REG - Reconstruction CapII - Interim Unaudited Financial Statements
30/08/2023 10:00
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RNS Number : 8062K Reconstruction Capital II Ltd 30 August 2023
30 August 2023
Reconstruction Capital II Limited (the "Company")
Interim Unaudited Financial Statements
for the six months ended 30 June 2023
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 2023.
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 2023, Reconstruction Capital II Limited ("RC2") had a total
unaudited net asset value ("NAV") of €23.4m or €0.1729 per share, which
represents a 1.59% fall since the beginning of the year.
As at 30 June 2023, RC2 and its subsidiary, RC2 (Cyprus) Ltd had cash and cash
equivalents of approximately €0.017m and receivables of €0.017m. As at 30
June 2023, RC2 had short-term liabilities of €0.243m.
Operational highlights
During the first half of 2023, the macroeconomic challenges which started in
2022 due to the outbreak of war in neighbouring Ukraine continued to erode
consumers' purchasing power, affecting all of the Fund's investee companies,
although inflationary pressures which had been fuelled by the outbreak of war
fell significantly in the second quarter.
The Policolor Group achieved revenues of € 37.6m during the first semester,
22.7% below budget and 15.9% lower year-on-year, as the anhydrides division
struggled to source the necessary raw materials due to the less available
ortho-xylene, pursuant to the EU banning imports from Russia. The coatings
division's sales were slightly higher year-on-year but 9% below budget, as the
cost-of-living crisis reduced consumers' discretionary spending, while the
construction market weakened. Although the Group's gross margin overperformed
the budget in percentage terms, the Group's six-month EBITDA of € 1.5m was
€ 1.3m below budget, mainly due to the reduced activity at the anhydrides
division and the underperformance of the coatings division.
The Mamaia Hotel did not meet its budget over the first half of 2023, as the
cost-of-living crisis and the ongoing war in Ukraine across the Black Sea
significantly impacted demand for the Hotel in the second quarter, despite an
unexpectedly good performance in the first quarter. In addition, unseasonal
bad weather, including lots of rainfall on weekends in May and June, led to
the cancellation of a number of corporate events and a significant reduction
in the number of walk-in clients. As a result, the Hotel generated revenues of
€ 0.90m, 22% below budget. During the first half of the year, the Hotel
posted an EBITDA loss of € 0.52m, € 0.14m higher than the budgeted loss of
€ 0.38m, mainly due to lower accommodation revenues, higher food and
beverage costs, and higher salaries due to a tight labour market.
During the first half of 2023, Telecredit generated interest revenues of €
0.83m, 7.8% higher year-on-year but 10% below budget, and an operating profit
before depreciation and interest expenses of € 0.25m, below both the €
0.34m budget target and last year's result of € 0.38m. The underperformance
was mainly driven by lower demand in the first quarter since Telecredit
outperformed its budgeted financing volumes in the second quarter. In May,
Telecredit extended the maturity of its € 2.0m loan from a specialized
institutional lender by a year to 2024, and increased the facility amount to
€ 3.0m.
At the end of June, RC2 had cash and cash equivalents of € 0.017m,
receivables of € 0.017m, and short-term liabilities of € 0.243m.
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 2023
During the first half of 2023, the macroeconomic challenges which started in
2022 due to the outbreak of war in neighbouring Ukraine continued to erode
consumers' purchasing power, affecting all of the Fund's investee companies,
although inflationary pressures which had been fuelled by the outbreak of war
fell significantly in the second quarter.
The Policolor Group achieved revenues of € 37.6m during the first semester,
22.7% below budget and 15.9% lower year-on-year, as the anhydrides division
struggled to source the necessary raw materials due to the less available
ortho-xylene, pursuant to the EU banning imports from Russia. The coatings
division's sales were slightly higher year-on-year but 9% below budget, as the
cost-of-living crisis reduced consumers' discretionary spending, while the
construction market weakened. Although the Group's gross margin overperformed
the budget in percentage terms, the Group's six-month EBITDA of € 1.5m was
€ 1.3m below budget, mainly due to the reduced activity at the anhydrides
division and the underperformance of the coatings division.
The Mamaia Hotel did not meet its budget over the first half of 2023, as the
cost-of-living crisis and the ongoing war in Ukraine across the Black Sea
significantly impacted demand for the Hotel in the second quarter, despite an
unexpectedly good performance in the first quarter. In addition, unseasonal
bad weather, including lots of rainfall on weekends in May and June, led to
the cancellation of a number of corporate events and a significant reduction
in the number of walk-in clients. As a result, the Hotel generated revenues of
€ 0.90m, 22% below budget. During the first half of the year, the Hotel
posted an EBITDA loss of € 0.52m, € 0.14m higher than the budgeted loss of
€ 0.38m, mainly due to lower accommodation revenues, higher food and
beverage costs, and higher salaries due to a tight labour market.
During the first half of 2023, Telecredit generated interest revenues of €
0.83m, 7.8% higher year-on-year but 10% below budget, and an operating profit
before depreciation and interest expenses of € 0.25m, below both the €
0.34m budget target and last year's result of € 0.38m. The underperformance
was mainly driven by lower demand in the first quarter since Telecredit
outperformed its budgeted financing volumes in the second quarter. In May,
Telecredit extended the maturity of its € 2.0m loan from a specialized
institutional lender by a year to 2024, and increased the facility amount to
€ 3.0m.
At the end of June, RC2 had cash and cash equivalents of € 0.017m,
receivables of € 0.017m, and short-term liabilities of € 0.243m.
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
30 June 30 June 31 December
2023 2022 2022
EUR EUR EUR
Unaudited Unaudited Audited
Investment Income
Fair value loss on financial assets at
fair value through profit or loss (261,845) (102,597) (2,615,823)
Interest income 255,360 257,916 518,085
Net investment income (6,485) 155,319 (2,097,738)
Expenses
Operating expenses (363,202) (394,892) (844,981)
Net financial income/(expense) (11,925) (35) (871)
Total expenses (375,127) (394,927) (845,852)
(Loss)/profit for the period/year (381,612) (239,608) (2,943,590)
Other comprehensive income - - -
Total comprehensive (loss)/profit for the period/year attributable to owners
(381,612) (239,608) (2,943,590)
Earnings Per Share attributable to the owners of the Company
Basic and diluted earnings per share
(0.0028) (0.0018) (0.0217)
STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
EUR EUR EUR
Unaudited Unaudited Audited
ASSETS
Non-current assets
Financial assets at fair value through profit or loss
24,027,598 26,557,140 24,104,083
Total non-current assets 24,027,598 26,557,140 24,104,083
Current assets
Trade and other receivables 17,126 19,172 15,492
Cash and cash equivalents 17,221 46,438 73,337
Total current assets 34,347 65,610 88,829
TOTAL ASSETS 24,061,945 26,622,750 24,192,912
LIABILITIES
Current liabilities
Trade and other payables 243,207 91,174 124,485
Total current liabilities 243,207 91,174 124,485
Non-current liabilities
Borrowings 382,756 - 250,833
Total non-current liabilities 382,756 - 250,833
TOTAL LIABILITIES 625,963 91,174 375,318
NET ASSETS 23,435,982 26,531,576 23,817,594
EQUITY ATTRIBUTABLE TO OWNERS
Share capital 1,355,784 1,357,034 1,355,784
Share premium 109,187,284 109,196,034 109,187,284
Accumulated deficit (87,107,086) (84,021,492) (86,725,474)
TOTAL EQUITY 23,435,982 26,531,576 23,817,594
Net Asset Value per share
Basic and diluted net asset value per share 0.1729 0.1955 0.1757
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Retained (deficit)/
Share
Share capital premium EUR earnings EUR Total EUR
EUR
Balance at 1 January (83,781,884) 26,783,464
2022
1,358,569 109,206,779
Loss for the (239,608) (239,608)
period
- - - -
Other comprehensive
income
- -
(239,608) (239,608)
Total comprehensive loss for the
period
- -
Repurchase and cancellation of own shares - (12,280)
(1,535) (10,745)
Transactions with - (12,280)
owners
(1,535) (10,745)
(84,021,492) 26,531,576
Balance at 30 June
2022
1,357,034 109,196,034
Profit for the
period
- - (2,703,982) (2,703,982)
Other comprehensive - -
income
- -
(2,703,982) (2,703,982)
Total comprehensive profit for the
period
- -
- (10,000)
Repurchase and cancellation of own shares
(1,250) (8,750)
- (10,000)
Transactions with
owners
(1,250) (8,750)
(86,725,474) 23,817,594
Balance at 31 December
2022
1,355,784 109,187,284
Loss for the (381,612) (381,612)
period
- - - -
Other comprehensive
income
- -
(381,612) (381,612)
Total comprehensive loss for the
period
- -
(87,107,086) 23,435,982
Balance at 30 June
2023
1,355,784 109,187,284
Balance at 30 June
2022
1,357,034 109,196,034
(84,021,492)
26,531,576
Profit for the
period
- -
Other comprehensive
income
- -
(2,703,982)
-
(2,703,982)
-
Total comprehensive profit for the
period
- -
(2,703,982)
(2,703,982)
Repurchase and cancellation of own shares
(1,250) (8,750)
-
(10,000)
Transactions with
owners
(1,250) (8,750)
-
(10,000)
Balance at 31 December
2022
1,355,784 109,187,284
(86,725,474)
23,817,594
Loss for the
period
- -
Other comprehensive
income
- -
(381,612)
-
(381,612)
-
Total comprehensive loss for the
period
- -
(381,612)
(381,612)
Balance at 30 June
2023
1,355,784 109,187,284
(87,107,086)
23,435,982
CASH FLOW STATEMENT
For the six months ended 30 June 2023
30 June 30 June 31 December
2023 2022 2022
EUR EUR EUR
Unaudited Unaudited Audited
Cash flows from operating activities
(Loss)/profit before taxation (381,612) (239,608) (2,943,590)
Adjustments for:
Fair value loss on financial assets at fair value
through profit or loss 261,845 102,597 2,615,823
Interest income (255,360) (257,916) (518,085)
Financial expenses 11,923 - 833
Net (gain)/loss on foreign exchange 2 35 6
Net cash outflow before changes in working
capital (363,202) (394,892) (845,013)
(Increase)/Decrease in trade and other receivables (1,634) (13,145) (9,465)
(Decrease)/Increase in trade and other payables 118,722 (114,511) (81,200)
Repayments of financial assets 70,000 570,000 770,000
Net cash provided by/(used in) operating (176,114) 47,452 (165,678)
Cash flows from financing activities
Payments to purchase own shares - (12,280) (22,280)
Proceeds from borrowings 120,000 - 250,000
Net cash flow (used in)/provided by financing 120,000 (12,280) 227,720
Net increase/(decrease) in cash and cash
equivalents before currency adjustment (56,114) 35,172 62,042
Effects of exchange rate differences on cash and cash equivalents (2) (35) (6)
Net increase/(decrease) in cash and cash
equivalents after currency adjustment (56,116) 35,137 62,036
Cash and cash equivalents at the beginning of the period/year 73,337 11,301 11,301
Cash and cash equivalents at the end of the
period/year 17,221 46,438 73,337
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