Consolidated Statement of Cash Flows
for the period ended 30 June 2021

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 October 2021

and were signed on their behalf by:

Chairman                                                                                              Director

Simon Hudd                                                                                         Ventsislava Altanova

Notes to the Financial Statements
for the period ended 30 June 2021

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 2020.

The consolidated financial statements of the Group as at and for the year ended 31 December 2020 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 October 2021.

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 2020

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 2020.

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 ECD Cayman 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:

The bargain purchase on acquisition of the ECD Cayman group can be presented as follows:

After the initial recognition the Group has recognized losses from ECDC Plc for 2020 of €29,313. In 2021 the Group has recognized additional losses of €12,355.

6.   Administration and other expenses

7.   Other income

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.

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.   Investment properties

The Directors confirm that there are no material changes in the valuation of investments as of 30 June 2021.

On 21st June 2021, European Convergence Development Malta Limited (ECDC Malta) entered into agreement to transfer to the buyer (Zagora Fininvest AD) the right of ownership over its own real estate, representing land with identifier 78080.27.71, located in the village of Tsaratsovo, Maritsa municipality, Plovdiv district. The price for the property under the agreement is fixed at €1,059,000 (VAT exclusive) to paid as follows: An amount of €1 000 000 was scheduled for 30.06.2021 and balance of €59 000 is due to be paid after signing the final agreement for transfer of the ownership of the property and establishing of first ranking mortgage in favour the Bank, to credit the Buyer. ECDC Malta received the initial payment as per the contract on 28th June 2021 and €400 000 were repaid from ECDC Malta on behalf of ECDC Cayman - repayment liabilities. At the time of acquisition BSP took into consideration valuation of the property at an amount €834 000.

10.  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 2020 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.

For 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 breakdown of the carrying amount can be presented as follows:

11.  Bank Loans

a)   In October 2017, the Company entered into a secured debt funding of €7 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 €11,329,000. 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. At the date these financial statements were signed the Company was in the process of renegotiating an extension of the credit repayment. The interest on the loan is the internal interest percentage by the bank plus 3.00%. The interest rate cannot be lower than 3.00%. At year-end date the applicable annual interest rate of the loan is 3.05%.

b)   Central Cooperative bank loan and overdraft

(i)         This is an overdraft with Central Cooperative Bank. The interest on the account is 4.00% and is repayable on 24 June 2022. At the date these financial statements were signed the Company made an extension of the credit repayment period by 12 months. In the beginning of March 2020, the Group successfully negotiated reduction of the interest rates on the loans due to Central Cooperative Bank to 2,8%.The interest rate on the overdraft and the investment loan is 3.6%. In the beginning of March 2020, the Group successfully negotiated reduction of the interest rates on the loans due to Central Cooperative Bank to 2,8%.

(ii)         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 the beginning of March 2020, the Group successfully negotiated reduction of the interest rates on the loans due to Central Cooperative Bank to 2,8%.In 2020, in connection with the Covid-19 pandemic and the effects on the business environment in Bulgaria, the Governing Council of the Bulgarian National Bank (BNB) approved the implementation of a debt moratorium with a limited duration, allowing for changes in the principal repayment schedule and / or interest on bank loan liabilities, without changing key parameters of the loan agreement. The Group took advantage of this opportunity for debt substitution agreements for the investment loan one of the overdrafts. With annexes from 12.06.2020 and 31.12.2020 a grace period was determined for the due interest from May 2020 to January 2021. The term of repayment of the loans remains unchanged.

12.  Trade and other payables

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

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

The payable amounting to €1,000,000 represents advance payment received for the sale of one of the investment properties in Plovdiv (note 9).

13.  Related party transactions

On 18 June 2020, a subsidiary of the Company, BSPF Project 1 EAD ("Project 1"), entered into a loan agreement with Phoenix Capital Holding Plc (Phoenix). Project 1 lent Phoenix €196,000 at a fixed annual interest rate of 4.5%, with a repayable date of 18 June 2021. At the end of 2020 the debtor made a partial repayment of the loan amounting to €47,429 in the form of paying Group trade payables. The outstanding balance as at 31.12.2020 is € 149 309. The Group has recognized expected credit losses of € 3,950. As at 30.06.2021 the loan is repaid.

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 €107,136 (2020: €107,136). The amount outstanding as at 30.06.2021 is € 53,568 (31.12.2020: €160,704).

Upon the business combination of ECD the Group has recognized €3,982,084 as payables to Sienit Holdings AD owner of 30% of Targovski Park Kraimorie. The liabilities represent loans granted by the shareholder. The Group has recognized interest expenses for 2021 of €120,163 (2020: €166,080). The outstanding liabilities as at 30.06.2021 are €4,268,328 (31.12.2020: €4,148,164.

Upon the business combination the Group has acquired a receivable from Sienit Holding AD. The nominal value is €1,325,000, but at acquisition date it has been fully impaired. As at 31.12.2020, the board has made a valuation of the recoverability and 50% of nominal value (€662,500) has been recognized. The Group has successfully arranged new a repayment schedule with the Sienit Holding AD

14.        Net asset value per share

15.        Events after reporting date

European Convergence Development Company PLC ("ECDC") Sale

As of September 30, 2021, Black Sea Property PLC is entering into an Agreement for the Purchase and Sale of Shares and Receivables of European Convergence Development (Cayman) Limited and ECD Management (Cayman) Limited. The agreed price of the sale is EUR 4,5m. Details of the fair value of assets and liabilities of the ECDC group that were acquired on 21 February 2020 are disclosed in note 5.