The Black Sea Property Fund Limited ( Black Sea or the Company )

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1 The Black Sea Property Fund Limited ( 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 The Annual Report and Consolidated Financial Statements are being circulated to shareholders and will be available shortly on the company's website at 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, New Street, St Helier, Jersey, JE1 4TR. The Black Sea Property Fund Limited Alex Borrelli, Chairman Tel: Cairn Financial Advisers LLP Tel: Nominated Adviser Sandy Jamieson Peterhouse Corporate Finance Limited Tel: Sole Broker Charles Goodfellow, Heena Karani Chairman s Statement As your new Chairman, I am pleased to present the financial statements of the Company for the year ended 31 December 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 1

2 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 trading on AIM. Alex Borrelli Chairman Consolidated Statement of Profit or Loss and Other Comprehensive Income Total revenue 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) Loss before tax (103,120) (1,245,554) 2

3 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 (84,863) (1,404,710) Other comprehensive income Items that may be reclassified to profit or loss (Losses)/gains on translation of foreign operations (195,932) 113,547 Recycle of cumulative losses in foreign exchange reserve for discontinued operations (432,250) - Total comprehensive loss for the year (713,045) (1,291,163) Loss per share 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. Consolidated Statement of Financial Position As at 31 December 2014 Non-current assets 31 December 31 December Notes Plant and equipment - - Investment properties - - Available for sale assets Current 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, ,707 3,300,652 Total assets 240,707 3,300,652 Equity and liabilities 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) 3

4 Total equity 187,925 3,153,942 Liabilities Other payables 52,782 44,496 Tax payable - 102,214 52, ,710 Total equity and liabilities 240,707 3,300,652 Number of ordinary shares in issue 2 213,112, ,112,896 Net asset value per ordinary share (pence) The financial statements were approved and authorised for issue by the Board on 27 March 2015 and were signed on its behalf by [ ]. Consolidated Statement of Changes in Equity Share capital Retained deficit Foreign exchange reserve Available for sale reserve Total At 1 January ,478,064 (41,781,790) (1,542,332) - 3,153,942 Loss for the year - (84,863) - - (84,863) Other comprehensive income - - (195,932) - (195,932) Recycle of cumulative losses in foreign exchange reserve for discontinued operations (432,250) 432,250 - Dividends paid in year - (2,685,222) - - (2,685,222) At 31 December ,478,064 (44,984,125) (1,306,014) - 187,925 At 1 January ,478,064 (40,377,080) (1,655,879) - 4,445,105 Loss for the year - (1,404,710) - - (1,404,710) Other comprehensive income , ,547 At 31 December ,478,064 (41,781,790) (1,542,332) - 3,153,942 Consolidated Statement of Cashflows Operating activities 31 December 31 December Notes Loss from continuing operations (103,120) (1,347,768) Profit/(loss) from discontinued operations 18,257 (56,942) 4

5 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 1,123,412 - Proceeds on disposal of investment property - 674,608 Cash received on available for sale assets - 114,657 Cash received on held for sale assets 900,106 - Net cash inflow from investing activities 2,023, ,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 Notes to the Consolidated Financial Statements 1. Accounting policies (a) Basis of preparation 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. 5

6 The Black Sea Property Fund Limited is incorporated in Jersey with company number and registered office located at 1 Waverley Place, Union Street, St Helier, Jersey, Channel Islands, JE1 1SG. (b) Basis of consolidation 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 10 th 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 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. 2. Issued share capital 6

7 Authorised: Number Number Founder shares of no par value Ordinary shares of no par value Unlimited Unlimited Issued and fully paid: 2 founder shares of no par value ,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. Capital management 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. 3. Profit and Net Asset Value per share 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. 4. Special dividend 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

THE BLACK SEA PROPERTY FUND LIMITED. Interim Report and Consolidated Financial Statements. for the period ended 30 June 2014

THE BLACK SEA PROPERTY FUND LIMITED. Interim Report and Consolidated Financial Statements. for the period ended 30 June 2014 Interim Report and Consolidated Financial Statements for the period ended 30 June 2014 TABLE OF CONTENTS Pages Chairman's Statement 2 Consolidated Statement of Comprehensive Income 3 Consolidated Statement