RNS Number:4180J
Bulgarian Land Development PLC
07 December 2007
7 December 2007
Bulgarian Land Development plc
INDEPENDENT REVALUATION PROVIDES A 41% UPLIFT AS AT 30 SEPTEMBER 2007 TO AN
ADJUSTED UNAUDITED NET ASSET VALUE OF 121P A SHARE
Bulgarian Land Development Plc ("BLD" or "the Company"), the AIM listed
Bulgarian residential and commercial development company, today announces that
its adjusted unaudited net asset value per share as at 30 September 2007 was
121p. This follows the revaluation of BLD's property interests carried out by
Savills (L & P) Ltd ("Savills") as at 30 September 2007 which valued the
property interests at E34.9m (£24m converted at the then 1.45 E/£ exchange
rate).
This figure is a 41% increase on the unaudited estimated net asset value of 86p
per share as at 30 September 2007 calculated in accordance with the Company's
accounting policies. Under IFRS accounting standards, development properties are
treated as trading stock and carried at cost and not revalued.
A professional revaluation was carried out as at 31 December 2006. This resulted
in an adjusted unaudited net asset value of 109p per share at that date. As
mentioned in the last interim report, the results of the £15m placing last March
at 100p per share meant that the equivalent adjusted figure became 103p as at 30
June 2007 (based on the independent valuation as at 31 December 2006). The 121p
unaudited net asset value per share mentioned above is a 17% increase on 103p.
BLD has also reviewed the net present value of its property interests as at 30
September 2007, based on Savills' valuation. This is between 140p and 112p,
depending largely on the assumptions made about when projects will deliver
profits and the rate of discount used.
The unaudited adjusted net asset value of 121p per share recognises a 41% uplift
on the unaudited estimated unadjusted net asset value of 86p per share.
Furthermore, the achievement is better than that as only 53p of that 86p has so
far been committed to property (the balance being in cash) and therefore the
increase of 35p per share is a 66% increase on the assets committed to property.
Information about the assumptions underlying the net asset value and net present
value are given below.
Christo Iliev, BLD's chief executive, commented: "I am delighted by the outcome
of this revaluation as it fully demonstrates the progress we are currently
making. Looking to next year, the fundamentals driving our market remain strong
and I believe we are in a positive position to deliver significant uplift for
our shareholders."
BLD continues to review development site opportunities, some of which include
agricultural sites where there are prospects of changing the planning zoning. At
present, BLD expects to be fully invested by Spring 2008.
For further information, please contact:
Bulgarian Land Development 020 7067 0700
Christo Iliev, Chief Executive,
Dimitar Savov, Executive Director
John Dodwell, Finance Director
www. Bld.bg
Weber Shandwick Financial 020 7067 0700
Terry Garrett
Nick Dibden
Georgia Dempsey
Collins Stewart Europe Limited 020 7523 8350
Helen Goldsmith
Notes to Editors
BLD was admitted to the AIM market in March 2006, following a share placing
which raised gross proceeds of £23m at 100p per share. In March 2007 an
additional placing raised £15m. BLD only operates in Bulgaria which is where its
full time management is based.
Revaluation Methodology and Assumptions
Net Asset Value per share
Savills revalued all of the property interests held by the Company as at 30
September 2007 in accordance with the Practice Statements contained in the RICS
Appraisal and Valuation Standards published by the Royal Institute of Chartered
Surveyors ("the Red Book") in May 2003.
The basis of the valuation is market value as defined in the Red Book. The
figures from the Savills' valuation report should be read in conjunction with
the assumptions and limitations of their report.
The adjusted unaudited net asset value per share has been arrived at by adding
the surplus of Savills' valuations over cost to the unaudited estimated net
assets of the Company calculated in accordance with the Company's accounting
policies as at 30 September 2007 and after making provision for Bulgarian tax
(which is 10%) and withholding tax on the surplus. The resultant sum has then
been divided by the 40m shares currently in issue.
Net Present Value per share
BLD has sought to establish an approximation of the net present value of its
property interests (and other assets), reflecting future possible development
profits, discounted at certain rates. At this early stage of BLD's life, the
Company feels that information about net asset values and net present values may
assist investors in reviewing the Company's progress; in the longer term, BLD
expects actual profits to be a more meaningful guide. The Company has approached
this with caution, being aware of important aspects which can materially affect
the outcome of the calculations. These include:
• The rate of discount used
• The length of the development periods
• Whether large developments are carried out in phases or in a single
phase
• Fluctuations in sales prices and development costs
• An assumption that each site is developed and that no part is sold off
• Whether overheads are allowed for
BLD has carried out calculations based on
• Savills' views of the development periods and potential profits per site
• Savills' assumptions on phasing
• Overheads of E2m a year: no allowance has been made for the likelihood
that overheads would be reduced towards the end of the current development
programme if no new projects were undertaken
• Discount rate of 11.25% p. a (the rate BLD uses to discount, for
accounting purposes, deferred payments due on certain site purchases)
BLD has also carried out similar calculations but varied to allow for:
• Each project being delayed by 6 months
• Discount rate of 15% p.a.
• Kavarna and Borovets being developed in phases, not a single phase,
thereby releasing cash earlier. BLD is planning to carry out these
developments in phases
These calculations have been provided to enable investors to make their own
assessment using different discount rates or different development periods if
they so wish. BLD expresses no view on the suitability of any particular
discount rate.
Calculation results of Net Present Value per share
Assuming sites are developed in single phases
NPV at 11.25% NPV at 11.25% p.a. NPV at 15% NPV at 15% p.a. if
p.a. if if completion is six p.a. if completion is six
completion is months later than completion is months later than
when Savills when Savills when Savills when Savills
expect expect expect expect
Net
Present
Value 126p 122p 117p 112p
per share
("NPV")
Assuming sites are developed in phases
NPV at 11.25% NPV at 11.25% p.a. NPV at 15% NPV at 15% p.a. if
p.a. if if completion is six p.a. if completion is six
completion is months later than completion is months later than
when Savills when Savills when Savills when Savills
expect expect expect expect
Net
Present
Value 140p 135p 133p 126p
per share
("NPV")
The unaudited net present value per share has been arrived at by adding to the
unaudited net asset value per share calculated in accordance with the Company's
accounting policies as at 30 September 2007 an amount equal to discounting back,
at the relevant rate, the expected profit, as estimated by Savills, from the
projects (assuming they were developed out) after making provision for Bulgarian
tax (which is 10%) and withholding tax on the surplus. The resultant sum has
been divided by the 40m shares currently in issue. Allowance has been made for
the cost of overheads that would arise during the development periods.
Relating to both Net Asset Value and Net Present Value
The calculations assume re-zoning (planning permission) has been obtained at
Kavarna. The Kavarna decision has been delayed by new regulations resulting from
Bulgaria's accession to the European Union but a positive decision is expected
to be obtained soon.
No allowance has been made for any dilutive effect which might arise from the
award of shares through the Company's management incentive arrangements ("the
Plan"). The Plan applies only if total shareholder return (being the increase in
share price during the year plus dividends paid in the year) exceeds a hurdle
rate of 10% of the share price at the beginning of the year; in such an event,
20% of the surplus is payable as a performance fee (up to 50% (such percentage
being determined by the directors) can be paid in cash with the rest being in
shares). As the Company feels it is not possible to predict what effect this
announcement will have on the share price over the duration of the current
financial year, no adjustment to the net asset value per share or net present
value per share has been made.
This revaluation is not a profit forecast but aims to provide a measure of the
progress of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
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