Pactolus Hungarian Property PL

Half-yearly Report For The Six Months ended 30 ...


         Pactolus Hungarian Property Plc ("Pactolus" or the "Company")         

           Half-yearly report for the six months ended 30 June 2008            

Pactolus Hungarian Property plc, the AIM listed property company, announces
results for the six months ended 30 June 2008.

The principal activity of the Company and its subsidiaries is investment in the
Hungarian property market, focusing on the residential freehold market in the
more affluent districts of Budapest. The property is renovated to a market
leading standard and then either let to tenants with good covenants or sold.

Key highlights for the period:

  * Operations remain cash positive, before working capital movements, on a
    month by month basis as current annualised rent roll reaches €1.5m (€0.9m
    as at 31 December 2007);
   
  * Since 31 December 2007, the Group has spent a further €3m on new property;
   
  * Floor space from the year end to date has increased by 10 per cent;
   
  * The Group has not undertaken any further revaluations of the property
    estate since the year end. Value of property per square metre now valued at
    €2,848 per square metre (€2,882 as at 31 December 2007);
   
  * Average rental yield to cost on let portfolio maintained at 8.7 per cent;
   
  * Net asset value per share (pre-deferred tax) of 77 pence which is an
    increase of 5 per cent since the year end;
   
  * Agreement to sell one property for €262,000 which is an uplift on valuation
    of 11 per cent.
   
Asset Manager's Review:

News on the Hungarian economy since our final results announcement on the 15
May 2008 has been reasonably positive.  Contrary to most global constituents,
both the government and private sector forecasters have been increasing their
GDP forecasts for 2008 to growth of approximately 1.4 per cent.  In addition,
Hungary is one of the largest producers of maize in Europe and an expected high
yielding crop could lead to GDP growth being boosted by a further 0.25 per
cent. 

The Central Statistics Office is now forecasting a budget deficit of only 4 per
cent for 2008 dropping to 3.2 per cent in 2009.  These forecasts look somewhat
optimistic to ourselves but the key point is that they are moving in the right
direction.  On the other hand, our fears regarding the overvaluation of the
Forint remain and projections that the EU zone economic growth may decline mean
we continue to proceed with caution and we are only investing our cash
resources opportunistically.

Purchases during the period which we intend to let

Since the year end, the Group has purchased a further three properties and a
small building which it is intended to develop and then let. Refurbishment on
the majority of these additions to the portfolio is currently being undertaken.
The small building has been let on a yield to total cost of 9 per cent.

Lettings

Since the announcement of our final results for the year ending 31 December
2007, lettings have continued as expected and Pactolus has maintained the
average yield on the let portfolio at 8.7 per cent.



Chairman's Statement:

Since the announcement of our final results on 15 May 2008, we have continued
to proceed with caution in light of global economic conditions. We will
continue to do so and only make acquisitions which we view as opportunistic.

As in our previous announcements, I would like to express my continued thanks
to the Asset Manager, directors, advisors and the Budapest team for their
efforts in the first half of the year.

C.H. Bennett, BA, FRICS,

Chairman,
Budapest.
31 July 2008.

For enquiries:

Mark Sheppard
Midas Investment Management Ltd (Asset Manager)
Tel: 00 44 (0) 20 7225 1836

Liam Murray
Dowgate Capital Advisers Ltd (Nominated Advisor)
Tel: 00 44 (0) 20 7492 4777

Notes:

1. Forex Rates:

Euro to the Pound Sterling rate of 1.260 as at 30 June 2008.

Consolidated Income Statement
For the six months ended 30 June 2008

                                               6 months ended    6 months ended
                                                 30 June 2008      30 June 2007
                                                            €                 €
                                                                               
                                        Notes       Unaudited         Unaudited
                                                                               
Continuing operations                                                          
                                                                               
Revenue                                   2           653,186           334,454
                                                                               
Administrative expenses                             (584,689)         (590,769)
                                                                               
Operating profit                                       68,497         (256,315)
                                                                               
Finance income                                        221,732            35,058
                                                                               
Finance costs                                       (283,806)                 -
                                                                               
Profit/(loss) before depreciation and                   6,423         (221,257)
amortisation                                                                   
                                                                               
Depreciation and amortisation                        (25,618)          (12,489)
                                                                               
Loss before tax                                      (19,195)         (233,746)
                                                                               
Taxation                                  3                 -            25,424
                                                                               
Loss for the period                                  (19,195)         (208,322)
                                                                               
Earnings per share basic and diluted               (0.07)cent        (1.17)cent
                                                                               
Weighted average number of shares                  25,611,415        17,798,614
                                                                               

Consolidated Balance Sheet
As at 30 June 2008

                                                 30 June 2008      30 June 2007
                                                            €                 €
                                                                               
                                        Notes       Unaudited         Unaudited
                                                                               
Non-current assets 

Investment properties                              27,071,383        21,431,705
                                                                               
Plant and equipment                                    96,876           153,702
                                                                               
Goodwill                                               22,678            22,678
                                                                               
                                                   27,190,937        21,608,085
                                                                               
Current assets                                                                 
                                                                               
Trade and other receivables                           276,407           211,456
                                                                               
Cash and short term deposits                        6,903,996         5,507,043
                                                                               
                                                    7,180,403         5,718,499
                                                                               
Total assets                                       34,371,340        27,326,584
                                                                               
Equity                                                                         
                                                                               
Share capital                                         372,941           372,941
                                                                               
Share premium account                               4,203,816         4,203,816
                                                                               
Distributable reserve                              15,412,576        15,412,576
                                                                               
Merger reserve                                      (109,195)         (109,195)
                                                                               
Translation reserve                                 (578,952)          (28,488)
                                                                               
Retained earnings                                   4,444,076         4,604,956
                                                                               
                                                   23,745,262        24,456,606
                                                                               
Current liabilities                                                            
                                                                               
Bank loan due within one year                         350,000                 -
                                                                               
Trade and other payables                              531,929         1,831,807
                                                                               
                                                      881,929         1,831,807
                                                                               
Non-current liabilities                                                        
                                                                               
Bank loan due after one year                        8,675,000                 -
                                                                               
Provision for deferred taxation                     1,069,149         1,038,171
                                                                               
                                                    9,744,149         1,038,171
                                                                               
Total liabilities                                  10,626,078         2,869,978
                                                                               
Total equity and liability                         34,371,340        27,326,584
                                                                               

Consolidated Statement of Changes in Equity
For the six months ended 30 June 2008

                  Share        Share Distributable    Merger Translation  Retained           
                Capital      Premium       Reserve   Reserve     Reserve  Earnings      Total
                      €            €             €         €           €         €          €
                                                                                             
              Unaudited    Unaudited     Unaudited Unaudited   Unaudited Unaudited  Unaudited
                                                                                             
Balance as at   372,941    4,203,816    15,412,576 (109,195)   (318,899) 4,463,271 24,024,510
1 January                                                                                    
2008                                                                                         
                                                                                             
Loss for the          -            -             -         -           -  (19,195)   (19,195)
period                                                                                       
                                                                                             
Exchange              -            -             -         -   (260,053)         -  (260,053)
difference                                                                                   
arising on                                                                                   
translation                                                                                  
of overseas                                                                                  
operations                                                                                   
                                                                                             
As at 30 June   372,941    4,203,816    15,415,576 (109,195)   (578,952) 4,444,076 23,745,262
2008                                                                                         
                                                                                             
                  Share        Share Distributable    Merger Translation  Retained           
                Capital      Premium       Reserve   Reserve     Reserve  Earnings      Total
                      €            €             €         €           €         €          €
                                                                                             
              Unaudited    Unaudited     Unaudited Unaudited   Unaudited Unaudited  Unaudited
                                                                                             
Balances as     298,185   15,412,576             - (109,195)      70,050 4,813,278 20,484,894
at 1 January                                                                                 
2007                                                                                         
                                                                                             
Loss for the          -            -             -         -           - (208,322)  (208,322)
period                                                                                       
                                                                                             
Reserve               - (15,412,576)    15,412,576         -           -         -          -
restructure                                                                                  
                                                                                             
Exchange              -            -             -         -    (98,538)         -   (98,538)
difference                                                                                   
arising on                                                                                   
translation                                                                                  
of overseas                                                                                  
operations                                                                                   
                                                                                             
Ordinary         74,756    4,410,579             -         -           -         -  4,485,335
share issue                                                                                  
                                                                                             
Cost of share         -    (206,763)             -         -           -         -  (206,763)
issue                                                                                        
                                                                                             
As at 30 June   372,941    4,203,816    15,412,576 (109,195)    (28,488) 4,604,956 24,456,606
2007                                                                                         
                                                                                             

Consolidated Cash Flow Statement
For the six months ended 30 June 2008

                                               6 months ended    6 months ended
                                                 30 June 2008      30 June 2007
                                                            €                 €
                                                                               
                                        Notes       Unaudited         Unaudited
                                                                               
Operating activities                                                           
                                                                               
Rent and fees received                                697,357           235,551
                                                                               
Bank interest received                                238,076            20,258
                                                                               
Bank loan interest paid                             (288,523)                 -
                                                                               
Expenses paid                                       (743,559)       (1,254,274)
                                                                               
Net cash outflow in operating             4          (96,649)         (998,465)
activities                                                                     
                                                                               
Investing Activities                                                           
                                                                               
Purchase of investment properties                 (2,995,253)         (189,544)
                                                                               
Purchase of plant and equipment                      (42,486)         (113,347)
                                                                               
Net cash outflow from investing                   (3,037,739)         (302,891)
activities                                                                     
                                                                               
Financing Activities                                                           
                                                                               
Proceeds from the issue of shares at a                      -         4,485,335
premium                                                                        
                                                                               
Cost of issue of shares at a premium                        -         (206,763)
                                                                               
Net cash inflow from financing                              -         4,278,572
activities                                                                     
                                                                               
Taxation                                              (3,855)                 -
                                                                               
Net movement in cash and short term               (3,138,243)         2,977,216
deposits                                                                       
                                                                               
Cash and short term deposit as at 1                10,042,239         2,529,827
January                                                                        
                                                                               
Cash and short term deposits as at 30               6,903,996         5,507,043
June                                                                           
                                                                               

Notes to the Accounts for the six months ended 30 June 2008

 1. General Information
   
Pactolus 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, Isles 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.

These consolidated half yearly report has been approved for issue by the Board
of Directors on 31 July 2008. The financial information contained in this
report does not constitute statutory accounts within the meaning of Section 240
of the Companies Act 1985. The financial information contained in this report
has been prepared based on the accounting policies described in the Group
financial statement for the year ended 31 December 2007. It is intended that
these policies will be adopted by the Group in preparation of the accounts.

 2. Revenue
   
Revenue consists of rental income and related charges for the period net of
value added tax. There has been no profit on sale of disposal on investment
properties for the reporting period.

 3. Tax on profit on ordinary activities
   
                                               6 months ended    6 months ended
                                                 30 June 2008      30 June 2007
                                                            €                 €
                                                                               
                                                    Unaudited         Unaudited
                                                                               
UK corporation tax                                          -                 -
                                                                               
Deferred tax on property revaluation                        -          (25,424)
                                                                               
                                                            -          (25,424)
                                                                               

 4. Tax on profit on ordinary activities
   
                                               6 months ended    6 months ended
                                                 30 June 2008      30 June 2007
                                                            €                 €
                                                                               
                                                    Unaudited         Unaudited
                                                                               
Loss before taxation                                 (19,195)         (233,746)
                                                                               
Adjustments for:                                                               
                                                                               
Depreciation and amortisation                          25,618            12,489
                                                                               
Operating cash flows before movements in                6,423         (221,257)
working capital                                                                
                                                                               
Decrease/(Increase) in debtors                         66,352         (111,985)
                                                                               
Decrease in creditors                               (169,424)         (665,223)
                                                                               
Net cash used in operating activities                (96,649)         (998,465)
                                                                               

 5. Half Yearly Report
   
The half yearly report and Accounts will be posted to shareholders and will be
available from the Company's registered address at Jubilee Building, Victoria
Street, Douglas, Isle of Man, IM1 2SH. These reports will also be available on
the Company's website www.pactolus.co.uk.