TIDMRC2

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 EUR21.2m or EUR0.1562 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 EUR0.37m. Additionally, RC2 (Cyprus) Ltd had loan receivables from Telecredit and Mamaia Resort Hotels of EUR 0.45m. As at 30 June 2021, RC2 had sundry liabilities of EUR0.07m.

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 EUR 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 EUR 2.6m, higher than the budgeted EUR 2.1m.

Mamaia Resort Hotels achieved first semester revenues of EUR 1m, or 14% above budget, which resulted in a six-month 2021 EBITDA loss of EUR -0.1m, compared to a budgeted loss of EUR -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 EUR 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 EUR 143,000 over the period, compared to a first quarter loss of EUR 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 EUR 21.2m or EUR 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 EUR 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 EUR 2.6m, higher than the budgeted 
 EUR 2.1m. 
 Mamaia Resort Hotels achieved first semester revenues of EUR 1m, or 
 14% above budget, which resulted in a six- month 2021 EBITDA loss 
 of EUR -0.1m, compared to a budgeted loss of EUR -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 EUR 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 EUR 143,000 over the period, compared to a first quarter loss of 
 EUR 8,000. 
 At the end of June, RC2 and RC2 (Cyprus) Ltd had cash and cash equivalents 
 of EUR 0.37m, loan receivables from Telecredit and Mamaia Resort Hotels 
 of EUR 0.45m, and short-term liabilities of EUR 0.07m. Telecredit 
 reimbursed a net amount of EUR 1.05m to RC2 during the first semester, 
 leaving an outstanding balance of EUR 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          30 June        31 December 
                                            2021             2020             2020 
                                             EUR              EUR              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          30 June        31 December 
                                          2021             2020             2020 
                                           EUR              EUR              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   earnings              Total EUR 
                                                             EUR EUR                  EUR 
Balance at 1 January 2020 1,358,569 109,206,779                                       (90,868,554)        19,696,794 
Loss for the period - -                                                                  (297,790)         (297,790) 
 Other comprehensive income - -                                                                  -                 - 
                                                                                    --------------  ---------------- 
 
 
                                                              Total comprehensive 
                                                              loss for the period 
                                                              - -                        (297,790)         (297,790) 
                                                                                    --------------  ---------------- 
 
                                                              Balance at 30 June 
                                                              2020 1,358,569 
                                                              109,206,779             (91,166,344)        19,399,004 
                                                                                    --------------  ---------------- 
 
  Profit for the period - -                                                              2,149,161         2,149,161 
  Other comprehensive income - -                                                                 -                 - 
                                                                                    --------------  ---------------- 
 
 
                                                              Total comprehensive 
                                                              profit for the 
                                                              period - 
                                                              -                          2,149,161         2,149,161 
                                                                                    --------------  ---------------- 
 
                                                              Balance at 31 
                                                              December 2020 
                                                              1,358,569 
                                                              109,206,779             (89,017,183)        21,548,165 
                                                                                    --------------  ---------------- 
 
  Loss for the period - -                                                                (329,698)         (329,698) 
  Other comprehensive income - -                                                                 -                 - 
                                                                                    --------------  ---------------- 
 
 
                                                              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 
                                                                                    --------------  ---------------- 
 

CASH FLOW STATEMENT

For the six months ended 30 June 2021

 
                                              30 June            30 June      31 December 
                                                2021               2020           2020 
                                                EUR                EUR            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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