TIDMSPDI
RNS Number : 7184Q
Secure Property Dev & Inv PLC
30 June 2022
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
30 June 2022
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
2021 Annual Results
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property company, is pleased to
announce its full year audited financial results for the year ended
31 December 2021.
Corporate Overview
The Company maintains its strategy to maximise value for
shareholders through continued discussions with Arcona on the
contribution of SDPI's property portfolio
Significant asset backing behind the Company:
-- NAV per share stood at 15p a share as at 31 December 2021 -
52% higher than share price at year end and 58% higher than the
current share price
-- Post period end, further progress of Stage 2 of the indirect
merger with Arcona Property Fund N.V (Arcona) with the transfer of
the following Romanian assets:
o Transfer of Lelar Holdings Limited ( Delenco Office Building
asset in Bucharest) to Arcona
o Transfer of N-E Real Estate Park First Phase SRL (EOS Business
Park in Bucharest) to Arcona
-- SPDI now has a total holding of 1,072,910 shares in Arcona
and 259,627 warrants over shares in Arcona which based on the
closing price of Arcona's shares on 29 June 2022, values the SPDI's
stake in Arcona at c.EUR6.7 million (excluding the issue of the
warrants), while based on the current net asset value per Arcona
share (as at 31 March 2022), values the stake at EUR12.75 million
(excluding the issue of the warrants)
-- Stage 2 is ongoing with the remaining assets in the Kiev
region of Ukraine. Discussions regarding Stage 3 of the transaction
are at a preliminary stage and will be intensified upon successful
closing of Stage 2
Financial Overview
-- Net income from continuing operations increased during 2021
to EUR2,397,646 (2020: EUR1,468,609) due to increased residential
unit sales
-- EBITDA from total operations of EUR819,431 (2020: loss of EUR199,213)
-- Operating results after finance and tax for the year reached
EUR144,828 (2020: loss of EUR994,039)
Lambros G. Anagnostopoulos, Chief Executive Officer, said ,
"Despite the headwinds faced during 2021 while the world continued
to battle a global pandemic, progress was made during the financial
year under review, leading to the delayed completion of two
Romanian asset disposals included in Stage Two of the Arcona
transaction earlier in 2022.
"While we saw a significant improvement in the economies of
Romania and Ukraine with the lifting of Covid-19 restrictions, the
war in Ukraine has, obviously, meant a reprioritisation of our
efforts to ensure the safety first and foremost of our team on the
ground and the consequent ongoing delays in the progress of the
Ukrainian aspect of the Arcona transaction.
"Following the transfer of SPDI's interests in Delenco and EOS
Business Park in Romania in March and June this year, the total
number of Arcona Shares issued to SPDI totals 1,072,910 to date, or
25.3% of the total issued shares in the company."
Copies of the Annual report and Accounts are being posted to
Shareholders today and are available on the Company's website at
www.secure-property.eu .
* *S * *
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Ritchie Balmer
Jon Belliss Novum Securities Limited Tel: +44 (0) 207 399 9400
Catherine Leftley St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Charlotte Page
1. Letter to Shareholders
30 June 2022
Dear Shareholder
2021 was the second year straight that our world, our continent
and our business experienced the impacts of COVID-19. Despite the
vaccines being available for much of the year, lockdowns were
frequent and fatalities increased. Consequently, our effort to
complete the merger with the Amsterdam and Prague listed Arcona
Property Fund N.V. ('APF') - with assets in Poland, Czech Republic
and Slovakia) took more time than expected. With the start of the
year bringing improvements on the health front, the process picked
up pace and is now progressing meeting SPDI's strategic objectives
to create a regional property platform of reference in South
Eastern Europe by offering exposure to our shareholders to a much
larger and broader East European regional property company.
The Romanian part of Stage 2, which in whole involves the
transfer of the remaining Ukraine assets and the Romanian portfolio
to APF, closed within H1 2022. Obviously, completing the Ukraine
part of Stage 2 has taken second stage to ensuring the life and
wellbeing of our Ukrainian executives and their families, all of
which we are happy to report are safe. We hope the unnecessary
military conflict in Ukraine with the untold catastrophes in the
country's population, society and infrastructure, as well as the
substantial consequences to our continent's present and future,
will end soon. As such the Ukrainian component may take longer, but
APF, in which we now own 25% and have our chairman as one of the
four supervisory board members, is committed to meeting its
obligations. With our directors consequently broadening their scope
of interest to include the future good management of APF, as per
their fiduciary responsibility to our shareholders, management's
focus has shifted towards monetising the remaining SPDI assets that
are not part of the APF deal and settling any remaining
liabilities, while reducing operating expenses to a minimum
(including management and directors fees).
2022 is expected to be the last year of SPDI operations as we
know them with its net assets turned into APF shares and cash,
within the year or soon after, and opex being reduced to mostly
listing and legal related costs. When such APF shares and cash are
distributed to our shareholders they will be able to either
monetise their investment by selling them or retain them and follow
APF's growth into a dividend issuing pan-East Europe property
company, the preferred way of safeguarding their investment value
together with having the option of further value generation.
Management and directors of SPDI are committed to see a swift
conclusion of the transaction, so that they will ensure the
transformation of our Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
2. Management Report
2.1 Corporate Overview & Financial Performance
SPDI's core property asset portfolio consists of South Eastern
European prime commercial and industrial real estate, the majority
of which is let to blue chip tenants on long leases. During 2021,
management in line with the Company's strategy to maximise value
for shareholders, continued the discussions with Arcona Property
Fund N.V (Arcona) in relation to the conditional implementation
agreement for the sale of Company's property portfolio, excluding
its Greek logistics property (which has now also separately been
sold), in an all-share transaction to Arcona, an Amsterdam and
Prague listed company that invests in commercial property in Central
Europe. Arcona originally held high yielding real estate investments
in Czech Republic, Poland and Slovakia, with the transaction valuing
the SPDI NAV at EUR29m, significantly higher than the current
market value of the Company as a whole.
The combination of two complementary asset portfolios is expected
to create a significant European property company, benefiting
both the Company's and Arcona's respective shareholders.
Following the completion of Stage 1 of the transaction in 2019,
which involved the sale of two land plots in Ukraine and residential
and land assets in Bulgaria and resulted in Company receiving
a total of 593.534 Arcona shares and 144.084 warrants over Arcona
shares, in June 2021, the two parties signed SPA agreements for
Stage 2 of the Arcona transaction. This stage involves the transfer
of the EOS and Delenco assets in Romania and the Kiyanovskiy and
Rozny land plots in Ukraine with a total net asset value of EUR8,2
million, in exchange for approximately 560.000 new ordinary shares
in Arcona and approximately 135.000 warrants over shares in Arcona,
as well as EUR1m in cash, subject to, inter alia, standard form
adjustment and finalisation in accordance with the relevant agreements.
However, the rapid development of COVID-19 affected during the
second half of 2021, all related countries and therefore all participants
in this process, causing major delays.
Finally, in March and June 2022 the parties signed the closing
documents of the transactions regarding the Delenco and the EOS
assets in Romania, and in particular the transfer of a 24,4% stake
in Delenco in exchange for the issue to SPDI of 362.688 new shares
in Arcona and 87.418 warrants over shares in Arcona, as well as
a 100% stake in EOS in exchange for the issue to SPDI of 116.688
new shares in Arcona and 28.125 warrants over shares in Arcona.
The invasion of Ukraine by Russia during February 2022, suspended
the transfer process of the relevant Ukrainian assets included
in Stage 2 of the Transaction. Any development of such process
is expected to take place in the future upon normalization of
current conditions.
Moreover, the war in Ukraine has also affected our standard local
business. In particular, despite submitting the official request
to the City of Kiev to extend the lease of Tsymlyanskiy for another
5 years last November (as we have first extension rights over
any other interested party) we have not managed to get an official
approval yet. The first step in the process whereby the presiding
committee of the municipality, before the final approval by the
City Council, did not place as too many other cases had accumulated
which had time priority over our case. During the period between
15 December 2021 and 20 January 2022, the committee did not convene
at all as is usual during holiday and vacation times. Once the
holiday season was over, the main focus of the committee and the
City Council unfortunately were on issues not related to property
lease extensions, but rather more pressing matters for the interests
and operational stability of the City of Kiev. From there on,
all decisions have been put on hold due to the Russian invasion
of Ukraine. However, management remains confident that the Company
will be awarded the lease extension once the war status permits.
Regarding the economic environment in which the Company operates,
the Romanian economy which constitutes the main operating market
of the Company, grew by 5,9% in 2021 following the downturn in
2020 due to the pandemic. Consumer spending has remained robust,
but lost momentum on the back of lower pent-up demand and price
increases. Inflation has surged, far above the central bank target
band, mainly driven by sharp increases in food and energy prices.
Labour market conditions improved, with the number of registered
unemployed moving towards to its pre-pandemic level. Real estate
investment volume picked up, with office assets representing 43%
of the annual volume, while industrial projects attracted 30%
and retail 21%.
Total operating income increased by 25% during 2021 to EUR2,6m
as a result of the increased sales of residential units throughout
the period, leading to an increase of net operating income of 14%
to EUR1,9m. Overall, the administration costs, adjusted by the
one-off costs associated with the transaction with Arcona, the
legal costs for the acceptance by Euroclear of the new custodian as
a result of Brexit, and ad-hoc previous periods and re-financing
costs, decreased by 5%, while at the same time profit realized from
associates and dividends income increased further recurring EBITDA
to EUR0,82m from losses EUR0,2m in 2020.
As a result, operating results after finance and tax for the
year reached EUR0,13m as compared to losses of EUR1,0m in 2020.
Table 1
EUR 2021 2020
----------------------------------------------------------------------- ---------------------------------------------------------------------------
Continued Discontinued Total Continued Discontinued Total
Operations Operations Operations Operations
----------------- ---------------------- ----------------------- ---------------------- ------------------------ ----------------------- ------------------------
Rental,
Utilities,
Management &
Sale of
electricity
Income 1,047,137 1,593,287 2,640,424 795,700 1,323,232 2,118,932
Income from
Operations 1,047,137 1,593,287 2,640,424 795,700 1,323,232 2,118,932
Asset operating
expenses - (763,024) (763,024) - (470,548) (470,548)
Net Operating
Income 1,047,137 830,263 1,877,400 795,700 852,684 1,648,384
Share of
profits from
associates - 344,746 344,746 - (179,775) (179,775)
Dividends
income - 175,500 175,500 - - -
Net Operating
Income
from
investments 1,047,137 1,350,509 2,397,646 795,700 672,909 1,468,609
Administration
expenses (1,367,129) (211,086) (1,578,215) (1,449,834) (217,988) (1,667,822)
Operating
Result
(EBITDA) (319,992) 1,139,423 819,431 (654,134) 454,921 (199,213)
Finance Cost,
net 298,663 (854,114) (555,451) 228,776 (861,559) (632,783)
Income tax
expense (51,824) (67,328) (119,152) (117,656) (44,387) (162,043)
Operating
Result after
Finance and
Tax Expenses (73,153) 217,981 144,828 (543,014) (451,025) (994,039)
Other income /
(expenses),
net 69,643 (12,510) 57,133 191,222 3,058 194,280
One off costs
associated
to Arcona
transaction (204,101) - (204,101) (81,346) - (81,346)
One off costs
associated
with previous
periods
and
re-financing
activities (90,313) (78,000) (168,313) (170,000) - (170,000)
One off costs
associated
with new
custodian
due to Brexit (136,750) - (136,750) - - -
Fair value
adjustments
from Investment
Properties (754,979) (754,979) - (3,495,700) (3,495,700)
Net gain/(loss)
on
disposal of
investment
property 748 - 748 - - -
Fair Value
adjustment
on financial
investments 683,478 - 683,478 (824,634) - (824,634)
Foreign exchange
differences,
net (65,147) (253,666) (318,813) (60,142) (318,925) (379,067)
Result for the
year 184,405 (881,174) (696,769) (1,487,914) (4,262,592) (5,750,506)
Exchange
difference
on I/C loans to
foreign
holdings - - - - (61,936) (61,936)
Exchange
difference
on translation
due
to presentation
currency - 64,299 64,299 - (1,392,153) (1,392,153)
Total
Comprehensive
Income for the
year 184,405 (816,875) (632,470) (1,487,913) (5,716,681) (7,204,594)
----------------- ---------------------- ----------------------- ---------------------- ------------------------ ----------------------- ------------------------
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial
income producing and residential properties in Romania, as well as
land plots in Ukraine and Romania.
Commercial Property Location Key Features
EOS Business Park
Bucharest, Romania Gross Leaseable Area: 3.386 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: Danone Romania
-------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
Delenco (SPDI has a 24,35% interest)
Bucharest, Romania Gross Leaseable Area: 10.280 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: ANCOM (Romanian telecoms regulator)
-------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
Innovations Logistics Park
Bucharest, Romania Gross Leaseable Area: 16.570 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: Favorit Business Srl
-------------------- --------------------------- -------------------------------------------
Occupancy Rate 2019: 37%
---------------------------------------------------------------------- -------------------------------------------
Occupancy Rate Currently: 83%
---------------------------------------------------------------------- -------------------------------------------
Kindergarten
Bucharest, Romania Gross Leaseable Area: 1.400 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: International School for Primary Education
-------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
Land & Residential Assets Location Key Features
Kiyanovskiy Residence Kiev, Ukraine Plot of land ( th. sqm): 6
Tsymlyanskiy Residence* Kiev, Ukraine Plot of land ( th. sqm): 4
Rozny Lane Kiev, Ukraine Plot of land ( th. sqm): 420
GreenLake Land
(SPDI has a 44% interest) Bucharest, Romania Plot of land ( th. sqm): 40
Monaco, Blooming,
GreenLake Romania Sold units during 2021: 22
GreenLake Romania Available units (end 2021): 11
*As of November 2021, the Company had submitted an official
request to the City of Kiev to extend the lease of the property for
another 5 years (since it has first extension rights over any other
interested party). The first step in the process whereby the
presiding committee of the municipality, before the final approval
by the City Council, did not place as too many other cases had
accumulated which had time priority over our case. During the
period between 15 December 2021 and 20 January 2022, the committee
did not convene at all as is usual during holiday and vacation
times. Once the holiday season was over, the main focus of the
committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Ukrainian invasion by Russia. Management remains confident that the
Company will be awarded the lease extension once the war status
permits.
In 2021, the Company's accredited valuers, namely CBRE Ukraine
for the Ukrainian Assets, and NAI RealAct for the Romanian Assets,
remained appointed. The valuations have been carried out by the
appraisers on the basis of Market Value in accordance with the
current Practice Statements contained within the Royal Institution
of Chartered Surveyors ("RICS") Valuation - Global Standards (2017)
(the "Red Book") and are also compliant with the International
Valuation Standards (IVS).
Following disposals of previous periods, SPDI's portfolio has
became more concentrated in terms of geography. At the end of the
reporting period, Romania is the prime country of operations (88%)
in terms of Gross Asset Value, while in Ukraine (12%) the Company
still has interests in land plots.
In respect of the Company's income generation capacity, Romania
has become the single operating income source.
The table below summarizes the main financial position of each
of the Company's assets (representing the Company's participation
in each asset) at the end of the reporting period.
2021
Property Country GAV* EURm Debt * NAV
Innovations Logistics Park Rom 9,7 6,5 3,2
EOS Business Park Rom 6,7 3,5 3,2
------------ ----- ------------- --------
Delenco (associate) Rom 5,1 0 5,1
------------ ----- ------------- --------
Kindergarten Rom 0,7 0,3 0,4
------------ ----- ------------- --------
Residential units Rom 0,4 0 0,4
------------ ----- ------------- --------
Land banking Rom & Ukr 6,6 3,8 3,1
------------ ----- ------------- --------
Total Value 29,2 14,1 15,1
----- ------------- --------
Other balance sheet items, net ** +8,1
----- ------------- --------
Net Asset Value total 23,2
Market Cap in EUR as at 31/12/2021 (Share price at GBP0,0725) 11 , 1
Market Cap in EUR as at 16/06/2022 (Share price at GBP0,0625) 9 ,4
Discount of Market Cap in EUR at 16/06/2022 vs NAV at 31/12/2021 -60%
* Reflects the Company's participation at each asset
**Refer to balance sheet and related notes of the financial statements
The Net Equity attributable to the shareholders as at 31
December 2021 stood at EUR23,2m vs EUR23,7m in 2020. The table
below depicts the discount of Market Share Price over NAV since
2012.
The NAV per share as at 31 December 2021 stood at GBP 0,15 and
the discount of the Market Value vis a vis the Company's NAV
denominated in GBP stands at 52% at year-end.
2.3 Financial and Risk Management
The Group's overall bank debt exposure at the end
of the reporting period was EUR14,06m (calculating
relative to the Company's percentage shareholding
in each), comprising the following:
a) EUR3,5m debt financing of EOS Business Park with
Patria Bank Romania.
b) EUR6,5m finance lease of Innovations Logistics
Park with Piraeus Leasing Romania.
c) EUR0,26m being the Company's portion of debt financing
of Kindergarten with Eurobank Ergasias.
d) EUR3,8m being the Company's portion of land plot
related debt financing in Romania.
Throughout 2021, the Company focused on managing and
preserving liquidity through cash flow optimisation.
In this context, Management secured a) collection
of scheduled re-payments of loans provided to third
parties, b) continuous sale of residential assets
and c) advancement of discussions related to the transaction
with Arcona Property Fund N.V. which partially materialised
in 2022.
2.4 2022 and beyond
2022 is expected to be the period in which the Company will
change completely, with all its assets expected to be sold.
Consequently its main operations will be minimised, subject to
constraints brought by the pandemic and the current war situation.
Despite such constraints, Management is working, along the guidance
of the board for the closing of the transaction with Arcona
Property Fund N.V., which will mark effectively the maximisation of
Company's value and will give our shareholders the opportunity to
gain direct exposure to an entity of considerably larger size, with
a dividend distribution policy, and active in a more diversified
and faster growing region (Central and South Eastern Europe) of the
European property market.
Having already completed during 2022 the transfers of Delenco
and EOS assets in Romania, the Management is currently working
towards completion of the remaining parts of the transaction,
monitoring closely any developments in Ukraine, as well as with all
other open issues which if resolved will effectively result in the
Company having as assets only Arcona shares and cash.
3. Regional Economic Developments (1)
After a strong recovery in the first half of 2021, economic
activity in Romania has been cooling as a result of the fourth
COVID-19 wave. Supply-chain disruptions have dampened manufacturing
activity while the rapid growth of coronavirus infections has
damaged confidence. Overall the economy grew by 5,9% in 2021 with
the agricultural sector leading with a 13,5% growth, following its
steep drop in 2020. The industrial sector following saw a 5%
growth, while the construction sector contracted by 1,7%.
Unemployment rate is estimated lower at 5,6%, while inflation
increased as a result of price increases mainly in foods and
energy, at 4,1% with an increasing trend.
Assuming the pandemic remains under control, economic growth in
2022 is projected to decelerate as a result of the Russia-Ukraine
war. The current energy crisis is expected to lead to further
increases in prices, leading in turn to an almost 20-year high
inflation level, affecting household consumption. At the same time
and for the same reasons, private investment activity is expected
to drop, however, EU-backed investments should provide some
counterbalance, provided that absorption of EU funds will remain
successful.
Macroeconomic data
Romania 2015 2016 2017 2018 2019 2020 2021f
GDP (EUR bn) 160,3 170,4 187,5 202,9 223,4 218,2 231,4
----- ----- ----- ----- ----- ----- -----
Population (mn) 19,9 19,8 19,6 19,5 19,5 19,3 19,2
----- ----- ----- ----- ----- ----- -----
Real GDP (y-o-y
%) 3,9 4,8 7,0 4,1 4,1 -3,7 5,9
----- ----- ----- ----- ----- ----- -----
CPI (average, y-o-y
%) -0,6 -1,5 1,3 4,6 3,3 2,3 4,1
----- ----- ----- ----- ----- ----- -----
Unemployment rate
(%) 6,8 5,9 4.3 3,6 3,1 6,1 5,6
----- ----- ----- ----- ----- ----- -----
In 2021, Ukraine's economy grew by 3,4% due to the easing of
COVID-19 restrictions which supported domestic demand, while at the
same time a bigger harvest offset effectively the drags of higher
global energy prices. Inflation rate showed incremental trends and
was estimated at 10% at year end, similarly the unemployment rate
which closed at 10,6%, leading the National Bank of Ukraine to
increase interest rates to 9% by the end of the year. Public sector
financial needs are expected to grow due to increases in minimum
wages and social transfers, limiting space for public investment,
and fueling further inflationary pressures in a supply-constrained
economy.
Following the invasion of Ukraine by Russia in February 2022,
Ukraine's economy is expected to shrink by an estimated 45% this
year, although the magnitude of the contraction will depend on the
duration and intensity of the ongoing war. The Russian invasion is
delivering a massive blow to Ukraine's economy and it has caused
enormous damage to country's infrastructure, so that the country is
in need of immediate financial support in order to keep its economy
going and the government providing aid to the population who face
an extreme situation.
Macroeconomic data
Ukraine 2015 2016 2017 2018 2019 2020 2021f
GDP (USD bn) 87,5 92,3 113,0 130,9 154,7 155,6 160,0
---- ---- ----- ----- ----- ----- -----
Population (mn) 42,6 42,4 42,2 42,0 41,9 41,5 41,4
---- ---- ----- ----- ----- ----- -----
Real GDP (y-o-y
%) -9,8 2,4 2,4 3,3 3,2 -3,8 3,4
---- ---- ----- ----- ----- ----- -----
CPI (average, y-o-y
%) 43,3 12,4 13,7 9,8 4,1 5,0 10,0
---- ---- ----- ----- ----- ----- -----
Unemployment rate
(%) 9,1 9,3 9,5 8,8 8,2 8,9 10,6
---- ---- ----- ----- ----- ----- -----
[1] Sources: World Bank Group, Eurostat, EBRD, National
Institute of Statistics- Romania, National Institute of Statistics
- Ukraine, IMF, European Commission.
4. Real Estate Market Developments (2)
4.1 Romania
Total real estate investment volume in Romania in 2021 reached
Euro 910 million, representing a 10% y-o-y increase. Despite the
pandemic, the investment volume reached in 2021 is one of the
highest in the past 10 years, proving the attractivenesss of
Romanian assets. The office segment represented 43% of the annual
volume, followed by logistics/ industrial sector (30%) and retail
(21%). Bucharest secured c.60% of country's investment volume,
driven mainly by office transactions. In contrast, logistics/
industrial parks accounted for 60-65% of regional cities
transactions.
Compression across all sectors is the trend that describes
yields in Romania during 2021. Prime office yields dropped to
6,75%, while industrials reached 7,5%, and retail 7%. Foreign
investors represent 91% of total investment volume, with the
remaining 9% attributed to local investors from 6% in 2020.
With c.600.000 sq m delivered during 2021, the total modern
industrial/ logistics stock reached c.5,8 million sq m. Almost 66%
of the new deliveries were in Bucharest area, being by far the
largest consumer market in the country. The total take-up reached
860.000 sq m, from which c.21% consists of prolongations and
renegotiations. Logistics/ Distribution sector accounted for 34% of
annual take-up, followed by Manufacturing/ Industrial (26%) and
Retail (19%). Pipeline consists of c.650.000 sq m deliverable in
2022 which would elevate the total stock to 6,5 million sq m. Such
deliverables are related mostly to regional cities, as only 45%
represent projects in Bucharest, with Timisoara, Oradea, Cluj,
Brasov and Arad to account for a total share of c.44% of the
pipeline. The vacancy rates showed a decreasing trend, estimated at
4,9% at the national level and 5,2% at the Bucharest level.
It is estimated that over 270.000 sq m in 13 buildings were
completed in 2021, which is the largest office supply delivered in
the past 5 years. Modern office stock stands at c.3,5 million sq m,
from which 72% are considered as Class A. The largest supply in
2021 was completed in Central West Bucharest submarket (27%), North
Bucharest (25%) and Central Bucharest (22%). Current pipeline
includes office deliverables of c.150.000 sq m in 2022 and another
c.93.000 sq m in 2023, with the majority to be located in Central
and Central-West Bucharest submarkets. On the other hand, annual
total leasing activity in 2021 reached c.297.000 sq m, from which
renewals accounted for 38% of the annual activity and pre-leases
for 17%. Leasing activity was 70% driven by Hi-tech/ Computers,
Medical & Pharma and Professional Services sectors.
In 2021, c.183.000 residential units were sold at a national
level, registering an increase of 50% compared to previous year,
and constituting 2021 as the most active year in terms of
residential sales. Approximately 30% of total sales transacted in
Bucharest. At the end of the year, the average selling prices in
Bucharest stood at 1.620 Euros per sq m, reflecting a 13,7%
year-on-year increase. Part of that increase came from the newer
stock and is directly attributed to the increased construction
costs and material prices. Regarding new supply, it is estimated
that during the first 9 months of the year, 14.600 units were
completed in Bucharest, a number similar to the total number
completed in 2020 and almost 50% higher than that of 2019. The
introduction of the Consumer Credit Reference Index (IRCC) for
consumer loans in Romania, has not affected demand which is
expected to continue to be strong.
2 Sources : Eurobank, CBRE Research , Colliers International ,
Cushman & Wakefield , Crosspoint Real Estate, Knight Frank,
Coldwell Banker Research, National Institute of Statistics- Romania
, State Statistics Service-Ukraine, NAI Real Act
4.2 Ukraine
Real estate investment in Ukraine during 2021 continued to be
weak on the back of the COVID-19 pandemic impact, tensions with
Russia, and lack of financing. The only exception is the
residential market, which during the first nine monts of the year,
and before the climax of the tensions with Russia, showed signs of
recovery. During that period, demand was reported to be stronger,
despite slowing construction activity, while property prices, as
well as land values and rents, were rising. Existing unit prices in
Kiev rose by +5%, to an average of $1.090 per sq m.
The demand for land plots started increasing in 2016, especially
for those suitable for commercial development, a trend which
stopped in 2020 mainly due to the effects of COVID-19 pandemic.
During the first half of 2021 land values increased significantly,
a trend that stopped with the increasing tension with Russia.
During that period, in the Kiev region, land values increased by
12,4% compared to previous year, while in the Odessa region the
relevant increase was 13,4%.
5. Property Assets
5.1 EOS Business Park - Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class "A"
office building of 3.386 sqm GLA and 90 parking places. It is
located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road.
The ark is very close to Bucharest's ring road and the DN 2
national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
The Company acquired the office building in November 2014. The
complex is fully let to Danone Romania, the French multinational
food company, until 2025. The asset was sold in June 2022 as part
of Stage 2 of the Arcona transaction.
5.2 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of
two underground levels, a ground floor and ten above-ground floors.
The building is strategically located in the very center of
Bucharest, close to three main squares of the city: Unirii, Alba
Iulia and Muncii, only 300m from the metro station.
The Company acquired 24,35% of the property in May 2015. As at
the end 2021, the building is 99% let, with ANCOM (the Romanian
Telecommunications Regulator) being the anchor tenant (81% of GLA).
The stake in the asset was sold in March and June 2022 as part of
Stage 2 of the Arcona transaction.
5.3 Innovations Logistics Park, Romania
The park incorporates approximately 8.470 sqm of multipurpose
warehousing space, 6.395 sqm of cold storage and 1.705 sqm of
office space. It is located in the area of Clinceni, south west of
Bucharest center, 200m from the city's ring road and 6km from
Bucharest-Pitesti (A1) highway. Its construction was completed in
2008 and was tenant specific. It comprises four separate
warehouses, two of which offer cold storage.
As at the year end the terminal was 65% leased, while currently
is 73,5% leased. Anchor tenant with 46% is Favorit Business Srl, a
large Romanian logistics operator, which accommodates in the
terminal their new business line which involves as end user
Carrefour. Following recent relevant agreement, Favorit's leases
extended until 2026. In 2019, the Company also signed short term
lease agreements for ambient storage space with Chipita Romania
Srl, one of the fastest growing regional food companies. The asset
is planned to be part of Stage 3 of the Arcona transaction.
5.4 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake,
a standalone building on ground and first floor, is used as a
nursery by one of the Bucharest's leading private schools. The
building is erected on 1.428.59 sqm plot with a total gross area of
1.198 sqm.
The property is 100% leased to International School for Primary
Education until 2032.
5.5 Residential Portfolio
- Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in South
Bucharest, Sector 4, enjoying good car access due to the large
boulevards, public transportation, and a shopping mall (Sun Plaza)
reachable within a short driving distance or easily accessible by
subway.
Following extended negotiations for two years with the company
which acquired Monaco's loan, the SPV holding Monaco units, in
2019, entered into insolvency status in order to protect itself
from its creditors. During 2020 the relevant loan has been fully
re-paid and in 2021 the SPV exited insolvency status and proceeded
to the sale of al 5 remaining units.
- Blooming House, Bucharest, Romania
Blooming House is a residential development project located in
Bucharest, Sector 3, a residential area with the biggest
development and property value growth in Bucharest, offering a
number of supporting facilities such as access to Vitan Mall,
kindergartens, café, schools and public transportation (both bus
and tram). During 2021 the last unit of the project was sold.
- GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of
apartments and villas, situated on the banks of Grivita Lake, in
the northern part of the Romanian capital - the only residential
property in Bucharest with a 200 meters frontage to a lake. The
compound also includes facilities such as one of Bucharest's
leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally
GreenLake includes land plots totaling 40.360 sqm. SPDI owns 43% of
this property asset portfolio.
During 2021, 16 apartments and villas were sold while at the end
of the year 11 units remained unsold. The asset is planned to be
part of Stage 3 of the Arcona transaction.
5.6 Land Assets
-- - Kiyanovskiy Residence - Kiev, Ukraine
The property consists of 0,55 Ha of freehold and leasehold land
located at Kiyanovskiy Lane, near Kiev city center. It is destined
for the development of businesses and luxury residences with
beautiful protected views overlooking the scenic Dnipro River, St.
Michaels' Spires and historic Podil.
The asset is part of Stage 2 of the Arcona transaction and the
relevant SPA for its disposal has already been signed in June 2021
while closing has been postponed due to the invasion of Ukraine by
Russia.
-- Tsymlyanskiy Residence - Kiev, Ukraine
The 0,36 Ha plot is located in the historic and rapidly
developing Podil District in Kiev. The Company owns 55% of the SPV
which leases the plot, with a local co-investor owning the
remaining 45%.
The extension of the lease, originally expected during 2021, was
delayed and currently is on hold due to the invasion of Ukraine by
Russia. The asset is planned to be part of Stage 3 of the Arcona
transaction.
-- Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be
developed as a residential complex. Following a protracted legal
battle, it has been registered under the Company pursuant to a
legal decision in July 2015.
The asset is part of Stage 2 of the Arcona transaction and
relevant SPA for its disposal has already been signed in June 2021
while closing has been postponed due to the invasion of Ukraine by
Russia.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Note 2021 2020
EUR EUR
Continued Operations
Income 10 1.047.137 795.700
Net Operating Income 1.047.137 795.700
Administration expenses 12 (1. 798.293 (1.701.180)
)
Gain/(Loss) on disposal of subsidiary 20 748 -
Fair Value gain/(loss) on Financial
Assets at FV through P&L 26 683.478 (824.634)
Other operating income/ (expenses),
net 15 69 .643 191.222
Operating profit / (loss) 2. 713 (1.538.892)
Finance income 16 489.072 503.527
Finance costs 16 (190.409) (274.751)
Profit / (Loss) before tax and foreign 301.376 (1.310.116)
exchange differences
Foreign exchange loss, net 17a (65.147) (60.142)
Profit/(Loss) before tax 236.229 (1.370.258)
Income tax expense 18 (51.824) (117.656)
Profit/(Loss) for the year from continuing 184.405 (1.487.914)
operations
Loss from discontinued operations 9b (881.174) (4.262.592)
Profit/ (Loss) for the year (696.769) (5.750.506)
Other comprehensive income
Exchange difference on I/C loans to
foreign holdings 17b - (61.936)
Exchange difference on translation
of foreign operations 29 64.299 (1.392.155)
Total comprehensive income for the (632.470) (7.204.597)
year
Profit/ (Loss) for the year from continued
operations attributable to:
Owners of the parent 184.405 (1.487.914)
Non-controlling interests - -
184.405 (1.487.914)
Profit/ (Loss) for the year from discontinued
operations attributable to:
Owners of the parent (659.215) (2.851.952)
Non-controlling interests (221.959) (1.410.640)
(881.174) (4.262.592)
Profit/ (Loss) for the year attributable
to:
Owners of the parent (474.810) (4.339.866)
Non-controlling interests (221.959) (1.410.640)
(696.769) (5.750.506)
Total comprehensive income attributable
to:
Owners of the parent (459.449) (7.115.161)
Non-controlling interests (173.021) (89.436)
(632.470) (7.204.597)
Earnings/(Losses) per share (Euro
per share):
Basic earnings/(losses) for the year
attributable to ordinary equity owners
of the parent 37b (0,00) (0,03)
Diluted earnings/(losses) for the
year attributable to ordinary equity
owners of the parent 37b (0,00) (0,03)
Basic earnings/(losses) for the year
from discontinued operations attributable
to ordinary equity owners of the parent 37c (0,00) (0,02)
Diluted earnings/(losses) for the
year from discontinued operations
attributable to ordinary equity owners
of the parent 37c (0,00) (0,02)
The notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2021
Note 2021 2020
EUR EUR
ASSETS
Non--current assets
Tangible and intangible assets 23 1.628 2.859
Long-term receivables and prepayments 24 824 836
Financial Assets at FV through 26 7.470.722 6.787.244
P&L
7.473.174 6.790.939
Current assets
Prepayments and other current 25 4. 510.381 6.880.076
assets
Cash and cash equivalents 27 2.160.576 129.859
------------- -------------
6.670. 957 7. 009.935
Assets classified as held for 9d 39.011.516 41.791.409
sale
Total assets 53.155. 647 55.592.283
EQUITY AND LIABILITIES
Issued share capital 28 1.291.281 1.291.281
Share premium 72.107.265 72.107.265
Foreign currency translation reserve 29 8.969.787 8.954.426
Exchange difference on I/C loans
to foreign holdings 39.3 (211.199) (211.199)
Accumulated losses ( 58.903.610 ( 58.428.800
) )
Equity attributable to equity 23.253.524 23.712.973
holders of the parent
Non-controlling interests 30 5.748.132 5.921.153
Total equity 29.001.656 29.634.126
Non--current liabilities
Borrowings 31 126.066 95.977
Bonds issued 32 1.033.842 1.033.842
Tax payable and provisions 35 627.130 663.062
------------- -------------
1.787.038 1.792.881
Current liabilities
Borrowings 31 1.577.500 2.054.400
Bonds issued 32 293.214 225.081
Trade and other payables 33 4.396.123 4.036.962
Tax payable and provisions 35 256.437 620.365
6 . 523.274 6.936.808
Liabilities directly associated
with assets classified as held
for sale 9d 15.843.679 17.228.468
22.366.953 24.165.276
Total liabilities 24.153.991 25.958.157
Total equity and liabilities 53.155. 647 55.592.283
Net Asset Value (NAV) EUR per share: 37d
Basic NAV attributable to equity
holders of the parent 0,18 0,18
Diluted NAV attributable to equity
holders of the parent 0,18 0,18
On 28 June 2022 the Board of Directors of SECURE PROPERTY
DEVELOPMENT & INVESTMENT PLC authorised these financial
statements for issue.
Lambros Anagnostopoulos Michael Beys Theofanis Antoniou
Director & Chief Executive Director & Chairman CFO
Officer of the Board
The notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Attributable to owners of the Company
------------------------------------------------------------------------------------ ------------ --------------
Share Share Accumulated Exchange Foreign Total Non- Total
capital premium, losses, difference currency controlling
Net(1) net of on I/C translation interest
non-controlling loans reserve
interest(2) to foreign (4)
holdings
(3)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31
December
201 9 1.291.281 72.107.265 (54.088.934) (149.263) 10.232.119 29.392.468 7.446.255 36.838.723
Loss for the
year - - (4.339.866) - - (4.339.866) (1.410.640) (5.750.506)
Exchange
difference
on
I/C loans
to foreign
holdings
( Note 17b) - - - (61.936) - (61.936) - (61.936)
Foreign (1.277.693) (114.462)
currency
translation
reserve - - - - (1.277.693) (1.392.155)
Balance - 31
December
2020 1.291.281 72.107.265 (58.428.800) (211.199) 8.954.426 23.712.973 5.921.153 29.634.126
Loss for the ( 474.810 ( 474.810 ( 696.769
year - - ) - - ) (221.959) )
Foreign
currency
translation
reserve - - - - 15.361 15.361 48.938 64.299
Balance - 31
December (58. 903.610
2021 1.291.281 72.107.265 ) (211.199) 8.969.787 23. 253.524 5.748.132 29.001.656
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defence at
17% and GHS contribution at 1,7%-2,65% for deemed distributions
after 1 March 2019 will be payable on such deemed dividends to the
extent that the ultimate shareholders are both Cyprus tax resident
and Cyprus domiciled. The amount of deemed distribution is reduced
by any actual dividends paid out of the profits of the relevant
year at any time. This special contribution for defence is payable
by the Company for the account of the shareholders.
(3) Exchange differences on intercompany loans to foreign
holdings arose as a result of devaluation of the Ukrainian Hryvnia
during previous years. The Group treats the mentioned loans as a
part of the net investment in foreign operations (Note 39.3).
(4) Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted for
directly to the foreign currency translation reserve. The foreign
currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local
currencies against the euro in the countries where the Group's
subsidiaries own property assets.
The notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Note 2021 2020
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(Loss) before tax and non-controlling
interests-continued operations 236.229 (1.370.258)
Profit/(Loss) before tax and non-controlling
interests-discontinued operations 9b (813.846) (4.218.205)
----------- -----------
Profit/(Loss) before tax and non-controlling
interests (577.617) (5.588.463)
Adjustments for:
(Gain)/Loss on revaluation of investment
property 13 754.979 3.495.700
Net loss on disposal of investment property 14.1 (653.567) (281.886)
Fair Value (gain)/ loss on Financial Assets
at FV through P&L 26 (683.478) 824.634
(Reversal) /Impairment of prepayments and
other current assets 15 5.932 (16.035)
Accounts payable written off 15 (18.536) (253.957)
Depreciation/ Amortization charge 12 2.101 4.883
Interest income 16 (498.438) (512.919)
Interest expense 16 1.044.296 1.071.822
Share of profit from associates 21 (344.746) 179.775
Gain on disposal of subsidiaries 20 (748) -
Effect of foreign exchange differences 17a 318.813 379.067
Cash flows from/(used in) operations before
working capital changes (651.009) (697.379)
Change in prepayments and other current
assets 25 ( 61.750 ) (104.272)
Change in trade and other payables 33 (486.081) (687.428)
Change in VAT and other taxes receivable 25 (17.181) (87.279)
Change in provisions 35 28.954 6.080
Change in other taxes payables 35 18.580 136.512
Change in deposits from tenants 34 - (3.038)
(1. 168.487
Cash generated from operations ) (1.436.804)
Income tax paid (515.938) (206.194)
(1. 684.425
Net cash flows provided in operating activities ) (1.642.998)
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment
property 14.1 3.245.322 2.427.184
Dividend received from associates 21 183.583 242.403
Increase/(Decrease) in long term receivables 24 (18.251) (281)
Repayment of principal and interest of
loan receivable 25 2.289.683 240.000
Net cash flows from / (used in) investing
activities 5.700.337 2.909.306
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank and non-bank loans 31 3.500.000 1.729.400
Repayment of bank and non-bank loans 31 (2.538.099) (2.083.700)
Interest and financial charges paid (117 . 032) (386.545)
Decrease in financial lease liabilities 36 (3.176.182) (392.441)
Net cash flows from / (used in) financing
activities (2.331.313) (1.133.286)
Net increase/(decrease) in cash at banks 1.684.599 133.022
Cash:
At beginning of the year 27 870.647 737.625
At end of the year 27 2.555.246 870.647
----------- -----------
The notes form an integral part of these consolidated financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the "Company")
was incorporated in Cyprus on 23 June 2005 and is a public limited
liability company, listed on the London Stock Exchange (AIM): ISIN
CY0102102213. Its registered office is at Kyriakou Matsi 16, Eagle
House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its
principal place of business is in Cyprus at 6 Nikiforou Foka
Street, 1060 Nicosia, Cyprus.
Principal activities
The principal activities of the Group are to invest directly or
indirectly in and/or manage real estate properties, as well as real
estate development projects in South East Europe (the "Region").
These include the acquisition, development, commercializing,
operating and selling of property assets in the Region.
The Group maintains offices in Nicosia, Cyprus, Bucharest,
Romania and Kiev, Ukraine.
As at 31 December 2021, the companies of the Group employed
and/or used the services of 15 full time equivalent people, (2020 à
15 full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union (EU) and the requirements of the
Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified
by the revaluation of investment property and investment property
under construction, of financial assets at fair value through other
comprehensive income and of financial assets at fair value through
profit and loss.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Company's accounting policies. It also requires the
use of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on Management's best knowledge of current
events and actions, actual results may ultimately differ from those
estimates.
Following certain conditional agreement signed in December 2018
with Arcona Property Fund N.V for the sale of Company's non-Greek
portfolio of assets, the Company classifies its assets since 2018
as discontinued operations (Note 4.3) .
Going concern basis
The financial statements have been prepared on a going concern
basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for
the foreseeable future.
In particular, the Company is in a process of disposing of its
portfolio of assets in an all share transaction with Arcona
Property Fund N.V., meaning that as soon as this transaction
consummates the Company will be left with its corporate receivables
and liabilities.
These conditions raise some doubt about the Company's ability to
continue as a going concern within the next twelve months from the
date these financial statements are available to be issued. The
ability to continue as a going concern is dependent upon positive
future cash flows.
Management believes that the Company will be able to finance its
needs given the fact that the additional corporate receivables, as
well as the consideration received in the form of Arcona shares is
estimated that it can effectively discharge all corporate
liabilities. At the same time, the transaction with Arcona Property
Fund N.V., which is a cash flow generating entity, will result in
the Company being a significant shareholder, entitled to dividends
according to the dividend policy of Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year the Company adopted all the new and
revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods
beginning on 1 January 2021. This adoption did not have a material
effect on the accounting policies of the Company.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented in
these consolidated financial statements unless otherwise
stated.
Local statutory accounting principles and procedures differ from
those generally accepted under IFRS. Accordingly, the consolidated
financial information, which has been prepared from the local
statutory accounting records for the entities of the Group
domiciled in Cyprus, Romania, and Ukraine reflects adjustments
necessary for such consolidated financial information to be
presented in accordance with IFRS.
4.1 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities (including special purpose
entities) controlled by the Company (its subsidiaries).
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group 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 Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognizes any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognized amounts of acquiree's identifiable net
assets.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such
re-measurement are recognized in profit or loss.
Any contingent consideration to be transferred by the Group is
recognized at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognized in accordance with
IAS 39, either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured and its subsequent settlement is
accounted for within equity.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognized, to reflect new
information obtained about facts and circumstances that existed at
the acquisition date that, if known, would have affected the
amounts recognized at that date.
Business combinations that took place prior to 1 January 2010
were accounted for in accordance with the previous version of IFRS
3.
Inter-company transactions, balances and unrealized gains on
transactions between group companies are eliminated. Unrealized
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the Group's
accounting policies.
Changes in ownership interests in subsidiaries without change of
control and Disposal of Subsidiaries
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals of
non-controlling interests are also recorded in equity.
When the Group ceases to have control, any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognized in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognized in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognized in other comprehensive
income are reclassified to profit or loss.
4.2 Functional and presentation currency
Items included in the Group's financial statements are measured
applying the currency of the primary economic environment in which
the entities operate ("the functional currency"). The national
currency of Ukraine, the Ukrainian Hryvnia, is the functional
currency for all the Group's entities located in Ukraine, the
Romanian leu is the functional currency for all Group's entities
located in Romania, and the Euro is the functional currency for all
Cypriot subsidiaries.
4.2 Functional and presentation currency (continued)
The consolidated financial statements are presented in Euro,
which is the Group's presentation currency.
As Management records the consolidated financial information of
the entities domiciled in Cyprus, Romania, Ukraine in their
functional currencies, in translating financial information of the
entities domiciled in these countries into Euro for inclusion in
the consolidated financial statements, the Group follows a
translation policy in accordance with IAS 21, "The Effects of
Changes in Foreign Exchange Rates", and the following procedures
are performed:
-- All assets and liabilities are translated at closing rate;
-- Equity of the Group has been translated using the historical rates;
-- Income and expense items are translated using exchange rates
at the dates of the transactions, or where this is not practicable
the average rate has been used;
-- All resulting exchange differences are recognized as a separate component of equity;
-- When a foreign operation is disposed of through sale,
liquidation, repayment of share capital or abandonment of all, or
part of that entity, the exchange differences deferred in equity
are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
-- Monetary items receivable from foreign operations for which
settlement is neither planned nor likely to occur in the
foreseeable future and in substance are part of the Group's net
investment in those foreign operations are recongised initially in
other comprehensive income and reclassified from equity to profit
or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central
banks used in translating the financial information of the entities
from the functional currencies into Euro are as follows:
Average 31 December
Currency 2021 2020 2021 2020 2019
-------- -------- -------- -------- -------
USD 1,1827 1,1422 1,1326 1,2270 1,1234
-------- -------- -------- -------- -------
UAH 32,3009 30,8013 30,9226 34,7396 26,422
-------- -------- -------- -------- -------
RON 4,9204 4,8371 4,9481 4,8694 4,7793
-------- -------- -------- -------- -------
4.3 Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single coordinated plan to dispose of a separate
major line of business or geographic area of operations; or
-- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
4.4 Investment Property at fair value
Investment property, comprising freehold and leasehold land,
investment properties held for future development, warehouse and
office properties, as well as the residential property units , is
held for long term rental yields and/or for capital appreciation
and is not occupied by the Group. Investment property and
investment property under construction are carried at fair value,
representing open market value determined annually by external
valuers. Changes in fair values are recorded in the statement of
comprehensive income and are included in other operating
income.
A number of the land leases (all in Ukraine) are held for
relatively short terms and place an obligation upon the lessee to
complete development by a prescribed date. It is important to note
that the rights to complete a development may be lost or at least
delayed if the lessee fails to complete a permitted development
within the timescale set out by the ground lease.
In addition, in the event that a development has not commenced
upon the expiry of a lease then the City Authorities are entitled
to decline the granting of a new lease on the basis that the land
is not used in accordance with the designation. Furthermore, where
all necessary permissions and consents for the development are not
in place, this may provide the City Authorities with grounds for
rescinding or non-renewal of the ground lease. However Management
believes that the possibility of such action is remote and was made
only under limited circumstances in the past.
4.4 Investment Property at fair value (continued)
Management believes that rescinding or non-renewal of the ground
lease is remote if a project is on the final stage of development
or on the operating cycle. In undertaking the valuations reported
herein, the valuer of Ukrainian properties CBRE has made the
assumption that no such circumstances will arise to permit the City
Authorities to rescind the land lease or not to grant a
renewal.
Land held under operating lease is classified and accounted for
as investment property when the rest of the definition is met.
Investment property under development or construction initially
is measured at cost, including related transaction costs.
The property is classified in accordance with the intention of
the management for its future use. Intention to use is determined
by the Board of Directors after reviewing market conditions,
profitability of the projects, ability to finance the project and
obtaining required construction permits.
The time point, when the intention of the management is
finalized is the date of start of construction. At the moment of
start of construction, freehold land, leasehold land and investment
properties held for a future redevelopment are reclassified into
investment property under development or inventory in accordance to
the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including
related transaction costs. Investment properties are derecognized
when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic
benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognized in
the consolidated statement of comprehensive income in the period of
retirement or disposal.
Transfers are made to investment property when, and only when,
there is a change in use, evidenced by the end of owner occupation,
or the commencement of an operating lease to third party. Transfers
are made from investment property when, and only when, there is a
change in use, evidenced by commencement of owner occupation or
commencement of development with a view to sale.
If an investment property becomes owner occupied, it is
reclassified as property, plant and equipment, and its fair value
at the date of reclassification becomes its cost for accounting
purposes. Property that is being constructed or developed for
future use as investment property is classified as investment
property under construction until construction or development is
complete. At that time, it is reclassified and subsequently
accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated
at fair value. Gains or losses arising from changes in the fair
value of investment property are included in the statement of
comprehensive income in the period in which they arise.
If a valuation obtained for an investment property held under a
lease is net of all payments expected to be made, any related
liabilities/assets recognized separately in the statement of
financial position are added back/reduced to arrive at the carrying
value of the investment property for accounting purposes.
Subsequent expenditure is charged to the asset's carrying amount
only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance costs are
charged to the statement of comprehensive income during the
financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial
position date. These valuations are prepared annually by chartered
surveyors (hereafter "appraisers"). The Group appointed valuers in
2014, which remain the same in 2021:
-- CBRE Ukraine, for all its Ukrainian properties,
-- NAI Real Act for all its Romanian properties.
The valuations have been carried out by the appraisers on the
basis of Market Value in accordance with the appropriate sections
of the current Practice Statements contained within the Royal
Institution of Chartered Surveyors ("RICS") Valuation - Global
Standards (2018) (the "Red Book") and is also compliant with the
International Valuation Standards (IVS).
"Market Value" is defined as: "The estimated amount for which a
property should be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm's-length transaction
after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion".
4.4 Investment Property at fair value (continued)
Basis of valuation (continued)
In expressing opinions on Market Value, in certain cases the
appraisers have estimated net annual rentals/income from sale.
These are assessed on the assumption that they are the best
rent/sale prices at which a new letting/sale of an interest in
property would have been completed at the date of valuation
assuming: a willing landlord/buyer; that prior to the date of
valuation there had been a reasonable period (having regard to the
nature of the property and the state of the market) for the proper
marketing of the interest, for the agreement of the price and terms
and for the completion of the letting/sale; that the state of the
market, levels of value and other circumstances were, on any
earlier assumed date of entering into an agreement for lease/sale,
the same as on the valuation date; that no account is taken of any
additional bid by a prospective tenant/buyer with a special
interest; that the principal deal conditions assumed to apply are
the same as in the market at the time of valuation; that both
parties to the transaction had acted knowledgeably, prudently and
without compulsion.
A number of properties are held by way of ground leasehold
interests granted by the City Authorities. The ground rental
payments of such interests may be reviewed on an annual basis, in
either an upwards or downwards direction, by reference to an
established formula. Within the terms of the lease, there is a
right to extend the term of the lease upon expiry in line with the
existing terms and conditions thereof. In arriving at opinions of
Market Value, the appraisers assumed that the respective ground
leases are capable of extension in accordance with the terms of
each lease. In addition, given that such interests are not
assignable, it was assumed that each leasehold interest is held by
way of a special purpose vehicle ("SPV"), and that the shares in
the respective SPVs are transferable.
With regard to each of the properties considered, in those
instances where project documentation has been agreed with the
respective local authorities, opinions of the appraisers of value
have been based on such agreements.
In those instances where the properties are held in part
ownership, the valuations assume that these interests are saleable
in the open market without any restriction from the co-owner and
that there are no encumbrances within the share agreements which
would impact the sale ability of the properties concerned.
The valuation is exclusive of VAT and no allowances have been
made for any expenses of realization or for taxation which might
arise in the event of a disposal of any property.
In some instances the appraisers constructed a Discounted Cash
Flow (DCF) model. DCF analysis is a financial modeling technique
based on explicit assumptions regarding the prospective income and
expenses of a property or business. The analysis is a forecast of
receipts and disbursements during the period concerned. The
forecast is based on the assessment of market prices for comparable
premises, build rates, cost levels etc. from the point of view of a
probable developer.
To these projected cash flows, an appropriate, market-derived
discount rate is applied to establish an indication of the present
value of the income stream associated with the property. In this
case, it is a development property and thus estimates of capital
outlays, development costs, and anticipated sales income are used
to produce net cash flows that are then discounted over the
projected development and marketing periods. The Net Present Value
(NPV) of such cash flows could represent what someone might be
willing to pay for the site and is therefore an indicator of market
value. All the payments are projected in nominal US Dollar/Euro
amounts and thus incorporate relevant inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the
appraisers have taken into account in arriving at Market Value the
following:
Pre Development
In those instances where the nature of the 'Project' has been
defined, it was assumed that the subject property will be developed
in accordance with this blueprint. The final outcome of the
development of the property is determined by the Board of Directors
decision, which is based on existing market conditions,
profitability of the project, ability to finance the project and
obtaining required construction permits.
Development
In terms of construction costs, the budgeted costs have been
taken into account in considering opinions of value. However, the
appraisers have also had regard to current construction rates
prevailing in the market which a prospective purchaser may deem
appropriate to adopt in constructing each individual scheme.
Although in some instances the appraisers have adopted the budgeted
costs provided, in some cases the appraisers' own opinions of costs
were used.
Post Development
Rental values have been assessed as at the date of valuation but
having regard to the existing occupational markets taking into
account the likely supply and demand dynamics during the
anticipated development period. The standard letting fees were
assumed within the valuations. In arriving at their estimates of
gross development value ("GDV"), the appraisers have capitalized
their opinion of net operating income, having deducted any
anticipated non-recoverable expenses, such as land payments, and
permanent void allowance, which has then been capitalized into
perpetuity.
4.4 Investment Property at fair value (continued)
Valuation Approach (continued)
The capitalization rates adopted in arriving at the opinions of
GDV reflect the appraisers' opinions of the rates at which the
properties could be sold as at the date of valuation.
In terms of residential developments, the sales prices per sq.
m. again reflect current market conditions and represent those
levels the appraisers consider to be achievable at present. It was
assumed that there are no irrecoverable operating expenses and that
all costs will be recovered from the occupiers/owners by way of a
service charge.
The valuations take into account the requirement to pay ground
rental payments and these are assumed not to be recoverable from
the occupiers. In terms of ground rent payments, the appraisers
have assessed these on the basis of information available, and if
not available they have calculated these payments based on current
legislation defining the basis of these assessments.
4.5 Goodwill
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to
each of the Group's cash-generating units (or Groups of
cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is
tested for impairment annually, or more frequently when there is
indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of
the unit pro rata based on the carrying amount of each asset in the
unit. Any impairment loss for goodwill is recognized directly in
profit or loss in the consolidated statement of comprehensive
income. An impairment loss recognized for goodwill is not reversed
in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
4.6 Property, Plant and equipment and intangible assets
Property, plant and equipment and intangible non-current assets
are stated at historical cost less accumulated depreciation and
amortization and any accumulated impairment losses.
Properties in the course of construction for production, rental
or administrative purposes, or for purposes not yet determined and
intangibles not inputted into exploitation, are carried at cost,
less any recognized impairment loss. Cost includes professional
fees and, for qualifying assets, borrowing costs capitalized in
accordance with the Group's accounting policy. Depreciation of
these assets, on the same basis as other property assets, commences
when the assets are ready for their intended use.
Depreciation and amortization are calculated on the
straight--line basis so as to write off the cost of each asset to
its residual value over its estimated useful life. The annual
depreciation rates are as follows:
Type %
Leasehold 20
IT hardware 33
Motor vehicles 25
Furniture, fixtures and office equipment 20
Machinery and equipment 15
Software and Licenses 33
No depreciation is charged on land.
Assets held under leases are depreciated over their expected
useful lives on the same basis as owned assets or, where shorter,
the term of the relevant lease.
The assets residual values and useful lives are reviewed, and
adjusted, if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its
estimated recoverable amount, the asset is written down immediately
to its recoverable amount.
4.6 Property, Plant and equipment and intangible assets
(continued)
Expenditure for repairs and maintenance of tangible and
intangible assets is charged to the statement of comprehensive
income of the year in which it is incurred. The cost of major
renovations and other subsequent expenditure are included in the
carrying amount of the asset when it is probable that future
economic benefits in excess of the originally assessed standard of
performance of the existing asset will flow to the Group. Major
renovations are depreciated over the remaining useful life of the
related asset.
An item of tangible and intangible assets is derecognized upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognized in
the statement of comprehensive income.
4.7 Cash and Cash equivalents
Cash and cash equivalents include cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
4.8 Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
than through continuing use.
Such assets, or disposal groups, are generally measured at the
lower of their carrying amount and fair value less costs to sell.
Any impairment loss on a disposal group is allocated first to
goodwill, and then to the remaining assets and liabilities on a pro
rata basis, except that no loss is allocated to inventories,
financial assets or investment property, which continue to be
measured in accordance with the Group's other accounting policies.
Impairment losses on initial classification as held-for-sale or
held-for-distribution and subsequent gains and losses on
remeasurement are recognised in profit or loss.
4.9 Financial Instruments
4.9.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially
recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Group
becomes a party to the contractual provisions of the
instrument.
A financial asset (unless it is a trade receivable without a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
4.9.2 Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as
measured at: amortised cost; FVOCI - debt investment; FVOCI -
equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding .
A debt investment is measured at FVOCI if it meets both of the
following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
4.9 Financial Instruments (continued)
4.9.2 Classification and subsequent measurement (continued)
Financial assets - Business model assessment:
The Group makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level
because this best reflects the way the business is managed and
information is provided to management. The information considered
includes:
- the stated policies and objectives for the portfolio and the
operation of those policies in practice. These include whether
management's strategy focuses on earning contractual interest
income, maintaining a particular interest rate profile, matching
the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows
through the sale of the assets;
- how the performance of the portfolio is evaluated and reported
to the Group's management;
- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
- how managers of the business are compensated - e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in
prior periods, the reasons for such sales and expectations about
future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the Group's continuing recognition of
the assets.
Financial assets that are held for trading or are managed and
whose performance is evaluated on a fair value basis are measured
at FVTPL.
Financial assets - Assessment whether contractual cash flows are
solely payments of principal and interest:
For the purposes of this assessment, 'principal' is defined as
the fair value of the financial asset on initial recognition.
'Interest' is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative
costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely
payments of principal and interest, the Group considers the
contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group
considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable-rate features;
- prepayment and extension features; and
- terms that limit the Group's claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of
principal and interest criterion if the prepayment amount
substantially represents unpaid amounts of principal and interest
on the principal amount outstanding, which may include reasonable
additional compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or
requires prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional compensation
for early termination) is treated as consistent with this criterion
if the fair value of the prepayment feature is insignificant at
initial recognition.
Financial assets - Subsequent measurement and gains and
losses:
These assets are subsequently measured at fair value. Net gains
and losses, including any interest or dividend income, are
recognised in profit or loss. However for derivatives designated as
hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or
loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest
income calculated using the effective interest method, foreign
exchange gains and losses and impairment are recognised in profit
or loss. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified
to profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends
are recognised as income in profit or loss unless the dividend
clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in OCI and
are never reclassified to profit or loss.
4.9 Financial Instruments (continued)
4.9.3 Derecognition
Financial assets
The Group derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it
transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the
financial asset.
The Group enters into transactions whereby it transfers assets
recognised in its statement of financial position, but retains
either all or substantially all of the risks and rewards of the
transferred assets. In these cases, the transferred assets are not
derecognised.
Financial liabilities
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire. The
Group also derecognises a financial liability when its terms are
modified and the cash flows of the modified liability are
substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed)
is recognised in profit or loss.
4 .9.4 Offsetting
Financial assets and financial liabilities are offset and the
net amount presented in the statement of financial position when,
and only when, the Group currently has a legally enforceable right
to set off the amounts and it intends either to settle them on a
net basis or to realise the asset and settle the liability
simultaneously.
4 .9.5 Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its
foreign currency and interest rate risk exposures. Embedded
derivatives are separated from the host contract and accounted for
separately if the host contract is not a financial asset and
certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to
initial recognition, derivatives are measured at fair value, and
changes therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments
to hedge the variability in cash flows associated with highly
probable forecast transactions arising from changes in foreign
exchange rates and interest rates and certain derivatives and
non-derivative financial liabilities as hedges of foreign exchange
risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the Group
documents the risk management objective and strategy for
undertaking the hedge. The Group also documents the economic
relationship between the hedged item and the hedging instrument,
including whether the changes in cash flows of the hedged item and
hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of
the derivative is recognised in OCI and accumulated in the hedging
reserve. The effective portion of changes in the fair value of the
derivative that is recognised in OCI is limited to the cumulative
change in fair value of the hedged item, determined on a present
value basis, from inception of the hedge. Any ineffective portion
of changes in the fair value of the derivative is recognised
immediately in profit or loss.
The Group designates only the change in fair value of the spot
element of forward exchange contracts as the hedging instrument in
cash flow hedging relationships. The change in fair value of the
forward element of forward exchange contracts ('forward points') is
separately accounted for as a cost of hedging and recognised in a
costs of hedging reserve within equity.
When the hedged forecast transaction subsequently results in the
recognition of a non-financial item such as inventory, the amount
accumulated in the hedging reserve and the cost of hedging reserve
is included directly in the initial cost of the non-financial item
when it is recognised.
For all other hedged forecast transactions, the amount
accumulated in the hedging reserve and the cost of hedging reserve
is reclassified to profit or loss in the same period or periods
during which the hedged expected future cash flows affect profit or
loss.
If the hedge no longer meets the criteria for hedge accounting
or the hedging instrument is sold, expires, is terminated or is
exercised, then hedge accounting is discontinued prospectively.
When hedge accounting for cash flow hedges is discontinued, the
amount that has been accumulated in the hedging reserve remains in
equity until, for a hedge of a transaction resulting in the
recognition of a non-financial item, it is included in the
non-financial item's cost on its initial recognition or, for other
cash flow hedges, it is reclassified to profit or loss in the same
period or periods as the hedged expected future cash flows affect
profit or loss.
4.9 Financial Instruments (continued)
4 .9.5 Derivative financial instruments and hedge accounting
(continued)
If the hedged future cash flows are no longer expected to occur,
then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to
profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial
liability is designated as the hedging instrument in a hedge of a
net investment in a foreign operation, the effective portion of,
for a derivative, changes in the fair value of the hedging
instrument or, for a non-derivative, foreign exchange gains and
losses is recognised in OCI and presented in the translation
reserve within equity. Any ineffective portion of the changes in
the fair value of the derivative or foreign exchange gains and
losses on the non-derivative is recognised immediately in profit or
loss. The amount recognised in OCI is reclassified to profit or
loss as a reclassification adjustment on disposal of the foreign
operation.
4.10 Leases
At inception of a contract, the Company assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Company assesses
whether:
the contract involves the use of an identified asset this may be
specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a
physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
the Company has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of
use; and
the Company has the right to direct the use of the asset. The
Company has this right when it has the decision making rights that
are most relevant to changing how and for what purpose the asset is
used. In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Company has the
right to direct the use of the asset if either:
the Company has the right to operate the asset; or
the Company designed the asset in a way that predetermines how
and for what purpose it will be used.
At inception or on reassessment of a contract that contains a
lease component, the Company allocates the consideration in the
contract to each lease component on the basis of their relative
stand alone prices. However, for the leases of land and buildings
in which it is a lessee, the Company has elected not to separate
non lease components and account for the lease and non lease
components as a single lease component.
The Company as lessor
When the Company acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an operating
lease.
To classify each lease, the Company makes an overall assessment
of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is
the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Company considers
certain indicators such as whether the lease is for the major part
of the economic life of the asset.
When the Company is an intermediate lessor, it accounts for its
interests in the head lease and the sub lease separately. It
assesses the lease classification of a sub lease with reference to
the right of use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short term
lease to which the Company applies the exemption described above,
then it classifies the sub lease as an operating lease.
If an arrangement contains lease and non lease components, the
Company applies IFRS 15 to allocate the consideration in the
contract.
The Company recognises lease payments received under operating
leases as income on a straight line basis over the lease term as
part of 'other income'.
The accounting policies applicable to the Company as a lessor in
the comparative period were not different from IFRS 16. However,
when the Company was an intermediate lessor the sub leases were
classified with reference to the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease
liability at the lease commencement date. The right of use asset is
initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
4. Significant accounting policies (continued)
The Company as lessee (continued)
The right of use asset is subsequently depreciated using the
straight line method from the commencement date to the earlier of
the end of the useful life of the right of use asset or the end of
the lease term. The estimated useful lives of the right of use
assets are determined on the same basis as those of property and
equipment. In addition, the right of use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise the following:
fixed payments, including in substance fixed payments;
variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the
commencementdate;
amounts expected to be payable under a residual value guarantee;
and
the exercise price under a purchase option that the Company is
reasonably certain to exercise, lease payments in an optional
renewal period if the Company is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Company is reasonably certain not to terminate
early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Company's estimate of the amount
expected to be payable under a residual value guarantee, or if the
Company changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right of use asset, or is recorded in profit or loss if the
carrying amount of the right of use asset has been reduced to
zero.
The Company presents its right of use assets that do not meet
the definition of investment property in 'Property, plant and
equipment' in the statement of financial position.
The lease liabilities are presented in 'loans and borrowings'in
the statement of financial position.
Short term leases and leases of low value assets
The Company has elected not to recognise the right of use assets
and lease liabilities for short term leases that have a lease term
of 12 months or less and leases of low value assets (i.e. IT
equipment, office equipment etc.). The Company recognises the lease
payments associated with these leases as an expense on a straight
line basis over the lease term.
4.11 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in profit
or loss over the period of the borrowings, using the effective
interest method, unless they are directly attributable to the
acquisition, construction or production of a qualifying asset, in
which case they are capitalized as part of the cost of that
asset.
Fees paid on the establishment of loan facilities are recognized
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extend there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalized as a prepayment and
amortised over the period of the facility to which it relates.
Borrowing costs are interest and other costs that the Group
incurs in connection with the borrowing of funds, including
interest on borrowings, amortization of discounts or premium
relating to borrowings, amortization of ancillary costs incurred in
connection with the arrangement of borrowings, finance lease
charges and exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to
interest costs.
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset,
being an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale, are capitalised as part
of the cost of that asset, when it is probable that they will
result in future economic benefits to the Group and the costs can
be measured reliably.
Borrowings are classified as current liabilities, unless the
Group has an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date.
4. Significant accounting policies (continued)
4.12 Tenant security deposits
Tenant security deposits represent financial advances made by
lessees as guarantees during the lease and are repayable by the
Group upon termination of the contracts. Tenant security deposits
are recognized at nominal value.
4.13 Impairment of tangible and intangible assets other than
goodwill
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. Where a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which
a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment loss
annually, and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre--tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash--generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash--generating unit) is reduced to its
recoverable amount. An impairment loss is recognized immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash--generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognized
for the asset (cash--generating unit) in prior years. A reversal of
an impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
4.14 Share Capital
Ordinary shares are classified as equity.
4.15 Share premium
The difference between the fair value of the consideration
received by the shareholders and the nominal value of the share
capital being issued is taken to the share premium account.
4.16 Share-based compensation
The Group had in the past and intends in the future to operate a
number of equity-settled, share-based compensation plans, under
which the Group receives services from Directors and/or employees
as consideration for equity instruments (options) of the Group. The
fair value of the Director and employee cost related to services
received in exchange for the grant of the options is recognized as
an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market service and performance vesting
conditions. The total amount expensed is recognized over the
vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At each financial position
date, the Group revises its estimates on the number of options that
are expected to vest based on the non-marketing vesting conditions.
It recognizes the impact of the revision to original estimates, if
any, in the statement of comprehensive income, with a corresponding
adjustment to equity. The proceeds received net of any directly
attributable transaction costs are credited to share capital and
share premium when the options are exercised.
4.17 Provisions
Provisions are recognized when the Group has a present
obligation (legal, tax or constructive) as a result of a past
event, it is probable that the Group will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. As at the reporting date the Group has settled all its
construction liabilities.
The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognized as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
4. Significant accounting policies (continued)
4.18 Non--current liabilities
Non--current liabilities represent amounts that are due in more
than twelve months from the reporting date.
4.19 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances. It is recognized to
the extent that it is probable that the economic benefits
associated with the transaction will flow to the Group and the
revenue can be measured reliably. Revenue earned by the Group is
recognized on the following bases:
4.20.1 Income from investing activities
Income from investing activities includes profit received from
disposal of investments in the Company's subsidiaries and
associates and income accrued on advances for investments
outstanding as at the year end.
4.20.2 Dividend income
Dividend income from investments is recognized when the
shareholders' right to receive payment has been established
(provided that it is probable that the economic benefits will flow
to the Group and the amount of income can be measured
reliably).
4.20.3 Interest income
Interest income is recognized on a time-proportion (accrual)
basis, using the effective interest rate method.
4.20.4 Rental income
Rental income arising from operating leases on investment
property is recognized on an accrual basis in accordance with the
substance of the relevant agreements.
4.20 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized
on an accrual basis.
4.21 Other property expenses
Irrecoverable running costs directly attributable to specific
properties within the Group's portfolio are charged to the
statement of comprehensive income. Costs incurred in the
improvement of the assets which, in the opinion of the directors,
are not of a capital nature are written off to the statement of
comprehensive income as incurred.
4.22 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in the statement of
comprehensive income in the period in which they are incurred as
interest costs which are calculated using the effective interest
rate method, net result from transactions with securities, foreign
exchange gains and losses, and bank charges and commission.
4.23 Asset Acquisition Related Transaction Expenses
Expenses incurred by the Group for acquiring a subsidiary or
associate company as part of an Investment Property and are
directly attributable to such acquisition are recognized within the
cost of the Investment Property and are subsequently accounted as
per the Group's accounting Policy for Investment Property
subsequent measurement.
4. Significant accounting policies (continued)
4.24 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
4.24.1 Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items of
income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The Group's liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting
period.
4. 24.2 Deferred tax
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Currently enacted tax rates are used in the determination of
deferred tax.
Deferred tax assets are recognized to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilized.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the
same fiscal authority.
4.24.3 Current and deferred tax for the year
Current and deferred tax are recognized in the statement of
comprehensive income, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in
which case, the current and deferred tax are also recognized in
other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included
in the accounting for the business combination.
The operational subsidiaries of the Group are incorporated in
Ukraine and Romania, while the Parent and some holding companies
are incorporated in Cyprus. The Group's management and control is
exercised in Cyprus.
The Group's Management does not intend to dispose of any asset,
unless a significant opportunity arises. In the event that a
decision is taken in the future to dispose of any asset it is the
Group's intention to dispose of shares in subsidiaries rather than
assets. The corporate income tax exposure on disposal of
subsidiaries is mitigated by the fact that the sale would represent
a disposal of the securities by a non--resident shareholder and
therefore would be exempt from tax. The Group is therefore in a
position to control the reversal of any temporary differences and
as such, no deferred tax liability has been provided for in the
financial statements.
4.24.4 Withholding Tax
The Group follows the applicable legislation as defined in all
double taxation treaties (DTA) between Cyprus and any of the
countries of Operations (Romania, Ukraine,). In the case of
Romania, as the latter is part of the European Union, through the
relevant directives the withholding tax is reduced to NIL subject
to various conditions.
4.24.5 Dividend distribution
Dividend distribution to the Company's shareholders is
recognized as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders.
4.25 Value added tax
VAT levied at various jurisdictions were the Group is active,
was at the following rates, as at the end of the reporting
period:
-- 20% on Ukrainian domestic sales and imports of goods, works
and services and 0% on export of goods and provision of works or
services to be used outside Ukraine.
-- 19 % on Cyprus domestic sales and imports of goods, works and
services and 0% on export of goods and provision of works or
services to be used outside Cyprus.
-- 19% on Romanian domestic sales and imports of goods, works
and services (decreased from 20% from 1 January 2017) and 0% on
export of goods and provision of works or services to be used
outside Romania.
4. Significant accounting policies (continued)
4.26 Operating segments analysis
Segment reporting is presented on the basis of Management's
perspective and relates to the parts of the Group that are defined
as operating segments. Operating segments are identified on the
basis of their economic nature and through internal reports
provided to the Group's Management who oversee operations and make
decisions on allocating resources serve. These internal reports are
prepared to a great extent on the same basis as these consolidated
financial statements.
For the reporting period the Group has identified the following
material reportable segments, where the Group is active in
acquiring, holding, managing and disposing:
Commercial-Industrial Residential Land Assets
* Warehouse segment * Residential segment * Land assets - the Group owns a number of land assets
which are either available for sale or for potential
development
* Office segment
* Retail segment
------------------------------- ----------------------------------------------------------------
The Group also monitors investment property assets on a
Geographical Segmentation, namely the country where its property is
located.
4.27 Earnings and Net Assets value per share
The Group presents basic and diluted earnings per share (EPS)
and net asset value per share (NAV) for its ordinary shares.
Basic EPS amounts are calculated by dividing net profit/loss for
the year, attributable to ordinary equity holders of the Company by
the weighted average number of ordinary shares outstanding during
the year. Basic NAV amounts are calculated by dividing net asset
value as at year end, attributable to ordinary equity holders of
the Company by the number of ordinary shares outstanding at the end
of the year.
Diluted EPS is calculated by dividing net profit/loss for the
year, attributable to ordinary equity holders of the parent, by the
weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would
be issued on conversion of all the potentially dilutive ordinary
shares into ordinary shares.
Diluted NAV is calculated by dividing net asset value as at year
end, attributable to ordinary equity holders of the parent with the
number of ordinary shares outstanding at year end plus the number
of ordinary shares that would be issued on conversion of all the
potentially dilutive ordinary shares into ordinary shares.
4.28 Comparative Period
Where necessary, comparative figures have been adjusted to
conform to changes in presentation in the current year.
5. New accounting pronouncement
Standards issued but not yet effective
Up to the date of approval of the financial statements, certain
new standards, interpretations and amendments to existing standards
have been published that are not yet effective for the current
reporting period and which the Company has not early adopted,
as follows :
New standards
* IFRS 17 "Insurance Contracts" (effective for annual
periods beginning on or after 1 January 2023).
Amendments
* Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current
or Non--current (issued on 23 January 2020 and 15
July 2020 respectively) (effective for annual periods
beginning on or after 1 January 2023).
* Amendments to IFRS 3 Business Combinations; IAS 16
Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; Annual
Improvements 2018--2020 (All issued 14 May 2020)
(effective for annual periods beginning on or after 1
January 2022).
* The above are expected to have no significant impact
on the Company's financial statements when they
become effective.
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Group's accounting policies. It also requires the use
of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates
are based on Management's best knowledge of current events and
actions and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual
results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the
future, the resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
-- Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence
of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the
state's ability to pay its dues (VAT receivable). If indications of
non-recoverability exist, the recoverable amount is estimated and a
respective provision for impairment of receivables is made. The
amount of the provision is charged through profit or loss. The
review of credit risk is continuous and the methodology and
assumptions used for estimating the provision are reviewed
regularly and adjusted accordingly. As at the reporting date
Management did not consider necessary to make a provision for
impairment of receivables.
-- Fair value of financial assets
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Company uses its judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at
each reporting date. The fair value of the financial assets at fair
value through other comprehensive income has been estimated based
on the fair value of these individual assets .
-- Fair value of investment property
The fair value of investment property is determined by using
various valuation techniques. The Group selects accredited
professional valuers with local presence to perform such
valuations. Such valuers use their judgment to select a variety of
methods and make assumptions that are mainly based on market
conditions existing at each financial reporting date. The fair
value has been estimated as at 31 December 2021 (Note 19.2).
-- Income taxes
Significant judgment is required in determining the provision
for income taxes. There are transactions and calculations for which
the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognizes liabilities for
anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
-- Impairment of tangible assets
Assets that are subject to depreciation are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
-- Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of
the investment property and investment property under development
as the Group is able to control the timing of the reversal of this
temporary difference and the Management has intention not to
reverse the temporary difference in the foreseeable future. The
properties are held by subsidiary companies in Ukraine, Greece and
Romania. Management estimates that the assets will be realized
through a share deal rather than through an asset deal. Should any
subsidiary be disposed of, the gains generated from the disposal
will be exempt from any tax.
-- Application of IFRS 10
The Group has considered the application of IFRS 10 and
concluded that the Company is not an Investment Entity as defined
by IFRS 10 and it should continue to consolidate all of its
investments, as in 2016. The reasons for such conclusion are among
others that the Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development,
allocation of capital expenditure for its properties, marketing
etc.) in order to provide benefits other than capital appreciation
and/or investment income,
c) to have investments that are not bound by time in relation to
the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as
well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its
investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making
investment decisions. The latter is being based on metrics like
IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate
property holding and development associated risks, property market
price risk, interest rate risk, credit risk, liquidity risk,
currency risk, other market price risk, operational risk,
compliance risk, litigation risk, reputation risk, capital risk and
other risks, arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these
risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and
economic environment of countries in which it operates.
Notably:
7.1.1.1 Ukraine
Ukraine's economy grew by 3,4% in 2021 driven by increased
domestic demand. Inflation picked up to 10% by year end leading
National Bank to increase interest rates to 9% by the end of the
same period. Unemplyment showed incremental trends to 10,6% as
minimum wages and social contributions increased during the
year.
All these have no real use by the time Russia invaded in Ukraine
in February 2022. Currently the political and economic risks
associated with Company's activities in the country have increased
dramatically and any relevant assessment for the future is
impossible to be made.
The Company owns land plots in Ukraine, either in Kiev or close
to the capital, reported at time of publishing still under
Ukrainian control. The plots do not generate income and therefore
the cash flow of the Group is not affected by the invasion.
On the other hand, starting from 2022 interim consolidated
accounts, the assets will be revalued affecting the net asset value
of the Group. At the end of the current reporting period Ukrainian
assets contribute EUR3,6 milion in Group's assets, figure which is
going to be significantly reduced.
Moreover, the war, as well as the preceded tensions during the
previous period, affect also the land leaseholds that the Company
has in the country. In particular, a s of November 2021, the Group
had submitted properly the official request to the City of Kiev to
extend the lease of Tsymlyanskiy Residence property for another 5
years, since the Group has first extension rights over any other
interested party. The first step in the process whereby the
presiding committee of the municipality, before the final approval
by the City Council, did not place as many other cases had
accumulated which had time priority over Group's case. During the
period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. The Management
remains confident that the Group will be awarded the lease
extension once the war status permits. However, as a result of such
development, the asset does not contribute value commencing from
current reporting period.
The Management will monitor developments in the country and
change policy if necessary.
7.1.1.2 Romania
The Romanian economy grew by 5,9% in 2021 following a year of
contraction. The agricultural sector led such growth with 13,5%,
followed by the industrial one with 5%.At the end of the year
unemployment rate stood at 5,6% and inflation rate at 4,1% due to
increased prices in foods and energy. Overall, during the first
half of the year the economy showed strong signs of recovery from
the effects of the COVID-19 pandemic, although such trend slowed
during the second half of the year, mainly due to the hurt in
confidence brought by the fourth pandemic wave and the political
tensions in the region.
Future outlook is positive with GDP expected to grow by 4,5%
annually in the next two year period, as a result of all monetary
and fiscal measures and reforms adopted by the government, and
provided that the health situation will progressively improve.
However, the recent invasion of Russia in neighboring country
Ukraine, and the ongoing war that takes place there, has harmed
confidence and local economic sentiment, while at the same time
might also harm foreign investment. Therefore, the associated risk
has significantly increased, being closely related to the
geopolitical developments in the region.
7.1 Financial risk factors (continued)
7.1.2 Risks associated with property holding and development
associated risks
Several factors may affect the economic performance and value of
the Group's properties, including:
-- risks associated with construction activity at the
properties, including delays, the imposition of liens and defects
in workmanship;
-- the ability to collect rent from tenants on a timely basis or
at all, taking also into account currency rapid devaluation
risk;
-- the amount of rent and the terms on which lease renewals and
new leases are agreed being less favorable than current leases;
-- cyclical fluctuations in the property market generally;
-- local conditions such as an oversupply of similar properties
or a reduction in demand for the properties;
-- the attractiveness of the property to tenants or residential purchasers;
-- decreases in capital valuations of property;
-- changes in availability and costs of financing, which may
affect the sale or refinancing of properties;
-- covenants, conditions, restrictions and easements relating to the properties;
-- changes in governmental legislation and regulations,
including but not limited to designated use, allocation,
environmental usage, taxation and insurance;
-- the risk of bad or unmarketable title due to failure to
register or perfect our interests or the existence of prior claims,
encumbrances or charges of which we may be unaware at the time of
purchase;
-- the possibility of occupants in the properties, whether
squatters or those with legitimate claims to take possession;
-- the ability to pay for adequate maintenance, insurance and
other operating costs, including taxes, which could increase over
time; and
-- political uncertainty, acts of terrorism and acts of nature,
such as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group's
portfolio investments will fluctuate as a result of changes in
market prices. The Group's assets are susceptible to market price
risk arising from uncertainties about future prices of the
investments. The Group's market price risk is managed through
diversification of the investment portfolio, continuous elaboration
of the market conditions and active asset management. To quantify
the value of its assets and/or indicate the possibility of
impairment losses, the Group commissioned internationally acclaimed
valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest
rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest--bearing assets apart from its cash balances
that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates
expose the Group to fair value interest rate risk. All of the
Group's borrowings are issued at a variable interest rate.
Management monitors the interest rate fluctuations on a continuous
basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to
discharge their obligations could reduce the amount of future cash
inflows from financial assets at hand at the end of the reporting
period. Cash balances are held with high credit quality financial
institutions and the Group has policies to limit the amount of
credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates.
Currency risk arises when future commercial transactions and
recognized assets and liabilities are denominated in a currency
that is not the Group's functional currency. Excluding the
transactions in Ukraine all of the Group's transactions, including
the rental proceeds are denominated or pegged to EUR. In Ukraine,
even though there is no recurring income stream, the fluctuations
of UAH against EUR entails significant FX risk for the Group in
terms of its local assets valuation. Management monitors the
exchange rate fluctuations on a continuous basis and acts
accordingly, although there are no available financial tools for
hedging the exposure on UAH. It should be noted though that the
current war in Ukraine causing economic and political problems, as
well as any probable currency devaluation may affect Group's
financial position.
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. The Group's core strategy is described in Note 42.1 of the
consolidated financial statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines
and other penalties, which arises from non--compliance with laws
and regulations of each country the Group is present, as well as
from the stock exchange where the Company is listed. Although the
Group is trying to limit such risk, the uncertain environment in
which it operates in various countries increases the complexities
handled by Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of
the Group's operations or any other undesirable situation that
arises from the possibility of non--execution or violation of legal
contracts and consequentially of lawsuits. The risk is restricted
through the contracts used by the Group to execute its
operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet
its financial obligations towards a lender as debts become due.
Addressing and resolving any insolvency issues is usually a slow
moving process in the Region. Management is closely involved in
discussions with creditors when/if such cases arise in any
subsidiary of the Group aiming to effect alternate repayment plans
including debt repayment so as to minimize the effects of such
situations on the Group's asset base.
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies
relating to the Group's information technology and control systems,
as well as the risk of human error and natural disasters. The
Group's systems are evaluated, maintained and upgraded
continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the end of the reporting
period.
8. Investment in subsidiaries
The Company has direct and indirect holdings in other companies,
collectively called the Group, that were included in the
consolidated financial statements, and are detailed below.
Holding %
Name Country Related Asset as at as at
of incorporation 31 Dec 31 Dec
2021 2020
------------------- --------------------- -------- --------
SC Secure Capital Limited Cyprus 100 100
------------------------------------------ -------- --------
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100
------------------- --------------------- -------- --------
LLC Trade Center Ukraine 100 100
------------------------------------------ -------- --------
Tsymlyanskiy
LLC Almaz--Pres--Ukraine Ukraine Residence* 55 55
------------------- --------------------- -------- --------
LLC Retail Development
Balabino Ukraine 100 100
------------------------------------------ -------- --------
LLC Interterminal Ukraine 100 100
------------------------------------------ -------- --------
LLC Aisi Ilvo Ukraine 100 100
------------------------------------------ -------- --------
Myrnes Innovations Innovations
Park Limited Cyprus Logistics Park 100 100
------------------- --------------------- -------- --------
Best Day Real Estate
Srl Romania 100 100
------------------------------------------ -------- --------
EOS Business
Yamano Holdings Limited Cyprus Park 100 100
------------------- --------------------- -------- --------
N-E Real Estate Park
First Phase Srl Romania 100 100
------------------------------------------ -------- --------
Victini Holdings Limited Cyprus - 100
------------------------------------------ -------- --------
Zirimon Properties Delea Nuova
Limited Cyprus (Delenco) 100 100
------------------- --------------------- -------- --------
Bluehouse Accession
Project IX Limited Cyprus 100 100
------------------------------------------ -------- --------
Bluehouse Accession
Project IV Limited Cyprus 100 100
------------------------------------------ -------- --------
BlueBigBox 3 Srl Romania 100 100
------------------------------------------ -------- --------
SPDI Real Estate Srl Romania Kindergarten 50 50
------------------- --------------------- -------- --------
SEC South East Continent
Unique Real Estate
Investments II Limited Cyprus 100 100
------------------------------------------ -------- --------
SEC South East Continent
Unique Real Estate
(Secured) Investments
Limited Cyprus 100 100
------------------------------------------ -------- --------
Residential
Diforio Holdings Limited Cyprus and Land portfolio 100 100
------------------- --------------------- -------- --------
Demetiva Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
Ketiza Holdings Limited Cyprus 90 90
------------------------------------------ -------- --------
Frizomo Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
SecMon Real Estate Romania 100 -
Srl
------------------- -------- --------
Ketiza Real Estate
Srl Romania 90 90
------------------------------------------ -------- --------
Edetrio Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
Emakei Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
RAM Real Estate Management
Limited Cyprus 50 50
------------------------------------------ -------- --------
Iuliu Maniu Limited Cyprus 45 45
------------------------------------------ -------- --------
Moselin Investments
Srl Romania 45 45
------------------------------------------ -------- --------
Rimasol Enterprises
Limited Cyprus 70,56 44,24
------------------------------------------ -------- --------
Rimasol Real Estate
Srl Romania 70,56 44,24
------------------------------------------ -------- --------
Ashor Ventures Limited Cyprus 44,24 44,24
------------------------------------------ -------- --------
Ashor Development Srl Romania 44,24 44,24
------------------------------------------ -------- --------
Jenby Ventures Limited Cyprus 44,30 44,30
------------------------------------------ -------- --------
Jenby Investments Srl Romania 44,30 44,30
------------------------------------------ -------- --------
Ebenem Limited Cyprus 44,30 44,30
------------------------------------------ -------- --------
Ebenem Investments
Srl Romania 44,30 44,30
------------------------------------------ -------- --------
Sertland Properties
Limited Cyprus 100 100
------------------------------------------ -------- --------
Mofben Investments
Limited Cyprus 100 100
------------------------------------------ -------- --------
SPDI Management Srl Romania 100 100
------------------------------------------ -------- --------
* As of November 2021, the Group had submitted properly the
official request to the City of Kiev to extend the lease of
Tsymlyanskiy Residence property for another 5 years, since the
Group has first extension rights over any other interested party.
The first step in the process whereby the presiding committee of
the municipality, before the final approval by the City Council,
did not place as too many other cases had accumulated which had
time priority over Group's case. During the period between December
15th 2021 and January 20th of 2022, the committee did not convene
at all as is usual during holiday and vacation times. Once the
holiday season was over, the main focus of the committee and the
City Council unfortunately were on issues not related to property
lease extensions, but rather more pressing matters for the
interests and operational stability of the City of Kiev. From there
on, all decisions have been put on hold due to the Russian
insurgence of Ukraine. The Management remains confident that the
Company will be awarded the lease extension once the war status
permits.
During 2021 the Group proceeded with the disposal of Victini
Holdings Limited in Cyprus which was idle after the disposal in
2019 of its subsidiary that used to hold the warehouse asset in
Greece. (Note 20).
Following extended but unsuccessful negotiations for more than 2
years with Tonescu Finance Srl, the company which had acquired
Monaco Towers property's loan, SecMon Real Estate Srl entered
voluntarily in January 2018 into insolvency process, in order to
protect its interests against its creditor, given that the value of
the assets was higher than the value of the relevant loan. The
entering of SecMon Real Estate Srl in the insolvency process meant
loss of control as per the definition of IFRS 10. As such SecMon
Real Estate Srl was not consolidated in previous periods in Group's
financial statements. However, during 2021 and after the successful
re-organization of SecMon Real Estate Srl through the insolvency
process, the company re-paid fully its loan and the Group regained
full control of the subsidiary. Following that, by the end of the
current period, the subsidiary had managed to sell successfully all
its units stock .
During the period the Company initiated the process of striking
off six holding subsidiaries in Cyprus, which became idle following
recent disposals of local asset owning companies and properties.
The companies to be struck off are: Bluehouse Accession Project IV
Limited, Demetiva Holdings Limited, Diforio Holdings Limited, Jenby
Ventures Limited, Ebenem Limited and Mofben Investments Limited.
Relevant official clearance from local Trade Registry and Tax
Authorities is expected in the following period. Currently the
Group has initiated strike off process for two additional Ukrainian
entities.
During 2021 the Group acquired an additional 26,32% stake in
Rimasol Enterprises Limited, which through Rimasol Real Estate Srl
owns Plot R in GreenLake, part of the Second Phase of the overall
GreenLake project. With this acquisition the total stake of the
Group in this particular plot increased to 70,56% .
9. Discontinued operations
9.(a) Description
The Company announced on 18 December 2018 that it has entered
into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties ('the
Non-Greek Portfolio'), in an all-share transaction to Arcona
Property Fund N.V. The transaction is subject to, among other
things, asset and tax due diligence (including third party asset
valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission
to listing of the new Arcona Property Fund N.V. shares), as well as
successful negotiating and signature of transaction documents.
During 2019 and as part of the Arcona transaction the Company sold
the Boyana Residence asset in Bulgaria, as well as the Bela and
Balabino land plots in Ukraine, while in March and June 2022 has
signed SPAs related to Stage 2 of the transaction, namely for the
EOS and Delenco assets in Romania, as well as the Kiyanovskiy and
Rozny assets in Ukraine. In March and June 2022, the Company sold
effectively to Arcona the Delenco and EOS assets. Regarding the
Ukrainian assets, further discussions for closing have been put on
hold due to the existing circumstances in the country.
Additionally, the Company also sold during 2019 the Greek
logistics property Victini Logistics, which was not part of the
Arcona transaction.
The companies that are classified under discontinued operations
are the followings:
-- Cyprus: Ashor Ventures Limited, Edetrio Holdings Limited,
Rimasol Enterprises Limited, Emakei Holdings Limited, Iuliu Maniu
Limited, Ram Real Estate Management Limited, Frizomo Holdings
Limited, Ketiza Holdings Limited and Victini Holdings Limited
-- Romania: Ashor Development Srl, Ebenem Investments Srl, Jenby
Investments Srl, Rimasol Real Estate Srl, Moselin Investments Srl,
Best Day Real Estate Srl, N-E Real Estate Park First Phase Srl,
Ketiza Real Estate Srl, SPDI Real Estate Srl and Secmon SRL
-- Ukraine: LLC Aisi Ukraine, LLC Almaz -- Pres -- Ukraine, LLC
Trade Center, LLC Retail Development Balabino
As a result, the Company has reclassified all assets and
liabilities related to these properties as held for sale according
to IFRS 5 (Note 4.3 & 4.8).
9.(b) Results of discontinued operations
For the year ended 31 December 2021
Note 2021 2020
EUR EUR
Income 10 939.720 1.041.346
Asset operating expenses 11 (763.024) ( 470.548)
---------------------- -----------------------
Net Operating Income 176.696 570.798
Administration expenses 12 (289.086) (217.988)
Share of profits/(losses) from associates 21 344.746 (179.775)
Valuation gains/(losses) from Investment
Property 13 (754.979) (3.495.700)
Net gain/(loss) on disposal of investment
property 14.1 653.567 281.886
Other operating income/(expenses), net 15 (12.510) 3.058
Operating profit / (loss) 118.434 (3.037.721)
Dividends income 20 175.500 -
Finance income 16 9.366 9.392
Finance costs 16 (863.480) (870.951)
Profit/(Loss) before tax and foreign (560.180) (3.899.280)
exchange differences
Foreign exchange (loss), net 17a (253.666) (318.925)
Profit/(Loss) before tax (813.846) (4.218.205)
Income tax expense 18 (67.328) (44.387)
Profit/(Loss) for the year (881.174) (4.262.592)
Loss attributable to:
Owners of the parent (659.215) (2.851.952)
Non-controlling interests ( 221.959 (1.410.640)
)
(881.174) (4.262.592)
9.(c) Cash flows from(used in) discontinued operation
31 Dec 31 Dec
2021 2020
EUR EUR
------------ ------------
Net cash flows provided in operating activities (712.598) 961.997
------------ ------------
Net cash flows from / (used in) financing 3.280.967 (3.880.653)
activities
------------ ------------
Net cash flows from / (used in) investing (2.275.600) 2.670.120
activities
------------ ------------
Net increase/(decrease) from discontinued
operations 292.769 (248.536)
------------ ------------
9.(d) Assets and liabilities of disposal group classified as
held for sale
The following assets and liabilities were reclassified as held
for sale in relation to the discontinued operation as at 31
December 2021:
Note 31 Dec 31 Dec
2021 2020
EUR EUR
------ ----------- -----------
Assets classified as held for sale
------ ----------- -----------
Investment properties 19.4a 31.554.991 34.903.480
------ ----------- -----------
Tangible and intangible assets 23 11.988 12.357
------ ----------- -----------
Long-term receivables and prepayments 24 333.263 315.000
------ ----------- -----------
Investments in associates 21 5.476.576 5.071.656
------ ----------- -----------
Financial Asset at FV through OCI 22 - 1
------ ----------- -----------
Prepayments and other current assets 25 1.240.028 748.127
------ ----------- -----------
Cash and cash equivalents 27 394.670 740.788
------ ----------- -----------
Total assets of group held for sale 39.011.516 41.791.409
------ ----------- -----------
Liabilities directly related with assets
classified as held for sale
------ ----------- -----------
Borrowings 31 8.022.899 6.324 .461
------ ----------- -----------
Finance lease liabilities 36 6.515.847 9.692.029
------ ----------- -----------
Trade and other payables 33 997.392 870.472
------ ----------- -----------
Taxation 35 243.310 277.275
------ ----------- -----------
Deposits from tenants 34 64.231 64.231
------ ----------- -----------
Total liabilities of group held for 15.843.679 17.228.468
sale
------ ----------- -----------
10. Income
Income from continued operations for the year ended 31 December
2021 represents:
a) rental income, as well as service charges and utilities
income collected from tenants as a result of the rental agreements
concluded with tenants of Innovations Logistics Park (Romania). It
is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through the
SPV, is planned to be transferred as part of the transaction with
Arcona Property Fund N.V. Upon a final agreement for such transfer,
the Company will negotiate with the lender its release from the
aforementioned lease agreement, and if succeeds, upon completion
such income will be also transferred.
b) Service and property managent income is related to one off invoice with a third party.
Continued operations 31 Dec 31 Dec
2021 2020
EUR EUR
---------- --------
Rental income 633.427 583.683
---------- --------
Service charges and utilities income 232.870 192.017
---------- --------
Service and property management income 180.840 20.000
---------- --------
Total income 1.047.137 795.700
---------- --------
Income from discontinued operations for the year ended 31
December 2021 represents:
a) rental income, as well as service charges and utilities
income collected from tenants as a result of the rental agreements
concluded with tenants of Innovations Logistics Park (Romania),
Kindergarten (Romania), and EOS Business Park (Romania)
b) rental income and service charges by tenants of the Residential Portfolio, and;
c) income from third parties and /or partners for consulting and
managing real estate properties for 2020
Discontinued operations (Note 9) 31 Dec 31 Dec
2021 2020
EUR EUR
-------- ----------
Rental income 916.498 1.008.294
-------- ----------
Service charges and utilities income 23.222 31.064
-------- ----------
Service and property management income - 1.988
-------- ----------
Total income 939.720 1.041.346
-------- ----------
Occupancy rates in the various income producing assets of the
Group as at 31 December 2021 were as follows:
Income producing assets
% 31 Dec 31 Dec
2021 2020
--------- ------- -------
EOS Business Park Romania 100 100
--------- ------- -------
Innovations Logistics
Park Romania 65 77
--------- ------- -------
Kindergarten Romania 100 100
--------- ------- -------
11. Asset operating expenses
The Group incurs expenses related to the proper operation and
maintenance of all properties in Kiev, Bucharest. Part of these
expenses is recovered from the tenants through the service charges
and utilities recharge (Note 10 ).
Under continued operations ,there are no such expenses related
to operation of the Assets.
Under discontinued operations are all the expenses related to
Innovations Logistics Park (Romania), EOS Business Park (Romania),
Residential Portfolio (Romania), GreenLake (Romania), and all
Ukrainian properties .
Discontinued operations (Note 9) 31 Dec 31 Dec
2021 2020
EUR EUR
---------- ----------
Property related taxes (253.917) (99.949)
---------- ----------
Property management fees (22.087) (9.054)
---------- ----------
Repairs and technical maintenance (179.009) (101.757)
---------- ----------
Utilities (218.519) (179.268)
---------- ----------
Property security (44.464) (33.223)
---------- ----------
Property insurance (10.267) (6.932)
---------- ----------
Leasing expenses (34.761) (40.267)
---------- ----------
Other operating expenses - (98)
---------- ----------
Total (763.024) (470.548)
---------- ----------
Property related taxes reflect local taxes of land and building
properties (in the form of land taxes, building taxes, garbage
fees, etc.). Relevant increase in 2021 resulted from the increased
sales of residential units during 2021, as well as land book taxes
associated with the acquisition of EOS asset from the leasing
company in order the project to be re-financed.
Repairs and technical maintenance increased substantially during
the period due to works performed on residential units for
facilitating their successful sale.
11. Asset operating expenses (continued)
Utilities increase came from Innovations Logistics Park in
Bucharest, and matches with the increased service charges and
utilities income invoiced by the Company and included in continued
operations.
Leasing expenses reflect expenses related to long term land
leasing.
12. Administration Expenses
Continued operations 31 Dec 31 Dec
2021 2020
EUR EUR
------------ ------------
Salaries and Wages (355.933) (368.684)
------------ ------------
Incentives to Management - (120.000)
------------ ------------
Advisory fees (360.578) (609.191)
------------ ------------
Public group expenses (144.330) (134.153)
------------ ------------
VAT expensed (68.135) (7.514)
------------ ------------
Corporate registration and maintenance fees (59.990) (30.697)
------------ ------------
Audit fees (78.668) (86.000)
------------ ------------
Accounting and related fees (29.180) (40.311)
------------ ------------
Legal fees (328.331) (77.688)
------------ ------------
Depreciation /Amortization charge (1.481) (2.200)
------------ ------------
Directors Renumeration (243.823) (129.000)
------------ ------------
Corporate operating expenses (127.844) (95.742)
------------ ------------
Total Administration Expenses (1.798.293) (1.701.180)
------------ ------------
Discontinued operations (Note 9) 31 Dec 31 Dec
2021 2020
EUR EUR
---------- ----------
Salaries and Wages (32.498) (46.177)
---------- ----------
Advisory fees (83.066) (35.897)
---------- ----------
Corporate registration and maintenance fees (38.765) (31.978)
---------- ----------
Audit fees (35.160) (40.800)
---------- ----------
Accounting and related fees (29.034) (31.823)
---------- ----------
Legal fees (52.940) (6.821)
---------- ----------
Depreciation /Amortization charge (620) (2.683)
---------- ----------
Corporate operating expenses (17.003) (21.809)
---------- ----------
Total Administration Expenses (289.086) (217.988)
---------- ----------
Salaries and wages include the remuneration of the CEO (2021:
EUR100.997, 2020: EUR100.997), the CFO, the Group Commercial
Director and the Country Managers of Ukraine and Romania, as well
as the salary cost of personnel employed in the various Company's
offices in the region.
Incentives to Management provided in 2020 for the successful
disposal of Victini Logistics Park.
Advisory fees are mainly related to advisors, brokers, valuers
and other professionals engaged in relevant transactions and
capital raising campaigns, as well as outsourced human resources
support on the basis of relevant contracts. In 2021, such fees
include EUR 36k of services related to Arcona transaction (EUR 52k
in 2020) and increased brokerage fees for the extended residential
sales of the Group that took place during the year in Romania. In
discontinued operations, advisory fees include also EUR 30k related
to the re-financing of EOS asset that took place in December
2021.
Accounting and related fees include fees from external
accounting services, as well as fees for transfer pricing and tax
consulting services. In particular, certain Group entities
proceeded during 2020 in preparation of Transfer Pricing file,
essential in such cases under recent local tax legislation.
Public group expenses include among others fees paid to the
AIM:LSE stock exchange and the Nominated Adviser of the Company, as
well as other expenses related to the listing of the Company, such
as public relations and registry expenses. Relevant increase in
2021 came as a result of the additional fees incurred by the new
custodian (Cyprus Stock Exchange) of the shares of the Company,
which came as requirement following Brexit, as well as extra fees
from the corporate registrar for arrangements in relation to the
new share custody status of the Company.
Corporate registration and maintenance fees represent fees
charged for the annual maintenance of the Company and its
subsidiaries, as well as fees and expenses related to the normal
operation of the companies including charges by the relevant local
authorities. Increase in current period came as a result of the
expenses incurred for striking off six (6) idle entities in
Cyprus.
Legal fees represent legal expenses incurred by the Group in
relation to asset operations (rentals, sales, etc.), ongoing legal
cases in Ukraine, Cyprus and Romania, compliance with AIM listing,
as well as one-off fees associated with legal services and advise
in relation to due diligence processes, and transactions. In 2021
an amount of EUR 168k was associated with legal advices and support
related to the transaction with Arcona (EUR 29k in 2020), while an
amount of EUR 123k was associated with the change of custodian due
to Brexit and the need to provide relevant legal opinion to
Euroclear (EUR 0 in 2020). In discontinued operations, an amount of
EUR 48k is related to the re-financing of EOS property, including
also the associated notary and relevant fees for acquiring the
asset from the leasing company.
12. Administration Expenses (continued)
Corporate operating expenses include office expenses, travel
expenses, (tele)communication expenses, D&O insurance and all
other general expenses for Cypriot, Romanian and Ukrainian
operations. Current increase is a result of the considerably higher
cost for the D&O insurance policy, following the general
increase of such premiums in the insurance market.
The annual Directors fees including Chairman and Committee
remunerations have been set at GBP 129k. In 2021 the Company posted
also fees from previous periods which were not included previously
in Company's books and presented as "Deferred Amounts" in table
below (Note 39.1.2).
Summary 31 Dec 2021 31 Dec 2020
of Directors'
Total
Remuneration
EUR EUR EUR EUR EUR EUR EUR
----------------- ----------- --------- ---------- ------------------ ----------- ----------
Base Chairman/ Deferred Total Base remuneration Chairman/ Total
remuneration Committee Amounts Committee
Fees Fees
----------------- ----------- --------- ---------- ------------------ ----------- ----------
Michael Beys (33.323) (5.950) (23.100) (62.373) (28.000) (5.000) (33.000)
----------------- ----------- --------- ---------- ------------------ ----------- ----------
Harin Thaker (33.323) (3.570) (21.700) (58.593) (28.000) (3.000) (31.000)
----------------- ----------- --------- ---------- ------------------ ----------- ----------
Ian Domaille (33.323) (7.141) (23.800) (64.263) (28.000) (6.000) (34.000)
----------------- ----------- --------- ---------- ------------------ ----------- ----------
Anthonios
Kaffas (33.323) (3.570) (21.700) (58.593) (28.000) (3.000) (31.000)
----------------- ----------- --------- ---------- ------------------ ----------- ----------
Total (133.291) (20.232) (90.300) (243.823) (112.000) (17.000) (129.000)
----------------- ----------- --------- ---------- ------------------ ----------- ----------
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the
reporting period, excluding foreign exchange translation
differences which are incorporated in the table of Note 19.2, are
presented in the tables below.
Discontinued operations (Note 9)
Property Name (EUR) Valuation gains/(losses)
---------------------------
31 Dec 31 Dec
2021 2020
------------ -------------
EUR EUR
------------ -------------
Kiyanovskiy Residence (93.835) 390.469
------------ -------------
Tsymlyanskiy Residence* (964.178) 94.811
------------ -------------
Rozny Lane 75.740 (171.690)
------------ -------------
Innovations Logistics Park (240.706) (305.894)
------------ -------------
EOS Business Park 107.164 (863.251)
------------ -------------
Residential Portfolio 4.438 (1.950)
------------ -------------
GreenLake 452.063 (2.664.980)
------------ -------------
Kindergarten (95.665) 26.785
------------ -------------
Total (754.979) (3.495.700)
------------ -------------
* As of November 2021, the Group had submitted properly the
official request to the City of Kiev to extend the lease of
Tsymlyanskiy Residence property for another 5 years, since the
Group has first extension rights over any other interested party.
The first step in the process whereby the presiding committee of
the municipality, before the final approval by the City Council,
did not place as many other cases had accumulated which had time
priority over Group's case. During the period between December 15th
2021 and January 20th of 2022, the committee did not convene at all
as is usual during holiday and vacation times. Once the holiday
season was over, the main focus of the committee and the City
Council unfortunately were on issues not related to property lease
extensions, but rather more pressing matters for the interests and
operational stability of the City of Kiev. From there on, all
decisions have been put on hold due to the Russian insurgence of
Ukraine. We remain confident that we will be awarded the lease
extension once the war status permits.
Valuation gains and losses result not only from the differences
in the values of the properties as reported by valuers at the
different points in time, but also from the fluctuation of the FX
rate between the denominated currency of the valuation report
itself and the functional currency of the company which posts
valuation amount in its accounting books. For example, valuations
of Ukrainian assets are denominated in USD and translated to UAH
for entering effectively in the accounting books of the local
entities. Similarly, valuations of Romanian assets are denominated
in EUR and translated to RON for accounting purposes.
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling
properties classified under Investment Property (Romanian
residential assets) designated as non-core assets. The gain/
(losses) from disposal of such properties are presented below:
14.1 Investment property
During 2021 the Group sold 7 villas in Greenlake Parcel K, 5
apartments in Monaco Towers and 1 apartment, 3 parking spaces in
Zizin.
In 2020 the Group sold 5 villas in Greenlake Parcel K, 1
apartment and 3 parking spaces in Romfelt Plaza (Doamna Ghica) and
3 apartments, 3 parking spaces and 1 commercial space in Zizin.
14. Gain/ (Loss) from disposal of properties (continued)
14.1 Investment property (continued)
Discontinued operations (Note 9) 31 Dec 31 Dec
2021 2020
EUR EUR
------------ ------------
Income from sale of investment property 3.245.322 2.427.184
------------ ------------
Cost of investment property (2.591.755) (2.145.298)
------------ ------------
Profit/(Loss) from disposal of investment
property 653.567 281.886
------------ ------------
15. Other operating income/(expenses), net
Continued operations 31 Dec 31 Dec
2021 2020
EUR EUR
--------- ---------
Other income 18.536 115.039
--------- ---------
Accounts payable written off 62.978 124.007
--------- ---------
Reversal of provisions and Impairment of prepayments
and other current assets - 16.035
--------- ---------
Other income 81.514 255.081
--------- ---------
Assets Written off - (55.128)
--------- ---------
Penalties (509) (2.184)
--------- ---------
Impairment of prepayments and other current ( 5.932
assets ) -
--------- ---------
Other expenses (5.430) (6.547)
--------- ---------
( 11.871
Other expenses ) (63.859)
--------- ---------
Other operating income/(expenses), net 69. 643 191.222
--------- ---------
Discontinued operations (Note 9) 31 Dec 31 Dec
2021 2020
EUR EUR
--------- ----------
Accounts payable written off - 129.950
--------- ----------
Other income 1.679 23
--------- ----------
Other income 1.679 129.973
--------- ----------
Penalties (240) (1.201)
--------- ----------
Other expenses (13.949) (125.714)
--------- ----------
Other expenses (14.189) (126.915)
--------- ----------
Other operating income/(expenses), net (12.510) 3.058
--------- ----------
Continued operations
Other income, represents income from services, while in 2020
included also a price adjustment of the sale of Terminal Brovary
pursuant to the relevant sale and purchase agreement.
The accounts payable write off under continued operations are
mainly related to writing off an old balance due to a vendor.
Discontinued operations
The accounts payable write off in 2020 under discontinued
operations are mainly related to revesal of accrued expenses which
after a long period of time were never realized.
In 2020 the other expenses under discontinued operations of a
total of EUR 126k relate mostly to VAT imposed to Jenby Srl after
relevant tax investigation by authorities, associated with past VAT
activity of the company.
16. Finance costs and income
Continued operations
Finance income 31 Dec 31 Dec
2021 2020
-------- --------
EUR EUR
-------- --------
Interest received from non-bank loans 489.072 503.527
-------- --------
Total finance income 489.072 503.527
-------- --------
Finance costs 31 Dec 31 Dec
2021 2020
EUR EUR
---------- ----------
Interest expenses (non-bank) (116.468) (140.489)
---------- ----------
Finance charges and commissions (5.808) (6.645)
---------- ----------
Bonds interest (68.133) (68.320)
---------- ----------
Interest on taxes - (59.297)
---------- ----------
Total finance costs (190.409) (274.751)
---------- ----------
Net finance result 298.663 228.776
---------- ----------
Discontinued operations (Note 9)
Finance income 31 Dec 31 Dec
2021 2020
------- -------
EUR EUR
------- -------
Interest received from non-bank loans (Note
39.1.1) 9.366 9.392
------- -------
Total finance income 9.366 9 .392
------- -------
Finance costs 31 Dec 31 Dec
2021 2020
EUR EUR
---------- ----------
Interest expenses (bank) (479.939) (378.793)
---------- ----------
Interest expenses (non-bank) (6.547) (7.172)
---------- ----------
Finance leasing interest expenses (373.209) (477.048)
---------- ----------
Finance charges and commissions (3.785) (2.585)
---------- ----------
Interest on taxes - (5.353)
---------- ----------
Total finance costs (863.480) (870.951)
---------- ----------
Net finance result (854.114) (861.559)
---------- ----------
Interest income from non-bank loans reflects income from loans
granted by the Group for financial assistance to associates. This
amount includes also interest on Loan receivables from 3(rd)
parties provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians
portfolio) in Romania. The funds provided initially with a
convertibility option which was not exercised, and is currently
treated as a loan.
According to the last addendum, the loan had certain one-off
payments for a period until 30 June 20202 which has to be re-paid
in full. The loan is bearing a fixed interest rate of 10% and the
Company has initiated the process of getting agreed security in the
form of pledge of shares following relevant provisions in the
initial Loan Agreement.
Borrowing interest expense represents interest expense charged
on Bank and non-Bank borrowings (Note 31).
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group. The decrease of finance leasing
interest during 2021 is due to the fact that the leasing loan with
Alpha Bank Romania SA was repaid and a new bank loan was granted (
Note 36).
Finance charges and commissions include regular banking
commissions and various fees paid to Banks.
Bonds interest represent interest calculated for the bonds
issued by the Company during 2018 (Note 32).
Interest on taxes posted in 2020 is related to interest charges
on taxes associated with the tax audit of all Cypriot entities of
the Group for all periods up to 2015, which follow a certain
repayment schedule via the local Ariadne repayment program.
17. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans
and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December
2021 from continued operations amounted to EUR65.147 (2020: loss
EUR60.142).
The exchange loss from discontinued operations for the year
ended 31 December 2021 amounted to EUR253.666 (2020: loss
EUR318.925) (Note 9).
b. Exchange difference on intercompany loans to foreign holdings
The Company has loans receivable from foreign group subsidiaries
which are considered as part of the Group's net investments in
those foreign operations (Note 39.3). For these intercompany loans
the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During
2021, the Group has not recognized any foreign exchange loss/
profit (2020: loss EUR61.936).
18. Tax Expense
Continued operations 31 Dec 31 Dec
2021 2020
EUR EUR
--------- ----------
Income and defence tax expense (51.824) (117.656)
--------- ----------
Taxes (51.824) (117.656)
--------- ----------
Discontinued operations (Note 9) 31 Dec 31 Dec
2021 2020
EUR EUR
--------- ---------
Income and defence tax expense (67.328) (44.387)
--------- ---------
Taxes (67.328) (44.387)
--------- ---------
For the year ended 31 December 2021, the corporate income tax
rate for the Group's subsidiaries are as follows: in Ukraine 18%,
and in Romania 16%. The corporate tax that is applied to the
qualifying income of the Company and its Cypriot subsidiaries is
12,5%.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 31 Dec
2021 2020
EUR EUR
------------ ------------
Profit / (loss) before tax (577.617) (5.588.463)
------------ ------------
Tax calculated on applicable rates 1.270.289 (177.663)
------------ ------------
Expenses not recognized for tax purposes 319.568 1.132.008
------------ ------------
Tax effect of allowances and income not subject
to tax (817.941) (844.478)
------------ ------------
Tax effect on tax losses for the year 390.502 801.574
------------ ------------
Tax effect on tax losses brought forward (1.060.938) (874.138)
------------ ------------
10% additional tax 4.339 20.616
------------ ------------
Overseas tax in excess of credit claim used
during the year - 636
------------ ------------
Tax effect of Group tax relief (919) (1.322)
------------ ------------
Defence contribution current year 14.252 13.860
------------ ------------
Prior year tax 90.950
------------ ------------
Total Tax 119.152 162.043
------------ ------------
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
-- EOS Business Park consists of 3.386 sqm gross leasable area
and includes a Class A office Building in Bucharest, which is
currently fully let to Danone Romania until 2025.
-- Innovations Logistics Park is a 16.570 sqm gross leasable
area logistics park located in Clinceni in Bucharest, which
benefits from being on the Bucharest ring road. Its construction
was tenant specific, was completed in 2008 and is separated in four
warehouses, two of which offer cold storage (freezing temperature),
the total area of which is 6.395 sqm. Innovations Logistics Park
was acquired by the Group in May 2014 and is 65% leased at the end
of the reporting period.
Residential Assets
The Company owns a residential portfolio, consisting at the end
of the reporting period of 2 villas in GreenLake Residential
complex, owned by Moselin Investments Srl. The associate company
Green Lake Developments Srl owns 9 more units in the Green Lake
Residential complex, classified under associates (Note 21).
Land Assets
-- Kiyanovskiy Residence consists of four adjacent plots of
land, totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael's Spires and
historic Podil neighborhood .
-- Tsymlyanskiy Residence is a 0,36 Ha plot of land located in
the historic Podil District of Kiev and is destined for the
development of a residential complex. As of November 2021, the
Group had submitted properly the official request to the City of
Kiev to extend the lease of Tsymlyanskiy Residence property for
another 5 years, since the Group has first extension rights over
any other interested party. The first step in the process whereby
the presiding committee of the municipality, before the final
approval by the City Council, did not place as many other cases had
accumulated which had time priority over Group's case. During the
period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. We remain confident that we will be
awarded the lease extension once the war status permits.
-- Rozny Lane is a 42 Ha land plot located in Kiev Oblast,
destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in
2015.
-- GreenLake land is a 40.360 sqm plot and is adjacent to the
GreenLake part of the Company's residential portfolio, which is
classified under Investments in Associates (Note 21). It is
situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI owns 44% of these plots, but has effective
management control.
19.2 Investment Property Movement during the reporting
period
The table below presents a reconciliation of the Fair Value
movements of the investment property during the reporting period
broken down by property and by local currency vs. reporting
currency.
Discontinued Operations
2021 ( EUR ) Fair Value Asset Value at the
movements Beginning of the period
or at Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair Disposals Transfer Additions Carrying
amount exchange value 2021 to 2021 amount
as at translation gain/(loss) Assets as at
31/12/2021 difference based held 31/12/2020
(a) on local for sale
currency
valuations
(b)
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kiyanovskiy
Residence Land 2.648.773 297.620 (93.835) - - - 2.444.988
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Tsymlyanskiy
Residence Land 1 67.683 (964.178) - - - 896.496
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Rozny Lane Land 971.217 (1.019) 75.740 - - - 896.496
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Ukraine 3.619.991 364.284 (982.273) - - - 4.237.980
----------- ------------ ------------ ------------ --------- ---------- ------------
Innovations
Logistic
s Park Warehouse 9.700.000 (159.294) (240.706) - - - 10.100.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
EOS Business
Park Office 6.700.000 (107.164) 107.164 - - - 6.700.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Residential
portfolio Residential - (4.438) 4.438 (277.458) - 124.958 152.500
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Land
GreenLake & Resi 10.215.000 (197.765) 452.062 (2.314.297) - - 12.275.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kindergarten Retail 1.320.000 (22.336) (95.664) - - 1.438.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Romania 27.935.000 (490.997) 227.294 (2.591.755) - 124.958 30.665.500
----------- ------------ ------------ ------------ --------- ---------- ------------
TOTAL 31.554.991 (126.713) (754.979) (2.591.755) - 124.958 34.903.480
----------- ------------ ------------ ------------ --------- ---------- ------------
19.2 Investment Property Movement during the reporting period
(continued)
Discontinued Operations
2020 ( EUR ) Fair Value Asset Value at the
movements Beginning of the period
or at Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair Disposals Transfer Additions Carrying
amount exchange value 2020 to 2020 amount
as at translation gain/(loss) Assets as at
31/12/2020 difference based held 31/12/2019
(a) on local for sale
currency
valuations
(b)
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kiyanovskiy
Residence Land 2.444.988 (704.961) 390.469 - - - 2.759.480
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Tsymlyanskiy
Residence Land 896.496 (266.501) 94.811 - - - 1.068.186
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Rozny Lane Land 896.496 - (171.690) - - - 1.068.186
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Ukraine 4.237.980 (971.462) 313.590 - - - 4.895.852
----------- ------------ ------------ ------------ --------- ---------- ------------
Innovations
Logistic
s Park Warehouse 10.100.000 (194.106) (305.894) - - - 10.600.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
EOS Business
Park Office 6.700.000 (136.749) (863.251) - - - 7.700.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Residential
portfolio Residential 152.500 (13.835) (1.950) (564.715) - - 733.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
GreenLake Land 12.275.000 (293.437) (2.664.980) (1.580.583) - - 16.814.000
& Resi
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kindergarten Retail 1.438.000 (26.785) 26.785 - - - 1.438.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Romania 30.665.500 (664.912) (3.809.290) (2.145.298) - - 37.285.000
----------- ------------ ------------ ------------ --------- ---------- ------------
TOTAL 34.903.480 (1.636.374) (3.495.700) (2.145.298) - - 42.180.852
----------- ------------ ------------ ------------ --------- ---------- ------------
The two components comprising the fair value movements are
presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation loss due to the devaluation of local
currencies of EUR 126.713 (a) (2020: loss EUR 1.636.374 ) is
presented as part of the exchange difference on translation of
foreign operations in other comprehensive income in the statement
of comprehensive income and then carried forward in the Foreign
currency translation reserve; and,
b. The fair value loss in terms of the local functional
currencies amounting to EUR 754.979 (b) (2020: loss EUR 3.495.700)
, is presented as Valuation gains/(losses) from investment
properties in the statement of comprehensive income and is carried
forward in Accumulated losses.
19.3 Investment Property Carrying Amount per asset as at the
reporting date
The table below presents the values of the individual assets as
appraised by the appointed valuer as at the reporting date.
Asset Name Location Principal Related Carrying amount as at
Operation Companies
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
------------ -------------- ------------- ------------- ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ -------------- ------------- ------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------ -------------- ------------- ------------- ------------- ------------ -------------
Kiyanovskiy Podil, Land for LLC Aisi 2.648.773 2.444.988
Residence Kiev residential Ukraine - -
City Development LLC Trade
Center Center
------------ -------------- ------------- ------------- ------------- ------------ -------------
Podil,
Kiev Land for LLC Almaz
Tsymlyanskiy City residential -- Pres
Residence Center Development -- Ukraine - 1 - 896.496
------------ -------------- ------------- ------------- ------------- ------------ -------------
Brovary Land for SC Secure
district, residential Capital
Rozny Lane Kiev Development Limited - 971.217 - 896.496
------------ -------------- ------------- ------------- ------------- ------------ -------------
Total Ukraine - 3.619.991 - 4.237.980
------------ -------------- ------------- ------------- ------------- ------------ -------------
Innovations Clinceni, Warehouse Myrnes - 9.700.000 - 10.100.000
Logistics Bucharest Innovations
Park Park Limited
Best Day
Real Estate
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
EOS Business Bucharest Office Yamano - 6.700.000 - 6.700.000
Park building Ltd
First Phase
srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Kindergarten Bucharest Retail Yamano - 1.320.000 - 1.438.000
Ltd
SPDI Real
Estate
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Secure
II
Ketiza
Ltd,
Residential Residential Ketiza
Portfolio Bucharest apartments Srl - - - 152.500
------------ -------------- ------------- ------------- ------------- ------------ -------------
GreenLake Bucharest Residential Edetrio
villas Holdings 10.215.000 12.275.000
(2 villas) Limited
& Emakei
Land for Holdings
Residential Limited
Development Iuliu Maniu
Limited - -
Moselin
Investments
srl
Rimasol
Limited
Rimasol
Real Estate
Srl
Ashor
Ventures
Limited
Ashor
Develpoment
Srl
Jenby
Investments
Srl
Ebenem
Investments
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Total Romania - 27.935.000 - 30.665.500
---------- ------------- ------------ -------------
TOTAL - 31.554.991 - 34.903.480
---------- ------------- ------------ -------------
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Innovations Logistics park, EOS Business Park, Kindergarten in
GreenLake and GreenLake parcel K, as well as all the land assets
namely Kiyanovskiy Residence, Tsymlyanskiy Residenceand Rozny Lane
in Ukraine, and GreenLake in Romania
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
(Note 9) (Note
9)
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
At 1 January - 34.903.480 - 42.180.852
------------ ------------- ------------ -------------
Additions - 124.958 - -
------------ ------------- ------------ -------------
Disposal of Investment Property - (2.591.755) - (2.145.298)
------------ ------------- ------------ -------------
Revaluation (loss)/gain on
investment property - (754.979) - (3.495.700)
------------ ------------- ------------ -------------
Translation difference - (126.713) - (1.636.374)
------------ ------------- ------------ -------------
At 31 December - 31.554.991 - 34.903.480
------------ ------------- ------------ -------------
Disposals of Investment Properties represent the sales of
apartments and parking spaces in Residential Portfolio and villas
in GreenLake parcel K.
19.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the
following table represents an analysis based on the various
valuation methods. The different levels as defined by IFRS have
been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and
liquid markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived
from prices). Level 2 fair values of investment properties have
been derived using the market value approach by comparing the
subject asset with similar assets for which price information is
available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred
recently in the market. The most significant input into this
valuation approach is price per sqm.
- Level 3 relates to inputs for the asset or liability that are
not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using
the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of
income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements at 31 (Level (Level (Level Total
Dec 2021 (EUR) 1) 2) 3)
Recurring fair value measurements
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 1 - 1
-------- ----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center - 2.648.773 - 2.648.773
-------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast - 971.217 - 971.217
-------- ----------- ----------- -----------
Innovations Logistics Park -
Bucharest - - 9.700.000 9.700.000
-------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - - 6.700.000 6.700.000
-------- ----------- ----------- -----------
GreenLake - Bucharest - 10.215.000 - 10.215.000
-------- ----------- ----------- -----------
Kindergarten - Bucharest - - 1.320.000 1.320.000
-------- ----------- ----------- -----------
Totals - 13.834.991 17.720.000 31.554.991
-------- ----------- ----------- -----------
19.5 Investment Property valuation method presentation
(continued)
Fair value measurements at 31 (Level (Level (Level Total
Dec 2020 (EUR) 1) 2) 3)
Recurring fair value measurements
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 896.496 - 896.496
-------- ----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center - 2.444.988 - 2.444.988
-------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast - 896.496 - 896.496
-------- ----------- ----------- -----------
Innovations Logistics Park -
Bucharest - - 10.100.000 10.100.000
-------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - - 6.700.000 6.700.000
-------- ----------- ----------- -----------
Residential Portfolio (ex GreenLake)
- Bucharest - 152.500 - 152.500
-------- ----------- ----------- -----------
GreenLake - Bucharest - 12.275.000 - 12.275.000
-------- ----------- ----------- -----------
Kindergarten - Bucharest - - 1.438.000 1.438.000
-------- ----------- ----------- -----------
Totals - 16.665.480 18.238.000 34.903.480
-------- ----------- ----------- -----------
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level 3 Fair Innovations EOS Business Kindergarten Total
value measurements Logistics Park Park
at 31 Dec 2021
(EUR)
Opening balance 10.100.000 6.700.000 1.438.000 18.238.000
---------------- ------------- ------------- -----------
Profit/(loss)
on revaluation (240.706) 107.164 (95.664) (229.206)
---------------- ------------- ------------- -----------
Translation difference (159.294) (107.164) (22.336) (288.794)
---------------- ------------- ------------- -----------
Closing balance 9.700.000 6.700.000 1.320.000 17.720.000
---------------- ------------- ------------- -----------
Level 3 Fair Innovations EOS Business Kindergarten Total
value measurements Logistics Park Park
at 31 Dec 2020
(EUR)
Opening balance 10.600.000 7.700.000 1.438.000 19.738.000
---------------- ------------- ------------- ------------
Profit/(loss)
on revaluation (305.894) (863.251) 26.785 (1.142.360)
---------------- ------------- ------------- ------------
Translation difference (194.106) (136.749) (26.785) (357.640)
---------------- ------------- ------------- ------------
Closing balance 10.100.000 6.700.000 1.438.000 18.238.000
---------------- ------------- ------------- ------------
Information about Level 3 Fair Values is presented below:
Fair Fair value Valuation Unobservable Relationship of
value at technique inputs unobservable inputs
at 31 Dec to fair value
31 Dec 2020
2021
EUR EUR EUR EUR EUR
----------- ----------- ---------------- --------------- ---------------------
Innovations 9.700.000 10.100.000 Income approach Future rental The higher the
Logistics income and rental income the
Park - Bucharest costs for higher the fair
10 years, value. The higher
discount the discount rate,
rate the lower fair
value
----------- ----------- ---------------- --------------- ---------------------
EOS Business 6.700.000 6.700.000 Income approach Future rental The higher the
Park - Bucharest, income and rental income the
City Center costs for higher the fair
10 years, value. The higher
discount the discount rate,
rate the lower fair
value
----------- ----------- ---------------- --------------- ---------------------
Kindergarten 1.320.000 1.438.000 Income approach Future rental The higher the
income and rental income the
costs of higher the fair
discount value. The higher
rate, vacancy the discount rate
rate and the vacancy
rate, the lower
fair value
----------- ----------- ---------------- --------------- ---------------------
Total 17.720.000 18.238.000
----------- ----------- ---------------- --------------- ---------------------
20. Investment Property Acquisitions, Goodwill Movement and
Disposals
On 7 December 2021, the Company proceeded to the sale of Victini
Holdings Limited to a 3(rd) party. Before the sale, Victini
Holdings Limited declared dividends of EUR175.500 for all previous
financial years. The subsidiary company was idle since December
2019 when its own Greek subsidiary which held the warehouse in
Greece was sold.
21. Investments in associates
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Cost of investment in associates - -
at the beginning of the period 5.071.656 5.380.021
------------- ------------- ------------ -------------
Share of profits /(losses)
from associates (Note 9) - 344.746 - (179.775)
------------- ------------- ------------ -------------
Dividend Income - (198.137) - (242.403)
------------- ------------- ------------ -------------
Foreign exchange difference - 258.311 - 113.813
------------- ------------- ------------ -------------
Total - 5.476.576 - 5.071.656
------------- ------------- ------------ -------------
Dividend Income reflects dividends received from Delenco Srl,
owner of the Delea Nuova building, where the Group maintains a
24,35% participation.
The share of profit from the associate GreenLake Development Srl
was limited up to the interest of the Group in the associate.
As at 31 December 2021, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value , total liabilities, revenues and profit or loss,
were as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
------------- ------------ ------------ ------------------------------ -------- ----------- -------- ------------
Lelar
Holdings
Limited
and S.C.
Delea Delenco
Nuova Construct Office
Project Srl 22.927.561 (440.187) 1.415.561 24,35 344.746 Romania building
------------- ------------ ------------ ------------------------------ -------- ----------- -------- ------------
GreenLake GreenLake 5.447.484 (7.752.870) 1.503.720 40,35 - Romania Residential
Project Development assets
- Phase Srl
A
------------- ------------ ------------ ------------------------------ -------- ----------- -------- ------------
Total 28.375.045 (8.193.057) 2.919.281 344.746
----------- ------------ ------------------------------ -------- ----------- -------- ------------
As at 31 December 2020, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value , total liabilities, revenues and profit or loss,
were as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
------------- ------------ -------------- ------------ -------- ------------ -------- ------------
Lelar
Holdings
Limited
and S.C.
Delea Delenco
Nuova Construct Office
Project Srl 21.926.174 (1.101.439) (738.176) 24,35 (179.775) Romania building
------------- ------------ -------------- ------------ -------- ------------ -------- ------------
GreenLake GreenLake 5.420.444 (9.455.683) (2.344.699) 40,35 - Romania Residential
Project Development assets
- Phase Srl
A
------------- ------------ -------------- ------------ -------- ------------ -------- ------------
Total 27.346.618 (10.557.122) (3.082.875) (179.775)
------------ ------------- ------------ -------- ------------ -------- ------------
22. Financial Assets at FV through OCI
The Group proceeded with an impairment of EUR297.200 for Monaco
Towers (company SecMon Real Estate Srl) in 2018 for which following
the court decision for entering into insolvency in January 2018,
the Company lost the control over the asset and as such it was
reclassified as Financial assets at fair value through OCI as per
table below (where the fair value of the property was adjusted at
80% of its value) and maintained as such until 2020. However,
during 2021 the SPV exited insolvency status successfully by
repaying back its loan and following the relevant Court procedures,
the Group re-gained full control and as a result SecMon Real Estate
Srl is included in current consolidation.
Discontinued operations (Note 9) 2020
Unadjusted Adjusted
------------ ------------
ASSETS EUR EUR
------------ ------------
Non-current assets
------------ ------------
Investment property 1.486.000 1.188.800
------------ ------------
Current assets
------------ ------------
Prepayments and other current assets 20.447 20.447
------------ ------------
Cash and cash equivalents 10.321 10.321
------------ ------------
Total assets 1.516.768 1.219.568
------------ ------------
Current liabilities
------------ ------------
Borrowings (1.075.176) (1.075.176)
------------ ------------
Other liabilities (19.433) (19.433)
------------ ------------
Intercompany loans (1.845.700) (124.958)
------------ ------------
Total liabilities (2.940.309) (1.219.567)
------------ ------------
Total Net equity (1.423.541) 1
------------ ------------
Add back Intercompany loans 1.845.700 -
------------ ------------
Total Net equity (excluding IC) 422.159 1
------------ ------------
Financial Asset at fair value through OCI 1
------------ ------------
23. Tangible and intangible assets
As at 31 December 2021 the intangible assets were composed of
the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of EUR103.193
(2020: EUR103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to EUR103.193 (2020:
EUR103.193) and therefore net value amounts to EUR0 (2020:
EUR0).
As at 31 December 2021 the tangible non-current assets under
continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of EUR1.628 (2020:
EUR2.859).
As at 31 December 2021 the tangible non-current assets under
discontinued operations mainly consisted of the machinery and
equipment used for servicing the Group's investment properties in
Ukraine and Romania amount to EUR81.144 (2020: EUR77.978).
Accumulated depreciation as at the reporting date amounts to
EUR69.156 (2020: EUR65.621).
24. Long Term Receivables and prepayments
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Long Term Receivables 824 333.263 836 315.000
------------ ------------- ------------ -------------
Total 824 333.263 836 315.000
------------ ------------- ------------ -------------
Long term receivables mainly include the cash collateral
existing in favor of Piraeus Leasing in relation to Innovations
asset.
25. Prepayments and other current assets
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Trade and other receivables 498.869 576.656 307.549 487.185
------------ ------------- ------------ -------------
VAT and other tax receivables 199.808 127.550 239.191 105.348
------------ ------------- ------------ -------------
Deferred expenses - 433 - 1.095
------------ ------------- ------------ -------------
Receivables due from related
parties 44.084 516.631 45.077 10.783
------------ ------------- ------------ -------------
Loan receivables from 3(rd)
parties 3.825.949 - 6.365.654 124.958
------------ ------------- ------------ -------------
Loan to associates (Note 39.4) 9.351 310.966 9.026 301.600
------------ ------------- ------------ -------------
Allowance for impairment of
prepayments and other current ( 67.680
assets ) (292.208) (86.421) (282.842)
------------ ------------- ------------ -------------
Total 4. 510.381 1.240.028 6.880.076 748.127
------------ ------------- ------------ -------------
Trade and other receivables mainly include receivables from
tenants and prepayments made for services. The increase during the
year is due to increased receivables from tenants which have been
recovered during 2022, as well as increased accrual prepayment
entry for the D&O insurance.
VAT receivable represent VAT which is refundable in Romania,
Cyprus and Ukraine.
Deferred expenses include legal, advisory, consulting and
marketing expenses related to ongoing share capital increase and
due diligence expenses related to the possible acquisition of
investment properties.
Receivables due from related parties represent all kind of
receivables from related parties of the Group. Relevant increase
represents the amount paid by Moselin Investments Srl during 2021
for the re-payment of associate's GreenLake Srl bank loan, given
that the former is a guarantor to the loan agreement.
Loan receivables from 3(rd) parties include an amount of
EUR3.825.949 (2020: EUR 4.580.000) provided as an advance payment
for acquiring a participation in an investment property portfolio
(Olympians portfolio) in Romania less accumulated expected credit
loss of EUR54.256. The accrued interest was fully repaid during the
year (2020: unpaid accrued interest of EUR1.071.271). The loan
provided initially with a convertibility option which was not
exercised. According to the last addendum the loan has certain
one-off and monthly payments for a period until 30 June 2022. The
loan is bearing a fixed interest rate of 10% and the Company is in
the process of getting agreed security in the form of pledge of
shares following the relevant process provided in the initial Loan
Agreement.
Loan receivable from 3(rd) parties under discontinued operations
included in 2020 a loan receivable from SecMon Real Estate Srl
which since January 2018 was classified as Financial Asset at Fair
value through OCI (Note 22). However, during 2021 the SPV exited
insolvency status successfully by repaying back its loan and
following the relevant Court procedures, the Group re-gained full
control and as a result SecMon Real Estate Srl is included in
current consolidation.
Loan to associates reflects a loan receivable from GreenLake
Development Srl, holding company of GreenLake Project-Phase A
(Notes 21 and 39.4).
26. Financial Assets at FV through P&L
The table below presents the analysis of the balance of
Financial Assets at FV through P&L in relation to the continued
operations of the Company:
31 Dec 31 Dec
2021 2020
EUR EUR
----------------------- ----------
Arcona shares 6.783.642 3.549.453
----------------------- ----------
Transfer from receivables - 4.030.234
----------------------- ----------
FV change in Arcona shares 546.503 (796.045)
----------------------- ----------
Arcona shares at reporting date 7.330.145 6.783.642
----------------------- ----------
Warrants over Arcona shares 3.602 32.190
----------------------- ----------
Transfer from receivables - 1
----------------------- ----------
FV change in warrants 136.975 (28.589)
----------------------- ----------
Arcona warrants at reporting date 140.577 3.602
----------------------- ----------
Total Financial Assets at FV 7.470.722 6.787.244
----------------------- ----------
FV change in Arcona shares 546.503 (796.045)
----------------------- ----------
FV change in warrants 136.975 (28.589)
----------------------- ----------
Fair Value loss on Financial Assets at FV through
P&L 683.478 (824.634)
----------------------- ----------
The Company received during 2019, 277.943 Arcona shares as part
of the disposal of Aisi Bella LLC, the owner company of Bella and
Balabino assets in Ukraine, to Arcona Property Fund N.V. Moreover,
the Company received during 2020, 315.591 Arcona shares as part of
the disposal of Boyana in Sofia, and therefore a relevant transfer
from receivables account took place. At the end of the reporting
period the shares revalued at their fair value based on the NAV per
share of Arcona at the same date, and as a result a relevant fair
value gain of EUR 546.503 (2020: loss EUR 796.045) is
recognized.
On top of the aforementioned shares, the Company received for
the sale of Bella and Balabino assets, 67.063 warrants over shares
in Arcona for a consideration of EUR 1, and 77.021 warrants over
Arcona shares for the sale of Boyana for a consideration of EUR 1.
The warrants are exercisable upon the volume weighted average price
of Arcona shares traded on a regulated market at EUR 8,10 or
higher. At year end, the warrants are re-valued to fair value and
as a result a relevant gain of EUR 136.975 (2020: loss EUR 28.589)
is recognized. The terms and assumptions used for such warrant
re-valuation are:
-- Current stock price (as retrieved from Amsterdam Stock Exchange): EUR 7,5 per share
-- Strike price of the warrants: EUR 8,10 per share
-- Expiration date: 1 November 2024
-- Standard deviation of stock price: 23,06%
-- Annualized dividend yield on shares: 0%
-- 5 year Government Bond rate (weighted average rate of
Government Bonds of countries that Arcona is exposed): 2,484%
27. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Cash with banks in USD 15.778 - 15.755 -
------------ ------------- ------------ -------------
Cash with banks in EUR 2.081.700 7.872 33.234 216.224
------------ ------------- ------------ -------------
Cash with banks in UAH 84 1.826 6 418
------------ ------------- ------------ -------------
Cash with banks in RON 62.841 384.972 79.577 524.146
------------ ------------- ------------ -------------
Cash with banks in GBP 173 - 1.287 -
------------ ------------- ------------ -------------
Total 2.160.576 394.670 129.859 740.788
------------ ------------- ------------ -------------
28. Share capital
Number of Shares during 2021 and 2020
31 December 2020 31 December 2021
Authorised
----------------- -----------------
Ordinary shares of EUR 0,01 989.869.935 989.869.935
----------------- -----------------
Total ordinary shares 989.869.935 989.869.935
----------------- -----------------
RCP Class A Shares of EUR0,01 - -
----------------- -----------------
RCP Class B Shares of EUR0,01 8.618.997 8.618.997
----------------- -----------------
Total redeemable shares 8.618.997 8.618.997
----------------- -----------------
Issued and fully paid
----------------- -----------------
Ordinary shares of EUR0,01 129.191.442 129.191.442
----------------- -----------------
Total ordinary shares 129.191.442 129.191.442
----------------- -----------------
Total 129.191.442 129.191.442
----------------- -----------------
Nominal value (EUR) for 2021 and 2020
EUR 31 December 2020 31 December 2020
Authorised
----------------- -----------------
Ordinary shares of EUR 0,01 9.898.699 9.898.699
----------------- -----------------
Total ordinary shares 9.898.699 9.898.699
----------------- -----------------
RCP Class A Shares of EUR0,01 - -
----------------- -----------------
RCP Class B Shares of EUR0,01 86.190 86.190
----------------- -----------------
Total redeemable shares 86.190 86.190
----------------- -----------------
Issued and fully paid
----------------- -----------------
Ordinary shares of EUR0,01 1.291.281 1.291.281
----------------- -----------------
Total ordinary shares 1.291.281 1.291.281
----------------- -----------------
Total 1.291.281 1.291.281
----------------- -----------------
28.1 Authorised share capital
T he authorised share capital of the Company as at the date of
issuance of this report is as follows:
a) 989.869.935 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 28.3) .
28.2 Issued Share Capital
As at the end of 2021, the issued share capital of the Company
was as follows:
a) 129.191.442 Ordinary Shares of EUR0,01 nominal value each,
b) 392.500 Redeemable Preference Class A Shares of EUR0,01
nominal value each, cancelled during 2018 as per the Annual General
Meeting decision of 29 December 2017 (Note 28.3),
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each.
In respect of the Redeemable Preference Class B Shares , issued
in connection to the acquisition of Craiova Praktiker, following
the holders of such shares notifying the Company of their intent to
redeem within 2016, the Company:
- for the Redeemable Preference Class B Shares , in lieu of
redemption the Company gave its 20% holding in Autounion (Note
28.3) in October 2016, to the Craiova Praktiker seller BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. and final settlement for
any resulting difference is expected to be provided by Cypriot
Courts (Note 40.3). As soon as the case is settled, the Company
will proceed with the cancellation of the Redeemable Preference
Class B Shares .
On 24(th) December 2019 the Company proceeded with the issue of
1.920.961 new Ordinary Shares as follows:
i. 1.219.000 new Ordinary Shares to certain advisors, directors
and executives of the Company involved in the closing of the Stage
I of the Arcona Transaction by means of settling relevant Company's
liabilities.
ii. 437.676 new Ordinary Shares to directors of the Company in
lieu of H1 2019 and before H2 2016 fees.
iii. 200.000 new Ordinary Shares to certain advisor in lieu of
cash fees for financial advisory services rendered in 2019.
iv. 64.285 new Ordinary Shares to certain executive of the
Company in lieu of cash fees for services rendered in 2018.
Following shares issuance completed within 2019, the issued
share capital of the Company as at the date of issuance of this
report is as follows:
a) 129.191.442 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 28.3) .
28.3 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as
follows:
Number of (as at) 31 December 2021 (as at) 31 December 2020
Ordinary shares of EUR0,01 Issued and Listed on AIM 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Total number of Shares Non-Dilutive Basis 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Total number of Shares Full Dilutive Basis 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Options - - -
------------------------- ------------------------- -------------------------
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker
Craiova asset acquisition do not have voting rights but have
economic rights at par with ordinary shares. As at the reporting
date all of the Redeemable Preference Class B Shares have been
redeemed but the Company is in legal proceedings with the vendor in
respect of a final settlement (Notes 33, 40.3).
29. Foreign Currency Translation Reserve
Exchange differences relate to the translation from the
functional currency to EUR of Group's subsidiaries' accounts and
are recognized by entries made directly to the foreign currency
translation reserve. The foreign exchange translation reserve
represents unrealized profits or losses related to the appreciation
or depreciation of the local currencies against EUR in the
countries where Company's subsidiaries' functional currencies are
not EUR. The Company had EUR64.299 gain on foreign exchange
losses/gains on translation due to presentation currency for 2021,
in comparison to EUR1.392.155 relevant losses in 2020.
30. Non-Controlling Interests
Non-controlling interests represent the percentage
participations in the respective entities not owned by the
Group:
% Non-controlling
interest portion
Group Company 31 Dec 31 Dec
2021 2020
--------- ---------
LLC Almaz-Press-Ukraine 45,00 45,00
--------- ---------
Ketiza Holdings Limited 10,00 10,00
--------- ---------
Ketiza Real Estate Srl 10,00 10,00
--------- ---------
Ram Real Estate Management Limited 50,00 50,00
--------- ---------
Iuliu Maniu Limited 55,00 55,00
--------- ---------
Moselin Investments Srl 55,00 55,00
--------- ---------
Rimasol Enterprises Limited 29,44 55,76
--------- ---------
Rimasol Real Estate Srl 29,44 55,76
--------- ---------
Ashor Ventures Limited 55,76 55,76
--------- ---------
Ashor Development Srl 55,76 55,76
--------- ---------
Jenby Ventures Limited 55,70 55,70
--------- ---------
Jenby Investments Srl 55,70 55,70
--------- ---------
Ebenem Limited 55,70 55,70
--------- ---------
Ebenem Investments Srl 55,70 55,70
--------- ---------
SPDI Real Estate Srl 50,00 50,00
--------- ---------
31. Borrowings
Project 31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
----------------- ------------ ------------- ------------ -------------
EUR EUR EUR EUR
----------------- ------------ ------------- ------------ -------------
Principal of bank
Loans
----------------- ------------ ------------- ------------ -------------
Bancpost SA GreenLake - 1.901.094
- Parcel K - -
----------------- ------------ ------------- ------------ -------------
Piraeus Bank SA GreenLake-Phase 2.525.938 2.525.938
2 - -
----------------- ------------ ------------- ------------ -------------
Kindergarten
Bancpost SA - SPDI RE - 510.188 - 670.293
----------------- ------------ ------------- ------------ -------------
Patria bank First Phase - 3.500.000 - -
----------------- ------------ ------------- ------------ -------------
Loans from other
3(rd) parties and
related parties
(Note 39.5) 1.587.128 183.140 2.061.514 235.191
------------ ------------- ------------ -------------
Overdrafts - 1.048 - 853
------------ ------------- ------------ -------------
Total principal
of bank and non-bank 6.720.314 5.333.369
Loans 1.587.128 2.061.514
----------------- ------------ ------------- ------------ -------------
Interest accrued
on bank loans - 1.251.191 - 952.321
------------ ------------- ------------ -------------
Interests accrued
on non-bank loans 116.438 51.394 88.863 38.771
------------ ------------- ------------ -------------
Total 1.703.566 8.022.899 2.150.377 6.324.461
------------ ------------- ------------ -------------
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Current portion 1.577.500 3.787.614 2.054.400 3.510.366
------------ ------------- ------------ -------------
Non-current portion 126.066 4.235.285 95.977 2.814.095
------------ ------------- ------------ -------------
Total 1.703.566 8.022.899 2.150.377 6.324.461
------------ ------------- ------------ -------------
Continued Operations
Loans from other 3(rd) parties and related parties under
continued operations include among others:
) Loans from 3 Directors of EUR375k provided as bridge financing
for future property acquisitions . The loans bear interest 8%
annually and are repayable on 31 August 2021 (Note 39.5) .
B) Safe Growth Investments, a third party company, provided a
loan of EUR1m to the Company in November 2020 to be used for
general working capital purposes. The loan bears interest of 5,35 %
per annum and was fully repaid April 2022.
Discontinued Operations
Ketiza Real Estate Srl entered in 2012 into a loan agreement
with Bancpost SA for a credit facility for financing the
acquisition of the Blooming House and 100% of the remaining
(without VAT) construction works of Blooming House project. The
loan was fully repaid 2 June 2020. The loan had borne interest of
EURIBOR 3M plus 3,5% and had secured by all assets of Ketiza Real
Estate Srl, as well as its shares and is being repaid through sales
proceeds.
SecRom Real Estate Srl entered (2009) into a loan agreement with
Alpha Bank Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. During 2018,
SecRom Real Estate Srl was merged with N-E Real Estate Park First
Phase Srl as a result the loan was transferred to N-E Real Estate
Park First Phase Srl. The the loan was fully repaid 29 December
2020. The loan had borne interest of EURIBOR 1M+4.25% and was
repayable on the basis of investment property sales.
Moselin Investments Srl entered in 2010 into a construction loan
agreement with Bancpost SA covering the construction works of
Parcel K GreenLake project.The loan was fully repaid on 25 November
2021 through sale proceeds. The loan borne interest of EURIBOR 3M
plus 2,5%, secured with the property itself and the shares of
Moselin Investments Srl.
Sertland Properties Limited entered in 2008 into a loan
agreement with Alpha Bank Bulgaria for an acquisition loan related
to the acquisition of Boyana Residence ood. On 29 July 2020 the
loan was transferred to Arcona as part of the transaction for the
sale of Boyana Residence ood in Bulgaria.
SEC South East Continent Unique Real Estate (Secured)
Investments Limited has a debt facility with Piraeus Bank for the
acquisition of the GreenLake land in Bucharest Romania. As at the
end of the reporting period the balance of the loan was
EUR2.525.938 plus accrued interest EUR1.220.857 and bears interest
of EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution.
During September 2019, the company received a termination notice
from Piraeus Bank and a payment order from court in relation to
this loan, and currently relevant discussions with the Bank are
taking place for a mutual agreed solution.
N-E Real Estate Park First Phase Srl entered in 2016 into a loan
agreement with Alpha Bank Romania for a credit facility of
EUR1.000.000 for working capital purposes. During 2020 the balance
of the loan was fully repaid. The loan borne interest of EURIBOR
1M+4,5% and was repayable from the free cash flow resulting from
the rental income of company's property, secured by a second rank
mortgage over assets of SecRom Real Estate Srl, which has been
absorbed by First Phase, as well as its shares.
N-E Real Estate Park First Phase Srl entered in December 2021
into a loan agreement with Patria Bank for a credit facility of
EUR3.500.000 used to refinance the Leasing Contract with Alpha
Leasing and to repay some of shareholders loans. As at the end of
the reporting period the balance of the loan was EUR3.500.000 and
bears interest of EURIBOR 3M plus 3,5%. The repayment is done in
monthly installments of principal plus interest. A collateral
deposit of EUR265.000 will be made in monthly installments of
EUR5.000, during the period January 2022 - May 2026. The loan has
the maturity date in December 2031 and was secured by a first rank
mortgage over EOS building and mortgage over the company's bank
accounts and receivables.
SPDI Real Estate Srl (Kindergarten) has a loan agreement with
Bancpost SA Romania. As at the end of the reporting period the
balance of the loan was EUR510.188 and bears interest of Euribor 3m
plus 4,6% per annum. The loan is repayable by 2027.
Loans from other 3(rd) parties and related parties under
discontinued operations includes borrowings from non-controlling
interest parties. During the last nine years and in order to
support the GreenLake project the non-controlling shareholders of
Moselin Investments Srl and SPDI Real Estate SRL (other than the
Group) have contributed their share of capital injections by means
of shareholder loans. The loans bear interest 4% annually.
32. Bonds
The Company in order to acquire up to a 50% interest in a
portfolio of fully let logistics properties in Romania, the
Olympians Portfolio, issued a financial instrument, 35% of which
consists of a convertible bond and 65% of which is made up of a
warrant. The convertible loan element of the instrument which was
in the value of EUR1.033.842 bears a 6,5% coupon, has a 7 year term
and is convertible into ordinary shares of the Company at the
option of the holder at 25p. starting from 1 January 2018.
33. Trade and other payables
The fair value of trade and other payables due within one year
approximate their carrying amounts as presented below.
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Payables to third parties 3.256.166 564.810 3.243.465 644.889
------------ ------------- ------------ -------------
Payables to related parties
(Note 39.2) 929.142 218.359 582.829 196.233
------------ ------------- ------------ -------------
Deferred income from tenants - 7.839 - 7.965
------------ ------------- ------------ -------------
Accruals 87.735 206.384 101.112 21.385
------------ ------------- ------------ -------------
Pre-sale advances (Advances
received for sale of properties) 123.080 - 109.556 -
------------ ------------- ------------ -------------
Total 4.396.123 997.392 4.036.962 870.472
------------ ------------- ------------ -------------
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Current portion 4.396.123 989.553 4.036.962 862.507
------------- ------------- ------------ -------------
Non-current portion - 7.839 - 7.965
------------- ------------- ------------ -------------
Total 4.396.123 997.392 4.036.962 870.472
------------- ------------- ------------ -------------
Payables to third parties represents: a) payables due to
Bluehouse Capital (under continued operations) as a result of the
Redeemable Convertible Class B share redemption (Note 28.3) which
is under legal proceedings for a final settlement (Note 40.3) , b)
amounts payable to various service providers including auditors,
legal advisors, consultants and third party accountants related to
the current operations of the Group, and c) guarantee amounts
collected from tenants.
Payables to related parties under continued operations represent
amounts due to directors and accrued management remuneration (Note
39.2). Relevant increase came mainly by posting in 2021 previous
periods' directors fees. Payables to related parties under
discontinued operations represent payables to non-contolling
intetest shareholders.
Deferred income from tenants represents advances from tenants
which will be used as future rental income and utilities
charges.
Accruals mainly include the accrued, administration fees,
accounting fees, facility management and other fees payable to
third parties. Relevant increase in discontinued operations
represent the allocation made on security and utilities expenses in
Green Lake complex between Moselin Investments Srl and GreenLake
Srl (associate).
Pre-sale advances reflect the advance received in relation to
Kiyanovskiy Residence pre-sale agreement, which upon non closing of
the said sale, part of which will be returned to the prospective
buyer.
34. Deposits from Tenants
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Deposits from tenants non-current - 64.231 - 64.231
------------- ------------- ------------ -------------
Total - 64.231 - 64.231
------------- ------------- ------------ -------------
Deposits from tenants appearing under non-current liabilities
include the amounts received from the tenants of Innovations
Logistics Park, EOS Business Park and companies representing
residential segment as advances/guarantees and are to be reimbursed
to these clients at the expiration of the lease agreements.
35. Taxation
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Corporate income tax - non
current 200.295 52.221 237.521 30.374
------------ ------------- ------------ -------------
Defence tax - non current 27.385 - 26.091 15
------------ ------------- ------------ -------------
Tax provision - non current 399.450 - 399.450 -
------------ ------------- ------------ -------------
Non- current 627.130 52.221 663.062 30.389
------------ ------------- ------------ -------------
Corporate income tax - current 127.528 9.085 449.844 58.960
------------ ------------- ------------ -------------
Other taxes including VAT
payable - current 128.909 182.004 163.972 165.521
------------ ------------- ------------ -------------
Provisions - current - - 6.549 22.405
------------ ------------- ------------ -------------
Current 256.437 191.089 620.365 246.886
------------ ------------- ------------ -------------
Total Provisions and Taxes
Payables 883.567 243.310 1.283.427 277.275
------------ ------------- ------------ -------------
Corporate income tax represents taxes payable in Cyprus and
Romania.
Other taxes represent local property taxes and VAT payable in
Romania.
Corporate income tax current amount represents the part of the
settlement plan agreed with the Cyprus tax authorities up to
2022.
36. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR6.234.852 and the current portion
of EUR280.995 (31 December 2020: EUR9.235.266 and EUR456.763,
accordingly).
Discontinued operations
31 Dec 2021 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- --------- ----------
42.2
&
Less than one year 42.6 582.862 301.868 280.994
------- -------------- --------- ----------
Between two and five years 7.144.878 934.758 6.210.120
------- -------------- --------- ----------
More than five years 33.844 11.813 22.031
-------------- --------- ----------
6.513.145
------- -------------- --------- ----------
Accrued Interest 2.702
-------------- --------- ----------
Total Finance Lease Liabilities 6.515.847
(Note 9d)
-------------- --------- ----------
31 Dec 2020 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- ---------- ----------
42.2
&
Less than one year 42.6 917.759 455.241 462.518
------- -------------- ---------- ----------
Between two and five years 5.265.225 1.414.550 3.850.675
------- -------------- ---------- ----------
More than five years 5.506.778 209.027 5.297.751
------- -------------- ---------- ----------
11.689.762 2.078.818 9.610.944
------- -------------- ---------- ----------
Accrued Interest 81.085
-------------- ---------- ----------
Total Finance Lease Liabilities 9.692.029
(Note 9d)
-------------- ---------- ----------
36 .1 Land Plots Financial Leasing
The Group holds land plots in Ukraine under leasehold agreements
which in terms of the accounts are classified as finance leases.
Lease obligations are denominated in UAH. The fair value of lease
obligations approximate to their carrying amounts as included
above. Following the appropriate discounting, finance lease
liabilities are carried at EUR34.210 under current and non-current
portion. The Group's obligations under finance leases are secured
by the lessor's title to the leased assets. Regarding Tsymlyanskiy,
as of November 2021, the Group had submitted properly the official
request to the City of Kiev to extend the lease property for
another 5 years, since the Group has first extension rights over
any other interested party. The first step in the process whereby
the presiding committee of the municipality, before the final
approval by the City Council, did not place as too many other cases
had accumulated which had time priority over Group's case. During
the period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. We remain confident that we will be
awarded the lease extension once the war status permits, and we
continue calculate relevant future lease obligations.
36.2 Sale and Lease Back Agreements
A. Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations
Logistics Park in Bucharest, owned by Best Day Real Estate Srl,
through a sale and lease back agreement with Piraeus Leasing
Romania SA. As at the end of the reporting period the balance is
EUR6.481.637 (2020: EUR6.707.475) , bearing interest rate at 3M
Euribor plus 4,45% margin, being repayable in monthly tranches
until 2026 with a balloon payment of EUR5.244.926. At the maturity
of the lease agreement and upon payment of the balloon Best Day
Real Estate Srl will become owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. Best Day Real Estate Srl pledged its future receivables from its tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved
accounts opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash
collateral in the amount of EUR250.000 in Piraeus Leasing Romania,
which had been deposited as follows, half in May 2014 and half in
May 2015.
SPDI provided a corporate guarantee in favor of the Leasing
company related to the liabilities of Best Day Real Estate Srl
arising from the sale and lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by the SPV N-E Real Estate Park
First Phase Srl, through a sale and lease back agreement with Alpha
Bank Romania SA. During December 2021 the SPV re-paid fully the
leasing facility (2020 balance: EUR 2.953.273) and acquired the
property, through a new loan from Patria Bank. The facility borne
interest at the rate of 3M Euribor plus 5,25% margin.
37. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
31 Dec 2021 31 Dec 2020
Issued ordinary shares capital 129.128.442 129.191.442
------------ ------------
Weighted average number of ordinary shares (Basic) 129.128.442 129.191.442
------------ ------------
Diluted weighted average number of ordinary shares 129.128.442 129.191.442
------------ ------------
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2021 31 Dec 2020
EUR EUR
------------ ------------
Profit/(Loss) after tax attributable to owners of the parent (184.405) (1.487.914)
------------ ------------
Basic 0,00 (0,03)
------------ ------------
Diluted 0,00 (0,03)
------------ ------------
c. Basic diluted and adjusted earnings per share from discontinued operations
Earnings per share 31 Dec 2021 31 Dec 2020
EUR EUR
------------ ------------
Loss after tax from discontinued operations attributable to owners of the parent (659.215) (2.851.952)
------------ ------------
Basic (0,00) (0,02)
------------ ------------
Diluted (0,00) (0,02)
------------ ------------
d. Net assets per share
Net assets per share 31 Dec 2021 31 Dec 2020
EUR EUR
------------ ------------
Net assets attributable to equity holders of the parent 23.253.524 23.712.973
------------ ------------
Number of ordinary shares 129.191.442 129.191.442
------------ ------------
Diluted number of ordinary shares 129.191.442 129.191.442
------------ ------------
Basic 0,18 0,18
------------ ------------
Diluted 0,18 0,18
------------ ------------
38. Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment -Innovations Logistics Park
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - Kindergarten of GreenLake
Residential
-- Residential segment
Land Assets
-- Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent
investment property (including investment properties under
development and prepayments made for the investment properties).
Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
Continued Operations
Profit and Loss for the year 2021
Warehouse Office Retail Residential Land Corporate Total
Plots
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- ------- ------------ ---------- ---------- ------------
Segment profit
---------- ---------- ------- ------------ ---------- ---------- ------------
Rental income (Note
10) - - - - - 633.427 633.427
---------- ---------- ------- ------------ ---------- ---------- ------------
Service charges and
utilities income (Note
10) - - - - - 232.870 232.870
---------- ---------- ------- ------------ ---------- ---------- ------------
Property Management
income (Note 10) - - - - - 180.840 180.840
---------- ---------- ------- ------------ ---------- ---------- ------------
Impairment of financial
investments ( Note
26 ) - - - - - 683.478 683.478
---------- ---------- ------- ------------ ---------- ---------- ------------
Gain on disposal of
subsidiaries - - - - - 748 748
---------- ---------- ------- ---------- ----------
Profit from discontinued
operation (Note 9b) (214.232) 1.061.290 5.439 271.406 (488.324) (215.549) 420.030
---------- ---------- ------- ------------ ---------- ---------- ------------
Segment profit (214.232) 1.061.290 5.439 271.406 (488.324) 1.515.814 2.151.393
Administration expenses
(Note 12) - - - - - - (1.798.293)
---------- ---------- ------- ------------ ---------- ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - 69.643
---------- ---------- ------- ------------ ---------- ---------- ------------
Finance income (Note
16) - - - - - - 489.072
Interest expenses
(Note 16) - - - - - - (184.601)
---------- ---------- ------- ------------ ---------- ---------- ------------
Other finance costs
(Note 16) - - - - - - (5.808)
---------- ---------- ------- ------------ ---------- ---------- ------------
Profit from discontinued
operations (Note 9b) - - - - - - (1.301.204)
---------- ---------- ------- ------------ ---------- ---------- ------------
Foreign exchange losses,
net (Note 17a) - - - - - - (65.147)
Income tax expense
(Note 18) - - - - - - (51.824)
Exchange difference
on I/C loan to foreign
holdings (Note 17b) - - - - - - 64.299
Total Comprehensive
Income - - - - - - (632.470)
38. Segment information (continued)
Continued Operations
Profit and Loss for the year 2020
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- -------- ------------ ------------ ---------- ------------
Segment profit
---------- ---------- -------- ------------ ------------ ---------- ------------
Rental income (Note
10) - - - - - 583.683 583.683
---------- ---------- -------- ------------ ------------ ---------- ------------
Service charges
and utilities income
(Note 10) - - - - - 192.017 192.017
---------- ---------- -------- ------------ ------------ ---------- ------------
Property Management
income (Note 10) - - - - - 20.000 20.000
---------- ---------- -------- ------------ ------------ ---------- ------------
Impairment of financial
investments ( Note
26 ) - - - - (796.045) (28.589) (824.634)
---------- ---------- -------- ------------ ------------ ---------- ------------
Profit from discontinued
operation (Note
9b) (158.082) (419.148) 145.586 30.200 (2.243.899) (177.448) (2.822.791)
---------- ---------- -------- ------------ ------------ ---------- ------------
Segment profit (158.082) (419.148) 145.586 30.200 (3.039.944) 589.663 (2.851.725)
Administration
expenses
(Note 12) - - - - - - (1.701.180)
---------- ---------- -------- ------------ ------------ ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - 191.222
---------- ---------- -------- ------------ ------------ ---------- ------------
Finance income
(Note 16) - - - - - - 503.527
Interest expenses
(Note 16) - - - - - - (208.809)
---------- ---------- -------- ------------ ------------ ---------- ------------
Other finance costs
(Note 16) - - - - - - (65.942)
---------- ---------- -------- ------------ ------------ ---------- ------------
Profit from discontinued
operations (Note
9b) - - - - - - (1.439.801)
---------- ---------- -------- ------------ ------------ ---------- ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (60.142)
Income tax expense
(Note 18) - - - - - - (117.656)
Exchange difference
on I/C loan to
foreign holdings
(Note 17b) - - - - - - (61.936)
Exchange difference
on translation
foreign holdings
(Note 29) - - - - - - (1.392.155)
Total Comprehensive
Income - - - - - - 7.204.597
* It is noted that part of the rental and service charges/
utilities income related to Innovations Logistics Park (Romania) is
currently invoiced by the Company as part of a relevant lease
agreement with the Innovations SPV and the lender, however the
asset, through the SPV, is planned to be transferred as part of the
transaction with Arcona Property Fund N.V. Upon a final agreement
for such transfer, the Company will negotiate with the lender its
release from the aforementioned lease agreement, and if succeeds,
upon completion such income will be also transferred.
38. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2021
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- --------- -------- ----------- ------------ --------- ------------
Segment profit
Property Sales
income (Note
14.1) - - - 542.297 2.703.025 - 3.245.322
---------- --------- ------------ ------------
Cost of Property
sold (Note 14.1) - - - (277.457) (2.314.297) - (2.591.754)
---------- --------- ------------ ------------
Rental income
(Note 10) 133.253 652.998 119.936 4.277 6.033 - 916.497
---------- --------- ------------ ------------
Service charges
and utilities
income (Note
10) 16.064 - - 6.608 550 - 23.222
---------- --------- ------------ ------------
Valuation gains/(losses)
from investment
property (Note
13) (240.706) 107.164 (95.664) 4.438 (530.211) - (754.979)
---------- --------- ------------ ------------
Share of profits/(losses)
from associates
(Note 21) - 344.746 - - - - 344.746
---------- --------- ------------ ------------
Asset operating
expenses
(Note 11) (122.843) (43.618) (18.833) (8.757) (353.424) (215.549) (763.024)
---------- --------- ------------ ------------
Segment profit (214.232) 1.061.290 5.439 271.406 (488.324) (215.549) 420.030
Administration
expenses
(Note 12) - - - - - - (289.086)
---------- --------- ------------ ------------
Other (expenses)/income,
net (Note 15) - - - - - - (12.510)
---------- --------- ------------ ------------
Dividends income - - - - - - 175.500
Finance income
(Note 16) - - - - - - 9.366
Interest expenses
(Note 16) - - - - - - (797.856)
---------- --------- ------------ ------------
Other finance
costs (Note
16) - - - - - - (65.624)
---------- --------- ------------ ------------
Foreign exchange
losses, net
(Note 17a) - - - - - - (253.666)
Income tax expense
(Note 18) - - - - - - (67.328)
Exchange difference
on translation
foreign holdings
(Note 29) - - - - - - 64.299
Loss for the
year - - - - - - (816.875)
38. Segment information (continued )
Discontinued Operations
Profit and Loss for the year 2020
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
--------- --------- ------- ----------- ------------ --------- ------------
Segment profit
Property Sales
income (Note 14.1) - - - 594.991 1.832.193 - 2.427.184
------------ ------------
Cost of Property
sold (Note 14.1) - - - (564.715) (1.580.583) - (2.145.298)
------------ ------------
Rental income
(Note 10) 228.820 648.499 122.928 8.047 - - 1.008.294
------------ ------------
Service charges
and utilities
income (Note 10) 27.812 942 - 2.310 - - 31.064
------------ ------------
Service and Property
Management income
(Note 10) - - 1.988 - - - 1.988
------------ ------------
Valuation gains/(losses)
from investment
property (Note
13) (305.894) (862.021) 26.785 (3.179) (2.351.391) - (3.495.700)
------------ ------------
Share of profits/(losses)
from associates
(Note 21) - (179.775) - - - - (179.775)
------------ ------------
Asset operating
expenses
(Note 11) (108.820) (26.793) (4.127) (9.242) (144.118) (177.448) (470.548)
------------ ------------
Segment profit (158.082) (419.148) 147.574 28.212 (2.243.899) (177.448) (2.822.791)
Administration
expenses
(Note 12) - - - - - - (217.988)
------------ ------------
Other (expenses)/income,
net (Note 15) - - - - - - 3.058
------------ ------------
Finance income
(Note 16) - - - - - - 9.392
------------ ------------
Interest expenses
(Note 16) - - - - - - (863.013)
------------ ------------
Other finance
costs (Note 16) - - - - - - (7.938)
------------ ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (318.925)
Income tax expense
(Note 18) - - - - - - (44.387)
Loss for the
year - - - - - - (4.262.592)
Total Operations
Balance Sheet as at 31 December 2021
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR
----------- ---------- --------- ----------- ---------- ---------- ----------
Assets
-----------
Long-term receivables
and prepayments - - - - - 823 823
Financial Assets
at FV through
P&L - - - - - 7.470.723 7.470.723
-----------
Assets held for
sale 10.015.000 12.176.575 1.338.263 - 12.939.514 2.542.163 39.011.515
-----------
Segment assets 10.015.000 12.176.575 1.338.263 - 12.939.514 10.013.709 46.483.061
Tangible and intangible
assets - - - - - - 1.628
Prepayments and
other current
assets - - - - - - 4.510.381
----------
Cash and cash
equivalents - - - - - - 2.160.577
----------
Total assets - - - - - - 53.155.647
Liabilities associated
with assets classified
as held for disposal 6.545.868 3.504.083 696.741 -3.856.285 1.240.702 15.843.679
----------
Borrowings - - - - - 1.703.566 1.703.566
----------
Segment liabilities 6.545.868 3.504.083 696.741 3.856.285 2.944.268 17.547.245
Trade and other
payables - - - - - - 4.396.123
----------
Taxation - - - - - - 883.567
----------
Bonds - - - - - - 1.327.056
Total liabilities - - - - - - 24.153.991
38. Segment information (continued)
Total Operations
Balance Sheet as at 31 December 2020
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR
---------- ---------- --------- ----------- ---------- --------- -----------
Assets
-----------
Long-term receivables
and prepayments - - - - - 836 836
Financial Assets
at FV through P&L - - - - - 6.787.244 6.787.244
-----------
Assets held for
sale 10.415.000 11.771.656 1.438.000 152.501 15.444.794 2.569.458 41.791.409
-----------
Segment assets 10.415.000 11.771.656 1.438.000 152.501 15.444.794 9.357.538 48.579.489
Tangible and intangible
assets - - - - - - 2.859
Prepayments and
other current assets - - - - - - 6.880.076
-----------
Cash and cash equivalents - - - - - - 129.859
-----------
Total assets - - - - - - 55.592.283
Liabilities associated
with assets classified
as held for disposal - - - - - 2.150.377 2.150.377
-----------
Borrowings 6.771.706 2.953.643 873.108 -5.482.264 1.147.747 17.228.468
-----------
Segment liabilities 6.771.706 2.953.643 873.108 -5.482.264 3.298.124 19.378.845
Trade and other
payables - - - - - - 4.036.962
-----------
Taxation - - - - - - 1.283.427
-----------
Bonds - - - - - - 1.258.923
Total liabilities - - - - - - 25.958.157
Discontinued operations
Assets and Liabilities held for sale 2021
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- --------- ----------- ---------- --------- -----------
Assets
-----------
Investment properties 9.700.000 6.700.000 1.320.000 - 12.939.514 895.477 31.554.991
-----------
Long-term receivables
and prepayments 315.000 - 18.263 - - - 333.263
Investments in
associates - 5.476.575 - - - - 5.476.575
-----------
Segment assets 10.015.000 12.176.575 1.338.263 - 12.939.514 895.477 37.364.829
Tangible and intangible
assets - - - - - - 11.988
Prepayments and
other current assets - - - - - - 1.240.028
----------
Cash and cash equivalents - - - - - - 394.670
Total assets - - - - - -39.011.515
Borrowings - 3.504.083 696.741 -3.822.075 - 8.022.899
----------
Finance lease liabilities 6.481.637 - - - 34.210 - 6.515.847
----------
Deposits from tenants 64.231 - - - - - 64.231
----------
Segment liabilities 6.545.868 3.504.083 696.741 -3.856.285 -14.602.977
Trade and other
payables - - - - - - 997.392
----------
Taxation - - - - - - 243.310
----------
Total liabilities - - - - - -15.843.679
38. Segment information (continued)
Discontinued operations
Assets and Liabilities held for sale 2020
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- --------- ----------- ---------- --------- -----------
Assets
-----------
Investment properties 10.100.000 6.700.000 1.438.000 152.500 15.444.794 1.068.186 34.903.480
-----------
Long-term receivables
and prepayments 315.000 - - - - - 315.000
Investments in
associates - 5.071.656 - - - - 5.071.656
-----------
Financial Asset
at FV through OCI - - - 1 - - 1
Segment assets 10.415.000 11.771.656 1.438.000 152.501 15.444.794 1.068.186 40.290.137
Tangible and intangible
assets - - - - - - 12.357
Prepayments and
other current assets - - - - - - 748.127
----------
Cash and cash equivalents - - - - - - 740.788
----------
Total assets - - - - - -41.791.409
Borrowings - 270 873.108 -5.451.083 - 6.324.461
----------
Finance lease liabilities 6.707.475 2.953.373 - - 31.181 - 9.692.029
----------
Deposits from tenants 64.231 - - - - - 64.231
----------
Segment liabilities 6.771.706 2.953.643 873.108 -5.482.264 -16.080.721
Trade and other
payables - - - - - - 870.472
----------
Taxation - - - - - - 277.275
----------
Total liabilities - - - - - -17.228.468
Geographical information
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Income ( Note 10) Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Ukraine - - - -
------------- ------------- ------------ -------------
Romania - 939.720 - 1.041.346
------------- ------------- ------------ -------------
Greece - - - -
------------- ------------- ------------ -------------
Bulgaria - - - -
------------- ------------- ------------ -------------
Cyprus * 1.047.137 - 795.700 -
------------- ------------- ------------ -------------
Total 1.047.137 939.720 795.700 1.041.346
------------- ------------- ------------ -------------
* It is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through the
SPV, is planned to be transferred as part of the transaction with
Arcona Property Fund N.V. Upon a final agreement for such transfer,
the Company will negotiate with the lender its release from the aforementioned
lease agreement, and if succeeds, upon completion such income will
be also transferred.
Gain/(loss) from disposal of investment 31 Dec 31 Dec 31 Dec 31 Dec
properties (Note 1 4.1) 2021 2021 2020 2020
------------- ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Romania - 653.567 - 281.886
------------- ------------- ------------ -------------
Total - 653.567 - 281.886
------------- ------------- ------------ -------------
38. Segment information (continued)
Geographical information (continued)
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
----------- ----------- ------------
Carrying amount of assets ( investment
properties, associates and Financial
asset at fair value through OCI)
Ukraine - 3.619.991 - 4.237.980
----------- ----------- ------------
Romania - 33.411.576 - 35.737.157
Total - 37.031.567 - 39.975.137
39. Related Party Transactions
The following transactions were carried out with related
parties:
39.1 Income/ Expense
39.1.1 Income
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Interest Income on loan to related
parties - - 2.294 -
Interest Income from loan to associates 325 9.366 326 9.392
Total 325 9.366 2.620 9.392
Interest income on loan to related parties relates to interest
income from Delia Lebada Srl in 2020 and interest income from
associates relates to interest income from GreenLake Development
Srl.
39.1.2 Expenses
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- -------------
EUR EUR EUR EUR
Management Remuneration and
incentives (Note 12) 244.350 - 388.925 -
----------- ------------- ----------- -------------
Directors fees (Note 12) 243.823 - 129.000 -
Interest expenses on Narrowpeak
loan (Note 16) - - 12 -
Interest expenses on Director
and Management Loans (Note 16) 40.194 - 36.265 -
Total 528.367 - 554.202 -
Management remuneration includes the remuneration of the CEO,
the CFO, the Group Commercial Director, and that of the Country
Managers of Ukraine and Romania pursuant to the decisions of the
remuneration committee.
39.2 Payables to related parties (Note 33)
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Board of Directors & Committees
remuneration 373.187 - 129.364 -
Secure Management Services LTD - - 1.146 -
SecMon SRL - - 6.285 -
Sec South East Continet Unique
Real Esate Management Limited 65 - 7.899 -
Management Remuneration 508.511 - 438.135 -
Total 881.763 - 582.829 -
39 .2.1 Board of Directors & Committees
The amount payable represents remuneration and expenses payable
to Non-Executive Directors until the end of the reporting period.
The members of the Board of Directors pursuant to a recommendation
by the remuneration committee and in order to facilitate the
Company's cash flow used to receive their payment in shares of the
Company. During 2018 the directors received 344.371 ordinary shares
in lieu of their 2016 H1 remuneration amounting to GBP 120.530.
During 2019, Non-Executive Directors received 261.000 ordinary
shares amounting to EUR
39 .2.1 Board of Directors & Committees (continued)
73.108 in lieu of their H1 2019 fees, and 176.576 ordinary
shares amounting to EUR 74.162,04 in lieu of their before H2 2016
fees. Since H2 2019 it has been decided that relevant fees will be
paid in cash. The increase in the amount during 2021 comes from the
posting of previous periods' directors fees in order accounts to be
in accordance with such decision.
39 .2.2 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO of the Company.
39.3 Loans from SC Secure Capital Limited to the Group's
subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs. The following table presents the amounts of such
loans which are eliminated for consolidation purposes, but their
related exchange difference affects the equity of the Consolidated
Statement of Financial Position.
Borrower Limit Principal Limit - Principal
- as at as at as at as at
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
EUR EUR EUR EUR
LLC " Trade Center" 5.800 5.707 5.800 5.266
---------- ----------- ---------
LLC "Aisi Ukraine" 23.062.351 220.514 23.062.351 137.966
--------- -----------
LLC " Almaz-Press-Ukraine " 8.236.554 259.126 8.236.554 239.079
--------- -----------
LLC "Aisi Ilvo" 150.537 24.435 150.537 21.750
--------- -----------
Total 31.455.242 509.782 31.455.242 404.061
A potential Ukrainian Hryvnia weakening/strengthening by 10%
against the US dollar with all other variables held constant, would
result in an exchange difference on I/C loans to foreign holdings
of EUR50.978 (2020: EUR40.406), estimated on balances held at 31
December 2021.
39.4 Loans to associates (Note 25)
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loans to GreenLake Development
Srl 9.351 310.966 9.026 301.600
Total 9.351 310.966 9.026 301.600
The loan was provided to GreenLake Development Srl from Edetrio
Holdings Limited (continued operations) and Sc Capital
(discontinued operations). The agreement with Edetrio Holdings
Limited was signed on 17 February 2012 and bears interest 5% and
the agreement with Sc Capital Limited was signed on 4 December 2017
and bears interest 4% per annum. The maturity date is 30 April 2023
for the Edetrio loan and 4 December 2022 for the SC Capital Limted
loan.
39.5 Loans from related parties (Note 31)
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loan from Directors and Management 577.500 - 604.400 -
Interest accrued on loans from
related parties 114.060 - 77.394 -
Total 691.560 - 681.794 -
Loans from directors of the order of EUR 375.000 reflect loans
provided from 3 directors as bridge financing for future property
acquisitions. The loans bear interest 8% annually and are repayable
by 31 August 2022. In case needed, the Company will discuss with
the directors relevant extension of the loans.
Rest amount of the order of EUR 202.500 reflect payables of EUR
42.000 to 2 executives and of EUR 160.500 to one director,
converted to loans for facilitating Company's cash flow.
40. Contingent Liabilities
40.1 Tax Litigation
The Group performed during the reporting period part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may
remain open for longer. Overall following the sales of Terminal
Brovary, Balabino and Bela, the exposure of the Group in Ukraine
has been significantly reduced.
The Group performed during the reporting and comparative periods
part of its operations in Romania and Greece. In respect of
Romanian and Greek tax systems, many aspects are subject to varying
interpretations and frequent changes, which in many cases have
retroactive effects. In certain circumstances it is also possible
that tax authorities may act arbitrary.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
advanced tax systems. Management believes that it has adequtely
provided for tax liabilities, based on its interpretation of tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant. Nevertheless, with the sale of the Bulgarian
and Greek assets, such risk has been effectively minimized.
40.2 Construction related litigation
There are no material claims from contractors due to the
postponement of projects or delayed delivery other than those
disclosed in the financial statements.
40.3 Bluehouse accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. (Bluehouse)
filed in Cypriot courts in December 2018 lawsuit against the
Company for the total amount of EUR 5.042.421,87, in relation to
the Praktiker Craiova acquisition in 2015, and the redemption of
the Redeemable Preference Class A shares which were issued as part
of the transaction to the vendor, plus special compensations of
EUR2.500.000 associated with the related pledge agreement. The
redemption of such shares was requested in 2016, and in lieu of
such redemption the Company transferred to the vendor the 20%
holding in Autounion asset which was used as a guarantee to the
transaction for the effective redemption of the Redeemable
Preference Class A shares. At the same time the Company has posted
in its accounts a relevant payable provision for Bluehouse in the
amount of EUR2.521.211 (Note 33). On the other hand, the Company
during 2019, as part of the judicial process, has filed a claim
against Bluehouse for concealing certain key information during the
Praktiker Craiova transaction, which if revealed would have
resulted in a significant reduction of the final acquisition price.
Management believes the Company has good grounds of defence and
valid arguments and the amount already provided is adequate to
cover an eventual final settlement between the parties. The hearing
of the combined cases in front of Cypriot Courts has been set in
September 2022.
40.4 Other Litigation
The Group has a number of other minor legal cases pending.
Management does not believe that the result of these will have a
substantial overall effect on the Group's financial position.
Consequently no such provision is included in the current financial
statements.
40.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2021.
41. Commitments
The Group had no other commitments as at 31 December 2021.
42. Financial Risk Management
42.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will
be able to implement its stated growth strategy in order to
maximize the return to stakeholders through the optimization of the
debt-equity structure and value enhancing actions in respect of its
portfolio of investments. The capital structure of the Group
consists of borrowings (Note 31 ), bonds (Note 32), trade and other
payables (Note 33) deposits from tenants (Note 34), financial
leases (Note 36), taxes payable (Note 35 ) and equity attributable
to ordinary or preferred shareholders.
Management reviews the capital structure on an on-going basis.
As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each
investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of
equity (issuance of shares to the Group's shareholders) or in the
form of debt. Management balances the capital structure of the
Group with a view of maximizing the shareholder's Return on Equity
(ROE) while adhering to the operational requirements of the
property assets and exercising prudent judgment as to the extent of
gearing.
42.2 Categories of Financial Instruments
Note 31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2020 2020
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Financial Assets
------------ ----------- ------------
Cash at Bank 27 2.160.576 394.670 129.859 740.788
Long-term Receivables and
prepayments 24 824 333.263 836 315.000
Financial Assets at FV
through P&L 26 7.470.722 - 6.787.244 -
Prepayments and other receivables 25 4.510.381 1.240.028 6.880.076 748.127
Financial Asset at FV through
OCI 22 - - - 1
Total 14.142.503 1.967.961 13.798.015 1.803.916
Financial Liabilities
Borrowings 31 1.703.566 8.022.899 2.150.377 6.324.461
Trade and other payables 33 4.396.123 997.392 4.036.962 870.472
Deposits from tenants 34 - 64.231 - 64.231
Finance lease liabilities 36 - 6.515.847 - 9.692.029
Taxation 35 883.567 243.310 1.283.427 277.275
Bonds 32 1.327.056 - 1.258.923 -
Total 8.310.312 15.843.679 8.729.689 17.228.468
42.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk, as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not
entered into any derivative contracts.
42.4 Economic Market Risk Management
The Group operates in Romania and Ukraine. The Group's
activities expose it primarily to financial risks of changes in
currency exchange rates and interest rates. The exposures and the
management of the associated risks are described below. There has
been no change in the way the Group measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized
financial assets and liabilities are denominated in a currency that
is not the Group's functional currency. Most of the Group's
financial assets are denominated in the functional currency.
Management is monitoring the net exposures and adopts policies to
encounter them so that the net effect of devaluation is
minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant floating interest-bearing assets. On December 31(st) ,
2021, cash and cash equivalent (including continued and
discontinued operations) financial assets amounted to EUR2.555.246
(2020: EUR870.647) of which approx . EUR1.910 in UAH and EUR447.813
in RON (Note 27) while the remaining are mainly denominated in
either USD,GBP or EUR.
The Group is exposed to interest rate risk in relation to its
borrowings (including continued and discontinued operations)
amounting to EUR9.726.465 (31 December 2020: EUR8.474.838 ) as they
are issued at variable rates tied to the Libor or Euribor.
Management monitors the interest rate fluctuations on a continuous
basis and evaluates hedging options to align the Group's strategy
with the interest rate view and the defined risk appetite. Although
no hedging has been applied for the reporting period, such may take
place in the future if deemed necessary in order to protect the
cash flow of a property asset through different interest rate
cycles.
Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's
strategy with the interest rate view and the defined risk appetite.
Although no hedging has been applied for the reporting period, such
may take place in the future if deemed necessary in order to
protect the cash flow of a property asset through different
interest rate cycles.
42.4 Economic Market Risk Management (continued)
Interest Rate Risk (continued)
As at 31 December 2021 the weighted average interest rate for
all the interest bearing borrowing and financial leases of the
Group stands at 5,07% (31 December 2020: 4%).
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2021 is presented below:
Actual +100 bps +200 bps
as at 31.12.2021
Weighted average interest
rate 5,07% 6,07% 7,07%
%Influence on yearly
finance costs 83.074 1466.149
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2020 is presented below:
Actual +100 bps +200 bps
as at 31.12.2020
Weighted average interest
rate 4% 5% 6%
%Influence on yearly
finance costs 73.949 147.898
The Group's exposures to financial risk are discussed also in
Note 7.
42.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. In respect of receivables
from tenants these are kept to a minimum of 2 months and are
monitored closely.
42.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which applies a framework for the Group's
short, medium and long term funding and liquidity management
requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and
budgets while maintaining adequate reserves. The following table
details the Group's contractual maturity of its financial
liabilities. The tables below have been drawn up based on the
undiscounted contractual maturities including interest that will be
accrued.
42.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2021 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
Financial assets
Cash at Bank 2.160.576 2.160.576 2.160.576 - -
Prepayments and
other receivables 4.510.381 4.510.381 4.510.381 - -
Financial Assets
at FV through P&L 7.470.722 7.470.722 7.470.722 - -
Long-term Receivables
and prepayments 824 824 - - 824
Total Financial
assets 14.142.503 14.142.503 14.141.679 - 824
Financial liabilities
Borrowings 1.703.566 1.862.279 570.795 1.291.484 -
Trade and other
payables 4.396.123 4.396.123 4.396.123 - -
Bonds issued 1.327.056 1.595.855 360.414 67.200 1.168.241
Taxes payable and
provisions 883.567 883.567 312.635 570.932 -
Total Financial
liabilities 8.310.312 8.737.824 5.639.967 1.929.616 1.168.241
Total net assets/(liabilities) 5.832.191 5.404.679 8.501.712 (1.929.616) (1.167.418)
Discontinued Operations
31 December 2021 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
------------- ------------- ----------- ----------- ------------
Financial assets
------------- ------------- ----------- ----------- ------------
Cash at Bank 394.670 394.670 394.670 - -
------------- ------------- ----------- ----------- ------------
Long-term receivables 333.263 333.263 - - 333.263
------------- ------------- ----------- ----------- ------------
Prepayments and
other receivables 1.240.028 1.240.028 1.240.028 - -
------------- ------------- ----------- ----------- ------------
Total Financial
assets 1.967.961 1.967.961 1.634.698 - 333.263
------------- ------------- ----------- ----------- ------------
Financial liabilities
------------- ------------- ----------- ----------- ------------
Borrowings 8.022.899 8.537.740 7.534.289 215.460 787.991
------------- ------------- ----------- ----------- ------------
Trade and other
payables 997.392 997.392 989.553 - 7.839
------------- ------------- ----------- ----------- ------------
Deposits from tenants 64.231 64.231 - - 64.231
------------- ------------- ----------- ----------- ------------
Finance lease liabilities 6.515.847 7.761.584 582.862 569.794 6.608.928
------------- ------------- ----------- ----------- ------------
Taxation 243.310 243.310 213.540 29.770 -
------------- ------------- ----------- ----------- ------------
Total Financial
liabilities 15.843.679 17.604.257 9.320.244 815.024 7.468.989
------------- ------------- ----------- ----------- ------------
Total net assets/(liabilities) (13.875.718) (15.636.296) (7.685.546) (815.024) (7.135.726)
------------- ------------- ----------- ------------
42.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2020 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
Financial assets
Cash at Bank 129.859 129.859 129.859 - -
Prepayments and
other receivables 836 836 - - 836
Financial Assets
at FV through P&L 6.787.244 6.787.244 6.787.244 - -
Long-term Receivables
and prepayments 6.880.076 6.880.076 6.880.076 - -
Total Financial
assets 13.798.015 13.798.015 13.797.179 - 836
Financial liabilities
Borrowings 2.150.377 2.356.528 566.938 1.789.590 -
Trade and other
payables 4.036.962 4.036.962 4.036.962 - -
Bonds issued 1.258.923 1.594.922 292.281 67.200 1.235.441
Taxes payable and
provisions 1.283.426 1.283.426 712.903 570.523 -
Total Financial 5.609.08 2.427.31
liabilities 8.729.688 9.271.838 4 3 1.235.441
Total net assets/(liabilities) 5.068.32 8.188.09 ( 2.427.31 ( 1.234.605
7 4.526.177 5 3) )
Discontinued Operations
31 December 2020 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
------------- ------------- ----------- ------------ -------------
Financial assets
------------- ------------- ----------- ------------ -------------
Cash at Bank 740.788 740.788 740.788 - -
------------- ------------- ----------- ------------ -------------
Long-term receivables 315.000 315.000 - - 315.000
------------- ------------- ----------- ------------ -------------
Financial Asset
at FV through OCI 1 1 1 - -
------------- ------------- ----------- ------------ -------------
Prepayments and
other receivables 748.127 748.127 748.127 - -
------------- ------------- ----------- ------------ -------------
Total Financial
assets 1.803.916 1.803.916 1.488.916 - 315.000
------------- ------------- ----------- ------------ -------------
Financial liabilities
------------- ------------- ----------- ------------ -------------
Borrowings 6.324.461 4.019.940 2.933.480 272.757 813.702
------------- ------------- ----------- ------------ -------------
Trade and other
payables 870.472 870.472 862.507 - 7.965
------------- ------------- ----------- ------------ -------------
Deposits from tenants 64.231 64.231 - - 64.231
------------- ------------- ----------- ------------ -------------
Finance lease liabilities 9.692.029 11.689.763 917.759 953.700 9.818.303
------------- ------------- ----------- ------------ -------------
Taxation 277.275 277.275 246.885 30.390 -
------------- ------------- ----------- ------------ -------------
Total Financial
liabilities 17.228.468 16.921.681 4.960.631 1.256.847 10.704.201
------------- ------------- ----------- ------------ -------------
Total net assets/(liabilities) (15.424.552) (15.117.764) (3.471.715) (1.256.847) (10.389.201)
------------- ------------- ------------ -------------
43. Events after the end of the reporting period
a) War in Ukraine
In light of Russian military activity in Ukraine started in
February 2022, the Company temporarily closed its Ukrainian office
in Kiev and is housing some family members of its Ukrainian staff
in Romania. The office re-opened in May and since then business is
running according to the conditions imposed by the ongoing war.
Group's assets in Ukraine consist of non-generating income land
plots and as such the financial impact of the invasion is expected
to be minimal, although the economic instability brought by the war
is expected to affect private investment activity and the overall
local real estate market. Starting from 2022 interim consolidated
accounts, local assets will be realued affecting the net asset
value of the Group. In current period the contributed value of
Ukrainian assets is EUR3,6 milion.
b) Arcona Property Fund N.V. transaction
Following the conditional Implementation Agreement signed
between the Company and Arcona Property Fund N.V. in December 2018
for the sale of Company's portfolio of assets in an all share
transaction, and the completion of Stage 1 of the transaction in
February 2020 with the sale of Boyana in Bulgaria, which followed
the Ukrainian Bella and Balabino asset disposals in Q4 2019, the
two parties signed in June 2021 SPAs related to Stage 2 of the
transaction which involves EOS and Delenco assets in Romania, and
Kiyanovskiy and Rozny land plots in Ukraine. The total value of the
transaction upon closing of such agreements is expected to reach
c.EUR8,2 million, payable in Arcona shares and warrants valued at
NAV plus EUR1 million in cash. Final figures are subject to, inter
alia, standard form adjustment and finalization in accordance with
the agreements.
Following SPA signing as per above, during March and June 2022
the transfers of Delenco and EOS assets in Romania to Arcona
Property Fund N.V. were concluded, in exchange for the issue to
SPDI of 479.376 new shares in Arcona and 115.543 warrants over
shares in Arcona.
c) Re-payment of corporate loan
During 2022 SPDI re-paid fully the corporate loan granted by
Safe Growth Investments on November 11(th) , 2020 for an amount of
EUR 1mil. In particular, the loan was re-paid in two tranches, one
of EUR 600.000 on January 6th, 2022 and one of EUR 400.000 on April
1(st) , 2022.
d) Final acquisition of 50% of Vic City shareholder SPV
Based on the relevant agreement in 2021, the Company, in
February 2022, acquired 50% of the share capital of Equardo
Limited, an SPV holding stake in Victoria City (Vic City) project
in Bucharest. The participation took place through a share capital
increase of the order of EUR 8.000, where the remaining
shareholders waived their right to participate. Vic City is a
development land in north Bucharest on Bucuresti Noi Boulevard near
a metro station, where a commercial mixed used center was to be
developed. The project was to be contributed to SPDI by its
promoters at the time, but neither its development nor its
contribution progressed due to other priorities. SPDI participated
in Equardo Limited so as to retain some of the value originally
destined to be part of its asset portfolio.
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