RNS Number : 3722W
Reconstruction Capital II Ltd
17 August 2022
 

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 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 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

 

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