RNS Number : 8026I
Reconstruction Capital II Ltd
17 August 2021
 

17 August 2021

Reconstruction Capital II Limited (the "Company")

Interim Unaudited Financial Statements

for the six months ended 30 June 2021

 

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 2021.

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 2021, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of €21.2m or €0.1562 per share, which represents a 1.53% fall since the beginning of the year.

As at 30 June 2021, RC2 and its subsidiary, RC2 (Cyprus) Ltd had cash and cash equivalents of approximately €0.37m. Additionally, RC2 (Cyprus) Ltd had loan receivables from Telecredit and Mamaia Resort Hotels of € 0.45m. As at 30 June 2021, RC2 had sundry liabilities of €0.07m.

Operational highlights

Both the Romanian and Bulgarian economies have proven to be relatively resilient to the ongoing Covid-19 pandemic, with their first quarter GDPs growing by 2.8% and 2.5%, respectively, over the quarter, compared to an average EU of 0.1%.

The pandemic itself seems to have subsided in Romania and Bulgaria, with the number of daily new cases falling from 1,400 and 600, respectively, at the beginning of May, to 150 and 100, at the end of July. Due to the fall in cases, most Covid-19 related restrictions were lifted in both countries. However, the number of daily new cases has started to creep up again, reaching 240 and 400 in Romania and Bulgaria, respectively, at the beginning of August. Romania and Bulgaria are particularly vulnerable to a resurgence of the pandemic, due to them having the lowest vaccination rates in the EU, with only 31.5% and 19.2% of their eligible populations, respectively, having received at least one dose, compared to an EU average of 71%.

The Policolor Group had a good performance in the first 6 months of 2021 with sales at € 41.2m, mainly helped by better-than-expected sales results from the resins and chemicals divisions, whose combined sales were 63.8% above the budget. On the other hand, the coatings division posted first half year sales 6.7% below budget, mainly due to weaker demand as consumers re-oriented their spending away from home improvement due to the easing of covid related restrictions. Helped by higher resins and chemicals sales and improved cost controls, the Group posted recurring EBITDA of € 2.6m, higher than the budgeted € 2.1m.

Mamaia Resort Hotels achieved first semester revenues of € 1m, or 14% above budget, which resulted in a six-month 2021 EBITDA loss of € -0.1m, compared to a budgeted loss of € -0.2m. The over-performance was mainly due to a contract signed with an international organization covering the low season first four months of the year. The bulk of the Hotel's revenues and profits are typically generated during the high season months of July and August.

Telecredit deployed € 6.5m in financing products to small and medium sized enterprises over the first semester, which was 4% below budget. However, the company turned profitable at operating level in the second quarter, having generated an Operating Profit before Depreciation of € 143,000 over the period, compared to a first quarter loss of € 8,000.

http://www.rns-pdf.londonstockexchange.com/rns/8026I_1-2021-8-16.pdf

For further information, please contact:

Reconstruction Capital II Limited

Cornelia Oancea / Anca Moraru

Tel: +40 21 316 76 80

 

Grant Thornton UK LLP

(Nominated Adviser)

Philip Secrett
Tel: +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 2021

 

On 30 June 2021, Reconstruction Capital II Limited ("RC2") had a total unaudited net asset value ("NAV") of € 21.2m or € 0.1562 per share, which represents a 1.53% fall since the beginning of the year.

Both the Romanian and Bulgarian economies have proven to be relatively resilient to the ongoing Covid-19 pandemic, with their first quarter GDPs growing by 2.8% and 2.5%, respectively, over the quarter, compared to an average EU of 0.1%.

The pandemic itself seems to have subsided in Romania and Bulgaria, with the number of daily new cases falling from 1,400 and 600, respectively, at the beginning of May, to 150 and 100, at the end of July. Due to the fall in cases, most Covid-19 related restrictions were lifted in both countries. However, the number of daily new cases has started to creep up again, reaching 240 and 400 in Romania and Bulgaria, respectively, at the beginning of August. Romania and Bulgaria are particularly vulnerable to a resurgence of the pandemic, due to them having the lowest vaccination rates in the EU, with only 31.5% and 19.2% of their eligible populations, respectively, having received at least one dose, compared to an EU average of 71%.

The Policolor Group had a good performance in the first 6 months of 2021 with sales at € 41.2m, mainly helped by better-than-expected sales results from the resins and chemicals divisions, whose combined sales were 63.8% above the budget. On the other hand, the coatings division posted first half year sales 6.7% below budget, mainly due to weaker demand as consumers re-oriented their spending away from home improvement due to the easing of covid related restrictions. Helped by higher resins and chemicals sales and improved cost controls, the Group posted recurring EBITDA of € 2.6m, higher than the budgeted € 2.1m.

Mamaia Resort Hotels achieved first semester revenues of € 1m, or 14% above budget, which resulted in a six- month 2021 EBITDA loss of € -0.1m, compared to a budgeted loss of € -0.2m. The over-performance was mainly due to a contract signed with an international organization covering the low season first four months of the year. The bulk of the Hotel's revenues and profits are typically generated during the high season months of July and August.

Telecredit deployed € 6.5m in financing products to small and medium sized enterprises over the first semester, which was 4% below budget. However, the company turned profitable at operating level in the second quarter, having generated an Operating Profit before Depreciation of € 143,000 over the period, compared to a first quarter loss of € 8,000.

At the end of June, RC2 and RC2 (Cyprus) Ltd had cash and cash equivalents of € 0.37m, loan receivables from Telecredit and Mamaia Resort Hotels of € 0.45m, and short-term liabilities of € 0.07m. Telecredit reimbursed a net amount of € 1.05m to RC2 during the first semester, leaving an outstanding balance of € 0.15m. The shareholder loan to RC2 from Portadrix Investments Limited was fully repaid in the second quarter, resulting in RC2 being debt-free at the end of June.

 

STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2021

 

 

 

 

 

30 June

2021

EUR

 

30 June

2020

EUR

 

31 December

2020

EUR

 

Unaudited

 

Unaudited

 

Audited

Investment
Income

 

 

 

 

 

 

Fair value loss on financial assets at

fair value through profit or loss

 

 

(2,100,354)

 

 

(2,113,199)

 

 

(1,752,486)

Interest income

 

2,112,394

 

2,131,097

 

4,280,442

Net
investment income

 

12,040

 

17,898

 

2,527,956

Expenses

 

 

 

 

 

 

Operating
expenses

 

(341,741)

 

(315,688)

 

(660,299)

Net financial income/(expense)

 

3

 

-

 

(16,286)

Total
expenses

 

(341,738)

 

(315,688)

 

(676,585)

(Loss)/profit for the period/year

 

(329,698)

 

(297,790)

 

1,851,371

Other comprehensive
income

 

-

 

-

 

-

Total comprehensive (loss)/profit for the period/year attributable to owners

 

 

 

(329,698)

 

 

 

(297,790)

 

 

 

1,851,371

Earnings Per Share attributable to the owners of the Company

Basic and diluted earnings per share

 

 

 

 

           (0.0024)

 

 

 

 

               (0.0022)

 

 

 

 

                 0.0136

 

 

 

 

STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

 

 

 

30 June

2021

EUR

 

30 June

2020

EUR

 

31 December

2020

EUR

 

 

Unaudited

 

Unaudited

 

Audited

ASSETS

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Financial assets at fair value through profit or loss

 

 

 

21,231,506

 

 

19,509,494

 

 

21,999,552

Total non-current
assets

 

21,231,506

 

19,509,494

 

21,999,552

 

Current assets

 

 

 

 

 

 

Trade and other receivables

 

17,123

 

13,585

 

13,600

Cash and cash equivalents

 

37,502

 

10,200

 

33,073

Total current assets

 

54,625

 

23,785

 

46,673

 

TOTAL ASSETS

 

 

21,286,131

 

 

19,533,279

 

 

22,046,225

 

LIABILITIES

 

 

 

 

 

 

Current
liabilities

 

 

 

 

 

 

Trade and other payables

 

67,664

 

134,275

 

91,782

Borrowings

 

-

 

-

 

406,278

 

TOTAL LIABILITIES

 

 

67,664

 

 

134,275

 

 

498,060

 

NET ASSETS

 

 

21,218,467

 

 

19,399,004

 

 

21,548,165

 

EQUITY ATTRIBUTABLE TO OWNERS

 

 

 

 

 

Share
capital

1,358,569

 

1,358,569

 

1,358,569

Share premium

109,206,779

 

109,206,779

 

109,206,779

Accumulated deficit

(89,346,881)

 

(91,166,344)

 

(89,017,183)

TOTAL EQUITY

21,218,467

 

19,399,004

 

21,548,165

Net Asset Value per share

Basic and diluted net asset value per share

 

0.1562

 

 

0.1428

 

 

0.1586

 

 

STATEMENT OF CHANGES IN EQUITY

 

 

For the six months ended 30 June 2021

 

 

Share

Retained (deficit)/

Share capital          premium EUR                                        EUR

earnings EUR

 

Total EUR

Balance at 1 January 2020                                     1,358,569        109,206,779

(90,868,554)

 

19,696,794

Loss for the period                                                                       -                             -

Other comprehensive income                                                    -                             -

(297,790)

-

 

(297,790)

-

 

 

 

Total comprehensive loss for the period                                 -                             -

 

 

(297,790)

 

 

 

(297,790)

 

Balance at 30 June 2020                                          1,358,569        109,206,779

 

19,399,004

 

Profit for the period                                                                     -                             -

Other comprehensive income                                                    -                             -

 

2,149,161

-

 

 

2,149,161

-

 

 

Total comprehensive profit for the period                              -                             -

 

2,149,161

 

 

2,149,161

 

Balance at 31 December 2020                                1,358,569        109,206,779

 

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

 

21,218,467

 

 

 

 

 

CASH FLOW STATEMENT

For the six months ended 30 June 2021

 

 

30 June

2021

EUR

 

30 June

2020

EUR

 

31 December

2020

EUR

Unaudited

 

Unaudited

 

Audited

Cash flows from operating activities

 

 

 

 

 

(Loss)/profit before taxation

(329,698)

 

(297,790)

 

1,851,371

Adjustments for:

 

 

 

 

 

Fair value loss on financial assets at fair value

 

 

 

 

 

through profit or loss

2,100,354

 

2,113,199

 

1,752,486

Interest income

(2,112,394)

 

(2,131,097)

 

(4,280,442)

Financial expenses

11,035

 

-

 

6,278

Net (gain)/loss on foreign exchange

(3)

 

-

 

8

Net cash outflow before changes in working

 

 

 

 

 

capital

(330,706)

 

(315,688)

 

(670,299)

(Increase)/Decrease in trade and other receivables

(3,523)

 

3,088

 

3,073

(Decrease)/Increase in trade and other payables

(24,118)

 

96,913

 

54,420

Disposals and repayments of financial assets

780,085

 

160,000

 

180,000

Net cash provided by/(used in) operating

421,738

 

(55,687)

 

(432,806)

Cash flows from financing activities

 

 

 

 

 

Proceeds from borrowings

250,000

 

-

 

400,000

Repayment of loans from related party

(650,000)

 

-

 

-

Interest paid

(17,312)

 

-

 

-

Net cash flow (used in)/provided by financing

(417,312)

 

-

 

400,000

Net increase/(decrease) in cash and cash

 

 

 

 

 

equivalents before currency adjustment

4,426

 

(55,687)

 

(32,806)

Effects of exchange rate differences on cash and cash

 

 

 

 

 

equivalents

3

 

-

 

(8)

Net increase/(decrease) in cash and cash

 

 

 

 

 

equivalents after currency adjustment

4,429

 

(55,687)

 

(32,814)

Cash and cash equivalents at the beginning of the

 

 

 

 

 

period/year

33,073

 

65,887

 

65,887

Cash and cash equivalents at the end of the

 

 

 

 

 

period/year

37,502

 

10,200

 

33,073

 

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