Consolidated Statement of Cash Flows
for the period ended 30 June 2022

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 €4,500,000. Both companies were subsidiaries of Black Sea Property PLC.

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

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:

6.   Administration and other expenses

7.   Other income

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.

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)

10.  Investment properties

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 €4,836,142.

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 €655,876 and no amortization expenses were recognized in 2020. During the prior year, the acquired intangible asset was impaired by €142,499 however the impairment of €142,499 was fully reversed in the current period. The acquired intangible asset was amortized by €49,191 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:

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

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

13.  Issued share capital

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

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 €11,251,523 (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 €2.3 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 €1.8 million and a revolving limit of up to €0.5 million. The debt funding from UniCredit is secured by a commercial mortgage on the property valued at €11,251,523 (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 €1.5 million of the investment limit is no later than 30 November 2023 while the utilization deadline of the remaining €0.3 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 €0.5 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

 (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:

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:

16.  Related party transactions

In the current year, the Group obtained a short-term loan of € 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 €2,520,518 (2021: €nil).

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 €107,358 (2021: €214,272). The amount outstanding as at 30.06.2022 is € 160,926 (31.12.2021: €53,568).

17.  Net asset value per share

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 € 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 € 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 €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 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 € 4.2 million) for the acquisition of all receivables of Star Mil. The Company financed the outstanding € 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.