Print   



Orchid Developments Group Limited

('Orchid' or the 'Company')

Interim Results for the 6 months Period Ended 30 June 2009

Orchid Developments Group, an established property developer in Bulgaria, today announces preliminary results for the 6 months period ended 30 June 2009. 

Highlights

• Orchid Developments Group - successfully raised new equity amounting to £5 million before expenses in August 2009.

• Grand Mall (Orchid Multi Use Complex Varna) - 73% of retail area pre-lets now agreed with well known brands. Further pre-lets being negotiated with construction progressing to schedule.

• Orchid Gardens Varna - Construction progressing according to schedule.

• Orchid Hills Varna - construction of stage 2 recently completed and construction of stage 3 started. 

David Holland, Chairman of Orchid, said:

'Further progress has been made across all our developments in the six months to 30 June 2009, and in particular the Grand Mall Varna continues to attract interest from international retail brands.' 

Enquiries:	+359 2 981 9955
Orchid Developments Group Limited
Guy Meyohas
Shore Capital and Corporate Limited	+44 20 7408 4090
Dru Danford
Stephane Auton
Citigate Dewe Rogerson	+44 20 7638 9571
Sarah Gestetner
Nicola Smith

Operational review

Orchid Developments Group is an established real estate developer active in all principal sub-sectors of the Bulgarian real estate market.

The Company is now focusing, as already announced on 30 January 2009, on the development of its three major projects being: the Grand Mall Varna; Orchid Gardens Varna commercial and residential development; and Orchid Hills Varna residential complex. 

As announced on 25 August 2009, the Company completed a successful placing of ordinary shares with institutional and other investors, raising approximately £5 million before expenses. The net proceeds of the placing are intended to strengthen the Company's balance sheet.

Grand Mall (Orchid Multi Use Complex Varna) - The Grand Mall project has continued to attract additional tenants with pre-lets of approximately 73% of the retail space having been now agreed (being circa 37,000 sq m). In addition, the Company is currently in negotiation over a further 10% of the retail space. Construction, which is fully funded by committed banking facilities, is progressing according to schedule and is expected to be completed by April 2010. As previously announced the Group decided to scale back the office element in this development. The change was agreed with the project's financing banks.

Orchid Hills Varna - The construction of the first two stages of the gated residential complex in Varna is now completed. The company had sold as at the reporting date 75% out of a total of  336 built units in both stages 1 and 2. 

Construction of the third stage, comprising 135 units, commenced in March 2009.

The demand for residential units has slowed during the last year as a result of restrictions in mortgage funding for first time buyers although the Company is starting to see renewed interest from buyers. 

The Company is currently in advanced negotiations with a local bank for financing of the third stage.

Orchid Gardens Varna - The construction of this high-end mixed use development on a prime location in Varna city centre is progressing according to schedule. The construction is fully funded by a committed banking facility and is expected to be completed in the first quarter of 2010. As at the reporting date the Company had sold 12 residential units for a total consideration of  €3 million.

The company continues to review its other projects with the intention to restart development when market conditions are appropriate.

Future Plans

The Company will continue to focus its efforts in the near future on progressing the construction of its developments, as well as on letting the retail space in Grand Mall and selling the residential and office units in Orchid Hills Varna and Orchid Gardens Varna projects. 

Outlook  

In light of the economic downturn and the lack of funding availability, the Company has limited its ongoing developments to three projects which it believes have the best prospects in terms of market demand and financing availability. These projects are the Grand Mall retail center, Orchid Gardens Varna multi-use commercial and residential development, and Orchid Hills Varna residential development. 

Financial Review

The Group recognises income and costs from sales of residential units when significant risks and rewards of ownership are transferred to the buyer. This usually takes place in Bulgaria when a notary deed is executed. The Company has restated revenue and costs previously recognised in accordance with the progress of construction. As a result, the Group's balance sheet at 30 June 2008 was restated and the effect is increase of accumulated loss of € 2,626,000 and an increase of liabilities of € 9,147,000.

The Group does not revalue its properties and its assets are represented in its balance sheet at nominal cash-based costs.

The revenue for the first half of 2009 reflects mainly the turnover from transfer of ownership of apartments in Orchid Hills Sofia and Orchid Hills Varna residential projects to their buyers during the reporting period.

Interest expense in 2008 is mainly attributable to the cost of financing of the Business Center in Varna which construction had been halted in 2008. 

Current tax expenses of €18,000 (2008: tax income €28,000), are attributable to the profits from sale of apartments.

Net loss for the period was € 1,073,000, compared to a loss of €1,479,000 as of 30 June 2008 (restated).

Non-current assets of €104.4 million increased from €75.9 million at the end of 2008 mainly due to the progress in construction of the Grand Mall project.

 

Most of the short-term borrowing facilities were repaid at the beginning of 2009 thus reducing the outstanding liabilities from €10.2 million as at 31.12.2008 to €2 million at the reporting date. Long-term borrowing liabilities have increased to €53.8 million (31 December 2008: €30.5 million) as a result of the drawdown of construction loans primarily reflecting the facility which has been drawndown on the Grand mall Varna project. All short term liabilities were repaid in August 2009 together with the related interest charges.

Trade payables increased to €27.3 million (2008: €19.2 million), as a result of the increase in the volume of construction activities.

Current trading

The development of Orchid Hills Varna (our residential neighborhood development) is well advanced, with the first and second stages already complete. The Group has seen a slowdown in the sales of apartment units as a result of the economic climate and the tightening of mortgage banks requirements. We expect that the residential market will start picking up towards the end of 2009. The development works of the Multi Complex in Varna are advancing as well, as is the letting of the retail space. 

Guy Meyohas

Joint Chief Executive 

4 September 2009

Interim consolidated statement of financial position

	Notes		Unaudited	Unaudited	Аudited
			6 months to 30 June 2009	6 months to 30 June 2008	31 December 2008
			€'000	€'000 Restated	€'000
Assets
Non-current
Property, plant and equipment	6		102,938	55,617	74,533
Equity accounted investments in associates			258	272	262
Goodwill			3	3	3
Other intangible assets			21	40	35
Other assets			404	208	319
Long-term loans due from associates			304	286	295
Deferred tax assets			485	570	482
Non-current assets			104,413	56,996	75,929
Current
Receivables from sale of investment			500	-	500
Development work in progress			11,808	22,960	12,925
Inventories			13,634	16	11,868
Trade receivables			7,310	5,191	6,469
Receivables from related parties			42	23	33
Tax receivables			5,264	2,611	5,266
Other receivables			240	354	348
Cash and cash equivalents			2,274	5,146	9,634
Current assets			41,072	36,301	47,043
Non-current asssets held for sale			-	5,762	-
Total assets			145,485	99,059	122,972
Approved by the Board and signed on its behalf by:
Guy Meyohas
Joint Chief Executive
4 September 2009

Interim consolidated statement of financial position (continued)

	Notes	Unaudited	Unaudited	Аudited
		6 months to 30 June 2009	6 months to 30 June 2008	31 December 2008
		€'000	€'000 Restated	€'000
Equity
Share capital		760	760	760
Share premium		64,216	64,216	64,216
Other reserves		224	337	224
Accumulated loss		(4,579)	(5,120)	(3,506)
Total equity		60,621	60,193	61,694
Liabilities
Non-current
Long-term borrowing liabilities	8	53,796	5,728	30,488
Long-term lease liabilities		-	18	2
Non-current liabilities		53,796	5,746	30,490
Current
Short-term borrowing liabilities	8	2,000	16,025	10,196
Short-term lease liabilities		7	18	20
Trade payables		27,307	15,384	19,188
Interest payable		817	934	662
Tax liabilities		594	428	485
Payables to employees and social  security institutions		296	267	221
Other liabilities to related parties		47	22	16
Current liabilities		31,068	33,078	30,788
Liabilities directly associated with non-current assets held for sale		-	42	-
Total liabilities		84,864	38,866	61,278
Total equity and liabilities		145,485	99,059	122,972

 Interim consolidated statement of comprehensive income

	Notes	Unaudited	Unaudited	Аudited
		6 months to 30 June 2009	6 months to 30 June 2008 Restated	Year to  31 December 2008
		€'000	€'000	€'000
Revenue		4,089	3,841	7,269
Development costs		(2,765)	(2,670)	(4,658)
Cost of materials		(122)	(117)	(312)
Hired services expenses		(845)	(704)	(1,918)
Employee benefits expenses		(987)	(1,127)	(2,238)
Depreciation and amortisation		(175)	(179)	(359)
Other expenses		(142)	(159)	(436)
Operating loss		(947)	(1,115)	(2,652)
Result from equity accounted associates		(4)	(5)	(15)
Interest expense		(72)	(203)	(576)
Interest income		10	49	108
Other financial expenses		(42)	(22)	(150)
Loss for the period before tax and discontinued operations		(1,055)	(1,296)	(3,285)
Tax (expenses)/income		(18)	28	(166)
Loss for the period from continuing operations		(1,073)	(1,268)	(3,451)
Loss/profit from discontinued operations		-	(211)	3,586
Loss /profit for the period		(1,073)	(1,479)	135
Other comprehensive income		-	-	-
Total comprehensive loss / income  for the period		(1,073)	(1,479)	135

Loss /Profit per share	Notes	€	€	€
Continuing operations
Basic loss per share	9	(0.014)	(0.017)	(0.045)
Diluted loss per share	9	(0.014)	(0.017)	(0.045)
Discontinued operations
Basic loss per share	9	-	(0.003)	0.047
Diluted loss per share	9	-	(0.003)	0.047

Interim consolidated statement of cash flows

	Notes	Unaudited	Unaudited	Аudited
		6 months to 30 June 2009	6 months to 30 June 2008	31 December 2008
		€'000	€'000	€'000
Cash flows from operating activities
Cash receipts from customers		2,660	5,207	8,847
Cash paid to suppliers		(3,843)	(10,042)	(15,094)
Cash paid to employees and social  security institutions		(915)	(1,209)	(2,518)
Taxes paid, net		(129)	(423)	(256)
VAT received, net		4,445	(116)	575
Other cash inflows, net		(42)	(80)	(25)
Net cash flows from operating activities		2,176	(6,663)	(8,471)
Cash flow from investing activities
Purchase of property, plant and equipment	6	(23,043)	(5,713)	(24,304)
Proceeds from sale of subsidiaries		-	350	9,153
Proceeds from sale of property,  plant and equipment	6	20	54	50
Interest received		-	42	92
Loans granted		-	(2)	(2)
Loan repayments received		-	15	16
Deposit received for the sale of the  asset held for sale		-	1,180	-
Net cash flows from investing activities		(23,023)	(4,074)	(14,995)
Cash flows from financing activities
Proceeds from bank loans		27,786	10,349	43,678
Proceeds from loans		22	-	-
Repayment of bank loans and related fees		(12,671)	(294)	(14,698)
Discharge of finance lease liability		(11)	(4)	-
Interest and bank charges paid		(1,629)	(195)	(1,937)
Net cash flows from financing activities		13,497	9,856	27,043
Cash outflow related to current exchange loss		(10)	(8)	(14)
Cash and cash equivalents, beginning of period		9,634	6,071	6,071
Net (decrease)/increase in cash and cash equivalents		(7,360)	(889)	3,563
Cash and cash equivalents, end of period		2,274	5,182	9,634
Included in non-current assets held for sale in the Balance sheet		-	(36)	-
Included in cash and cash equivalents in the Balance sheet		2,274	5,146	9,634

Interim consolidated statement of changes in equity

All amounts presented in €'000	Share capital	Premium reserve	Other reserves	Accumulated loss	Total equity
Balance 1 January 2009	760	64,216	224	(3,506)	61,694
Net loss for the period	-	-	-	(1,073)	(1,073)
Total comprehensive loss for the period	-	-	-	(1,073)	(1,073)
Balance 30 June 2009	760	64,216	224	(4,579)	60,621
All amounts presented in €'000	Share capital	Premium reserve	Other reserves	Accumulated loss	Total equity
Balance 1 January 2008 as previously stated	760	64,216	212	(1,364)	63,824
Changes in accounting policy (note 5)	-	-	-	(2,277)	(2,277)
Balance 1 January 2008 as restated	760	64,216	212	(3,641)	61,547
Employee share based compensation	-	-	125	-	125
Transactions with owners	-	-	125	-	125
Net loss for the period	-	-	-	(1,479)	(1,479)
Total comprehensive loss for the period	-	-	-	(1,479)	(1,479)
Balance 30 June 2008	760	64,216	337	(5,120)	60,193
All amounts presented in €'000	Share capital	Premium reserve	Other reserves	Accumulated loss	Total equity
Balance 1 January 2008	760	64,216	212	(3,641)	61,547
Employee share based compensation	-	-	12	-	12
Transactions with owners	-	-	12	-	12
Net profit for 2008	-	-	-	135	135
Total comprehensive income for the year	-	-	-	135	135
Balance 31 December 2008	760	64,216	224	(3,506)	61,694

Notes to the Interim Consolidated Financial Statements

1.  General information

Orchid Developments Group Ltd. is a limited liability company incorporated on 2 June 2004 and domiciled in George Town, Grand Cayman, British West Indies. 

The Group includes companies which have the following main activities:

all commercial, financial, lending, borrowing, trading activities, sale and purchase of real estate; tourist services, real estate property transactions and constructions of hotels; and 

commercial property and residential property development.

2.  Basis of preparation

These condensed interim consolidated financial statements are for the six months ended 30 June 2009. They have been prepared in accordance with IAS 34 Interim Consolidated Financial Reporting. They do not include all of the information required in annual Consolidated financial statements in accordance with IFRS as adopted by EU, and should be read in conjunction with the financial statements of the Group for the year ended 31 December 2008. 

The condensed interim consolidated financial statements are presented in Euro (€), which is also the functional currency of the parent company. The functional currency of all Bulgarian subsidiaries is Bulgarian leva, which has been fixed to the Euro since 17 July 1997.

These condensed interim consolidated financial statements for the period ended 30 June 2009 (including the comparative information for the period ended 30 June 2008 and for the year ended 31 December 2008) have been approved for issue by the board of directors on 4 September 2009. 

3.  Accounting policies and significant changes during the period

These condensed interim consolidated financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual consolidated financial statements for the year to 31 December 2008 except for the adoption of the following new standards, amendments to standards and interpretations, which are mandatory for the first time for the financial year beginning 1 January 2009:

IFRS 2 (Revised) 'Share-based Payment'

IFRS 8 'Operating segments' 

IAS 1 (Revised) 'Presentation of Financial Statements' 

IAS 23 (Revised) 'Borrowing Costs' 

IAS 32 (Amendment) 'Financial Instruments: Presentation'

IAS 39 (Amendment) 'Financial Instruments: Recognition and measurement'

IFRIC 13 'Customer Loyalty Programmes'

IFRIC 15 'Agreements for the Construction of Real Estate'

IFRIC 16 'Hedges of a Net Investment in a Foreign Operation'

The adoption of IAS 1 (Revised 2007) makes certain changes to the format and titles of the primary financial statements and to the presentation of some items within these statements. It also gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. IAS 1 affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. 

The adoption of IFRS 8 has not significantly affected the identified operating segments for the Group. However, reported segment results are now based on internal management reporting information that is regularly reviewed by the chief operating decision maker. In the previous annual and interim financial statements, segments were identified by reference to the dominant source and nature of the Group's risks and returns. 

IAS 23 (Revised 2007) requires the capitalisation of borrowing costs to the extent they are directly attributable to the acquisition, production or construction of qualifying assets that need a substantial period of time to get ready for their intended use or sale. No retrospective restatement of borrowing costs has been made in accordance with the transitional provisions of IAS 23 (Revised 2007) and also because the Group has previously applied the same approach - capitalization of all borrowing costs provided that qualifying assets are acquired. For the period January - 30 June 2009 € 1,663,000 borrowing costs were capitalised in property, plant and equipment and development work in progress (2008: € 2,140,246 ). 

IFRIC 15 was adopted for the first time within the annual financial statements for the year ended 31 December 2008. Further information regarding the impact of the standard is set out in note 5.

All of the other accounting standards applicable for the first time this period had no effect on the Group financial statements.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings. 

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements. 

4.  Segment analysis

	Commercial development	Residential development	Hotel	Total
	€'000	€'000	€'000	€'000

6 months to 30 June 2009

Revenue from external customers	77	3,871	139	4,087
Depreciation and amortisation	(21)	(23)	(115)	(159)
Reportable segment operating loss / profit	(220)	314	(183)	(89)
Interest expense	(71)	(2)	(10)	(83)
Interest income	10	8	-	18
Other financial expenses	(17)	(6)	(1)	(24)
Income tax expense	18	(36)	-	(18)
Net loss/ profit from continuing operations	(280)	278	(194)	(196)
Reportable segment assets	90,080	36,094	7,910	134,084
Expenditures for reportable segment property, plant and equipment	78,363	5,239	7,041	90,643
Reportable segment liabilities	66,208	18,709	358	85,275

	Commercial development	Residential development	Hotel	Total
	€'000	€'000	€'000	€'000
		Restated		Restated

6 months to 30 June 2008

Revenue from external customers	30	3,571	126	3,727
Depreciation and amortisation	(10)	(24)	(112)	(146)
Reportable segment operating profit/loss	(275)	416	(246)	(105)
Interest expense	-	(2)	(199)	(201)
Interest income	9	-	-	9
Other financial expenses	(15)	(4)	(1)	(20)
Income tax expense	26	(42)	44	28
Net profit/loss from continuing operations	(255)	368	(402)	(289)
Net profit/loss from discontinued operations	-	-	(212)	(212)
Reportable segment assets	40,368	31,950	19,709	92,027
Expenditures for reportable segment property, plant and equipment	32,885	3,942	7,203	44,030
Reportable segment liabilities	20,569	12,789	6,020	39,378

	Commercial development	Residential development	Hotel	Total
	€'000	€'000	€'000	€'000

Year to 31 December 2008

Revenue from external customers	110	6,347	648	7,105
Depreciation and amortisation	(33)	(46)	(225)	(304)
Reportable segment operating profit/loss	(629)	453	(288)	(464)
Interest expense	(1)	(3)	(403)	(407)
Interest income	19	8	30	57
Other financial expenses	(22)	(9)	(99)	(130)
Income tax expense	52	(59)	(149)	(156)
Net profit/loss from continuing operations	(596)	390	(909)	1,115
Net profit/loss from discontinued operations	-	-	1,941	1,941
Reportable segment assets	62,266	32,455	16,833	111,554
Expenditures for reportable segment property, plant and equipment	51,551	4,370	7,155	63,076
Reportable segment liabilities	43,134	14,516	4,831	62,481

Segment revenue, operating profit and assets can be reconciled to Group's as follows:

	6 months to 30 June 2009	6 months to 30 June 2008	Year to 31 December 2008
	€'000	€'000	€'000
Segment revenue from external customers	4,087	3,727	7,105
Reconciling items:
Other revenues	2	114	164
Group's revenue	4,089	3,841	7,269

	6 months to 30 June 2009	6 months to 30 June 2008	Year to 31 December 2008
	€'000	€'000	€'000
Reportable segment operating loss	(89)	(105)	(464)
Reconciling items:
Other income not allocated	296	470	998
Other expenses not allocated	(1,154)	(1,480)	(3,186)
Group's operating profit	(947)	(1,115)	(2,652)
Interest expense	(72)	(203)	(576)
Interest income	10	49	108
Other financial expenses	(46)	(27)	(165)
Group's loss before tax and discontinued operations	(1,055)	(1,296)	(3,285)

	6 months to 30 June 2009	6 months to 30 June 2008	Year to 31 December 2008
	€'000	€'000	€'000
Reportable segment assets	134,084	92,027	111,554
Reconciling items:
Other assets	61,019	63,501	65,370
Elimination of payables to central management	(49,618)	(56,469)	(53,952)
Group's assets	145,485	99,059	122,972

5.  Effect of change in accounting policy following adoption of IFRIC 15 'Agreements for the Construction of Real Estate'

The Group has adopted the requirements of IFRIC 15 and as a result has amended its accounting policy in respect of revenue recognition relating to its residential property development projects as of 31 December 2008 and after. The Group's residential property developments relate to the apartments for sale developed in the residential area owned by Orchid Sofia Hills and Orchid Seaside Apartments Ltd.

The effect of adopting IFRIC 15 on the Group's accumulated loss at 1 January 2008 was an increase in accumulated loss of €2,277,000. The effect of adopting IFRIC 15 on years prior to 2008 was to reduce revenues by €12,194,000 and to increase liabilities by €8,479,000.

The effect of adopting IFRIC 15 on the Group's interim consolidated statement of comprehensive income for the 6 months ended 30 June 2008 is set out in the table below:

Income statement extract	6 months to  30 June 2008	Adjustments	6 months to  30 June 2008
			Restated
	€'000	€'000	€'000
Revenue	5,297	(1,456)	3,841
Operating loss	(722)	(393)	(1,115)
Tax income	(15)	43	28
Net loss for the year	(1,130)	(349)	(1,479)

The effect of adopting IFRIC 15 on the balance sheet of the Group at 30 June 2008 is set out below:

	30 June  2008	Adjustments	30 June  2008
	€'000		€'000
Assets			Restated
Non -current
Property, plant and equipment	56,387	(770)	55,617
Deferred tax assets	249	321	570
Others	809	-	809
	57,445	(449)	56,996
Current assets
Development work in progress	11,541	11,419	22,960
Development contract receivables	5,860	(4,449)	1,411
Tax receivables	2,611	-	2,611
Others	9,319	-	9,319
	29,331	6,970	36,301
Non-current assets held for sale	5,762	-	5,762
Total assets	92,538	6,521	99,059
Equity
Accumulated loss	(2,494)	(2,626)	(5,120)
Others	65,313	-	65,313
Total equity	62,819	(2,626)	60,193
Liabilities
Non-current liabilities
Others	5,746	-	5,746
	5,746	-	5,746
Current liabilities
Trade payables	6,184	9,200	15,384
Tax liabilities	481	(53)	428
Others	17,266	-	17,266
Total current liabilities	23,931	9,147	33,078
Liabilities directly associated with non-current assets held for sale	42	-	42
Total liabilities	29,719	9,147	38,866
Total equity and liabilities	92,538	6,521	99,059

6.  Property, plant and equipment

6 months to 30 June 2009	Land	Buildings	Machines and equipment	Vehicles	Furniture and fixtures	Assets under construction	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Gross carrying amount
Carrying amount  at 1 January 2009	31,431	6,480	998	294	639	35,653	75,495
Additions	-	498	1	42	5	28,254	28,800
Transfer to development work in progress	(201)	-	-	-	-	-	(201)
Transfer within property, plant and equipment	-	-	-	-	7	(7)	-
Disposals	-	-	-	(30)	(7)	-	(37)
Carrying amount  at 30 June 2009	31,230	6,978	999	306	644	63,900	104,057
Depreciation
Carrying amount  at 1 January 2009	-	(388)	(115)	(161)	(298)	-	(962)
Disposals- accumulated depreciation	-	-	-	15	4	-	19
Depreciation	-	(72)	(18)	(37)	(49)	-	(176)
Carrying amount  at 30 June 2009	-	(460)	(133)	(183)	(343)	-	(1,119)
Net book amount  at 30 June 2009	31,230	6,518	866	123	301	63,900	102,938

6 months to 30 June 2008	Land	Buildings	Machines and equipment	Vehicles	Furniture and fixtures	Assets under construction	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Gross carrying amount
Carrying amount  at 1 January 2008	37,219	5,694	986	385	624	8,097	53,005
Additions	42	556	5	14	5	8,778	9,400
Transfer to development work in progress	(5,926)	-	-	-	-	-	(5,926)
Disposals	-	-	(2)	-	-	-	(2)
Carrying amount  at 30 June 2008	31,335	6,250	989	399	629	16,875	56,477
Depreciation
Carrying amount  at 1 January 2008	-	(262)	(84)	(131)	(209)	-	(686)
Disposals	-	-	1	-	-	-	1
Depreciation	-	(56)	(28)	(50)	(41)	-	(175)
Carrying amount  at 30 June 2008	-	(318)	(111)	(181)	(250)	-	(860)
Net book amount  at 30 June 2008	31,335	5,932	878	218	379	16,875	55,617

Year to 31 December 2008	Land	Buildings	Machines and equipment	Vehicles	Furniture and fixtures	Assets under construction	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Gross carrying amount
Carrying amount  at 1 January 2008	37,219	5,694	986	385	624	8,097	53,005
Additions	148	72	30	18	15	28,335	28,618
Transfers within property, plant and equipment	13	766	-	-	-	(779)	-
Transfer to development work in progress	(5,926)	-	-	-	-	-	(5,926)
Disposals	(23)	(52)	(18)	(109)	-	-	(202)
Carrying amount  at 31 December 2008	31,431	6,480	998	294	639	35,653	75,495
Depreciation
Carrying amount  at 1 January 2008	-	(262)	(84)	(131)	(209)	-	(686)
Disposals	-	-	17	59	-	-	76
Depreciation charge	-	(126)	(48)	(89)	(89)	-	(352)
Carrying amount  at 31 December 2008	-	(388)	(115)	(161)	(298)	-	(962)
Net book amount  at 31 December 2008	31,431	6,092	883	133	341	35,653	74,533

    

 7.  Taxation

Orchid Developments Group Ltd. is a registered offshore company exempt from taxes. Its offshore subsidiaries are also tax-exempt companies. The current income tax expenses are attributable only to Bulgarian companies owned by the Group. 

Recognized tax expenses are based on management's best estimate of the expected annual tax rate. The tax rate, valid for 2009 is 10% (2008 is 10%) corporate tax. 

8.  Borrowing liabilities

	30 June	30 June	31 December
	2009	2008	2008
	€'000	€'000	€'000
Bank loans	53,796	14,753	33,684
Loan note	2,000	7,000	7,000
	55,796	21,753	40,684

The loans comprise the following components:

	30 June	30 June	31 December
	2009	2008	2008
	€'000	€'000	€'000
Long-term loans	53,796	5,728	30,488
Short-term loans	2,000	16,025	10,196
	55,796	21,753	40,684

Changes in loans during the period were as follows:

	€'000
For the period ended 30 June 2008
Beginning balance 1 January 2008	11,698
Received during the period	10,349
Repaid during the period	(294)
Ending balance 30 June 2008	21,753
For the period ended 30 June 2009
Beginning balance 1 January 2009	40,684
Received during the period	27,783
Repaid during the period	(12,671)
Ending balance 30 June 2009	55,796

The Group received long-term loans from the following banks:

	30 June	30 June	31 December
	2009	2008	2008
	€'000	€'000	€'000
OTP and MKBank	46,613	-	25,013
Raifaizenbank	3,055	1,617	3,540
EBRD	-	4,111	-
Unicredit Bulbank	4,128	-	1,935
	53,796	5,728	30,488

The Group received funding for its projects in accordance with the following loan agreements signed with banks and financial institutions:

The Group has site specific loan facilities with a European banking consortium led by OTP Bank in respect of its Grand Mall development. The investment facility totals €97.6 million and is repayable in 78 quarterly installments from the project completion date. The revolving vat facility total BGN11.3 million repayable 6 months after the project completion date. The annual interest rate consists of three-month EURIBOR plus margin. The facilities are collaterised by pledges over the subsidiary enterprise , its shares and its bank accounts. 

The Group has site specific facilities with Raiffeisenbank, Bulgaria in respect of its Business center Varna office development. The investment facility totals €11.9 and is repayable in forty consecutive quarterly installments starting from 20 March 2010. The revolving vat facility totals €0.9 million repayable by 20 June 2010. The annual interest rate consists of three-month EURIBOR plus margin. The collateral provided to the bank is land in Varna owned by the borrower with an area of 4,629 sq m and the right to build related to it and a first ranking pledge on all future receivables under lease agreements.

The Group has site specific facilities with Unicredit Bulbank, Bulgaria in respect of its Orchid Gardens mixed use development. The investment facility totals €21.4 million and is repayable up to 30 May 2016. The revolving vat facility totals €1.2 million repayable up to 09.06.2011 . The annual interest rate consists of three-month EURIBOR plus margin. The collateral provided to the bank is land in Varna owned by the borrower with an area of 6,850 sq m and pledges over the borrower's receivables. 

A loan note was issued by Lakan Investment Ltd. (a wholly owned subsidiary of the Group), the final maturity of which has been extended to 22 June 2010. The remaining principal amount is €2 million. The interest rate charged on the loan, which was negotiated on 17 June 2009 is three-month EURIBOR plus 25% for the period to 26 August 2009 and three-month EURIBOR plus 50% for the period from 27 August 2009 to 22 June 2010. The loan is secured by different plots of land owned by the Group. The loan was repaid in September 2009.  

A short-term overdraft facility from UBP, Switzerland for the amount of €3.2 million was repaid on 5 January 2009.

9.  Loss / profit per share

Both the basic and diluted loss per share have been calculated using the net results attributable to shareholders of the Group as the numerator.

The weighted average number of shares used to calculate basic earnings (loss) per share and the profit (loss) attributable to shareholders is as follows:

	6 months to 30 June 2009	6 months to 30 June 2008	Year to 31 December 2008
Continuing operations
Loss as previously stated from continuing operations	(1,073,000)	(919,000)	(3,451,000)
Restatement as a result of adoption of IFRIC 15 (note 5)	-	(349,000)	-
Loss from continuing operations as restated	(1,073,000)	(1,268,000)	(3,451,000)
Weighted average number of shares	75,966,260	75,966,260	75,966,260
Basic loss per share	(0.014)	(0.017)	(0.045)
Basic loss per share as previously stated	-	(0.012)	-
Discontinued operations
(Loss)/ Profit from discontinued operations	-	(211,000)	3,586,000
Weighted average number of shares	75,966,260	75,966,260	75,966,260
Basic (loss)/earnings per share	-	(0.003)	0.047
Total operations
(Loss)/Profit after tax from total operations	(1,073,000)	(1,130,000)	135,000
Restatement as a result of adoption of IFRIC 15 (note 5)	-	(349,000)	-
Loss/ Profit from total operations as restated	(1,073,000)	(1,479,000)	135,000
Weighted average number of shares	75,966,260	75,966,260	75,966,260
Basic (loss)/earnings per share	(0.014)	(0.019)	0.002
Basic loss per share as previously stated	-	(0.015)	-

Diluted loss per share is calculated adjusting the weighted average number of ordinary shares to assume conversion of all dilutive potential ordinary shares. The Group has one category of dilutive potential ordinary shares being share options granted which are assumed to have been converted into ordinary shares.

	6 months to 30 June 2009	6 months to 30 June 2008	Year to 31 December 2008
Continuing operations
Loss attributable to equity hoilders of the Group  as previously stated from continuing operations	(1,073,000)	(919,000)	(3,451,000)
Restatement as a result of adoption of IFRIC 15 (note 5)	-	(349,000)	-
Loss from continuing operations as restated	(1,073,000)	(1,268,000)	(3,451,000)
Weighted average number of shares	75,966,260	75,966,260	75,966,260
Adjustments for assumed conversion of share options	589,945	801,763	589,945
Weighted average number of ordinary shares for diluted earnings/(loss) per share	76,556,205	76,768,023	76,556,205
Diluted loss per share	(0.014)	(0.017)	(0.045)
Diluted loss per share as previously stated	-	(0.012)	-
Discontinued operations
(Loss)/ Profit attributable to equity holders of the Group from discontinued operations	-	(211,000)	3,586,000
Weighted average number of shares	75,966,260	75,966,260	75,966,260
Adjustments for assumed conversion of share options	589,945	801,763	589,945
Weighted average number of ordinary shares for diluted earnings/(loss) per share	76,556,205	76,768,023	76,556,205
Diluted loss/earnings per share	-	(0.003)	0.047
Total operations
(Loss)/Profit attributable to equity holders of the Group	(1,073,000)	(1,130,000)	135,000
Restatement as a result of adoption of IFRIC 15 (note 5)	-	(349,000)	-
Loss/ Profit from total operations as restated	(1,073,000)	(1,479,000)	135,000
Weighted average number of shares	75,966,260	75,966,260	75,966,260
Adjustments for assumed conversion of share options	589,945	801,763	589,945
Weighted average number of ordinary shares for diluted earnings/(loss) per share	76,556,205	76,768,023	76,556,205
Diluted (loss)/earnings per share	(0.014)	(0.019)	0.002
Diluted loss per share as previously stated	-	(0.015)	-

10.  Contingent liabilities

There are no pending court claims against the Group, nor any circumstances concerning the Group to give rise to claims that may result in material outflows.

11.  Post balance sheet events

The Company placed 12,500,000 new ordinary shares to raise a total of ₤5.0 million (before expenses) in August 2009. It also repaid the outstanding loan notes (principal and interest) amounting to €2.9 million.

No other significant and/or material non-adjusting events took place concerning the activities of the Group between the period of the preparation of the interim consolidated financial statements and their approval by the Board of Directors.

ENDIR ILFSRADIVIIA