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Orchid Convinced That Bulgaria Property Market Will Bloom.

Losses have increased at Orchid Developments, a property and hotel operator specialising in Bulgaria, but the group says it exceeded expectations in its first set of results since it floated on AIM last July.

Orchid (OCH) operates in commercial, residential and retail markets, and since the float has paid ВЂ21 million (ВЈ14.5 million) for three new development plots in Varna totalling around 38,000 square metres. It is continuing to develop its land bank and says land values are increasing rapidly.

Five of OrchidВ’s projects are co-financed by the European Bank of Reconstruction and Development which has agreed a ВЂ30 million debt facility. This breaks new ground for the financing of real estate developments in Bulgaria, providing long-term funding that was not previously available, says chairman David Holland.

В‘The real estate market in Bulgaria remains buoyant and is expected to experience further growthВ’ he said.

Group revenue rose from ВЂ1.1 million in 2004 to ВЂ3.4 million in the year to 31 December. The net loss before tax was ВЂ1.175 million against ВЂ953,000 in 2004.

Orchid says the net loss increased because of an increase in the size of the development team and higher expenses arising from increased activity.

The results reflect a profit of ВЂ1 million from of the sale of 70 of the 167 units in phase one of the Orchid Sofia Hills residential project. Total sales were ВЂ7.25 million.

Since the year-end a further 40 apartments have been sold for ВЂ3.3 million taking the total to 110 worth ВЂ10.6 million.

Another source of revenue was the four-star, 224 room Yavor Hotel in the Golden Sands beach resort close to Varna on the Black Sea which is owned and operated by the group.

Last year Orchid completed a second hotel, the Golden Yavor, on an adjacent site providing 167 units, mostly self catering apartments. The Golden Yavor operated for half the season and the combined revenue of both hotels was ВЂ1.7 million.