Interim / Quarterly Report • Sep 27, 2024
Interim / Quarterly Report
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INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS for the period 1 January 2024 to 30 June 2024
| Board of Directors and other officers | 1 |
|---|---|
| Interim report of the Board of Directors | 2 - 3 |
| Interim statement of profit or loss and other comprehensive income | 4 |
| Interim statement of financial position | 5 |
| Interim statement of changes in equity | 6 |
| Interim cash flow statement | 7 |
| Notes to the interim financial statements | 8 - 14 |
| Board of Directors: | Nayia Morphi - Executive member Maria Demetriou - Non-executive member Zoe Christou Tziortzi - Non-executive member |
|---|---|
| Company Secretary: | Omniserve Ltd 17-19 Themistokli Dervi Street The City House 1066, Nicosia Cyprus |
| Legal Advisers: | Ioannides Demetriou LLC 17-19 Themistokli Dervi Street The City House 1066, Nicosia Cyprus |
| Registered office: | 33 Vasilissis Freiderikis Palais D'Ivoire, Floor 2 1066, Nicosia Cyprus |
| Bankers: | Astrobank Limited 1, Spyrou Kyprianou Avenue 1065, Nicosia Cyprus |
| Piraeus Bank (Greece) S.A. 4 Amerikis street 105 64 Athens Greece |
|
| Registration number: | HE420422 |
The Board of Directors presents its management report and financial statements of Phoenix Vega Mezz PLC (the "Company") for the period 1 January 2024 to 30 June 2024.
The Company Phoenix Vega Mezz Plc was incorporated in Cyprus on 12 April 2021 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. On 21 July 2021, the Company was renamed from Phoenix Vega Mezz Ltd to Phoenix Vega Mezz PLC and was transformed to a public limited liability company under the provisions of the Cyprus Companies Law.
On 12 August 2021, the shares of the Company were listed in the Alternative Market EN.A. Plus of the Athens Stock Exchange.
The principal activity of the Company, which remains unchanged from last year, is the holding and management of the following notes (the "Νotes"):
On the issuance of the notes, a Priority of Payments Schedule ("Waterfall'') was established, which is settled on a quarterly basis. Based on this schedule, the principal repayments regarding the mezzanine and junior notes are the last ones in the order of priority. The Waterfall is as follows:
The contractual documents of the securitizations stipulate that after 24 months from the entry into force of the HAPS, if at the date of payment of interest on the mezzanine notes, the total net collections from the beginning of the portfolio servicing is falling short 15% or more from the budgeted net collections, as specified in the respective business plan, the payment of the total (100%) of the interest payable at the relevant date to the holders of the mezzanine notes is postponed.
The deferred interest is payable on the first interest payment date of the mezzanine notes at which, either the Senior notes' principal has been repaid in full, or the balance between actual and budgeted net collections has been fully restored, subject to funds being available for the payment of the interest of the mezzanine notes, otherwise on the following determined date for the payment of interest on the mezzanine notes.
In the aforementioned context, the interest to the holders of the mezzanine notes issued by Vega III NPL Finance DAC was deferred for Q1 and Q2 of 2024. The deferred interest payments will be restored once the respective conditions referred to in the previous paragraph are met.
For the period from 1 January 2024 to 30 June 2024, the Company received coupon payments of €6,801,426 in relation to the notes it holds (30 June 2023: €10,295,831).
Following the update of the business plans of the securitized portfolios, the fair value of financial assets measured at fair value through profit or loss increase in the current period was primarily attributable to the revision of the estimated future cash flows of the notes.
The Company's development to date, financial results, and position as presented in the financial statements are considered satisfactory.
During August 2024, the company received coupon payments of €2,364,591.
On 5 July 2024, during the Company's Annual General Meeting "AGM", the shareholders approved the proposal of the Board of Directors to reduce the share capital of the Company by €16,004,700.53 by reducing the nominal value of the entire shares from €0.0212 each to €0.0084 each. The capital reduction is expected to be completed in the fourth quarter of the financial year 2024.
Disclosed in note 15 of the financial statements.
By order of the Board of Directors,
Omniserve Ltd Secretary
27 September 2024
for the period 1 January 2024 to 30 June 2024
| Note | 01/01/2024- 30/06/2024 € |
01/01/2023- 30/06/2023 € |
|
|---|---|---|---|
| Interest income | 4 | 3,249,788 | 4,977,359 |
| Net gains/(losses) from financial assets at fair value through profit or loss Net gains/(losses) from adjustments on investments at amortised cost |
9 | 47,841,068 2,090,249 |
2,014,720 - |
| Impairment (losses)/releases on investments at amortised cost | 8 | (266,151) | - |
| Total net income | 52,914,954 | 6,992,079 | |
| Administration expenses | 5 | (219,752) | (186,983) |
| Operating profit | 52,695,202 | 6,805,096 | |
| Finance income | 188,981 | 14,268 | |
| Finance cost Net finance income |
6 | (868) 188,113 |
(1,112) 13,156 |
| Profit before tax | 52,883,315 | 6,818,252 | |
| Tax | (376,329) | (336,281) | |
| Net profit for the period | 52,506,986 | 6,481,971 | |
| Other comprehensive income | - | - | |
| Total comprehensive income for the period | 52,506,986 | 6,481,971 | |
| 4.20 | 0.52 | ||
| Profit per share attributable to equity holders (cent) | 7 |
The notes on pages 8 to 14 form an integral part of these financial statements.
| ASSETS | Note | 30/06/2024 € |
31/12/2023 € |
|---|---|---|---|
| Non-current assets Investments at amortized cost Financial assets at fair value through profit or loss |
8 9 |
8,855,438 70,181,177 |
6,394,996 26,528,091 |
| Current assets Other receivables Refundable taxes Cash and cash equivalents |
10 11 |
79,036,615 - 234,127 21,148,202 |
32,923,087 33,768 364,646 14,363,858 |
| Total assets EQUITY AND LIABILITIES |
21,382,329 100,418,944 |
14,762,272 47,685,359 |
|
| Equity Share capital Retained earnings Total equity |
12 | 26,507,785 73,584,739 100,092,524 |
26,507,785 21,077,753 47,585,538 |
| Current liabilities Trade and other payables Current tax liabilities Total liabilities |
13 14 |
124,420 202,000 326,420 |
99,821 - 99,821 |
| Total equity and liabilities | 100,418,944 | 47,685,359 |
The notes on pages 8 to 14 form an integral part of these financial statements.
| Note | Share capital € |
Retained earnings € |
Total € |
|
|---|---|---|---|---|
| Opening balance as at 1 January 2023 | 44,513,073 | 9,884,996 | 54,398,069 | |
| Net profit for the period | - | 6,481,971 | 6,481,971 | |
| Total comprehensive income for the period | - | 6,481,971 | 6,481,971 | |
| Balance as at 30 June 2023 | 12 | 44,513,073 | 16,366,967 | 60,880,040 |
| Opening balance as at 1 January 2024 | 26,507,785 | 21,077,753 | 47,585,538 | |
| Net profit for the period | - | 52,506,986 | 52,506,986 | |
| Total comprehensive income for the period | - | 52,506,986 | 52,506,986 | |
| Balance as at 30 June 2024 | 12 | 26,507,785 | 73,584,739 100,092,524 |
Companies, which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, within two years after the end of the relevant tax year, will be deemed to have distributed this amount as dividend on the 31 of December of the second year. The amount of the deemed dividend distribution is reduced by any actual dividend already distributed by 31 December of the second year for the year the profits relate. The Company pays special defence contribution on behalf of the shareholders over the amount of the deemed dividend distribution at a rate of 17% (applicable since 2014) when the entitled shareholders are individual tax residents of Cyprus and have their domicile in Cyprus. In addition, the Company pays on behalf of the shareholders General Healthcare System (GHS) contribution at a rate of 2.65%, when the entitled shareholders are individual tax residents of Cyprus, regardless of their domicile.
The notes on pages 8 to 14 form an integral part of these financial statements.
| 01/01/2024- 30/06/2024 |
01/01/2023- 30/06/2023 |
||
|---|---|---|---|
| Note | € | € | |
| CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: |
52,883,315 | 6,818,252 | |
| Net (gains)/losses from financial assets at fair value through profit of loss Net (gains)/losses from adjustments on investments at amortised cost Impairment losses on investments at amortised cost |
(47,841,068) (2,090,249) 266,151 |
(2,014,720) - - |
|
| Interest income from financial assets at amortized cost | 4 | (636,344) | (768,159) |
| Interest income from financial assets at fair value through profit or loss Interest income from bank deposits |
4 6 |
(2,613,444) (188,981) |
(4,209,199) (14,268) |
| (220,620) | (188,094) | ||
| Changes in working capital: Increase/(decrease) in trade and other payables |
24,599 | (15,743) | |
| Coupons received | 6,801,426 | 10,295,831 | |
| Cash generated from operations before income tax payments | 6,605,405 | 10,091,994 | |
| Tax paid | (5,942) | (4,281) | |
| Net cash generated from operating activities | 6,599,463 | 10,087,713 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Interest received from bank deposits | 184,881 | 14,268 | |
| Net cash generated from investing activities | 184,881 | 14,268 | |
| CASH FLOWS FROM FINANCING ACTIVITIES | - | - | |
| Net increase in cash and cash equivalents | 6,784,344 | 10,101,981 | |
| Cash and cash equivalents at beginning of the period | 14,363,858 | 13,150,595 | |
| Cash and cash equivalents at end of the period | 11 | 21,148,202 | 23,252,576 |
The notes on pages 8 to 14 form an integral part of these financial statements.
The interim financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), and the requirements of the Cyprus Companies Law, Cap. 113. The financial statements have been prepared under the historical cost convention and financial assets at fair value through profit or loss.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires Management to exercise its judgment in the process of applying the Company's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Although these estimates are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
The interim financial statements, which are presented in Euro, have been prepared in accordance with International Financial Reporting Standards, including IAS 34 ''Interim Financial Reporting''.
The accounting policies used in the preparation of the interim financial statements are in accordance with those used in the annual financial statements for the year ended 31 December 2023.
Costs that are incurred during the financial year are anticipated or deferred for interim reporting purposes if, and only if, it is also appropriate to anticipate or defer that type of cost at the end of the financial year.
Corporation tax for the period is calculated based on the expected tax rates for the whole financial year.
The financial statements of the Company have been prepared on a going concern basis.
These interim financial statements must be read in conjunction with the annual financial statements for the year ended 31 December 2023.
The table below depicts the carrying amounts and fair values of certain financial assets, which are either material or their carrying amount is not a reasonable approximation of fair value:
| Carrying amounts | Fair values | ||||
|---|---|---|---|---|---|
| 30/06/2024 | 31/12/2023 | 30/06/2024 | 31/12/2023 | ||
| € | € | € | € | ||
| Financial assets | |||||
| Cash and cash equivalents | 21,148,202 | 14,363,858 | 21,148,202 | 14,363,858 | |
| Fair value through profit or loss | 70,181,177 | 26,528,091 | 70,181,177 | 26,528,091 | |
| Investments at amortised cost | 8,855,438 | 6,394,996 | 12,265,889 | 6,542,313 | |
| 100,184,817 | 47,286,945 | 103,595,268 | 47,434,262 |
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company considers a variety of valuation methods and makes assumptions that are based on market conditions existing at the reporting date.
The increase in the fair value of financial assets measured at fair value through profit or loss in the current period, is primarily attributable to the revision of the estimated future cash flows of the notes, following the update in the business plans of the securitized portfolios.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
| 30 June 2024 | Level 1 € |
Level 2 € |
Level 3 € |
Total € |
|
|---|---|---|---|---|---|
| Financial assets at fair value through profit or loss |
|||||
| Mezzanine notes (Class B2) | - | - | 70,181,177 | 70,181,177 | |
| Total | - | - | 70,181,177 | 70,181,177 | |
| 31 December 2023 | Level 1 | Level 2 | Level 3 | Total | |
| € | € | € | € | ||
| Financial assets at fair value through profit or loss Mezzanine notes (Class B2) |
- | - | 26,528,091 | 26,528,091 | |
| Total | - | - | 26,528,091 | 26,528,091 |
The fair value reconciliation of Level 3 financial instruments is depicted in Note 9 "Financial assets at fair value through profit or loss". The changes in the fair value of financial instruments are recognized in the statement of profit or loss line "Net gains/(losses) from financial assets at fair value through profit or loss".
The fair value of Junior notes (Class C2) is nil.
The Company utilizes an income approach valuation technique. Specifically, the Company determines the fair value of the notes by discounting future cash flows utilizing revised business plan estimates adjusted for actual recovery rates to date and an additional haircut applied throughout the second half of the residual term assumed. A build up approach is followed on the discount rate determination utilizing observable market data (i.e. risk free rates) and various unobservable data (i.e. risk premia) to replicate market participants perspective towards the notes.
The following table presents the valuation techniques used to measure the fair values of Level 3 financial instruments in the statement of financial position, along with the significant unobservable inputs applied:
| Financial instruments |
Valuation technique |
Significant unobservable inputs |
Range 2024 |
Range 2023 |
||
|---|---|---|---|---|---|---|
| Low | High | Low | High | |||
| Financial assets at fair value through profit or loss |
Discounted Expected Cash Flows method (DCF) |
Discount Rate | 18% | 18% | 19.8% | 19.8% |
| Residual term assumed |
10 yrs | 10 yrs | 2.5 yrs | 2.5 yrs | ||
| Haircut applied | 40% | 40% | n/a | n/a |
The following table presents the effect in the statement of profit or loss and other comprehensive income of reasonable possible changes in one of the significant unobservable inputs of Level 3 financial instruments as of the reporting date, keeping all other inputs constant.
| Main assumptions | Change in the assumptions |
Statement of profit or loss and total equity | ||
|---|---|---|---|---|
| Favourable changes | Unfavourable changes | |||
| Discount rate | +/-1% | 1,876,370 | (1,773,930) | |
| Residual term assumed | +/- 1 year | 2,674,175 | (5,490,885) | |
| Haircut applied | +/-5% | 1,185,451 | (1,185,451) |
| 01/01/2024- 30/06/2024 € |
01/01/2023- 30/06/2023 € |
|
|---|---|---|
| Interest income from financial assets at fair value through profit or loss Interest income from financial assets at amortized cost |
2,613,444 636,344 |
4,209,199 768,160 |
| 3,249,788 | 4,977,359 | |
| 5. Administration expenses | ||
| 01/01/2024- 30/06/2024 € |
01/01/2023- 30/06/2023 € |
|
| Rent Municipality taxes Registrar of Companies annual levy |
3,070 250 - |
3,070 250 350 |
| Auditors' remuneration for the statutory audit of annual accounts Accounting fees |
35,700 19,500 |
35,700 19,500 |
| Legal fees | 13,000 | 10,500 |
| Directors' fees Other professional fees |
12,000 136,232 |
12,000 105,613 |
| 219,752 | 186,983 | |
| 6. Finance income/(costs) | ||
| 01/01/2024- 30/06/2024 € |
01/01/2023- 30/06/2023 € |
|
| Interest income from bank deposits | 188,981 | 14,268 |
| Finance income | 188,981 | 14,268 |
| Bank charges | (868) | (1,112) |
| Finance cost | (868) | (1,112) |
| Net finance income | 188,113 | 13,156 |
| 01/01/2024- 30/06/2024 |
01/01/2023- 30/06/2023 |
|
|---|---|---|
| Profit attributable to shareholders (€) | 52,506,986 | 6,481,971 |
| Weighted average number of ordinary shares in issue during the period | 1,250,367,229 | 1,250,367,229 |
| Profit per share attributable to equity holders (cent) | 4.20 | 0.52 |
| 8. Financial assets measured at amortized cost | ||
| 30/06/2024 | 31/12/2023 | |
| € | € | |
| Balance as at 1 January 2024/ 1 January 2023 | 6,394,996 | 7,886,187 |
| Other adjustments | 2,090,249 | - |
| Interest income | 636,344 | 1,475,753 |
| Coupons received | - | (2,275,188) |
| Impairment losses | (266,151) | (691,756) |
| Balance as at 30 June 2024 /31 December 2023 | 8,855,438 | 6,394,996 |
Based on the existing contractual governance framework of the securitizations, decisions on significant financial and operating matters of the Issuers require the unanimous consent of the Class B1 and B2 noteholders. On this basis, the Issuers are jointly controlled by the said noteholders, meeting the joint venture definition. No investment in joint ventures has been recognised, as the Company does not hold any equity interest in the Issuers, thus its proportionate share of their net assets is zero. The Company does not hold any interests in the Issuers, other than the Class B2 and Class C2 notes, which are accounted for under IFRS 9.
During Q1 and Q2 of 2024, the interest to the holders of the mezzanine notes issued by Vega III NPL Finance DAC was deferred.
As at 30 June 2024 an additional ECL charge was recognized on Vega III financial asset amounting to €266,151 (31 December 2023: €691,756). The cumulative ECL stood at €957,907. Following a revision on the estimated cash flows of Vega III financial asset, the Company proceeded with an upward adjustment in the amortized cost of the note by €2,090,249 which recognized in the statement of profit and loss.
| 30/06/2024 | 31/12/2023 | |
|---|---|---|
| € | € | |
| Balance as at 1 January 2024 / 1 January 2023 | 26,528,091 | 32,669,332 |
| Interest income | 2,613,444 | 8,396,175 |
| Change in fair value | 47,841,068 | 3,202,847 |
| Coupons received | (6,801,426) | (17,740,263) |
| Balance as at 30 June 2024 /31 December 2023 | 70,181,177 | 26,528,091 |
for the period 1 January 2024 to 30 June 2024
| 9. Financial assets at fair value through profit or loss (continued) | ||
|---|---|---|
| 30/06/2024 | 31/12/2023 | |
| € | € | |
| Financial assets at fair value through profit or loss | ||
| Mezzanine notes (Class B2) | 70,181,177 | 26,528,091 |
| 70,181,177 | 26,528,091 | |
The fair value of Junior notes (Class C2) is nil.
| 30/06/2024 | 31/12/2023 | |
|---|---|---|
| € | € | |
| Corporation tax | 234,127 | 364,646 |
| 234,127 | 364,646 |
Cash balances are analysed as follows:
| 30/06/2024 | 31/12/2023 | |
|---|---|---|
| € | € | |
| Cash at bank | 21,148,202 | 14,363,858 |
| 21,148,202 | 14,363,858 |
| 30/06/2024 Number of |
30/06/2024 | 31/12/2023 Number of |
31/12/2023 | |
|---|---|---|---|---|
| shares | € | shares | € | |
| Authorised | ||||
| Ordinary shares | 1,250,367,229 | 26,507,785 | 1,250,367,229 | 44,513,073 |
| Reduction of nominal value of share capital | - | - | - | (18,005,288) |
| 1,250,367,229 | 26,507,785 | 1,250,367,229 | 26,507,785 | |
| Issued and fully paid | ||||
| Balance as at 1 January | 1,250,367,229 | 26,507,785 | 1,250,367,229 | 44,513,073 |
| Reduction of nominal value of share capital | - | - | - | (18,005,288) |
| Balance as at 30 June 2024/ 31 December | ||||
| 2023 | 1,250,367,229 | 26,507,785 | 1,250,367,229 | 26,507,785 |
On 12 July 2023, during the course of the Company's AGM the shareholders approved the proposal of Board of Directors to reduce the nominal value of each ordinary share by €0.0144 from €0.0356 to €0.0212 each.
On 16 October 2023, the share capital reduction was approved via court order. The Company's issued share capital was reduced to €26,507,785 divided in 1,250,367,229 ordinary shares of €0.0212 each. The amount of share capital decreased was distrubuted to the Company's shareholders on 05 December 2023.
| 30/06/2024 | 31/12/2023 | |
|---|---|---|
| € | € | |
| VAT | - | 1,167 |
| Shareholders' current accounts - credit balances (Note 15.2) | 1,675 | 2,035 |
| Accruals | 76,700 | 50,496 |
| Other creditors | 46,045 | 46,123 |
| 124,420 | 99,821 |
| 30/06/2024 | 31/12/2023 | |
|---|---|---|
| € | € | |
| Corporation tax | 202,000 | - |
| 202,000 | - |
The following transactions were carried out with related parties:
15.1 Directors' remuneration
The remuneration of Directors and other members of key management was as follows:
| 01/01/2024- | 01/01/2023- | |
|---|---|---|
| 30/06/2024 | 30/06/2023 | |
| € | € | |
| Directors' fees | 12,000 | 12,000 |
| 12,000 | 12,000 | |
| 15.2 Shareholders' current accounts - credit balances | ||
| 30/06/2024 | 31/12/2023 | |
| € | € | |
| Shareholders' current accounts - credit balances (Note 13) | 1,675 | 885 |
| 1,675 | 885 |
The shareholders' current accounts are interest free, and have no specified repayment date.
During August 2024, the Company received coupon payments of €2,364,591.
On 5 July 2024, during the Company's AGM, the shareholders approved the proposal of the Board of Directors to reduce the share capital of the Company by €16,004,700.53, by reducing the nominal value of the entire shares from €0.0212 each to €0.0084 each. The capital reduction is expected to be completed in the fourth quarter of the financial year 2024.
There were no other material events after the reporting period, which have a bearing on the understanding of the interim financial statements.
These interim unaudited financial statements are solely for informational purposes, are not an offer to sell or a solicitation of an offer to buy or provide a basis for evaluations, and do not constitute investment, legal, accounting, regulatory, taxation, or other advice. No representation, warranty, or undertaking is being made and no reliance may be placed for any purpose whatsoever on the information contained in these interim unaudited financial statements in making any investment decision. Users are solely responsible for forming their own opinions and conclusions on such matters and for making their own independent assessments of the Company. Users are solely responsible for seeking independent professional advice in relation to the Company and they should consult with their own advisers as to the legal, tax, business, financial and related aspects and/or consequences of any investment decision. No responsibility or liability is accepted by any person for any of the information or for any action taken by the users or any of their officers, employees, agents, or associates based on such information. The Company, its financial and other advisors, and their respective directors, officers, and representatives expressly disclaim any and all liability that may arise from these interim unaudited financial statements and any errors contained herein and/or omissions and accept no liability for any loss howsoever arising, directly or indirectly, from any use of the information in these interim unaudited financial statements.
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