TIDMBSP
RNS Number : 6316H
Black Sea Property PLC
28 July 2023
BLACK SEA PROPERTY PLC
("Black Sea Property" or the "Company")
Audited Results for the year ended 31 December 2022
The Board of Black Sea Property PLC is pleased to announce its
audited results for year ended 31 December 2022.
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@d3acap.com
Simon Hudd, Chairman
PETERHOUSE CAPITAL LIMITED +44 (0) 20 7469 0930
AQSE Corporate Adviser
Heena Karani and Duncan Vasey
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).
Black Sea Property PLC
Consolidated Annual Report
Year ended 31 December 2022
Page
Corporate Information 1
Chairman's Statement 2 - 4
Director's Report 5 - 6
Statement of Director's Responsibilities 7
Independent Auditor's Report to the members of Black
Sea Property PLC 8 - 14
Consolidated Statement of Comprehensive Income 15
Consolidated Statement of Financial Position 16
Consolidated Statement of Changes in Equity 17
Consolidated Statement of Cash Flows 18
Notes to the Consolidated Financial Statements 19 - 39
Directors AQSE Corporate Advisor
Ventsislava Altanova Peterhouse Capital Limited
Yordan Naydenov 15-17 Eldon Street
Miroslav Georgiev London
Simon Hudd EC2M 7LD
United Kingdom
Registered office Registrar
6(th) Floor Share Registrars Limited
Victory House 27/28 Eastcastle Street
Prospect Hill London
Douglas, Isle of Man W1W 8DH
IM1 1EQ United Kingdom
Administrator Property Investment Advisor
Crowe Trust Isle of Man Limited Phoenix Capital Management JSC
6(th) Floor 109-115 Todor Aleksandrov Blvd
Victory House Sofia
Prospect Hill Bulgaria
Douglas, Isle of Man
IM1 1EQ
Website Auditor of the Company and Group
www.blackseapropertyplc.com Grant Thornton Limited
Exchange House
54 - 62 Athol Street
Douglas, Isle of Man
IM1 1JD
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 2022.
The net asset value as at 31 December 202 2 was EUR2 8 , 779 ,
491 or 1. 59 cents per share (2021: EUR24, 930 , 250 or 1.37 cents
per share).
The Company generated revenues from camping reservations of EUR1
,159,445 (2021: EUR1,246,616). This resulted in earnings per share
of 0. 22 cents (2021: 0.14 cents).
Investments
Camping South Beach EOOD ("CSB")
In 2022 Camping South Beach preserve d its prime position as a
destination for luxury camping holidays and beach houses . However,
the period was marked by the uncertainty caused by the military
conflict in Ukraine and all consequences arising therefrom as well
as the post-pandemic environment.
A significant factor that affected the whole economy in Europe
was the rapidly rising inflation rate, in contrast to the situation
before 2020 where it had been slightly increasing at a rate of 2-3%
per annum. The inflation rate for consumer prices in Bulgaria by
the end of 2022 reached 15.3%, mainly due to price increases in
energy and raw materials.
During the accounting period, the prevailing economic
environment for the hospitality segment in Bulgaria continued to be
challenging, largely due to the consequences of the conflict in
Ukraine.
The demand for high-end luxury camping holidays was driven
generally by domestic guests. Camping South Beach achieved
occupancy levels of around 44% in July and 50% in August 2022.
The 6.99% slight decrease in revenues from reservations in 2022
in comparison to 2021 reflects the overall economic uncertainty.
Another reason is the post-Covid desire among domestic tourists to
travel to nearby competitive destinations like Greece and Turkey,
as travelling restrictions were relaxed.
In accordance with the terms of the beach concession agreement,
signed in 2020 for 20 years, the Company fulfilled its investment
requirements for 2022 in the amount of EUR 76,182. The major part
of the investments are required to be fulfilled in the first three
years of the concession, and have already been realized by the
Company.
The fair value of the investment property in CSB at the year-end
was EUR16, 430 ,000 which represents an increase of EUR 200 ,000
above the value at the end of the previous year.
In November 2022, CSB acquired several plots behind the camp
site for total consideration of EUR 1,470,562, with the aim to
achieve synergy and optimization with the joint development and
management of CSB, the newly acquired Black Sea Star Hotel and
future developments on the plots.
Outlook for 202 3
The expectations for the tourist segment in 2023 are positive
despite the challenging environment arising from the war in
Ukraine.
Over the years, an insignificant part of the Company's revenues
was generated by tourists from the countries affected by the
conflict, and the forecasts prepared by the management for the
summer season 2023 do not include revenues from this segment.
The initial forecast by the management indicates an approx imate
increase of 10% in occupancy for 2023.
Star Mil
During the accounting period, Black Sea Property PLC, through
its subsidiary has completed the purchase of a 100% stake in Star
Mil EOOD, and acquired all outstanding loans due and payable to its
previous parent company, in July 2022. The total consideration paid
for Star Mil is approximately EUR5.15 million. Star Mil owns the
Black Sea Star hotel complex, located in a prime location on the
Black Sea Coast, behind the Company's existing site at Camping
Gradina. The rationale behind the investment is the opportunity for
synergy and economy of scale with the joint development and
management of Camping Gradina and Black Sea Star.
The acquisition was partial l y financed through a loan from a
leading Bulgarian commercial bank amounting to approximately EUR4.2
million for the acquisition of all receivables of Star Mil. The
funding was secured by a commercial mortgage on the property of
Star Mil and the Company agreed to provide additional security to
the bank in accordance with normal commercial practice. The Company
financed the outstanding EUR1 million of the consideration by way
of cash.
Ivan Vazov 1 Building
In April 2022 the C ompany started reconstruction works for the
historic Ivan Vazov building in central Sofia that is planned to be
completed by the end of Q3 2023. Simultaneously with the
restoration of the historical value of the building it is planned
to be converted into a luxury office space meeting the highest
requirements of the office segment.
The building consists of a basement floor, five floors and an
attic floor with total buil t -up area of 9 , 107 m2. The attic
floor will be converted into a mansard floor with the
reconstruction of the roof.
As the building is a historical monument (according to the
National Institute of Cultural Monuments in Bulgaria ) not only the
outside, but also the inside of the building with elements such as
the columns, the profiled cornices, the figures of Atlanteans and
the mask of Goddess on the façade and the iron ornamental wrought
of the entrance doors will be renovated.
The Company is carrying out all of the works in accordance with
applicable regulations. The construction of the beautiful copper
covered roof has been finalized and thus the building will be
preserved according to the highest standards. The acceptance from
the local authorities for receiving permission for use for the last
floor and related reconstruction of the roo f is planned for August
2023.
In parallel to the reconstruction process , the Company has
commenced the process of securing suitable tenants for the premises
.
The Ivan Vazov 1 Building was valued at EUR11 , 550 , 000 at 31
December 2022, which represents an increase of EUR 365 , 27 0 above
the balance at the end of the previous year.
Byala Plots of Land ("Byala")
The Urban Master Plan of Byala municipality region was not yet
approved during the accounting period, which prevented the Company
from making its intended progress with the planning process.
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 EUR10,860,000 at 31 December 2022,
which represents an increase of EUR 130,000 above the balance at
the end of the previous year.
ECDC Group
On 30 September 2021, Black Sea Property agreed to sell the
remaining assets of ECDC Group for cash consideration of EUR4.5
million. Those assets were valued by the Company at EUR2.5 million
at the time of the sale.
On 30 May 2023 Black Sea Property received EUR2.5 million from
the price. The remaining balance were received on 6 July 2023.
The proceeds of the disposal were used to repay debt, granted by
the major shareholder as stated below.
Loan from Neo London
In May 2022 the Company agreed and entered into lending terms
with its major shareholder Neo London Capital AD for deposits that
may be required in relation to the exploration of future property
development opportunities.
Neo London Capital AD has agreed to lend the Company up to
EUR2,500,000 in agreed allocated tranches for the exploration,
which need to be utilised within agreed timescales. The loan was
refunded in May 2023.
Outlook
The Company operates in a challenging environment and is not
able to assess the full impact of the war in Ukraine. All sectors
of the economy are significantly affected by the consequences of
the military conflict in Ukraine, namely rising inflation levels,
raw materials price increases and market uncertainty.
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.
Despite the tough environment, the Directors believe that in
2023 incomes from CSB will increase by approximately 10% compared
to 2022, based on current reservations and forecasts.
Traditionally, CSB relies mainly on domestic demand and an
insignificant part of its revenues are generated by tourists from c
ountries affected by the conflict in Ukraine.
The reconstruction of Ivan Vazov Building is planned to be
successfully finalized by Q3 2023. The competitive advantages of
the building are the unique architecture and prime downtown
location. The letting of the prime office space will generate
returns for the Company in due course.
Signed on behalf of the Board by:
Simon Hudd
Chairman
28 July 2023
Director's Report
As at 31 December 2022, 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 2021 is the
following:
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%
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 (EUR112,970
at year-end exchange rate) per annum, plus expenses.
Fees Fees Payable Fees Fees payable
Year ended As at Year ended As at
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
EUR EUR EUR EUR
Ventsislava Altanova 13,552 13,552 13,901 3,249
Miroslav Georgiev 13,552 13,552 13,901 3,273
Boris Lagadinov - - 8,271 -
Simon Hudd 13,552 6,776 11,855 -
Yordan Naydenov 13,552 13,552 14,173 -
54,208 47,432 62,101 6,522
------------ ------------- ------------ -------------
Boris Lagadinov - resigned 30 October 2020
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 EUR6,570,581 current assets at 31 December 2022,
the majority of which are cash and cash equivalents, trade 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
The Company has signed an agreement to acquire 98.27% of Grand
Hotel Varna AD. Grand Hotel Varna AD wholly owns GHV-Dolphins EAD,
a Bulgarian company which holds the title to real estate comprising
three hotels and a beach marina resort, situated in a prime
location on the Black Sea Coast. The assets being acquired also
include a mutual fund portfolio, comprising readily realisable
investments. The consideration payable for the acquisition is EUR28
million in cash, of which an initial non-refundable deposit of
EUR1.6 million was paid upon signing of the agreement. The property
assets being acquired have been independently valued at EUR19
million, and the mutual fund portfolio is currently valued at EUR12
million.
Signed on behalf of the Board by:
Simon Hudd
Chairman
28 July 2023
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 the UK-adopted
International Accounting Standards ("IASs") 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 IASs;
-- 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.
Signed on behalf of the Board by:
Simon Hudd
Chairman
28 July 2023
Independent auditor's report to the members of Black Sea
Property PLC
Opinion
We have audited the financial statements of Black Sea Property
PLC ("Company") and its subsidiaries (the "Group"), which comprise
the Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes
in Equity, Consolidated Statement of Cash Flows for the year ended
31 December 2022, and the related notes to the financial
statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
UK-adopted International Accounting Standards (UK-adopted IAS).
In our opinion, Group's financial statements:
-- give a true and fair view in accordance with UK-adopted IAS
of the financial position of the Group as at 31 December 2022 and
of the Group's financial performance and cash flows for the year
then ended; and
-- have been properly 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
'Responsibilities of the auditor 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 in the Isle of Man, including
the FRC's Ethical Standard , applied as determined to be
appropriate in the circumstances for the entity. 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors' use of going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the validity of the directors' assessment of
the Group's ability to continue to adopt the going concern basis of
accounting included:
-- Evaluating management's future cash flow forecasts, the
process by which they were prepared, and assessed the calculations
are mathematically accurate;
-- Challenging the underlying key assumptions such as expected
cash outflow for property operating and other operating expenses;
and
-- Obtained the letter of support from major shareholders to
provide the required financial support.
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 the date 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.
Independent auditor's report to the members of Black Sea
Property PLC (Continued)
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 financial period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit, and the directing of 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 therefore we do not provide a separate opinion on
these matters.
Overall audit strategy
We designed our audit by determining materiality and assessing
the risks of material misstatement in the financial statements. In
particular, we looked at where the directors made subjective
judgements, for example, in respect of significant accounting
estimate of valuation of investment properties. We also addressed
the risk of management override of internal controls, including
evaluating whether there was any evidence of potential bias that
could result in a risk of material misstatement due to fraud.
Based on our considerations as set out below, our areas of focus
included:
-- Valuation of investment properties
How we tailored the audit scope
The group is property investment group, which seeks to generate
capital gains through the development, financing and sale of
property in Bulgaria. The group engages Phoenix Capital Management
JSC as property investment advisor. We tailored the scope of our
audit taking into account the components of the group, investment
properties these hold and the involvement of third parties, the
accounting processes and controls, and the industry in which the
group operates.
We performed an audit of the complete financial information of
all the Bulgarian components. We engaged component auditors to
audit a certain number of the components. As group auditor, we
retained overall responsibility for the audit of all components.
The components where we performed full audit procedures accounted
for 100% of the Group's Profit before tax from continuing
operations, 100% of the Group's Revenue and 100% of the Group's
Total Assets. The directors control the affairs of the group and
are responsible for the overall investment property policy, which
is determined by them.
The board has delegated certain responsibilities to Crowe Trust
Isle of Man Limited ("the Administrator"). The company engages the
administrator to manage certain duties and responsibilities with
regards to the management of the company. The financial statements,
which remain the responsibility of the directors, are prepared on
their behalf by the administrator.
In establishing the overall approach to our audit, we assessed
the risk of material misstatement at group level, taking into
account the nature, likelihood and potential magnitude of any
misstatement. As part of our risk assessment, we considered the
group's interaction with the administrator, and we assessed the
control environment in place at the administrator.
Independent auditor's report to the members of Black Sea
Property PLC (Continued)
Key audit matters (Continued)
Materiality and audit approach
The scope of our audit is influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, such
as our understanding of the entity and its environment, the history
of misstatements, the complexity of the Group and the reliability
of the control environment , helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures
and to evaluate the effect of misstatements, both individually and
on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the group as EUR882,000 being 1.7% of the Group's Total Assets
at 31 December 2022. We have applied this benchmark because the
group is primarily an investment property group with investment
properties either for sale or intended to be let to generate
income.
We have set Performance materiality for the group at EUR662,000
(75% of materiality) having considered our prior year experience of
the risk of misstatements, business risks and fraud risks
associated with the entity and its control environment. This is to
reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements in the
financial statements exceeds materiality for the financial
statements as a whole.
We agreed with the Directors that we would report to them
misstatements identified during our audit above triviality of
EUR44,000, as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Significant matters identified
The risks of material misstatement that had the greatest effect
on our audit, including the allocation of our resources and effort,
are set out below as significant matters together with an
explanation of how we tailored our audit to address these specific
areas in order to provide an opinion on the consolidated financial
statements as a whole. This is not a complete list of all risks
identified by our audit.
Independent auditor's report to the members of Black Sea
Property PLC (Continued)
Key audit matters (Continued)
Key audit matter How the scope of our audit addressed
the key audit matter
Valuation of Investment Our audit work included, but was
property not restricted to, the following:
As detailed in note 9, the * We obtained an understanding of the processes in
group owns investment properties place in relation to valuation of investment
with a fair value of EUR47,517,500 properties and tested the design and implementation
at 31 December 2022. of relevant controls.
The determination of the
fair value of the investment * We assessed the competency, independence,
properties is considered qualifications and objectivity of the independent
to be a significant judgement valuer to confirm that they are appropriately
as detailed in note 3 and qualified to value the properties.
we therefore considered this
to be a significant audit
risk and key audit matter.
* We reviewed the valuation reports to ensure that all
The group engages an independent valuations have been carried out in line with
valuer to determine the fair relevant professional standards and in accordance
value of the properties at with the group's accounting policy.
the year end. This valuation
considers the nature of the
property, its location and
any comparable property transactions. * We assessed and challenged the significant judgements
The valuations require the used in the valuations to ensure they are reasonable.
independent valuer to make
significant professional
judgements in relation to
expected future cash flows, * We reviewed the appropriateness of the disclosures
market capitalisation yields within the group's financial statements in relation
and appropriate input information to the valuation methodology, key valuation inputs
provided by the management and valuation uncertainty.
in relation to occupancy
and rental values. Any inaccuracies
in this input information
or unreasonable judgements * We recalculated the movement in fair value based of
made in the valuation could revaluation reports, and agreed the movement posting
result in a material misstatement to the financial statements.
of the Consolidated Statement
of Comprehensive Income and
the Consolidated Statement
of Financial Position. 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.
------------------------------------------------------------------------
Independent auditor's report to the members of Black Sea
Property PLC (Continued)
Other information
Other information comprises information included in the annual
report, other than the financial statements and our auditor's
report thereon, including the Chairman's Statement and the
Directors' Report as set out page 2 to 6. The directors are
responsible for the other information. 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 in the financial statements,
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 management and those charged with governance
for the financial statements
As explained more fully in the Directors' responsibilities
statement as set out page 7, management is responsible for the
preparation of the financial statements which give a true and fair
view in accordance with UK-adopted IAS, and for such internal
control as directors determine necessary to enable the preparation
of financial statements are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible
for assessing the Group and the Company'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
management either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the
Group and the Company's financial reporting process.
Responsibilities of the auditor for the audit of the financial
statements
The objectives of an auditor 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 their 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.
A further description of an auditor's 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.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. Owing to the
inherent limitations of an audit, there is an unavoidable risk that
material misstatement in the financial statements may not be
detected, even though the audit is properly planned and performed
in accordance with the ISAs (UK). The extent to which our
procedures are capable of detecting irregularities, including fraud
is detailed below.
Independent auditor's report to the members of Black Sea
Property PLC (Continued)
Responsibilities of the auditor for the audit of the financial
statements (Continued)
Based on our understanding of the Group and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to compliance with the Isle of Man Companies
Act 2006, Bulgarian and Jersey Company law and the listing
regulations of Aquis Stock Exchange and we considered the extent to
which non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations that have
a direct impact on the preparation of the financial statements such
as the taxation law. The Audit engagement director considered the
experience and expertise of the engagement team to ensure that the
team had appropriate competence and capabilities to identify or
recognise non-compliance with the laws and regulation . We
evaluated management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were
related to posting inappropriate journal entries to manipulate
financial performance and management bias through judgements and
assumptions in significant accounting estimates, in particular in
relation to significant one-off or unusual transactions. We apply
professional scepticism through the audit to consider potential
deliberate omission or concealment of significant transactions, or
incomplete/inaccurate disclosures in the financial statements.
The group engagement team shared the risk assessment with the
component auditors so that they could include appropriate audit
procedures in response to such risks in their work.
In response to these principal risks, our audit procedures
included but were not limited to:
-- enquiries of management and board on the policies and
procedures in place regarding compliance with laws and regulations,
including consideration of known or suspected instances of
non-compliance and whether they have knowledge of any actual,
suspected or alleged fraud;
-- inspection of the Group's regulatory and legal correspondence
and review of minutes of board meetings and annual general meeting
during the year to corroborate inquiries made;
-- gaining an understanding of the entity's current activities,
the scope of authorisation and the effectiveness of its control
environment to mitigate risks related to fraud;
-- discussion amongst the engagement team in relation to the
identified laws and regulations and regarding the risk of fraud,
and remaining alert to any indications of non-compliance or
opportunities for fraudulent manipulation of financial statements
throughout the audit;
-- identifying and testing journal entries to address the risk
of inappropriate journals and management override of controls;
-- designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing;
-- challenging assumptions and judgements made by management in
their significant accounting estimates, including valuation of
investment property and debtors;
-- review of the financial statement disclosures to underlying
supporting documentation and inquiries of management; and
-- requested information from component auditors on instances of
non-compliance with laws or regulations that could give rise to a
material misstatement of the group financial statements.
The primary responsibility for the prevention and detection of
irregularities including fraud rests with those charged with
governance and management. As with any audit, there remains a risk
of non-detection or irregularities, as these may involve collusion,
forgery, intentional omissions, misrepresentations or override of
internal controls.
Independent auditor's report to the members of Black Sea
Property PLC (Continued)
The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the company's members, as a body,
in accordance with the terms of engagement letter. 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
Consolidated Statement of Comprehensive Income
Notes Year to Year to
31 Dec 22 31 Dec 21
EUR EUR
Revenue 4) 1,159,445 1,246,616
Property operating expenses 4) (1,409,106) (568,559)
------------ -----------
(249,661) 678,057
------------ -----------
Gain on revaluation of investment
properties 9) 724,708 554,443
Net Gain on investment properties 724,708 554,443
------------ -----------
Administration and other expenses 5) (800,340) (858,290)
------------ -----------
Operating (loss) / profit (325,293) 374,210
------------ -----------
Other Income 7) 3,449,267 1,287,782
Bargain purchase 11) 2,127,765 -
Share of post-tax losses of
equity accounted associate (2,548) (14,765)
Profit from disposal of subsidiary 6) - 1,718,367
Interest payable and similar
charges 7) (862,551) (825,739)
------------ -----------
Profit before taxes 4,386,640 2,539,855
------------ -----------
Taxation 8) (537,399) (53,471)
------------ -----------
Profit and total comprehensive
income 3,849,241 2,486,384
============ ===========
Profit and total comprehensive
income attributable to the:
- shareholders of the parent
company 3,849,241 2,537,817
- non-controlling interest - (51,433)
Earnings per share
Basic and Diluted earnings per
share (cents) 20) 0.22 0.14
The results are derived from continuing operations during the
year.
The notes on pages 19 to 39 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 28 July 2023 and were signed on their
behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
Consolidated Statement of Financial Position
Notes 2022 2021
Non-current assets EUR EUR
Investment properties 9) 47,517,500 38,144,730
Intangible assets 10) 450,390 513,377
Property, plant and equipment 12) 517,952 24,883
Investments in associates - 2,548
Total non-current assets 48,485,842 38,685,538
-------------- --------------
Current assets
Trade and other receivables 13) 6,331,172 4,906,752
Cash and cash equivalents 14) 239,409 326,188
-------------- --------------
Total current assets 6,570,581 5,232,940
-------------- --------------
Total assets 55,056,423 43,918,478
-------------- --------------
Equity and liabilities
Issued share capital 18) 70,699,442 70,699,442
Retained earnings 19) (40,386,865) (44,236,106)
Foreign currency translation
reserve 19) (1,533,086) (1,533,086)
-------------- --------------
Total equity, attributable to
the shareholders of the parent
company 28,779,491 24,930,250
Non-controlling interest - -
-------------- --------------
Total equity 28,779,491 24,930,250
-------------- --------------
Liabilities
Non-current liabilities
Bank loans 16) 18,185,200 14,521,076
Trade and other payables 15) 539,929 560,615
Deferred tax liability 8) 2,407,965 1,944,802
-------------- --------------
Total non-current liabilities 21,133,094 17,026,493
-------------- --------------
Current liabilities
Trade and other payables 15) 726,326 193,000
Tax liability 15) 80,426 -
Bank loans 16) 1,771,278 1,768,735
Shareholder loan 26) 2,565,808 -
Total current liabilities 5,143,838 1,961,735
-------------- --------------
Total liabilities 26,276,932 18,988,228
-------------- --------------
Total equity and liabilities 55,056,423 43,918,478
============== ==============
Number of ordinary shares in
issue 18) 1,813,323,603 1,813,323,603
NAV per ordinary share (cents) 20) 1.59 1.37
The notes on pages 19 to 39 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 28 July 2023 and were signed on their
behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
Consolidated Statement of Changes in Equity
Share Retained Foreign Total Non-controlling Total
capital earnings currency equity interests
translation attributable
reserve to the
parent
company
EUR EUR EUR EUR EUR EUR
At 1 January 2021 70,699,442 (46,773,922) (1,533,086) 22,392,434 (3,065,234) 19,327,199
Business disposal - - - - 3,116,667 3,116,667
Transactions with
owners - - - - 3,116,667 3,116,667
----------- ------------- ------------- -------------- ---------------- -----------
Profit for the
year - 2,537,817 - 2,537,817 (51,433) 2,486,384
Total comprehensive
income - 2,537,817 - 2,537,817 (51,433) 2,486,384
----------- ------------- ------------- -------------- ---------------- -----------
At 31 December
2021 70,699,442 (44,236,106) (1,533,086) 24,930,250 - 24,930,250
----------- ------------- ------------- -------------- ---------------- -----------
At 1 January 2022 70,699,442 (44,236,106) (1,533,086) 24,930,250 - 24,930,250
Profit for the
year - 3,849,241 - 3,849,241 - 3,849,241
Total comprehensive
income - 3,849,241 - 3,849,241 - 3,849,241
----------- ------------- ------------- -------------- ---------------- -----------
At 31 December
2022 70,699,442 (40,386,865) (1,533,086) 28,779,491 - 28,779,491
=========== ============= ============= ============== ================ ===========
The notes on pages 19 to 39 are an integral part of these
consolidated financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 28 July 2023
and were signed on their behalf by:
Simon Hudd Ventsislava Altanova
Chairman Director
Consolidated Statement of Cash Flows
Note 2022 2021
EUR EUR
------------------------------------------------------------- ----- ------------ ------------
Operating activities
Profit before taxation 4,386,640 2,539,855
Gain on revaluation of investment property 9) (724,708) (554,443)
Bargain Purchase on Acquisition 11) (2,127,765) -
Materials form purchase of subsidiary 232,737 -
Profit from disposal of subsidiaries - (1,718,367)
Loss from disposal of investment property - 192,788
Loss from investments accounted for using the equity method - 14,765
Amortization of intangible fixed assets 10) 62,987 142,499
Depreciation of property, plant and equipment 3,444 2,899
Interest received 7) (898,689) (1,277,756)
Bad debt recovered 7) (2,550,578) -
Finance expense 7) 862,551 825,739
Changes in working capital (753,381) 167,979
(Increase)/Decrease in trade and other receivables (1,451,996) (238,422)
(Decrease)/Increase in trade and other payables 431,565 (940,143)
Cash used in operations (1,773,812) (1,010,586)
Tax refund/(paid) 6,190 -
------------------------------------------------------------- ----- ------------ ------------
Cash flows used in operating activities (1,767,622) (1,010,586)
------------------------------------------------------------- ----- ------------ ------------
Investing activities
Investment property additions (1,470,562) (673,764)
Property, plant and equipment additions (496,513)
Proceeds from disposal of investment property - 1,270,800
Star Mill acquisition (5,150,001) -
Bad debt recovered 2,550,578
Interest received 7) 898,689 1,277,756
Cash held by the (disposed)/acquired subsidiary 151 (32,923)
------------------------------------------------------------- ----- ------------ ------------
Net cash (outflow) from investing activities (3,667,658) 1,841,869
------------------------------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from issuing share capital - -
Loans issued 6,211,052 (272,286)
Interest paid and other charges 7) (862,551) (575,027)
Other flows from financing activities - (27,979)
Net cash (outflow)/inflow from financing activities 5,348,501 (875,292)
------------------------------------------------------------- ----- ------------ ------------
Net (decrease) in cash and cash equivalents 14) (86,779) (44,009)
Cash and cash equivalents at beginning of year 326,188 370,197
Cash and cash equivalents at end of year 14) 239,409 326,188
------------------------------------------------------------- ----- ------------ ------------
The notes on pages 19 to 39 are an integral part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
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. This ECDC group was subsequently sold in the prior year.
The financial statements represent the financial position and
effects of the operations of the Company and its subsidiaries
(collectively referred as the "Group").
Black Sea Property Plc is an entity listed on the Aquis stock
exchange. Aquis is a primary and secondary market for equity and
debt securities
2) Summary of significant accounting policies
a) Basis of preparation
The principal accounting policies applied in the preparation of
the consolidated financial statements are set out below. These
policies have been consistently applied throughout the year, unless
otherwise stated.
The consolidated 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 consolidated financial statements have been prepared in
accordance with the UK-adopted International Accounting Standards
("IASs") and International Financial Reporting Interpretations
Committee ("IFRIC") interpretations as applicable to an Isle of Man
company under the Isle of Man Companies Act 2006.
Use of estimates and judgements
The preparation of financial statements in conformity with IASs
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 2022
-- Amendment to IFRS 16 COVID-19-Related Rent Concessions
-- Annual improvements to IFRS Standards 2018-2020 - IFRS 1, IFRS 9, IFRS 16, IAS41
-- Property, plant and equipment: Proceeds before Intended Use - Amendments to IAS 16
-- Amendment to conceptual framework. The framework is not an
IFRS standard and does not override any standard. This amendment
will be applied prospectively.
None of the above listed amendments have had a significant
effect on the financial statements. All other standards or
amendments to standards that have been issued by the IASB, and are
effective from 1 January 2022, onwards are not applicable or
material to the Group.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
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 2022 and earlier application is
permitted; however, the Group has not early adopted the new or
amended standards in preparing these consolidated financial
statements.
-- Amendments to IAS 12 'Deferred Tax related to Assets and
Liabilities arising from a Single Transaction. Effective date for
annual periods on or after 1 January 2023.
-- Amendments to IAS 1 'Presentation of financial statements' on
classification of liabilities.
Effective date for annual periods on or after 1 January
2023.
-- Amendments to IAS1 and IFRS Practice Statement 2 'Disclosure
of Accounting Policies'. Effective date for annual periods on or
after 1 January 2023.
-- Amendments to IAS 8 'Definition of Accounting Estimates'.
Effective date for annual periods on or after 1 January 2023.
d) Basis of consolidation
The financial statements comprise the results of the Company and
its subsidiaries as set out in note 17. 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 EUR6,570,581 current assets at 31 December 2022,
the majority of which are trade 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 support 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.
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.
Amounts are rounded to the nearest Euro unless otherwise
stated.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
f) Functional and presentation currency (continued)
(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 the
consolidated statement of comprehensive income. 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
consolidated statement of comprehensive income.
(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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
g) Fair value measurement principles (continued)
-- 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 and other income
Interest and other income are recognised on a receivable
basis.
j) Revenue recognition
Revenue comprise of camping reservations fees. Revenue is
recognised at a point in time when the Company has satisfied its
performance obligation of allocating a camp site reservation. Where
the reservation fees are billed to the customers in advance, the
unearned element of the fees billed during the year is carried
forward as deferred income.
k) Expenses
Expenses including interest payable are accounted for on an
accrual basis. The Group's property operating expenses,
administration fees, finance costs and all other expenses are
charged to the consolidated statement of comprehensive income and
are accounted for on an accrual basis. 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.
Blocked cash and cash equivalents are funds on which the company
can operate under certain conditions. Such assets are used by the
Company as collateral for its obligations.
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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
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) Fixed assets investments
A subsidiary is an entity controlled by the company . Control is
the power to govern the financial and operating policies of the
entity so as to obtain benefits from its activities. The
consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the
statement of financial position, the acquirer's identifiable
assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control
ceases.
An associate is an entity, being neither a subsidiary nor a
joint venture, in which the company holds a long-term interest and
where the company has significant influence. The company considers
that it has significant influence where it has the power to
participate in the financial and operating decisions of the
associate. Investment in associates are initially recognised in the
consolidated statement of financial position at cost. Subsequently
associates are accounted for using the equity method, where the
Group's share of post-acquisition profits and losses and other
comprehensive income is recognised in the consolidated statement of
comprehensive income (except for losses in excess of the Group's
investment in the associate unless there is an obligation to make
good those losses).
q) Property, plant and equipment
Tangible fixed assets are initially measured at cost and
subsequently measured at cost net of depreciation
and any impairment losses.
Depreciation is recognised so as to write off the cost of assets
less their residual values over their useful lives on the following
bases:
Plant and equipment 10%/15% per annum on a reducing balance
basis.
The gain or loss arising on the disposal of an asset is
determined as the difference between the sale
proceeds and the carrying value of the asset, and is credited or
charged to consolidated statement of comprehensive income.
r) Assets under construction
Assets under construction are initially measured at cost and
comprises actual cost relating to the construction.
s) 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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
s) Taxation (continued)
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.
t) Trade and other payables
Trade and other payables are recognised at amortised cost and
relate to amounts accrued in the normal course of business.
u) 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.
v) 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. The bargain purchase is the amount
by which the fair value of assets acquired exceeds purchase
consideration and is recognised in consolidated statement of
comprehensive income.
w) Disposal of businesses
When the Group loses control over a subsidiary, it derecognises
the assets and liabilities of the subsidiary, and any related NCI
and other components of equity. Any resulting gain or loss is
recognised in consolidated statement of comprehensive income.
x) 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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
(i) Financial assets (continued)
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 these 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.
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 considering 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 consolidated statement of comprehensive income 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 the consolidated
statement of comprehensive income and other comprehensive
income.
y) Intangible assets
Intangible assets include the rights under a concession
agreement of 20 years and also software. They are accounted for
using the cost model. The cost comprises discounted cash flows of
the future payment according to the concession agreement.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
y) Intangible assets (continued)
After initial recognition, an intangible asset is carried at its
cost less any accumulated amortization and any accumulated
impairment losses. Impairment losses are recognised 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. Software have a useful life of 5 years and are amoritsed at
20% per annum.
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 2022 31 Dec
EUR 2021
EUR
Camping reservations 1,159,445 1,246,616
Property operating expenses (1,409,106) (568,559)
------------- -----------
(249,661) 678,057
------------- -----------
All income during the year is primarily due to camping
reservations from CSB.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
5) Administration and other expenses
Year ended Year ended
31 Dec 31 Dec
2022 2021
EUR EUR
Directors' remuneration 54,208 62,101
Administration fees - Isle of Man 64,579 70,544
Administration fees - Bulgaria 28,279 28,845
Legal and professional fees* 301,063 378,988
Auditors' remuneration 53,477 46,501
Foreign currency expenses 3,262 (2,379)
Other administration and professional fees 229,041 273,690
Depreciation expense and amortization 66,431 -
----------- -----------
800,340 858,290
----------- -----------
*2021 depreciation and amortisation expense of EUR145,398 was
included within legal and professional expense.
In 2022, key management personnel comprise the Board (2021: The
Board). The Board's compensation
comprised Directors' fees only during the year, the amount of
which is summarised within the Directors'
Report.
The average monthly number of persons (including directors)
employed by the company during the year was: 4 (2021: 4).
6) Disposal of ECDC group
On 30 September 2021, the Company successfully completed the
disposal of 100% of European Convergence Development (Cayman)
Limited ("ECD Cayman") and ECD Management (Cayman) Limited ("ECD
Management"). The consideration receivable for ECD Cayman and ECD
Management in total was EUR4,500,000. Both companies were
subsidiaries of Black Sea Property PLC.
The fair value of assets and liabilities disposed were EUR
as follows:
Investment properties 3,585,404
Trade and other receivables 723,333
Cash and cash equivalents 32,923
Trade payables (20,224)
Loan payables (4,632,418)
------------
Net identifiable assets (310,982)
------------
The profit on disposal of the ECD Cayman group was presented EUR
as follows:
Net identifiable assets (310,982)
FX differences on disposal (24,052)
Non-controlling interest 3,116,667
Consideration receivable (4,500,000)
------------
1,718,367
------------
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
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 2022 31 Dec
EUR 2021
EUR
Interest income - cash and deposit instruments 303,952 1,277,756
Bad debts recovered 2,550,578 -
Others 594,737 10,026
------------- -----------
3,449,267 1,287,782
------------- -----------
Year ended Year ended
Interest payable and similar charges 31 Dec 2022 31 Dec 2021
EUR EUR
Interest expense on borrowings* 634,583 541,883
Amortisation of bank loan agreement fee - 64,190
Other 227,968 219,666
------------- -------------
862,551 825,739
------------- -------------
*The interest on borrowings relates mainly to the secured debt
funding on (note 16) .
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% (2021: 0%). Additionally, neither the
Isle of Man nor Jersey levies tax on capital gains.
Consequently, shareholders resident outside of the Isle of Man
and Jersey will not incur any withholding tax in those
jurisdictions on any distributions made to them.
Bulgaria
Subsidiaries of the Company incorporated in Bulgaria are taxed
in accordance with the applicable tax laws of Bulgaria. The
Bulgarian corporate tax rate for the year was 10% (2021: 10%).
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% (2021: 12.5%).
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
8) Taxation (continued)
Year Year ended
ended 31 Dec
31 Dec 2021
2022 EUR
EUR
------------------------------------------------------ ---------- -----------
Profit before tax 3,849,241 2,539,855
------------------------------------------------------ ---------- -----------
Profit on ordinary activities multiplied by the - -
standard rate in the Isle of Man of 0% (2021:
0%)
Effect of different tax rates in different countries 74,236 50,468
Deferred tax liability on fair value uplift of
investment property 463,163 3,003
------------------------------------------------------ ---------- -----------
Current charge for the year 537,399 53,471
------------------------------------------------------ ---------- -----------
Bulgarian tax losses brought-forward at 10% (183,943) (190,958)
Tax losses utilized in the year - 7,015
------------------------------------------------------ ---------- -----------
Bulgarian tax losses carried-forward at 10% (183,943) (183,943)
------------------------------------------------------ ---------- -----------
Deferred tax liability
Opening deferred tax liability balance 1,944,802 1,941,799
Deferred tax liability on fair value uplift of
investment property on
Acquisition/(disposal) of a subsidiary - (34,860)
Bulgarian deferred tax liability charge - 3,063
Deferred tax movement on fair value uplift of
investment property 463,163 34,800
Closing deferred tax liability balance 2,407,965 1,944,802
------------------------------------------------------ ---------- -----------
9) Investment properties
Year ended Year ended
31 Dec 2022 31 Dec 2021
EUR EUR
Beginning of year (Level 3) 38,144,730 42,360,142
Additions - (note 11) 7,177,500 66,287
Additions - further plot CSB 1,470,562 -
Disposals - (4,836,142)
Fair value adjustment 724,708 554,443
------------------------------------- ------------- -------------
Total investment property (Level 3) 47,517,500 38,144,730
------------------------------------- ------------- -------------
Ivan Vazov 1 Building 11,550,000 11,184,730
CSB 16,430,000 16,230,000
CSB additional plots 1,500,000 -
Byala Land 10,860,000 10,730,000
Star Mil - Acquisition (note 11) 7,177,500 -
Total investment property 47,517,500 38,144,730
------------------------------------- ------------- -------------
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
9) Investment properties (continued)
Upon the 2020 financial year 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 measured
at the most recent sale prices.
With the prior year sale of the ECD group, the group disposed of
the three plots in Plovdiv (through European Convergence
Development (Malta) Limited) and the two plots in Burgas with a
fair value of EUR4,836,142.
The valuations of the other Group properties at 31 December 2022
and 31 December 2021 were based on the most recent independent
valuation received for each property. The valuations were performed
by external accredited independent valuers with recognised
professional qualifications and with recent experience in the
location and category of the investment properties being
valued.
The fair value of completed investment property has been
determined on a market value basis in accordance with the RICS "Red
Book". In arriving at their estimates of market values, the valuers
have used their market knowledge and professional judgement,
historical transactional comparables and discounted cash flow
forecasts. The highest and best use of the investment properties is
not considered to be different from its current use.
The cost of the investment properties comprises their purchase
price and directly attributable expenditure. Directly attributable
expenditure includes professional fees for legal services and stamp
duty land tax.
In November 2022, CSB acquired several plots behind the camp
site for total consideration of EUR1,470,562, with the aim to
achieve synergy and optimization with the joint development and
management of CSB, the newly acquired Black Sea Star Hotel and
future developments on the plots.
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 2021, the beach was managed by CSB under
the terms of a lease agreement. The concession agreement entered
into force on 17 October 2020, and at the beginning of 2021 the
handover of the sea beach by the grantor Ministry of Tourism to the
concessionaire was carried out. The term of the contract is 20
years. The concession contract of CSB grants the right to operate
the sea beach, performing alone or through subcontractors providing
visitors to the sea beach of the following services: beach
services, including the provision of umbrellas and sunbeds,
services in fast food restaurants, sports and entertainment
services, water attraction services, health and rehabilitation
services and other events, after prior agreement with the grantor.
A condition for operation of the concession site is the
implementation of mandatory activities, which include provision of
water rescue activities, security of the adjacent water area,
health and medical services for beach users, sanitary and hygienic
maintenance of the beach, maintenance for use of the elements of
the technical infrastructure, the temporary connections, the
movable objects, the facilities and their safe functioning.
In 2020 the Group paid the first due concession fee, which
provides the period from the date of entry into force of the
concession agreement until the end of the same calendar year and
the period from January 1 of the last calendar year in which the
concession agreement is valid until the date upon expiration of the
contract.
According to the financial model presented by the Company, which
is accepted by the grantor and is an integral part of the
concession agreement, for the concession period the Group will make
additional investments related to the implementation of mandatory
activities and investments to improve access to the beach. After
the expiration of the concession contract, all constructed sites
remain the property of the grantor. The activities related to the
operation of the concession site are performed by the
concessionaire at his risk and at his expense. The cost of the
acquired intangible assets was EUR655,876 and no amortization
expenses were recognised in 2020. The acquired intangible asset was
amortized by EUR62,987 (2021: EUR142,499). The amortisation expense
has been included with in property operating expenses in the
consolidated statement of comprehensive income.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
10) Intangible assets (continued)
Year ended Year ended
31 Dec 2022 31 Dec 2021
EUR EUR
Beginning of year 513,377 655,876
Additions - -
Disposals - -
Amortisation (62,987) (142,499)
------------------------------------- ------------- -------------
Total Intangible assets at year end 450,390 513,377
------------------------------------- ------------- -------------
11) Acquisition of a subsidiary
On 18 July 2022, the Company through its owned subsidiary, BSPF
Project 1 EAD, acquired 100% of share capital Star Mil EOOD ("Star
Mil") including all its assets and liabilities. Star Mil owns the
Black Sea Star hotel complex, located in a prime location on the
Black Sea Coast, behind the Company's existing site at Camping
Gradina. The Acquisition of Star Mil provides opportunities for
synergies and economies of scale with the joint development and
management of Camping Gradina and Black Sea Star.
The consideration for this acquisition was EUR5.15 million. BSPF
Project 1 EAD acquired EUR7.83 million worth of outstanding loans
due to the company's previous parent company.
On 24 July 2022, the transaction for the shares was finalized
and the acquisition recorded in the Trade Register in Bulgaria.
This is the date that the group obtained control of Star Mil.
The property was deemed to have a fair value at acquisition of
EUR7,177,500.
Since the acquisition Star Mill has contributed EUR20,740 to
group revenue and loss of EUR429,377 to group profit. If the
acquisition had occurred on 1 January 2022, group revenue would
have been EUR1,159,445 and group profit for the year would have
been EUR3,832,081.
The fair value of the identifiable assets and liabilities of
Star Mil as at the date of acquisition were:
Pre- acquisition Fair value Recognised
carrying adjustments value on
value acquisition
EUR
EUR EUR
Investment property (note
9) 3,270,579 3,906,921 7,177,500
Plant and equipment - - -
Materials 232,738 - 232,738
Trade and other receivables 27,575 - 27,575
Cash and cash equivalents 151 - 151
Trade and other payables (138,775) - (138,775)
Long/short loans (7,855,597) 7,834,174 (21,423)
---------------------------------- ----------------- ------------- -------------
Total net identifiable
assets (4,463,329) 11,741,095 7,277,766
---------------------------------- ----------------- ------------- -------------
Purchase consideration
transferred 5,150,001
-------------
Bargain purchase on acquisition (2,127,765)
-------------
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
12) Property, plant and equipment
Plant and Assets Total
equipment under construction
EUR EUR EUR
Cost
Cost at the beginning
of the year 28,990 - 28,990
Additions during the
year 8,180 - 8,180
Additions from acquisition
(note 11) 10,349 - 10,349
Additions - Assets under
construction - 488,333 488,333
Cost at the end of the
year 47,519 488,333 535,852
------------------------------ ---------- -------------------- --------
Accumulated depreciation
Accumulated depreciation
at the beginning of the
year 4,107 - 4,107
Additions from acquisition
(note 11) 10,349 - 10,349
Depreciation 3,444 - 3,444
------------------------------ ---------- -------------------- --------
Accumulated depreciation
at the end of year 17,900 - 17,900
------------------------------ ---------- -------------------- --------
Net book value at the
end of year 31 December
2022 29,619 488,333 517,952
------------------------------ ---------- -------------------- --------
Net book value at the
end of year 31 December
2021 24,883 - 24,883
------------------------------ ---------- -------------------- --------
13) Trade and other receivables
Year ended Year ended
31 Dec 2022 31 Dec
EUR 2021
EUR
Trade receivables* 1,798,839 406,729
Amount receivable from the sale of the ECDC
group* 4,500,000 4,500,000
Prepayments 32,333 23
------------- -----------
6,331,172 4,906,752
------------- -----------
*All amounts are due within one year. The expected credit losses
(ECL) for this amount is nil. On 30 May 2023 Black Sea Property
received EUR2.5million from the price. The remaining balance were
received on 6 July 2023.
14) Cash and cash equivalents
Year ended Year ended
31 Dec 31 Dec
2022 2021
EUR EUR
Cash in hand 8,399 1,724
Cash at bank 231,010 324,464
----------- -----------
239,409 326,188
----------- -----------
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 87,549 cash are restricted according to the
bank loan agreement with Unicredit.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
15) Trade and other payables
Non-current trade and other payables can be presented as
follows:
Year ended Year ended
31 Dec 2022 31 Dec
EUR 2021
EUR
Concession payable 539,929 560,615
539,929 560,615
------------- -----------
The current trade and other payables can be presented as
follows:
Year ended Year ended
31 Dec 31 Dec 2021
2022 EUR
EUR
Trade creditors 188,499 23,074
Concession payable 23,823 23,008
Other payables 514,004 146,918
----------- -------------
726,326 193,000
----------- -------------
Tax liability 80,426 -
----------- -------------
16) Bank loans
Year ended Year ended
31 Dec 31 Dec
2022 2021
EUR EUR
Loan from UniCredit (a) 11,763,884 7,016,178
Central Cooperative Bank (b) 8,192,594 9,273,633
-------------------------------- ------------ ------------
19,956,478 16,289,811
------------ ------------
Long term bank loans 18,185,200 14,521,076
Current bank loans 1,771,278 1,768,735
------------ ------------
Reconciliation of bank loans
Beginning of year (gross loan) 16,289,811 17,385,138
Bank loan arrangement fees - -
Loan received 5,099,630 -
Interest charged 472,617 541,883
Principal repayments (1,366,680) (1,062,183)
Interest payments (538,900) (575,027)
Total bank loans 19,956,478 16,289,811
-------------------------------- ------------ ------------
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
16) Bank loans (continued)
(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 EUR11,550,000 (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. The company renegotiated the terms of the
loan, extending the repayment period until 30 November 2033 and
changed the margin to the interest rate to 2%.
The interest on the loan is now the internal interest percentage
by the bank plus 2.00% (2021: 2%).
The company entered into an agreement with Unicredit Bulbank AD
("UniCredit"), a leading Bulgarian commercial bank, which involved
revised and extended lending terms for the construction of the Ivan
Vazov 1 Building.
The bank has agreed to lend the Company up to BGN 4,498,409
(approximately GBP2.0 million) in agreed allocated tranches for the
reconstruction, which need to be utilised within agreed timescales.
The Funding will be secured by a commercial mortgage on the
property and the Company has agreed to provide additional security
to the bank in accordance with normal commercial practice.
In November 2021, the Company entered into a secured debt
funding of up to EUR2.3 million from UniCredit Bulbank AD
("UniCredit"), a leading Bulgarian commercial bank which was used
to partly finance the construction costs for the planned renovation
of the roof and overhaul of the administrative building known as
the Ivan Vazov 1 Building. The secured debt funding is made up of
an investment limit of up to EUR1.8 million and a revolving limit
of up to EUR0.5 million. The debt funding from UniCredit is secured
by a commercial mortgage on the property valued at EUR11,550,000
(see note 9) . The debt funding is also secured by a first rank
pledge of all the receivables, claims, rights and interests, both
current and future, of the company along with a second ranking
registered pledge of the commercial enterprise of the company and a
second ranking pledge of 100% of the shares of the capital of the
company. The utilization deadline of EUR1.5 million of the
investment limit is no later than 30 November 2023 while the
utilization deadline of the remaining EUR0.3 million is no later
than 30 November 2024. There is a grace period on the repayment of
the principal amount due until 30 November 2023. After this date
the principal will be repaid in equal monthly instalments. Interest
is also repayable monthly with no grace period agreed. The
repayment period is up until 30 November 2033. The utilization
deadline of EUR0.5 million of the revolving limit is no later than
30 November 2023.The repayment of the revolving limit is made
within 6 months of each utilized amount and the repayment period is
up until 30 May 2024.
(b) Central Cooperative bank loan and overdraft
As at As at
31 Dec 31 Dec
2022 2021
EUR EUR
Central Cooperative Bank overdraft (i) 664,234 662,737
Central Cooperative Bank overdraft (ii) 6,178,112 6,938,614
Central Cooperative Bank investment loan (ii) 1,350,248 1,672,282
---------- ----------
8,912,594 9,273,633
---------- ----------
(i) This is an overdraft with Central Cooperative Bank. The
interest on the account is 4% and was repayable on 24 June 2021
however the terms of the contract were extended to 24 June 2022. At
the
date these financial statements were signed the Company made an
extension of the credit repayment period by 12 months.
(ii) The interest rate on the overdraft and the investment loan
is 3.6%. The maturity date for both the overdraft and the
investment loan is 21 January 2028.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
16) Bank loans (continued)
In March 2020, the Group successfully negotiated reduction of
the interest rates on the loans due to Central Cooperative Bank to
2.8%. The loan is secured by the commercial property of South Beach
(Gradina) Camp which includes all the tangible fixed assets of the
property along with the mortgage on the land.
17) 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 29.85% Property Investment Isle of Man
Company Plc
Held indirectly:
Camping South Beach EOOD 100% Property Investment Bulgaria
Star Mil EOOD 100% Property Investment Bulgaria
BSPF (Property 2 - 6) all are dormant companies.
18) Issued share capital
As at As at
Authorised 31 Dec 31 Dec
2022 2021
Founder shares of no par value 10 10
Ordinary shares of no par value Unlimited Unlimited
Issued and fully paid
EUR EUR
2 Founders shares of no par value (2021: 2) - -
1,813,323,603 ordinary shares of no par value
(2021: 1,269,407,896) 70,699,442 70,699,442
The Founders shares do not carry any rights to dividends or
profits and on liquidation they will rank behind Shares for the
return of the amount paid up on each of them. The shares carry the
right to receive notice of and attend general meetings, but carry
no right to vote thereat unless there are no Participating Shares
in issue.
Capital management
The Directors consider capital to be the net assets of the
Group. The capital of the Company will be managed in accordance
with the Investment Strategy documented on the Company's
website.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
19) 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.
20) 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 2022 31 Dec 2021
EUR EUR
Profit attributable to owners of parent (EUR) 3,849,241 2,537,817
Weighted average number of ordinary shares
in issue 1,783,601,434 1,783,601,434
----------------------------------------------- ----------------- --------------
Basic profit per share (cents) 0.22 0.14
----------------------------------------------- ----------------- --------------
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 2022 31 Dec 2021
EUR EUR
Net assets attributable to owners of the
parent (EUR) 28,779,491 24,930,250
Number of ordinary shares outstanding 1,813,323,603 1,813,323,603
------------------------------------------ -------------- --------------
Net Asset Value per share (cents) 1.59 1.37
------------------------------------------ -------------- --------------
21) 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.
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.
22) Contingencies and commitments
There are no contingencies or commitments outstanding at 31
December 2022 (2021: nil).
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
23) Directors' interests
Total compensation paid to the Directors during the period were
EUR54,208 (2021: EUR62,101). Outstanding
Directors' fees were EUR 47,432 (2021: EUR6,522).
24) Ultimate controlling party
The Directors consider that there is no controlling or ultimate
controlling party of the Group.
25) 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 EUR EUR LEV EUR EUR
2022
Investment Property - - 47,517,500 47,517,500
Intangible assets - - 450,390 450,390
Property, plant and
equipment - - 517,952 517,952
Trade and other receivables - 4,500,000 1,831,172 6,331,172
Cash and cash equivalents 30 142 239,237 239,409
Trade and other payables - (347,797) (998,884) (1,346,681)
Shareholders loans - (2,565,808) - (2,565,808)
Deferred tax liability - - (2,407,965) (2,407,965)
Bank loans - - (19,956,478) (19,956,478)
Net exposure 30 1,586,537 27,192,924 28,779,491
----------------------------- ----- ------------ ------------- -------------
GBP EUR Bulgarian Total
As at 31 December EUR EUR LEV EUR EUR
2021
Investment Property - - 38,144,730 38,144,730
Intangible assets - - 513,377 513,377
Property, plant and
equipment - - 24,883 24,883
Investment in associates - 2,548 - 2,548
Trade and other receivables - 4,500,000 406,752 4,906,752
Cash and cash equivalents 70 43,557 282,561 326,188
Trade and other payables - (50,208) (703,407) (753,615)
Deferred tax liability - - (1,944,802) (1,944,802)
Bank loans - (7,016,178) (9,273,633) (16,289,811)
Net exposure 70 (2,520,281) 27,450,461 24,930,250
----------------------------- ----- ------------ ------------- -------------
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
i. Currency risk (continued)
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 2022 was to
strengthen or weaken by +/-10% it would result in a decrease or
increase respectively in the net liabilities of EUR12 (2021: a
decrease or increase in net liabilities of EUR10).
ii. Credit risk
Credit risk arises on investments, cash balances and trade and
other receivables. 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 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 31 December 2022 or 31 December 2021. 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 2022 rate bearing
EUR EUR EUR
EUR
Trade and other receivables - - 6,331,172 6,331,172
Cash and cash equivalents - - 239,409 239,409
Trade and other payables - (563,751) (782,930) (1,346,681)
Bank loans (19,956,478) - - (19,956,478)
Shareholder loan - (2,565,808) - (2,565,808)
(19,956,478) (3,129,559) 5,787,651 (17,298,386)
------------- ------------ ------------- -------------
As at 31 December 2021
Trade and other receivables - - 4,906,752 4,906,752
Cash and cash equivalents - - 326,188 326,188
Trade and other payables - (583,623) (169,992) (753,615)
Bank loans (16,289,811) - - (16,289,811)
(16,289,811) (583,623) 5,062,948 (11,810,486)
------------- ------------ ------------- -------------
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 EUR172,983 (2021: increase EUR161,229). 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.
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2022
iv. Liquidity risk (continued)
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:
As at 31 December 2022 <1 Year 1-5 Years >5 Years Total
EUR EUR EUR EUR
Trade and other payables (1,346,681) - - (1,346,681)
Shareholders loan (2,565,808) - - (2,565,808)
Bank loans and interest (1,771,278) (10,098,661) (8,086,539) (19,956,478)
------------
(5,683,767) (10,098,661) (8,086,539) (23,868,967)
------------ ------------- ------------ -------------
As at 31 December 2021 <1 Year 1-5 Years >5 Years Total
EUR EUR EUR EUR
Trade and other payables (193,000) (560,615) - (753,615)
Bank loans and interest (1,768,735) (3,328,334) (11,192,742) (16,289,811)
------------
(1,961,735) (3,888,949) (11,192,742) (17,043,426)
------------ ------------ ------------- ---------------
26) Related party transactions
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% (2021: 24.81%) of the issued
share capital of the Company. Phoenix Capital Management JSC
received fees of EUR268,062 (2021: EUR214,272). The amount
outstanding as at year-end is EUR268,062 (2021: EUR53,568).
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 EUR104,284 (2021: EUR26,391). The
amount outstanding as at year end is EUR28,298 (2021: nil).
The company agreed and entered into lending terms with its major
shareholder Neo London Capital AD in relation to the exploration of
future property development opportunities. Neo London Capital AD
agreed to lend the Company up to EUR2,500,000 in agreed allocated
tranches for the exploration, which need to be utilised within
agreed timescales. The Funding was unsecured and was fully repaid
on 30 May 2023.
The total amount outstanding at year end to the shareholders
totaled EUR2,565,808.
27) Subsequent events
BSPF Property 2, subsidiary of the Company has signed an
agreement to acquire 98.27% of Grand Hotel Varna AD. Grand Hotel
Varna AD wholly owns GHV-Dolphins EAD, a Bulgarian company which
holds the title to real estate comprising three hotels and a beach
marina resort, situated in a prime location on the Black Sea Coast.
The assets being acquired also include a mutual fund portfolio,
comprising readily realisable investments. The consideration
payable for the acquisition is EUR28 million in cash, of which an
initial non-refundable deposit of EUR1.6 million was paid upon
signing of the agreement. The property assets being acquired have
been independently valued at EUR19 million, and the mutual fund
portfolio is currently valued at EUR12 million. The completion of
the acquisition would be no later than 30 October 2023.
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END
NEXNKFBKOBKDKOB
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July 28, 2023 13:04 ET (17:04 GMT)
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