4th Dec 2006 07:01
Black Sea Property Fund Limited04 December 2006 For Immediate Release 4 December 2006 The Black Sea Property Fund Limited Quarterly valuation as at 30 September 2006 and update on investment at Borovetz The Black Sea Property Fund Limited (the "Fund"), which specialises in thefinancing and sale of holiday apartments in Bulgaria, presents its valuation ofthe Fund as at 30 September 2006. • The unaudited net assets of the Fund as at 30 September 2006 were £42.8m, 17.1p per share. (30 June £43.9m, 17.5p per share) • Net present value of the Fund (pre-tax) as at 30 September 2006 ("NPV") estimated at £62.6m (25.0p per share) excluding potential development gains on the two recent land purchases. (30 June 2006: £71.6m, 28.6p per share) • Indicative net present value following the development of the land at Borovetz and Byala £4.9m (2.0p per share). (30 June 2006: £10.2m, 4.1p per share) Methodology and assumptions Colliers International have valued the projects to which Fund financinghas been committed and those under option, as at the interim period (30June 2006), in accordance with the Royal Institute of CharteredSurveyors' valuation methodology on an "as built condition, open marketcomparative" basis. Following the delay outlined below at the Borovetz site the Board hastaken the decision to carry out a detailed review of the entireportfolio. Projected construction and sales times have been extended,sales costs increased and some estimated prices reduced. The result ofthis review is the reduction in the NPV quoted above. The Board hopesthat such a negative outcome is unlikely to arise, however it believesthat it is appropriate at this time to take a more cautious stance. Valuation of projects Taking the Colliers valuations and discounting back the expected cashflows from the projects at 11%, together with the net current assets andthe land investments held at cost by the Fund, produces a net presentvalue for the investments of £62.6m (before tax), equivalent to 25.0pper share, as at 30 September 2006. Development land The two plots of land at Byala and Borovetz have been valued using theManager's cost and valuation estimates and discounting back at a rate of15%. This produces a pre-tax net present value for these two projects of£4.9m or 2.0p per share. The net present value of the Fund's existing investment in Borovetz hasbeen calculated on the revised assumption that the project will commencein four years time. This is as a result of a legal challenge to theownership of the land which the Fund has a preliminary contract toacquire. The Fund has to date only paid a 10% deposit to the seller ofEUR360,720 (0.6% of the Fund's Assets) and will not complete thepurchase unless and until this purported claim has been resolved. TheFund has received a legal opinion that the legal challenge has no merit,however court proceedings may take significant time to be resolvedbetween the seller and the claimant. These valuations are not a profit forecast but they aim to provide ameasure of the progress of the Fund. Sales Since marketing commenced two weeks ago the Fund has, as of 30thNovember, secured 36 reservations for the Obzor development on the coastand 21 for second phase of the Magnolia development in the mountains.Should these reservations convert into sales, the expected profit beforemarketing and other costs would be €1.3m, against an investment on aunit by unit basis of €1.2m. These reservations together with previousreservations on Magnolia lift the total GDV of units to in excess of€10m. The Fund is managed by Development Capital Management (Jersey) Limited. List of Contacts Development Capital ManagementRoger HornettTom Pridmore020 7355 7600 Buchanan Communications Charles RylandIsabel Podda020 7466 5000 Numis SecuritiesIain McDonaldBruce Garrow020 7776 1500 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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