BLACK SEA PROPERTY FUND LTD. ("Black Sea" or the "Company")
Final Results for the year ended 31 December 2014 Change of Adviser Change of Registered Office
The Black Sea Property Fund Limited is pleased to announce its audited annual results for the year ended 31
December 2014.
The Annual Report and Consolidated Financial Statements are being circulated to shareholders and will be available shortly on the company's website at www.blackseapropertyfund.com.
In addition, the Company has appointed Vistra Fund Services Limited to act as administrator and secretary to the Company, and approved the change of its registered office to 4th Floor, St Paul's Gate, 22-24 New Street, St Helier, Jersey, JE1 4TR.
Alex Borrelli, Chairman Tel: +44 7747 020600
Cairn Financial Advisers LLP Tel: +44 20 7148 7900
Nominated Adviser
Sandy Jamieson
Sole Broker
Charles Goodfellow, Heena Karani
As your new Chairman, I am pleased to present the financial statements of the Company for the year ended
31 December 2014. Following the realisation of the Company's remaining assets, the net asset value as at
31 December 2014 was £187,925 or 0.1 pence per share (2013: £3,153,942 or 1.5 pence per share).
I was appointed to the Board on 12 December 2014, together with Trevor Hunt, joining Antony Gardner- Hillman and replacing John Chapman, Stephen Coe and Andrew Wignall. These Board changes succeeded the Extraordinary General Meeting held on that date when shareholders voted overwhelmingly in favour of the two new directors in place of the three former directors in order for the new Board to be able to pursue the adoption of a new investing policy extending the life of the Company and the raising of new funds for investment in the Bulgarian real estate market. The new Board's proposals are subject to the approval of the Jersey Financial Services Commission (JFSC).
During the year, the then Board pursued the Company's stated strategy of selling assets and returning excess cash to shareholders. The Company's life had previously been extended by 24 months to 30 June 2014 which the Board had considered was optimal for asset realisation on the best terms and by such means as it considered to be reasonably achievable, with the view to liquidating as much as possible of the assets of the Company by 31 December 2014 and then proposing its winding up.
On 3 June 2014, the Board announced a return of capital from the sale proceeds of the Evergreen land and remaining units at Obzor amounting to approximately £2,365,553 or 1.11 pence per share to shareholders. The Board also announced on that date completion of the sale of the Byala land for net proceeds of approximately €850,000 and, on 16 July 2014, the Board announced the sale of the Company's last remaining asset, the Borovets land, for net proceeds of €125,000. On 22 July 2014, the Board announced a final return of capital of £319,669 or 0.15 pence per share to shareholders and that shareholders should not expect any further returns of capital. At that time, the Board expected to put to shareholders a special resolution for the winding up or other ultimate disposition of the Company.
During the year, the composition of the shareholder base had changed substantially and three significant new investors joined the shareholder register following share acquisitions, including AG Capital AD through
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Mamferay Holdings Limited which holds 28.54% of the issued share capital. On 3 November 2014, the Company announced that it had received a requisition for an extraordinary general meeting from Fitel Nominees Limited, the nominee for Mamferay Holdings Limited, to remove three directors and appoint Trevor Hunt and myself as new directors. This followed AG Capital AD having informed the Company that it opposed the proposal to wind up the Company and instead wanted the Company to continue in business and to retain its AIM quotation.
Following the Extraordinary General Meeting on 12 December 2014, the Board announced the appointment of Cairn Financial Advisers LLP as nominated adviser and Peterhouse Corporate Finance as sole broker and its intention to appoint AG Capital AD as investment adviser subject to the agreement of terms and the approval of the JFSC.
The Board believes that there are opportunities for investment in the residential real estate, holiday homes, commercial real estate and distressed real estate markets of Bulgaria. In January 2015, the Board with its advisers was able to inspect a number of potential acquisition opportunities in and around Sofia and, as a result, is confident that the Company will be able to make appropriate investments when funds are raised.
The Company was pleased to announce on 3 February 2015 the appointment as a non-executive director of Yordan Naydenov, a Bulgarian lawyer who is a partner of Boyanov & Co in Sofia where he heads the Corporate and M&A practice group.
I believe that the Board now has the requisite skills and expertise for the successful development of the
Company.
A circular was released on 13 March 2015 detailing the proposals for our new investing policy and the raising of funds for investment in the Bulgarian real estate market. An EGM has been scheduled for 10 April 2015 to discuss the proposals to be implemented in sufficient time to avoid the shares being suspended from trad ing on AIM.
Alex Borrelli
Chairman
Notes £ £
Gain on disposal of held for sale assets 573,928 -
Gain on disposal of investment property - 287,969
Loss on revaluation of investment property - (487,099) Total gain/(loss) on investment 573,928 (199,130) Operating expenses
Impairment of available for sale assets - (412,953)
Other operating expenses (689,838) (691,923)
Foreign exchange losses (5,864) (1,077) Total operating expenses (695,702) (1,105,953) Operating loss before interest and tax (121,774) (1,305,083)
Bank interest receivable 20,997 62,164
Bank charges and interest payable (2,343) (2,635)
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Tax expense | - | (102,214) |
Loss from continuing operations | (103,120) | (1,347,768) |
Profit/(loss) from discontinued operations | 18,257 | (56,942) |
Loss for the year after tax Other comprehensive income Items that may be reclassified to profit or loss (Losses)/gains on translation of foreign operations | (84,863) (195,932) | (1,404,710) 113,547 |
Recycle of cumulative losses in foreign exchange reserve for
discontinued operations (432,250) -
Basic and diluted loss per share (pence) 3 (0.04) (0.66)
All losses for the year and total comprehensive income are attributable to the owners of the Company.
Notes £ £
Plant and equipment - - Investment properties - - Available for sale assets - -
Other receivables 20,283 35,062
Cash and cash equivalents 220,424 1,659,042
Assets in disposal group classified as held for sale - 1,606,548
Issued share capital 2 46,478,064 46,478,064
Retained deficit (44,984,125) (41,781,790)
Foreign exchange reserve (1,306,014) (1,542,332)
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Total equity Liabilities Other payables | 187,925 52,782 | 3,153,942 44,496 | ||
Tax payable | - | 102,214 | ||
52,782 | 146,710 | |||
Total equity and liabilities | 240,707 | 3,300,652 | ||
Number of ordinary shares in issue | 2 | 213,112,896 | 213,112,896 | |
Net asset value per ordinary share (pence) | 3 | 0.1 | 1.5 | |
The financial statements were approved and authorised f signed on its behalf by [ ]. | or issue by th | e Board on 27 M | arch | 2015 and were |
Notes £ £
Loss from continuing operations (103,120) (1,347,768)
Profit/(loss) from discontinued operations 18,257 (56,942)
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Gain on disposal of investment property | (573,928) | (287,969) | |
(Gain)/loss on revaluation of investment property | - | 487,099 | |
(Gain)/loss in fair value of available for sale assets | - | 412,953 | |
Foreign exchange (gains)/losses | 5,864 | 1,077 | |
Interest received | (20,997) | (62,164) | |
Finance expense | 2,343 | 2,635 | |
Tax expense | - | 102,214 | |
Movement in net cash outflow from operating activities | (671,581) | (748,865) | |
Decrease in other receivables | 14,779 | 16,415 | |
Increase in other payables | 8,286 | 2,059 | |
Net cash outflow from operating activities | (648,516) | (730,391) | |
Withholding tax paid | (101,695) | - | |
Net cash outflow from operating activities | (750,211) | (730,391) | |
Investing activities | |||
Proceeds on disposal of subsidiaries Proceeds on disposal of investment property | 1,123,412 - | - 674,608 | |
Cash received on available for sale assets Cash received on held for sale assets | - 900,106 | 114,657 - | |
Net cash inflow from investing activities | 2,023,518 | 789,265 | |
Financing activities | |||
Interest received | 20,997 | 1,855 | |
Interest paid | (2,343) | (2,635) | |
Special dividend | 4 | (2,685,222) | - |
Net cash outflow from financing activities | (2,666,568) | (780) | |
Net (decrease)/increase in cash and cash equivalents | (1,393,261) | 58,094 | |
Cash and cash equivalents at beginning of year | 1,659,042 | 1,575,280 | |
Effect of foreign exchange rates | (45,357) | 25,668 | |
Cash and cash equivalents at end of year | 220,424 | 1,659,042 |
The consolidated financial statements of the Company for the year ended 31 December 2014 comprise the financial statements of the Company and its subsidiaries (together, the "Group") and have been prepared in accordance with International Financial Reporting Standards ("IFRS"); endorsed for use in the European Union.
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The Black Sea Property Fund Limited is incorporated in Jersey with company number 89392 and registered office located at 1 Waverley Place, Union Street, St Helier, Jersey, Channel Islands, JE1
1SG.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. All companies within the Group have a 31 December year end and apply consistent accounting policies. Control exists when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences up to the date that control ceases. All intra group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Assets and liabilities of subsidiaries denominated in foreign currencies are translated at the closing rate at the reporting date. Profit or loss amounts are translated at an average rate. Differences are taken directly to foreign currency translation differences in equity.
(c) Going concern
On 28 June 2012 a special resolution was passed at the AGM which authorised the Directors to pursue a strategy of asset realisation on the best terms and by such means as they consider to be reasonably achievable, with the view to liquidating as much as possible of the assets of the Company and then proposing to the Members not later than 30 June 2014 a resolution (which will be proposed as a special resolution) that a liquidator be appointed and the Company be wound up.
Following the change of the management of the Group, as approved at the Extraordinary General Meeting ("EGM") held on 12 December 2014, it is the intention of the Group to pursue real estate investment in the Black Sea region.
An EGM of the shareholders has been convened to be held on 10th April 2015 in order to consider either delisting and winding up the Company (the "Wind Up Resolutions"), or to extend the life of the Company by approximately six years and nine months, to appoint an Investment Advisor, to enable the Directors to issue new Participating Shares and to adopt an investing policy (the "Continuation Resolutions").
The directors are confident that the Wind Up Resolutions will be rejected and the Continuation Resolutions will be passed at the EGM. Shareholders representing 28.54 per cent of the current issued Participating Shares have signed irrevocable undertakings to vote against the Wind Up Resolutions to delist and wind up the Company and to vote in favour of the Continuation Resolutions.
If the Continuation Resolutions are passed the Company will need to raise funds to provide sufficient working capital to fulfil the investing policy. The Company proposes to achieve this through the issue of new Participating Shares by way of a subscription or placing as soon as practical following conclusion of the EGM. There can be no guarantee that any such proposed subscription or placing will be successful.
In the event that the Wind Up Resolutions are passed the Company is of the opinion that the Company has sufficient capital available to meet the obligations of the wind up process. The directors do not believe that any adjustments would need to be made to the financial statements should the Wind Up Resolutions be passed.
As at 31 December 2014, the Board is of the opinion that the Company holds sufficient liquid assets to fund its operating expenses for the coming 12 month period. On 29 January 2015, the Company entered into a loan agreement with Mamferay Holdings Limited for a facility of up to £350,000 with a one year term. The purpose of the loan facility is to fund the running costs of the Company.
Accordingly, the directors, at the time of approving the financial statements, are confident that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
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Authorised: | 2014 Number | 2013 Number |
Founder shares of no par value Ordinary shares of no par value | 10 Unlimited | 10 Unlimited |
Issued and fully paid: 2 founder shares of no par value | £ - | £ - |
213,112,896 (2011: 213,112,896) ordinary shares of no par value | 46,478,064 | 46,478,064 |
There was no movement in stated capital during the year or prior year.
Founder shares are not eligible for participation in Group investments and carry no voting rights at general meetings of the Company.
The Directors consider capital to be the net assets of the Group.
In accordance with the resolution passed at the annual general meeting held on 28 June 2012, any proceeds of sale of the property portfolio will be returned to shareholders as determined by the Board and distributions may be made by way of a dividend or a redemption or repurchase of ordinary shares, at the Board of Directors' discretion.
The loss per ordinary share of 0.04 pence (2013: loss of 0.66 pence) is based on the loss for the year of
£84,863 (2013 loss: £1,404,710) and on the weighted average number of ordinary shares in issue of
213,112,896 (2013: 213,112,896).
There is no difference between diluted and undiluted earnings per share.
The net asset value per ordinary share of 0.1 pence (2013: 1.5 pence) is based on the net assets attributable to ordinary shareholders, divided by 213,112,896 (2013: 213,112,896) being the number of outstanding ordinary shares in issue at the year end.
On 18 June 2014 and 5 August 2014, the Company paid special dividends to ordinary shareholders of
£2,365,553 or 1.11 pence per share and £319,669 or 0.15 pence per share (2013: £nil) in accordance with
Article 115 of Companies (Jersey) Law 1991.
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