TIDMLCSS
29 September 2009
Lewis Charles Sofia Property Fund Limited
("the company")
Interim Results for the six month period ending 30 June 2009
Highlights -
· Valuation of the Lewis Charles Sofia Property Fund Limited, property portfolio at 30 June
2009 is EUR 40.9 million but the Board and management team do not believe
these valuations are achievable in current markets.
· NAV per share of 63 pence.
· Appointment of Duncan Abbot to the Board.
· Desmond Swayne leaves the Board.
· The termination of the Management Agreement between Lewis Charles
Securities Limited and the Company takes effect from 1 October 2009. The
Company has announced that from 1 October 2009 arrangements have been made
to internalise the management operations.
· Recovery in the Sofia residential market expected to begin in H2 2010.
For further enquires -
Dominic Morley, Stuart Gledhill - Panmure Gordon
+44 (0) 20 7459 3600
Ed Portman, Leesa Peters - Conduit PR
+44 (0) 207 429 6607 / +44 (0) 7733 363 501
Charles Burton - Lewis Charles Sofia Property Fund Limited
+44 (0) 20 7803 1400
Chairman's Report
The Fund has faced a difficult external context over the past twelve months,
with negative corrections in both the Bulgarian economy generally and
residential property markets. The Board has continued to manage the Fund's
operations carefully, given both this and the operating environment.
Two board changes were made on 9 September, with the appointment of Duncan Abbot
and resignation of Desmond Swayne. The Board wishes to thank Desmond Swayne for
his invaluable contribution over the past four years. Duncan Abbot's long
experience of both management and finance will prove to be of undoubted benefit
to the Board's management of the fund's operations.
The Company gave notice that the employment of Lewis Charles Securities as
Manager would be terminated at the end of September 2009. The Board has decided
to internalise the management with effect from the 1st October 2009. The
benefits of internalising the management are clear and should result in a
reduction of costs to the Fund.
The difficult trading conditions together with the problems with raising credit
in the Bulgarian banking market means that the Company is facing a tight cash
position. In these circumstances the Fund has effectively mothballed development
work on all of its projects in order to preserve cash. The Fund is seeking to
raise additional funds through either the sale of assets or through raising
equity or debt financing. This would allow the Fund to exercise the Bistritsa
buy-back option which expires is mid-December 2009 and to provide the Fund with
further working capital.
Finally, the published valuation NAV is currently 63 pence (EUR 74 cents) as at
30 June 2009, having fallen from 92 pence (EUR 96 cents) at the end of December
2008. However, your attention is drawn to the investment managers' comments on
valuations. The Board supports the Manager's opinion in that in these highly
abnormal markets, even these lower valuations are probably not achievable. The
accounting NAV of 60 pence (EUR 71 cents) as at 30 June 2009, from 87 pence (EUR
91 cents) per share at the end of December 2008. The end of June 2009 exchange
rate used is EUR/GBP 1.1728.
Charles Burton
Chairman
28 September 2009
Investment Managers' Report
THE BULGARIAN ECONOMY
Preliminary GDP data for the first 6 months of the year show a 4.8% year-on-year
contraction, the worst performance since the 1996-97 crisis.
The contraction was broad-based with private consumption dropping by 8.2% year
on year and unemployment rising to 7.6% in July. Consumer confidence however has
recovered modestly over the last three months. Business confidence continues to
be poor and with restricted access to credit Bulgaria has seen a sharp
contraction in industrial production. With exports decreasing by 18.8% over the
past 3 months, and an even greater 26.9% decline in import volumes the 2009 H1
current account deficit has narrowed to just 6.3% of GDP from 25% of GDP in
2008. Net FDI (Foreign Direct Investment) inflows covered nearly 75% of that
gap, a considerable improvement from the 41% financing achieved in Q4 last year.
Similar coverage is expected during the rest of 2009.
On the positive side, inflation has fallen sharply - to just 1.6% in July -
providing some support to real household incomes that have been hit by rising
unemployment.
Whilst the 2nd half of 2009 is also expected to be difficult culminating in GDP
falling by around 4.75% for 2009 as a whole, 2010 should see a return to growth
of just over 1% followed by a more normal 4.2% in 2011 (Oxford Economics).
On the political front, the recent parliamentary election results gave the
populist centre-right GERB party (led by Sofia's mayor Boiko Borisov) 116 seats
in the 240 seat parliament, having won a convincing 39.7% of the vote on a 60.2%
turnout. Other rightist parties did well, with Attack (21 seats), the Blue
Coalition (15 seats) and Order, Law and Justice (10 seats) all promising to
support the minority GERB government. However, Prime Minister Borisov's decision
not to form a formal coalition and offer cabinet seats to allies risks
instability in the months ahead.
BULGARIAN PROPERTY MARKET UPDATE
The international financial crisis was reflected in a very difficult first six
months of 2009 for the residential property market. The de-leveraging of the
real estate sector and the difficulty of obtaining mortgage finance for
individual buyers caused a general fall in demand, supply and prices.
Construction and sales of residential property were adversely affected by the
financial limitations imposed by the banks. The number of mortgage approvals
fell by 80% on an annualised basis and banks are now offering mortgages of only
70% of the value of the property. The resort sector has been especially hard hit
as foreign buyers have been distracted by economic woes in their own home
markets.
According to data released in July by Bulgaria's National Statistics Institute
(NSI), residential property prices fell by 10% quarter-on-quarter during Q2 and
22% to 25% year-on-year. The highest decreases were in Ruse (-14.4%), Plovdiv
(-14.1%), Burgas (-12.3%) and Sofia (-12%). The average market price for
residential properties is now EUR 539 per square metre. The Black Sea capital,
Varna, has the highest prices (average EUR 913 per square metre) followed by Sofia
(EUR 872) and Burgas (EUR 736). Residential property prices are now approaching 2007
levels and the fall is especially marked in properties in the most popular price
range: EUR 50,000 - EUR 70,000. The only sector unaffected by the fall has been luxury
property in Sofia priced over EUR 1,500 per square metre, where demand still
exceeds supply.
The general steep fall in demand and financial de-leveraging of the sector has
caused the insolvency of many developers before their projects were completed.
Other developers took their projects off the market or tried to renegotiate
contracts with contractors to slowdown their projects or reduce costs. A handful
of apartment buildings were completed in Sofia but these were at the luxury end
of the market and priced above EUR 1,700 per square metre. They had high
specifications and the design trademarks necessary to endure current market
conditions.
Bank repossessions might have been expected to create a secondary supply market,
but overdue loans account for only 3.2% of residential mortgages. It is possible
that banks are prepared to overlook some defaults simply to avoid having to
absorb them on their balance sheets and have the additional problem of
maintaining the assets.
There is an overhang of unsold properties in Sofia at the middle to lower end of
the market and it is unlikely that any new developments will break ground during
the next 12 months. Recovery in the Sofia residential market is not expected to
occur before the end of 2010, and successful projects will probably be those
that have superior location, quality and design.
GROUP PROPERTIES
Land Build At Cost Valuation
Area Area (EUR) (EUR)
M2 M2 30/06/2009 30/06/2009
(Note 2) (Note 3)
1. Goverdartsi(Crystal
Vale/ Crystal Glade) 36,581 34,604 5,579,348 5,170,000
2. Beli Iskar 19,432 19,432 1,322,379 1,223,000
(Crystal Heights)
3. Razlog/Bansko 18,354 26,119 9,091,232 6,108,000
4. Plovdiv 12,151 12,712 3,890,991 2,832,000
5. Veliko 13,443 26,886 2,493,942 1,900,000
6. Dolna Banya 48,548 57,621 1,661,755 1,450,000
7. Sofia Kambanite 100,713 100,713 9,251,412 15,460,000
Bistritsa
8. Banya 117,774 182,130 3,608,192 4,552,000
9. BuySell - Vetz 48,218 89,967 10,379,426 -
Simenovo (Note 1)
Vetz Simenovo - 1,298 3,198 2,196,509 2,290,000
Project 55
_________ _________ _________ _________
Total 416,512 553,382 49,475,186 40,985,000
_________ _________ _________ _________
_________ _________ _________ _________
Note 1: The Group has terminated these contracts with BuySell and accordingly
they have been valued at Nil on the balance sheet.
Note 2: Some build areas are estimated subject to planning approval.
Note 3: Because of the provisions of IAS 2, some of these values may not be
fully reflected in the balance sheet. A full reconciliation between the
accounting NAV and the published valuation NAV is contained in the notes to the
Financial Statements.
As explained in the property report and the economic report, conditions are
extremely difficult in both the residential and commercial sectors of the
property market. Borrowing is tightening given that most banks are non Bulgarian
and any lending to the property market has been earmarked for their home
markets. The few buyers that are in the market are generally seeking distressed
assets and there is very little cash. Due to this very abnormal situation, the
Fund has effectively mothballed development work on all of its projects in order
to preserve cash. The Fund is seeking to raise additional funds through either
the sale of assets or through raising equity or debt financing. This would allow
the Fund to exercise the Bistritsa buy-back option which expires is mid-December
2009 and to provide the Fund with further working capital.
The valuations at the end of June were prepared by King Sturge in accordance
with the Appraisal and Valuation Standards, fifth edition, published by the
Royal Institution of Chartered Surveyors (RICS). Whilst the valuations show a
further fall of 22% from the end of 2008 to end June 2009, it is the Manager's
opinion that in todays highly abnormal market it would be unlikely that even
these lower valuations could be achieved at the present time. It is also the
Manager's opinion that it could take some time for Bulgarian property markets to
begin to function normally.
1 GOVEDARCI
CRYSTAL VALE
The first phase of Crystal Vale has reached the stage of rough construction;
further work has been temporarily suspended due to weak domestic and
international market conditions. Sales operations will re-launch when market
recovery begins, possibly in Q2 2010. The Crystal Vale site has full Ministry
approval for residential use.
CRYSTAL GLADE
Crystal Glade is intended to be the sister resort to Crystal Vale. The two sites
are only 1 km apart and are located in the foothills of the Rila Mountains only
a few hundred metres from a ski lift. The site is also close to the ski resort
of Borovets and approx one hour's drive from Sofia airport. Crystal Glade has
now received full Ministry approval for residential use and will remain in the
land bank until Crystal Vale has been substantially completed.
2 BELI ISKAR
CRYSTAL HEIGHTS
This land is located on the edge of the picturesque village of Beli Iskar within
500 meters of the proposed site of the new ski gondola to the Borovets resort.
The land is still designated for agricultural use and will remain in the land
bank until market conditions encourage development of the site.
3 RAZLOG
PANORAMA VILLAS
Phase 1 of the Panorama Villas has reached the stage of rough construction;
further work has been temporarily suspended due to weak domestic and
international market conditions. The planned sales campaign would have coincided
with the worst phase of the international financial crisis and has been halted
pending a recovery in markets. Until Phase 1 of the project has been
substantially completed the remaining three phases will remain in the land bank.
NIRVANA
This undeveloped land plot will remain in the land bank.
4 PLOVDIV
ROMAN VIEW
It was decided not to proceed with the development of this excellent site in
central Plovdiv until economic conditions improve.
PLOVDIV REACH
This land plot is located beside the national rowing centre on the edge of
Plovdiv. It will remain in the land bank.
5 VELIKO TARNOVO
This land plot is located close to the city centre and has full residential
planning permission.
6 DOLNA BANYA
The Fund owns four separate plots of land in good locations and residential
planning permission in and around the town of Dolna Banya. It is intended that
they should remain in the land bank.
7 SOFIA - KAMBANITE BISTRITSA
The Fund was obliged to sell this land for EUR1.826 million in order to raise
cash for working capital purposes in January 2009, with an exclusive option to
repurchase the plot by 15 December 2009 for EUR4.0 million.
8 BANYA
This site has now been consolidated into three contiguous plots which have all
been removed from agricultural status. One of the plots has now received full
Ministry approval for residential use and planning applications will be made for
the other two.
9 SOFIA - VITOSHAVETS SIMEONOVO
The Fund had exercised seven options to purchase properties in Sofia situated in
the Vitoshavets Simeonovo, Krustovat and Dragalevtsi areas of Sofia. These
properties comprised residential villas and apartment developments, together
with shops, some small offices and parking to be developed by BuySell Real
Estate Agent Limited ('BuySell'), a Bulgarian incorporated property development
company.
The Company has rescinded six preliminary sales contracts of the seven options
entered into with BuySell and is taking steps to recover the sums paid under the
contract to date, and a penalty that is equal to 100% of the initial deposit
paid.
If BuySell do not pay the Fund all amounts due, it may be necessary for the Fund
to recover this money in the Bulgarian courts. The EUR 10,379,426 and a further
EUR 9,000,494 in penalties from BuySell may therefore be contingent on the
outcome of legal proceedings. The Board is currently considering its options in
relation to pursuing any legal claim.
The Fund took delivery of one building from BuySell in September 2008 (Project
55 - see Table). Sales of apartments in this building have progressed well
despite difficult market conditions, and sales have been concluded for well over
half of the apartments.
Lewis Charles Securities Limited
28 September 2009
Condensed consolidated statement of
comprehensive income
for the 6 month period ended 30 June 2009
1 Jan
2008 to
30 Jun
2008
Notes Revenue Capital Total Total
? ? ? ?
_______ __________ __________ __________ __________
Revenue
Property sales 88,207 - 88,207 -
Cost of sales (127,020) - (127,020) -
Net change in (loss) / gain
on revaluation of investment 3 - (11,810,816) (11,810,816) 1,083,481
properties
__________ __________ __________ __________
Gross profit (38,813) (11,810,816) (11,849,629) 1,083,481
__________ __________ __________ __________
Expenses
Administration fees 87,784 - 87,784 91,568
Management fees 377,406 - 377,406 456,619
Performance fees - (2,092,068) (2,092,068) (187,866)
Directors' fees and expenses 31,786 - 31,786 35,138
Foreign exchange loss (20,194) - (20,194) 1,184
Other expenses 484,097 - 484,097 534,522
Impairment of inventory net 4 - (831,601) (831,601) 914,708
__________ __________ __________ __________
960,879 (2,923,669) (1,962,790) 1,845,873
__________ __________ __________ __________
Operating loss (999,692) (8,887,147) (9,886,839) (762,392)
Finance income 2,698 - 2,698 54,124
Finance cost 5 (782,011) - (782,011) -
__________ __________ __________ __________
Loss before taxation (1,779,005) (8,887,147) (10,666,152) (708,268)
Taxation - 793,715 793,715 (179,453)
__________ __________ __________ __________
Loss for the period (1,779,005) (8,093,432) (9,872,437) (887,721)
__________ __________ __________ __________
Other comprehensive income
Exchange differences arising on
translation of foreign operations - - - -
Total comprehensive loss for the __________ __________ __________ __________
period (1,779,005) (8,093,432) (9,872,437) (887,721)
__________ __________ __________ __________
__________ __________ __________ __________
Earnings per share - basic and
diluted (cents per share) 2 (20.42) (1.84)
All items in the above statement derived from continuing operations
The accompanying notes 1 to 8 form an integral part of these financial
statements
Condensed consolidated statement of financial position
As at 30 June 2009
Consolidated Consolidated
Notes 30 June 2009 31 December 2008
? ? ? ?
_____ ______________________ ______________________
Non-current assets
Investment properties 3 33,079,000 44,848,000
Current assets
Inventory 4 7,812,509 6,801,000
Property options 5 5
Trade and other receivables 204,105 548,827
Cash and cash equivalents 968,997 767,920
__________ __________
8,985,616 8,117,752
Total assets 42,064,616 52,965,752
__________ __________
Current liabilities
Trade and other payables (1,541,096) (3,072,785)
__________ __________
(1,541,096) (3,072,785)
Non-current liabilities
Loan payable 5 (2,607,663) -
Trade and other payables (3,075,519) (4,386,477)
Deferred taxation (620,749) (1,414,464)
(6,303,931) (5,800,941)
__________ __________
Total liabilities (7,845,027) (8,873,726)
__________ __________
Net assets 34,219,589 44,092,026
__________ __________
__________ __________
Equity
Share capital - -
Special reserve 56,956,985 56,956,985
Capital reserve (10,616,334) (2,522,902)
Revenue reserve (12,121,062) (10,342,057)
__________ __________
Total Equity 34,219,589 44,092,026
__________ __________
__________ __________
NAV per share (Euro per share) 6 0.71 0.91
NAV per share at launch (Euro per share) 1.1781 1.1781
These condensed financial statements were approved by the Board of Directors and
authorised for issue on 28 September 2009. They were signed on its behalf by
G. Williams and C. Simon.
G. Williams C. Simon
Director Director
The accompanying notes 1 to 8 form an integral part of these financial
statements
Condensed consolidated statement of changes in equity
for the 6 month period ended 30 June 2009
Share Special Capital Revenue Total
Capital Reserve Reserve Reserve Equity
? ? ? ? ?
As at 31 December 2008 - 56,956,985 (2,522,902) (10,342,057) 44,092,026
Loss for the year - - (8,093,432) (1,779,005) (9,872,437)
__________ __________ __________ __________ __________
Total recognised income and
expenses for the year - - (8,093,432) (1,779,005) (9,872,437)
Loss for the year - - (8,093,432) (1,779,005) (9,872,437)
__________ __________ __________ __________ __________
As at 30 June 2009 - 56,956,985 (10,616,334) (12,121,062) 34,219,589
Loss for the year - - (8,093,432) (1,779,005) (9,872,437)
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
Share Special Capital Revenue Total
Capital Reserve Reserve Reserve Equity
? ? ? ? ?
As at 31 December 2007 - 56,956,985 18,138,960 (8,890,398) 66,205,547
Profit / (loss) for the year - - 1,091,894 (1,979,615) (887,721)
__________ __________ __________ __________ __________
Total recognised income
and expenses for the year - - 1,091,894 (1,979,615) (887,721)
__________ __________ __________ __________ __________
As at 30 June 2008 - 56,956,985 19,230,854 (10,870,013) 65,317,826
__________ __________ __________ __________ __________
__________ __________ __________ __________ __________
The accompanying notes 1 to 8 form an integral part of these financial statements
Condensed consolidated statement of cash flows
for the 6 month period ended 30 June 2009 1 Jan 2009 1 Jan 2008
to to
30 Jun 2009 30 Jun 2008
? ?
(Loss) for the period (9,872,437) (887,721)
Adjustment for:
Net finance income and expenses 779,313 (11,077)
Revaluation of investment 11,810,816 (1,083,481)
properties
Impairment of inventory (831,601)
Taxation (793,715) 179,453
___________ ___________
Operating cash flows before movements
in working capital 1,092,376 (1,802,826)
(Increase) / decrease in operating and 344,722 (392,045)
other receivables
(Decrease) / increase in operating and (2,842,647) 767,454
other payables
Increase in inventory (179,908) -
___________ ___________
(1,585,457) (1,427,417)
Interest received 2,698 11,077
Taxation - -
___________ ___________
Net cash outflow from operating activities (1,582,759) (1,416,340)
___________ ___________
Investing activities
Additions to investment properties (41,816) (3,158,289)
___________ ___________
Net cash outflow from investing activities (41,816) (3,158,289)
___________ ___________
Financing activities
Proceeds from loan 1,825,652 -
___________ ___________
Net cash inflow from financing activities 1,825,652 -
___________ ___________
Net decrease in cash and cash equivalents 201,077 (4,574,629)
Cash and cash equivalents at start of period 767,920 7,209,621
___________ ___________
Cash and cash equivalents at end of period 968,997 2,634,992
___________ ___________
___________ ___________
The accompanying notes 1 to 8 form an integral part of these financial statements
Notes to the condensed interim financial statements
for the 6 month period ended 30 June 2009
1 SIGNIFICANT ACCOUNTING POLICIES
Lewis Charles Sofia Property Fund Limited (the `Company') is a closed-ended
investment company incorporated in Guernsey. The condensed financial statements
of the Company for the period ended 30 June 2009 comprise the Company and its
subsidiaries (together referred to as the `Group').
The unaudited condensed interim financial statements have been prepared in
accordance with International Financial Reporting Standards (`IFRS') IAS 34
Interim Financial Reporting. They do not include all of the information required
for the full annual financial statements, and should be read in conjunction with
the consolidated financial statements of the Group as at and for the year ended
31 December 2008. The unaudited condensed interim financial statements were
approved by the board of directors on 28 September 2009.
The financial statements have been prepared on the basis of the accounting
policies set out in the Group's annual financial statements for the year ended
31 December 2008 except for the adoption of standards described below. The
Group's annual financial statements refer to new Standards and Interpretations
none of which had a material impact on the financial statements.
IFRS 8 Operating Segments (effective for annual periods beginning on or after 1
January 2009) - This is a disclosure Standard that has had no impact on the
reported results or financial position of the Group.
IAS 1 (revised 2007) Presentation of Financial Statements (effective for annual
periods beginning on or after 1 January 2009) - The revised Standard has
introduced a number of terminology changes and has resulted in a number of
changes in presentation and disclosure. However, the revised Standard has had no
impact on the reported results or financial position of the Group.
IAS 23 Borrowing Costs (revised 2007) - The revised standard requires
capitalisation of interest on development properties.
2 EARNINGS PER SHARE - BASIC AND DILUTED
The consolidated deficit per Ordinary Share of 20.42 cents (2008: 1.84) is based
on the net revenue loss of ?1,779,005 (June 2008: ?1,979,615) and the net
capital loss for the period of ?8,093,432 (June 2008: Gain of ?1,091,894). Both
calculations are made based on 48,345,000 Ordinary Shares, being the weighted
average number of shares in issue during both periods.
3 INVESTMENT PROPERTIES
30 June 31 December
2009 2008
? ?
Opening market value of investment properties 44,848,000 55,127,208
Acquisitions during the period at cost - -
Subsequent expenditure 41,816 361,060
Fair value adjustment in the year (11,810,816) (10,640,268)
____________ ____________
Market value of investment properties at 33,079,000 44,848,000
30 June 2009 ____________ ____________
____________ ____________
The fair value of the Group's investment properties at 30 June 2009 and 31
December 2008 has been arrived at on the basis of valuations carried out at that
date by King Sturge Kft, independent valuers not connected to the Group.
The valuation basis has been market value as defined by the Royal Institute of
Chartered Surveyors (RICS). The approved RICS definition of market value is the
"estimated amount for which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arms length transaction after
proper marketing wherein the parties had each acted knowledgeably, prudently and
without compulsion."
Included in the above is the Bistritsa project valued at ?15.46 million which
has been used for a financing. See note 5 for further details.
4 INVENTORY
30 June 31 December
2009 2008
? ?
Opening cost 6,801,000 15,625,171
Additions 306,928 5,998,040
Disposals (127,020) (109,807)
Repayment of deposit - (865,801)
Impairment (555,070) (13,846,603)
Reversal of impairment 1,386,671 -
__________ __________
Closing cost 7,812,509 6,801,000
__________ __________
__________ __________
At valuation 7,906,000 6,801,000
__________ __________
On 17 April 2009 the Group served a notice on BuySell to terminate the
development contract due to non performance. As a result of this termination
directors have decided to write down the carrying value of the BuySell project
to nil.
Remaining properties were valued on an open market basis as at 30 June 2009 by
King Sturge Kft, independent valuers not connected to the Group. As a result of
decrease in the market value of the properties, as determined by the valuers, an
impairment charge has been recognised on these properties as well.
The carrying value has been set as the lower of cost and net realisable value as
set out under the requirements of IAS 2, Inventories. The total carrying value
of all the properties impaired is 7,812,509.
5 LOAN PAYABLE
30 June
2009
?
Balance at 1 January 2009 -
Proceeds 1,825,652
Interest 782,011
_____________
Balance at 30 June 2009 2,607,663
_____________
_____________
During the year Splendid Investments S.A. a wholly owned subsidiary of the Group
entered into a sale and buyback transactions in which shares of Blacksea
Properties were sold at ?1.825m with an option to buyback at an agreed price of
?4m. This option is required to be exercised before 15 December 2009. This
arrangement is treated as a financing transaction with the intention to exercise
the buyback option.
6 NAV PER SHARE
30 31
June December
2009 2008
Net Asset Value 34,219,589 44,092,026
Average number of shares in issue 48,345,000 48,345,000
Net asset value per share ? 0.71 ? 0.91
7 RECONCILIATION OF NAV PER THE FINANCIAL STATEMENTS TO PUBLISHED NAV
2009 2008
? Per share ? Per share
Net Asset Value per financial statements 34,219,589 0.71 44,092,026 0.91
Add back:
Adjustment to value of properties 93,491 0.00 - -
Preliminary expenses 677,701 0.02 736,896 0.02
Adjustment to calculate deferred tax 620,749 0.01 1,414,464 0.03
___________ ___________ ___________ ___________
Published Net Asset Value 35,611,530 0.74 46,243,386 0.96
___________ ___________ ___________ ___________
___________ ___________ ___________ ___________
An adjustment is required within the financial statements to record the value of
inventory from fair value, as used for the published Net Asset Value, to cost as
required to ensure compliance with International Accounting Standard 2,
"Inventories".
The Company's principal documents require the dealing valuation of the Company's
net assets to include preliminary expenses incurred in the establishment of the
Company, such expenses to be amortised over the expected life of the Company.
However, this accounting treatment is not permitted for financial reporting
purposes and has been adjusted accordingly within these financial statements.
8 POST BALANCE SHEET EVENTS
Group's Bulgarian subsidiary company Lewis Charles Sofia Property Fund Bulgaria
EOOD incorporated four new subsidiary companies in Bulgaria after the period
end.
THE FOLLOWING PAGES DO NOT FORM PART OF THE
AUDITED FINANCIAL STATEMENTS OF THE COMPANY
AND ARE PRESENTED FOR INFORMATION PURPOSES ONLY
Condensed consolidated statement of comprehensive income
for the 6 month period ended 30 June 2009
Restated into Pounds Sterling for information purposes only
1 Jan 2008
to
30 Jun
2008
Revenue Capital Total Total
_________________________________________________
GBP GBP GBP GBP
Revenue
Property sales 78,094) - 78,094 -
Cost of sales (112,457 - (112,457) -
Net change in (loss) /
gain on revaluation
of investment properties - (10,456,676) (10,456,676) 842,997
__________ __________ __________ __________
Total income (34,363) (10,456,676) (10,491,039) 842,997
__________ __________ __________ __________
Expenses
Administration fees 77,719 - 77,719 71,244
Management fees 334,135 - 334,135 355,270
Performance fees - (1,852,207) (1,852,207) (146,168)
Directors' fees and expenses 28,142 - 28,142 27,339
Foreign exchange loss (17,879) - (17,879) 921
Other expenses 428,594 - 428,594 415,882
Impairment of inventory net - (736,256) (736,256) 711,684
__________ __________ __________ __________
Total expenditure 850,711 (2,588,463) (1,737,752) 1,436,172
__________ __________ __________ __________
Operating loss (885,074) (7,868,213) (8,753,287) (593,175)
Finance income 2,389 - 2,389 42,111
Finance cost (692,351) - (692,351) -
__________ __________ __________ __________
Loss before taxation (1,575,036) (7,868,213) (9,443,249) (551,064)
Taxation - 702,714 702,714 (139,623)
__________ __________ __________ __________
Loss for the period (1,575,036) (7,165,499) (8,740,535) (690,687)
__________ __________ __________ __________
Other comprehensive income
Exchange differences
arising on translation
of foreign operations (4,279,613) - (4,279,613) 3,656,821
__________ __________ __________ __________
Total comprehensive loss
for the period (5,854,649) (7,165,499) (13,020,148) 2,966,134
__________ __________ __________ __________
__________ __________ __________ __________
Condensed consolidated statement of financial position as at 30 June 2009
Restated into Pounds Sterling for information purposes only
30 June 2009 31 December 2008
GBP GBP GBP GBP
Non-current assets
Investment properties 28,205,150 42,921,330
__________ __________
28,205,150 42,921,330
Current assets
Inventory 6,661,416 6,508,829
Property options 4 5
Trade and other 174,032 525,249
receivables
Cash and cash 826,225 734,930
equivalents
__________ __________
7,661,677 7,769,013
__________ __________
Total assets 35,866,827 50,690,343
__________ __________
Current liabilities
Trade and other (1,314,031) (2,940,778)
payables __________ __________
(1,314,031) (2,940,778)
Non-current
liabilities
Loan payable (2,223,451) -
Trade and other (2,622,373) (4,198,034)
payables
Deferred taxation (529,288) (1,353,699)
__________ __________
(5,375,112) (5,551,733)
__________ __________
Total liabilities (6,689,143) (8,492,511)
__________ __________
Net assets 29,177,684 42,197,832
__________ __________
__________ __________
Equity
Share capital - -
Special reserve 38,676,000 38,676,000
Capital reserve (11,230,839) (4,065,340)
Revenue reserve 1,732,523 7,587,172
__________ __________
Total Equity 29,177,684 42,197,832
__________ __________
__________ __________
NAV per share (Pence per share) 60.35 87.28
NAV per share at launch 72.80 72.80
(Pence per share)
Condensed consolidated statement of changes in equity
for the 6 month period ended 30 June 2009
Restated into Pounds Sterling for information purposes only
Share Special Capital Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
As at 31 - 38,676,000 (4,065,340) 7,587,172 42,197,832
December 2008
Loss for the - - (7,165,499) (1,575,036) (8,740,535)
period
Foreign exchange
adjustment arising
on translation - - - (4,279,613) (4,279,613)
to Sterling
_______ __________ __________ __________ __________
As at 30 June - 38,676,000 (11,230,839) 1,732,523 29,177,684
2009 _______ __________ __________ __________ __________
_______ __________ __________ __________ __________
Share Special Capital Revenue
Capital Reserve Reserve Reserve Total
GBP GBP GBP GBP GBP
As at 31 - 38,676,000 12,503,407 (2,518,331) 48,661,076
December 2007
Profit/(loss) - - 849,542 (1,540,229) (690,687)
for the period
Foreign exchange
adjustment arising
on translation - - - 3,656,821 3,656,821
to Sterling _______ __________ __________ __________ __________
As at 30 June - 38,676,000 13,352,949 (401,739) 51,627,210
2008 _______ __________ __________ __________ __________
_______ __________ __________ __________ __________
Condensed consolidated statement of cash flows
for the 6 month period ended 30 June 2009
Restated into Pounds Sterling for information purposes only
1 Jan 2009 to 1 Jan 2008 to
30 Jun 2009 30 Jun 2008
GBP GBP
___________ ___________
Loss for the year (8,740,535) (690,687)
Adjustment for:
Net finance income and expenses 689,962 (8,618)
Revaluation of investment properties 10,456,676
Impairment of inventory (736,256) (842,997)
Taxation (824,411) 139,623
___________ ___________
Operating cash flows before movements
in working capital 845,436 (1,402,679)
(Increase) / decrease in operating and 305,199 (305,029)
other receivables
(Decrease) / increase in operating and (2,516,730) 597,114
other payables
Increase in inventory (159,281)
___________ ___________
(1,525,376) (1,110,594)
Interest received 2,389 8,618
Taxation -
___________ ___________
Net cash inflow outflow from operating (1,522,987) (1,101,976)
activities ___________ ___________
Investing activities
Additions to investment properties (37,022) (2,457,291)
___________ ___________
Net cash outflow from investing activities (37,022) (2,457,291)
___________ ___________
Financing activities
Proceeds from loan 1,616,336 -
___________ ___________
Net cash inflow from financing activities 1,616,336 -
___________ ___________
Net decrease in cash and cash equivalents 56,327 (3,559,267)
Exchange difference arising on (1,312,801) 342,895
translation to Sterling
Cash and cash equivalents 2,082,699 5,299,071
at start of period ___________ ___________
Cash and cash equivalents 826,225 2,082,699
at end of period ___________ ___________
___________ ___________
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