Citybud Sp. z o.o. Result Statements for the period ended 30 September, 2006

Transcription

1 Citybud Sp. z o.o. Result Statements for the period ended 30 September, 2006

2 Citybud Sp. z o.o. 2 Contents Management's Report 3 Auditors Report 4 Financial Statements ntroduction to the financial statements 5 8 Balance Sheet as at 30 September, Statement of ncome for the period ended 30 September, Statement on changes in equity for the period ended 30 September, Statement of cash flows for the period ended 30 September, Notes to the Financial Statements 14 17

3 Citybud Sp. z o.o. Financial Statements 3rd quarter NTRODUCTON TO THE FNANCAL STATEMENTS 1. nformation on the company a. CTYBUD Sp. z o.o. was established on the basis of memorandum and articles of association prepared in form of deed Rep. A No 6102/09, signed on 16 September As stipulated in the memorandum and articles of association, the company was established for an indefinite period. b. The company s registered office is situated in Warsaw, ul. Powązkowska 15. c. By decision of Sąd Rejonowy dla m. st. Warszawy, XX Commercial Division of the National Court Register the company was entered in the National Court Register Register of Enterprise under number KRS Polices adopted in the preparation of the financial statements a. These financial statements cover the period from to and have been based on the assumptions that the company shall continue in operation for the foreseeable future and that it neither intends nor needs to liquidate or curtail materially the scale of its operations. b. The Directors are not aware of any circumstances which would cast doubt upon the company s ability to continue as a going concern. c. The cash flow statement has been prepared using the indirect method. d. The data concerning the previous reporting period have been adjusted in order to make them comparable. 3. Accounting polices and methods applied The accounting polices adopted in the preparation of the financial statements comply with the nternational Financial Reporting Standards (FRS). Elements of assets, equity and liabilities are valued, with the exercise of prudence, at cost actually borne to acquire them. a. ntangible and tangible fixed assets ntangible assets, tangible fixed assets and assets in course of construction are valued at cost diminished by amortisation/ depreciation to date. Amortisation/ Depreciation is charged in accordance with the straight line method. ntangible and tangible fixed assets whose initial values do not exceed are charged to expenses on a one off basis in the month of their transfer to use. mpairment losses are recorded for assets for which it is suspected that they would not bring economic benefits in the foreseeable future. The annual amortization/ depreciation rates applied to principal asset groups are as follows: ntangible assets: Other intangible assets 10 50% Tangible fixed assets: Plant and machinery 30% Other tangible fixed assets 20 50%

4 Citybud Sp. z o.o. Financial Statements 3rd quarter NTRODUCTON TO THE FNANCAL STATEMENTS a. Stock Tangible elements of stock acquired of manufactured during the financial year are recognised at purchase price. The issue of stock is valued on the basis of first in first out method. At balance sheet date, items of stock are valued at the lower of purchase price and net realisable value. The stock which has lost its trading value or become obsolete is written down. Write downs of stock are classified as other operating expenses, as appropriate. b. Debtors and creditors Debtors and creditors (including those arising on bank and other loans) stated in are disclosed in the amounts due for payment. Foreign currency debtors and creditors are recorded at the date when they arise at the average rate determined for the given currency for that day by the Head of the National Bank of Poland. Exchange gains and losses which arise on the day of payment as a result of the difference between the exchange rates of that currency at the date of payment and at the date when the debtor or creditor arose are posted to financial income or expenses, respectively. Foreign currency debtors and creditors which remain unpaid at balance sheet date are translated according to the purchasing or selling rate, respectively, of the bank whose services are used by the enterprise. The valuation of assets stated in foreign currency may not be higher, and that of liabilities lower than their values translated into according to the average exchange rate determined by the Head of NBP for that day. The amount of debtors is revalued by recording write downs on the basis of analyzing the probability of payment. c. Cash and cash equivalents Cash and cash equivalents at bank and in hand held in are stated in nominal values. Receipts of cash on a foreign currency account are valued at the purchasing rate used on that day by the bank which keeps the account, whereas payments made in foreign currency are valued at the selling rate of that bank used at that date. At balance sheet date cash and cash equivalents are valued at the purchasing rate of the bank whose services are used by the enterprise. Their balance sheet value may not exceed the result of translating the same amounts into at the average NBP rate determined for the given currency at that date. Exchange gains and losses established at the end of the financial year affect the profit or loss for the period, the gains as financial income, and the losses as financial expenses. d. Equity Share capital is disclosed in the amount which is stated in the company s memorandum and articles of association or statue and recorded in the court register. Amounts of capital which have been declared but not yet paid in are recognised as called up share capital. Reserve capital is set up by distribution of the company s net profit for the year. Furthermore, reserve capital includes the share premium minus cost of issuance. e. Provisions for liabilities Provisions are set up for liabilities in cases when their amount or maturity date are uncertain, when they are certain or highly probable to arise and when they result from past events and can be reliably estimated. The company has set up provisions for pending court cases and delays in transferring apartments to use.

5 Citybud Sp. z o.o. Financial Statements 3rd quarter NTRODUCTON TO THE FNANCAL STATEMENTS a. Prepayments and accurate expenses n the case when the company has borne expenses in relateion to future reporting periods, such expenses are posted to prepayments. They are spread over time and include principally prepaid press subscriptions. Provisions are set up for expenses in the amount of probable liabilities relative to the current reporting period and resulting from goods and resulting from goods services provided for the company s benefit by its contracting parties and from its obligation to provide in future goods or services relative to current activities for the benefit of unknown parties when the amount of such obligations may be estimated though it is not known when they will arise. Accruals comprise principally the following: the value of services performed but not yet invoiced. b. Deferred tax provision and assets Because of temporary differences occurring between the value of assets and liabilities shown in the books of account and the taxable value thereof, as well in the amount of loss deductible in future from the taxable base, the company sets up deferred tax provisions and records deferred tax assets. Deferred tax assets are stated in the amounts which are expected to be deducted in future from income tax because of negative temporary differences which shall in future bring about a reduction of taxable base or an increase in the deductible loss. Deferred tax provisions are set up in the amount of income tax to be paid in future due to the occurrence of positive temporary differences, i.e. such differences which shall in future bring about an increase in the taxable base. The amounts of deferred tax provisions and assets are established on the basis of the income tax rates in force in the year when the tax liability arises. n accordance with the Corporate ncome Tax Act, the rates to be in force in the coming years are: 19% in 2006, and 19% in c. Profit or loss for the period The company s profit or loss is made up of the profit or loss on sales, on other operating activities, on financial activities, obligatory charges on profit, and profit or loss on extraordinary items. The company measures its performance by using the calculation format of the profit and loss account. ncome from sales of products, i.e. of finished products and services, is the amount due from the purchaser les the output VAT thereon. The moment of sale is the transfer of products to the purchaser or the approval of a service by the recipient. ncome arising from long term contracts is recognised according to the accounting rules (policy) of the Company presented below. Construction contracts f it is possible to estimate the result of a construction contract, income and expenses are recognised depending on the progress of the works involved as at the balance sheet date. The rate of progress is usually measured as the ratio of the cost already incurred to the total budgeted costs, excluding the situations when this way of measuring does not reflect the actual rate of progress. All changes in the scope of works, claims and bonuses are recognised in the amount agreed with the client.

6 Citybud Sp. z o.o. Financial Statements 3rd quarter NTRODUCTON TO THE FNANCAL STATEMENTS t is not possible to estimate the value of a contract reliably, the income arising thereon is recognized in the degree it exceeds the cost of the contract. The cost related to the contract is recognised as the cost of the period when they were incurred. f it is probable that the cost of the contract exceeds the income, the anticipated loss is immediately recognised and disclosed as cost. Cost of products and services sold corresponds to the cost of manufacturing these products and services which matches the sales income thereon. Other operating expenses and income are those items of expenses and income which do not directly relate to ordinary business activities but which affect the company s profit or loss. Financial income consists of income due from financial transactions, whereas financial expenses comprise the cost of financial transactions. nterest, commissions and exchange gains or losses relative to fixed assets in course of construction increase the cost of these assets. Exchange losses, interest on liabilities and investment loans are changed to financial expenses after a given investment has been transferred to use. The profit or loss on extraordinary items corresponds to the difference between realised extraordinary gains and incurred extraordinary losses.

7 Citybud So. z o.o. Financial Statements 30 Septetmber BALANCE SHEET as at 30 September September December 2005 Note Assets A. Fixed assets. ntangible assets Other intangible assets , ,00 Total intangible assets 2 366, ,00. Tangible fixed assets Fixed assets plant and machinery , ,00 other fixed assets , ,33 Total tangible fixed assets 4 416, ,33 V. Long term investments Long term financial assets in related enterprises loans ,48 0, ,48 V. Long term prepayments Deferred tax assets , ,35 Total long term prepayments , ,35 Total fixed assets , ,68 B. Current assets l. Stock Semi products and work in progress , ,97 Payments on account of deliveries 8 999,31 0,00 Total stock , ,97. Short term debtors Related enterprises other 1 182,73 0, ,73 0,00 Other enterprises trade debtors falling due within 12 months , ,60 tax, grant, customs, social security, health 0,00 0,00 insurance and other benefits , ,24 other 0,06 0,00 Total short term debtors , ,84 Cash, cash equivalents and other monetary assets cash in hand and at bank , ,78 Total short term investments , ,78 V. Short term prepayments 2 282, ,81 Total current assets , ,40 Total assets , ,08

8 Citybud So. z o.o. Financial Statements 30 September BALANCE SHEET as at 30 September September December 2005 Note Equity and liabilities A. Equity Share capital , ,00 Profit (loss) of prior years , ,30 Net profit (loss) , ,17 Total equity , ,87 B. Creditors and provisions for liabilities. Provisions for liabilities Provision for deferred tax liability 9 0, ,80 0, ,80 Other provisions short term , , , ,36 Total provisions for liabilities , ,16. Long term creditors Related enterprises , ,19 Total long term creditors , ,19. Short term creditors Related enterprises other 6 513, , , ,00 Other enterprises trade creditors falling due within 12 months , ,23 trade creditors falling due after more than 12 months 0, ,70 advance payments received for deliveries ,94 0,00 tax, customs, social security and similar benefits , ,96 payroll creditors 1 645, ,42 other 0,00 986, , ,30 Total short term creditors , ,30 V. Accruals Other short term accruals , ,56 Total accruals , ,56 Total creditors and provisions for liabilities , ,21 Total equity and liabilities , ,08

9 Citybud So. z o.o. Financial Statements 30 September PROFT AND LOSS as at 30 September months to 12 months to 30 September December 2005 Note A. Net income from sales of products, goods, and materials of which: Net income from sales of products , ,43 Total income from sales of goods and products , ,43 B. Cost of products, goods and materials sold, of which: Manufacturing cost of products sold , ,62 Total cost of goods and products sold , ,62 C. Gross profit (loss) on sales (A B) , ,82 J. Financial income nterest , ,32 Other ,22 0,00 Total financial income , ,32 K. Financial expenses nterest , ,99 Other 19 3, ,88 Total financial expenses , ,87 L. Profit (loss) from ordinary activities (+J K) , ,27 O. Corporate income tax , ,09 R. Net profit (loss) (N O P) , ,17

10 Citybud So. z o.o. Financial Statements 30 September STATEMENT ON CHANGES N EQUTY as at 30 September months to 12 months to 30 September December 2005 Note l. Equity at beginning of period (opening balance) , ,30 Share capital at beginning of period , ,00 Loss of prior years at end of period , ,30 net profit , ,17. Equity at end of period (closing balance) , ,87

11 Citybud So. z o.o. Financial Statements 30 September STATEMENT ON CASH FLOW as at 30 September months to 12 months to 30 September December 2005 A. Cash flows from operating activities l. Net profit (loss) , ,17. Total adjustments for: Depreciation/ amortisation 2 374, ,61 Foreign exchange gains (losses) , ,88 nterest and distributions of profit (dividends) , ,67 nvestment profit (loss) 0,00 0,00 Change in provisions , ,17 Change in stock , ,01 Change in debtors , ,10 Change in short term creditors except for those arising on bank and o , ,78 Change in prepayments and accruals , ,95 Other adjustments 0, , , ,59. Net cash flows from operating activities (l±ll) , ,76 B. Cash flows from investing activities l. Receipts From financial assets, of which: , ,32 interest , , , ,32. Payments Acquisition of intangible and tangible fixed assets 1 226, ,53 nvestments in property and intangible assets 0,00 0,00 For financial assets, of which: 0,00 0,00 in related enterprises 0,00 0,00 in other enterprises ,98 0,00 acquisition of financial assets 0,00 0,00 long term loans advanced 0,00 0,00 Other investment expenditure 0,00 0, , ,53. Net cash flows from investing activities ( ) , ,79 C. Cash flows from financing activities l. Receipts Bank and other loans 0, ,64 0, ,64. Payments Repayment of bank and other loans , ,05 nterest , ,99 Other financial expenditure ,22 0, , ,04. Net cash flows from financing activities (l ll) , ,40 D. Total net cash flows (A.±B.±C.) , ,85 F. Cash and cash equivalents at the beginning of period , ,63 G. Cash and cash equivalents at the end of period (F±D), of whi , ,78 of limited disposability 0,00 0,00

12 Citybud So. z o.o. Financial Statements 30 September SUPPLEMENTARY NOTES AND EXPLANATONS 1. ntangible assets movements during the year Other ntangible assets Total At costs at beginning of the period 4 916, ,88 Additions 576,00 576, , ,88 Accumulated amortization at beginning of period 3 126, ,88 Additions 0,00 0,00 Accumulated amortization at end of period 3 126, ,88 Net book value at beginning of period 1 790, ,00 Net book value at end of period 2 366, ,00 2. Tangible fixed assets movements during the year Plant Other Total and tangible machinery fixed assets At costs at beginning of the period 21218, , ,41 Additions 650,00 0,00 650, , , ,41 Accumulated amortization at beginning of period 18674,16 256, ,08 Additions 1 604,00 770, ,37 Accumulated amortization at end of period , , ,45 Net book value at beginning of period 2 544, , ,33 Net book value at end of period 1 590, , ,96 3. Deferred tax assets 30 September 31 December Temporary differences of which: accruals , ,80 interest on loans , ,12 Social security 06/2006 (not paid) 669, ,43 Current tax loss (2006) ,65 Balance of deferred tax assets , ,35 4. Stock nventories consists of semi products and work in progress (at cost) in amount ,80 No write downs were made during the period. The amount of inventories recognised as an construction contract expense according to AS 11 is 85,715, This expense is included in the manufactoring cost of products sold item as a cost of inventories recognised as a contract expense.

13 Citybud So. z o.o. Financial Statements 30 September SUPPLEMENTARY NOTES AND EXPLANATONS 5. Debtors other enterprises Short term debtors from other enterprises comprise debtors arising from contracts signed with clients regarding purchase of space in the investment in ul. Słomińskiego realised by the company. Trade receivable are non interest bearing. 6. Short term investments 30 September 31 December Cash at bank and in hand , ,20 Short term deposit 0, , , ,78 Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Company, and earn interest at the respective short term deposit rates. 7. Share Capital 9 month to 12 months to 30 September 31 December Balance at beginning of period , ,00 Balance at end of period , ,00 The Company's share capital at the balance sheet date consisted of 80 equal and individible shares of 625 each. At balance sheet date, the Company's sole shareholder which held 100% of the shares was Sharson Holdings Ltd. 8. Net profit The shareholder's meeting for 2005 was held on October 5th Deferred tax provision 30 September 31 December Temporary differences of which: loans evaluation 0, ,80 Balance of deferred tax provision at end of period 0, ,80

14 Citybud So. z o.o. Financial Statements 30 September SUPPLEMENTARY NOTES AND EXPLANATONS 10. Other provisions 30 September 31 December Cost of period (ref. To construction works) invoiced after the end of period , ,00 Other costs of the period invoiced after the period 0, ,00 sraeli Real Estate agency arbiter decision , ,00 GSP court decision 0, ,18 Delays and warrrantees on the contract , , , , Tax, customs and social security creditors 30 September 31 December Corporate income tax according to AS financial statements , ,55 VAT 0,00 Company income tax CT 10 Personal income tax 2 497, ,90 Social security 7 579, , , , Sales and costs of products, goods and materials Value of net income from sales of products and manufactoring costs of products sold was calculated according to the accounting rules of the Company referring to construction contracts on the basis of the following sales recognitions criteria: 50% of the apartments contracted 15% of prepayments made 25% costs of investment born (cost of land excluded)

15 Citybud So. z o.o. Financial Statements 30 September SUPPLEMENTARY NOTES AND EXPLANATONS Net income from sales totals ,73 and constitutes the amount of contract revenue recognised as revenue in the period and calculated on the basis of value of the contracted space with the use of cost ratio. Manufacturing cost of products sold was calculated on the basis of net income from sales with the use of budgeted cost to budgeted income ratio and totals , nterest income 9 month to 12 months to 30 September 31 December nterest received from banks , , , , Other financial income 9 month to 12 months to 30 September 31 December Exchange rate gains Exchange rate losses ,22 0, ,22 0, Financial expenses 9 month to 12 months to 30 September 31 December nterest on bank loans ,01 nterest on shareholder's loans , ,55 Other financial costs , ,43 Unrealised exchange rate losses , , , Discontinued operations During the period from to the company did not discontinue any operations carried on previously; it does not expect to discontinue any operations during the next period either. 17. Post balance sheet events No events which could have material impact on the company's state of affairs occurred after balance sheet date and before signing the financial statements. 18. Consolidated financial statements The name and registered address of the parent company, which prepares the consolidated financial statements are as follows: Sharson Holding Ltd., Or Yehud, Hayotzurim 5, srael.

16 Star nvestments Sp. z o.o. nterim Result Statements for the period ended 30 September, 2006

17 Star nvestments Sp. z o.o. 2 Contents Management's Report 3 Auditors Report 4 Financial Statements Statement of ncome for the period ended 30 September, Statement of changes in equity 6 Balance Sheet as at 30 September, Statement of Cash Flows 8 Notes to the Financial Statements 9 15

18 Star nvestments Sp. z o.o. 7 Balance Sheet as at 30 September, ASSETS Note Non current assets Other fixed assets Deferred tax asset Total non current assets Current Assets nventory Receivables Prepayments Cash and cash equivalent Total Current Assets TOTAL ASSETS LABLTES & SHAREHOLDERS EQUTY Current Liabilities Trade Liabilities Liabilities to related parties Prepayments received from customers Guarantee amount from contractor Accrued costs Total Short Term Liabilities Long Term Liabilities From related parties Bank loans Total Long Term Liabilities Shareholders Equity Share Capital Net result from previous years Correction of result for Net result for the period Total Equity Capital TOTAL EQUTY & LABLTES

19 Star nvestments Sp. z o.o. 5 Statement of ncome for the period ended 30 September, Revenues Note Operating income 0 Administrative and General Expenses Office Costs Marketing expenses Consultancy fees Depreciation Other ncome and Costs Profit/ (Loss) from continuing operations before tax and financial income/(expense) Net Financial Profit / (Loss) Profit / (Loss) before Taxation Taxation Profit / (Loss) for the period

20 Star nvestments Sp. z o.o. 6 Statement of changes in equity for the period 1 January 30 September, Shareholders' equity at the beginning of the period Correction of error from Net result for the period Shareholders' equity at the end of the period

21 Star nvestments Sp. z o.o. 8 Statement of Cash Flows for the period ended 30 September, Cash Flows from Operating Activity Net ncome Adjustments to reconcile to Net Cash flow from Operating Activities Depreciation (ncrease) / Decrease in Receivables ncrease / (Decrease) in Payables Net Cash flow from Operating Activities Cash flows from nvesting Activities Fixed assets nventory Net Cash Flow from nvesting Activities Cash flows from Financing Activities ncrease in Long Term Liabilities ncrease in equity capital 0 0 Net Cash Flow from Financing Activities Net ncrease / (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at the beginning of the period Cash and Cash Equivalents at the end of the period

22 Star nvestments Sp. z o.o. 9 NOTES TO THE FNANCAL STATEMENTS Note 1 Significant Accounting Policies Activities Star nvestments Sp. z o.o. is a limited liability company incorporated in Poland on 9 February 2000 whose activities include construction, maintenance and sales of apartments, architecture and engineering services related to construction. The Company is registered in Warsaw, Poland. General and basis of preparation The financial statements are prepared under the historical cost convention. The financial statements have been prepared under nternational Financial Reporting Standards. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with nternational Financial Reporting Standards have been condensed or omitted pursuant to nternational Accounting Standard No. 34, nterim Financial Reporting (AS 34). The Company followed the same accounting policies and methods of computation in these condensed consolidated financial statements as compared with the financial statements for the year ended 31 December Fair value of financial instruments The Company's financial instruments include receivables, payables and loans. The carrying amounts of these financial instruments approximate their fair value. nventories The main components of inventory are work in progress and goods in the form of the land. Work in progress includes costs on construction work, that are directly attributable to the project. Financial costs connected with construction of a building are capitalised during the period of preparing the construction plans and a real construction work. The Group policy is to cease capitalization during an extended period in which the activities necessary to prepare an asset are suspended. Revenue recognition Revenue from sale of services is recognised when services are delivered. This means when the Notarial Act of sale of an apartment takes place.

23 Star nvestments Sp. z o.o. 10 NOTES TO THE FNANCAL STATEMENTS Note 1 Significant Accounting Policies (continued) Foreign exchange transactions Transactions in currencies other than are initially recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the National Bank of Poland rates ruling on the balance sheet date (as shown below). Profits and losses arising on exchange differences are capitalised if they are connected with the construction of assets. Otherwise they are included in the statement of operations. The National Bank of Poland average foreign exchange rates used in the report at balance sheet date: USD / 3,1425 3,2613 EUR / 3,9835 3,8598 Cash Cash comprises cash on hand and cash on current bank account. Taxation The charge for current tax is based on the results for the year as adjusted for items which are disallowed for corporate income tax purposes. t is calculated using tax rates that have been enacted at the balance sheet date. Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. n principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the statement of operations.

24 Star nvestments Sp. z o.o. 11 NOTES TO THE FNANCAL STATEMENTS Note 2 Consultancy fees Legal services Moved to prepaid expenses Audit fees Commision to SJM Development Sp. z o.o Other services Total: Note 3 Financial ncome/(loss) nterest income nterest expenses Currency differences Total: Note 4 Taxation Result before taxation Permanent differences Taxable income according to Polish rules 0 0 Changes in temporary differences The tax rate is 19% Corporate income tax for Change in deferred tax in Correction of deferred tax for Correction of deferred tax for Taxation for

25 Star nvestments Sp. z o.o. 12 NOTES TO THE FNANCAL STATEMENTS Note 5 Tangible fixed assets Furniture Value at cost At 1 January ncreases 0 At 30 September Depreciation At 1 January Current period depreciation 625 At 30 September Net book value At 1 January At 30 September Note 6 Deferred tax asset Temporary Value difference 19% Tax losses carried forward Provisions Tax losses are carried forward 50% in 4 years and 50% in 5 years Note 7 nventory Value of land including agency fee and purchase expenses Value of work in progress nvestment Capitalised interest Prepaid fees regarding sales Total The land area is 9,012 sq.m. in the Zoliborz district in Warsaw. The land is a perpetual usufruct until 22 April, t is mortgaged as security for the bank loan.

26 Star nvestments Sp. z o.o. 13 NOTES TO THE FNANCAL STATEMENTS Note 8 Receivables Receivables VAT to be reimbursed Overpayment of corporate income tax Total: Note 9 Cash and cash equivalent Money in transit Cash at bank Total: Of the cash at bank, 2,838,627,77 is on a blocked account. Note 10 Trade liabilities Karmar Zumbrota Estonia withheld from agency fee Adam Szczepankowski TU Hestia Gleeds Other trade liabilities Note 11 Liabilities to related parties SJM Management Sp. z o.o Arik Koren SJM Development

27 Star nvestments Sp. z o.o. 14 NOTES TO THE FNANCAL STATEMENTS Note 12 Prepayments received from customers The company has started to receive prepayments from people interested in buying apartments. Payments take place in accordance with conditions described in the presale agreements. Commercial Phase Apartments Garages space No. of units in phase m2 Expected value As of No. of contracts signed Value Paid Paid in pct. of signed 39% 53% 0% Paid in pct. of Phase 35% 19% 0% Commercial Phase Apartments Garages space No. of units in phase ,5m2 Expected value As of 30 September, 2006 No. of contracts signed Value Paid Paid in pct. of signed 13% 15% Paid in pct. of Phase 6% 4% 0% Note 13 Loans from related parties As of 30 September, 2006 Principal nterest Total Amertab Rahmani ASD Ltd Hasson Averman As of 31 December, 2005 Principal nterest Total Amertab Rahmani ASD Ltd Hasson Averman

28 Star nvestments Sp. z o.o. 15 NOTES TO THE FNANCAL STATEMENTS Note 13 Loans from related parties (continued) n general, the loans are granted in 2005, with a repayment period of at least 2 years. The interest is WBOR at the time of granting the loan +2%. Some loans have shorter repayment periods. Note 14 Bank loan The loan was granted by BPH in different tranches. Totally, BPH will grant up to 39.5 million in loans for the project. The land, the project, the bank accounts all act as security for the loan. The interest is based on WBOR and is calculated every quarter. Note 15 Share capital Shares Tadmore Ltd., Cyprus Amertab Development Ltd., Cyprus Pct. Share capital fully paid Note 16 Related party transactions Except for loans and trade liabilities described in Note 10 and 12, the Company had following transactions with related parties: Management fee to SJM Management Sp. z o.o Commission fee to SJM Development Sp. z o.o Note 17 Directors' renumeration There was no remuneration paid to the Company's Board of Directors. Note 18 Subsequent events There were no material events that should be reflected in the condensed financial statement subsequent to the balance sheet date

29 Baltic Accountants and Consultants A. STATE AUTHORZED PUBLC ACCOUNTANTS ~A WORLDWDE NETWORK OF N BURO AUTORYZOWANYCH AUDYTOR6W KONSULTANT6w 28 November, 2006 Kost Forer Gabbay & Kasierer Certified Public Accountants 2 Pal-Yam St. Haifa, SRAEL Gentlemen, Re: Citybud SP. Z 0.0. (hereinafter - "the Company") n connection with the unaudited interim financial statements of the Company as of 30 September, 2006 and for the nine month period then ended, we state as follows: 1. We are aware that the abovementioned interim financial statements of the Company will be included in the consolidated interim financial statements of Hason P.A. Ltd. for the same period, and that in your review report on the consolidated financial statements of Hason P.A. Ltd. you will be referring to our review report on the interim financial statements of the Company. 2. With respect to Hason P.A. Ltd. and to all members of the group, we are independent, as that term is used in the Code of Ethics for Professional Accountants issued by the nternational Federation of Accountants (FAC). 3. We are familiar with nternational Financial Reporting Standards relating to interim financial reporting. 4. We are familiar with the nternational Standard on Review Engagements issued by FAC in connection with the review of financial statements and our review of the abovementioned interim financial statements of the Company was performed in accordance with them. Based on our review, nothing has come to our attention that causes us to believe that the abovementioned interim financial statements of the Company are not presented fairly, in all material respects, in accordance with nternational Financial Reporting Standards. Sincerely, V~ Kurt versen Baltic Accountants and Consultants Kurt versen Baltic Accountants and Consultants, A. Wojska Polskiego 11; Warszawa Tel:(48 22) , Fax:(48 22) contact.us@baac.com.pl, Web: NP: REGON: Represented through Alliott Group, a worldwide network of independent firms

30 Citybud So. Z Financial Statements 30 Septetmber BALANCE SHEET as at 30 Septe~ber 2006 Assets A. Fixed assets. ntangible assets Other intangible assets Total intangible assets Note 1 30 September , ,00 31 December , ,00 11.Tangible fixed ass,ets Fixedassets. plant and ma~hinery other fixed a~sets Total tangible fixed a,ssets! , , , , , ,33 V. Long-term investr;nents Real property! ntangible assets i Long-term financial ~ssets in rrlated enterptifes; shares. other securities loans i other long-terr financi~1 assets 0,00 0,00 0,00 0,00 0, ,48, ~ 0, ,48 V. Long-term prepayments Deferred tax :jssets Total long-term prep~yments Total fixed assets B. Current assets. Stock i,! Semi-products and work in prqgress Payments on jaccountof deliveries Total stock 11.Short-term debtors Related enterprises other , ,31 6 5/?4203, , , ,11 ' ' , , , , , , ,97 Other enterprises, i trade debtors jfallingdue within 12 hi tax, grant,cu*oms, Social~ecurity", insurance and other benefits i! : other, ' i Total short-term debtprs, i i,': Cash, cash equivale~ts and other fnon~ta~ cash in hand and at bank i i Total short-terminvestments i.. V. Short-term prepayments Total current assets Total assets 5 6.".1 i,! 2f!' ,77.Jei, '!! 000 ' '00', '! J! 0,06! 2~ ,831 j!,! l ,951 1) ,951! , ~: ,961 5ij632776,71 ' , , , , ,78 i l- i i 2 279,81 ; ,40 : ,08 ~

31 ,., '."., 1 ' \ it if 1 Citybud SO.z 0.0. ~FinanCial!Statemewts 30 5ePteh,~er2006 ' ;: ", " i "!f BALANCE SHEET as at 30 5~ptemberj, 006, Note Equity and liabilities i A, Equity Share capital Total equity Profit (loss) of prior years Net profit (loss)! r B. Creditors and provisions for liabilities. Provisions for liabilities Provision for def~rred tax liability Other provisions short-term Total provisions 11.Long-term Total long-term ll. Short-term for liabilities creditors Related enterprises Related enterprises other Other enterprises creditors creditors trade creditors trade creditors falling due within 12 months falling due after more than 12 months advance payments receivled for deliveries tax, customs, social security and similar benefits payroll creditors other Total short-term V. Accruals Other short-term Total accruals creditors accruals Total creditors and provisions for liabilities Total equity and liabilities '! ii!; i " " 1 : ,43 1iF7~ 70,43' 11$77il 70,43' " ' ' i "U,.', 1, i 4i703~ J42,261 ~ ii :1 1i ~!i 6111$13,00 i6;~13,00 ' ' 43' 11: " 0,00, ' ' 0 94',j 6, " 13,, 51665;, J 66,331 1] 45,07, 0, , ,74, , ,113, ~00,19 i 58632:176,71 p,! December 2005 i i : , ,30 1, , , , , , , , , ,00 7 ; , ,70 4 J , ,42 986, , ,30 23 ~53 819,56 23,653819, , ,08

32 Star nvestments Sp. Z 0.0. NDEPENDENTAUDTORS' REPORT TO THE SHAREHOLDERSOF STAR~ NVESTMENTSSP. Z 0.0. We have reviewed the attached interim balance sheet of Star nvestments Sp. Z 0.0. ('the Company') as at 30 September 2006 and the related interim income statement, interim cash flow statement, interim statement of changes in equity for the 9 months period then ended and the interim explanatory notes ('the attached interim financial statements'). ''-.,./ Management is responsible for the preparation and presentation of these interim financial statements in accordance with nternational Financial Reporting Standard applicable to interim financial reporting ('AS 34'). Our responsibility is to express a conclusion on these interim financial statements based on our review. <ll We conducted our review in accordance with nternational Standard on Review Engagements 2410, "Review of nterim Financial nformation Performed by the ndependent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters. and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with nternational Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. '"-' Based on our review, nothing has come to our attention that causes us to believe that the attached interim financial statements are not prepared, in all material respects, in accordance with AS 34. Warsaw, 30 October Baltic Accountants and Consultants- Kurt versen,v~ Kurt versen Polish Expert Auditor

33 Star nvestments Sp. z 0.0. Balance Sheet as at 30 September: 200'6' ASSETS Note, " Non-current assets Other fixed assets Deferred tax asset Total non-current assets ' Current Assets nventory Receivables Prepayments Cash and cash equivalent Total Current Assets , ' 1296, TOTALASSETS 60' ' 34 39Q 391 ".., "'" "" LAB UTES & SHAREHOLDERS EQUTY..-'..",'"....' -."" -'-' '" Current liabilities Trade Liabilities, Liabilitiesto related parties Prepayments received from customers Guarantee amount from contractor Accrued costs Total Short,Term, Liabilities ", LonQ Term liabilities From relatecj parties Bank loans,,...' -,' '.', Total LongTerm 'Liabilities 10 '11 12 "~,,,',""," ",." -'",-,.,_.,,~,-- '-"', :,945 " ' ,'''5,74''166 ' 252~9962,1357~1~ 1,56,~ 1~O,,',..,,..~.~-QQ.2.,.."..'" 6 000,, 18'000,,-, --"""..,, '-21" '-""-"'5"'5'81""~7'---'-,...:J3..,...,29...?-43:..21,5.,::,. ::1-~::39.$t.5fi;,:;:::::.=~..,14...",.1:3..958_.89,9. ',.., '..,,' """"~'+::...,,,,,...,,34202"114 '29 "'8i21'9":-":"-' Shareholders EQui'!y Share Capita,l Net (esuit from previous years Correctic:m'of-result'for 2005 Net result for the period Total Equity Capital 15, "''''74'' , -, "" "'," TOTAL EQUTY & LABLTES Ul 'd~-l \ St 'ON 2~S 82D2vEv228vDD ~ lme'~~~.. ~'~~3"3~~" T..rs 5 L : l \ loo7. 'q ~4 ' DE: l. 1 en.if

34 ; Star nvestments Sp. z 0.0. Statement of Cash Flows for the period end,cd 30,SeDte~ber. 2006,,' Cash Flows from O~eratina Actlvi!y Net tncome AdJustments to reconcile to Net Cash flow from ODeratinQActivities Depreciation (ncrease) Decrease in Receivables ncrease (Decrease) in Payables Net Cash now from Operating Activities Cash flows from nvestinqactivities Fixed assets nventory Net Cash Flow from nvesting Activities Cash f'ows from Financina Activities ~ ncrease in Long Term liabilities ncrease in equity capital Net Cash Flow from Financing Activities Net ncrease (Decrease) in Cash and Cash Equivalents ~.3.?1.9. 0'".....'..,... "" ' ,...,..., , ,.. '" '. "....., Cash and Cash Equivarents at the... beginningofthe period '--'..' JQ"~gz".,_ Cash and Cash Equivalents at the.",.,..,... end of the period.. -n.,"...,~'--'""...'.'."'.", =_..2.,83.9;396..".,....,...",~.~43-8G , '.... '.".", "..., -~-~(c;'..,,;~:-~'.'~::~:;;~~ "..' "'..,....,..".. '. "",..,"'.;-~ "': '-V'0.~,-~'~.''''~~-'''''~-- Ut 'd llsv'on.'-..:.,..'" --'-"--"M-'nO~HH~8tOO ~~l;ll'--/oor. 'q~~ '(,,~s 8202"" "228 "00. lj3w3~~"~w"rs 0" 'l.l 2' H