Black Sea Property Plc

Interim / Quarterly Report • Sep 30, 2020

National Storage Mechanism | Additional information

RNS Number : 6042A

Black Sea Property PLC

30 September 2020

BLACK SEA PROPERTY PLC

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

Half-yearly report for the period ended 30 June 2020

The Board of Black Sea Property PLC is pleased to announce its interim report for the six-month period ended 30 June 2020.

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

BLACK SEA PROPERTY PLC Alex Borrelli -  Chairman	+44(0) 774 702 0600
PETERHOUSE CAPITAL LIMITED AQSE Corporate Adviser Heena Karani and Duncan Vasey	+44 (0) 207 469 0930

Chairman's Statement

I am pleased to present the unaudited interim financial statements of the Company for the six months ended 30 June 2020.

The unaudited net asset value as at 30 June 2020 was €21.9 million or 1.21 cents per share (31 December 2019: €16.1 million or 1.27 cents per share).

During the period, the Company generated revenues of €129,476 (2019: €312,459) which resulted in a loss before taxation of €72,420 (2019: €2.526 million which included a loss on revaluation of investment properties of €1.897 million).  The results reflect other income of €911,705, which relates to cash received against the receivable included in the acquisition of Camping South Beach EOOD (previously written off) and interest income accrued on this receivable (2019: €8,082) (note 11). The results also reflect property operating expenses of €381,301 (2019: €294,481), other operating expenses of €457,688 (2019: €386,472) and interest payable and other charges of €274,612 (2019: €317,964).  Loss per share amounted to €0.01 cents (2019: €0.20 cents).

The impact of Covid-19 has adversely affected our operations during the period.  The holiday season only started at the beginning of July, after the beaches on the Black Sea coast were opened in June, and occupancy levels at Camping South Beach have not reached expected levels.  We are commencing our development of the Byala plots into a further camping operation.  We are considering development proposals for Ivan Vazov 1 Building which we expect will enhance its value significantly.

In February 2020, we successfully completed the acquisition of European Convergence Development (Cayman) Limited and ECD Management (Cayman) Limited, both subsidiaries of European Convergence Development Company PLC ("ECDC"), for €3,582,638. We also signed agreements for the acquisition of 29.85% of ECDC at a price per share equal to the net asset value of the shares equivalent to €44,855. We paid €1 for the loan granted by ECDC to ECD Cayman of €122,221,701.

The main rationale for the acquisition of interests in ECDC Group includes: the opportunity to add two development plots suitable for logistics/industrial development (the site in Plovdiv) and residential, commercial or hospitality development (the site in Kraimorie), thus diversifying our portfolio. Both ECD Cayman and ECDC have established structures in place that will save time and costs for future investments.

In January 2020, we completed a share placing and simultaneous 'debt to equity' conversion. The overall amount raised before expenses was €4,585,682, through a placement of 416,880,162 new ordinary shares of nil par value at a price of €0.011 per Ordinary Share.  In addition, Mamferay Holdings Limited ("Mamferay") converted all of its outstanding loans, including interest totalling €1,394,958 into 127,035,545 ordinary shares at €0.011 per share. Following this conversion, Mamferay, now has a 26.94% shareholding in the Company.

We are not yet able to assess fully the impact of the current restrictions on the results for the year ending 31 December 2020 as a result of the continuing impact of Covid-19 but, in the meantime, we are managing closely our cash flow and cost base. We believe that the potential for our camping operations with the refurbishment of the Ivan Vazov 1 will add significant value in due course.

Alex Borrelli

Chairman

29 September 2020

Consolidated Statement of Comprehensive Income

for the period ended 30 June 2020

		(Unaudited)		(Unaudited)		(Audited)
		6 months to		6 months to		Year to
		30 June 2020		30 June 2019		31 December 2019
	Notes	€		€		€
Total revenue
Revenue		129,476		312,459		671,030
Property operating expenses		(381,301)		(294,481)		(468,514)
Net rental and related income		(251,825)		17,978		202,516
(Loss)/gain on revaluation of investment properties		-		(1,896,721)		4,564,767
Net (loss)/gain on investment property		-		(1,896,721)		4,564,767
Operating expenses
Other operating expenses	7	(457,688)		(386,472)		(977,728)
Total operating (loss)/profit		(709,513)		(2,265,215)		3,789,555
Operating loss before interest and tax
Other income	11	911,705		8,082		1,318,513
Interest payable and similar charges		(274,612)		(317,964)		(652,436)
(Loss)/profit before tax		(72,420)		(2,575,097)		4,455,632
Tax expense		-		49,310		(391,178)
(Loss)/profit and total comprehensive income attributable to shareholders		(72,420)		(2,525,787)		4,064,454
(Loss)/earnings per share
Basic & Diluted(loss)/earnings per share (cents)	12	(0.01)		(0.20)		0.32

The notes form an integral part of these financial statements.

Consolidated Statement of Financial Position

at 30 June 2020

		(Unaudited)		(Unaudited)		(Audited)
		30 June 2020		30 June 2019		31 December 2019
	Notes	€		€		€
Non-current assets
Investment properties	8	39,655,103		27,566,766		35,986,000
Investment in associate	5	46,626		-		-
		39,701,729		27,566,766		35,986,000
Current assets
Other receivables		347,846		1,304,568		351,367
Related party loan	10	196,000		-		-
Cash and cash equivalents		948,275		978,406		717,945
		1,492,121		2,282,974		1,069,312
Total assets		41,193,850		29,849,740		37,055,312
Equity and liabilities
Issued share capital	6	70,699,442		64,774,886		64,774,886
Retained deficit		(47,247,377)		(53,765,198)		(47,174,957)
Foreign exchange reserve		(1,533,086)		(1,533,086)		(1,533,086)
Total equity	13	21,918,979		9,476,602		16,066,843
Non-current liabilities
Bank loans	9	17,217,366		16,576,585		8,326,534
Deferred tax liability		1,903,784		1,466,552		1,903,784
		19,121,150		18,043,137		10,230,318
Current liabilities
Trade payables		153,721		587,532		496,684
Shareholder loan	6	-		150,000		1,394,958
Bank loans	9	-		1,592,469		8,866,509
		153,721		2,330,001		10,758,151
Total equity and liabilities		41,193,850		29,849,740		37,055,312
Number of ordinary shares in issue	13	1,813,323,603		1,269,407,896		1,269,407,896
NAV per ordinary share (cents)	13	1.21		0.75		1.27

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 2020 and were signed on their behalf by:

Chairman                                                                                               Director

Alex Borrelli                                                                                          Ventsislava Altanova

Consolidated Statement of Changes in Equity

for the period ended 30 June 2020

	Share capital		Retained deficit		Foreign exchange reserve		Total
	€		€		€		€
At 1 January 2019	64,774,886		(51,239,411)		(1,533,086)		12,002,389
							-
Loss for the six-month period	-		(2,525,787)		-		(2,525,787)
At 30 June 2019 (unaudited)	64,774,886		(53,765,198)		(1,533,086)		9,476,602
At 1 January 2019	64,774,886		(51,239,411)		(1,533,086)		12,002,389
Profit for the year	-		4,064,454		-		4,064,454
At 31 December 2019 (audited)	64,774,886		(47,174,957)		(1,533,086)		16,066,843
At 1 January 2020	64,774,886		(47,174,957)		(1,533,086)		16,066,843
Transactions with shareholders:
Conversion of shareholder loan to equity	4,585,682		-		-		4,585,682
Share capital issue	1,397,391		-		-		1,397,391
Less: share issue costs	(58,517)		-		-		(58,517)
	5,924,556		-		-		5,924,556
Loss for the six-month period	-		(72,420)		-		(72,420)
At 30 June 2020 (unaudited)	70,699,442		(47,247,377)		(1,533,086)		21,918,979

The notes form an integral part of these financial statements.

Consolidated Statement of Cash Flows

for the period ended 30 June 2020

	(Unaudited)		(Unaudited)		(Audited)
	6 months to		6 months to		Year to
	30 June 2020		30 June 2019		31 December 2019
	€		€		€
Operating activities
(Loss)/profit before tax	(72,420)		(2,575,097)		4,455,632
Gain/(loss) on revaluation of investment properties	-		1,896,721		(4,564,767)
Other income	(911,705)		-		(1,318,513)
Finance expense	274,612		317,964		652,436
Movement in net cash outflow from operating activities	(709,513)		(360,412)		(775,212)
Decrease/(increase) in receivables	3,521		(695,342)		(659,493)
(Decrease)/increase in payables	(510,218)		353,271		265,256
	(506,697)		(342,071)		(394,237)
Withholding tax paid	-		6,089		-
Net cash outflow from operating activities	(1,216,210)		(696,394)		(1,169,449)
Investing activities
Acquisition of subsidiary, net of cash acquired	(3,032,745)		-		-
Investment property additions	(469,103)		(1,896,721)		(3,854,467)
Investment in associate	(46,626)		-		-
Related party loan granted	(196,000)		-		-
Interest received	911,705		-		1,318,513
Net cash (outflow)/ from investing activities	(2,832,769)		(2,593,115)		(2,535,954)
Financing activities
Proceeds from share capital issued	4,585,682		-		-
Conversion of shareholder loan to equity	1,397,391		-		-
Loans and interest repaid	(274,612)		(317,964)		(669,849)
Bank loan received	-		41,246		-
Shareholder loans (converted to equity net of interest)/received	(1,394,958)		150,000		1,394,958
Share capital issue costs	(58,517)		-		-
Bank loans repaid	24,323		-		-
Net cash inflow/(outflow) from financing activities	4,279,309		(126,718)		725,109
Net increase/(decrease) in cash and cash equivalents	230,330		(2,719,833)		(2,980,294)
Cash and cash equivalents at beginning of period	717,945		3,698,239		3,698,239
Cash and cash equivalents at end of period	948,275		978,406		717,945

The notes form an integral part of these financial statements.

Notes to the Financial Statements for the period ended 30 June 2020

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 2019.

The consolidated financial statements of the Group as at and for the year ended 31 December 2019 are available upon request from the Company's registered office at 55 Athol Street, Douglas, Isle of Man or at www.blackseapropertyplc.com.

These interim consolidated financial statements were approved by the Board of Directors on 29 September 2020.

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 2019.

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 2019.

5.        Acquisition of ECDC Group

On 21 February 2020, the Company successfully completed the acquisition of 100% of European Convergence Development (Cayman) Limited ("ECD Cayman") and ECD Management (Cayman) Limited ("ECD Management"). The consideration paid for ECD Cayman and ECD Management in total was €3,582,638. Both companies were subsidiaries of European Convergence Development Company PLC, Isle of Man ("ECDC").

The Company also signed agreements for the acquisition of 29.85% of ECDC at a price per share equal to the net asset value of the shares of €0.00168 or a total of €44,855. The total cost net of share transaction fees was €46,626. €1 was paid for the loan granted by ECDC to ECD Cayman of €122,221,701.

The main rationale for the acquisition of interests in ECDC Group includes: the opportunity to add two development plots suitable for logistics/industrial development (the site in Plovdiv) and residential, commercial or hospitality development (the site in Kraimorie), thus diversifying BSP portfolio. Both ECD Cayman and ECDC have established structures in place that will save time and costs for future investments.

The fair value of assets and liabilities acquired are as follows:

	(Unaudited)
	21 Feb 2020
	€
Investment property	3,200,000
Cash	549,893
Trade payables	(167,255)
	3,582,638

6.        Cash placing and debt to equity conversion

On 20 January 2020 the Company performed a share placing and simultaneous debt to equity conversion. The overall amount raised before expenses was €4,585,682, through a placement of 416,880,162 new ordinary shares of nil par value (the "Placing Shares") at a price of €0.011 per Ordinary Share (the "Placing").

In addition to the Placing, Mamferay Holdings Limited ("Mamferay") agreed to convert all its outstanding loans, including interest totalling €1,394,958 into 127,035,545 ordinary shares at €0.011 per share (the "Loan Shares").

7.        Other administration fees and expenses

	(Unaudited)	(Unaudited)	(Audited)
	6 months to	6 months to	Year to
	30 June 2020	30 June 2019	31 December 2019
	€	€	€
Directors' remuneration	49,847	40,547	81,039
Investment advisory fees	107,136	53,568	214,272
Legal and professional fees	120,506	55,828	123,232
Other administration and sundry expenses	180,199	236,529	559,185
	457,688	386,472	977,728

8.        Investment properties

	(Unaudited)	(Unaudited)	(Audited)
	30 June 2020	30 June 2019	31 December 2019
	€	€	€
Beginning of year	35,986,000	27,566,766	27,566,766
Acquisition	3,200,000	-	1,065,723
Fair value adjustment	-	(1,896,721)	4,564,767
Additions	469,103	1,896,721	2,788,744
End of year	39,655,103	27,566,766	35,986,000

The Directors confirm that there are no material changes in the valuation of investments as of 30 June 2020.

9.        Bank Loans

	(Unaudited)		(Unaudited)	(Audited)
		30 June 2020	30 June 2019	31 December 2019
		€	€	€
Loan and interest accrued from UniCredit		6,976,847	7,066,023	6,980,477
Loan and interest accrued from Central Cooperative Bank		10,182,940	11,103,031	10,212,566
		17,159,787	18,169,054	17,193,043

The Central Cooperative Bank debt funding provided to Camping South Beach EOOD was due to expire on 24 June 2020, however it has been agreed with the lender to postpone repayment until 24 June 2021.

The Unicredit debt funding provided to BSPF Bulgaria EAD was due to expire in October 2020, however it has been agreed with the lender to postpone repayment until 30 April 2021.

10.      Related party loan

On 18 June 2020, a subsidiary of the Company, BSPF Project 1 EAD ("Project 1"), entered into a loan agreement with Phoenix Capital Holding AD. Project 1 lent Phoenix €196,000 at a fixed annual interest rate of 4.5%, with a repayable date of 18 June 2021. Phoenix Capital Holding AD owns 79.99% of the shares of Phoenix Capital Management JSC, the Company's investment adviser, and is also a subsidiary of Mamferay Holdings which owns 26.94% of the shares of Black Sea Property plc.

11.      Other income

	(Unaudited)		(Unaudited)	(Audited)
		30 June 2020	30 June 2019	31 December 2019
		€	€	€
Interest income - receivable balances		232,843	8,082	271,551
Reversal of fair value adjustment of CSB acquisition receivable balance		678,863	-	1,046,962
		911,705	8,082	1,318,513

12.      (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)
	30 June 2020	30 June 2019	31 December 2019
(Loss)/earnings attributable to owners of parent €	(72,420)	(2,525,787)	4,064,454
Weighted average number of ordinary shares in issue	1,287,431,251	1,269,407,896	1,269,407,896
Basic (loss)/earnings per share (cents)	(0.01)	(0.20)	0.32

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

13.                  Net asset value per share

	(Unaudited)	(Unaudited)	(Audited)
	30 June 2020	30 June 2019	31 December 2019
Net assets attributable to owners of the parent (€)	21,918,979	9,476,602	16,066,843
Number of ordinary shares outstanding	1,813,323,603	1,269,407,896	1,269,407,896
Net Asset Value (cents)	1.21	0.75	1.27

14.                  Events after reporting date

There are no significant events after reporting date.

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