TIDMBSP
RNS Number : 6267N
Black Sea Property PLC
30 September 2021
30 September 2021
BLACK SEA PROPERTY PLC
("Black Sea Property" or the "Company")
Audited Results for the year ended 31 December 2021
The Board of Black Sea Property PLC is pleased to announce its
audited results for year ended 31 December 2020.
Electronic copies of the annual report will be available at the
Company's website www.blackseapropertyplc.com .
The Directors of the Company are responsible for the contents of
this announcement.
For further information, please visit
www.blackseapropertyplc.com or contact the following:
BLACK SEA PROPERTY PLC simon.hudd@d3ainvestments.com
Simon Hudd, Chairman
PETERHOUSE CAPITAL LIMITED
AQSE Corporate Adviser
Mark Anwyl +44 (0) 20 7469 0930
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms
part of retained EU law (as defined in the European Union
(Withdrawal) Act 2018).
Chairman's Statement
I am pleased to present the financial statements of Black Sea
Property PLC ("Black Sea Property" or the "Company") for the year
ended 31 December 2020. This follows an extension granted by Aquis
Stock Exchange ("AQSE") as a result of logistical issues arising
from Covid-19 restrictions and pursuant to Rule 3.1(2) of the AQSE
Growth Market Access Rulebook.
The net asset value as at 31 December 2020 was EUR 22,392,434 or
1.23 cents per share (2019: EUR 16,066,843 or 1.27 cents per
share).
The Company generated revenues from camping reservations of EUR
955, 157 (2019: EUR 671,030). This resulted in earnings per share
of 0.0 2 cents (2019: 0.32 cents), after taking into account the
purchase gain of EUR 221,558 after operating expenses.
Investments and Financings
Camping South Beach EOOD ("CSB")
During the period, Camping South Beach successfully strengthened
its position as a destination for luxury camping holidays and beach
houses, which resulted in further revenue generation in the
season.
At the end of 2020, CSB won a tender procedure for a concession
of approximately 79 978 square metre of beach in front of the
property, for a term of 20 years. The Concession Agreement entered
into force on 17.10.2020. It is anticipated that the Concession
will add value to the property enabling synergy with the existing
camp site at CSB.
Due to the prevailing Covid environment, the expected occupancy
levels were negatively influenced due to significant Covid
restrictions. International travel was severely hindered by
quarantines and strict restrictions. However, CSB benefits from a
domestic competitive advantage in Bulgaria, as the site has
historically been very popular with Bulgarian tourists.
The Bulgarian tourist segment in 2020 was mainly driven by
domestic travel. The expectation is that CSB will benefit from the
increased move within the Bulgarian hospitality market towards
camping holidays in local markets which allow for social distancing
while holidaying within the country.
The fair value of the investment property in CSB at the year-end
was EUR16,040,000 which represents a marginal decrease of EUR
160,000 below the value at the end of the previous year.
In 2020, as a result of the Covid-19 pandemic and the effects on
the business environment in Bulgaria, the National Bank of Bulgaria
approved a moratorium on credit facilities and ensured that
borrowers are able to re-schedule the principals under such
borrowings. The Company took advantage of this possibility and
signed annexes with the financing bank for grace period for the
interest accrued from 12.06.2020 till 31.12.2020. The other terms
of the credit facilities remain the same.
Ivan Vazov 1 Building
During the period the Company prepared and filed all technical
documentation for the reconstruction of the building. There is
currently no signed lease of the building and the plan is to start
the letting activity after completion of necessary construction
works.
The pandemic significantly affected the real estate sector. We
anticipate that the market and the real estate sector would recover
relatively quickly as vaccination levels in Bulgaria increase.
The Company signed Annexes for an extension of the credit
repayment period up to and including 31.12.2021. The Company is
currently negotiating new financing conditions for the construction
budget as well as an extension of the outstanding principal for a
period of 8 years, with a grace period for the principal covering
the time schedule for the reconstruction of the building.
The Ivan Vazov 1 Building was valued at EUR 10 974 000 at 31
December 2020 (note 9) .
Consequently, in July 2021 the Company received the signed
building permit by the Authorities for the reconstruction of the
roof and the building.
Byala Plots of Land ("Byala")
The Company is planning the development of plots of land at
Byala as a camping site with luxury bungalows, which is anticipated
to be complementary to existing investments at CSB. The project
will add value to the portfolio of the Company reflecting the high
demand of close-to-nature camp sites offering a safe and secure
environment for visitors.
Byala plots were valued at EUR10 510 000 at 31 December 2020
(note 9) , which represents an increase of EUR2,113,000 above the
balance at the end of the previous year.
ECDC Group
In February 2020, the Company 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 EUR3,582,638. 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 equivalent to EUR44,855. The Company paid EUR1 for the loan
granted by ECDC to ECD Cayman of EUR122,221,701.
ECD Cayman's main assets include a 70% holding via a subsidiary
in two plots in Kraymorie, Burgas and a 100% holding in three plots
in Plovdiv.
Subsequently in July 2021 one of the investment properties in
Plovdiv held by the ECDC Malta Company was sold for cash
consideration of approx. EUR1.06 million. The property was valued
at EUR0.83 million at the time of acquisition in February 2020.
Financings
On 10 January 2020, the Company raised EUR4,585,682 through a
placement of 416,880,162 new ordinary shares at EUR0.011 per share
for further development of the Company's real estate portfolio and
for making investments. At the same time, Mamferay Holdings Limited
converted its existing loans of EUR1,397,391 into 127,035,545 new
ordinary shares at EUR0.011 per share.
Change of Registered Office and Registered Agent
In March 2021 the Company appointed Crowe Trust Isle of Man
Limited to act as Administrator and Registered Agent.
With effect from 31 March 2021 the Company changed its
registered office to 6(th) Floor, Victory House, Prospect Hill,
Douglas, Isle of Man, IM1 1EQ.
BSP's suspension in trading in December 2020
Trading in the Company's shares on the AQSE Growth Market was
suspended on 17 December 2020 as a result of the Company's Annual
General Meeting and particularly for non-re-appointment of FIM
Capital Limited as Administrators of the Company and resignation of
Alex Borelli, Non-executive Chairman of the Company.
Following appointment of Crowe Trust Isle of Man Limited as
Administrators of the Company and the appointment of Simon Hudd as
a Company Non-executive Chairman on 26 February 2021, trading in
the Company's shares re-commenced on the AQSE Growth Market on
17June 2021.
Annual General Meeting and Resolutions
The resolutions for the forthcoming Annual General Meeting will
be contained in a separate Notice to be issued shortly.
Outlook
The Company is not able to fully assess the impact of the
current restrictions on the results for the year ending 31 December
2021 due to Covid-19. The pandemic has so far significantly
disturbed everyday life and economic activity. Limitations on
travel and operational restrictions have negatively affected real
estate operations in the short term.
The Directors are taking cautious measures to diminish and
manage the cash flow and cost base of the Company and are confident
that the business is well equipped to withstand this near-term
uncertainty.
The Directors believe that CSB will attract strong rental demand
from both domestic and also other European customers for the next
season following our marketing campaigns and increased vaccination
levels.
The Directors believe that the development of the plots of land
at Byala will add significantly to the Group's operations as a
luxury camping operator taking into account the increased demand
for high-class camping locations and the relatively low supply at
the Black Sea coast.
The reconstruction of Ivan Vazov Building and the subsequent
letting of the office premises will generate returns for the
Company in due course.
Signed on behalf of the Board by:
Simon Hudd
Chairman
30 September 2021
Director's Report
As at 31 December 2020, the significant shareholders of Black
Sea Property Plc ("the Company") were as follows:
Beneficial shareholder Holding Percentage
Neo London Capital
Plc 515,126,806 28.41%
Compass Capital JSC 304,354,182 16.78%
Mamferay Holdings
Limited 449,957,562 24.81%
Capman AM 92,000,000 5.07%
Interfund Investments
Plc 89,500,000 4.94%
The shareholder structure as at 31 December 2019 is the
following:
Beneficial shareholder Holding Percentage
Neo London Capital
AD 357,814,581 28.18%
Compass Capital JSC 217,936,000 17.17%
Mamferay Holdings
Limited 372,126,806 29.31%
Capman AM 105,000,000 8.27%
Auditor
The Company's Auditor, Grant Thornton Limited, being eligible,
has expressed their willingness to continue in office in accordance
with Section 80C of the Isle of Man Companies Act 2006.
Directors' interests
No current Director has an interest in the share capital of the
Company.
Directors' remuneration
Directors' remuneration comprises solely the fee payments
received by the Directors. No Directors received any benefits under
long term or short-term incentive schemes.
The maximum amount of the aggregate Directors' ordinary
remuneration permitted under Article 83.1 of
the Company's Articles of Association is GBP100,000 (EUR116,668
at year-end exchange rate) per annum, plus expenses.
Fees Fees Payable Fees invoiced Fees payable
Year ended As at Year ended As at
31 Dec 2020 31 Dec 2020 31 Dec 2019 31 Dec 2019
EUR EUR EUR EUR
Alex Borrelli* 24,203 6,168 25,447 13,525
Ventsislava Altanova 13,251 - 13,873 7,095
Miroslav Georgiev 13,231 - 13,873 7,095
Boris Lagadinov 11,343 - 13,901 7,109
Yordan Naydenov 16,906 3,316 13,945 7,095
78,934 9,484 81,039 41,919
------------- ------------- -------------- -------------
*includes 20% VAT charge.
Corporate Governance
The Company is committed to applying the highest principles of
corporate governance commensurate with its size.
While the Company is not required to comply in full with the
provisions set out in the UK Corporate Governance Code Issued by
the Financial Reporting Council, or to comment on its compliance
with the provisions of that Code, the Board is nevertheless
accountable to shareholders for the good corporate governance of
the Company.
The Board consists of four Directors and holds at least four
board meetings annually. Matters which would normally be referred
to appointed committees, such as the Audit, Remuneration and
Nomination Committees, are dealt with by the Board as a whole.
Going concern
The Group had EUR1,350,336 current assets at 31 December 2020,
the majority of which are related party receivables, cash and cash
equivalents and other receivables.
Accordingly, the Directors have a reasonable expectation that
the Company and the Group will continue in operational existence
for the foreseeable future, and for a period of at least 12 months
from the date of signing of these financial statements. Therefore,
the financial statements have been prepared as a going concern.
Post balance sheet events
Loan facility
Mamferay Holdings Limited a significant shareholder of Black Sea
Property PLC advanced a loan facility in the sum of EUR400,000 to
the Company on 11 June 2021 with an expected repayment date on or
before 14 June 2022. Interest on this loan will be calculated at 3
months Euro Interbank Offered Rate plus 6.5% per annum.
Sale of the land in Plovdiv
On 21st June 2021, European Convergence Development Malta
Limited (ECDC Malta) entered into an 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 EUR1,059,000 (VAT exclusive) to be paid as follows:
An amount of EUR1 000 000 was scheduled for 30 June 2021 and the
balance of EUR59 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 of a Bulgarian
Bank, financing the Buyer. ECD Malta received the initial payment
as per the contract on 28th June 2021. At the time of acquisition,
the Company took into consideration valuation of the property at
the amount of EUR834 000.
Directorate change
The board confirmed the appointment of Simon Hudd as Chairman on
26 February 2021.
Change in registered office address
With effect from 31(st) March 2021, the Company changed its
registered office to 6(th) Floor, Victory House, Prospect Hill,
Douglas, Isle of Man, IM1 1EQ.
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 6. The post year end sale of some of its land in Plovdiv is
as noted above.
Statement of Director's Responsibilities
The Directors are responsible for preparing the Annual Report
and the Group financial statements in accordance with applicable
law and regulations.
The Directors are required to prepare Group financial statements
for each financial year. The Directors have elected to prepare the
Group financial statements in accordance with International
Financial Reporting Standards ("IFRSs") as adopted by the European
Union and applicable law.
The Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and of its profit or loss for that period.
In preparing each of the Group financial statements, the Directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable, relevant and reliable;
-- state whether they have been prepared in accordance with IFRSs;
-- assess the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and
-- use the going concern basis of accounting unless they either
intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that its
financial statements comply with the Isle of Man Companies Act
2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website. Legislation in the Isle of Man governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Simon Hudd
Chairman
30 September 2021
Independent Auditor's Report to the shareholders of
Black Sea Property PLC
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Black Sea Property
Plc (the 'company') and its subsidiary companies (the 'group') for
the year ended 31 December 2020 which comprise the Consolidated
Statement of Comprehensive Income, Consolidated Statement of
Financial Position, Consolidated Statement of Changes in Equity,
Consolidated Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the group's affairs
as at 31 December 2020 and of its profit for the year then
ended;
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements, including the FRC's Ethical
Standard, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
The impact of macro-economic uncertainties on our audit
Our audit of the financial statements requires us to obtain an
understanding of all relevant uncertainties, including those
arising as a consequence of the effects of macro-economic
uncertainties such as Covid-19. All audits assess and challenge the
reasonableness of estimates made by management and the related
disclosures and the appropriateness of the going concern basis of
preparation of the financial statements. All of these depend on
assessments of the future economic environment and the group's
future operational arrangements.
Covid-19 is amongst the most significant economic events
currently faced by companies which has had a significant impact on
the results of the group in the year to 31 December 2020. We
applied a standardised firm-wide approach in response to these
uncertainties when assessing the group's future operational
arrangements. However, no audit should be expected to predict the
unknowable factors or all possible future implications for an
entity associated with these particular events.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
In our evaluation of the directors' conclusions, we considered
the risks associated with the group's business model, including
effects arising from macro-economic uncertainties such as Covid-19,
and analysed how those risks might affect the group's financial
resources or ability to continue operations over the period of at
least twelve months from the date when the financial statements are
authorised for issue. In accordance with the above, we have nothing
to report in these respects.
However, as we cannot predict with certainty all future events
or conditions and as any subsequent events may result in outcomes
that are inconsistent with judgements that were reasonable at the
time they were made, the absence of reference to a material
uncertainty in this auditor's report cannot be viewed as a
guarantee as the group's ability to continue as a going
concern.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our
audit.
Key audit matter How the scope of our audit
addressed the key audit matter
--------------------------------------- -------------------------------------------------------------------
Carrying value of investment
property
Our audit work included,
As detailed in note 9, the but was not restricted to,
group owns investment properties the following:
with a fair value of EUR42,360,142
at 31 December 2020. * We assessed the competency, independence,
qualifications and objectivity of the independent
The determination of the valuer to confirm that they are appropriately
fair value of the investment qualified to value the properties.
properties is considered
to be a significant judgement
as detailed in note 3 and
we therefore considered this * We reviewed the valuation reports to ensure that all
to be a significant audit valuations have been carried out in line with
risk and key audit area. relevant professional standards and in accordance
with the group's accounting policy.
The group engages an independent
valuer to determine the fair
value of some properties
at the year end. This valuation * We assessed the significant judgements used in the
considers the nature of the valuations to ensure they are reasonable.
property, its location and
any comparable property transactions.
The valuations require the
independent valuer to make * We reviewed recent open market land sales and applied
significant professional unit prices in such sales to land held by the
judgements in relation to company.
expected future cash flows,
market capitalisation yields
and appropriate input information
provided by the management * We reviewed the appropriateness of the disclosures
in relation to occupancy within the group's financial statements in relation
and rental values. In addition to the valuation methodology, key valuation inputs
to this method, the company and valuation uncertainty.
also uses the price of recent
land sales in the open market
as being indicative of the
value of comparable land * We recalculated the movement in fair value, ensured
held by the company. Any that this was reasonable and agreed this to the
inaccuracies in this input financial statements.
information or unreasonable
judgements made in the valuation
could result in a material
misstatement of the Statement
of Comprehensive Income and
the Statement of Financial
Position.
--------------------------------------- -------------------------------------------------------------------
Key observations
------------------------------------------------------------------------------------------------------------
As a result of our work we concluded that the valuation
of the group's investment properties is appropriate
and in line with the group's accounting policies
------------------------------------------------------------------------------------------------------------
Valuation and recoverability
of the intergroup loans Our audit work included,
but was not restricted to,
The company holds receivables the following:
with its subsidiary companies
totalling EUR4,870,233 at * We obtained and reviewed all loan agreements in place
31 December 2020. These loans and recalculated the interest receivable from the
have been issued to support subsidiary companies.
the operations of the Bulgarian
subsidiaries. Due to the
nature of these loans they
are considered key to the * We reviewed the consolidation to ensure that all
audit of the company. loans and interest were fully eliminated on
consolidation and preparation of the group financial
statements.
--------------------------------------- -------------------------------------------------------------------
Key observations
------------------------------------------------------------------------------------------------------------
As a result of our work we concluded that the valuation
of the intergroup loans is appropriate and in line
with the group's accounting policies
------------------------------------------------------------------------------------------------------------
Our application of materiality
We define materiality as the magnitude of a misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality in determining the nature, timing
and extent of our audit work and in evaluating the results of that
work.
The materiality for the group was set at EUR656,000, which
equates to 1.5% of group total assets at the planning stage of our
audit, before the final property valuations had been accounted for.
This benchmark was considered to be the most appropriate given the
nature of the asset based group. We chose not to revise our
materiality threshold throughout the course of the audit once the
final property valuation figures were known as this would result in
a higher materiality to that set at planning which we did not feel
was appropriate.
We use a different level of materiality, performance
materiality, to drive the extent of our testing. This was set at
60% of the financial statement materiality which reflects our
assessment of risk inherent in the audit.
We determined the threshold at which we will report individual
audit differences to the Board to be EUR32,800. In addition, we
communicate misstatements below that threshold that, in our view,
warrant reporting on qualitative grounds.
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the
group's business and is risk-based. Our audit was scoped by
obtaining an understanding of the group and its environment,
including the group's system of internal control, and assessing the
risk of material misstatement at the group level.
A full scope audit was carried out on most components of the
group. We carried out targeted audit procedures on material parts
of the ECD group. Detailed audit instructions were issued to the
auditors of the components which detailed the significant risks
that were to be addressed through the audit and indicated the
information that needed to be reported back to the group audit
team. The group audit team communicated with all component auditors
throughout the planning, fieldwork and concluding stages of the
local audits.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the
Chairman's Statement and the Directors' Report set out on pages 2
to 7 , other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon. In connection with our audit of the financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 8, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
The objectives of our audit are to identify and assess the risks
of material misstatement of the financial statements due to fraud
or error; to obtain sufficient appropriate audit evidence regarding
the assessed risks of material misstatement due to fraud or error;
and to respond appropriately to those risks. Owing to the inherent
limitations of an audit, there is an unavoidable risk that material
misstatements in the financial statements may not be detected, even
though the audit is properly planned and performed in accordance
with the ISAs (UK).
In identifying and assessing risks of material misstatement in
respect of irregularities, including fraud and non-compliance with
laws and regulations, our procedures included the following:
- The Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation. We determined that the following laws and regulations
were most significant including IFRS as adopted by the European
Union, the Isle of Man Companies Act 2006, Bulgarian, Maltese,
Cypriot and Cayman company law, the listing regulations of the
Aquis stock exchange and taxation laws. We assessed the extent of
compliance with these laws and regulations as part of our
procedures on the related financial statement items.
- We understood how the group is complying with those legal and
regulatory frameworks by, making inquiries to management and those
responsible for legal and compliance procedures. We corroborated
our inquiries through our review of minutes and documents provided
to the board.
- We assessed the susceptibility of the group's financial
statements to material misstatement, including how fraud might
occur. Audit procedures performed by the engagement team
included:
-- identifying and assessing the design effectiveness of
controls management has in place to prevent and detect fraud;
-- understanding how those charged with governance considered
and addressed the potential for override of controls or other
inappropriate influence over the financial reporting process;
-- challenging assumptions and judgements made by management in
its significant accounting estimates; and
-- identifying and testing journal entries, in particular any unusual journal entry postings.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with the terms of our engagement. Our audit work has
been undertaken so that we might state to the company's members
those matters we are required to state to them in an auditor's
report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the company and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
Grant Thornton Limited
Douglas
Isle of Man
Date: 30 September 2021
Consolidated Statement of Comprehensive Income
Notes Year to Year to
31 Dec 20 31 Dec 19
Total Revenue
Revenue 4) 955,157 671,030
Property operating expenses 4) (805,931) (468,514)
----------- -----------
149,226 202,516
----------- -----------
Gain on revaluation of investment
properties 9) 262,596 4,564,767
Bargain purchase on acquisition 6) 731,634 -
----------- -----------
Net gain on investment properties 994,230 4,564,76
----------- -----------
Administration and other expenses 5) (931,382) (977,728)
----------- -----------
Operating Profit 212,074 3,789,555
----------- -----------
Other Income 7) 912,816 1,318,513
(Losses) from investments accounted
for using the equity method 6) (29,313) -
Interest payable and similar
charges 7) (753,806) (652,436)
----------- -----------
Profit before taxes 341,771 4,455,632
----------- -----------
Taxation 8) (38,015) (391,178)
----------- -----------
(Loss)/Profit and total comprehensive
income 303,756 4,064,454
=========== ===========
(Loss)/Profit and total comprehensive
income attributable to the:
- shareholders of the parent
company 401,035 4,064,454
- non-controlling interest (97,279) -
Gain per share
Basic and Diluted gain per share
(cents) 18) 0.02 0.32
The results are derived from continuing operations during the
year.
The notes on pages 18 to 37 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 30 September 2021 and were signed on
their behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
Consolidated Statement of Financial Position
Notes 2020 2019
Non-current assets
Investment properties 9) 42,360,142 35,986,000
Intangible assets 10) 655,876 -
Property, plant and equipment 27,782 -
Investments in associates 6) 17,313 -
-------------- --------------
Total non-current assets 43,061,113 35,986,000
-------------- --------------
Current assets
Trade and other receivables 11) 168,330 351,367
Related party receivables 24) 811,809 -
Cash and cash equivalents 12) 370,197 717,945
-------------- --------------
Total current assets 1,350,336 1,069,312
-------------- --------------
Total assets 44,411,449 37,055,312
-------------- --------------
Equity and liabilities
Issued share capital 16) 70,699,442 64,774,886
Retained earnings 17) (46,773,922) (47,174,957)
Foreign currency translation
reserve 17) (1,533,086) (1,533,086)
-------------- --------------
Total equity, attributable to
the shareholders of the parent
company 22,392,434 16,066,843
Non-controlling interest (3,065,234) -
-------------- --------------
Total equity 19,327,200 16,066,843
-------------- --------------
Liabilities
Non-current liabilities
Bank loans 14) 8,612,341 8,326,534
Trade payables 13) 585,628 -
Deferred tax liability 8) 1,941,799 1,903,784
-------------- --------------
Total non-current liabilities 11,139,768 10,230,318
-------------- --------------
Current liabilities
Trade payables 13) 1,023,520 496,684
Shareholder loans 24) - 1,394,958
Bank loans 14) 8,772,797 8,866,509
Related party payables 14) 4,148,164 -
-------------- --------------
Total current liabilities 13,944,481 10,758,151
-------------- --------------
Total liabilities 25,084,249 20,988,469
-------------- --------------
Total equity and liabilities 44,411,449 37,055,312
============== ==============
Number of ordinary shares in
issue 16) 1,813,323,603 1,269,407,896
NAV per ordinary share (cents) 18) 1.23 1.27
The notes on pages 18 to 37 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 30 September 2021 and were signed on
their behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
Consolidated Statement of Changes in Equity
Share Retained Foreign Total equity Non-controlling Total
capital earnings currency attributable interests
translation to the
reserve parent
company
EUR EUR EUR EUR EUR EUR
At 1 January 2019 64,774,886 (51,239,411) (1,533,086) 12,002,389 - 12,002,389
Profit for the
year - 4,064,454 - 4,064,454 - 4,064,454
Total comprehensive
income - 4,064,454 - 4,064,454 - 4,064,454
----------- ------------- ------------- -------------- ---------------- ------------
At 31 December
2019 64,774,886 (47,174,957) (1,533,086) 16,066,843 - 16,066,843
=========== ============= ============= ============== ================ ============
At 1 January 2020 64,774,886 (47,174,957) (1,533,086) 16,066,843 16,066,843
Share capital placing 5,924,556 - - 5,924,556 - 5,924,556
Business combinations - - - - (2,967,955) (2,967,955)
----------- ------------- ------------- -------------- ---------------- ------------
Transactions with
owners 5,924,556 - - 5,924,556 (2,967,955) 2,956,600
Profit for the
year - 401,035 - 401,035 (97,279) 303,756
Total comprehensive
income - 401,035 - 401,035 (97,279) 303,756
----------- ------------- ------------- -------------- ---------------- ------------
At 31 December
2020 70,699,442 (46,773,922) (1,533,086) 22,392,434 (3,065,234) 19,327,199
=========== ============= ============= ============== ================ ============
The notes on pages 18 to 37 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 30 September 2021 and were signed on
their behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
Consolidated Statement of Cash Flows
Note 2020 2019
EUR EUR
------------------------------------------------------------- ----- ------------ ------------
Operating activities
(Loss)/Profit before taxation 341,771 4,455,632
(Gain)/loss on revaluation of investment property 9) (262,596) (4,564,767)
Bargain Purchase on Acquisition 6) (731,634) -
Loss from investments accounted for using the equity method 29,313 -
Other income 7) (879,901) (1,318,513)
Finance expense 7) 753,806 652,436
Changes in working capital (739,757) (775,212)
Decrease/(Increase) in trade and other receivables 202,335 (659,493)
Increase in trade and other payables 128,063 265,256
Cash used in operations (418,843) (1,169,449)
Tax refund/(paid) - -
------------------------------------------------------------- ----- ------------ ------------
Cash flows used in operating activities (418,843) (1,169,449)
------------------------------------------------------------- ----- ------------ ------------
Investing activities
Investment property additions and acquisitions 9 (4,712,662) -
Loans granted (196,000) -
Interest received 6 207,447 1,318,513
Cash held by the acquired subsidiary 613,952 -
------------------------------------------------------------- ----- ------------ ------------
Net cash (outflow) from investing activities (4,087,263) (2,535,954)
------------------------------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from issuing share capital 4,527,165 -
Interest paid and other charges 14 (362,841) (669,849)
Loans received 23 - 1,394,958
Other flows from financing activities 12 (5,966) -
Net cash inflow from financing activities 4,158,358 725,109
------------------------------------------------------------- ----- ------------ ------------
Net (decrease) in cash and cash equivalents 12 (347,748) (2,980,294)
Cash and cash equivalents at beginning of year 717,945 3,698,239
Cash and cash equivalents at end of year 12 370,197 717,945
------------------------------------------------------------- ----- ------------ ------------
The notes on pages 18 to 37 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 30 September 2021and were signed on
their behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
1) General information
Black Sea Property PLC (the "Company") was originally
incorporated in Jersey and re-domiciled to the Isle
of Man with effect from 20 July 2016 and continues under the
Isle of Man Companies Act 2006 with
registered number 013712V.
The Company seeks to generate capital gains through the
development, financing and sale of property in Bulgaria, including
the prime areas of Bulgaria's Black Sea coast, the ski resorts and
the capital, Sofia. The Company has five wholly owned Jersey
subsidiaries. In 2020 the parent-company purchased the ECDC group,
including entities in Cayman islands, Malta, Cyprus, Romania and
Bulgaria. The financial statements represent the financial position
and effects of the operations of the Company and its subsidiaries
(collectively referred as the "Group").
2) Summary of significant accounting policies
a) Basis of preparation
The principal accounting policies applied in the preparation of
the financial statements are set out below. These policies have
been consistently applied throughout the year, unless otherwise
stated.
The financial statements have been prepared on a going concern
basis under the historical-cost convention as modified by the
revaluation of financial assets held at fair value through profit
or loss and investment properties that have been measured at fair
value.
Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standards Board ("IASB") and International
Financial Reporting Interpretations Committee ("IFRIC")
interpretations as applicable to an Isle of Man company under the
Companies Act 2006.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the Directors to make judgements, estimates and
assumptions that affect the reported amounts of assets,
liabilities, income and expenses. These estimates and associated
assumptions are based on historical experience and various other
factors, which are believed to be reasonable under the
circumstances, and are reviewed on an on-going basis. The Directors
believe that the estimates utilised in preparing its financial
statements are reasonable and prudent. Actual results could differ
from these estimates. The most significant accounting estimate
affecting the financial statements is the valuation of investment
property (see note 3).
b) Standards and amendments which are first effective for the
period beginning 1 January 2020
-- Amendments to IFRS 3 'Business Combination' - Definition of a
business, the amendment clarifies the definition of a business with
the objective of assisting entities to determine whether a
transaction should be accounted for as a business combination or as
an asset acquisition.
On 25 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"), both being 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
EUR0.00168.
-- Amendment to IFRS 9, IAS 39 - Interest rate benchmark reform.
This require entities to update the effective interest rate to
reflect the change to the alternative benchmark rate rather than
derecognise or adjust the carrying amount of financial instruments
for changes required by the reform. Also, it require companies to
provide additional information to investors on potential new risks
from the reform and how it manages the transition to the
alternative benchmark rate. This amendment will be applied
prospectively.
-- Amendments to IAS 1 'Presentation of financial statements'
and IAS 8 'Accounting policies, changes in accounting estimates and
errors' - Definition of material. This has been applied and do not
have significant impact on the financial statements.
-- Amendment to conceptual framework. The framework is not an
IFRS standard and does not override any standard. This amendment
will be applied prospectively
c) New standards, amendments and interpretations issued but not yet effective and not early
adopted
A number of new standards are effective for annual periods
beginning after 1 January 2020 and earlier application is
permitted; however, the Group has not early adopted the new or
amended standards in preparing these consolidated financial
statements.
-- IFRS 17 'Insurance Contracts' Effective date Annual periods on or after 1 January 2021
-- Amendments to IAS 1 'Presentation of financial statements' on
classification of liabilities.
Effective date Annual periods on or after 1 January 2022.
d) Basis of consolidation
The financial statements comprise the results of the Company and
its subsidiaries as set out in note 15 Subsidiaries in which the
Company has the ability to exercise control are fully consolidated.
Control is defined as having exposure, or rights, to variable
returns due to involvement in an investee and the ability to affect
those returns.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated. The
accounting policies of the subsidiaries are consistent with those
of the Company.
e) Going concern
The Group had EUR1,350,336 current assets at 31 December 2020,
the majority of which are related party receivables, cash and cash
equivalents and other receivables. As part of their going concern
assessment, the Board of Directors have reviewed cash flow
forecasts for the 12 months from the date these financial
statements were signed and with supports by the shareholders, they
believe that the group is able to continue as a going concern at
least for the next 12 months from date of signing. Further details
are given in note 25) .
Accordingly, the Directors have a reasonable expectation that
the Company and the Group will continue in operational existence
for the foreseeable future, and for a period of at least 12 months
from the date of signing of these financial statements. Therefore,
the financial statements have been prepared as a going concern.
f) Functional and presentation currency
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the 'functional
currency'). The consolidated financial statements are presented in
Euros, which is the Company's presentational currency. The
functional currency of each entity within the Group is a key
judgement of management and the Directors. This judgement
prioritises primary factors, such as the source of competitive
forces and the denomination of sales prices and input costs, over
secondary considerations such as the source of financing, in
accordance with IAS21. These considerations indicate that the
functional currency of the Bulgarian entities is Bulgarian Lev and
the functional currency of the holding companies is the Euro.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Non-monetary items carried at fair value, which are denominated in
foreign currencies, are translated at the rates prevailing at the
date when the fair value was determined, and the gain or loss is
recognised in the profit or loss.
(iii) Foreign operations
The results and financial position of all the foreign entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities are translated to Euro at exchange rates at the reporting date;
-- income and expenses are translated at average exchange rates
(unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at the dates of
the transactions); and
-- all resulting exchange differences are recognised as a
separate component of Other Comprehensive Income.
When a foreign operation is sold, such exchange differences are
recognised in the Consolidated Statement
of Comprehensive Income as part of the gain or loss on sale.
g) Fair value measurement principles
The Group measures its investments in properties at fair value.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes place either in the
principal market for the asset or liability or, in the absence of a
principal market, in the most advantageous market for the asset or
liability. The principal or the most advantageous market must be
accessible to the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest. The fair value for financial instruments
traded in active markets at the reporting date is based on their
mid quoted price or binding dealer price quotations, without any
deduction for transaction costs. Securities defined in these
accounts as 'listed' are traded in an active market.
The valuations of investment properties are performed by an
external accredited independent valuer with recognised and relevant
professional qualifications and with recent experience in the
location and category of the investment property being valued. The
valuations are prepared in accordance with the RICS Valuation -
Global Standards, which incorporate the International Valuation
Standards ("IVS") and the RICS UK Valuation standards (the "RICS
Red Book"), as set out by the International Valuation Standards
Council ("IVSC"), taking into consideration the relevant IFRS 13
requirements. In arriving at their estimates of market values, the
valuers have used their market knowledge and professional judgement
and not only relied on historical transactional comparables.
Properties are valued annually.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
-- Level 1 - Quoted (unadjusted) market prices in active markets
for identical assets or liabilities.
-- Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is directly
or indirectly observable.
-- Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
h) Impairment of financial assets
The Group assesses at each reporting date whether a financial
asset is impaired. A financial asset is deemed to be impaired if,
and only if, there is objective evidence of impairment as a result
of one or more events that have occurred after the initial
recognition of the asset and that loss event has an impact on the
estimated future cash flows of the financial asset that can be
reliably estimated.
If there is objective evidence that an impairment loss has been
incurred, the amount of the loss is measured as the difference
between the assets' carrying amount and the present value of
estimated future cash flows discounted using the asset's original
effective interest rate.
i) Interest income
Income on investments is recognised on an accruals basis.
j) Revenue recognition
Revenue includes mainly fees from camping reservations. Such
fees are recognised in income when received and in the period that
the company reservation has occurred.
k) Expenses
Expenses are accounted for on an accruals basis. The Group's
property operating expenses, administration fees, finance costs and
all other expenses are charged to the profit or loss. Transaction
costs directly attributable to the purchase of investment property
are included within the cost of the property.
l) Loans payable at amortised cost
Loans payable are recognised on an amortised cost basis. Loans
payable are recognised when cash is received from lenders and are
derecognised when the cash, and related interest, has been repaid.
Loans payable are initially recorded at fair value plus any
directly attributable transaction costs and are subsequently
measured at amortised cost using the effective interest method.
m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash held at
the bank and demand deposits.
Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash and that are
subject to an insignificant risk of changes in value.
n) Trade and other receivables
Trade receivables are non-derivative financial assets with fixed
or determinable payment terms that are not quoted in an active
market. The carrying value of trade receivables approximates their
fair values. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of receivables.
o) Investment properties
Property that is held for rental yields or for capital
appreciation or both is classified as investment property.
Investment property comprises freehold land, freehold buildings,
and land held under long term operating leases. Investment property
is measured initially at its cost, including related transaction
costs and subsequently revalued annually to fair value.
Investment property that is being redeveloped for continuing use
as investment property or for which the market has become less
active continues to be measured at fair value.
Investment properties are accounted for on completion of
contract when ownership is recorded in the trade registry.
p) Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax is payable on taxable profits for the year. Taxable
profit differs from net profit as reported in the Consolidated
Statement of Comprehensive Income because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
date.
Current taxes include irrecoverable withholding tax on the
interest receivable on loans from the Company
to its Bulgarian subsidiaries.
Deferred tax is recognised in respect of all temporary
differences that have originated but not reversed at the reporting
date, where transactions or events that result in an obligation to
pay more tax in the future or right to pay less tax in the future
have occurred at the reporting date. This is subject to deferred
tax assets only being recognised if it is considered more likely
than not that there will be sufficient profits from which the
future reversal of the temporary differences can be deducted.
q) Trade and other payables
Trade and other payables are recognised at amortised cost and
relate to amounts accrued in the normal course of business which
are payable within one year.
r) Share capital
Ordinary share capital
Ordinary shares are classified as equity. External costs
directly attributable to the issue of new shares are deducted from
the proceeds of issue and shown as a deduction to reserves.
Founder shares
Founder shares are classified as equity.
s) Acquisition of businesses
The acquisition method of accounting is used to account for
business combinations by the Group.
The consideration transferred for the acquisition of a
subsidiary comprises the fair value of the assets transferred, the
liabilities incurred and the equity interests issued by the Group.
The consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any
pre-existing equity interest in the subsidiary. Acquisition-related
costs are expensed as incurred.
t) Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another.
(i) Financial assets
Financial assets are classified at initial recognition. The
classification of financial assets at initial recognition that are
debt instruments depends on the financial asset's contractual cash
flow characteristics and the Group's business model for managing
them. The Group initially measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value
through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through other comprehensive income
("OCI"), it needs to give rise to cash flows that are solely
payments of principal and interest ("SPPI") on the principal amount
outstanding. This assessment is referred to as the SPPI test and is
performed at an instrument level.
Classification and measurement are based on both whether
contractual cash flows are solely payments of principal and
interest; and whether the debt instrument is held to collect those
cash flows. In the case of the Company or Group, all financial
assets meet this criteria and so are held at amortised cost.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking
information to recognise expected credit losses ("ECLs") - the ECL
model. This replaces IAS 39's 'incurred loss model'.
ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at the original
effective interest rate ("EIR"). The expected cash flows will
include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next 12
months (a '12-month ECL'). For those credit exposures for which
there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a 'lifetime ECL').
For trade receivables and contract assets, the Group applies a
simplified approach in calculating ECLs. Therefore, the Group does
not track changes in credit risk, but instead recognises a loss
allowance based on lifetime ECLs at each reporting date.
It is the Group's policy to measure ECLs on such instruments on
a 12-month basis.
(ii) Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at amortised cost. The Group's financial
liabilities include trade and other payables and loans.
Subsequent measurement
Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings
and trade and other payables are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in
profit or loss and OCI when the liabilities are derecognised, as
well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss and other comprehensive
income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
u) Intangible assets
Intangible assets include rights under a concession agreement.
They are accounted for using the cost model. The cost comprises
discounted cash flows of the future payment according to the
concession agreement.
After initial recognition, an intangible asset is carried at its
cost less any accumulated amortization and any accumulated
impairment losses. Impairment losses are recognized in the
statement of profit or loss and other comprehensive income for the
respective period.
Subsequent expenditure on an intangible asset after its purchase
or its completion is expensed as incurred unless it is probable
that this expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standard of
performance and this expenditure can be measured reliably and
attributed to the asset. If these two conditions are met, the
subsequent expenditure is added to the carrying amount of the
intangible asset.
Residual values and useful lives are reviewed at each reporting
date.
3) Significant accounting judgements, estimates and assumptions
The preparation of the Group's financial statements requires
management to make judgements, estimates and assumptions that
affect the reported amounts recognised in the financial statements
and disclosure of contingent liabilities. However, uncertainty
about these assumptions and estimates could result in outcomes that
could require a material adjustment to the carrying amount of the
asset or liability affected in future periods.
The Group based its assumptions and estimates on parameters
available when the financial statements were prepared. However,
existing circumstances and assumptions about future developments
may change due to market changes or circumstances arising beyond
the control of the Group. Such changes are reflected in the
assumptions when they occur.
A key judgement area for the Group is the valuation of
investment properties. External independent valuers assessed the
fair value of investment properties. The valuations are performed
by a recognised valuer with a relevant professional qualification
and recent experience in the location and category of the
investment properties as described in note 2g. Details of
investment properties held at fair value can be found in note 9
The investment properties are valued annually. The Directors
consider any relevant movements in property markets that may impact
the carrying values of the property held between the date of the
last valuation
and the date of financial statements.
4) Net operating income
Year ended Year ended
31 Dec 2020 31 Dec
EUR 2019
EUR
Camping reservations 955,157 670,723
Property operating expenses (805,931) (487,134)
------------- -----------
149,226 183,589
------------- -----------
All income during the year is primarily due to camping
reservations from CSB - see note 8.
5) Administration and other expenses
Year ended Year ended
31 Dec 31 Dec
2020 2019
EUR EUR
Directors' remuneration 78,934 81,039
Administration fees - Isle of Man 67,262 48,491
Administration fees - Jersey - 17,685
Administration fees - Bulgaria 54,446 379,826
Legal and professional fees 340,183 123,232
Auditors' remuneration 55,269 43,477
Foreign currency expenses 10,937 3,920
Registrar fees - 2,970
Broker fees 33,353 33,961
Other administration and professional fees 290,998 243,127
----------- -----------
931,382 977,728
----------- -----------
In 2020, key management personnel comprise the Board (2019: The
Board). The Board's compensation
comprised Directors' fees only during the year, the amount of
which is summarised within the Directors'
Report.
6) 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 EUR3,582,638. 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 EUR0.00168 or a total of EUR44,855. The total cost net of
share transaction fees was EUR46,626. EUR1 was paid for the loan
granted by ECDC to ECD Cayman of EUR122,221,701.
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:
EUR
Investment properties 4,922,142
Trade and other receivables 19,298
Cash and cash equivalents 613,952
Trade payables (226,990)
Loan payables (3,982,084)
------------
Net identifiable assets 1,346,318
------------
The bargain purchase on acquisition of the ECD Cayman group can
be presented as follows:
EUR
Net identifiable assets 1,346,318
Non-controlling interest 2,967,955
Consideration transferred (3,582,639)
------------
731,634
------------
After the initial recognition the Group has recognized losses
from ECDC Plc for 2020 of EUR29,313.
7) Finance income/(expense)
The following amounts have been included in the Consolidated
Statement of Comprehensive Income line for the reporting periods
presented:
Other income Year ended Year ended
31 Dec 2020 31 Dec
EUR 2019
EUR
Interest income - cash and deposit instruments 212,173 271,551
Reversal of fair value adjustment of acquisition
receivable balance 662,500 1,046,962
Others 38,143 -
------------- -----------
912,816 1,318,513
------------- -----------
Interest payable and similar charges Year ended Year ended
31 Dec 2020 31 Dec
EUR 2019
EUR
Interest expense on borrowings* 701,523 628,996
Amortisation of bank loan agreement fee 46,912 23,440
Loan impairment 3,950 -
Other 1,421 -
---------------- -----------
53,806 652,436
---------------- -----------
*The interest on borrowings relates mainly to the secured debt
funding on note 14 )
8) 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% (2019: 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% (2019: 10%).
Cyprus
Subsidiaries of the Company incorporated in Cyprus are taxed in
accordance with the applicable tax laws of Cyprus. The Cyprus
corporate tax rate for the year was 12.5%.
Malta
Subsidiaries of the Company incorporated in Malta are taxed in
accordance with the applicable tax laws of Malta. The Malta
corporate tax rate for the year was 35%.
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% (2019: 0%) is
shown below.
Year ended Year ended
31 Dec 31 Dec
2020 2019
EUR EUR
--------------------------------------------- ----------- -----------
(Loss)/Profit before tax 351,255 4,455,632
--------------------------------------------- ----------- -----------
Profit on ordinary activities multiplied by - -
the standard rate in the Isle of Man of 0%
(2019: 0%)
Effect of different tax rates in different
countries 3,155 6,285
Deferred tax liability on fair value uplift
of investment property 34,860 384,893
--------------------------------------------- ----------- -----------
Current charge for the year 38,015 391,178
--------------------------------------------- ----------- -----------
Bulgarian tax losses brought-forward at 10% (359,178) (750,356)
Tax losses utilised in the year 168 220 391,178
--------------------------------------------- ----------- -----------
Bulgarian tax losses carried-forward at 10% 190,958 (359,178)
--------------------------------------------- ----------- -----------
Deferred tax liability
Opening deferred tax liability balance 1,903,784 1,509,773
Deferred tax liability on fair value uplift 34,860 -
of investment property on
acquisition of a subsidiary
Bulgarian deferred tax liability charge 3,155 391,178
Reclassification of prior year balance - 2,833
--------------------------------------------- -----------
Closing deferred tax liability balance 1,941,799 1,903,784
--------------------------------------------- ----------- -----------
9) Investment properties
Year ended Year ended
31 Dec 2020 31 Dec 2019
EUR EUR
Beginning of year 35,986,000 27,566,766
Acquisition 4,922,142 1,065,723
Additions 1,189,404 2,788,744
Fair value adjustment 262,596 4 564 767
--------------------------- ------------- -------------
Total investment property 42,360,142 35,986,000
--------------------------- ------------- -------------
Ivan Vazov 1 Building 10,974,000 11,329,000
CSB 16,040,000 16,260,000
Byala Land 10,510,000 8,397,000
Tsaratovo Plovdiv 1,472,142 -
Targovski Park 3,364,000 -
Total investment property 42,360,142 35,986,000
--------------------------- ------------- -------------
On 27 December 2019, the Company signed a settlement agreement
(the "Agreement") for the cancellation of the sale of 23 plots of
land in Byala ("Plots of land"). The former management of the
Company had previously agreed to the sale of the Plots of Land in
2014 at a consideration of EUR1,020,000 VAT included, being a price
level significantly under the then market valuation. Under the
terms of the Agreement the transfer agreement for the ownership of
the Plots of Land was rescinded and is restored to the Company. The
Company paid a net cost of EUR1,065,723, which included legal
costs, for the return of the Plots of Land.
Upon the purchase of ECD group, the group acquired three plots
in Plovdiv with a fair value of EUR1,472,142 (through European
Convergence Development (Malta) limited ) and two plots in Burgas
with a fair value of EUR3,364,000 (through Targovski Park
Kraimorie).
The fair value of the Tsaratsovo Plovdiv properties was measure
at recent sale prices. Additional information is presented in note
25 ) .
The valuations of the other Group properties at 31 December 2020
and 31 December 2019 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.
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 cost of the
acquired intangible assets is EUR655,876 and no amortization
expenses were recognized in 2020.
11) Trade and other receivables
Year ended Year ended
31 Dec 2020 31 Dec
EUR 2019
EUR
Trade receivables* 133,505 345,657
Prepayments 34,825 5,710
------------- -----------
168,330 351,367
------------- -----------
*All amounts are due within one year. The expected credit losses
(ECL) for this amount is nil.
12) Cash and cash equivalents
Year ended Year ended
31 Dec 31 Dec
2020 2019
EUR EUR
Cash in hand 2,138 647
Cash at bank 368,059 717,298
----------- -----------
370,197 717,945
----------- -----------
Cash and cash equivalents comprise cash on hand, cash held at
the bank and demand deposits. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of
changes in value. EUR 83,726 cash are restricted according to the
bank loan agreement with Unicredit.
13) Trade and other payables
Non-current trade and other payables can be presented as
follows:
Year ended Year ended
31 Dec 2020 31 Dec
EUR 2019
EUR
Concession payable 571,351 -
Lease payables 14,277 -
------------- -----------
585,628 -
------------- -----------
The current trade and other payables can be presented as
follows:
Year ended Year ended
31 Dec 31 Dec 2019
2020 EUR
EUR
Trade creditors 663,731 482,494
Concession payable 46,404 -
Lease payables 8,506 -
Other payables 304,879 14,190
----------- -------------
1,023,520 496,684
----------- -------------
14) Bank loans
Year ended Year ended
31 Dec 31 Dec
2020 2019
EUR EUR
Loan from UniCredit (a) 7,018,083 6,980,477
Central Cooperative Bank (b) 10,367,055 10,212,566
-------------------------------- ----------- -----------
17,385,138 17,193,043
----------- -----------
Long term bank loans 8,612,341 8,326,534
Current bank loans 8,772,797 8,866,509
----------- -----------
Reconciliation of bank loans
Beginning of year (gross loan) 17,193,043 18,084,845
Bank loan arrangement fees 8,729 23,440
Interest charged 546,207 652,436
Principal repayments - (897,829)
Interest payments (362,841) (669,849)
Total bank loans 17,385,138 17,193,043
-------------------------------- ----------- -----------
(a) In October 2017, the Company entered into a secured debt
funding of EUR7 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 EUR11,329,000 (see note 9). 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 period by 12 months.
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
As at As at
31 Dec 2020 31 Dec
EUR 2019
EUR
Central Cooperative Bank overdraft (i) 664,605 667,102
Central Cooperative Bank overdraft (ii) 7,957,698 7,837,176
Central Cooperative Bank investment loan (ii) 1,744,752 1,708,288
------------- -----------
10,367,055 10,212,566
------------- -----------
This is an overdraft with Central Cooperative Bank. The interest
on the account is 4.00% and is repayable on 24 June 2020. At the
date these financial statements were signed the Company made an
extension of the credit repayment period by 12 months.
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.
15) Details of Group undertakings
The Group holds 20% or more of the nominal value of any class of
share capital in the following investments:
Share-holding Nature of Business Country of
Incorporation
Held directly:
BSPF (Property 2) Limited 100% Property Investment Jersey
BSPF (Property 3) Limited 100% Property Investment Jersey
BSPF (Property 4) Limited 100% Property Investment Jersey
BSPF (Property 5) Limited 100% Property Investment Jersey
BSPF (Property 6) Limited 100% Property Investment Jersey
BSPF Project 1 EAD 100% Property Investment Bulgaria
BSPF Super Borovetz EAD 100% Property Investment Bulgaria
BSPF Bulgaria EAD 100% Property Investment Bulgaria
European Convergence Development 100% Property Investment Cayman Islands
(Cayman) Limited
ECD Management (Cayman) Limited 100% Property Investment Cayman Islands
European Convergence Development 29.85% Property Investment Isle of Man
Company Plc
Held indirectly:
Camping South Beach EOOD 100% Property Investment Bulgaria
European Convergence Development 100% Property Investment Malta
(Malta) Limited
Asmita Holdings Limited 100% Property Investment Cyprus
Convergence Development (Cyprus) 100% Property Investment Cyprus
Limited
European Real Estate Development 100% Property Investment Romania
Invest S.R.L.
European Property Development 100% Property Investment Romania
Corporation S.R.L.
Targovski Park Kraimorie 70% Property Investment Bulgaria
Convergence Development Invest 45% Property Investment Romania
S.R.L
Mega Mall Ruse AD - in solvency 50% Property Investment Bulgaria
BSPF (Property 3) Limited, BSPF (Property 6) Limited, European
Property Development Corporation S.R.L. and Convergence Development
Invest S.R.L. are dormant companies.
The interests in Mega Mall Ruse AD and Convergence Development
Invest S.R.L have been recognized upon the purchase of ECD at
EUR0.
16) Issued share capital
As at As at
Authorised 31 Dec 2020 31 Dec
2019
Founder shares of no par value 10 10
Founder shares of no par value Unlimited Unlimited
Issued and fully paid EUR EUR
2 Founders shares of no par value (2019: 2) - -
1,813,323,603 ordinary shares of no par value
(2019: 1,269,407,896) 70,699,442 64,774,886
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.
During the year end the Company successfully completed a share
raise of 416,880,162 new ordinary shares of nil par value (at a
price of EUR0.011 per ordinary share).
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.
17) Reserves
The following describes the nature and purpose of each reserve
within equity:
Retained earnings - The retained earnings represent cumulative
net profits and losses recognised in the Group's statement of
comprehensive income.
Foreign currency translation reserve - Exchange differences
relating to the translation of the results and net assets of the
Group's foreign operations from their functional currencies to the
Group's presentation currency (i.e. Currency Units). The Bulgarian
subsidiaries' functional currency is the Bulgarian Lev which is
pegged to the Euro at 1 EUR = 1.95583 BGN, hence there is no
movement of foreign currency translation reserve during the
year.
18) Profit and Net Asset Value per share
Profit per share
The basic profit per ordinary share is calculated by dividing
the net profit attributable to the ordinary
shareholders of the Company by the weighted average number of
ordinary shares in issue during the year.
Year ended Year ended
31 Dec 2020 31 Dec 2019
EUR EUR
Profit attributable to owners of parent (EUR) 401,035 4,065,454
Weighted average number of ordinary shares
in issue 1,783,601,434 1,269,407,896
----------------------------------------------- ----------------- --------------
Basic profit per share (cents) 0.02 0.32
----------------------------------------------- ----------------- --------------
The Company has no dilutive potential ordinary shares; the
diluted earnings per share is the same as the
basic earnings per share.
Year ended Year ended
31 Dec 2020 31 Dec 2019
EUR EUR
Net assets attributable to owners of the parent
(EUR) 22,392,434 16,066,843
Number of ordinary shares outstanding 1,813,323,603 1,269,407,896
------------------------------------------------- -------------- --------------
Net Asset Value per share (cents) 1.23 1.27
------------------------------------------------- -------------- --------------
19) Segmental analysis
IFRS 8 Operating Segments requires operating segments to be
identified on the basis of internal reports about components of the
Group that are regularly reviewed by the chief operating decision
maker in order to allocate resources to the segments and to assess
their performance.
Other than the previous investments in money market funds in the
UK, the Group is organised into one main operating and reporting
segment focusing on investment in the Bulgarian property
market.
No additional disclosure is included in relation to segmental
reporting as the Group's activities are limited to one operating
and reporting segment.
20) Contingencies and commitments
There are no contingencies or commitments outstanding at 31
December 2020 (2019: nil).
21) Directors' interests
Total compensation paid to the Directors during the period was
EUR78,934 (2019: EUR81,039). Outstanding
Directors' fee was EUR 9,484 (2019: EUR41,919).
22) Ultimate controlling party
The Directors consider that there is no controlling or ultimate
controlling party of the Group.
23) Financial risk management objectives and policies
The Group's financial instruments comprise cash and cash
equivalents, receivables and payables that arise directly from its
operations, for example, in respect of sales and purchases awaiting
settlement, and receivables for accrued income. All of the Group's
financial instruments are loans and receivables. The main risks the
Group faces from its financial instruments are (i) market price
risk (comprising currency risk, interest rate risk and other price
risk), (ii) liquidity risk and (iii) credit risk.
The Board regularly considers risks applicable to the
portfolio.
As a result of the short term nature of the Group's financial
instruments, the carrying values approximate to fair value.
i. Currency risk
The functional and presentational currency of the Group is
Euros. The Group does not hedge this risk.
An analysis of the Group's currency exposure is detailed
below:
GBP EUR Bulgarian Total
As at 31 December 2020 EUR EUR LEV EUR EUR
Investment Property - - 42,360,142 42,360,142
Intangible assets - - 655,876 655,876
Property, plant and equipment - - 27,782 27,782
Investment in associates - 17 313 - 17 313
Trade and other receivables 7,165 39,879 121,286 168,030
Related party receivables - 811,809 - 811,809
Cash and cash equivalents 589 226,760 142,848 370,197
Trade and other payables (124,768) (264,725) (1,210,171) (1,599,664)
Deferred tax liability - - (1,941,799) (1,941,799)
Bank loans - (7,018,083) (10,367,055) (17,385,138)
Related party payables - (4,148,164) - (4,148,164)
------------------------------- ---------- ------------- ------------- -------------
Net exposure (117,013) (10,335,211) 29,788,909 19,336,684
------------------------------- ---------- ------------- ------------- -------------
As at 31 December 2019
Investment Property - - 35,986,000 35,986,000
Trade and other receivables 6,322 - 345,045 351,367
Cash and cash equivalents 245 493,288 224,412 717,945
Trade and other payables (112,714) (212,155) (171,815) (496,684)
Deferred tax liability - - (1,903,784) (1,903,784)
Shareholder loans - (1,394,958) - (1,394,958)
Bank loans - (7,000,000) (10,193,043) (17,193,043)
------------------------------- ---------- ------------- ------------- -------------
Net exposure (106,147) (8,113,825) 24,286,815 16,066,843
------------------------------- ---------- ------------- ------------- -------------
Foreign currency sensitivity
The Bulgarian lev has been pegged to the Euro since its launch
in 1999 at the rate of 1.95583 leva = 1 euro, hence effectively
there is no foreign currency risk as long as the peg is in place.
If the EUR/GBP exchange rate as at 31 December 2020 was to
strengthen or weaken by +/-10% it would result in a decrease or
increase respectively in the net liabilities of EUR 12,540 (2019: a
decrease or increase in net assets of EUR10,615).
ii. Credit risk
Credit risk arises on investments, cash balances and debtor
balances. The amount of credit risk is equal to the amounts stated
in the statement of financial position for each of these assets.
Cash balances are limited to high-credit-quality financial
institutions. The Group has recognized and impairment of EUR 3 950
for the loan granted to Phoenix Capital Holding as at 31 December
2020 (2019: nil).
The allowance for expected credit losses (ECLs) are nil.
iii. Interest rate risk
Interest rate movements may affect: (i) the fair value of the
investments in fixed interest rate securities and (ii) the level of
income receivable on cash deposits. There are no fixed interest
rate securities as at 31December 2020 or 31 December 2019. The
interest rate profile of the Group's financial instruments
excluding other receivables was as follows:
Variable Fixed rate Non-interest Total
As at 31 December 2020 rate bearing
EUR EUR EUR
EUR
Trade and other receivables - - 168,330 168,330
Related party receivables 811,809 - 811,809
Cash and cash equivalents - - 370,197 370,197
Trade and other payables - (640,539) (959,125) (1,599,664)
Bank loans (17,385,138) - - (17,385,138)
Related party payables - (4,148,164) - (4,148,164)
(17,385,138) (3,976,893) (420,599) (21,782,630)
------------- ------------ ------------- -------------
As at 31 December 2019
Trade and other payables - - (496,684) (496,684)
Trade and other receivables 1,211 - 350,156 351,367
Cash and cash equivalents 1,742 - 716,203 717,945
Shareholder loans (1,394,958) - - (1,394,958)
Bank loans (17,193,043) - - (17,193,043)
(18,585,048) - 569,675 (18,015,373)
------------- ------------ ------------- -------------
Interest rate sensitivity
An increase of 100 basis points in interest rates during the
year would have decreased the net assets attributable to
shareholders and changes in net assets attributable to shareholders
by EUR161,480 (2019: increase EUR178,000). A decrease of 100 basis
points would not be possible because an interest rate floor has
been set with loan providers which is currently in operation.
iv. Liquidity risk
'Liquidity risk' is the risk that the Group will encounter
difficulty in meeting obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset.
The Group's policy and the Boards approach to managing liquidity
is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both
normal and stress conditions. The Group's financial assets include
investment properties, which are generally illiquid. As a result,
the Group may not be able to liquidate some of its investments in
due time to meet its liquidity requirements. The Group's liquidity
is managed on a daily basis by the administrators of the Company
and its subsidiaries in accordance with policies and procedures in
place. The Group's overall liquidity risk is managed on a monthly
basis by the Board of Directors.
The following table sets out the carrying amount, by maturity,
of the Group's financial instruments that are
exposed to liquidity risk:
tt
As at 31 December 2020 <1 Year 1-5 Years >5 Years Total
EUR EUR EUR EUR
Trade and other payables (1,014,036) (199,895) (649,661) (1,863,592)
Related party payables (4,148,164) - - (4,148,164)
Bank loans and interest (9,216,230) (5,088,050) (4,458,783) (18,763,063)
------------
14,378,430) (5,287,945) (5,108,444) (24,774,819)
------------ ------------ ------------ -------------
As at 31 December 2019 <1 Year 1-5 Years >5 Years Total
EUR EUR EUR EUR
Trade and other payables (493,105) (3,579) - (496,684)
Shareholder loans (1,394,958) - - (1,394,958)
Bank loans and interest (8,886,032) (4,516,435) (3,810,099) (17,212,566)
-------------
(10,774,095) (4,520,014) (3,810,099) (19,104,208)
------------- ------------ ------------ -------------
24) Related party transactions
During the year the Group provided a loan of EUR 196,000 to
Phoenix Capital Holdings at a fixed interest rate of 4.50% and due
up to June 2021. At the end of the year the debtor made a partial
repayment of the loan amounting to EUR47,429 in the form of paying
Group trade payables. The outstanding balance as at 31.12.2020 is
EUR 149 309. The Group has recognized expected credit losses of EUR
3,950.
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 JSC owns 79.99% of the Phoenix Capital Management JSC
shares. Phoenix Capital Holding JSC, through its wholly owned
subsidiary Mamferay, holds 24.81% (2019: 28.18%) of the issued
share capital of the Company. Phoenix Capital Management JSC
received fees of EUR EUR214,272 (2019: EUR214,272). The amount
outstanding as at year-end is EUR160,704 (2019: EUR160,704).
Yordan Naydenov is a Director of the Company and a partner with
Boyanov & Co, a legal adviser to the Company. During the year,
Boyanov & Co received fees of EUR87,347 (2019: EUR86,010).
Upon the business combination the Group has recognized
EUR3,982,084 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
2020 of EUR166,080. The outstanding liabilities as 31.12.2020 are
EUR4,148,164.
Upon the business combination the Group has acquired a
receivable from Sienit Holding. The nominal value is EUR1,325,000,
but at acquisition date it has been fully impaired. As at year end,
the board has made a valuation of the recoverability and 50% of
nominal value (EUR662,500) has been recognized. The Group has
successfully arranged new a repayment schedule with the Sienit.
25) Subsequent events
Loan facility
Mamferay Holdings Limited a significant shareholder of Black Sea
Property PLC advanced a loan facility sum of EUR400,000 to Black
Sea Property PLC on 11 June 2021 with an expected repayment date on
or before 14 June 2022. Interest on this loan will be calculated at
3 months Euro Interbank Offered Rate plus 6.5% per annum.
Sale of the land in Plovdiv
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 EUR1,059,000 (VAT exclusive) to paid as follows:
An amount of EUR1 000 000 was scheduled for 30.06.2021 and
balance of EUR59 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 favor the Bank, to credit
the Buyer. ECDC Malta received the initial payment as per the
contract on 28th June 2021 and EUR400 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 EUR834 000.
Directorate change
The board confirmed the appointment of Simon Hudd as board
member on 26 February 2021
Change in registered office address
With effect from 31(st) March 2021, the Company changed its
registered office to 6(th) Floor, Victory House, Prospect Hill,
Douglas, Isle of Man, IM1 1EQ.
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 6. The post year end sale of some of its land in Plovdiv is
as noted above.
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September 30, 2021 12:04 ET (16:04 GMT)
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