Black Sea Property - Half-year Report
RNS Number : 2192C
Black Sea Property PLC
28 September 2018
 

 

BLACK SEA PROPERTY PLC

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

 

Half Yearly Report for the period ended 30 June 2018

 

The Board of Black Sea Property PLC is pleased to announce its half yearly report for the period ended 30 June 2018.

 

 

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

 

 

For further information, please visit www.blackseapropertyplc.com or contact the following:

 

BLACK SEA PROPERTY PLC

Alex Borrelli, Chairman

 

07747 020600

PETERHOUSE CAPITAL LIMITED

Corporate Adviser

Heena Karani, Fungai Ndoro

020 7469 0933

 


 

 

Chairman's Statement

 

I am pleased to present the unaudited interim financial statements of the Black Sea Property Plc for the six months ended 30 June 2018.

 

The unaudited net asset value as at 30 June 2018 was €14.77 million or 1.16 cents per share (31 December 2017: €9.66 million or 0.76 cents per share).

 

During the period, the Company completed the acquisition of Camping South Beach EOOD ("CSB") (formerly Camping Gradina EOOD) in January 2018 for €2.76 million. CSB owns four contiguous plots of land on the beachfront of the Black Sea Coast, close to the City of Sozopol, with a total area of 63,193 sqm. The fair value of the identifiable assets and liabilities of CSB as at the date of acquisition was €8.10 million giving rise to a gain on acquisition of €5.34 million. Subsequent to its acquisition, we have increased the capital of CSB by €3.37 million to provide the needed funds for the further development of the company's business. As of the present moment the company has successfully completed the pilot project and put into operation the first three new bungalows, to be followed shortly by further bungalows, the construction of which is scheduled to commence in October 2018 (the construction activities on the Bulgarian Black Sea coast are prohibited by law during the active summer season).

 

We have also focused on the initial stages of the refurbishment of the office building at 1, Ivan Vazov Str., the UniCredit Building, acquired in 2017 for €10.52 million, financed by a bank loan of up to €7.00 million and the remainder by new equity.

 

The Company works in conjunction with Phoenix Capital Management JSC ("Phoenix"), its property investment adviser, on the development of both CSB and the UniCredit Building.  Phoenix Capital Holding JSC, which owns 99.99% of the property investment adviser, holds 104,814,581 ordinary shares in the Company (representing 28.65% of the Company's issued share capital) through its wholly owned subsidiary, Mamferay Holdings Limited ("Mamferay").

 

We have undertaken a review of the Company in order to ensure we have a corporate structure appropriate to the Company's listed status and corporate governance requirements while, at the same time, ensuring we have the necessary real estate expertise for developing our asset base.  Further to a request from Mamferay, we are considering the appointment of two additional Directors subject to regulatory approvals. Elena Fournadjieva has today resigned as a Director and we are grateful for her contribution to the Company.

 

The Board has determined that the Chairman will act in an executive capacity for the Company until the Board is able to consider one of the additional appointees taking on this role following their appointment as Directors. The Board further determined that the Company will be represented by the Chairman acting jointly with any of the other two directors.

 

We continue to investigate further investment opportunities for the Company, which are becoming available at reasonable valuations as local market conditions improve where we believe we can create significant value uplift for our shareholders.

 

We believe we have now established the first phase of a strong base for delivering value for our shareholders.

 

 

 

Alex Borrelli

Chairman

27 September 2018

 

 

Consolidated Statement of Comprehensive Income
for the period ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

6 months to

 

6 months to

 

Year to

 

 

30 June 2018

 

30 June 2017

 

31 December 2017

 

Notes

 

 

Total revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

272,374

 

-

 

-

Property operating expenses

 

(143,904)

 

-

 

-

Net rental and related income

 

128,470

 

-

 

-

 

 

 

 

 

 

 

Bargain purchase on acquisition

6

5,338,623

 

-

 

-

Gain on disposal of investment property

 

-

 

-

 

428,792

Other income

 

2

 

-

 

-

 

 

 

 

 

 

 

Net gain on investment property

 

5,338,625

 

-

 

428,792

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Other operating expenses

5

(298,573)

 

(160,444)

 

(443,737)

 

 

 

 

 

 

 

Total operating expenses

 

(298,573)

 

(160,444)

 

(443,737)

 

 

 

 

 

 

 

Operating loss before interest and tax

 

 

 

 

 

 

Foreign currency exchange differences

 

(3,542)

 

 

 

(2,349)

Bank charges and interest payable

 

(58,397)

 

(1,727)

 

(41,405)

 

 

 

 

 

 

 

Profit/ (loss) before tax

 

5,106,583

 

(162,171)

 

(58,699)

Tax expense

 

-

 

-

 

(64,256)

Profit/(loss) for the period after tax

 

5,106,583

 

(162,171)

 

(122,955)

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss

 

 

 

 

 

 

Gain on translation of foreign operations

 

-

 

2,619

 

-

Total comprehensive profit / (loss) in period

 

5,106,583

 

(159,552)

 

(122,955)

 

 

 

 

 

 

 

Earnings/(loss) per share

 

 

 

 

 

 

Basic and Diluted earnings/(loss) per share (cents)

9

0.40

 

(0.04)

 

(0.02)

 

 

 

The notes form an integral part of these financial statements.

Consolidated Statement of Financial Position
at 30 June 2018

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

30 June 2018

 

30 June 2017

 

31 December

2017

 

Notes

 

 

Non-current assets

 

 

 

 

 

 

Investment properties

7

27,524,660

 

1,043,000

 

11,229,740

Fixed assets

 

729,364

 

-

 

-

 

 

28,254,024

 

1,043,000

 

11,229,740

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Other receivables

 

335,065

 

7,093

 

6,138,436

Cash and cash equivalents

 

3,811,844

 

21,024

 

2,238,811

 

 

 

 

 

 

 

 

 

4,146,909

 

28,117

 

8,377,247

 

 

 

 

 

 

 

Total assets

 

32,400,933

 

1,071,117

 

 

 

 

 

 

 

 

Equity and liabilities

 

 

 

 

 

 

Issued share capital

 

64,774,886

 

55,920,286

 

64,774,886

Retained deficit

 

(48,473,520)

 

(53,619,319)

 

(53,580,103)

Foreign exchange reserve

 

(1,533,086)

 

(1,530,467)

 

(1,533,086)

 

 

 

 

 

 

 

Total equity

 

14,768,280

 

770,500

 

9,661,697

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Bank loans

8

17,445,368

 

-

 

6,933,596

Deferred tax liability

 

41,932

 

-

 

42,879

 

 

17,487,300

 

-

 

6,976,475

Current liabilities

 

 

 

 

 

 

Trade payables

 

139,678

 

-

 

207,839

Other payables

 

5,675

 

177,179

 

2,760,976

Loan payable

 

-

 

123,438

 

-

 

 

145,353

 

300,617

 

2,968,815

 

 

 

 

 

 

 

Total equity and liabilities

 

32,400,933

 

1,071,117

 

19,606,987

 

 

 

 

 

 

 

 

 

Number of ordinary shares in issue

 

1,269,407,896

 

365,807,896

 

1,269,407,896

NAV per ordinary share (cents)

10

1.16

 

0.21

 

0.76

 

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 27 September 2018 and were signed on their behalf by:

 

 

 

 

 

Chairman                                                                      Director

Alex Borrelli                                                                   Yordan Naydenov

 

Consolidated Statement of Changes in Equity
for the period ended 30 June 2018

 

 

Share capital

 

Retained deficit

 

Foreign exchange reserve

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2017

 55,920,286

 

(53,457,148)

 

 (1,533,086)

 

930,052

 

 

 

 

 

 

 

 

Loss for the six-month period

 -  

 

 (162,171)

 

 2,619  

 

(159,552)

 

 

 

 

 

 

 

 

At 30 June 2017 (unaudited)

 55,920,286

 

(53,619,319)

 

 (1,530,467)

 

 770,500

 

 

 

 

 

 

 

 

At 1 January 2017

 55,920,286

 

(53,457,148)

 

 (1,533,086)

 

 930,052

 

 

 

 

 

 

 

 

Loss for the year

 -  

 

 (122,955)

 

 -  

 

(122,955)

Other comprehensive loss

 -  

  

 -  

  

 -

  

 -

 

 

 

 

 

 

 

 

Transactions with owners

 

 

 

 

 

 

 

Issue of share capital

 9,036,000

 

 -  

 

 -  

 

9,036,000

Share issue costs

(181,400)

 

-

 

-

 

(181,400)

 

 

 

 

 

 

 

 

At 31 December 2017 (audited)

64,774,886

 

(53,580,103)

 

(1,533,086)

 

9,661,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2018

64,774,886

 

(53,580,103)

 

(1,533,086)

 

9,661,697

 

 

 

 

 

 

 

 

Profit for the six-month period

-

 

5,106,583

 

-

 

5,106,583

 

 

 

 

 

 

 

 

At 30 June 2018 (unaudited)

64,774,886

 

(48,473,520)

 

(1,533,086)

 

14,768,280

 

 

 

 

 

The notes form an integral part of these financial statements.

 

 

Consolidated Statement of Cash Flows
for the period ended 30 June 2018

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

6 months to

 

6 months to

 

Year to

 

30 June 2018

 

30 June 2017

 

31 December 2017

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

5,106,583

 

(162,171)

 

(58,699)

Gain on revaluation of investment property

-

 

-

 

(428,792)

Bargain purchase on acquisition

(5,338,623)

 

-

 

-

Finance expense

58,397

 

1,727

 

41,405

 

 

 

 

 

 

Movement in net cash outflow from operating activities

(173,643)

 

(160,444)

 

(446,086)

 

 

 

 

 

 

 

 

 

 

 

 

Decrease/(increase) in receivables

4,618,777

 

(2,956)

 

1,204

Increase/(decrease) in payables

(2,521,901)

 

72,247

 

102,907

 

 

 

 

 

 

 

2,096,876

 

69,291

 

104,111

 

 

 

 

 

 

Withholding tax paid

(943)

 

-

 

(21,377)

 

 

 

 

 

 

Net cash outflow from operating activities

1,922,290

 

(91,153)

 

(363,352)

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

Investment property additions

-

 

(1,043,000)

 

(10,800,948)

Fixed assets additions

(470,650)

 

-

 

-

Cash held by the acquired subsidiary (note 6)

780,231

 

-

 

-

Cash advance pre-acquisition

-

 

-

 

(3,374,527)

Net cash outflow from investing activities

309,581

 

(1,043,000)

 

(14,175,475)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

Loans and interest repaid

(658,838)

 

(289)

 

(159,809)

Bank loan received

-

 

-

 

7,000,000

Bank loan arrangement fees

-

 

-

 

(70,000)

Issue of share capital

-

 

-

 

8,854,600

 

 

 

 

 

 

Net cash (outflow)/inflow from financing activities

(658,838)

 

(289)

 

15,624,791

 

 

 

 

 

 

Net decrease in cash and cash equivalents

1,573,033

 

(1,134,442)

 

(1,085,965)

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

2,238,811

 

1,152,847

 

1,152,847

 

 

 

 

 

 

Effect of foreign exchange rates

-

 

2,619

 

-

 

 

 

 

 

 

Cash and cash equivalents at end of period

3,811,844

 

21,024

 

2,238,811

 

 

The notes form an integral part of these financial statements.

Notes to the Financial Statements
for the period ended 30 June 2018

 

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 NEX Exchange.

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 2017.

 

The consolidated financial statements of the Group as at and for the year ended 31 December 2017 are available upon request from the Company's registered office at IOMA House, Hope Street, Douglas, Isle of Man or at www.blackseapropertyplc.com.

 

These interim consolidated financial statements were approved by the Board of Directors on 27 September 2018.

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 2017.

 

Changes in significant accounting policies

 

The Group has initially adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments from 1 January 2018. There were no material effects of initially applying IFRS 15 and IFRS 9 Financial Instruments.

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 2017.

5.        Other administration fees and expenses

 

(Unaudited)

(Unaudited)

(Audited)

 

6 months to

6 months to

Year to

 

30 June 2018

30 June 2017

31 December 2017

 

 

 

 

 

Directors' remuneration

32,535

67,655

112,079

Administration fees

109,671

43,392

102,550

Investment advisory fees

107,136

-

75,849

Legal and professional fees

16,550

11,797

53,574

Auditors' fee

2,404

7,000

39,395

Registrar fees

1,102

717

2,653

Broker fees

16,994

17,408

34,507

NEX Listing fees

-

-

-

Other administration and professional fees

12,181

12,475

23,130

 

298,573

160,444

443,737

 

 

6.        Acquisition of a subsidiary

 

On 2 January 2018, the Company through its owned subsidiary, BSPF Project 1 EAD, acquired Camp South Beach EOOD ("CSB") (formerly Camping Gradina EOOD) including all its assets and liabilities. CSB owns four plots of land situated next to each other with a total area of 63,193 sqm, with permission to develop a camping complex. The four plots are located at the beachfront on the Black Sea Coast, close to the City of Sozopol.

 

The fair value of the identifiable assets and liabilities of CSB as at the date of acquisition were:

 

The fair value of the identifiable assets and liabilities

 

 

 

 

 €

Land and buildings

 

 

16,294,872     

Fixed assets

 

 

258,714     

Receivables

 

 

2,531,841     

Cash and cash equivalents

 

780,231     

Total assets

 

 

19,865,658     

 

 

 

 

Trade payables

 

 

 

Bank loans

 

 

2,453,690     

Other liabilities

 

 

9,116,038     

 

 

 

196,331     

Total liabilities

 

 

 11,766,059     

 

 

 

 

Total identifiable net assets at fair value

 

8,099,599     

 

 

 

 

Bargain purchase on acquisition

 

(5,338,623)    

Purchase consideration transferred (BGN 5.40 million)

2,760,976     

 

The purchase consideration was disclosed an advance in prior year accounts.

 

Pursuant to IFRS 3, Business Combinations, circumstances leading up to the sale of a business may result in recognition of a bargain purchase gain if the fair value of assets acquired and liabilities assumed exceeds the amount of consideration transferred. The resulting gain is recognized in net earnings of the acquirer on the acquisition date.

 

The acquisition of CSB resulted in a bargain purchase gain, mainly due to the purchase price reflecting the on-going difficulties of CSB in its ability to accumulate sufficient funds for execution of its investment plans, history of sustained losses, difficulty servicing loans, and its inability to pay off or refinance loans the cumulative effect of which effectively forced the sale of CSB. Through the Company, CSB acquisition, as part of a larger organization, gained the ability to recapitalize and refinance certain obligations with more favourable terms, realizing immediate synergy savings and operationally therefore, having the ability to expand its business potential.

7.        Investment properties

 

(Unaudited)

(Unaudited)

(Audited)

 

30 June

2018

30 June

2017

31 December

2017

 

 

 

 

 

Beginning of year

11,229,740

-

-

Acquisition (note 7)

16,294,920

1,043,000

10,800,948

Fair value adjustment

-

-

428,792

 

 

 

 

End of year

27,524,660

1,043,000

11,229,740

 

The Directors confirm that there are no material changes in the valuation of investments as of 30 June 2018.

 

8.        Bank Loans

 

 

(Unaudited)

(Unaudited)

(Audited)

 

30 June

2018

30 June

2017

31 December

2017

 

 

 

 

 

Loan and interest accrued from UniCredit

7,000,000

-

6,933,596

Loan and interest accrued from Central Cooperative Bank

10,445,368

-

-

 

 

 

 

 

17,445,368

-

6,933,596

9.        Earnings per share

The basic earnings/(loss) per ordinary share is calculated by dividing the net profit/(loss) 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 to

6 months to

Year to

 

30 June

2018

30 June

2017

31 December

2017

 

 

 

 

Earnings/(loss) attributable to owners of parent (€)

5,106,583

(162,171)

(122,955)

Weighted average number of ordinary shares in issue

1,269,407,896

365,807,896

513,625,478

 

 

 

 

Basic earnings/(loss) per share (cents)

0.40

(0.04)

(0.02)

 

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

10.      Net asset value per share

 

 

(Unaudited)

(Unaudited)

(Audited)

 

30 June

2018

30 June

2017

31 December

2017

 

 

 

 

 

Net assets attributable to owners of the parent (€)

14,768,280

770,500

9,595,293

Number of ordinary shares outstanding

1,269,407,896

365,807,896

1,269,407,896

 

 

 

 

Net Asset Value (cents)

1.16

0.21

0.76

 

11.      Events after reporting date

There are no significant events after reporting date.

 


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