28th Dec 2007 11:32
Eastern European Property Fund Ltd28 December 2007 EASTERN EUROPEAN PROPERTY FUND LIMITED UNAUDITED RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2007 HIGHLIGHTS - Property valued by DTZ Debenham Tie Lung at £23.6 million, an increase of 10%;- Net asset value at 30 September 2007 of £23.0 million, 115.19p per share, an increase of 3% from 31 March 2007;- Profit for the six months ended 30 September 2007 of £0.6 million, equal to 3.18p per share;- Five year loan facility of US$17.5 million with HSBC Bank plc agreed on 18 December 2007 and drawn down on 19 December 2007. Azhic Basirov / Bob Locker Keiran Gallagher /Siobhan Sergeant Ollie CadoganSmith & Williamson Corporate CNC Property Fund Active PropertyFinance Ltd Management Ltd Investments LtdTel: 0207 131 4000 Tel: +44 1784 424 784 Tel: +44 1481 731 987 CHAIRMAN'S STATEMENT I am pleased to present the results of the Company for the period ended 30September 2007. Results The Company generated a net profit for the period ended 30 September 2007 of£0.6 million, representing a profit per Ordinary Share of 3.18p. Theconsolidated net asset value at 30 September 2006 was £23.0 million (115.19p perOrdinary Share). Despite the Company's strong performance during the period, the price of theOrdinary Shares has suffered from current market conditions, falling 2.5p duringthe period to 95.25p at 30 September 2007 (a discount to net asset value of17%). The Company did not purchase any new properties during the period but insteadutilised its funds to try to maximise the value of its existing propertiesthrough further refurbishment. This has proved to be a profitable strategy withthe fair value of the Company's properties increasing by £2.1 million, an upliftof £1.4 million during the period after accounting for costs and foreignexchange movements. In line with the Admission Document, the Company did not hedge the exchange raterisk, which reduced the Company's profit for the period by £0.6 million. Dividend No dividends were paid during the period ended 30 September 2007. However, on 6August 2007 the Board declared an interim dividend of 3.20 pence per OrdinaryShare for the period ended 31 March 2007. This dividend was paid on 16 November2007 and thus has not been provided for in these interim results. Loan Facility The Company has invested all of its available equity, so, in order to takeadvantage of the strong property market in Turkey, the advisers have been innegotiations to secure a term loan facility. On 18 December 2007, HSBC Bank plcmade available to the Company's two Turkish subsidiaries two loan facilitiestotalling US$17,500,000 which were drawn down on 19 December 2007 and are to berepaid at the end of five years from drawdown. Refinancing In order to take advantage of the opportunities that exist in the EasternEuropean property markets, the Board and its advisers continue to explore waysto increase the equity base of the Company. Outlook The Directors' visit to Turkey during the period to inspect the Company'sTurkish properties reinforced our opinion that the Turkish property marketappears to be buoyant and that excellent opportunities still exist to acquirefurther properties in prime locations. The Bulgarian, Romanian and Turkishproperty markets have not followed the same recent downturn as the UK propertymarket and the Board and its advisers are cautiously optimistic that theCompany's property portfolio will continue to perform strongly for the remainderof the period. Charles ParkinsonChairman28 December 2007 PROPERTY MANAGER'S REPORT Strategy Since 31 March 2007, the Company has focused on consolidating its property holdings, progressing and completing refurbishment projects, and finalising lettings, including the undertaking of fit-outs for tenants. In addition, considerable time was committed to putting in place a flexible realestate loan facility in Turkey to enable the Company to leverage efficiently going forward. This proved more difficult than originally envisaged due to the relatively new lending market on property in Turkey. On 18 December 2007, HSBC Bank plc made available to the Company's two Turkish subsidiaries two loan facilities totalling US$17,500,000. The facilities were drawn down on 19 December 2007 and are to be repaid five years from drawdown. Interest is payableat 2.35% above the US Dollar London interbank euro-currency deposit market rate. Property Portfolio The unlet space in the portfolio continues to reduce and, as at 30 September 2007, 82% of refurbished property, i.e. property ready for occupation, had been let. Despite UK and Western sentiment towards real estate, rent levels and property prices have continued to grow in all regions of the target countries. The net yield on each property acquired to date (once fully let) will be in excess of 9% on cost. DTZ Debenham Tie Leung carried out a desktop revaluation as at 30 September 2007which indicated an uplift in property values since March 2007 of 9.66% to £23.6 million. Current Holdings Market Value -------------- £'000Bulgaria24 George Washington Street, Sofia Office 3,763 Romania Industrial 3,763Transalkim Warehouse, S Bucharest Turkey134-39 Susam Street, Cihangir, Istanbul Leisure/Office/Residential 1,8076thFloor,The Misir Building, IstiklalStreet, Beyoglu, Istanbul Office 1,187Ravouna Apts, 401 Istiklal Street.,Beyoglu, Istanbul Office/Retail 2,491Oriental Passage, Istiklal Street,Beyoglu, Istanbul Leisure/Office/Retail 8,549Nil Passage, Istiklal Street, Beyoglu,Istanbul Leisure/Office/Retail 1,070Pera Residence, Asmalimescrit St.Beyoglu,Istanbul Retail 952 --------- 16,056 ---------Total investment properties 23,582 ========= The properties at the period end were as follows: 24 George Washington Street, Sofia, Bulgaria (Office)The building contract continues to overrun, for which the Company is entitled todamages. The latest anticipated practical completion date is the end of 2007. An agreement to lease has been signed, providing €180,000 per annum for theletting of one unit spanning two floors on a two year lease. We have negotiatedthe right to cancel this agreement, should a better offer be received for alarger letting. Currently there is interest from two other tenants, an onlinetravel agency and an advertising agency. Transalkim Warehouse, S. Bucharest, Romania (Industrial)The Agreement to Lease with the tenant became unconditional in May, followingcompletion of the refurbishment of a third warehouse. The total annual incomefrom Romania is €460,000 per annum. 134-39 Susam Street, Cihangir, Istanbul, Turkey (Leisure/Office/Residential)Despite some difficulties with the Conservation Committee and the Municipality,construction is now finished. A significant part of the works involvedearthquake proofing measures, which introduced steel re-enforcement in thebuilding. All floors of the building have been refurbished and are now servicedby a new lift. Throughout the refurbishment there has been good interest in acquiring eitherpart of the building or the whole building and the property is now on themarket. An offer has been received for one of the apartments and a separateoffer has been received for the whole building. In addition, a five year leaseagreement, commencing on 1 January 2008, has recently been signed for therestaurant. 6th Floor, The Misir Building, Istiklal Street, Beyoglu, Istanbul, Turkey(Office)Turkish Companies, Elektronick and Propaganda now occupy the 6th floor on leaseterms that run to 2012. Each tenancy has built in rental growth on an annualbasis. Ravouna Apartments, 401 Istiklal Street, Beyoglu, Istanbul, Turkey (Office/Retail)Architects have continued to refine proposals, which have received approval fromthe local municipality, for the refurbishment of the building, which will beginwhen the Company obtains vacant possession. An action has been put forward tothe Courts to evict the existing tenant who occupies the ground floor at a lowrent. Markiz Passage, Istiklal Street, Beyoglu, Istanbul (Leisure/Office/Retail)Roberts and Darty have now moved in and between them pay rentals of almostUS$690,000 per annum. The Company has created a glazed sliding roof for the restaurant bar area on thesecond floor. With the roof complete, final works are underway on the remainingarea which will allow most of the second floor to be let to a night cluboperator. A number of potential tenants have viewed the building and during the period anumber of office units and the car park were let. A service charge mechanism isnow in place so that all occupiers benefit from a pro-active maintenanceprogramme on the building as a whole. Nil Passage, Asmalimescrit Street, Beyoglu, Istanbul, Turkey (Leisure/Office/Retail)Following the initial purchase of 56% of the building, negotiations have beenongoing for a further proportion of the property. The Company is seeking tocontrol the building in order to implement a strategy of bringing togetherMarkiz and Nil Passage into one large mall. As a temporary measure, an incomestream on Nil Passage has been created from a number of small lettings, whichgenerate a total annual income of over US$77,000 per annum. Pera Residence, Asmalimescrit Street, Beyoglu, Istanbul, Turkey (Retail)The property was acquired for US$1.04 million and refurbishment of the threeground floor shops and basement area was completed in September 2007.All three shops have now been let to North Shields, which is Turkish owned andhas a number of outlets providing themed English pubs. Regional Overview Romania and BulgariaDifferences between the President and Prime Minister in Romania continue, butseem to have had little impact on day to day matters. Both countries are lookingforward to their first European elections and the actual accession appears tohave reduced the perceived risk, with an increased willingness of Westerncompanies to consider expansion in both countries. Indeed, various internationalinvestor groups have announced several billion Euros of residential, office andretail schemes for the country as a whole. Interest shown by both multi-national and domestic companies to situate theirheadquarters in offices in Central Bucharest has lowered the availability ofClass A offices to 0.02% (an all time low) according to Colliers International.In Central Sofia, office rents continue to rise due to the lack of supply(€15-€17 per m(2)). Although there has been turbulence in the internationalcapital markets in recent months, inward investment flows have continued at highlevels. The commercial space around the Sofia Airport (Sofia Business Park) in Sofiacontinues to be a focus for new development, but there is little impact on theCentral Business District. TurkeySince the elections returning the AKP party, and following the stand off withthe military earlier in the year, the Government has strengthened its position. The AKP was returned to power on the basis of its strong economic performanceand recent announcements from the Foreign Minister and the Prime Minister haveconfirmed the Government's intentions to implement all the requirements tofulfil accession to the E.U., whether or not Turkey is ultimately accepted. The Turkish Lira has remained remarkably resilient and has only recentlysuffered, following Turkey's decision to invade Iraq in response to PKK's(Kurdistan Workers Party) attacks in mainland Turkey. Conditions, up until theincursions into Iraq by the military, have been stable with general businessconfidence growing since the elections. However, these military actions haveaffected the investment risk sentiment, but it is too early to assess whetherthis is material. Generally, rents continue to rise and investment yields for property continue tofall. However, due to the lack of transparency in the property market, thisinformation is primarily drawn from anecdotal evidence as opposed to analysis ofreal transactions, which tend to be historic and of an exceptional nature. UkraineDespite reviewing a large number of potential purchases in Kiev (Ukraine), nonewere concluded as we judged that the overall level of return achievable wasinsufficient, after allowing for the additional risk of investing there,relative to the risk adjusted returns available in the other major cities of ourTarget Countries. Whilst no acquisitions have been made in the Ukraine to date,these factors are continually reviewed and re-evaluated and, should thesituation improve, then the Group may commence investment in this country. The property market in Kiev continues to be strong in all areas with asignificant shortage of western standard space in both the commercial andresidential property sectors. Bureaucratic planning processes however limit theopportunities to capitalise on this shortage of quality space and the costs oflocal financing for projects remains high. Prospects There are a number of potential acquisitions being considered throughout Turkey,Bucharest and Romania. In Istanbul some of the potential acquisitions are veryclose to the Company's existing holdings. Many of these properties are now of alarger lot size that may require additional funding over and above borrowinglimits within the existing portfolio and the Company is exploring means ofovercoming this issue. Bob LockerCNC Property Fund Management Limited(formerly Collins Stewart Property Fund Management Limited) Keiran GallagherOliver CadoganActive Property Investments Limited 28 December 2007 CONDENSED CONSOLIDATED INCOME STATEMENT for the period ended 30 September 2007 (unaudited) 01 April 2007 27 February 2006 27 February 2006 to to to 30 September 2007 30 September 2006 31 March 2007 Note (unaudited) (unaudited) (audited) £'000 £'000 £'000IncomeGross rentalincome 313 - 69Bank interestand otherincome 37 422 614Movement inunrealisedgain onrevaluation ofinvestmentproperties 1,449 - 4,559 ------------ ------------ ----------Total income 1,799 422 5,242 ------------ ------------ ----------ExpensesAdministrator'sfees 7 (63) (66) (131)Management fees 7 (193) (175) (340)Performancefees 7 (159) - (241)Otheroperatingexpenses (278) (125) (389)Net loss onforeignexchange (597) (78) (2) ------------ ------------ ----------Total expenses (1,290) (444) (1,103) ------------ ------------ ----------Netprofit/(loss)from operating activities 509 (22) 4,139 Taxation 127 (16) (829) ------------ ------------ ----------Profit/(loss)for the period 636 (38) 3,310 ------------ ------------ ---------- Earnings pershare - basicand diluted 3.18p (0.19)p 16.55p ------------ ------------ ---------- CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period from 01 April 2007 to 30 September 2007 (unaudited) Share capital Share premium Distributable Non-distributable Total reserves reserves £'000 £'000 £'000 £'000 £'000Net assets at31 March 2007 200 - 18,223 3,978 22,401(Loss)/profitfor the period - - (461) 1,097 636 ---------- ---------- ---------- ---------- -------Net assets at30 September2007 200 - 17,762 5,075 23,037 ---------- ---------- ---------- ---------- ------- CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period from 27 February 2006 to 30 September 2006 (unaudited) Share capital Share premium Distributable Non-distributable Total reserves reserves £'000 £'000 £'000 £'000 £'000Gross proceedsof placing 200 19,800 - - 20,000Issue Costs - (909) - - (909)Cancellationof sharepremiumaccount - (18,891) 18,891 - -Profit/(loss)for the period - - 137 (175) (38) ---------- ---------- ---------- ---------- ------Net assets at30 September2006 200 - 19,028 (175) 19,053 ---------- ---------- ---------- ---------- ------ CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period from 27 February 2006 to 31 March 2007 (audited) Share capital Share premium Distributable Non-distributable Total reserves reserves £'000 £'000 £'000 £'000 £'000Gross proceedsof placing 200 19,800 - - 20,000Issue Costs - (909) - - (909)Cancellationof sharepremiumaccount - (18,891) 18,891 - -(Loss)/profitfor the period - - (668) 3,978 3,310 ---------- ---------- ---------- ---------- ------Net assets at31 March 2007 200 - 18,223 3,978 22,401 ---------- ---------- ---------- ---------- ------ CONSOLIDATED BALANCE SHEET as at 30 September 2007 (unaudited) Note 30 September 30 September 31 March 2007 2007 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000Non-current assetsFreehold investmentproperty 23,582 1,604 21,504Property, plant andequipment 77 - 73Intangible assets 14 - 15Deferred tax assets 224 - 161 ---------- ---------- ---------- 23,897 1,604 21,753Current assetsTrade and otherreceivables 1,223 64 759Cash and cashequivalents 1,312 17,521 1,364 ---------- ---------- ---------- 2,535 17,585 2,123 ---------- ---------- ----------Total assets 26,432 19,189 23,876 ---------- ---------- ---------- Current liabilitiesTrade and otherpayables (2,370) (136) (446)Overseas corporatetax (166) - (89) ---------- ---------- ---------- (2,536) (136) (535)Non-current liabilitiesRents received inadvance (138) - (72)Deferred taxliabilities (721) - (868) ---------- ---------- ---------- (859) - (940) ---------- ---------- ----------Total liabilities (3,395) (136) (1,475) ---------- ---------- ----------Net assets 23,037 19,053 22,401 ---------- ---------- ---------- Capital and reservesCalled-up sharecapital 9 200 200 200Share premium - - -Distributablereserves 17,762 19,028 18,223Non-distributablereserves 5,075 (175) 3,978 ---------- ---------- ----------Total equityshareholders' funds 23,037 19,053 22,401 ---------- ---------- ---------- Net Asset Value perOrdinary Share - basic and fully diluted 10 115.19p 95.27p 112.01p ---------- ---------- ---------- CONSOLIDATED CASH FLOW STATEMENT for the period ended 30 September 2007 (unaudited) 01 April 2007 27 February 2006 27 February 2006 to to to 30 September 2007 30 September 2006 31 March 2007 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Netprofit/(loss)from operatingactivities 509 (22) 4,139Adjustments for:Interestreceivable (37) (422) (614)Gain onrevaluation ofinvestmentproperties (1,449) - (4,559)Depreciation - - 5 ---------- ---------- ----------Net cashoutflow fromoperatingactivitiesbefore workingcapitalchanges,interestreceived andtax paid (977) (444) (1,029)Increase intrade andotherreceivables (464) (64) (755)Increase intrade andother payables 1,924 136 446Increase inothernon-currentliabilities 66 - 72 ---------- ---------- ----------Net cashinflow/(outflow)fromoperatingactivitiesbeforeinterestreceived andtax paid 549 (372) (1,266)Interestreceived inthe period 31 409 610Tax paid inthe period (2) (3) (33) ---------- ---------- ----------Net cashinflow/(outflow)fromoperatingactivities 578 34 (689) Investing activitiesPurchase of/additions toinvestmentproperty (749) (1,604) (16,974)Purchase ofintangibleassets - - (15)Purchase ofproperty,plant andequipment - - (78) ---------- ---------- ----------Net cashoutflow frominvestingactivities (749) (1,604) (17,067) Financing activitiesIssue of shares - 20,000 20,000Share issuecosts - (909) (909) ---------- ---------- ----------Net cashinflow fromfinancingactivities - 19,091 19,091 ---------- ---------- ----------(Decrease)/increase in cashand cashequivalents (171) 17,521 1,335 ---------- ---------- ---------- Cash and cashequivalents atbeginning ofperiod 1,364 - -Increase incash and cashequivalents (171) 17,521 1,335Foreignexchangemovement 119 - 29 ---------- ---------- ----------Cash and cashequivalents atend of period 1,312 17,521 1,364 ---------- ---------- ---------- NOTES TO THE CONDENSED RESULTS for the period from 01 April 2007 to 30 September 2007 1. Reporting entity The Company is domiciled in Guernsey. The condensed consolidated interim results of the Company for the six months ended 30 September 2007 comprise the Company and its subsidiaries. The consolidated financial statements of the Company for the period ended 31 March 2007 are available at www.eepfl.com. 2. Statement of compliance These unaudited condensed consolidated interim results have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting ("IAS 34"). They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the period ended 31 March 2007. These condensed consolidated interim results were approved by the Board of Directors on 28 December 2007. 3. Significant accounting policies These unaudited condensed consolidated interim results have adopted the same accounting policies as the last audited financial statements, which were prepared in accordance with International Financial Reporting Standards, issued by the International Accounting Standards Board, interpretations issued by the International Financial Reporting Interpretations Committee and applicable legal and regulatory requirements of Guernsey Law and reflect the accounting policies as disclosed in the Company's last audited financial statements, which have been adopted and applied consistently. 4. Estimates The preparation of interim results requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by the Directors in applying the accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the period ended 31 March 2007. 5. Financial risk management The Company's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements for the period ended 31 March 2007. 6. Segmental Analysis Segment information is presented in respect of the Group's geographical segments. The Group operates in five principal geographic segments, being Guernsey, Bulgaria, Cyprus and Malta, Romania, and Turkey. Guernsey is where the primary holding company is registered; it provides loans to the other subsidiaries and receives bank and loan interest and dividend income. The Maltese and Cypriot subsidiaries are investment holding companies and Bulgaria, Romania and Turkey hold investment property. Income Statement for the period ended 30 September 2007 (unaudited) Guernsey Bulgaria Cyprus Romania Turkey Total & Malta £'000 £'000 £'000 £'000 £'000 £'000Gross rentalincome - - - 156 157 313Bank interestand otherincome 13 13 - 9 2 37 ---------- --------- -------- -------- --------- ---------Income 13 13 - 165 159 350 Administrativeand otherexpenses andforeignexchangemovements 497 (44) (8) 9 (1,744) (1,290) ---------- ---------- -------- ------- --------- ---------Netprofit/(loss)from operatingactivities 510 (31) (8) 174 (1,585) (940)Movement inunrealisedgain onrevaluation ofinvestmentproperties - (117) - 324 1,242 1,449 ---------- ---------- -------- ------- -------- --------Profit/(loss)before tax 510 (148) (8) 498 (343) 509Taxation - (1) - (70) 198 127 ---------- ---------- -------- -------- --------- -------Profit/(loss)for the period 510 (149) (8) 428 (145) 636 ---------- ---------- -------- -------- --------- ------- Balance Sheet as at 30 September 2007 (unaudited) Guernsey Bulgaria Cyprus Romania Turkey Total & Malta £'000 £'000 £'000 £'000 £'000 £'000Investmentproperty - 3,763 - 3,763 16,056 23,582Property,Plant &Equipment - - - 35 42 77Intangibleassets - - - - 14 14Deferred taxassets - 2 - - 222 224Trade andotherreceivables 18 753 2 42 408 1,223Cash and cashequivalents 156 1,096 4 19 37 1,312 ---------- ---------- -------- -------- -------- --------Total assets 174 5,614 6 3,859 16,779 26,432 ---------- ---------- -------- -------- -------- -------- Currentliabilities (531) (1,624) (5) (49) (327) (2,536)Non-currentliabilities - (89) - (114) (656) (859) ---------- ---------- ------- -------- ------- --------Totalliabilities (531) (1,713) (5) (163) (983) (3,395) ---------- ---------- ------- -------- ------- --------Net(liabilities)/ assets (357) 3,901 1 3,696 15,796 23,037 ---------- ---------- ------- -------- ------- -------- Income Statement for the period ended 30 September 2006 (unaudited) Guernsey Bulgaria Cyprus Romania Turkey Total & Malta £'000 £'000 £'000 £'000 £'000 £'000Rent incomereceivable - - - - - -Bank interestreceivable 422 - - - - 422 ---------- ---------- ------ -------- ------- --------Income 422 - - - - 422 Administrative,otherexpenses andforeignexchangemovements (398) - (6) - (40) (444) ---------- ---------- ------ -------- ------- --------Netprofit/(loss)from operatingactivities 24 - (6) - (40) (22)Unrealisedgain onrevaluation ofinvestmentproperties - - - - - - ---------- ---------- ------ -------- -------- -------Profit/(loss)before tax 24 - (6) - (40) (22)Taxation - - - - (16) (16) ---------- ---------- ------ -------- -------- -------Profit/(loss)for the period 24 - (6) - (56) (38) ---------- ---------- ------ -------- -------- ------- Balance Sheet as at 30 September 2006 (unaudited) Guernsey Bulgaria Cyprus Romania Turkey Total & Malta £'000 £'000 £'000 £'000 £'000 £'000Investmentproperty - - - - 1,604 1,604Property, Plant &Equipment - - - - - -Intangible assets - - - - - -Deferred tax assets - - - - - -Trade andotherreceivables 29 - - - 35 64Cash andcash equivalents 17,482 - - - 39 17,521 ---------- ---------- --------- -------- -------- --------Total assets 17,511 - - - 1,678 19,189 ---------- ---------- ---------- -------- -------- -------- Currentliabilities (134) - - - (2) (136)Non-currentliabilities - - - - - - ---------- ---------- ---------- --------- -------- -------Totalliabilities (134) - - - (2) (136) ---------- ---------- ---------- --------- -------- -------Netassets/(liabilities) 17,377 - - - 1,676 19,053 ---------- ---------- --------- --------- ------- -------- Income Statement for the period ended 31 March 2007 (audited) Guernsey Bulgaria Cyprus Romania Turkey Total & Malta £'000 £'000 £'000 £'000 £'000 £'000Rent incomereceivable - - - 49 20 69Bank interestreceivable 579 6 - 25 4 614 ---------- --------- ---------- -------- ------- -------Income 579 6 - 74 24 683 Administrative,otherexpenses andforeignexchangemovements (914) (5) (32) 9 (161) (1,103) ---------- ---------- ---------- -------- ------- -------Net(loss)/profitfrom operatingactivities (335) 1 (32) 83 (137) (420)Unrealisedgain onrevaluation ofinvestmentproperties - 981 - 378 3,200 4,559 ---------- ---------- ---------- -------- -------- ------(Loss)/profitbefore tax (335) 982 (32) 461 3,063 4,139Taxation (20) (93) - (82) (634) (829) ---------- ---------- ---------- -------- -------- ------(Loss)/profitfor the period (355) 889 (32) 379 2,429 3,310 ---------- ---------- ---------- -------- -------- ------ Balance Sheet as at 31 March 2007 (audited) Guernsey Bulgaria Cyprus Romania Turkey Total & Malta £'000 £'000 £'000 £'000 £'000 £'000Investmentproperty - 3,421 - 3,285 14,798 21,504Property,Plant &Equipment - - - 36 37 73Intangibleassets - - - - 15 15Deferredtax assets - 5 - 4 152 161Trade andotherreceivables 67 485 2 26 179 759Cash andcash equivalents 960 129 5 133 137 1,364 ---------- ---------- -------- ---------- ------ -------Total assets 1,027 4,040 7 3,484 15,318 23,876 ---------- ---------- -------- ---------- ------ ------- Currentliabilities (390) (7) (10) (48) (80) (535)Non-currentliabilities - (99) - (61) (780) (940) ---------- ---------- ---------- ---------- ------- ------Totalliabilities (390) (106) (10) (109) (860) (1,475) ---------- ---------- ---------- ---------- ------ -------Netassets/(liabilities) 637 3,934 (3) 3,375 14,458 22,401 ---------- ---------- ---------- --------- ------- ------ 7. Management and administration fees Elysium Fund Management Limited ("Elysium") is Manager, Administrator and Secretary to the Company, CNC Property Fund Management Limited ("CNC") (formerly Collins Stewart Property Fund Management Limited) is Property Manager and Active Property Investments Limited is the Investment Adviser. Elysium is entitled to receive an annual fee of 1.75% of the Gross Asset Value of the Company. The management fee is payable quarterly in advance. In addition, Elysium is entitled to a performance fee in certain circumstances. This fee is payable by reference to the increase in Adjusted NAV per Ordinary Share over the course of a 'performance period'. Elysium is entitled to a performance fee in respect of a performance period only if two conditions are met. First, a performance hurdle condition must be met. The performance hurdle is that the Adjusted NAV per Ordinary Share at the end of the relevant performance period must exceed an amount equal to the Placing Price, increased at a rate of 7% per annum on a compounding basis up to the end of the relevant performance period. The second condition to be met (a 'high watermark' test) is that the Adjusted NAV per Ordinary Share at the end of the relevant performance period is higher than the highest previously recorded Adjusted NAV per Ordinary Share at the end of a performance period in relation to which a performance fee was last earned (or if no performance fee had been earned since Admission, is higher than the Placing Price). If the performance hurdle is met, and the high watermark exceeded, the performance fee will be an amount equal to 20% of the excess of the Adjusted NAV per Ordinary Share at the end of the relevant performance period over the higher of (i) the performance hurdle; (ii) the Adjusted NAV per Ordinary Share at the start of the relevant performance period; and (iii) the high watermark (in both cases on a per Ordinary Share basis), multiplied by the time weighted average of the number of Ordinary Shares in issue in the performance period (or since Admission in the first performance period) (together, if applicable, with an amount equal to the VAT thereon). The Manager has the benefit of an indemnity from the Company in relation to liabilities incurred by the Manager in the discharge of its duties other than those arising by reason of any fraud, willful default, negligence or bad faith on the part of the Manager or its delegates. The Manager's appointment as investment manager is terminable by either party on not less than twelve months' notice, such notice to expire at any time on or after the third anniversary of Admission. The Management Agreement may also be terminated by either the Manager or the Company if the other party, or CNC, has gone into liquidation, administration or receivership or has committed a substantial or continuing breach of the Management Agreement. The Manager is responsible for the payment of the fees of the Investment Adviser. 8. Dividend No dividends were paid during the period ended 30 September 2007. However, on 6 August 2007 the Board declared an interim dividend of 3.20 pence per Ordinary Share for the period ended 31 March 2007. This dividend was paid on 16 November 2007 and thus has not been provided for in these interim results. 9. Share Capital 30 September 30 September 31 March 2007 2007 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Authorised: 200,000,000 Ordinary Shares 2,000 2,000 2,000 of 1 pence each ------------ ------------ ------------ Issued and fully paid: 20,000,000 Ordinary Shares of 200 200 200 1 pence each ------------ ------------ ------------ The Company has the authority to purchase up to 10% of the Ordinary Shares in issue and hold them as Treasury Shares until a time when they are either re-issued or cancelled. 10. Net asset value per Ordinary Share The net asset value, in pence per Ordinary Share, is based on the net assets attributable to equity shareholders of £23,037,000 (30 September 2006: £19,053,000, 31 March 2007: £22,401,000) and on 20,000,000 Ordinary Shares in issue at the end of the period (30 September 2006 and 31 March 2007: 20,000,000 Ordinary Shares). 11. Related parties The relationship and transactions between the Group, and Elysium and Active Property Investments Limited are disclosed in note 7. The Directors are not aware of any ultimate controlling party. 12. Subsequent events On 12 October 2007 Collins Stewart Europe Limited resigned as Nominated Adviser and Broker to the Company and Smith & Williamson Corporate Finance Limited was appointed as Nominated Adviser and Liberum Capital Limited was appointed as Broker. On 17 October 2007 the Manager made available to the Company a £100,000 loan facility. The loan bore interest at the aggregate of the Bank of England base lending rate and a margin of 1.0%. The loan and the related interest were repaid on 16 November 2007. On 9 November 2007 HSBC Bank plc made available to the Company an overdraft facility of £1,000,000. Interest on this facility is charged at 1.5% over HSBC Bank plc's base rate, which is currently equal to the Bank of England base lending rate. The Manager has provided certain of its own assets as security for this £1,000,000 facility. On 18 December 2007, HSBC Bank plc made available to the Company's two Turkish subsidiaries two loan facilities totalling US$17,500,000 which were drawn down on 19 December 2007 and are to be repaid at the end of five years from drawdown. Interest is payable at 2.35% above the US Dollar London interbank euro-currency deposit market rate. 13. Copies of the Condensed Interim Report and Financial Statements Copies of the Company's Condensed Interim Report and Financial Statements will be sent to shareholders in due course with further copies available from Elysium Fund Management Limited, PO Box 650, 2nd Floor, No. 1 Le Truchot, St Peter Port, Guernsey, GY1 3JX and from the Company's website, www.eepfl.com from 2 January 2008. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Eastern European Property