17 Aug 2022 15:28
17 August 2022
Reconstruction Capital II Limited (the "Company")
Interim Unaudited Financial Statements
for the six months ended 30 June 2022
Reconstruction Capital II Limited ("RC2", the "Company" or the "Group"), a closed-end investment company incorporated in the Cayman Islands admitted to trading on the AIM market of the London Stock Exchange, today announces its results for the six months ended 30 June 2022.
Copies of the company's interim financial statements will today be posted to shareholders. The interim report is also available on the Company's website http://www. reconstructioncapital2.com/.
Financial highlights
On 30 June 2022, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of €26.5m or €0.1955 per share, which represents a 0.83% fall since the beginning of the year.
As at 30 June 2022, RC2 and its subsidiary, RC2 (Cyprus) Ltd had cash and cash equivalents of approximately €0.05m and receivables of €0.02m. As at 30 June 2022, RC2 had liabilities of €0.09m.
Operational highlights
Whilst Romania and Bulgaria continued to achieve strong year-on-year GDP growth of 6.4% and 4.0%, respectively, during the first quarter of 2022, the outbreak of war in neighbouring Ukraine at the end of February generated supply chain disruptions and exacerbated food and energy price increases. Consequently, inflationary pressures intensified in both countries, eroding the purchasing power of consumers, and adding additional pressure on companies' profitability margins as the prices of raw materials and utilities experienced sharp increases. At the end of June, the annual inflation rate reached 15.1% in Romania, and 16.9% in Bulgaria.
The Policolor Group generated operating revenues of €45.2m over the first six months, slightly above budget and 8.8% above the €41.5m achieved during the same period last year. Coatings sales of €25.3m were 4.2% above the same period last year, but 8.0% below budget, mainly due to weak market demand due to cost-of-living pressures on consumers. Sales of anhydrides reached €6.0m, below the budgeted €6.7m, whilst resins sales of €16.9m were 29.2% above last year, and 20.0% above budget, driven by high market prices for resins and strong demand from customers. Driven mainly by the coatings business' gross margin underperforming the budget due to difficulties in passing on raw material price increases to customers, the Group's recurring six-month EBITDA came in at € 1.8m, significantly below both last year's result and the budget target of €3.1m
Mamaia Resort Hotels reported excellent results for the first semester of 2022, significantly overperforming both its budget and last year's performance. Operating revenues came in at €1.7m, 112.7% above budget and 55.3% higher year-on-year, driven by a better occupancy rate due to the Hotel securing some long-term group occupancy contracts which started in the off-season months. The six-month EBITDA of €0.3m compares to a budgeted EBITDA loss of €-0.3m, mainly due to the higher revenues.
Telecredit continued its strong growth during the second quarter, having deployed € 11.1m in financing products to small and medium-sized enterprises over the first semester, 16.1% above budget and 70.7% higher year-on-year. The company generated an Operating Profit before Depreciation and Interest Expense of €383,000 over the period, 38.3% above budget and 176.0% above the result achieved during the same period of 2021.
At the end of June, RC2 and RC2 (Cyprus) Ltd had cash and cash equivalents of €0.2m, receivables of €0.1m, and short-term liabilities of €0.1m.
For further information, please contact:
Reconstruction Capital II Limited
Cornelia Oancea / Luca Nicolae
Tel: +40 21 316 76 80
Grant Thornton UK LLP
(Nominated Adviser)
Philip SecrettTel: +44 (0) 20 7383 5100
finnCap Limited
(Broker)
William Marle / Giles Rolls
Tel: +44 20 7220 0500
ADVISER'S REPORT For the six months ended 30 June 2022
|
On 30 June 2022, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of €26.5m or €0.1955 per share, which represents a 0.83% fall since the beginning of the year. Whilst Romania and Bulgaria continued to achieve strong year-on-year GDP growth of 6.4% and 4.0%, respectively, during the first quarter of 2022, the outbreak of war in neighbouring Ukraine at the end of February generated supply chain disruptions and exacerbated food and energy price increases. Consequently, inflationary pressures intensified in both countries, eroding the purchasing power of consumers, and adding additional pressure on companies' profitability margins as the prices of raw materials and utilities experienced sharp increases. At the end of June, the annual inflation rate reached 15.1% in Romania, and 16.9% in Bulgaria. The Policolor Group generated operating revenues of € 45.2m over the first semester, slightly above budget and 8.8% above the € 41.5m achieved during the same period last year. Coatings sales of € 25.3m were 4.2% above the same period last year, but 8.0% below budget, mainly due to weak market demand due to cost-of-living pressures on consumers. Sales of anhydrides reached € 6.0m, below the budgeted € 6.7m, whilst resins sales of € 16.9m were 29.2% above last year, and 20.0% above budget, driven by high market prices for resins and strong demand from customers. Driven mainly by the coatings business' gross margin underperforming the budget due to difficulties in passing on raw material price increases to customers, the Group's recurring six-month EBITDA came in at € 1.8m, significantly below both last year's result and the budget target of € 3.1m Mamaia Resort Hotels reported excellent results for the first semester of 2022, significantly overperforming both its budget and last year's performance. Operating revenues came in at € 1.7m, 112.7% above budget and 55.3% higher year-on-year, driven by a better occupancy rate due to the Hotel securing some long-term group occupancy contracts which started in the off-season months. The six-month EBITDA of € 0.3m compares to a budgeted EBITDA loss of € -0.3m, mainly due to the higher revenues. Telecredit continued its strong growth during the second quarter, having deployed € 11.1m in financing products to small and medium-sized enterprises over the first semester, 16.1% above budget and 70.7% higher year-on-year. The company generated an Operating Profit before Depreciation and Interest Expense of € 383,000 over the period, 38.3% above budget and 176.0% above the result achieved during the same period of 2021. At the end of June, RC2 and RC2 (Cyprus) Ltd had cash and cash equivalents of € 0.22m, receivables of € 0.05m, and short-term liabilities of € 0.09m. |
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
| 30 June 2022 EUR | 30 June 2021 EUR | 31 December 2021 EUR | |||
Unaudited | Unaudited | Audited | ||||
Investment Income | ||||||
Fair value loss on financial assets at fair value through profit or loss |
(102,597) |
(2,100,354) |
2,774,875 | |||
Interest income | 257,916 | 2,112,394 | 3,197,478 | |||
Net investment income | 155,319 | 12,040 | 5,972,353 | |||
Expenses | ||||||
Operating expenses |
| (394,892) | (341,741) | (725,459) | ||
Net financial income/(expense) | (35) | 3 | (11,595) | |||
Total expenses | (394,927) | (341,738) | (737,054) | |||
(Loss)/profit for the period/year | (239,608) | (329,698) | 5,235,299 | |||
Other comprehensive income | - | - | - | |||
Total comprehensive (loss)/profit for the period/year attributable to owners |
(239,608) |
(329,698) |
5,235,299 | |||
Earnings Per Share attributable to the owners of the Company Basic and diluted earnings per share |
(0.0018) |
(0.0024) |
0.0385 |
STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
| 30 June 2022 EUR | 30 June 2021 EUR | 31 December 2021 EUR | |||
Unaudited | Unaudited | Audited | ||||
ASSETS | ||||||
Non-current assets | ||||||
Financial assets at fair value through profit or loss |
|
26,557,140 |
21,231,506 |
26,971,821 | ||
Total non-current assets | 26,557,140 | 21,231,506 | 26,971,821 | |||
Current assets | ||||||
Trade and other receivables |
| 19,172 | 17,123 | 6,027 | ||
Cash and cash equivalents | 46,438 | 37,502 | 11,301 | |||
Total current assets | 65,610 | 54,625 | 17,328 | |||
TOTAL ASSETS |
26,622,750 |
21,286,131 |
26,989,149 | |||
LIABILITIES | ||||||
Current liabilities | ||||||
Trade and other payables |
| 91,174 | 67,664 | 205,685 | ||
Borrowings |
| - | - | - | ||
TOTAL LIABILITIES |
91,174 |
67,664 |
205,685 | |||
NET ASSETS |
26,531,576 |
21,218,467 |
26,783,464 | |||
EQUITY ATTRIBUTABLE TO OWNERS | ||||||
Share capital | 1,357,034 | 1,358,569 | 1,358,569 | |||
Share premium | 109,196,034 | 109,206,779 | 109,206,779 | |||
Accumulated deficit | (84,021,492) | (89,346,881) | (83,781,884) | |||
TOTAL EQUITY | 26,531,576 | 21,218,467 | 26,783,464 | |||
Net Asset Value per share Basic and diluted net asset value per share |
0.1955 |
0.1562 |
0.1971 | |||
STATEMENT OF CHANGES IN EQUITY | |||
For the six months ended 30 June 2022 | |||
Share | Retained (deficit)/ | ||
Share capital premium EUR EUR | earnings EUR | Total EUR | |
Balance at 1 January 2021 1,358,569 109,206,779 | (89,017,183) | 21,548,165 | |
Loss for the period - - Other comprehensive income - - | (329,698) - | (329,698) - | |
Total comprehensive loss for the period - - |
(329,698) |
(329,698) | |
Balance at 30 June 2021 1,358,569 109,206,779 | (89,346,881) | 21,218,467 | |
Profit for the period - - Other comprehensive income - - |
5,564,997 - |
5,564,997 | |
Total comprehensive profit for the period - - |
5,564,997 |
5,564,997 | |
Balance at 31 December 2021 1,358,569 109,206,779 | (83,781,884) | 26,783,464 | |
Loss for the period - - Other comprehensive income - - |
(239,608) - |
(239,608) - | |
Total comprehensive loss for the period - - |
(239,608) |
(239,608) | |
Repurchase and cancellation of own shares (1,535) (10,745) Transactions with owners (1,535) (10,745) |
- - |
(12,280) (12,280) | |
Balance at 30 June 2022 1,357,034 109,196,034 | (84,021,492) | 26,531,576 | |
CASH FLOW STATEMENT
For the six months ended 30 June 2022
30 June 2022 EUR | 30 June 2021 EUR | 31 December 2021 EUR | |||
Unaudited | Unaudited | Audited | |||
Cash flows from operating activities | |||||
(Loss)/profit before taxation | (239,608) | (329,698) | 5,235,299 | ||
Adjustments for: | |||||
Fair value loss on financial assets at fair value | |||||
through profit or loss | 102,597 | 2,100,354 | (2,774,875) | ||
Interest income | (257,916) | (2,112,394) | (3,197,478) | ||
Financial expenses | - | 11,035 | 11,035 | ||
Net (gain)/loss on foreign exchange | 35 | (3) | (44) | ||
Net cash outflow before changes in working | |||||
capital | (394,892) | (330,706) | (726,063) | ||
(Increase)/Decrease in trade and other receivables | (13,145) | (3,523) | 7,573 | ||
(Decrease)/Increase in trade and other payables | (114,511) | (24,118) | 113,902 | ||
Repayments of financial assets | 570,000 | 780,085 | 1,210,085 | ||
Purchase of financial assets | - | - | (210,000) | ||
Net cash provided by/(used in) operating | 47,452 | 421,738 | 395,497 | ||
Cash flows from financing activities | |||||
Payments to purchase own shares | (12,280) | ||||
Proceeds from borrowings | - | 250,000 | 250,000 | ||
Repayment of loans from related party | - | (650,000) | (650,000) | ||
Interest paid | - | (17,312) | (17,313) | ||
Net cash flow (used in)/provided by financing | (12,280) | (417,312) | (417,313) | ||
Net increase/(decrease) in cash and cash | |||||
equivalents before currency adjustment | 35,172 | 4,426 | (21,816) | ||
Effects of exchange rate differences on cash and cash | |||||
equivalents | (35) | 3 | 44 | ||
Net increase/(decrease) in cash and cash | |||||
equivalents after currency adjustment | 35,137 | 4,429 | (21,772) | ||
Cash and cash equivalents at the beginning of the | |||||
period/year | 11,301 | 33,073 | 33,073 | ||
Cash and cash equivalents at the end of the | |||||
period/year | 46,438 | 37,502 | 11,301 |