exercisable are taken into
account.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
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, Bulgarian Property Developments 4 EOOD,
Bulgarian Property Developments 5 EOOD, Sandanski Retail Centre OOD, Trakia
Retail Centre OOD and Bulgarian Property Developments Bansko EOOD.
Business combinations and goodwill
On acquisition, the assets, liabilities and contingent liabilities of
subsidiaries are measured at their fair values at the date of acquisition. Any
excess of cost of acquisition over the fair values of the identifiable net
assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to the income statement in the period of
acquisition. Goodwill arising on consolidation is recognised as an asset and
reviewed for impairment at least annually. Any impairment is recognised
immediately in the income statement and is not subsequently reversed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
1.ACCOUNTING POLICIES (continued)
Joint ventures
Joint ventures are included using the equity method in accordance with IAS 31.
However, within the consolidated balance sheet and consolidated income
statement, additional information is shown regarding the Group's share of the
assets which it jointly controls and the share of the liabilities for which it
is jointly responsible, together with 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.
Associates
Associates are those entities over which the Group has significant influence,
but not control, over the financial and operating policies. Associates are
accounted for under the equity method.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, VAT and other sales related
taxes. Sales of property are recognised when title has passed.
Revenue arising from the provision of services is recognised when and to the
extent that the Group obtains the right to consideration in exchange for the
performance of its contractual obligations as follows: 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 operating income from one country, Bulgaria.
Functional and presentation currency
These consolidated financial statements are presented in Sterling, the
functional currency of the parent company, Bulgarian Property Developments Plc,
being the preferred reporting currency of its shareholders. The accounts of
subsidiaries are prepared in Bulgarian Lev (Lev) (their functional currency).
All financial information presented in Sterling has been rounded to the nearest
thousand. Transactions in foreign currencies are translated into Sterling at the
foreign exchange rate prevailing on the date of the transaction. The assets and
liabilities in the financial statements of foreign subsidiaries are translated
at the rate of exchange ruling at the balance sheet date. Income and expenses
are translated at average rates provided there is no significant change in
month. The exchange differences arising from the retranslation of the opening
net investment in subsidiaries are taken directly to the "Reserve for exchange
differences on translation of foreign operations."
Taxation
The tax expense represents the sum of the tax currently payable and any deferred
tax. The tax currently payable is based on the taxable profit for the period.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax rates that have
been enacted or substantially enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
1ACCOUNTING POLICIES (continued)
Taxation (continued)
Deferred tax liabilities are generally recognized for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilized. Such assets and liabilities are not
recognized if the temporary difference arises from goodwill or from the initial
recognition (other than a business combination) of other assets and liabilities
in a transaction that affects neither the taxable profit nor the accounting
profit.
Deferred tax liabilities are recognized for taxable temporary differences
arising on investments in subsidiaries, except where the Group is able to
control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realized. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current assets and liabilities on a net basis.
Investment in subsidiary
Investments in subsidiary undertakings are shown at cost, less any provision for
impairment.
Share based payments
In accordance with IFRS 2, 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 31 December 2008
1ACCOUNTING POLICIES (continued)
Investment properties
The group reviewed its property portfolio and strategy in December 2007. As a
result of this review, all properties were reclassified from inventory to
investment properties.
Investment properties are those properties that are held by the Group or in
joint ventures either to earn rental income or for capital appreciation or both.
Investment properties are measured at cost plus associated transaction costs as
permitted by IAS 40. Properties are treated as acquired at the point when the
Group assumes title to ownership on completion and as disposed when the title is
transferred to the buyer. Additions to investment properties consist of costs of
a capital nature.
When the Group redevelops an investment property for continued use as a
development property, the property remains a development property and is
accounted for as such.
The cost of newly constructed buildings is depreciated at 4% per annum on a
straight line basis and for those buildings that are currently in use, but
planned to be demolished in future when construction work starts, are
depreciated at 6.67% per annum on a straight line basis. Land is not
depreciated. However, as the decision to reclassify the properties to investment
properties was made in December 2007, no depreciation was charged in the
financial statements in the six months to 31 December 2007.
A professional valuation is made as of each reporting date, of each investment
property. Where the professional valuation shows a value lower than cost, the
carrying value of that property within the accounts is reduced to the valuation.
No account is taken of any fair value gains in investment properties as a result
of professional valuations.
Investment property under construction
Properties that are built with the intention to be used as investment properties
in the future are classified as investment properties under construction, and
are stated at cost until the construction is completed. Subsequently they are
reclassified and reported as investment properties. The Company has adopted the
cost model for subsequent recognition of investment properties.
All costs directly associated with the purchase and construction of a property
and all subsequent capital expenditures for the development are capitalised.
Borrowing costs
Borrowing costs related to the acquisition and construction of investment
properties are expensed in the period when incurred.
Inventories
In cases where land and buildings are acquired for resale, they are classified
as inventories.
Inventories are 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 inventory 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
1ACCOUNTING POLICIES (continued)
Plant and equipment
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 |
+------------------------------------------+---------------------------------------------+
| Vehicles, plant and equipment | 3-4 years |
+------------------------------------------+---------------------------------------------+
Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted
accounting practice requires management to make estimates and judgments that
affect reported amounts of assets and liabilities as well as the disclosure of
contingent assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the reporting period.
Estimates and judgments are normally evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Key sources of estimation uncertainty relate to:
- Bad debt provisions
The trade and other receivables balances recorded in the Group's balance sheet
comprise a relatively small number of small balances. A full line by line review
of trade receivables is carried out at the end of each month. Whilst every
attempt is made to ensure that the bad debt provisions are as accurate as
possible, there remains a risk that the provisions do not match the level of
debts which ultimately prove to be uncollectible.
- Impairment of investment properties
Management recognises that the impairment of investment properties requires
professional judgment and is a potential source of estimation uncertainty.
However, the Group has a policy in respect of impairment of investment
properties as stated above.
Financial instruments
(i) Non-derivative financial instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
Trade and other receivables are initially recognised at fair value, and are
subsequently measured at amortised cost using the effective interest method. A
provision is established when there is objective evidence that the Group will
not be able to collect all amounts due. The amount of any provision is
recognised in the income statement.
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less.
Trade and other payables are initially recognised at fair value, and are
subsequently measured at amortised cost, using the effective interest rate
method.
(ii) Derivative financial instruments
During 2007 and 2008 the Group did not hold derivative financial instruments to
hedge foreign currency, interest rate risk exposures, or cash flows.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
1ACCOUNTING POLICIES (continued)
Financial risk management
The Group uses a limited number of financial instruments, comprising cash and
short-term deposits, and various items such as trade receivables and payables,
which arise directly from operations. The Group does not trade in financial
instruments.
Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and interest rate risk), credit risk, liquidity risk
and cash flow risk. The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimize potential adverse
effects on the Group's financial performance.
+----------+-----------------+
| a) | Foreign |
| | exchange |
| | risk |
+----------+-----------------+
| | The |
| | Group |
| | operates |
| | internationally |
| | and is exposed |
| | to foreign |
| | exchange risk |
| | arising from |
| | various |
| | currency |
| | exposures, |
| | primarily with |
| | respect to |
| | Sterling, the |
| | Euro and the |
| | Bulgarian Lev. |
| | Foreign |
| | exchange risk |
| | arises from |
| | future |
| | commercial |
| | transactions, |
| | recognised |
| | assets and |
| | liabilities and |
| | net investments |
| | in foreign |
| | operations. |
| | Details of the |
| | Group's policy |
| | in respect of |
| | this risk are |
| | set out in note |
| | 21. |
+----------+-----------------+
| | |
+----------+-----------------+
| | Foreign |
| | exchange |
| | risk |
| | arises |
| | when |
| | future |
| | commercial |
| | transactions |
| | or |
| | recognised |
| | assets or |
| | liabilities |
| | are |
| | denominated |
| | in a |
| | currency |
| | that is not |
| | the entity's |
| | functional |
| | currency. |
+----------+-----------------+
| | |
+----------+-----------------+
| | The |
| | Group |
| | has |
| | certain |
| | investments |
| | in foreign |
| | operations, |
| | whose net |
| | assets are |
| | exposed to |
| | foreign |
| | exchange |
| | risks. |
+----------+-----------------+
| | |
+----------+-----------------+
| b) | Credit |
| | risk |
+----------+-----------------+
| | The |
| | Group |
| | has no |
| | significant |
| | concentrations |
| | of credit risk |
| | and has |
| | policies in |
| | place to |
| | ensure that |
| | sales are made |
| | to customers |
| | with an |
| | appropriate |
| | credit |
| | history. |
+----------+-----------------+
| | |
+----------+-----------------+
| c) | Liquidity |
| | risk |
+----------+-----------------+
| | Prudent |
| | liquidity |
| | risk |
| | management |
| | implies |
| | maintaining |
| | sufficient |
| | cash and |
| | available |
| | funding |
| | through an |
| | adequate |
| | amount of |
| | committed |
| | facilities. |
| | The Group |
| | ensures it |
| | has |
| | adequate |
| | cover |
| | through the |
| | availability |
| | of funding |
| | and |
| | facilities. |
+----------+-----------------+
| | |
+----------+-----------------+
| d) | Cash |
| | flow |
| | risk |
+----------+-----------------+
| | The |
| | Group |
| | finances |
| | its |
| | operations |
| | through |
| | its own |
| | equity |
| | finance. |
| | Risk is |
| | mitigated |
| | by |
| | depositing |
| | cash |
| | resources |
| | with banks |
| | of high |
| | financial |
| | standing |
| | and |
| | spreading |
| | deposits |
| | amongst a |
| | group of |
| | banks. |
+----------+-----------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
1ACCOUNTING POLICIES (continued)
Impairment of financial and non-financial assets
Financial assets
A financial asset is assessed at each reporting date to determine whether there
is any objective evidence that it is impaired. A financial asset is considered
to be impaired if objective evidence indicates that one or more events have had
a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount, and the present value
of the estimated future cash flows discounted at the original effective interest
rate.
Individually significant financial assets are tested for impairment on an
individual basis. The remaining financial assets are assessed collectively in
groups that share similar credit risk characteristics.
All impairment losses are recognised in the income statement.
An impairment loss is reversed if the reversal can be related objectively to an
event occurring after the impairment loss was recognised. For financial assets
measured at amortised cost the reversal is recognised in the income statement.
Non-financial assets
The carrying amounts of the Company's non-financial assets, other than
investment property, inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If
any such indication exists, then the asset's recoverable amount is estimated.
For goodwill and intangible assets that have indefinite lives or that are not
yet available for use, the recoverable amount is estimated at each reporting
date.
The recoverable amount of an asset or cash-generating unit is the greater of its
value in use and its fair value less costs to sell. In assessing value in use,
the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. For the purpose of impairment
testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the "cash-generating unit").
An impairment loss is recognised if the carrying amount of an asset or its
cash-generating unit exceeds its estimated recoverable amount. Impairment losses
are recognised in the income statement.
Impairment losses in respect of assets, other than goodwill, recognised in prior
periods are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset's carrying amount
does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
Provisions, contingent liabilities and contingent assets
A provision is recognised in the balance sheet when the Group has a legal or
constructive obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the obligation and a
reliable estimate of the amount of the obligation can be made. If the effect is
material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability. If
the amount of the obligation cannot be reliably measured a contingent liability
is disclosed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
1ACCOUNTING POLICIES (continued)
Contingent liabilities are not recognised in the financial statements but are
disclosed unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent assets are not recognised in the financial
statements but are disclosed when an inflow of economic benefits is probable.
Investment revenues
Investment revenues comprise interest earned on deposits. Interest income is
recognized as it accrues in profit or loss, using the effective interest method.
2 REVENUE
All revenue generated is from rendering services, comprising rental income.
3 OTHER EXPENSES
+--------------------------------------------+---------------+--+---------------+
| | Year ended | | Six months |
| | 31 December | | ended |
| | 2008 | | 31 December |
| | | | 2007 |
+--------------------------------------------+---------------+--+---------------+
| | GBP'000 | | GBP'000 |
+--------------------------------------------+---------------+--+---------------+
| | | | |
+--------------------------------------------+---------------+--+---------------+
| Administrative expenses | 1,138 | | 207 |
+--------------------------------------------+---------------+--+---------------+
| Potential fines at Pleven property | - | | 92 |
+--------------------------------------------+---------------+--+---------------+
| Takeover defense costs | - | | 680 |
+--------------------------------------------+---------------+--+---------------+
| Costs associated with creation of Special | 85 | | - |
| reserve | | | |
+--------------------------------------------+---------------+--+---------------+
| Loss from investment in associate: | | | |
+--------------------------------------------+---------------+--+---------------+
| Sofia Estate Developments EOOD | 204 | | 261 |
+--------------------------------------------+---------------+--+---------------+
| Provision for Loss on loan to Sofia Estate | 46 | | - |
| Development EOOD | | | |
+--------------------------------------------+---------------+--+---------------+
| | 1,473 | | 1,240 |
+--------------------------------------------+---------------+--+---------------+
4.OTHER REVENUE
+---------------------------------------+--------------------+--+----------------+
| | Year ended | | Six months |
| | 31 December 2008 | | ended |
| | | | 31 December |
| | | | 2007 |
+---------------------------------------+--------------------+--+----------------+
| | GBP'000 | | GBP'000 |
+---------------------------------------+--------------------+--+----------------+
| | | | |
+---------------------------------------+--------------------+--+----------------+
| Gain of sale of investment property | 735 | | - |
+---------------------------------------+--------------------+--+----------------+
| Income from compensations | 96 | | - |
+---------------------------------------+--------------------+--+----------------+
| Other | 10 | | - |
+---------------------------------------+--------------------+--+----------------+
| | 841 | | - |
+---------------------------------------+--------------------+--+----------------+
GBP735,000 was the gain made from the sale of investment property owned by
Trakia Retail Centre EOOD. The revenue of GBP96,000 comprises a compensation
paid by the Municipality of Sofia for using the Group's property at Airport Site
One for municipality pipeline purposes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
5IMPAIRMENT OF INVESTMENT PROPERTIES
+--------------------------------------------+---------------+--+----------------+
| | Year ended | | Six months |
| | 31 December | | ended 31 |
| | 2008 | | December 2007 |
+--------------------------------------------+---------------+--+----------------+
| | Group | | Group |
+--------------------------------------------+---------------+--+----------------+
| | GBP'000 | | GBP'000 |
+--------------------------------------------+---------------+--+----------------+
| | | | |
+--------------------------------------------+---------------+--+----------------+
| Impairment of investment properties | 499 | | 75 |
+--------------------------------------------+---------------+--+----------------+
| | 499 | | 75 |
+--------------------------------------------+---------------+--+----------------+
The impairment loss for the year to 31 December 2008 of GBP499,000 related to
the write down of the carrying value of Rousse of GBP188,000 and Bansko of
GBP311,000, the value calculated by Colliers CRE as at 31 December 2008.
The impairment loss for the six months to 31 December 2007 of GBP75,000 relates
to the write down of the carrying value of Rousse to the value calculated by
Colliers CRE as at 12 December 2007.
6 AUDITORS' REMUNERATION
+-------------------------------------------+----------------+--+---------------+
| | Year ended | | Six months |
| | 31 December | | ended 31 |
| | 2008 | | December2007 |
+-------------------------------------------+----------------+--+---------------+
| | GBP'000 | | GBP'000 |
+-------------------------------------------+----------------+--+---------------+
| | | | |
+-------------------------------------------+----------------+--+---------------+
| Fees payable to the Group's auditor for | 45 | | 48 |
| the audit of the Group's annual accounts | | | |
+-------------------------------------------+----------------+--+---------------+
| | | | |
+-------------------------------------------+----------------+--+---------------+
| Fees payable to the Group's auditor and | | | |
| its associates for other services: | | | |
+-------------------------------------------+----------------+--+---------------+
| | | | |
+-------------------------------------------+----------------+--+---------------+
| Services relating to taxation | 33 | | 9 |
+-------------------------------------------+----------------+--+---------------+
| Other services * | 31 | | - |
+-------------------------------------------+----------------+--+---------------+
| | 109 | | 57 |
+-------------------------------------------+----------------+--+---------------+
+----------+-------------+
| * | Other |
| | services |
| | in the |
| | year to |
| | 31 |
| | December |
| | 2008 |
| | comprised |
| | a fee for |
| | a working |
| | capital |
| | review of |
| | GBP22,000 |
| | for the |
| | purposes |
| | of |
| | preparing |
| | the |
| | company |
| | for the |
| | Special |
| | Dividend |
| | and an |
| | independent |
| | review |
| | report on |
| | the interim |
| | financial |
| | statements |
| | for the six |
| | months to |
| | 30 June |
| | 2008 for a |
| | fee of |
| | GBP9,000. |
+----------+-------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
7TAXATION
+--------------------------------------------+----------------+--+---------------+
| | Year ended | | Six months |
| | 31 December | | ended |
| | 2008 | | 31 December |
| | | | 2007 |
+--------------------------------------------+----------------+--+---------------+
| | GBP'000 | | GBP'000 |
+--------------------------------------------+----------------+--+---------------+
| Analysis of tax charge for the period | | | |
+--------------------------------------------+----------------+--+---------------+
| Current tax: | | | |
+--------------------------------------------+----------------+--+---------------+
| UK corporation tax at 28.5% (2007: 30%) | 346 | | 360 |
+--------------------------------------------+----------------+--+---------------+
| Less: overprovision in prior year | (33) | | (1) |
+--------------------------------------------+----------------+--+---------------+
| | 313 | | 359 |
+--------------------------------------------+----------------+--+---------------+
| | | | |
+--------------------------------------------+----------------+--+---------------+
| Bulgaria corporation tax at 10% (2007: | (29) | | 21 |
| 10%) | | | |
+--------------------------------------------+----------------+--+---------------+
| | 284 | | 380 |
+--------------------------------------------+----------------+--+---------------+
The standard average rate of tax for the year, based on the UK standard rates of
corporation tax applicable during the year, is 28.5% (Bulgaria: 10%). The actual
tax charge for the current year is less than the standard rate for reasons set
out in the following reconciliation:
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | Year ended 31 December 2008 | | Six |
| | | | months |
| | | | ended |
| | | | 30 |
| | | | December |
| | | | 2007 |
+--------------------------------+---------------------------------------+--+----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | Bulgaria | | UK | | Total | | Total |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Reconciliation of current tax | | | | | | | |
| charge | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| (Loss)/profit before tax for | (684) | | 1,129 | | 445 | | 301 |
| the period | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Tax on loss on ordinary | (68) | | 322 | | 254 | | 111 |
| activities at standard | | | | | | | |
| corporation tax rate of 30% to | | | | | | | |
| 31 March 2008 and then 28% to | | | | | | | |
| 31 December 2008 (Bulgaria: | | | | | | | |
| 10%) | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Effects of: | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Expenses not deductible for | - | | 24 | | 24 | | 238 |
| tax purposes | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Unrelieved tax losses | 39 | | - | | 39 | | 32 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Utilization of tax losses | - | | - | | - | | - |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Overseas losses not available | - | | - | | - | | - |
| for relief | | | | | | | |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| Overprovision in prior year | - | | (33) | | (33) | | (1) |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
| | (29) | | 313 | | 284 | | 380 |
+--------------------------------+-----------+--+----------+--+----------+--+----------+
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 2008 available to the Group are Lev 7,976,000 (2007: Lev
2,395,000).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
8SEGMENTAL ANALYSIS
All of the Group's operations have occurred in Bulgaria and are in the same
business sector.
9PERSONNEL EXPENSES AND DIRECTORS EMOLUMENTS
The average monthly number of employees, together with executive and
non-executive directors during the period was:
+----------------------------------------------+---------------+--+--------------+
| | Year ended | | Six months |
| | 31 December | | ended 31 |
| | 2008 | | December |
| | | | 2007 |
+----------------------------------------------+---------------+--+--------------+
| | Number | | Number |
+----------------------------------------------+---------------+--+--------------+
| | | | |
+----------------------------------------------+---------------+--+--------------+
| Office and management: Group | 26 | | 26 |
+----------------------------------------------+---------------+--+--------------+
| | GBP'000 | | GBP'000 |
+----------------------------------------------+---------------+--+--------------+
| Personnel expenses: | | | |
+----------------------------------------------+---------------+--+--------------+
| Wages and salaries | 490 | | 232 |
+----------------------------------------------+---------------+--+--------------+
| Social security costs | 68 | | 24 |
+----------------------------------------------+---------------+--+--------------+
| | 558 | | 256 |
+----------------------------------------------+---------------+--+--------------+
| | | | |
+----------------------------------------------+---------------+--+--------------+
| Directors remuneration: | | | |
+----------------------------------------------+---------------+--+--------------+
| Directors emoluments included within | 230 | | 133 |
| personnel expenses | | | |
+----------------------------------------------+---------------+--+--------------+
| Directors emoluments paid under management | 738 | | 400 |
| agreements | | | |
+----------------------------------------------+---------------+--+--------------+
| Total directors emoluments | 968 | | 533 |
+----------------------------------------------+---------------+--+--------------+
| | | | |
+----------------------------------------------+---------------+--+--------------+
| Directors emoluments in respect of highest | 369 | | 200 |
| paid director | | | |
+----------------------------------------------+---------------+--+--------------+
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 management fee payable by
Bulgarian Property Developments plc to Bulgarian Property Management Limited
(see note 24).
Key management are those persons having authority and responsibility for
planning, directing, and controlling the activities of the entity. In the
opinion of the Board, the Group's key management comprises the executive and
non-executive directors of the Company. Information regarding their emoluments
is set out below.
The following disclosures are in respect of employee benefits payable to the
directors of the Company across the Group and are stated in accordance with the
IFRS:
+----------------------------------------------+------+----------+--------+---------+
| | | 2008 | | 2007 |
+----------------------------------------------+------+----------+--------+---------+
| | | GBP'000 | | GBP'000 |
+----------------------------------------------+------+----------+--------+---------+
| | | | | |
+----------------------------------------------+------+----------+--------+---------+
| Short-term employee benefits | | 997 | | 544 |
+----------------------------------------------+------+----------+--------+---------+
| | | 997 | | 544 |
+----------------------------------------------+------+----------+--------+---------+
| | | | | |
+----------------------------------------------+------+----------+--------+---------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
10PARENT COMPANY INCOME STATEMENT
The profit after tax for the period dealt with in the financial statements of
the parent company was GBP816,000 (six months ended 31 December 2007:
GBP50,000). As permitted by section 230 of the Companies Act 1985, no separate
income statement is presented for the parent company.
11 EARNINGS PER SHARE
+---------------------------------------------+---------------+--+----------------+
| | Year ended | | Six months |
| | 31 December | | ended 31 |
| | 2008 | | December 2007 |
+---------------------------------------------+---------------+--+----------------+
| | GBP'000 | | GBP'000 |
+---------------------------------------------+---------------+--+----------------+
| Earnings for the purpose of basic and | (357) | | (982) |
| diluted | | | |
| earnings per share being net loss | | | |
| attributable | | | |
| to equity shareholders | | | |
| Loss for the period | | | |
+---------------------------------------------+---------------+--+----------------+
| | | | |
+---------------------------------------------+---------------+--+----------------+
| Weighted average number of ordinary shares | 107,825,104 | | 106,892,732 |
| for the purposes of basic earnings per | | | |
| share | | | |
+---------------------------------------------+---------------+--+----------------+
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 IAS 33 "Earnings per share".
12FINANCE COSTS AND INVESTMENT REVENUES
+---------------------------------------------+---------------+--+----------------+
| | Year ended | | Six months |
| | 31 December | | ended 31 |
| | 2008 | | December 2007 |
+---------------------------------------------+---------------+--+----------------+
| | GBP'000 | | GBP'000 |
+---------------------------------------------+---------------+--+----------------+
| Finance costs | | | |
+---------------------------------------------+---------------+--+----------------+
| Group | - | | - |
+---------------------------------------------+---------------+--+----------------+
| | | | |
+---------------------------------------------+---------------+--+----------------+
| Investment revenues | | | |
+---------------------------------------------+---------------+--+----------------+
| Group | 729 | | 727 |
+---------------------------------------------+---------------+--+----------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
13PLANT AND EQUIPMENT
Group
+-------------------------------+--------------+--+--------------+--+--------------+
| | Vehicles, | | Fixtures & | | Total |
| | Plant & | | Fittings | | |
| | Equipment | | | | |
+-------------------------------+--------------+--+--------------+--+--------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+--------------+--+--------------+--+--------------+
| Cost | | | | | |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 30 June 2007 | 10 | | 2 | | 12 |
+-------------------------------+--------------+--+--------------+--+--------------+
| Additions | 3 | | - | | 3 |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 31 December 2007 | 13 | | 2 | | 15 |
+-------------------------------+--------------+--+--------------+--+--------------+
| Additions | 35 | | 6 | | 41 |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 31 December 2008 | 48 | | 8 | | 56 |
+-------------------------------+--------------+--+--------------+--+--------------+
| | | | | | |
+-------------------------------+--------------+--+--------------+--+--------------+
| Depreciation | | | | | |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 30 June 2007 | 3 | | - | | 3 |
+-------------------------------+--------------+--+--------------+--+--------------+
| Charge | 2 | | 1 | | 3 |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 31 December 2007 | 5 | | 1 | | 6 |
+-------------------------------+--------------+--+--------------+--+--------------+
| Charge | 6 | | 2 | | 8 |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 31 December 2008 | 11 | | 3 | | 14 |
+-------------------------------+--------------+--+--------------+--+--------------+
| | | | | | |
+-------------------------------+--------------+--+--------------+--+--------------+
| Net Book Value | | | | | |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 30 June 2007 | 7 | | 2 | | 9 |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 31 December 2007 | 8 | | 1 | | 9 |
+-------------------------------+--------------+--+--------------+--+--------------+
| As at 31 December 2008 | 37 | | 5 | | 42 |
+-------------------------------+--------------+--+--------------+--+--------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
14INVESTMENTS
Company
+--------------------------------------------------------------------+-----------+
| | GBP'000 |
+--------------------------------------------------------------------+-----------+
| | |
+--------------------------------------------------------------------+-----------+
| As at 30 June 2007 | 20,225 |
+--------------------------------------------------------------------+-----------+
| Additions | 11,557 |
+--------------------------------------------------------------------+-----------+
| As at 31 December 2007 | 31,782 |
+--------------------------------------------------------------------+-----------+
| Additions | - |
+--------------------------------------------------------------------+-----------+
| As at 31 December 2008 | 31,782 |
+--------------------------------------------------------------------+-----------+
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 | % holding |
| | Incorporation | |
+--------------------------------------------------+---------------+--------------+
| Owned directly by Bulgarian Property Development | | |
| Plc | | |
+--------------------------------------------------+---------------+--------------+
| Bulgarian Property Developments EOOD | Bulgaria | 100 |
+--------------------------------------------------+---------------+--------------+
| | | |
+--------------------------------------------------+---------------+--------------+
| Owned 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 |
+--------------------------------------------------+---------------+--------------+
| Bulgarian Property Developments 4 EOOD | Bulgaria | 100 |
+--------------------------------------------------+---------------+--------------+
| Bulgarian Property Developments 5 EOOD | Bulgaria | 100 |
+--------------------------------------------------+---------------+--------------+
| Trakia Retail Centre OOD | Bulgaria | 100 |
+--------------------------------------------------+---------------+--------------+
| Varna Logistics AD | Bulgaria | 50 |
+--------------------------------------------------+---------------+--------------+
| Vidin Retail Centre OOD | Bulgaria | 50 |
+--------------------------------------------------+---------------+--------------+
| Pleven Retail Centre OOD | Bulgaria | 38 |
+--------------------------------------------------+---------------+--------------+
| Sandanski Retail Centre OOD | Bulgaria | 100 |
+--------------------------------------------------+---------------+--------------+
| Sofia Estates Development OOD* | Bulgaria | 50 |
+--------------------------------------------------+---------------+--------------+
* Not consolidated.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
14 INVESTMENTS (continued)
Group
Joint ventures
a)As at 31 December 2008, the Group had the following interests in joint
ventures:
+------------------------------------------------------------+------------------+
| | % holding |
+------------------------------------------------------------+------------------+
| 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.
On 3 July 2007, the Group acquired 50% of the share capital of Sandanski Retail
Centre OOD at a price of Lev 416,000 to form a joint venture with FairPlay
International AD. On 9 June 2008 the Group acquired the 50% shareholding of
FairPlay International AD in the Sandanski Retail Centre OOD for a consideration
of EUR900,000.
On 15 November 2007, the Group acquired 32% of the share capital of Sofia
Estates Developments OOD (SED) at a price of Lev 696,000. This investment was
treated as an associated company as at 31 December 2007. Since the financial
statements available to the Group for SED showed a negative net asset position
as at 31 December 2007, the carrying value of this investment was written down
to zero as at 31 December 2007. On 15 January 2008, BPD acquired a further 18%
of the issued share capital of SED from FairPlay International AD for a
consideration of EUR209,000. The investment in SED has been fully written off.
On 9 June 2008 BPD EOOD approved the sale of its 50% interest in the shares of
Varna Logistics AD to FairPlay Commercial EAD (FPC) at the price of EUR15 million
and preliminary agreement for this was concluded on 9 June 2008. Completion was
expected on or before 9 December 2008, however FPC failed to complete. Details
are explained in note 25 on subsequent events.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
14 INVESTMENTS (continued)
The Group's share of the results of its joint venture operations was as follows:
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| | | Varna | | Vidin | | Pleven | | Group |
| | | Logistics | | Retail | | Retail | | Share in |
| | | | | Centre | | Centre | | Joint |
| | | | | | | | | Ventures |
+-------------------------+--+ +----------+ +--+ +----------+ +
| | | | | | | | | |
+-------------------------+--+ +----------+ +--+ +----------+ +
| | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Summarised income | | | | | | | | |
| statement for the year | | | | | | | | |
| ended 31 December 2008 | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Revenue - rent | | 517 | | - | | - | | 517 |
| receivable | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Expenses | | (285) | | (13) | | (6) | | (304) |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Impairment of | | - | | (256) | | (302) | | (558) |
| investment properties | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Operating (loss)/profit | | 232 | | (269) | | (308) | | (345) |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Investment revenues | | 2 | | - | | - | | 2 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Finance costs | | (166) | | (1) | | - | | (167) |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Profit/(loss) for the | | 68 | | (270) | | (308) | | (510) |
| period before tax | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Taxation | | (8) | | - | | - | | (8) |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| (Loss)/profit for the | | 60 | | (270) | | (308) | | (518) |
| period | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Summarised balance | | | | | | | | |
| sheets | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| as at 31 December 2008 | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Non-current assets | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Plant and equipment | | 34 | | - | | - | | 34 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Investment properties | | 10,191 | | 292 | | 665 | | 11,148 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Total non-current | | 10,225 | | 292 | | 665 | | 11,182 |
| assets | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Current assets | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Trade and other | | 435 | | 1 | | 13 | | 449 |
| receivables | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Cash and cash | | 58 | | 2 | | 8 | | 68 |
| equivalents | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Total current assets | | 493 | | 3 | | 21 | | 517 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| | | | | | | | |
+----------------------------+-----------+----------+----------+--+----------+----------+----------+
| Current liabilities | | | | | | | |
+----------------------------+-----------+----------+----------+--+----------+----------+----------+
| Trade and other | | (326) | | (1) | | (424) | | (751) |
| payables | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Current tax liabilities | | - | | - | | - | | - |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Financial liabilities | | (3,602) | | - | | - | | (3,602) |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Net assets | | 6,790 | | 294 | | 262 | | 7,346 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Represented by: | | | | | | | | |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
| Capital and reserves | | 6,790 | | 294 | | 262 | | 7,346 |
+-------------------------+--+-----------+----------+----------+--+----------+----------+----------+
On 1 August 2007, Unicredit Bulbank AD agreed to provide to Varna Logistics AD
investment credit to the amount of Euro 6,400,000 for 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 Euro 1,500,000. The interest rate for this facility has
been fixed at 1 month EURIBOR plus a spread of 1.8% for the life of the
development. The borrowing matures on 31 July 2010. BPD EOOD has pledged its 50%
ownership being 5,799,500 shares in Varna Logistics AD in respect of this
financing (see note 26 for more information).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
14 INVESTMENTS (continued)
The Group's share of the results of its joint venture operations was as follows:
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+--------+--+--------+----------+
| | | Trakia | | Varna | | Vidin | | Pleven | | Sandanski | | Group |
| | | Retail | | Logistics | | Retail | | Retail | | Retail | | Share |
| | | Centre | | | | Centre | | Centre | | Centre | | in |
| | | | | | | | | | | | | Joint |
| | | | | | | | | | | | | Ventures |
+--------------------+-+ +------------+ +-+ +--------+ +-+ +--------+ +
| | | | | | | | | | | | | |
+--------------------+-+ +------------+ +-+ +--------+ +-+ +--------+ +
| | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Summarised income | | | | | | | | | | | | |
| statement for the | | | | | | | | | | | | |
| six months ended | | | | | | | | | | | | |
| 31 December 2007 | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Revenue - rent | | - | | 110 | | - | | - | | - | | 110 |
| receivable | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Expenses | | 1 | | (19) | | (6) | | (87) | | (1) | | (112) |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Impairment of | | - | | - | | (729) | | - | | (90) | | (819) |
| investment | | | | | | | | | | | | |
| properties | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Operating | | 1 | | 91 | | (735) | | (87) | | (91) | | (821) |
| (loss)/profit | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Finance costs | | (51) | | (12) | | - | | - | | (11) | | (74) |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Profit/(loss) for | | (50) | | 79 | | (735) | | (87) | | (102) | | (895) |
| the period before | | | | | | | | | | | | |
| tax | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Taxation | | - | | (8) | | - | | - | | - | | (8) |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| (Loss)/profit for | | (50) | | 71 | | (735) | | (87) | | (102) | | (903) |
| the period | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Summarised balance | | | | | | | | | | | | |
| sheets | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| as at 31 December | | | | | | | | | | | | |
| 2007 | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Non-current assets | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Plant and | | | | 17 | | - | | - | | - | | 17 |
| equipment | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Investment | | 1,694 | | 4,688 | | 755 | | 463 | | 332 | | 7,932 |
| properties | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Assets under | | - | | 621 | | - | | - | | - | | 621 |
| construction | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Total non-current | | 1,694 | | 5,326 | | 755 | | 463 | | 332 | | 8,570 |
| assets | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Current assets | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Inventories | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Trade and other | | - | | 76 | | 1 | | 5 | | 20 | | 102 |
| receivables | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Cash and cash | | 10 | | 1 | | - | | 3 | | 5 | | 19 |
| equivalents | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Total current | | 10 | | 77 | | 1 | | 8 | | 25 | | 121 |
| assets | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| | | | | | | | | | | | |
+----------------------+------------+------------+-----------+-+---------+--------+---------+-+--------+-----------+----------+
| Current liabilities | | | | | | | | | | | |
+----------------------+------------+------------+-----------+-+---------+--------+---------+-+--------+-----------+----------+
| Trade and other | | - | | (109) | | (8) | | (92) | | (1) | | (210) |
| payables | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Current tax | | - | | (11) | | - | | - | | - | | (11) |
| liabilities | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Financial | | - | | (289) | | - | | - | | - | | (289) |
| liabilities | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Net assets | | 1,704 | | 4,994 | | 748 | | 379 | | 356 | | 8,181 |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Represented by: | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+-----------+--------+----------+
| Capital and | | 1,704 | | 4,994 | | 748 | | 379 | | 356 | | 8,181 |
| reserves | | | | | | | | | | | | |
+--------------------+-+------------+------------+-----------+-+---------+--------+---------+-+--------+--+--------+----------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
14INVESTMENTS (continued)
Amounts owed by the joint venture operations to Bulgarian Property Developments
EOOD as at 31 December 2008 were:
+--------------------------------------------+----------------+-+----------------+
| | 31 December | | 31 December |
| | 2008 | | 2007 |
+--------------------------------------------+----------------+-+----------------+
| | GBP'000 | | GBP'000 |
+--------------------------------------------+----------------+-+----------------+
| Trakia Retail Centre | - | | 1,778 |
+--------------------------------------------+----------------+-+----------------+
| Varna Logistics | 257 | | 182 |
+--------------------------------------------+----------------+-+----------------+
| Vidin Retail Centre | 25 | | 8 |
+--------------------------------------------+----------------+-+----------------+
| Pleven Retail Centre | 695 | | 494 |
+--------------------------------------------+----------------+-+----------------+
| Sandanski Retail Centre | - | | 362 |
+--------------------------------------------+----------------+-+----------------+
All the joint ventures in Bulgaria have statutory accounting periods ending on
31 December. The Group's share of results has been based on the joint ventures
audited accounts for the period ended 31 December 2008 and for the period ending
31 December 2007.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
15 INVESTMENT PROPERTY
+---------------------------------------------+-----------+--+---------+--+-------------------+
| | Buildings | | Land | | Total Investment |
| | | | | | Property |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Cost | | | | | |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Balance at 30 June 2007 | - | | - | | - |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Transfers from inventory | 16,080 | | 8,772 | | 24,852 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Balance as at 31 December 2007 | 16,080 | | 8,772 | | 24,852 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| | | | | | |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Exchange differences on translation | 5,239 | | 3,616 | | 8,855 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Acquisition | - | | 6,103 | | 6,103 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Disposals | - | | (4,500) | | (4,500) |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Balance as at 31 December 2008 | 21,319 | | 13,991 | | 35,310 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| | | | | | |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Depreciation | | | | | |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Balance as at 30 June 2007 | - | | - | | - |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Impairment | - | | 75 | | 75 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Balance as at 31 December 2008 | - | | 75 | | 75 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Exchange differences on translation | - | | (22) | | (22) |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Impairment | - | | 499 | | 499 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Charged during the year | 1,422 | | - | | 1,422 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Disposals | - | | - | | - |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Balance as at 31 December 2008 | 1,422 | | 552 | | 1,974 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| | | | | | |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| Carrying amount | | | | | |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| As at 30 June 2007 | - | | - | | - |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| As at 1 January 2008 | 16,080 | | 8,697 | | 24,777 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
| As at 31 December 2008 | 19,897 | | 13,439 | | 33,336 |
+---------------------------------------------+-----------+--+---------+--+-------------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
15 INVESTMENT PROPERTY (continued)
The total estimated fair value ("market value") of all of the investment
properties including the Group's share of joint ventures is GBP66,207,000
(EUR67,958,000) arrived at by Colliers CRE Chartered Surveyors in their report
dated 31 December 2008 (2007: GBP 55,162,000, EUR75,020,000).
+--------------------------------+------------------------------------------------+
| Average rental rate per sqm in | 4.5 - 34.9 |
| GBP | |
+--------------------------------+------------------------------------------------+
| Net initial yield | 8.57% - 9.25% |
+--------------------------------+------------------------------------------------+
| Construction area in sqm | 7,174 - 125,788 |
+--------------------------------+------------------------------------------------+
The table below presents the sensitivity of fair value to average fair value as
per valuation report GBP66,207,000, due to change in assumptions:
+----------------------------------+---+----------------------+---+------------------+
| | | As at | | Change |
| | | 31 December 2008 | | to average |
+----------------------------------+---+----------------------+---+------------------+
| | | GBP'000 | | GBP'000 |
+----------------------------------+---+----------------------+---+------------------+
| | | | | |
+----------------------------------+---+----------------------+---+------------------+
| Increase of 10% in construction | | 71,830 | | 6,120 |
| area | | | | |
+----------------------------------+---+----------------------+---+------------------+
| Decrease of 10% in construction | | 59,198 | | (6,511) |
| area | | | | |
+----------------------------------+---+----------------------+---+------------------+
| | | | | |
+----------------------------------+---+----------------------+---+------------------+
| Increase of 10% in estimated | | 86,234 | | 20,495 |
| rental income | | | | |
+----------------------------------+---+----------------------+---+------------------+
| Decrease of 10% in estimated | | 44,829 | | (20,881) |
| rental income | | | | |
+----------------------------------+---+----------------------+---+------------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
16INVENTORIES
+---------------------------------------------+----------------+--+----------------+
| | 31 December | | 31 December |
| | 2008 | | 2007 |
+---------------------------------------------+----------------+--+----------------+
| | GBP'000 | | GBP'000 |
+---------------------------------------------+----------------+--+----------------+
| | | | |
+---------------------------------------------+----------------+--+----------------+
| Balance at start of period | - | | 21,040 |
+---------------------------------------------+----------------+--+----------------+
| Acquisitions | - | | 3,812 |
+---------------------------------------------+----------------+--+----------------+
| Reclassification to investment property | - | | (24,852) |
+---------------------------------------------+----------------+--+----------------+
| Balance at end of period | - | | - |
+---------------------------------------------+----------------+--+----------------+
Effective from December 2007 Management changed its intentions with respect to
the trading properties held for future undetermined use and therefore the
respective properties were reclassified to investment properties.
17 TRADE AND OTHER RECEIVABLES
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| | 31 December 2008 | | 31 December 2007 |
+----------------------+------------------------------+--+---------------------------+
| | Group | | Company | | Group | | Company |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| | | | | | | | |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| Trade receivables | - | | - | | - | | - |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| Amounts owed by | - | | 1,864 | | - | | 2,610 |
| group undertakings | | | | | | | |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| Other debtors | 509 | | - | | 261 | | 31 |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| Other taxes | 100 | | 7 | | 287 | | - |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| Prepayments | 89 | | 81 | | 27 | | 24 |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
| | 698 | | 1,952 | | 575 | | 2,665 |
+----------------------+-------------+--+-------------+--+------------+--+-----------+
Trace receivables and other receivables constitute the only financial assets
within the category "loans and receivables" as defined by IAS 39.
Based on prior experience and an assessment of the current economic environment,
the directors do not consider any impairment provision is required against the
above assets and consider that the carrying amount of the Company's trade and
other receivables approximates their fair value.
Included within amounts owed by group companies is a loan (31 December 2008,
GBP1,756,000; 31 December 2007, GBP1,756,000) repayable on demand. This loan is
denominated in Sterling and carries interest charged at the Bank of England Base
Rate plus 2%.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
18 TRADE AND OTHER PAYABLES
+----------------------+-------------+--+-------------+--+------------+--+------------+
| | 31 December 2008 | | 31 December 2007 |
+----------------------+------------------------------+--+----------------------------+
| | Group | | Company | | Group | | Company |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| | | | | | | | |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| Trade payables | - | | - | | 84 | | - |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| Other taxation and | 58 | | 7 | | 11 | | 6 |
| social security | | | | | | | |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| Other creditors * | 3,946 | | - | | 116 | | - |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| Wages & Salaries | 9 | | 7 | | 12 | | 8 |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| Accruals | 123 | | 123 | | 725 | | 725 |
+----------------------+-------------+--+-------------+--+------------+--+------------+
| | 4,136 | | 137 | | 948 | | 739 |
+----------------------+-------------+--+-------------+--+------------+--+------------+
In the opinion of the directors, the carrying amount of trade and other payables
approximates to their fair value.
* Other creditors includes EUR3,900,000 being the advance payment from FairPlay
Commercial EAD under the Varna Logistics AD Sale and Purchase agreement (see
note 25 for further information).
19 CASH AND CASH EQUIVALENTS
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | 31 December 2008 | | 31 December 2007 |
+----------------------+-------------------------------+--+----------------------------+
| | Group | | Company | | Group | | Company |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | | | | | | | |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| Cash at bank and in | 8,665 | | 5,829 | | 26,479 | | 25,370 |
| hand | | | | | | | |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | 8,665 | | 5,829 | | 26,479 | | 25,370 |
+----------------------+-------------+--+--------------+--+------------+--+------------+
Cash at bank is denominated in Euros and in Sterling and is held in the Group's
bank accounts earning interest at rates between 0.5% and 6.5% per annum.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
20.RESTRICTED CASH
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | 31 December 2008 | | 31 December 2007 |
+----------------------+-------------------------------+--+----------------------------+
| | Group | | Company | | Group | | Company |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | | | | | | | |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| Held in Bulgaria * | 2,923 | | - | | - | | - |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| Held in UK | | 202 | | 202 | | | | |
+----------------------+-------------+--+--------------+--+------------+--+------------+
| | 3,125 | | 202 | | - | | - |
+----------------------+-------------+--+--------------+--+------------+--+------------+
* The restricted cash held in Bulgaria is blocked in an escrow account by a
public notary, responsible for the Varna Logistics Sale and Purchase agreement
for the sale of 50% of the share capital of Varna Logistics AD to FairPlay
Commercial EAD. The deposit was made by Trakia Retail Centre as a guarantee for
proceeding with the deal (for further information refer to note 25).
| The restricted cash in the Company relates to cash set aside in a blocked
trust bank account for the benefit of outstanding creditors on 22 May 2008. The
sole creditor at this date was HMRC in respect of corporation tax payable. At a
General Meeting of the Company held on 7 April 2008 a special resolution to
cancel the Company's Share Premium account was approved. An application to the
Courts was then made to create a Special Reserve which is treated as
distributable. The Court Order became effective on 28 May 2008.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
21FINANCIAL INSTRUMENTS
The Group's operations expose it to a variety of financial risks including
credit risk, liquidity risk, interest rate risk, equity price risk and foreign
currency exchange rate risk. Given the size of the Group, the directors have not
delegated the responsibility of monitoring financial risk management to a
subcommittee of the board. The policies set by the board of directors are
implemented by the company's finance department.
Credit risk
The Group's credit risk is primarily attributable to its trade and other
receivables. The Group has implemented policies that require appropriate credit
checks on potential customers before leases are entered into and a rent deposit
lodged with the Group. The amount of exposure to any individual counterparty is
subject to a limit, which is reassessed annually by the board.
The carrying amount of financial assets represents the maximum credit exposure.
The maximum credit exposure to credit risk at the reporting date was:
+---------------------------------------+------------------+--+------------------+
| | As at | | As at |
| | 31 December 2008 | | 31 December 2007 |
+---------------------------------------+------------------+--+------------------+
| | GBP'000 | | GBP'000 |
+---------------------------------------+------------------+--+------------------+
| | | | |
+---------------------------------------+------------------+--+------------------+
| Trade and other receivables | 698 | | 575 |
+---------------------------------------+------------------+--+------------------+
| Restricted cash | 3,125 | | - |
+---------------------------------------+------------------+--+------------------+
| Cash and cash equivalents | 8,665 | | 26,479 |
+---------------------------------------+------------------+--+------------------+
| | 12,488 | | 27,054 |
+---------------------------------------+------------------+--+------------------+
There are no financial assets past their due date.
Liquidity risk
The following are the maturities of financial liabilities, including estimated
interest payments and excluding the impact of netting agreements; all of which
are measured at amortised cost.
+---------------------------------------+------------+--+-------------+--+----------+
| 31 December 2008 |
+-----------------------------------------------------------------------------------+
| | Carrying | | Contractual | | 6 months |
| | amount | | cash flows | | or less |
+---------------------------------------+------------+--+-------------+--+----------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------------------------+------------+--+-------------+--+----------+
| | | | | | |
+---------------------------------------+------------+--+-------------+--+----------+
| Trade and other payables | 4,078 | | 4,078 | | 4,078 |
+---------------------------------------+------------+--+-------------+--+----------+
| | 4,078 | | 4,078 | | 4,078 |
+---------------------------------------+------------+--+-------------+--+----------+
+---------------------------------------+------------+--+-------------+--+----------+
| 31 December 2007 |
+-----------------------------------------------------------------------------------+
| | Carrying | | Contractual | | 6 months |
| | amount | | cash flows | | or less |
+---------------------------------------+------------+--+-------------+--+----------+
| | GBP'000 | | GBP'000 | | GBP'000 |
+---------------------------------------+------------+--+-------------+--+----------+
| | | | | | |
+---------------------------------------+------------+--+-------------+--+----------+
| Trade and other payables | 937 | | 937 | | 937 |
+---------------------------------------+------------+--+-------------+--+----------+
| | 937 | | 937 | | 937 |
+---------------------------------------+------------+--+-------------+--+----------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
21FINANCIAL INSTRUMENTS (continued)
Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and maintain an optimal capital structure to reduce the cost of
capital.
The Group defines capital as being share capital plus reserves. The Board of
Directors monitors the level of capital as compared to the Group's long term
debt commitments and adjusts the ratio of debt to capital as is determined to be
necessary, by issuing new shares, reducing or increasing debt, paying dividends
and returning capital to shareholders.
The Group is not subject to any externally imposed capital requirements.
Interest rate risk
The Group has interest bearing assets but no non-intragroup interest bearing
liabilities.
Interest bearing assets comprise intragroup loans and cash and cash equivalents
which earn interest at a variable rate. The Group has a policy of maintaining
cash deposits at the most competitive rates monitoring the risk exposure to
various financial institutions. The directors will revisit the appropriateness
of this policy should the Group's operations change in size or nature. See notes
16 and 18 for details of the applicable interest rates.
The Group has not entered into any derivative transactions during the period
under review.
In the normal course of business the Group is exposed to credit and interest
rate risk. However, the Group does not use derivatives to reduce exposure to
fluctuations in interest rates.
The Group is exposed to interest rate risk as a result of positive balances in
respect of cash and cash equivalents in Sterling, Euros and Lev's.
As at 31 December 2008, if interest rates had increased or decreased by 1% per
annum with all other variables held constant, pre-tax profit and equity would
have increased or decreased in accordance with the amounts set out in the table
below:
+-------------------------------+-----------+--+----------+--+---------+--+----------+
| | 31 December 2008 | | 31 December 2007 |
+-------------------------------+-------------------------+--+-----------------------+
| | Group | | Company | | Group | | Company |
+-------------------------------+-----------+--+----------+--+---------+--+----------+
| | GBP'000 | | GBP'000 | | GBP'000 | | GBP'000 |
+-------------------------------+-----------+--+----------+--+---------+--+----------+
| +/- 1% per annum change in | | | | | | | |
| interest rates | | | | | | | |
+-------------------------------+-----------+--+----------+--+---------+--+----------+
| Change in pre-tax profit and | 172 | | 155 | | 104 | | 98 |
| equity | | | | | | | |
+-------------------------------+-----------+--+----------+--+---------+--+----------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
21FINANCIAL INSTRUMENTS (continued)
Foreign currency exchange rate risk
The Group is exposed to foreign exchange rate risk as a result of having cash
and cash equivalents in Euros and Lev in its bank accounts and those of its
subsidiaries. During the year, the Group did not enter into any arrangements to
hedge this risk, as the directors did not consider the exposure to be
significant given the short term nature of the balances. The Group will review
this policy as appropriate in the future.
The Group also has foreign exchange risk in respect of its investment in its
wholly owned subsidiary, Bulgarian Property Developments EOOD, which accounts in
Bulgarian Lev, as a result there are gains and losses in respect of translating
those accounts into Sterling.
The Group is exposed to foreign currency risk in respect of transactions not
denominated in Sterling. Currently the Bulgarian Lev is pegged to the Euro at
1.95583 Lev/Euro. The Sterling: Euro exchange rate as at 31 December 2008 was
1.02 (31 December 2007, 1.36).
As at 31 December 2008, if the Euro had strengthened or weakened against
Sterling by 10% with all other variables held constant, pre-tax profit and
equity would have been increased or decreased as follows:
+---------------------------------------+------------------+--+------------------+
| | 31 December 2008 | | 31 December 2007 |
+---------------------------------------+------------------+--+------------------+
| | GBP'000 | | GBP'000 |
+---------------------------------------+------------------+--+------------------+
| | Group | | Group |
+---------------------------------------+------------------+--+------------------+
| Euro strengthening by 10% against | | | |
| Sterling | | | |
+---------------------------------------+------------------+--+------------------+
| Effect on income statement | (117) | | (103) |
+---------------------------------------+------------------+--+------------------+
| Effect on exchange differences on | 4,098 | | 3,182 |
| translation of foreign operations | | | |
+---------------------------------------+------------------+--+------------------+
| Total effect on equity | 3,981 | | 3,079 |
+---------------------------------------+------------------+--+------------------+
| | | | |
+---------------------------------------+------------------+--+------------------+
| Euro weakening by 10% against | | | |
| Sterling | | | |
+---------------------------------------+------------------+--+------------------+
| Effect on income statement | 107 | | 94 |
+---------------------------------------+------------------+--+------------------+
| Effect on exchange differences on | (3,726) | | (2,893) |
| translation of foreign operations | | | |
+---------------------------------------+------------------+--+------------------+
| Total effect on equity | (3,619) | | (2,799) |
+---------------------------------------+------------------+--+------------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
22 CALLED UP SHARE CAPITAL
+---------------------------------------+-------------------+--+-------------------+
| | As at 31 December | | As at 31 December |
| | 2008 | | 2007 |
+---------------------------------------+-------------------+--+-------------------+
| Ordinary Share Capital of 25p Nominal | | | |
| Value: | | | |
+---------------------------------------+-------------------+--+-------------------+
| Authorised (number) | 200,000,000 | | 200,000,000 |
+---------------------------------------+-------------------+--+-------------------+
| Authorised (value) | GBP50,000,000 | | GBP50,000,000 |
+---------------------------------------+-------------------+--+-------------------+
| | | | |
+---------------------------------------+-------------------+--+-------------------+
| Allotted, issued and fully paid | 108,238,914 | | 106,966,187 |
| (number) | | | |
+---------------------------------------+-------------------+--+-------------------+
| | | | |
+---------------------------------------+-------------------+--+-------------------+
| Value | GBP27,059,729 | | GBP26,741,547 |
+---------------------------------------+-------------------+--+-------------------+
On 28 April 2008, the Company issued 1,272,727 ordinary shares of 25p for a
consideration of GBP700,000. These shares represented the exercise of an option
granted to Fairfax IS Limited on 20 December 2005 at an exercise price of 55p
per 25p ordinary share.
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 GBP21,239,000 (GBP21,920,000 net of issue
costs of GBP681,000) 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.
23CAPITAL COMMITMENTS
As at 31 December 2008, the Group had commitments of Lev 2,838,000 relating to
the completion for some of the new buildings being constructed by Group's Joint
Venture Varna Logistics AD.
24 RELATED PARTY TRANSACTIONS
Bulgarian Property Management Limited
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 fulfill the Company's executive functions. These
services represent the executive requirements for the Company. The details of
this arrangement were 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 between the Company and Bulgarian Property
Management Limited ("BPM") was entered into on the same terms and conditions as
the agreement with Bulgarian Property Management LLP (as amended).
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
24RELATED PARTY TRANSACTIONS (continued)
On 4 June 2007, this management agreement was amended to increase the annual
return to be achieved by the Company before a performance fee became payable to
BPM from 8% per annum to 10% per annum and to change the annual administration
fee to a flat rate of 2% of the Group's audited net assets
BPM is entitled to receive an annual administration fee at a rate of 2 per cent
on the audited net asset value of the Company. For the purpose of calculating
the administration fee, the net asset value of the Company, is the value
attributed to shareholders' funds (i.e. share capital plus the balance on profit
and loss account and any other reserves) as disclosed in the audited accounts of
the previous accounting period.
In addition to the administration fee, BPM is entitled to an annual performance
fee of 20 per cent of the amount by which annual audited realised profits before
tax of the Company exceeds an amount representing a cumulative annual return on
the share capital invested in the Company. The annual return is currently equal
to an annual interest rate of 10 per cent multiplied by the Company's
outstanding share capital (including share premium account) (the "Annual
Return"). To the extent that the Company does not have any realised profits in a
particular year, or the realised profits are less than the Annual Return, the
amount of such Annual Return and of the realised profits will be carried forward
and added to the Annual Return and the realised profits for the following year
respectively.
In the event of termination of the agreement the Company shall also procure that
each of its assets is valued as at the date of termination by an independent
valuer. To the extent that the valuation is greater than historical cost then
the BPM shall be entitled to be paid a sum equal to 20% of the increase minus
the Annual Return (the "Payment"). If after two years from the date of
termination any amount of the Payment remains outstanding the Company shall have
one month in which to satisfy the payment in full. As at 31 December 2008, in
the opinion of the directors, no accrual for payment is deemed to be required.
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 31 December 2008, the Company was charged GBP738,000 by
Bulgarian Property Management Limited (in the period to 31 December 2007,
GBP400,000 was charged). At 31 December 2008 GBP81,000 is due from Bulgarian
Property Management Limited to the Company (31 December 2007, GBP24,000).
Brisk Consulting
Bulgarian Property Developments EOOD entered into agreements in Bulgaria with
Brisk Consulting, which is 100% owned and managed by Galchev and Co. Nikolay
Galchev is a director and shareholder of Galchev and Co. and director of the
Company.
Transactions
+-----------------------------------------------+--------------+--+--------------+
| | 31 December | | 31 December |
| | 2008 | | 2007 |
+-----------------------------------------------+--------------+--+--------------+
| | GBP'000 | | GBP'000 |
+-----------------------------------------------+--------------+--+--------------+
| | | | |
+-----------------------------------------------+--------------+--+--------------+
| Galchev and Co. EOOD | - | | - |
+-----------------------------------------------+--------------+--+--------------+
| Brisk Consulting | 70 | | - |
+-----------------------------------------------+--------------+--+--------------+
For amounts owed by the Group's joint venture operations to Bulgarian Property
Developments EOOD as at 31 December 2008, please refer to note 14. These
balances represent short term loans, together with accrued interest on those
loans.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2007
24RELATED PARTY TRANSACTIONS (continued)
Transactions (continued)
The related party is the subsidiary Bulgarian Property Development EOOD which is
100% owned by the Company.
Transactions between the two companies in the period were as follows:
+-----------------------------------------------+-------------+--+--------------+
| | Year ended | | Six months |
| | 31 December | | to |
| | 2008 | | 31 December |
| | | | 2007 |
+-----------------------------------------------+-------------+--+--------------+
| | GBP'000 | | GBP'000 |
+-----------------------------------------------+-------------+--+--------------+
| Transactions | | | |
+-----------------------------------------------+-------------+--+--------------+
| Loan provided by Bulgarian Property | - | | 1,756 |
| Development Plc to Bulgarian Property | | | |
| Development EOOD | | | |
+-----------------------------------------------+-------------+--+--------------+
| Interest charged by Bulgarian Property | 117 | | 32 |
| Development Plc to Bulgarian Property | | | |
| Development EOOD | | | |
+-----------------------------------------------+-------------+--+--------------+
| Management fee charged by Bulgarian Property | 60 | | 54 |
| Development Plc to Bulgarian Property | | | |
| Development EOOD | | | |
+-----------------------------------------------+-------------+--+--------------+
| | | | |
+-----------------------------------------------+-------------+--+--------------+
| | | | |
+-----------------------------------------------+-------------+--+--------------+
| | 31 December | | 31 December |
| | 2008 | | 2007 |
+-----------------------------------------------+-------------+--+--------------+
| | GBP'000 | | GBP'000 |
+-----------------------------------------------+-------------+--+--------------+
| Receivables | | | |
+-----------------------------------------------+-------------+--+--------------+
| Loan from Bulgarian Property Development plc | 1,756 | | 1,756 |
| to Bulgarian Property Development EOOD and | | | |
| interest | | | |
+-----------------------------------------------+-------------+--+--------------+
| Interest | 153 | | 789 |
+-----------------------------------------------+-------------+--+--------------+
| Management fee | - | | 65 |
+-----------------------------------------------+-------------+--+--------------+
| | 1,909 | | 2,610 |
+-----------------------------------------------+-------------+--+--------------+
| | | | |
+-----------------------------------------------+-------------+--+--------------+
| Payables | - | | - |
+-----------------------------------------------+-------------+--+--------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
25 SUBSEQUENT EVENTS
Dispute with FairPlay Commercial EAD ("FPC") over Varna Logistics AD Sale and
Purchase Agreement ("Varna SPA")
On 8 December 2008, FPC failed to complete on the purchase of Bulgarian Property
Developments EOOD's ("BPD EOOD") 50% shareholding in Varna Logistics in
accordance with the terms of the agreement with FPC dated 9 June 2008. Through a
notary certified notification dated December 5, 2008, FPC has informed BPD EOOD
that on 4 December 2008, it has appealed to the Arbitration Court of the
Bulgarian Industrial Association claiming "economic impossibility". BPD EOOD
received FPC's arbitration complaint on 19 January 2009. The term "economic
impossibility" is provided for under the provisions of Article 307 of the
Commercial Act of Bulgaria. According to the notification, FPC has made two
requests to the Court of Arbitration: (i) to rescind the contract and receive
back the advance payment of EUR3.9 million or (ii) to amend the contract price to
EUR9.3 million (this price would include the EUR3.9 million payment already paid).
Presently, BPD EOOD is not aware of any successful case ruled out by the
Bulgarian courts based on "economic impossibility".
In order to secure its claim to recover the advance payment of EUR3.9 million, FPC
has served a disposal injunction preventing the release to BPD EOOD of the EUR3
million which was held in the notary escrow account as a performance guarantee
under the Varna Logistics SPA. BPD EOOD has appealed the disposal injunction
with the Sofia Appellate Court on 15 December 2008. On 12 March 2009, the Sofia
Appellate Court revoked the ruling of the Sofia City Court. BPD EOOD will
therefore ask the notary to release the funds in due course.
In accordance with the Varna SPA any disputes arising from and in relation to
this contract, including the disputes arising from and in relation to its
interpretation, invalidity, fulfillment or termination shall be settled by the
ad hoc arbitration in accordance with the rules of the International Commercial
Arbitration Act, the seat of the arbitration will be in the city of Sofia,
Bulgaria, whereas the arbitration shall be administered by the Bulgarian
Industrial Association. On 27 January 2009, BPD EOOD filed its answer to FPC's
arbitration complaint. In its answer BPD EOOD has: (i) rejected the application
of the suggested Implementing Regulations of the Arbitration Court of the
Bulgarian Industrial Association since according to the International Commercial
Arbitration Act the parties shall first agree on the specific arbitration
procedures to be applied and BPD EOOD has never given such consent; (ii) stated
that it considers FPC's complaint only as a request for arbitration under the
terms of Art. 23 of the International Commercial Arbitration Act, and not as a
standard complaint as defined in the Act; (iii) provided the names of its
arbitrator and substitute arbitrator in response to FPC's nominees whereas
further together BPD EOOD's and FPC's arbitrator nominees shall chose the super
arbitrator; (iv) rejected FPC's "economic impossibility" claim as groundless and
unsubstantiated; (v) reserved its right to present additional arguments and
evidences to reject FPC's complaint. BPD EOOD is currently expecting the answer
of the Bulgarian Industrial Association and FPC regarding the further procedural
steps that need to be taken within the agreed ad hoc arbitration.
Offer from Windsorville Investments Limited
On 12 February 2009, the board of Windsorville Investments Ltd. ("Windsorville")
announced the terms of a cash offer by Windsorville for the entire issued and to
be issued ordinary share capital of Bulgarian Property Developments Plc ("BPD")
at a price of 16 pence per BPD Share.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
25 SUBSEQUENT EVENTS (continued)
On 5 March 2009, Windsorville had accumulated approximately 52.39 per cent. of
the existing issued share capital of BPD towards satisfaction of the acceptance
condition to its Offer. As a result, Windsorville is the Company's controlling
party.
All conditions of the Offer, as set out in the Offer Document dated 19 February
2009, have now been satisfied or waived and accordingly, the Offer has become
unconditional in all respects.
As stated in the announcement from Windsorville dated 6 March 2009, subject to
Windsorville controlling 75 per cent of the shares in BPD, Windsorville intends
to delist the Company from AIM and re-register BPD as a private company. In
this event, there may be no liquidity in the market for buying or selling shares
of BPD and consequently BPD shareholders may have difficulty in realising their
investment in BPD. In addition, Windsorville has stated that once the
conditions of sections 979 to 991 (inclusive) of the Companies Act 2006 have
been met, it intends to acquire compulsorily the remaining BPD shares not
already owned by Windsorville.
Employment Benefit Trust ("EBT")
As at 31 December 2008 the EBT held GBP140,000 in cash in order to purchase
shares in the stock market in order to fulfil the list of wishes drawn up by the
Remuneration Committee of the Company to grant 783,000 ordinary shares in the
Company for the benefit of each employee.
Prior to 11 February 2009, the EBT bought only 396,700 ordinary shares in the
Company. Following the takeover no additional shares have been bought in order
to satisfy the original list of wishes. However, following approval by the
Takeover Panel, the 396,700 shares purchased by the EBT were granted and vested
to the employees and pro-rated in accordance with the list of wishes dated 23
December 2008. The balance of cash in the EBT will be distributed to the
beneficiaries and pro-rated in accordance with the original list of wishes.
Investment Property
On 27 February 2009, for the purpose of meeting the requirements of Rule 29 of
the City Code on Takeovers and Mergers, Colliers CRE prepared a valuation of the
Group's investment property, valuing the total investment property at
GBP54,800,000 (EUR61,385,000).
Had impairments for individual properties been accounted for as at 27 February
2009, additional impairments to write down cost to these individual values would
have been made as follows:
+---------------------------------------+-------------------------+-----------+
| | | EUR |
+---------------------------------------+-------------------------+-----------+
| Bansko | | EUR50,000 |
+---------------------------------------+-------------------------+-----------+
| Pleven | | EUR28,188 |
+---------------------------------------+-------------------------+-----------+
| Vidin | | EUR90,000 |
+---------------------------------------+-------------------------+-----------+
| Rousse | | EUR310,000 |
+---------------------------------------+-------------------------+-----------+
| | | EUR478,188 |
+---------------------------------------+-------------------------+-----------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
26 CONTINGENT LIABILITIES
Bulgarian Property Developments 2 EOOD Restitution Claims
There are court claims raised with respect to the title over certain plots of
land on the territory of the property acquired by Bulgarian Property
Developments 2 EOOD ("BPD 2 EOOD"). As at the date of the preparation of the
financial statements, the outcome of the claims cannot be estimated reliably.
The contingent liability related to the restitution claims against the District
Governor of the Sofia District and the Mayor of Sofia Municipality is
securitized by retaining part of the purchase price in the amount of EUR400,000 in
an escrow account. If the escrow account is insufficient to satisfy the claims,
additional contingent liabilities might arise, the amount of which as at the
date of these financial statements could not be reliably estimated. In the
beginning of 2008 one restitution claim was successfully rejected following a
ruling of the Supreme Court of Cossation where BPD 2 EOOD has successfully
defended title over approximately 450sq m of commercial land.
Vidin Retail Centre Border Dispute
As a result of a court resolution, the borders and the area of the Regulated
Land Plot III owned by Vidin Retail Centre (VRC) have been reduced by 3,641sq m
from an area of 11,660sq m to 8,019sq m in Vidin quarter 515a. Also, the purpose
of the plot has been reverted to that of 'Theatre' from a 'Commercial complex'.
As a result, an impairment of the value of the property has been booked. VRC
will re-apply for planning permission on the site in the near future. If the
company does not obtain the planning permission, additional impairment might be
necessary in the future.
Varna Logistics AD pledge in favour of Unicredit Bulbank AD
In accordance with a Bank Credit Agreement dated August 1, 2007, entered into by
and between Bulgarian Property Developments ("BPD EOOD") and Unicredit Bulbank
AD for securing project financing for the first phase of development of Varna
Logistics Park, BPD EOOD has established a pledge in favour of the bank over its
5,799,500 shares in Varna Logistics AD, representing 50% of the registered
capital of the company. In accordance with Investment Credit Agreement dated 14
August 2008, entered into by and between BPD EOOD and Unicredit Bulbank AD, for
securing project financing to the second phase of development of Varna Logistics
Park, BPD EOOD is required to establish a pledge in favour of the bank over its
5,799,500 shares in Varna Logistics AD, representing 50% of the registered
capital of the company.
Pleven Retail Centre OOD
Bulgarian Property Developments EOOD 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 has planning
permission for retail use. The project has been delayed and the due date for
completion of the project investment expired on 11 April 2008. As a result,
penalties for failure to make the agreed investments, building the external
infrastructure and retainment of certain level of employees are currently
accruing under the contract with the Pleven municipality. In April 2008, the
municipality inscribed a mortgage over the Pleven plot to secure its claim for
penalties. Negotiations are in progress with the municipality for these
penalties to be waived or reduced on the basis that the project is now
significantly larger than originally proposed. The Board has felt it prudent, as
these negotiations have not been concluded, to increase the accrual in the
accounts in respect of the potential penalties to Lev 851,705.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
26 CONTINGENT LIABILITIES (continued)
Rousse Logistics Park
Bulgarian Property Developments EOOD ("BPD EOOD") is currently developing
Rousse Logistics Park which is located in the Rousse Industrial Zone in very
close proximity to the Danube river bridge connecting Bulgaria and Romania. The
Rousse Logistics Park's project consists of two main industrial/warehouse
buildings for a total of 22,150 sq m built on a plot of 54,000 sq m. On 8
September 2008, BPD EOOD obtained a construction permit for the project. Under
the contract with the Rousse municipality, BPD EOOD shall complete the
construction of the Rousse Logistics Park by mid August 2009. In view of the
current market situation BPD EOOD is planning to start construction as soon as
it obtains a comfortable number of pre-lets. For this purpose BPD EOOD is
currently actively marketing the project. Nevertheless, delays under the
contract with the Rousse municipality could be expected as it will take about
9-12 months to complete construction. As a result, the Rousse municipality could
claim penalties for delay of construction completion. However, since the
contract does not set a fixed amount of penalties in case of default, the
municipality shall first prove the damages that it has suffered as a result of
the delay. Depending on the developments contingent liabilities might arise, the
amount of which as at the date of these financial statements could not be
reliably estimated.
Ring Road Site One
In the second half of the year 2008, the Sofia municipality initiated a new
comprehensive General Development Plan for the entire municipality's area.
According to the municipality's initial proposal, about 40,000 sq m of the total
90,000 sq m of the Ring Road Site One plot were designated to remain
agricultural land because of reports from animal activist organizations that
there are birds nesting in the area. Bulgarian Property Developments EOOD's
("BPD EOOD") management believes that this is not the case taking into account
the industrialization of the area and its proximity to the main highway.
Further, BPD EOOD has taken steps to challenge such reports.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
27LIST OF PUBLISHED IFRS AS ADOPTED BY THE EU THAT ARE NOT EFFECTIVE FOR THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2008
Certain new standards, amendments and interpretations to existing standards have
been published that are mandatory for accounting periods beginning on or after 1
January 2009 or later periods but which the Group has not early adopted, as
follows:
IFRS 1 First-time Adoption (Amended) and IAS 27 Consolidated and Separate
Financial Statements (Amended)
The amendments to IFRS 1 and IAS 27 become effective for financial years
beginning on or after 1 January 2009. The amendments to IFRS 1 allow the cost of
investments in subsidiaries, jointly controlled entities or associates (in the
opening IFRS financial statements) to be determined as either cost in accordance
with IAS 27 or deemed cost. The amended IAS 27 requires all dividends from
subsidiaries, jointly controlled entities or associates to be recognized in
profit or loss in separate financial statements. The revision to IAS 27 will
have to be applied prospectively. Further, it allows cost of an investment in a
subsidiary, in limited reorganizations, to be based on the previous carrying
amount of the subsidiary rather than its fair value. The new requirements affect
only the parent's separate financial statements and do not have an impact on the
consolidated financial statements.
IFRS 2 Share-based Payments - Vesting Conditions and Cancellations
This amendment to IFRS 2 Share-based Payments was issued in January 2008 and
becomes effective for financial years beginning on or after 1 January 2009. The
Standard restricts the definition of "vesting condition" to a condition that
includes an explicit or implicit requirement to provide services. Any other
conditions are non-vesting conditions, which have to be taken into account to
determine the fair value of the equity instruments granted. In the case that the
award does not vest as the result of a failure to meet a non-vesting condition
that is within the control of either the entity or the counterparty, this must
be accounted for as a cancellation. As the Group does not have share-based
payment schemes, the amendment will not have any impact on it.
IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate
Financial Statements (Revised)
The revised standards were issued in January 2008 and become effective for
financial years beginning on or after 1 July 2009. The revised IFRS 3 introduces
a number of changes in the accounting for business combinations occurring after
this date that will impact the amount of goodwill recognised, the reported
results in the period that an acquisition occurs, and future reported results.
The revised IAS 27 requires that a change in the ownership interest of a
subsidiary (without loss of control) is accounted for as an equity transaction.
Therefore, such transactions will no longer give rise to goodwill, nor will it
give raise to gain or loss. Furthermore, the amended standard changes the
accounting for losses incurred by the subsidiary as well as the loss of control
of a subsidiary. The changes introduced by the revised IFRS 3 and the revised
IAS 27 must be applied prospectively and will affect future acquisitions or loss
of control and transactions with minority interests. The revised standards have
not yet been endorsed by the EU.
IFRS 8 Operating segments
IFRS 8 replaces IAS 14 Segment Reporting and is effective for financial years
beginning on or after 1 January 2009. IFRS 8 adopts a management approach to
segment reporting. The information reported would be that which management uses
internally for evaluating the performance of operating segments and allocating
resources to those segments. This information may be different from that
reported in the balance sheet and income statement and entities will need to
provide explanations and reconciliations of the differences. As the Group does
not report any operating segment, this standard will have no impact on it.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
27LIST OF PUBLISHED IFRS AS ADOPTED BY THE EU THAT ARE NOT EFFECTIVE FOR THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2008 (continued)
Improvements to International Financial Reporting Standards ("IFRSs") 2008.
Improvements to IFRSs were issued on 22 May 2008 by the International Accounting
Standards Board and is the first standard issued as part of its "Annual
Improvements Process" and include a number of minor changes to various IFRSs.
The amendments are made to specify the contents of the rules and eliminate
unintended inconsistencies among the standards. Most of the amendments become
effective for fiscal years starting on or after 1 January 2009. The impacts of
the first-time application of these amendments on the Group's financial
statements are currently being reviewed.
IAS 1 Presentation of Financial Statements - Revised
The revised Standard was issued in September 2007 and becomes effective for
financial years beginning on or after 1 January 2009. The Standard separates
owner and non-owner changes in equity. The statement of changes in equity will
include only details of transactions with owners, with non-owner changes in
equity presented as a single line. In addition, the Standard introduces the
statement of comprehensive income: it presents all items of recognised income
and expense, either in one single statement, or in two linked statements. The
Group is still evaluating whether it will have one or two statements.
IAS 23 Borrowing Costs - Revised
A revised IAS 23 Borrowing costs was issued in March 2007, and becomes effective
for financial years beginning on or after 1 January 2009. The standard has been
revised to require capitalisation of borrowing costs when such costs relate to a
qualifying asset. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale. The Group
will be required to change its accounting policy from 1 January 2009 to
capitalise borrowing costs on qualifying assets prospectively from that date.
In accordance with the transitional requirements in the Standard, the Group will
adopt this as a prospective change. Accordingly, borrowing costs will be
capitalised on qualifying assets with a commencement date on or after 1 January
2009. No changes will be made for borrowing costs incurred to this date that
have been expensed.
IAS 39 and IFRS 7, Reclassification of Financial Assets (Amended)
The amendments were issued in October 2008 and become effective from 1 July
2008. The amendment to IAS 39 permits reclassification of non-derivative
financial assets (other than those designated at fair value through profit or
loss by the entity upon initial recognition) out of the fair value through
profit or loss category as well as transfer from the available-for-sale category
to loans and receivables, in particular circumstances. The amendment to IFRS 7
requires specific disclosures in respect of the above reclassifications. The
Group does not expect these amendments to impact its financial statements.
IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged
Items
These amendments to IAS 39 were issued in August 2008 and become effective for
financial years beginning on or after 1 July 2009. The amendment addresses the
designation of a one-sided risk in a hedged item, and the designation of
inflation as a hedged risk or portion in particular situations. It clarifies
that an entity is permitted to designate a portion of the fair value changes or
cash flow variability of a financial instrument as hedged item. The Group does
not expect these amendments to impact its financial statements. The amendments
to IAS 39 have not yet been endorsed by EU.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
27LIST OF PUBLISHED IFRS AS ADOPTED BY THE EU THAT ARE NOT EFFECTIVE FOR THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2008 (continued)
Amendments to IAS 32 and IAS 1 Puttable Financial Instruments and Obligations
Arising on Liquidation
The amendments to IAS 32 and IAS 1 were issued in February 2008 and become
effective for annual periods beginning on or after 1 January 2009. The amendment
to IAS 32 requires certain puttable financial instruments and obligations
arising on liquidation to be classified as equity if certain criteria are met.
The amendment to IAS 1 requires disclosure of certain information relating to
puttable instruments classified as equity. The Group does not expect these
amendments to impact its financial statements.
IFRIC 12 - Service Concession Arrangements
The IFRIC issued IFRIC 12 in November 2006. This interpretation applies to
service concession operators and explains how to account for the obligations
undertaken and rights received in service concession arrangements. The Group is
not an operator and, therefore, this interpretation has no impact on it. IFRIC
12 has not been yet endorsed by EU.
IFRIC 13 - Customer Loyalty Programmes
IFRIC Interpretation 13 was issued in June 2007 and becomes effective for annual
periods beginning on or after 1 July 2008. This Interpretation requires customer
loyalty award credits to be accounted for as a separate component of the sales
transaction in which they are granted and therefore part of the fair value of
the consideration received is allocated to the award credits and deferred over
the period that the award credits are fulfilled. The Group expects that this
interpretation will have no impact on the Group's financial statements as no
such schemes currently exist.
IFRIC 15 - Agreements for the Construction of Real Estate
IFRIC 15 was issued in July 2008 and becomes effective for financial years
beginning on or after 1 January 2009. The interpretation is to be applied
retrospectively. It clarifies when and how revenue and related expenses from the
sale of a real estate unit should be recognised if an agreement between a
developer and a buyer is reached before the construction of the real estate is
completed. Furthermore, the interpretation provides guidance on how to determine
whether an agreement is within the scope of IAS 11 Construction Contracts or IAS
18 Revenue. This interpretation will have no impact on the Group's financial
statements. IFRIC 15 has not yet been endorsed by the EU.
IFRIC 16 - Hedges of a Net Investment in a Foreign Operation
IFRIC 16 was issued in July 2008 and becomes effective for financial years
beginning on or after 1 October 2008. The interpretation is to be applied
prospectively. IFRIC 16 provides guidance on the accounting for a hedge of a net
investment. As such it provides guidance on identifying the foreign currency
risks that qualify for hedge accounting in the hedge of a net investment, where
within the Group the hedging instruments can be held in the hedge of a net
investment and how an entity should determine the amount of foreign currency
gain or loss, relating to both the net investment and the hedging instrument, to
be recycled on disposal of the net investment. This interpretation will have no
impact on the Group's financial statements. IFRIC 16 has been endorsed by the EU
on 31 January 2009.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
for the year ended 31 December 2008
27LIST OF PUBLISHED IFRS AS ADOPTED BY THE EU THAT ARE NOT EFFECTIVE FOR THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2008 (continued)
IFRIC 17 - Distributions of Non-cash Assets to Owners
IFRIC 17 was issued on 27 November 2008 and is effective for annual periods
beginning on or after 1 July 2009 and must be applied prospectively. IFRIC 17
applies to all non-reciprocal distributions of non-current assets to owners. It
provides guidance when to recognise a liability, how to measure it and the
associated assets, and when to derecognise the asset and liability and
consequences of doing so. The Group is in the process of assessing the impact of
IFRIC 17 on its financial statements. This interpretation has not yet been
endorsed by the EU.
IFRIC Interpretation 18 - Transfers of Assets from Customers.
The interpretation was issued in January 2009 and is effective for financial
years beginning on or after 1 July 2009 and is to be applied prospectively.
However, limited retrospective application is permitted. This Interpretation is
of particular relevance for the utility sector as it clarifies the accounting
for agreements where an entity receives an item of property, plant and equipment
(or cash to construct such an item) from a customer and this equipment in turn
is used to connect a customer to the network or to provide ongoing access to
supply of goods/services. The Company and its subsidiaries are in the process of
assessing the impact of this interpretation. This Interpretation has not yet
been endorsed by the EU."
This information is provided by RNS
The company news service from the London Stock Exchange
END
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