TIDMBSP

RNS Number : 3470B

Black Sea Property PLC

30 September 2022

Friday 30 September, 2022

Black Sea Property

Half-year Report

BLACK SEA PROPERTY PLC

("Black Sea Property" or the "Company")

Half-yearly report for the period ended 30 June 2022

The Board of Black Sea Property PLC is pleased to announce its interim report for the six-month period ended 30 June 2022.

Electronic copies of the interim report will be available at the Company's website http://www.blackseapropertyplc.com

 
BLACK SEA PROPERTY PLC            simon.hudd@d3ainvestments.com 
 Simon Hudd, Chairman 
 
  PETERHOUSE CAPITAL LIMITED 
  AQSE Corporate Adviser 
  Heena Karani and Duncan Vasey     +44 (0) 20 7469 0930 
 

Market Abuse Regulation (MAR) Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).

Black Sea Property PLC

HALF-YEARLY REPORT

FOR THE SIX MONTH PERIODED

30 JUNE 2022

Contents

Chairman's Statement

Consolidated Statement of Comprehensive Income..... 4

Consolidated Statement of Financial Position.............. 5

Consolidated Statement of Changes in Equity ..................6

Consolidated Statement of Cash Flows........................ 7

Notes to the Financial Statements................................ 8

Chairman's Statement

As at 30 June 2022, the significant shareholders of Black Sea Property Plc ("the Company") were as follows:

 
 Beneficial shareholder        Holding   Percentage 
 Neo London Capital 
  Plc                      515,126,806       28.41% 
 Compass Capital JSC       304,354,182       16.78% 
 Mamferay Holdings 
  Limited                  449,957,562       24.81% 
 Capman AM                  92,000,000        5.07% 
 Interfund Investments 
  Plc                       89,500,000        4.94% 
 

The shareholder structure as at 31 December 2021 is the following:

 
 Beneficial shareholder        Holding   Percentage 
 Neo London Capital 
  Plc                      515,126,806       28.41% 
 Compass Capital JSC       304,354,182       16.78% 
 Mamferay Holdings 
  Limited                  449,957,562       24.81% 
 Capman AM                  92,000,000        5.07% 
 Interfund Investments 
  Plc                       89,500,000        4.94% 
 

Chairman's statement

I am pleased to present the unaudited interim financial statements of the Company for the six months ended 30 June 2022.

The unaudited net asset value as at 30 June 2022 was EUR24.3 million or 1.34 cents per share (30 December 2021: EUR24.9 million or 1.37 cents per share).

During the period, the Company generated revenues of EUR152,646 (June 2020: EUR207,147) which resulted in a loss before taxation of EUR553,150 (June 2021: EUR593,746). The results reflected other income of EUR106,798 (June 2021: EUR213,543), property operating expenses of EUR132,856 (June 2020: EUR271,863), other operating expenses of EUR458,473 (June 2021: EUR278,605) and interest payable and other charges of EUR215,287 (June 2020: EUR390,939). Loss per share amounted to EUR0.03 cents (June 2021: EUR0.03 cents).

Camping South Beach EOOD ("CSB")

Throughout 2022 CSB continued operating in the challenging environment marked by the far-reaching economic consequences of the war in Ukraine, as well as post Covid implications.

The company struggled to preserve its position as a destination for luxury camping holidays and beach houses in the significant political and economic uncertainty created by the Ukraine conflict, just when the COVID-19 pandemic started to recede.

Following the trend from the previous years, during the period CSB relied to a great extent on domestic demand for high-end luxury camping holidays. It has to be noted that, due to the relaxation of travelling Covid restrictions, many domestic tourists have chosen overseas holiday destinations which negatively influenced the expected occupancy levels.

Camping South Beach achieved occupancy levels of around 44% in July and 50% in August 2022. The occupancy levels reflect the overall economic uncertainty, the rapidly rising inflation levels due to energy and raw materials price increase.

Nevertheless, CSB has continued to provide hospitality services at highest standards in a safe environment.

Chairman's Statement (continued)

2022 marked the second active season under the Concession Agreement for the beach in front of the location, adding value to the property and enabling synergy with the camp site. The term of the Concession Agreement is 20 years. According to the Concession Agreement, the investment requirements for 2022 amount to EUR 76 182 and have been successfully fulfilled.

Thou gh the outcome for 2023 is unclear due to the severe international political situation, CSB will strive to strengthen its position and will benefit from its competitive advantage due to its prime location at the beachfront of one of the widest and most beautifully-preserved beaches on the Black Sea coast.

Ivan Vazov 1 Building

In April 2022 the company started reconstruction works for the historic Ivan Vazov building in central Sofia that is planned to be completed by the end of Q2 2023.

The building consists of a basement floor, five floors and an attic floor with total build-up area of 9 107 m2. The attic floor will be converted into a mansard floor with the reconstruction of the roof.

As the building is a historical monument (according to the National Institute of Cultural Monuments) not only the outside, but also the inside of the building with elements such as the columns, the profiled cornices, the figures of Atlanteans and the mask of Goddess on the façade and the iron ornamental wrought of the entrance doors will be renovated.

The Company is carrying out all of the works in line with the applicable regulations.

In parallel to the reconstruction process the renting out process of the premises will proceed.

Byala Plots of Land ("Byala")

The public procedure for the Urban Master Plan of Byala municipality region by the authorities has commenced, but the approval process is not yet finished.

The Company is planning the development of plots of land at Byala as a camping site with luxury bungalows, which is anticipated to be complementary to existing investments at CSB. The project will add value to the portfolio of the Company reflecting the high demand of close-to-nature camp sites offering a safe and secure environment for visitors.

Events after reporting date

Acquisition of Star Mil

Black Sea Property PLC, through its subsidiary has completed the purchase of a 100% stake in Star Mil EOOD, and acquired all outstanding loans due to its previous parent company, on 18 July 2022. The total consideration paid for Star Mil is approximately EUR 5.15 million. Star Mil owns the Black Sea Star hotel complex, located in a prime location on the Black Sea Coast, behind the Company's existing site at Camping Gradina. The rationale behind the investment is the opportunity for synergy and economy of scale with the joint development and management of Camping Gradina and Black Sea Star.

Chairman's Statement (continued)

The acquisition was part ialy financed through a loan from a leading Bulgarian commercial bank amounting to approximately EUR 4.2 million for the acquisition of all receivables of Star Mil. The funding was secured by a commercial mortgage on the property of Star Mil and the Company agreed to provide additional security to the bank in accordance with normal commercial practice. The Company financed the outstanding EUR 1 million of the consideration by way of cash.

Outlook

The impact of the severe political and economic situation due to the war in Ukraine, just when the Covid-19 pandemic started to recede will affect negatively all economic segments.

Energy and raw material prices have risen sharply, further accelerating inflationary pressures.

The Directors are taking cautious measures to diminish and manage the cash flow and cost base of the Company and are confident that the business is well equipped to withstand this near-term uncertainty .

The Company will follow its strategy to invest in real estate assets in Bulgaria and to develop and maintain its portfolio.

The Directors of the Company are responsible for the contents of this announcement.

Simon Hudd

Chairman

29 September 2022

Consolidated Statement of Comprehensive Income

for the period ended 30 June 2022

 
 
                                                     (Unaudited)   (Unaudited)      (Audited) 
                                                        6 months      6 months     Year ended 
                                                              to            to 
                                                         30 June       30 June    31 December 
                                                            2022          2021           2021 
                                             Notes           EUR           EUR            EUR 
 Total revenue 
 
 Revenue                                                 152,646       207,147      1,246,616 
 Property operating expenses                           (132,856)     (271,863)      (568,559) 
                                                    ------------  ------------  ------------- 
 Net rental and related income                            19,790      (64,716)        678,057 
                                                    ------------  ------------  ------------- 
 
 (Loss)/gain on revaluation of investment 
  properties                                             (3,430)      (60,674)        554,443 
 Net (loss)/gain on investment property                  (3,430)      (60,674)        554,443 
                                                    ------------  ------------  ------------- 
 
 
 Administration and other expenses             6       (458,473)     (278,605)      (858,290) 
 Total operating (loss)/profit                         (442,113)     (403,995)        374,210 
                                                    ------------  ------------  ------------- 
 
 Operating (loss)/profit before interest 
  and tax 
 Other income                                  7         106,798       213,543      1,287,782 
 Losses from investments accounted 
  for using the equity method                            (2,548)      (12,355)       (14,765) 
 Profit from disposal of subsidiary                            -             -      1,718,367 
 Interest payable and similar charges                  (215,287)     (390,939)      (825,739) 
 (Loss)/profit before tax                              (553,150)     (593,746)      2,539,855 
 
 Tax expense                                            (62,266)             -       (53,471) 
 
 (Loss)/profit and total comprehensive 
  income for the period                                (615,416)     (593,746)      2,486,384 
                                                    ============  ============  ============= 
 
 (Loss)/Profit and total comprehensive 
  income attributable to the: 
 - shareholders of the parent company                  (615,416)     (552,335)      2,537,817 
 - non-controlling interest                                    -      (41,411)       (51,433) 
 
 (Loss)/earnings per share 
 Basic & Diluted(loss)/earnings per 
  share (cents)                                8          (0,03)        (0,03)           0,14 
 
 

The notes form an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 29 September 2022

and were signed on their behalf by:

Chairman Director

Simon Hudd Ventsislava Altanova

Consolidated Statement of Financial Position at 30 June 2022

 
                                                 (Unaudited)       (Audited) 
                                                     30 June     31 December 
                                                        2022            2021 
                                       Notes             EUR             EUR 
 Non-current assets 
 Investment properties                  10        38,211,523      38,144,730 
 Intangible assets                      11           606,685         513,377 
 Property, plant and equipment                        31,477          24,883 
 Trade and other receivables            12           806,600               - 
 Investment in associate                                   -           2,548 
 Total non-current assets                         39,656,285      38,685,538 
                                              --------------  -------------- 
 
 Current assets 
 Trade and other receivables            12         5,803,160       4,906,752 
 Cash and cash equivalents                         1,508,693         326,188 
 Total current assets                              7,311,853       5,232,940 
                                              --------------  -------------- 
 
 Total assets                                     46,968,138      43,918,478 
                                              ==============  ============== 
 
 Equity and liabilities 
 Issued share capital                             70,699,442      70,699,442 
 Retained deficit                               (44,851,522)    (44,236,106) 
 Foreign exchange reserve                        (1,533,086)     (1,533,086) 
                                              --------------  -------------- 
 Total equity                                     24,314,834      24,930,250 
                                              --------------  -------------- 
 
 Non-current liabilities 
 Bank loans                             14        14,702,657      14,521,076 
 Trade payables                         15           550,680         560,615 
 Deferred tax liability                  9         1,949,249       1,944,802 
                                              --------------  -------------- 
 Total non-current liabilities                    17,202,586      17,026,493 
                                              --------------  -------------- 
 
 Current liabilities 
 Bank loans                             14         2,009,388       1,768,735 
 Related party payables                 16         2,520,518               - 
 Trade payables                         15           920,812         193,000 
 Total current liabilities                         5,450,718       1,961,735 
                                              --------------  -------------- 
 
 Total liabilities                                22,653,304      18,988,228 
                                              --------------  -------------- 
 
 Total equity and liabilities                     46,968,138      43,918,478 
                                              ==============  ============== 
 
 
 Number of ordinary shares in issue            1,813,323,603   1,813,323,603 
 NAV per ordinary share (cents)         17              1.34            1.37 
 

The notes form an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 29 September 2022

and were signed on their behalf by:

Chairman Director

Simon Hudd Ventsislava Altanov

Consolidated Statement of Changes in Equity for the period ended 30 June 2022

 
                                   Share       Retained        Foreign     Total equity   Non-controlling        Total 
                                 capital       earnings       currency     attributable         interests 
                                                           translation    to the parent 
                                                               reserve          company 
                                     EUR            EUR            EUR              EUR               EUR          EUR 
 
 At 1 January 2021            70,699,442   (46,773,922)    (1,533,086)       22,392,434       (3,065,234)   19,327,199 
 
 Profit for the period                 -      (552,335)              -        (552,335)          (41,411)    (593,746) 
                             -----------  -------------  -------------  ---------------  ----------------  ----------- 
 Total comprehensive income            -      (552,335)              -        (552,335)          (41,411)    (593,746) 
                             -----------  -------------  -------------  ---------------  ----------------  ----------- 
 At 30 June 2021 
  (unaudited)                 70,699,442   (47,326,257)    (1,533,086)       21,840,099       (3,106,645)   18,733,454 
                             -----------  -------------  -------------  ---------------  ----------------  ----------- 
 
 At 1 January 2021            70,699,442   (46,773,922)    (1,533,086)       22,392,434       (3,065,234)   19,327,199 
 
 Business disposal                     -              -              -                -         3,116,667    3,116,667 
                             -----------  -------------  -------------  ---------------  ----------------  ----------- 
 Transactions with owners              -              -              -                -         3,116,667    3,116,667 
 Profit for the year                   -      2,537,817              -        2,537,817          (51,433)    2,486,384 
 Total comprehensive income            -      2,537,817              -        2,537,817          (51,433)    2,486,384 
                             -----------  -------------  -------------  ---------------  ----------------  ----------- 
 At 31 December 2021 
  (audited)                   70,699,442   (44,236,106)    (1,533,086)       24,930,250                 -   24,930,250 
                             ===========  =============  =============  ===============  ================  =========== 
 
 At 1 January 2022            70,699,442   (44,236,106)    (1,533,086)       24,930,250                 -   24,930,250 
 
 Profit for the period                 -      (615,416)              -        (615,416)                 -    (615,416) 
 Total comprehensive income            -      (615,416)              -        (615,416)                 -    (615,416) 
                             -----------  -------------  -------------  ---------------  ----------------  ----------- 
 At 30 June 2022 
  (unaudited)                 70,699,442   (44,851,522)    (1,533,086)       24,314,834                 -   24,314,834 
                             ===========  =============  =============  ===============  ================  =========== 
 

The notes form an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 29 September 2022

and were signed on their behalf by:

Chairman Director

Simon Hudd Ventsislava Altanova

Consolidated Statement of Cash Flows

for the period ended 30 June 2022

 
                                                    (Unaudited)    (Unaudited)     (Audited) 
                                                    6 months to    6 months to    Year ended 
                                                   30 June 2022   30 June 2021   31 December 
                                                                                        2021 
                                                            EUR            EUR           EUR 
 
 Operating activities 
 (Loss)/profit before tax                             (553,150)      (593,746)     2,539,855 
 
 Profit from disposal of subsidiaries                         -              -   (1,718,367) 
 Loss from disposal of investment property                    -              -       192,788 
 Loss/(gain) on revaluation of investment                                          ( 554,443 
  properties                                              3,430         60,674             ) 
 Loss from investments accounted for 
  using the equity method                                 2,548         12,355        14,765 
 Impairment of intangible fixed assets                (142,499)              -       142,499 
 Amortization of intangible fixed assets                 49,191              -             - 
 Depreciation of property, plant and 
  equipment                                               1,586              -         2,899 
 Other income                                          (94,882)      (213,543)   (1,277,756) 
 Finance expense                                        215,288        390,939       825,739 
 Changes in the working capital                       (518,488)      (343,321)       167,979 
 Decrease/(increase) in receivables                   (254,811)         19,310     (238,422) 
 (Decrease)/increase in payables                        715,094        226,315     (940,143) 
 Cash used in operation                                (58,205)       (97,696)   (1,010,586) 
 Net cash outflow from operating activities            (58,205)       (97,696)   (1,010,586) 
 
 Investing activities 
 Investment property additions and acquisitions     (1,526,600)      (294,298)     (673,764) 
 Proceeds from sale of investment property                    -      1,000,000     1,270,800 
 Loans granted                                         (29,235)       (89,936)             - 
 Loan repayments                                         38,244        153,259             - 
 Interest received                                       84,466        208,660     1,277,756 
 Cash held by the (disposed)/acquired 
  subsidiary                                                  -              -      (32,923) 
 Net cash (outflow)/ from investing 
  activities                                        (1,433,125)        977,685     1,841,869 
 
 Financing activities 
 Interests paid and other charges                     (215,943)      (316,333)     (575,027) 
 Loans received                                       2,939,083        400,000             - 
 Loan repayment                                               -      (407,363)     (272,286) 
 Other flows from financing activities                 (49,305)        (5,348)      (27,979) 
 Net cash inflow/(outflow) from financing 
  activities                                          2,673,835      (329,044)     (875,292) 
 
 Net increase/(decrease) in cash and 
  cash equivalents                                    1,182,505        550,945      (44,009) 
 
 Cash and cash equivalents at beginning 
  of period                                             326,188        370,197       370,197 
 
 Cash and cash equivalents at end of 
  period                                              1,508,693        921,142       326,188 
                                                  =============  =============  ============ 
 

The notes form an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 29 September 2022

and were signed on their behalf by:

Chairman Director

Simon Hudd Ventsislava Altanova

Notes to the Financial Statements for the period ended 30 June 2022

   1.   General information 

Black Sea Property Plc (the Company) is a company incorporated and domiciled in the Isle of Man whose shares are publicly traded on the Aquis Stock Exchange in London.

   2.   Statement of compliance 

These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year-ended 31 December 2021.

The consolidated financial statements of the Group as at and for the year ended 31 December 2021 are available upon request from the Company's registered office at 6th Floor, Victory House, Prospect Hill, Douglas, Isle of Man or at www.blackseapropertyplc.com.

These interim consolidated financial statements were approved by the Board of Directors on 29 September 2022.

   3.   Significant accounting policies 

The accounting policies applied in these interim financial statements, except for the ones listed below, are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2021.

   4.   Financial risk management policies 

The principal risks and uncertainties are consistent with those disclosed in preparation of the Group's annual financial statements for the year ended 31 December 2021.

   5.   Disposal of ECDC group 

On 30 September 2021, the Company successfully completed the disposal of 100% of European Convergence Development (Cayman) Limited ("ECD Cayman") and ECD Management (Cayman) Limited ("ECD Management"). The consideration receivable for ECD Cayman and ECD Management in total is EUR4,500,000. Both companies were subsidiaries of Black Sea Property PLC.

The fair value of assets and liabilities disposed were as follows:

 
                                        EUR 
 Investment properties            3,585,404 
 Trade and other receivables        723,333 
 Cash and cash equivalents           32,923 
 Trade payables                    (20,224) 
 Loan payables                  (4,632,418) 
                               ------------ 
 Net identifiable assets          (310,982) 
                               ------------ 
 

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

   5.    Disposal of ECDC group (continued ) 

The profit on disposal of the ECD Cayman group is presented as follows:

 
                                       EUR 
 Net identifiable assets         (310,982) 
 FX differences on disposal       (24,052) 
 Non-controlling interest        3,116,667 
 Consideration receivable      (4,500,000) 
                              ------------ 
                                 1,718,367 
                              ------------ 
 
   6.   Administration and other expenses 
 
                                             (Unaudited)   (Unaudited)     (Audited) 
                                                6 months      6 months    Year ended 
                                                      to            to 
                                                 30 June       30 June   31 December 
                                                    2022          2021          2021 
                                                     EUR           EUR           EUR 
 
 Directors' remuneration                          27,818        23,595        62,101 
 Investment advisory fees                        107,358       107,136       214,272 
 Legal and professional fees                     309,746       106,815       378,988 
 Other administration and sundry expenses         13,551        41,059       202,929 
                                                 458,473       278,605       858,290 
                                            ------------  ------------  ------------ 
 
   7.   Other income 
 
                                            (Unaudited)   (Unaudited)     (Audited) 
                                               6 months      6 months    Year ended 
                                                     to            to 
                                                30 June       30 June   31 December 
                                                   2022          2021          2021 
                                                    EUR           EUR           EUR 
 
 Interest income - receivable balances           94,882       113,371     1,277,756 
 Reversal of fair value adjustment of                 -        96,223             - 
  CSB acquisition receivable balance 
 Reintegration of expected credit losses              -         3,950             - 
 Others                                          11,916             -        10,026 
                                                106,798       213,543     1,287,782 
                                           ------------  ------------  ------------ 
 

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

   8.   (Loss)/earnings per share 

The basic (loss)/earnings per ordinary share is calculated by dividing the net (loss)/profit attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the period.

 
                                              (Unaudited)     (Unaudited)       (Audited) 
                                                 6 months        6 months      Year ended 
                                                       to              to 
                                                  30 June         30 June     31 December 
                                                     2022            2021            2021 
                                                      EUR             EUR             EUR 
 
 (Loss)/earnings attributable to owners 
  of parent EUR                                 (615,416)       (552,335)       2,537,871 
 Weighted average number of ordinary 
  shares in issue                           1,813,323,603   1,813,323,603   1,783,601,434 
 Basic (loss)/earnings per share (cents)           (0.03)          (0.03)            0.14 
                                           --------------  --------------  -------------- 
 

The Company has no potential dilutive ordinary shares; the diluted (loss)/earnings per share is the same as the basic (loss)/earnings per share.

   9.   Taxation 

Isle of Man

There is no taxation payable on the Company's or its Jersey subsidiaries' results as they are based in the Isle of Man and in Jersey respectively where the Corporate Income Tax rates for resident companies are 0% (2021: 0%). Additionally, neither the Isle of Man nor Jersey levies tax on capital gains.

Consequently, shareholder's resident outside of the Isle of Man and Jersey will not incur any withholding tax in those jurisdictions on any distributions made to them.

Bulgaria

Subsidiaries of the Company incorporated in Bulgaria are taxed in accordance with the applicable tax laws of Bulgaria. The Bulgarian corporate tax rate for the year was 10% (2021: 10%).

No deferred tax assets are recognised on trading losses in the subsidiary companies as there is significant uncertainty as to whether sufficient future profits will be available in order to utilise these losses.

A reconciliation of the tax charge for the year to the standard rate of corporation tax for the Isle of Man of 0% (2021: 0%) is shown below.

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

   9.   Taxation (continued) 
 
                                                 (Unaudited)      (Audited) 
                                                     30 June    31 December 
                                                                       2021 
                                                        2021            EUR 
 
                                                         EUR 
---------------------------------------------  -------------  ------------- 
 (Loss)/Profit before tax                          (553,150)      2,539,855 
---------------------------------------------  -------------  ------------- 
 
 Profit on ordinary activities multiplied by               -              - 
  the standard rate in the Isle of Man of 0% 
  (2021: 0%) 
 Effect of different tax rates in different 
  countries                                           57,819         50,468 
 Deferred tax liability movement                       4,447          3,003 
---------------------------------------------  -------------  ------------- 
 Current charge for the year                          62,266         53,471 
---------------------------------------------  -------------  ------------- 
 
 Bulgarian tax losses brought-forward at 10%       (183,943)      (190,958) 
 Tax losses utilised in the year                           -          7,015 
---------------------------------------------  -------------  ------------- 
 Bulgarian tax losses carried-forward at 10%       (183,943)      (183,943) 
---------------------------------------------  -------------  ------------- 
 
 Deferred tax liability 
 Opening deferred tax liability balance            1,944,802      1,941,799 
 Deferred tax liability on fair value uplift 
  of investment property on 
  Acquisition/(disposal) of a subsidiary                   -       (34,860) 
 Bulgarian deferred tax liability charge               4,447          3,063 
 Deferred tax liability on fair value uplift 
  of investment property                                   -         34,800 
 Closing deferred tax liability balance            1,949,249      1,944,802 
---------------------------------------------  -------------  ------------- 
 

10. Investment properties

 
                              (Unaudited)     (Audited) 
                                  30 June   31 December 
                                     2022          2021 
                                      EUR           EUR 
 Beginning of year             38,144,730    42,360,142 
 Additions                         70,223        66,287 
 Disposals                              -   (4,836,142) 
 Fair value adjustment            (3,430)       554,443 
                             ------------  ------------ 
 Total investment property     38,211,523    38,144,730 
                             ------------  ------------ 
 
 Ivan Vazov 1 Building         11,251,523    11,184,730 
 Camp South Beach              16,230,000    16,230,000 
 Byala Land                    10,730,000    10,730,000 
 Total investment property     38,211,523    38,144,730 
                             ------------  ------------ 
 

The Directors confirm that there are no material changes in the valuation of investments as of 30 June 2022.

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

10. Investment properties (continued)

With the prior year sale of the ECD group, the group disposed of the three plots in Plovdiv (through European Convergence Development (Malta) Limited) and the two plots in Burgas with a fair value of EUR4,836,142.

The valuations of the other Group properties at 31 December 2021 were based on the most recent independent valuation received for each property. The valuations were performed by external accredited independent valuers with recognised professional qualifications and with recent experience in the location and category of the investment properties being valued.

The fair value of completed investment property has been determined on a market value basis in accordance with the RICS "Red Book". In arriving at their estimates of market values, the valuers have used their market knowledge and professional judgement, historical transactional comparables and discounted cash flow forecasts. The highest and best use of the investment properties is not considered to be different from its current use.

The cost of the investment properties comprises their purchase price and directly attributable expenditure. Directly attributable expenditure includes professional fees for legal services and stamp duty land tax.

   11.   Intangible assets 

At the end of 2020, after participating in an open concession award procedure, the Group through Camping South Beach received the concession rights over the sea beach "Camping Gradina". During the active summer season of 2021, the beach is managed by CSB under the terms of a lease agreement. The concession agreement enters into force on 17.10.2020, and at the beginning of 2021 the handover of the sea beach by the grantor Ministry of Tourism to the concessionaire was carried out. The term of the contract is 20 years. The concession contract of CSB grants the right to operate the sea beach, performing alone or through subcontractors providing visitors to the sea beach of the following services: beach services, including the provision of umbrellas and sunbeds, services in fast food restaurants, sports and entertainment services, water attraction services, health and rehabilitation services and other events, after prior agreement with the grantor. A condition for operation of the concession site is the implementation of mandatory activities, which include provision of water rescue activities, security of the adjacent water area, health and medical services for beach users, sanitary and hygienic maintenance of the beach, maintenance for use of the elements of

the technical infrastructure, the temporary connections, the movable objects, the facilities and their safe functioning.

In 2020 the Group has paid the first due concession fee, which provides the period from the date of entry into force of the concession agreement until the end of the same calendar year and the period from January 1 of the last calendar year in which the concession agreement is valid until the date upon expiration of the contract.

According to the financial model presented by the Company, which is accepted by the grantor and is an integral part of the concession agreement, for the concession period the Group will make additional investments related to the implementation of mandatory activities and investments to improve access to the beach. After the expiration of the concession contract, all constructed sites remain the property of the grantor. The activities related to the operation of the concession site are performed by the concessionaire at his risk and at his expense. The cost of the acquired intangible assets was EUR655,876 and no amortization expenses were recognized in 2020. During the prior year, the acquired intangible asset was impaired by EUR142,499 however the impairment of EUR142,499 was fully reversed in the current period. The acquired intangible asset was amortized by EUR49,191 in the current period.

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

12. Trade and other receivables

Non-current trade and other receivables can be presented as follows:

 
                      (Unaudited)     (Audited) 
                          30 June   31 December 
                             2022          2021 
                              EUR           EUR 
 
 Trade receivables*       806,600             - 
                          806,600             - 
                     ------------  ------------ 
 

The current trade and other receivables can be presented as follows:

 
                                                (Unaudited)     (Audited) 
                                                    30 June   31 December 
                                                       2022          2021 
                                                        EUR           EUR 
 
 Trade receivables*                               1,285,750       406,729 
 Amount receivable from the sale of the ECDC 
  group                                           4,500,000     4,500,000 
 Prepayments                                         17,410            23 
                                                  5,803,160     4,906,752 
                                               ------------  ------------ 
 

*All amounts are due within one year. The expected credit losses (ECL) for this amount is nil.

13. Issued share capital

 
                                   (Unaudited)      (Audited) 
   Authorised                            As at          As at 
                                       30 June    31 December 
                                          2022           2021 
 Founder shares of no par value             10             10 
 Founder shares of no par value      Unlimited      Unlimited 
 
 
 
   Issued and fully paid                                 EUR          EUR 
 2 Founders shares of no par value (2021: 2)               -            - 
 1,813,323,603 ordinary shares of no par value 
  (2021: 1,813,323,603)                           70,699,442   70,699,442 
 

The Founders shares do not carry any rights to dividends or profits and on liquidation they will rank behind Shares for the return of the amount paid up on each of them. The shares carry the right to receive notice of and attend general meetings, but carry no right to vote thereat unless there are no Participating Shares in issue.

Capital management

The Directors consider capital to be the net assets of the Group. The capital of the Company will be managed in accordance with the Investment Strategy documented on the Company's website.

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

14. Bank Loans

 
                                   (Unaudited)                (Audited) 
                                       30 June              31 December 
                                          2022                     2021 
                                           EUR                      EUR 
 
 Loan from UniCredit (a & b)         7,421,345                7,016,178 
 Central Cooperative Bank (c)        9,290,700                9,273,633 
--------------------------------  ------------  ----------------------- 
                                    16,712,045               16,289,811 
                                  ------------  ----------------------- 
 Long term bank loans               14,702,657               14,521,076 
 Current bank loans                  2,009,388                1,768,735 
                                  ------------  ----------------------- 
 
 Reconciliation of bank loans 
 Beginning of year (gross loan)     16,289,811               17,385,138 
 Bank loan arrangement fees           (49,305)                        - 
 Interest charged                      248,399                  541,883 
 Loan received                         439,083                        - 
 Principal repayments                        -              (1,062,183) 
 Interest payments                   (215,943)                (575,027) 
 Total bank loans                   16,712,045               16,289,811 
--------------------------------  ------------  ----------------------- 
 

a) In October 2017, the Company entered into a secured debt funding of EUR7 million from UniCredit Bulbank AD ("UniCredit"), a leading Bulgarian commercial bank which was used to complete the acquisition of the Ivan Vazov 1 Building. The debt funding from UniCredit is secured by a commercial mortgage on the property valued at EUR11,251,523 (see note 10). The term of the debt funding is thirty-six months from date of execution of the loan documentation. The repayment shall be made as a one-off payment on the repayment deadline. The company renegotiated the terms of the loan, extending the repayment period until 30 November 2033 and changed the margin to the interest rate to 2%.

b) In November 2021, the Company entered into a secured debt funding of up to EUR2.3 million from UniCredit Bulbank AD ("UniCredit"), a leading Bulgarian commercial bank which was used to partly finance the construction costs for the planned renovation of the roof and overhaul of the administrative building known as the Ivan Vazov 1 Building. The secured debt funding is made up of an investment limit of up to EUR1.8 million and a revolving limit of up to EUR0.5 million. The debt funding from UniCredit is secured by a commercial mortgage on the property valued at EUR11,251,523 (see note 10). The debt funding is also secured by a first rank pledge of all the receivables, claims, rights and interests, both current and future, of the company along with a second ranking registered pledge of the commercial enterprise of the company and a second ranking pledge of 100% of the shares of the capital of the company. The utilization deadline of EUR1.5 million of the investment limit is no later than 30 November 2023 while the utilization deadline of the remaining EUR0.3 million is no later than 30 November 2024. There is a grace period on the repayment of the principal amount due until 30 November 2023. After this date the principal will be

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

14. Bank Loans (continued)

repaid in equal monthly instalments. Interest is also repayable monthly with no grace period agreed. The repayment period is up until 30 November 2033. The utilization deadline of EUR0.5 million of the revolving limit is no later than 30 November 2023.The repayment of the revolving limit is made within 6 months of each utilized amount and the repayment period is up until 30 May 2024.

The interest on the loan is the average deposit interest of the bank plus 2.00% (2021: 2.00%).

   a)    Central Cooperative bank loan and overdraft 
 
                                             (Unaudited)     (Audited) 
                                                 30 June   31 December 
                                                    2022          2021 
                                                     EUR           EUR 
 
 Central Cooperative Bank overdraft (i)          665,381       662,737 
 Central Cooperative Bank overdraft (ii)       7,073,251     6,938,614 
 Central Cooperative Bank investment loan 
  (ii)                                         1,552,068     1,672,282 
                                            ------------  ------------ 
                                               9,290,700     9,273,633 
                                            ------------  ------------ 
 

(i) This is an overdraft with Central Cooperative Bank. The interest on the account is 4% and was repayable on 24 June 2020 however the terms of the contract were extended to 24 June 2021. At the date these financial statements were signed the Company made an extension of the credit repayment period by 12 months.5

(i) The interest rate on the overdraft and the investment loan is 3.6%. The maturity date for both the overdraft and the investment loan is 21 January 2028.

In March 2020, the Group successfully negotiated reduction of the interest rates on the loans due to Central Cooperative Bank to 2.8%. The loan is secured by the commercial property of South Beach (Gradina) Camp which includes all the tangible fixed assets of the property along with the mortgage on the land.

15. Trade and other payables

Non-current trade and other payables can be presented as follows:

 
                       (Unaudited)     (Audited) 
                           30 June   31 December 
                              2022          2021 
                               EUR           EUR 
 
 Concession payable        550,680       560,615 
                           550,680       560,615 
                      ------------  ------------ 
 

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

15. Trade and other payables (continued)

The current trade and other payables can be presented as follows:

 
                       (Unaudited)     (Audited) 
                           30 June   31 December 
                              2022          2021 
                               EUR           EUR 
 
 Trade creditors            57,394        23,074 
 Concession payable         23,365        23,008 
 Other payables          1,727,194       146,918 
                      ------------  ------------ 
                         1,807,953       193,000 
                      ------------  ------------ 
 

16. Related party transactions

In the current year, the Group obtained a short-term loan of EUR 2,500,000 from Neo London Capital AD at a fixed interest rate of 4.25% and due in September 2022. At the end of the period the amount payable on the loan amounted to EUR2,520,518 (2021: EURnil).

In July 2017, the Company appointed Phoenix Capital Management JSC as its investment adviser with responsibility for advising on the investment of the Company's property portfolio. Phoenix Capital Holding Plc owns 79.99% of the Phoenix Capital Management JSC shares. Phoenix Capital Holding Plc, through its wholly owned subsidiary Mamferay Holdings Ltd, holds 24.81% (31.12.2020: 24.81%) of the issued share capital of the Company. Phoenix Capital Management JSC received fees of EUR107,358 (2021: EUR214,272). The amount outstanding as at 30.06.2022 is EUR 160,926 (31.12.2021: EUR53,568).

17. Net asset value per share

 
                                                      (Unaudited)     (Unaudited) 
                                                          30 June         30 June 
                                                             2022            2021 
                                                              EUR             EUR 
 
 Net assets attributable to owners of the parent 
  (EUR)                                                24,314,834      24,930,250 
 Number of ordinary shares outstanding              1,813,323,603   1,813,323,603 
 Net Asset Value (cents)                                     1.34            1.37 
                                                   --------------  -------------- 
 

18. Events after reporting date

Lending agreed for the acquisition of Star Mil EOOD, UIC

Black Sea Property PLC entered into lending terms with a leading Bulgarian commercial bank for payment of part of the price for the acquisition of all receivables of Star Mil EOOD, UIC ("Star Mil").

The bank agreed to lend the Company up to BGN 8,150,000 (approximately EUR 4.2 million) for payment of part of the price for the acquisition of all receivables of Star Mil. The funding was secured by a commercial mortgage on the property of Star Mil and the Company agreed to provide additional security to the bank in accordance with normal commercial practice. The Company shall further finance the acquisition of Star Mil by way of a cash investment amounting to EUR 1 million.

Notes to the Financial Statements for the period ended 30 June 2022 (continued)

18. Events after reporting date (continued)

Acquisition of Star Mil EOOD, UIC

Black Sea Property PLC purchased 100% stake in Star Mil EOOD, UIC ("Star Mil") and acquired all outstanding loans due to its previous parent company, on 18 July 2022. The total consideration paid for Star Mil was approximately EUR5.15 million. Star Mil owns the Black Sea Star hotel complex, located in a prime location on the Black Sea Coast, behind the Company's existing site at Camping Gradina. The Acquisition of Star Mil provides opportunities for synergies and economies of scale with the joint development and management of Camping Gradina and Black Sea Star.

The Acquisition was part financed through a loan from a leading Bulgarian commercial bank amounting to BGN 8,150,000 (approximately EUR 4.2 million) for the acquisition of all receivables of Star Mil. The Company financed the outstanding EUR 1 million of the consideration by way of cash.

Renegotiation of terms with Neo London Capital AD

Black Sea Property PLC entered into discussions with Neo London Capital AD with the aim of extending the terms of the loan agreement. The aim is to extend the term of the loan from being repayable in September 2022 to being repayable on or before 31 March 2023. The loan amount and fixed repayment rate will not be changed. Black Sea Property PLC are in advanced stages of the negotiations and the Directors are confident that a positive agreement will be reached.

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END

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(END) Dow Jones Newswires

September 30, 2022 05:07 ET (09:07 GMT)

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