Pactolus Hungarian Property Plc
Interim report to 30 June 2012 (Unaudited)
Pactolus Hungarian Property plc ("the Company") announces its results for the six months ended 30 June 2012.
The principal activity of the Company and its subsidiaries (the "Group") is investment in the Hungarian property market, focusing on the residential freehold market in the more affluent districts of Budapest. The Group invests in freehold property, which is then renovated to a high standard and either let to tenants with good covenants or sold.
Key highlights for the period
* Net asset value per share (before deferred taxation) of 45p as at 30 June
2012 (48p at 31 December 2011), constituting a decrease of 6 per cent;
* Annualised rent roll of €757,350 as at 30 June 2012 (€816,012 as at 31
December 2011);
* Rental yield on cost as at 30th June 2012 was 7.5 per cent (7.6 per cent as
at 31 December 2011); and
* Net debt decreased from €2.6m to €1.8m.
Chairman's Statement
The market conditions in Hungary have remained depressed since our last report in May. As we stated then, this was expected and we cannot see any significant change for the better in the near future. During the period since our reporting year end, the Group has agreed the sale of eight properties for aggregate proceeds of €1,887,554 at an average price of €1,688 per square metre. On average, these sales represent a loss of 11 per cent compared to valuation. Six of these sales were previously announced in the Asset Managers update, and the financial statements for the year ended 31 December 2011, which were released on 1 February 2012 and 31 May 2012 respectively.
It is important to note that although the Group has contracted to sell the properties, completion and exchange of monies has not yet occurred on one of these properties.
The Group currently has €1.9m of excess funds generated from the completed sale of properties set aside to fund the reduction of bank debt when this becomes due in December 2012. .
The Group continues to focus on reducing costs and the sale of property. The net proceeds of any sales will be used to reduce debt and buy-back the Company's shares if that opportunity arises.
C.H. Bennett Chairman Budapest. 3 September 2012.
Notes: Euro to the Pound Sterling rate of €1.2403 as at 30 June 2012 (Source:
xe.com)
Pactolus Hungarian Property Plc
Consolidated Income Statement
Notes 6 months 6 months Year ended
ended 30 June ended 30 June
31 December
2012 2011 2011
€ € €
Unaudited Unaudited Audited
Continuing operations
Rental income and related fees 392,886 523,824 964,999
Direct operating expenses (156,770) (188,723) (364,930)
Gross profit 236,116 335,101 600,069
Administrative expenses (227,618) (299,269) (561,745)
Operating profit 8,498 35,832 38,324
Finance income 12,297 1,035 5,652
Finance costs (107,824) (145,266) (262,367)
Impairment of fixed assets (20,000) - (279,995)
Loss on disposal of investment (227,265) (78,141) (448,439)
properties
Net loss on revaluation of - - (197,105)
investment properties
Loss before taxation (334,294) (186,540) (1,143,930)
Taxation 5 - (10,619) 95,132
Loss for the year from (334,294) (197,159) (1,048,798)
continuing operations
Other comprehensive loss:
Exchange differences on translating (53,152) (40,494) (177,692)
foreign operations
Total comprehensive loss for (387,446) (237,653) (1,226,490)
the year
Loss attributable to equity (334,294) (197,159) (1,048,798)
shareholders
Total comprehensive loss attributable (387,446) (237,653) (1,226,490)
to equity shareholders
Earnings per share (2.1) cents (1.2) cents (6.4) cents
Weighted average number of 16,147,582 16,147,582 16,147,582
shares
Pactolus Hungarian Property Plc
Consolidated Statement of Financial Position
As at 30 June 2012
30 June 30 June 31 December
2012 2011 2011
€ € €
Unaudited Unaudited Audited
Non-current assets
Investment properties 9,088,269 13,278,133 9,598,616
Property under development 361,111 361,111 361,111
Property, plant & equipment 140,000 490,630 160,000
9,589,380 14,129,874 10,119,727
Current assets
Investment properties 137,500 429,026 1,613,939
Trade and other receivables 978,114 512,328 193,691
Cash and cash equivalents 1,948,986 203,242 1,177,451
3,064,600 1,144,596 2,985,081
Total assets 12,653,980 15,274,470 13,104,808
Current liabilities
Trade and other payables 593,924 685,391 657,306
Secured loan 3,112,500 4,165,833 3,112,500
3,706,424 4,851,224 3,769,806
Non-current liabilities
Deferred taxation - 99,407 -
- 99,407 -
Total liabilities 3,706,424 4,950,631 3,769,806
Net assets 8,947,556 10,323,839 9,335,002
Equity
Share capital 235,133 235,133 235,133
Capital redemption reserve 137,808 137,808 137,808
Share premium account 1,046,894 1,046,894 1,046,894
Merger reserve (109,195) (109,195) (109,195)
Translation reserve (1,202,482) (1,012,132) (1,149,330)
Retained earnings 8,839,398 10,025,331 9,173,692
Total equity 8,947,556 10,323,839 9,335,002
Net asset value per share 55.4 cents 63.9 cents 57.8 cents
Pactolus Hungarian Property Plc
Consolidated Statement of Changes in Equity
Unaudited
Six months ended 30 June 2012
Share Capital Share Merger Translation Retained
Capital Redemption Premium Reserve Reserve Earnings Total
€ € € € € € €
Balance as at 1st 235,133 137,808 1,046,894 (109,195) (1,149,330) 9,173,692 9,335,002
January 2012
Loss for the - - - - - (334,294) (334,294)
period
Exchange - - - - (53,152) - (53,152)
difference
arising on
translation of
overseas
operations
235,133 137,808 1,046,894 (109,195) (1,202,482) 8,839,398 8,947,556
Unaudited
Six months ended 30 June 2011
Share Capital Share Merger Translation Retained
Capital Redemption Premium Reserve Reserve Earnings Total
€ € € € € € €
Balances as at 1 235,133 137,808 1,046,894 (109,195) (971,638) 10,222,490 10,561,492
st January 2011
Loss for the - - - - - (197,159) (197,159)
period
Exchange - - - - (40,494) - (40,494)
difference
arising on
translation of
overseas
operations
235,133 137,808 1,046,894 (109,195) (1,012,132) 10,025,331 10,323,839
Audited
Year ended 31 December 2011
Share Capital Share Merger Translation Retained
Capital Redemption Premium Reserve Reserve Earnings Total
€ € € € € € €
Balance as at 1 235,133 137,808 1,046,894 (109,195) (971,638) 10,222,490 10,561,492
st January 2011
Loss for the - - - - - (1,048,798) (1,048,798)
year
Exchange - - - - (177,692) - (177,692)
difference
arising on
translation of
overseas
operations
235,133 137,808 1,046,894 (109,195) (1,149,330) 9,173,692 9,335,002
Pactolus Hungarian Property Plc
Consolidated Cash Flow Statement
6 months 6 months Year ended
ended ended
30 June 30 June 31 December
2012 2011 2011
Notes € € €
Unaudited Unaudited Audited
Net cash outflow from 6 (66,888) (48,617) (206,291)
operating activities
Cash flow from investing
activities
Properties renovation - (30,751) (65,004)
Net receipt from sale of 832,329 406,723 2,594,214
investment properties
Purchase of fixed assets - (11,711) (18,327)
Bank interest received 3,597 1,035 5,652
Net cash inflow from investing 835,926 365,296 2,516,535
activities
Cash flow from financing
activities
Loan repayment - (295,000) (1,348,333)
Net cash outflow from - (295,000) (1,348,333)
financing activities
Net movement in cash and short 769,038 21,679 961,911
term deposits
Effect of exchange movement 2,497 (2,841) 31,136
Cash and short term deposits 1,177,451 184,404 184,404
as at 1st January
Cash and short term deposits 1,948,986 203,242 1,177,451
Notes to the Interim Report
1. General informationPactolus Hungarian Property Plc was incorporated in the Isle of Man on 21 December 2005. The address of the registered office is Jubilee Buildings, Victoria Street, Douglas, Isle of Man, IM1 2SH.
Pactolus Hungarian Property Plc and its subsidiaries (together the "Group") is an investment group concentrating on properties in Budapest, Hungary. It is principally involved in acquiring, developing and letting investment property under short to medium term contracts.
2. Basis of preparation
The financial information contained in this report does not constitute statutory accounts within the meaning of Section 434 of the UK Companies Act 2006. The financial information contained in this report has been prepared based on the accounting policies described in the Group financial statements for the year ended 31 December 2011. It is intended that these policies will be adopted by the Group in preparation of the accounts.
The interim report was approved for issue by the Board of Directors on 31 August 2012.
3. Going concern
The directors are satisfied that the Group has adequate resources in place to manage its risks after the review of the financial position and cash flow forecast. The impact of any potential tenancy failures and the continued volatility in the economy has been taken into account. The directors are satisfied that the Group will continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing these interim reports.
4. Operating segments
The Group operates in a single reporting segment under the classification of its properties held for investment.
The loss for the period of €334,294 (2011: €197,159) is all derived from the operations of managing the Group's investment properties. The Group's principal activity is to acquire, renovate and let properties located in central Budapest.
The entire Group's revenue and property assets are derived from and located in a single geographical location, Hungary.
5. Tax on profit on ordinary activities
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2012 2011 2011
€ € €
Unaudited Unaudited Audited
Taxation on foreign - (10,619) (4,275)
operations
Deferred tax expenses - - 99,407
- (10,619) 95,132
6. Reconciliation of net loss to net cash inflow
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2012 2011 2011
€ € €
Unaudited Unaudited Audited
Loss before taxation (334,294) (186,540) (1,143,930)
Realised loss on sale of 227,265 78,141 448,439
investment properties
Bank interest received (3,597) (1,035) (5,652)
Income tax paid 12,702 (10,619) -
Adjustments for:
Depreciation and amortisation 36,140 33,168 344,784
Decrease in debtors 95,297 13,859 31,473
Increase/(decrease) in (102,898) 27,250 50,478
creditors
Effect of exchange movements 2,497 (2,841)(128,988)
Unrealised loss on investment - - 197,105
property valuation
Net cash (outflow)/inflow (66,888) (48,617) (206,291)
from operating activities
7. Events after the balance sheet date
There are no post balance sheet events.
8. Interim report
The Interim Report and Accounts will be posted to shareholders and will be available from the Company's registered address at Jubilee Buildings, Victoria Street, Douglas, Isle of Man, IM1 2SH and on the Company's website www.pactolus.co.uk.
For further information, please contact:
Midas Investment Management Ltd:
Mark Sheppard Tel: 00 44 (0) 161 242 2895 Singer Capital Markets Ltd: Nick Donovan Tel: 00 44 (0) 20 3205 7500
