TIDMSPDI
RNS Number : 5746A
Secure Property Dev & Inv PLC
30 September 2020
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
30 September 2020
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
2019 Annual Results and Interim Reporting Timetable
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 2019.
As announced on 11 June 2020, the Company was granted by AIM
Regulation an additional period of up to three months to publish
its annual audited accounts for the year ended 31 December 2019.
The three-month extension allowed the site visits required to carry
out property valuations as part of the annual audit to take place.
These were previously unable to take place due to COVID-19 and the
associated lockdowns in the respective countries. The lockdowns had
also affected the annual audit with accountants and auditors in all
related countries (Romania, Bulgaria, Ukraine, Cyprus) working from
home.
Operational Highlights
Successfully executing strategy to realise value of South
Eastern European property portfolio:
o EUR2.0m cash generated net to SPDI following profitable sale
of the Victini Logistics asset in Greece
o Completion of Stage 1 of all share sale of property portfolio
(excl Greek logistics property) to Arcona Property Fund N.V.
(Arcona), an Amsterdam and Prague listed company which invests in
commercial property in Central Europe
o Arcona transaction values the SPDI assets to be sold at
EUR29m, or 3,2 times the current market value of the Company as a
whole
o The combination of the SPDI and Arcona asset portfolios is
expected to create a significant European focused property
company
o Stage1 involved exchange of two land plots in Ukraine, Bella
and Balabino plots, and the Boyana asset in Bulgaria together with
its existing debt, for a total of 593.534 Arcona shares and 144.264
warrants over Arcona shares
o Number of income-producing commercial properties in portfolio
currently stands at four 10% increase in average occupancy rate of
income producing assets to 93%
Financial Highlights
Significant asset backing behind the Company:
o NAV per share stood at GBP 0.2 as at 31 December 2019 -
current share price trading at a ca. 67% discount to NAV per
share
Sales of Victini Logistics in Athens in 2019 and BlueBigBox
asset in Craiova in 2018 resulted in lowering of SPDI's income and
debt profiles
-- EUR2.3million operating income compared to EUR3.1million in
2018 following sales of Victini Logistics in Athens
-- EBITDA on recurring operations decreased to EUR0,06m compared
to EUR0.76m in 2018 as a result of operating income reduction as
above
-- Operating loss after finance and tax for the year on
recurring operations of EUR1.1m (31 Dec 2018: EUR-0.64m)
-- 10% reduction in FY finance costs to EUR1,083,173 compared to EUR1,200,159 in FY 2018
Lambros G. Anagnostopoulos, Chief Executive Officer, said , "NAV
per share of 20p as at year end, more than 3 times our current
share price, highlights both the value behind our portfolio of
South Eastern European prime real estate, and also how this value
is not being recognised in SPDI's current market valuation. By
valuing the SPDI assets at EUR29m, or 215% higher than the current
market value of the Company, the Arcona transaction provides our
shareholders with a means of closing the share price disconnect as
well as a mechanism through which a significant European Property
company can be established. While progress to complete the
transaction has been slower than expected, not helped by COVID-19
and associated lockdowns, we continue to work with Arcona to
progress the deal as fast as we can, given the unprecedented
backdrop.
"In the meantime, we continue to manage our commercial property
portfolio with a view to maximising returns: 2019 saw average
occupancy rates rise 10% over the course of the year to 93%.
Importantly, our commercial properties are predominantly let to
blue chip tenants operating in defensive industries, such as the
food and the telco sectors. As a result, to date our tenants have
experienced little or no disruption from the COVID-19 crisis.
Together with the relatively positive economic performance of the
countries in which SPDI is active, we remain confident that the
Company is well placed to withstand the effects of the pandemic in
the year ahead, while we work to close the Arcona transaction."
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 .
Interim Results Reporting Timeline
In line with the guidance issued by AIM Regulation in an Inside
AIM notification dated 9 June 2020, and the ongoing COVID-19
related disruption to processes, the Company is availing of the one
month extension to the date by which it is required under AIM Rule
18 to publish its interim accounts for the six months ended 30 June
2020. Accordingly, the Company is required to publish its 2020
interim accounts by 31 October 2020.
* *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
Jack Botros
Jon Belliss Novum Securities Limited Tel: +44 (0) 207 399 9400
Cosima Akerman St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Frank Buhagiar
Notes to Editors
Secure Property Development and Investment plc is an AIM listed
property development and investment company focused on the South
East European markets. The Company's strategy is focused on
generating healthy investment returns principally derived from: the
operation of income generating commercial properties and capital
appreciation through investment in high yield real estate assets.
The Company is focused primarily on commercial and industrial
property in populous locations with blue chip tenants on long term
rental contracts. The Company's senior management consists of a
team of executives that possess extensive experience in managing
real estate companies both in the private and the publicly listed
sector, in various European countries.
Charmain Statement
During 2019, the favorable fundamentals of our target markets
continued to prevail, with Romania continuing its leading growth
within the EU, and with Greece electing a new government and
continuing a path to recovery and economic growth. The property
markets in our region continued to experience growth and yield
compression, underpinning our effort to merge with Arcona Property
Fund ("APF"), the Central European property fund listed in
Amsterdam. To effect the Stage 1 of the APF transaction, SPDI
accepted a discount to the NAV of the transferred assets, which,
even though it is to be compensated by the APF warrants received
when they are exchanged with shares caused much of SPDI's financial
losses for 2019, yet when the global COVID-19 pandemic hit global
economies in early 2020, we found ourselves well protected, as our
tenants in the food and telecom industries were mostly untouched
during the crisis. Throughout this period, SPDI has continued to
pursue the APF transaction, although at a slower pace not only
because of the pandemic but also due to increased difficulties
faced by APF. In any case, the Company's management and board are
committed to generating value for our shareholders in markets that
are strong and growing and, no matter the temporary difficulties,
will attempt to do whatever is necessary to realise that end.
Michael Beys
Chairman of the Board
1. Letter to Shareholders
29 September 2020
Dear Shareholders,
2019 was the year when the merger with the Amsterdam and Prague
listed Arcona Property Fund N.V. (APF - with assets in Poland,
Czech Republic and Slovakia) would have been finalised confirming
SPDI's strategy to establish itself as the regional property
company of reference in South Eastern Europe and offering to our
shareholders exposure to a much larger and broader East European
regional property company, as per our original plan. As the
European and more specifically the regional economies and related
property markets where SPDI is present continued their respective
growth trends, SPDI commenced 2019 with the plan of having executed
the transaction already in the first half of the year.
Unfortunately the complication of joining forces in six different
jurisdictions with corporate entities in two additional
jurisdictions, proved an obstacle difficult to overcome and the end
of the year found SPDI and APF having barely closed one sixth of
the transaction, with yet one more sixth being almost concluded in
the first half of 2020. As the APF transaction extended itself
throughout 2020, with legal advisors from nine different
jurisdictions being involved, it was further affected by the
COVID-19 related citywide lockdowns, as well as certain APF
specific issues.
In 2019, Romania continued being the fastest growing economy of
the European Union and saw property prices continue rising across
all sectors, facilitating our residential sales at rising prices
confirming our choice not to have gone all out on selling such
assets in prior years. At the same the Greek economy started
growing following years of recession and driven by a new
pro-business government. Consequently, we disposed of our Athens
logistics terminal, as this property was not included in the APF
deal.
During 2019 our leaner, more agile Board of Directors, went the
extra mile (with almost bi-weekly meetings) in guiding the company
to affect the APF transaction and shape SPDI's strategy towards
concluding such. Management is confident that, with such
commitment, support and involvement from all its non-executive
directors, as well as members of its Advisory Board, who have taken
the lead in negotiating with APF management and pushing the
transaction forward, the successful end for SPDI and its
shareholders is near ensuring thus 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 2019,
management, in line with Company's strategy to maximize value for
shareholders, commenced the implementation agreement for the sale
of its property portfolio, excluding its Greek logistics property,
in an all-share transaction to Arcona Property Fund N.V. (Arcona),
an Amsterdam and Prague listed company that invests in commercial
property in Central Europe. Arcona currently holds high yielding
real estate investments in Czech Republic, Poland and Slovakia. The
transaction values the SPDI assets NAV at EUR29m, or 215% higher
than the current market value of the Company as a whole. If one
takes into consideration and assumes the warrants that will be
issued together with the ARCONA shares, the transaction values the
SPDI assets at their Net Asset Value.
Based on such strategy, during the period the Company sold the
Victini Logistics asset in Greece, as the asset was excluded from
the beginning from the transaction with Arcona. The Company
generated EUR2,0m in cash from the sale.
Most importantly, in 2019 the Company completed Stage 1 of the
transaction with Arcona, exchanging effectively two land plots in
Ukraine, Bella and Balabino plots, and the Boyana asset in Bulgaria
together with its existing debt, for a total of 593.534 Arcona
shares and 144.264 warrants over Arcona shares.
The combination of the two complementary asset portfolios is
expected to create a significant European Property company,
benefiting both the Company's and the buyer's respective
shareholders.
Regarding the economic environment in which the Company
operates, the Romanian economy which constitutes the main operating
market of the Company, continued in 2019 to grow strongly with a
4,1% GDP increase, whilst maintaining record low unemployment.
Investment and development activity in Bucharest was strong
throughout 2019, mainly in Logistics and Office sectors, both from
international and local investors. However, the trend was disrupted
in Q1 2020 due to COVID-19 pandemic crisis that negatively affected
economic activity, with as yet undetermined effects for the whole
of the year.
Following the successful sales of Victini Logistics in Athens in
2019 and the sale of BlueBigBox asset in Craiova in 2018, rental
and related income reduced by 26% during 2019, while net operating
income from investments reduced by 27%.
Overall corporate and administration costs, adjusted by the
one-off costs associated with the transaction with Arcona,
decreased by 2%, and recurring EBITDA decreased to -EUR0,06m
compared to EUR0,8m in 2018. Moreover, finance costs dropped to
EUR1,08m from EUR1,2m in 2018.while.
EUR 2019 2018
------------------------------------------------------------- -------------------------------------------------
Continued Discontinued Total Continued Discontinued Total
Operations Operations Operations Operations
----------------- -------------------- ----------------------- ------------------------ ---------------------- --------------------- --------------------------
Rental,
Utilities,
Management
& Sale
of electricity
Income 457,450 1,884,304 2,341,754 769,463 2,378,875 3,148,338
Income
from
Operations 457,450 1,884,304 2,341,754 769,463 2,378,875 3,148,338
Asset
operating
expenses - (591,811) (591,811) (118,319) (606,069) (724,388)
Net Operating
Income 457,450 1,292,493 1,749,943 651,144 1,772,806 2,423,950
Share
of profits
from
associates - 297,985 297,985 - 364,920 364,920
Net Operating
Income
from
investments 457,450 1,590,478 2,047,928 651,144 2,137,726 2,788,870
Administration
expenses (1,764,957) (220,509) (1,985,466) (1,768,847) (260,714) (2,029,561)
Operating
Result
(EBITDA) (1,307,507) 1,369,969 62,462 (1,117,703) 1,877,012 759,309
Finance
Cost, net 337,334 (1,420,507) (1,083,173) 332,442 (1,532,601) (1,200,159)
Income
tax expense (36,380) (52,315) (88,695) (106,306) (96,567) (202,873)
Operating
Result
after Finance
and Tax
Expenses (1,006,553) (102,853) (1,109,406) (891,567) 247,844 (643,723)
Other
income
/ (expenses),
net (442,629) 312,801 (129,828) (31,716) (363,435) (395,151)
One of
costs
associated
to Arcona
transaction (677,213) - (677,213)
Income
Tax - One
off - - - (506,728) - (506,728)
Fair value
adjustments
from
Investment
Properties - 417,852 417,852 (1,266,438) (1,916,596) (3,183,034)
Net gain/(loss)
on disposal
of investment
property (4,992,763) (4,992,763) 421,257 636,521 1,057,778
Impairment
of financial
investments (153,913) - (153,913) - - -
Foreign
exchange
differences,
net (74,779) (436,880) (511,659) (71,390) (10,233) (81,623)
Result
for the
year (2,355,086) (4,801,841) (7,156,930) (2,346,582) (1,405,899) (3,752,481)
Exchange
difference
on I/C
loans to
foreign
holdings - 66,557 66,557 - 1,850 1,850
Exchange
difference
on translation
due to
presentation
currency - 223,133 223,133 - 421,086 421,086
Total
Comprehensive
Income
for the
year (2,355,086) (4,512,153) (6,867,239) (2,346,582) (982,963) (3,329,545)
----------------- -------------------- ----------------------- ------------------------ ---------------------- --------------------- --------------------------
The operating results after finance and tax for the year were
negative with the loss being EUR1,1m.
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
Romfelt, Monaco, Blooming,
GreenLake Romania Sold units during 2019: 16
Romfelt, Monaco, Blooming,
GreenLake Romania Available units (end 2019): 68
In 2019, 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).
In recent years, following the implementation of the Company's
strategy, SPDI's portfolio became even more diversified in terms of
geography, as well as asset class. At the end of the reporting
period, considering the asset sales that took place during the
recent years, Romania is the prime country of operations (87%) in
terms of Gross Asset Value, while in Ukraine (13%) the Company
still has interests in land plots.
In respect of the Company's income generation capacity, Romania
is the prime source with 64%, with the remaining income deriving
from Greece (36%). Note that the Greek property was sold during
2019 and therefore Romania has now become the single operating
income source of the Company.
2019
EURm
Property Country GAV* Debt (principal)* NAV
Innovations Logistics Park Rom 10,6 6,9 3,7
Eos Business Park Rom 7,7 3,5 4,2
----------- ------ -------------------- --------
Delenco (associate) Rom 5,6 0,3 5,3
----------- ------ -------------------- --------
Kindergarten Rom 0,7 0,4 0,4
----------- ------ -------------------- --------
Residential units Rom 2,8 1,8 1,0
----------- ------ -------------------- --------
Land banking Rom & Ukr 10,4 3,2 7,2
----------- ------ -------------------- --------
Total Value 37,9 16,0 21,9
------ -------------------- --------
Other balance sheet items, net ** +7,4
------ -------------------- --------
Net Asset Value total 29,3
Market Cap 31/12/2019 (Share price at GBP0,085) 13, 0
Market Cap 24/09/2020 (Share price at GBP0,065) 9 , 2
Discount of Market Cap (at 24/9/2020) vs NAV (at 31/12/2019) -69%
* Reflects the Company's participation at each asset
**Refer to balance sheet and related notes of the financial statements
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.
The Net Equity attributable to the shareholders as at 31
December 2019 stood at EUR29,3m vs EUR35,6m in 2018. The table
below depicts the discount of Market Cap over NAV during the
years.
The NAV per share as at 31 December 2019 stood at GBP 0,20 and
the discount of the Market Value vis a vis the Company's NAV stands
at 56% at year-end.
2.3 Financial and Risk Management
The Group's overall bank principal debt exposure at the end of
the reporting period was EUR16,0m (calculating relative to the
Company's percentage shareholding in each), comprising of the
following:
a) EUR3,2m finance lease of EOS Business Park with Alpha Leasing
Romania and EUR0,3m debt facility received by First Phase from
Alpha Bank Romania.
b) EUR6,9m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
c) EUR0,4m being the Company's portion on debt financing of the
Kindergarten with Eurobank Ergasias.
d) EUR1,8m being the Company's portion on the residential portfolio debt financing.
e) EUR3,2m being the Company's portion on land plot related debt financing in Romania.
f) EUR0,3m being the Company's portion on debt financing of Delenco asset.
Throughout 2019, the Company focused on managing and preserving
liquidity through cash flow optimization. In this context, the
Victini Logistics asset in Athens, Greece, was sold, and the
Company is focused on completing the aforementioned transaction
with Arcona Property Fund N.V.
2.4 2020 and beyond
During 2020 the Company expects to complete Stage 2 of the
transaction with Arcona, following the conditional implementation
agreement signed in December 2018 by the two parties. During the
first half of the year, and due to the COVID-19 pandemic crisis
with lockdowns in all relevant jurisdictions, the process
progressed slowly. The parties have resumed discussions regarding
agreeing binding terms for the second step of the transaction which
involves three land plots in Ukraine (Rhozny, Kiyanovskiy,
Tsymlyanskiy) and two office building properties in Bucharest (EOS,
Delenco). Overall completion of the transaction is planned in three
steps with the last to be expected to commence and close in
2021.
The finalisation of the transaction with Arcona Property Fund
N.V. marks effectively the maximization of the Company's value from
the current asset portfolio, providing the Company's shareholders
the opportunity to gain direct exposure to a property fund of
significantly larger size, listed on two stock exchanges, having a
strong dividend distribution policy, and active in a fast-growing
area (Central and South Eastern Europe) of the European property
market.
3. Regional Economic Developments
Romania's GDP growth was strong in 2019 at 4,1 percent, driven
by private consumption and an investment rebound. The labour market
tightened, and unemployment reached historic lows at 3.1%. Private
consumption, up 5,9%, was the main driver of growth, supported by
wage and pension increases. Investment rose strongly, growing at
17,8% year-on-year (y-o-y), owing to a strong performance in
construction. Exports grew by 3,5%, reflecting weaker demand in
major export markets, while imports remained buoyant (up 7,2%).
Construction (up 16,8%) and information and communications
technology (ICT) (up 8,1%) were the main drivers of production.
The situation abruptly shifted in early 2020 due to the impact
of the COVID-19 pandemic on the health sector, businesses, the
labour market, and households. The risk of a recession in 2020 is
substantial and growing as COVID-19 brings to a halt large segments
of the European economy and causes disruptions to global supply
chains and trade patterns. The negative impact of the COVID-19
pandemic is anticipated to be substantial. The economy is expected
to contract in 2020, but the severity of the recession will depend
on the length of the lockdown, the impact of the national economic
stimulus, and the spill overs from the stimulus at the EU level.
The fiscal stimulus is expected to focus on targeted spending to
contain the disease; deferred tax payments; liquidity support for
companies, small and medium enterprises, and firms in severely
affected sectors, such as transport and tourism; and support for
self-employed workers and others affected by the crisis. To address
the consequences of COVID-19, the fiscal deficit is expected to
widen to at least 5,5% of GDP in 2020, up from a planned deficit of
3,6%. Once the impacts of COVID-19 dissipate, the deficit is
expected to follow a downward adjustment of at least 0,5% of GDP
per year.
Macroeconomic data and forecasts
Romania 2013 2014 2015 2016 2017 2018 2019
GDP (EUR bn) 143,8 150,5 160,3 170,4 187,5 202,9 223,4
----- ----- ----- ----- ----- ----- -----
Population (mn) 20,0 20,0 19,9 19,8 19,6 19,5 19,5
----- ----- ----- ----- ----- ----- -----
Real GDP (y-o-y
%) 3,5 3,4 3,9 4,8 7,0 4,1 4,1
----- ----- ----- ----- ----- ----- -----
CPI (average, y-o-y
%) 4,0 1,1 -0,6 -1,5 1,3 4,6 3,3
----- ----- ----- ----- ----- ----- -----
Unemployment rate
(%) 7,1 6,8 6,8 5,9 4.3 3,6 3,1
----- ----- ----- ----- ----- ----- -----
Bulgaria has undergone a significant transformation over the
past three decades. It has changed from a highly centralized,
planned economy to an open, market-based, upper-middle-income
country securely anchored in the European Union (EU). In its
initial transition, Bulgaria went through a decade of slow economic
restructuring and growth, high indebtedness, and a loss of
savings.
However, the advancement of structural reforms starting in the
late 1990s, the introduction of the currency board, and
expectations of EU accession unleashed a decade of exceptionally
high economic growth and improved living standards.
Yet, a number of legacies from that early period, the global
economic crisis of 2008, and a period of political instability in
2013-14 undid some of those gains. In the current period, the
ongoing pandemic is most likely to drag the economy into a
recession in 2020. After better-than-expected GDP growth in 2019,
the economy is set to plunge into a recession in 2020 due to the
toll of the COVID-19 pandemic on exports and domestic activity. GDP
is expected to decline by 3,7 % in 2020.
Macroeconomic data and forecasts
Bulgaria 2013 2014 2015 2016 2017 2018 2019
GDP (EUR bn) 41,9 42,8 45,3 48,1 51,7 55,2 61,0
---- ---- ---- ---- ---- ---- ----
Population (mn) 7,2 7,2 7,2 7,1 7,1 7,0 7,0
---- ---- ---- ---- ---- ---- ----
Real GDP (y-o-y
%) 0,5 1,8 3,5 3,9 3,8 3,2 3,4
---- ---- ---- ---- ---- ---- ----
CPI (average, y-o-y
%) 0,9 -1,4 -0,1 -0,8 2,1 2,8 2,4
---- ---- ---- ---- ---- ---- ----
Unemployment rate
(%) 13,0 11,4 9,2 7,6 6,3 5,2 4,7
---- ---- ---- ---- ---- ---- ----
Greece's economy entered 2020 on a relatively strong footing.
GDP growth in 2019 reached 1,5%, only slightly below expectations.
Growth was mainly driven by domestic demand and to a lesser extent
net exports. The labour market was improving and employment grew by
2%, leading to a further decrease in the unemployment rate to 17,2%
for the year overall. But this came to a sudden stop with the
spread of the virus. While the main effects of the lockdown are
expected to be concentrated in the second quarter of this year,
Greece's large tourism sector is likely to be affected in the third
quarter as well, as restrictions on travel are expected to remain
in place and foreign demand for overseas travel may remain subdued.
Since more than 70% of tourism receipts are concentrated in the
main summer months, impediments during this period would have a
large impact on overall exports of services in 2020. The budget
balance will deteriorate significantly in 2020 due to the operation
of automatic stabilisers and the cost of measures to address the
crisis. The size of the fiscal measures amounts to 6,9% of GDP.
Last but not least, there is considerable uncertainty as to the
final cost of the emergency fiscal measures adopted by the
authorities. The general government deficit is forecast to reach
6,25% of GDP in 2020 and to decrease to about 2% in 2021 based on a
no-policy-change assumption. Public debt is expected to increase to
around 196% of GDP in 2020 before declining to around 183% in 2021,
supported by the economic recovery.
Macroeconomic data and forecasts
Greece 2013 2014 2015 2016 2017 2018 2019
GDP (EUR bn) 180,7 178,7 177,3 176,5 180,2 184,7 187,5
----- ----- ----- ----- ----- ----- -----
Population (mn) 11,0 10,9 10,9 10,8 10,8 10,7 10,7
----- ----- ----- ----- ----- ----- -----
Real GDP (y-o-y
%) -3,2 0,7 -0,4 -0,2 1,5 2,1 1,5
----- ----- ----- ----- ----- ----- -----
CPI (average, y-o-y
%) -0,9 -1,3 -1,7 -0,8 1,1 0,6 1,1
----- ----- ----- ----- ----- ----- -----
Unemployment rate
(%) 27,5 26,6 25,0 23,6 21,4 19,3 17,2
----- ----- ----- ----- ----- ----- -----
Economic growth was solid at 1,9% in 2019, led by a good
agricultural harvest and sectors dependent on domestic consumption.
Household consumption grew by 11,9% in 2019, supported by sizable
remittance inflows and a resumption of consumer lending, while
domestic trade and agriculture grew by 3,4% and 1,3%, respectively.
However, manufacturing and investment growth remained weak.
Manufacturing contracted by 0,3% in the first three quarters of
2019 (compared to 0,6% growth in 2018), while fixed investment
growth slowed to 12,8% (compared to 14,3 percent in 2018). The
economy lost momentum in the fourth quarter of the year, with
estimated growth of 1,5% year-on-year (y-o-y), and the decline in
steel prices contributed to a 5,1% (y-o-y) contraction in
industrial production. Fixed investment, at 18% of GDP, has been
too low for sustained economic growth. Fiscal restraint helped
contain the fiscal deficit at 2,1% of GDP in 2019 (the fourth year
in a row). This, together with currency appreciation, helped lower
public debt to 50% of GDP in 2019 from 81% in 2018.
The COVID-19 crisis is expected to impact economic activity in
Ukraine through several channels in 2020. First, disposable income
and consumption will suffer from the sudden necessary restrictions,
including the closure of restaurants, cafes, and
shopping/entertainment centres and the halt to air, rail, and bus
passenger transport. Second, lower remittances due to weaker
economic activity in Poland and other European Union countries will
also adversely affect household consumption. Third, lower commodity
prices will have a negative effect on Ukraine's exports. The
overall impact on economic activity in 2020 will depend on the
duration of the public health crisis, as a more protracted crisis
would lead to second-order effects through more widespread layoffs,
business closures, and weaker liquidity and asset quality in
banks.
Under a scenario in which the crisis is contained by the second
half of the year and key reforms move forward, the economy is
projected to contract by 3,5% in 2020.
Macroeconomic data and forecasts
Ukraine 2013 2014 2015 2016 2017 2018 2019
GDP (EUR bn) 135,2 98,4 81,6 84,4 99,4 105,4 108,8
----- ---- ---- ---- ---- ----- -----
Population (mn) 45,2 42,8 42,6 42,4 42,2 42,0 41,9
----- ---- ---- ---- ---- ----- -----
Real GDP (y-o-y
%) 0,0 -6,6 -9,8 2,4 3,5 3,3 1,9
----- ---- ---- ---- ---- ----- -----
CPI (average, y-o-y
%) -0,2 12,1 48,7 13,9 14,4 11,0 8,0
----- ---- ---- ---- ---- ----- -----
Unemployment rate
(%) 7,2 9,3 9,1 9,4 9,5 8,8 8,2
----- ---- ---- ---- ---- ----- -----
4. Real Estate Market Developments
4.1 Romania
Year 2019 found Romania with an investment volume of 608,85
million Euros, slightly decreased from 2018 levels. Market volumes
were dominated by the office segment (62%), with retail following
up with 26% and industrial at 9%, with 3% accounting for the hotel
industry.
Although facing a small decline in 2019, prime yields continue
to be amongst the highest in Europe. Prime office and retail yields
range between 7,25%-6,75%, while prime industrial yields are at 8%.
The CEE region had the strongest yield compression this year but
yields in Romania are still around 7% or higher in all market
sectors.
For the year 2019, Romania's industrial stock stands at around
4,6 million sqm, 500.000 sqm of which were delivered in 2019. This
accounts for an impressive 13% increase comparing to the previous
year. Bucharest continues to be the largest market accounting for a
little over 2 mil sqm (50%) of the market share, with the West and
Northwest areas accounting for 40% of the market share. Leasing
activity dropped by 9% in 2019 to 457.230 sqm, mainly due to the
fact that a significant number of businesses are moving into
self-built facilities. In the following years we are expecting to
see new areas being developed like Costanta and Craiova, along with
record deliveries of modern spaces.
The total take-up of the office market for the year 2019
amounted to almost 377.000 sqm, increasing by 5% from 2018. Most of
the demand was concentrated in the West/Central-West areas. The
dominant industry for 2019 was the IT&C sector, weighing a 45%
in the total take-up. The office vacancy rate in Bucharest has
increased to 9%, and the areas where the vacancy rates remain the
lowest are Floreasca/Barbu Vacarescu with under 2% and CBD with
around 3%. The record deliveries of new products announced for 2020
and 2021 will likely cause a further increase in vacancy rates.
In Romania, for year 2019, we have witnessed a series of
macroeconomic changes: a 3,8% increase in inflation as well as an
average exchange rate of 4,74 RON/EUR, and the introduction of the
Consumer Credit Referece Index (IRCC), replacing ROBOR for consumer
loans in RON. In spite of the 'First Home' initiative by the
government, lending conditions have remained unchanged. Increasing
prices in new residential dwellings are due to the increased
material costs which have increased by 30% in 2019, as well as the
lack of qualified workforce. Nevertheless, over 15.000 new units
were delivered in 2019 in Bucharest alone, and prices are expected
to increase by a further 15% in 2020 due to changes in local
legislations.
4.2 Bulgaria
After five years of strong house price increases, the housing
market in Bulgaria remains strong, mainly due to low interest rates
and a stable economy. The total value for 2019 was 270 million
Euro, with the majority of the acquisitions being land, followed up
by offices, hotels and retail. Yield levels were preserved in three
major real estate market segments, 8% for offices, 7,25% for retail
and 9,5% for the industry sector. Nevertheless, due to to COVID-19
pandemic, investment volumes are unlikely to reach the record
levels of 2017 and 2018.
Growth in the economy, low interest rates and an increase in the
availability of credit play a key role in the residential market
and is estimated to continue to do so. The nationwide price index
rose by 7,29% (3,56% inflation adjusted). Prices of new dwellings
rose by 11,9% during the year to Q1 2019, strongly up from previous
years 2,3% y-o-y rise. Prices of existing dwellings rose by 5%. The
almost zero interest rates have really pushed investment in real
estate, although this is expected to come to a short halt due to
the COVID-19 pandemic, temporarily. Despite strong demand,
construction remains low as new dwelling construction fell by a
1,5% for 2019, to 2.250 units. Sofia remains the most sought-after
location in the country, particularly Sofia's Southern districts,
from both local and foreign buyers. Lozenets and the City Center
remain highly sought after even though they are by far the most
expensive locations, at 1.500-2.000 Euro per sqm, with Strelbishte
and Gotse Delchev following at 1.100-1.400 Euros per sqm.
On an additional note rental yields in Sofia are at 6%. However,
the COVID-19 pandemic will also take its toll on the Bulgarian real
estate market, bringing it to an at least temporary slowdown
compared to previous years, as we are still not aware of the final
repercussions it will have on the economy. To a certain degree, the
decrease in commercial leases and postponement of construction is
going to affect the Bulgarian real estate market.
4.3 Greece
After nine years of falling real estate prices, the Greek
housing market is now growing strongly alongside improving economic
conditions and market expansionary measures. Overall, before the
pandemic, demand was rising on all prime real estate segments. Post
pandemic the situation does not look negative though, as demand
will remain for logistics in strategic locations, as well as
quality residential properties and large hotels. Demand for prime
assets will continue to increase, and the retail segment is
expected to be mostly affected by the pandemic.
For 2019, residential prices increased by 9,32%, far higher than
2018's 2,35%, with Athens and Thessaloniki leading the price
increase with 11,91% and 8,52% respectively. Construction permits
drastically increased by 24,5% for 11.744 new units although the
total remains well below the 70.000 to 80.000 issued annually
during the period 2004-2007.
As of May 2020, the industrial/logistics market segment counted
for 9% of the total Greek real estate market. Prime yields were
within the range of 8,5% - 10,0% depending on the specific area,
but with upward predictions for 2020.
As far sales activity is concerned, in the Attica region it came
mainly from Greek REIC's and other domestic real estate funds and
investors. In Thessaloniki, interest came mainly from expanding
industrial occupiers and local companies active in imports and
wholesale trading. Regarding leasing, recent activity came mainly
from medical services, consumer healthcare and household goods
distributors. On an additional note, 25% of companies using
logistics assets operate in the consumer products sector, followed
by transport and third-party logistics providers (24%), and
retailers (11%). Shipping and port operation counted for 5% of the
space, with businesses in the power sector (mostly oil and gas)
occupying 4% of the total market space. As of 2019, the Greek
logistics market features several strengths. Firstly, the country's
geographical location within the Eastern Mediterranean corridor,
followed by privatizations and upgrades in the ports and airports.
The presence of COSCO in the port of Piraeus and its development as
an international transit container hub, as well as a rapid
strengthening of the e-commerce market, make the Greek logistics
sector a strong developing market.
4.4 Ukraine
After a massive decrease by 72% from their peak in 2008, during
2019 real estate prices in Ukraine and especially Kiev were stable
or mildly rising. Tensions with Russia are de-escalating,
corruption is dropping and the economy is slowly recovering, with
the real estate market also affected in a positive way. However,
due to the COVID-19 outbreak, the imminent increase in the
Ukrainian real estate market is expected to be put to a halt.
With regards to the Ukrainian land market, due to lack of
finance, many potential investors are placing unfinished projects
on the market. However, particularly in Kiev, there is scarcity of
undeveloped land plots near the city centre with access to public
transportation and especially to metro stations. On the supply
side, the sellers pool consists of development companies, unable to
develop due to the lack of finance, companies or individuals having
speculatively acquired land plots prior to the crisis with the
intention to sell on and banks possessing mortgaged land upon
default of previous owners. The demand for land plots has started
increasing since 2016, especially for ones suitable for commercial
development, with large land plots sales in 2017, reflecting the
existing positive investment trend.
The number of apartments in Ukraine increased by 1,6% in 2019,
as per the State Statistics Service. This accounts for almost
280.000 apartments, the biggest increase since 1995. Similarly, the
total area of housing stock increased by 1,8% y-o-y to 1,01 billion
sqm over the same period. Securing construction permits has been
drastically easier during the past years in Ukraine, mainly due to
a reduction in the mandatory licenses and permits, particularly in
the construction sector.
5. Property Assets
5.1 Victini Logistics (ex GED), Athens Greece
The 17.756 sqm complex that consists of industrial and office
space is situated on a 44.268 sqm land plot in the West Attica
Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki
Odos (the Athens ring road) and is 20 minutes from the port of
Piraeus (where Cosco runs a container port handling more than 5,5
million containers a year) and the National Road connecting Athens
to the north of the country. The roof of the warehouse buildings
houses a photovoltaic park of 1.000 KWp.
The buildings are characterized by high construction quality and
state-of-the-art security measures. The complex includes 100 car
parking spaces, as well as two central gateways (south and
west).
Currently, Kuehne & Nagel (the German transportation and
logistics company), occupies all the warehouse space and almost all
of the office space until 2023.
The asset was not part of the Arcona transaction and sold
independently on 8 August 2019.
5.2 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 Park 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 is planned to be part of the
Arcona transaction.
5.3 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 300 m from the metro station.
The Company acquired 24,35% of the property in May 2015. As at
the year end 2019, the building is 100% let, with ANCOM (the
Romanian Telecommunications Regulator) being the anchor tenant (70%
of GLA). The asset is planned to be part of the Arcona
transaction.
5.4 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, 200 m 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.
In April 2017, the Company signed a lease agreement with Aquila
Srl, a large Romanian logistics operator, for 5.740 sqm of ambient
space in the warehouse which expired during April 2018 without
being extended. During Q1 2019 the Company signed with Favorit
Business Srl a lease agreement for 3,000 sqm of cold storage space,
506 sqm of ambient storage space, and 440 sqm of office space. In
Q2 2019 the Company agreed with Favorit Business Srl a lease of an
extra 3.000 sqm of cold storage space, and an extra 210 sqm of
office space to accommodate their new business line which involves
as end user Carrefour. Moreover, during 2019 and H1 2020 the
Company signed short term lease agreements for 2.000 sqm of ambient
storage space with Chipita Romania Srl, one of the fastest growing
regional food companies. As at the year end, the terminal was 70%
leased, while currently is 83%. The asset is planned to be part of
the Arcona transaction.
5.5 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.
Property description
The property is 100% leased to International School for Primary
Education until 2032. The asset is planned to be part of the Arcona
transaction.
5.6 Residential portfolio
-- Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Romfelt Plaza is a residential complex located in Bucharest,
Sector 2, relatively close to the city center, easily accessible by
public transport and nearby supporting facilities and green
areas.
During 2019, 3 units were sold and, at the end of 2019, one
apartment was available. The asset is planned to be part of the
Arcona transaction.
-- 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 the last two years with the
company which acquired Monaco's loan, the SPV holding Monaco units
entered into insolvency status in order to protect itself from its
creditors. During 2019, based on regulatory procedures for
disposing assets held by the debtor and upon agreement of all
parties and the judicial administrator's approval, 5 units were
sold. At the end of 2019, 17 apartments were available, four of
which were rented.
-- 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).
At the end of 2019, 4 apartments and 1 commercial space were
available, while 1 unit and 1 commercial space were rented. During
2019, 4 units were sold. The asset was planned to be part of the
Arcona transaction, but it is expected that all units will have
been sold before completion.
-- 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 2019, four apartments and villas were sold while at the
end of the year, of the 46 units that were unsold, 8 were let. The
asset is planned to be part of the Arcona transaction.
-- Boyana Residence, Sofia, Bulgaria
A residential compound, which consisted at acquisition date in
May 2015 of 67 apartments plus 83 underground parking slots
developed on a land surface of 5.700 sqm, situated in the Boyana
high end suburb of Sofia, at the foot of Vitosha mountain with
Gross Buildable Area ("GBA") totaling 11.400 sqm. The complex
includes adjacent land plots available for sale or development of
22.000 sqm of gross buildable area.
34 units remain unsold at the end of 2019.
The asset was sold as part of the Arcona transaction on 06
December 2019.
5.7 Land Assets
-- Aisi Bela - Bela Logistic Park, Odessa, Ukraine
The site consists of a 22,4 Ha plot of land with zoning
allowance to construct up to 103.000 sqm GBA industrial properties
and is situated on the main Kiev - Odessa highway, 20 km from
Odessa port, in an area of high demand for logistics and
distribution warehousing.
Development has been put on hold.
The asset was sold as part of the Arcona transaction during
November 2019.
-- Kiyanovskiy Residence - Kiev, Ukraine
The property consists of 0,55 Ha of 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.
Discussions are ongoing with interested parties with view to
sale the property. The asset is planned to be part of the Arcona
transaction.
-- 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
plot, with a local co-investor owning the remaining 45%.
Discussions are ongoing with interested parties with a view to
partnering in the development or sale of this property. The asset
is planned to be part of the Arcona transaction.
-- Balabino Project - Zaporozhye, Ukraine
The 26,38 Ha site is situated on the south entrance of
Zaporozhye city, 3km away from the administrative border of
Zaporozhye. It borders the Kharkov-Simferopol Highway (which
connects eastern Ukraine and Crimea and runs through the two
largest residential districts of the city), as well as another
major artery accessing the city center.
The site is zoned for retail and entertainment. Development has
been put on hold.
The asset was sold as part of the Arcona transaction during
November 2019.
-- 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 Company is evaluating potential commercialization options to
maximize the property's value. The asset is planned to be part of
the Arcona transaction.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Note 2019 2018
EUR EUR
Continued Operations
Income 10 457.450 769.463
Asset operating expenses 11 - (118.319)
------------ ------------
Net Operating Income 457.450 651.144
Administration expenses 12 (2.442.171) (1.768.847)
Fair Value loss on Financial Assets
at FV through P&L 27 (153.913) -
Net loss on disposal of investment
property 14b - (845.181)
Other operating expenses, net 15 (442.629) (31.716)
Operating profit / (loss) (2.581.263) (1.994.600)
Finance income 16 474.584 686.183
Finance costs 16 (137.250) (353.741)
Profit / (loss) before tax and foreign (2.243.929) (1.662.158)
exchange differences
Foreign exchange (loss), net 17a (74.779) (71.390)
Loss before tax (2.318.708) (1.733.548)
Income tax expense 18 (36.380) (613.034)
Loss for the year from continuing operations (2.355.088) (2.346.582)
Loss from discontinued operations 9b (4.801.843) (1.405.899)
Loss for the year (7.156.929) (3.752.481)
Other comprehensive income
Exchange difference on I/C loans to
foreign holdings 17b 66.557 1.850
Exchange difference on translation
of foreign operations 30 223.135 421.086
Total comprehensive income for the (6.867.239) (3.329.545)
year
Loss for the year from continued operations
attributable to:
Owners of the parent (2.355.088) (2.346.582)
Non-controlling interests - -
(2.355.088) (2.346.582)
Loss for the year from discontinued
operations attributable to:
Owners of the parent (4.846.634) (699.271)
Non-controlling interests 44.791 (706.628)
(4.801.843) (1.405.899)
Loss for the year attributable to:
Owners of the parent (7.201.722) (3.045.853)
Non-controlling interests 44.791 (706.628)
(7.156.931) (3.752.481)
Total comprehensive income attributable
to:
Owners of the parent (6.777.803) (2.463.822)
Non-controlling interests (89.436) (865.723)
(6.867.241) (3.329.545)
Earnings/(losses) per share (Euro 39b,c
per share):
Basic earnings/(losses) for the year
attributable to ordinary equity owners
of the parent 39b (0,06) (0,03)
Diluted earnings/(losses) for the
year attributable to ordinary equity
owners of the parent 39b (0,06) (0,03)
Basic earnings/(losses) for the year
from discontinued operations attributable
to ordinary equity owners of the parent 39c (0,04) (0,01)
Diluted earnings/(losses) for the
year from discontinued operations
attributable to ordinary equity owners
of the parent 39c (0,04) (0,01)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2019
Note 2019 2018
EUR EUR
ASSETS
Non--current assets
Tangible and intangible assets 23 566 3.674
Long-term receivables and prepayments 24 852 850
Financial Assets at FV through 27 3.581.643 -
P&L
3.583.061 4.524
Current assets
Prepayments and other current 26 10.833.913 5.585.408
assets
Cash and cash equivalents 28 207.251 282.713
------------- -------------
11.041.164 5.868.121
Assets classified as held for 9d 49.891.627 79.678.738
sale
Total assets 64.515.852 85.551.383
EQUITY AND LIABILITIES
Issued share capital 29 1.291.911 1.272.702
Share premium 71.924.045 71.381.259
Foreign currency translation reserve 30 10.232.119 9.874.757
Exchange difference on I/C loans
to foreign holdings 41.3 (149.263) (215.820)
Accumulated losses (53.906.344) (46.704.622)
Equity attributable to equity 29.392.468 35.608.276
holders of the parent
Non-controlling interests 31 7.446.255 7.535.691
Total equity 36.838.723 43.143.967
Non--current liabilities
Borrowings 32 7.249 380.256
Bonds issued 33 1.033.842 1.033.842
Taxation 36 595.541 761.460
1.636.632 2.175.558
Current liabilities
Borrowings 32 420.751 22.034
Bonds issued 33 156.761 88.628
Trade and other payables 34 4.579.595 4.174.936
Taxation 36 550.162 652.367
5.707.269 4.937.965
Liabilities directly associated
with assets classified as held
for sale 9d 20.333.228 35.293.893
26.040.497 40.231.858
Total liabilities 27.677.129 42.407.416
Total equity and liabilities 64.515.852 85.551.383
Net Asset Value (NAV) EUR per share: 39d
Basic NAV attributable to equity
holders of the parent 0,23 0,28
Diluted NAV attributable to equity
holders of the parent 0,23 0,28
On 29 September 2020 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
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
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 1 January 2018 1.035.893 123.126.328 (97.228.064) (217.670) 9.294.576 36.011.063 8.401.414 44.412.477
Loss for the year - - (3.045.853) - - (3.045.853) (706.628) (3.752.481)
Issue of share capital
(Note 29) 66.044 810.522 - - - 876.566 - 876.566
Exchange difference on
I/C loans to foreign
holdings
(Note 17b ) - - - 1.850 - 1.850 - 1.850
Share premium set off
with
accumulated losses
(Note
29.6) - (53.569.295) 53.569.295 - - - - -
Expenses for capital
raising - (735.623) - - - (735.623) - (735.623)
Exercised warrants
(Note
29.4) 170.765 1.749.327 - - - 1.920.092 1.920.092
Foreign currency
translation
reserve - - - 580.181 580.181 (159.095) 421.086
Balance - 31 December
201 8 1.272.702 71.381.259 (46.704.622) (215.820) 9.874.757 35.608.276 7.535.691 43.143.967
Loss for the year - - (7.201.722) - - (7.201.722) 44.791 (7.156.931)
Issue of share capital
(Note 29) 19.209 542.786 - - - 561.995 - 561.995
Exchange difference on
I/C loans to foreign
holdings
(Note 17b) - - - 66.557 - 66.557 - 66.557
Foreign currency
translation
reserve - - - - 357.362 357.362 (134.227) 223.135
Balance - 31 December
2019 1.291.911 71.924.045 (53.906.344) (149.263) 10.232.119 29.392.468 7.446.255 36.838.723
(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 defense at
20% will be payable on such deemed dividends to the extent that the
shareholders (companies and individuals) are Cyprus tax residents.
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 defense is payable on 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 41.3).
(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.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
Note 2019 2018
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling interests-continued
operations (2.318.706) (1.733.548)
Loss before tax and non-controlling interests-discontinued
operations 9b (4.749.528) (1.309.332)
Loss before tax and non-controlling interests (7.068.234) (3.042.880)
Adjustments for:
(Gain)/Loss on revaluation of investment
property 13 (417.852) 1.218.297
Net loss on disposal of investment property 14b 7.404 893.406
Other non-cash movements 35 113
Fair Value loss on Financial Assets at
FV through P&L 27 153.913 -
Impairment of prepayments and other current
assets 15 380.127 415.289
Impairment on Receivable from Arcona 15 211.310 -
Accounts payable written off 15 (462.198) (85)
Depreciation/ Amortization charge 12 5.896 27.384
Interest income 16 (484.606) (696.162)
Interest expense 16 1.525.526 1.836.590
Share of profit from associates 21 (297.985) (364.920)
Loss on disposal of subsidiaries 20 4.992.763 -
Effect of foreign exchange differences 17a 511.659 81.623
-
----------- -----------
Cash flows from/(used in) operations before
working capital changes (942.242) 368.655
Change in inventory 25 - 208.506
Change in prepayments and other current
assets 26 (456.878) 15.564
Change in trade and other payables 34 1.170.302 708.591
Change in VAT and other taxes receivable 26 (39.954) 240.255
Change in provisions 36 (665) 14.998
Change in other taxes payables 36 145.045 (543.861)
Change in deposits from tenants 35 (75) 55.345
Cash generated from operations (124.467) 1.068.053
Income tax paid (391.616) (368.156)
Net cash flows provided in operating activities (516.083) 699.897
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment
property 14b 608.073 8.016.573
Dividend received from associates 21 121.772 143.263
Interest received 657 405
Increase/(Decrease) in long term receivables 24 (44.994) 45.667
Cash inflow on disposal of subsidiaries 20 2.030.624 -
Repayment of interest of loan receivable 26 229.576 -
Loan granted for property acquisition 26 - (350.000)
Net cash flows from / (used in) investing
activities 2.945.708 7.855.908
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank and non-bank loans 32 503.871 1.044.408
Repayment of bank and non-bank loans 32 (1.795.665) (7.558.655)
Interest and financial charges paid (1.002.202) (1.528.913)
Decrease in financial lease liabilities 37 (385.542) (356.231)
Net cash flows from / (used in) financing
activities (2.679.538) (8.399.391)
Net increase/(decrease) in cash at banks (249.913) 156.414
Cash:
At beginning of the year 28 987.538 831.124
At end of the year 28 737.625 987.538
----------- -----------
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
1. 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 2019, the companies of the Group employed
and/or used the services of 14 full time equivalent people, (2018 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, as well as plans and discussions regarding the
Greek asset, the Company has classified its assets in 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 substantial 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 45% 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 2019. 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, Ukraine, Greece and Bulgaria,
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, the Bulgarian lev is the functional currency
for all Group's entities in Bulgaria and the Euro is the functional
currency for all the Greek and Cypriot subsidiaries.
4. Significant accounting policies (continued)
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, Greece and
Bulgaria 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 2019 2018 2019 2018 2017
-------- -------- ------- -------- --------
USD 1,1195 1,1810 1,1234 1,1450 1,1993
-------- -------- ------- -------- --------
UAH 28,9406 32,1341 26,422 31,7141 33,4954
-------- -------- ------- -------- --------
RON 4,7453 4,6535 4,7793 4,6639 4,6597
-------- -------- ------- -------- --------
BGN 1,9558 1,9558 1,9558 1,9558 1,9558
-------- -------- ------- -------- --------
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. Significant accounting policies (continued)
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 2019:
-- CBRE Ukraine, for all its Ukrainian properties,
-- Real Act for all its Romanian, Greek and Bulgarian 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
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.
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. Property tax
is not presently payable in Ukraine.
4.5 Investment Property under development
Property that is currently being constructed or developed, for
future use as investment property is classified as investment
property under development carried at cost until construction or
development is complete, or its fair value can be reliably
determined. This applies even if the works have temporarily being
stopped.
4.6 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.
4.7 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.
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.
4.8 Inventory
Inventory principally comprises of residential property .
Inventory is recognized initially at cost, including transaction
costs, which represent its fair value at the time of acquisition.
Costs related to the development of land are capitalised and
recognized as inventory. Inventory is carried at the lower of cost
and net realizable value.
4.9 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.
4.10 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.
4.11 Financial Instruments
4.11.1 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.
4.11.2 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.
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.
4.11.3 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 .11.4 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 .11.5 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.
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.
4.12 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.
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.
4.13 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.
4.14 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.
4.15 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.
4.16 Share Capital
Ordinary shares are classified as equity.
4.17 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.
4.18 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.
4.19 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.
4.20 Non--current liabilities
Non--current liabilities represent amounts that are due in more
than twelve months from the reporting date.
4.21 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:
4.21.1 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.
4.21.2 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).
4.21.3 Interest income
Interest income is recognized on a time-proportion (accrual)
basis, using the effective interest rate method.
4.21.4 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.
4.22 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized
on an accrual basis.
4.23 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.
4.24 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.
4.25 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)
4.26 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
4.26.1 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. 26.2 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.
4.26.3 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.
4.26.4 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.
4.26.5 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.
4.27 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)
4.28 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.
4.29 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.
4.30 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:
(i) Issued by the IASB and adopted by the European Union
Amendments
IFRS Interpretations Committee
-- Amendments to IAS 1 and IAS 8: Definition of Material (issued
on 31 October 2018) (effective for annual periods beginning on or
after 1 January 2020).
The amendments clarify the definition of material and how it
should be applied by including in the definition guidance that
until now has featured elsewhere in IFRS. In addition, the
explanations accompanying the definition have been improved.
Finally, the amendments ensure that the definition of material is
consistent across all IFRS Standards. Information is material if
omitting, misstating or obscuring it could reasonably be expected
to influence the decisions that the primary users of general
purpose financial statements make on the basis of those financial
statements, which provide financial information about a specific
reporting entity.
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective for annual periods beginning on or after 1
January 2020)
5. New accounting pronouncement (continued)
In March 2018 the IASB issued a comprehensive set of concepts
for financial reporting, the revised "Conceptual Framework for
Financial Reporting" (Conceptual Framework), replacing the previous
version issued in 2010. The main changes to the framework's
principles have implications for how and when assets and
liabilities are recognised and derecognised in the financial
statements, while some of the concepts in the revised Framework are
entirely new (such as the "practical ability" approach to
liabilities". To assist companies with the transition, the IASB
issued a separate accompanying document "Amendments to References
to the Conceptual Framework in IFRS Standards". This document
updates some references to previous versions of the Conceptual
Framework in IFRS Standards, their accompanying documents and IFRS
Practice Statements.
(ii) Issued by the IASB but not yet adopted by the European Union
New standards
-- IFRS 17 "Insurance Contracts" (effective for annual periods
beginning on or after 1 January 2021).
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a
comprehensive new accounting standard for insurance contracts
covering recognition and measurement, presentation and disclosure.
Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts
that was issued in 2005. IFRS 17 applies to all types of insurance
contracts (i.e. life, non life, direct insurance and re insurance),
regardless of the type of entities that issue them, as well as to
certain guarantees and financial instruments with discretionary
participation features. A few scope exceptions will apply.
Amendments
-- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non current (issued on
23 January 2020) (effective for annual periods beginning on or
after 1 January 2020).
-- Amendment to IFRS 3 Business Combinations (issued on 22
October 2018) (effective for annual periods beginning on or after 1
January 2020)
The amendments revise definition of a business. A business must
have inputs and a substantive process that together significantly
contribute to the ability to create outputs. The new guidance
provides a framework to evaluate when an input and a substantive
process are present, including for early stage companies that have
not generated outputs. An organised workforce should be present as
a condition for classification as a business if are no outputs. The
definition of the term 'outputs' is narrowed to focus on goods and
services provided to customers, generating investment income and
other income, and it excludes returns in the form of lower costs
and other economic benefits. It is also no longer necessary to
assess whether market participants are capable of replacing missing
elements or integrating the acquired activities and assets. An
entity can apply a 'concentration test'. The assets acquired would
not represent a business if substantially all of the fair value of
gross assets acquired is concentrated in a single asset (or a group
of similar assets).
-- IFRS 10 (Amendments) and IAS 28 (Amendments) "Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture(effective date postponed indefinitely).
The amendments address an acknowledged inconsistency between the
requirements in IFRS 10 and those in IAS 28, in dealing with the
sale or contribution of assets between an investor and its
associate or joint venture. The main consequence of the amendments
is that a full gain or loss is recognised when a transaction
involves a business (as defined in IFRS 3). A partial gain or loss
is recognised when a transaction involves assets that do not
constitute a business. In December 2015, the IASB postponed the
effective date of this amendment indefinitely pending the outcome
of its research project on the equity method of accounting.
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 .
6. Critical accounting estimates and judgments (continued)
-- 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 2019 (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
After a significant deterioration in 2014 and 2015, the current
political and economic situation in Ukraine remains volatile. In
2019, the Ukrainian government continues to implement a
comprehensive structural reform program aimed at eliminating
existing imbalances in the economy, public finances and governance,
fighting corruption, and reforming the legal environment to provide
conditions for economic recovery in the country.
The stabilization of Ukraine's economy in the near future
depends on the success of the government's actions and the
provision of continuous financial support to Ukraine by
international donors and international financial institutions.
The National Bank of Ukraine continues to adhere to the policy
of floating exchange rate of hryvnia. During 2019, the official
exchange rate of hryvnia to the US dollar of the National Bank of
Ukraine decreased by 13% from 27.6883 hryvnia for the US dollar on
January 1, 2019 to 23.6862 hryvnia for the US dollar on December
31, 2019. During 2019, the National Bank of Ukraine reduced the
discount rate from 18.0% to 13.5%.
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.1 Operating Country Risks (continued)
7.1.1.1 Ukraine(continued)
Regarding currency regulation, the National Bank of Ukraine
continued the policy of reducing currency restrictions, and
starting from March 2019, reduced the mandatory share of exchange
of foreign currency earnings from 50% to 30%, and completely
abolished this restriction starting from June 20, 2019.
In 2019, consumer inflation slowed to 4.1% (from 9.8% in 2018),
and real GDP growth amounted to 3.2%. The slowdown in inflation was
facilitated by moderate dynamics of food prices, as well as the
strengthening of the hryvnia exchange rate due to the foreign
exchange surplus in the market, which was maintained during most of
2019.
International rating agencies Fitch and Standard & Poor's
have upgraded Ukraine's sovereign rating to B. The agencies noted a
significant improvement in the macroeconomic situation, responsible
fiscal and budgetary policies, and the emergence of a "window of
opportunity" for economic reform. At the end of 2019, the
international rating agency Moody's Investors Service reaffirmed
Ukraine's sovereign credit rating in national and foreign
currencies at Caa1 and changed the stable outlook to positive.
7.1.1.2 Romania
The Romanian economy continued to grow within 2019, featuring
GDP growth of 4.1%, according to Eurostat. The strong growth has
been mainly fueled from a large domestic market, a diversified and
competitive industry mainly due to cheap labor, as well as a
limited energy dependence thanks to coal, oil, and gas.
Inflation for 2019 was at 3.9%, following a 2018 4.6% increase.
Private consumption for the year will ease, although its solid
level and substantial share in the economy (63% of GDP) will keep
it as the main growth driver. The ongoing improvement on the labour
market, with the unemployment rate dropping to 3.8% in mid-2019,
and further growth of wages and pensions, will continue to support
household spending. Labor cost continues to be amonst the lowest in
Europe, giving a constant boost to foreign investment and services
sector.
On the other hand, exports' growth will be limited due to the
global trade downturn and deteriorated prospects of main export
destinations. Therefore, the contribution of next exports to GDP
growth is likely to remain negative but less so. Moreover,
increased public spending has raised questions in relation to the
future level of budget deficit and the overall sustainability of
current economic growth.
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. Risk Management (continued)
7.1 Financial risk factors (continued)
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 steady 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. It
should be noted that the current political uncertainty in Ukraine,
and any currency devaluation may affect the Group's financial
position.
Management is monitoring foreign exchange fluctuations closely
and acts accordingly.
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 44.1 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. Risk Management (continued)
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 of Related Asset as at as at
incorporation 31 Dec 31 Dec
2019 2018
---------------- --------------------- -------- --------
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
---------------- --------------------- -------- --------
Bela Logistic
Park
LLC Aisi Bela Ukraine Balabino Project - 100
---------------- --------------------- -------- --------
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 Victini Logistics 100 100
---------------- --------------------- -------- --------
Victini Logistics Park
S.A. (ex SPDI Logistics
S.A.) Greece - 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
--------------------------------------- -------- --------
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 44,24 44,24
--------------------------------------- -------- --------
Rimasol Real Estate
Srl Romania 44,24 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
--------------------------------------- -------- --------
Boyana Residence ood Bulgaria - 100
--------------------------------------- -------- --------
Mofben Investments
Limited Cyprus 100 100
--------------------------------------- -------- --------
SPDI Management Srl Romania 100 100
--------------------------------------- -------- --------
During the reporting period the Group proceeded with the
disposal of Aisi Bela in Ukraine as well as with the disposal of
the Boyana Residence in Bulgaria, as part of the Arcona's
transaction. In addition the Group also disposed of Victini
Logistics Park AE in Greece on top of the aforementioned
transactions with Arcona.
The Group has resolved to streamline its structure in Cyprus and
Romania for cost cutting and tax optimization purposes. Towards
this goal, during 2018 the following mergers have been
finalized:
. merger by absorption of SecVista Real Estate Srl acting as
Absorbed Company, with Best Day Real Estate Srl acting as Absorbing
Company,
8. Investment in subsidiaries (continued)
. merger by absorption of SecRom Real Estate Srl and Secure
Property Development and Investment Srl acting as Absorbed
Companies, with N-E Real Estate Park First Phase Srl acting as
Absorbing Company.
Following extended but unsuccessful negotiations for more than 2
years with Tonescu Finance Srl, the company which has 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 is higher than the value of the relevant loan. The
entering of SecMon Real Estate Srl in the insolvency process means
loss of control as per the definition of IFRS 10. As such SecMon
Real Estate Srl is not consolidated in the present consolidated
financial statements.
9. Discontinued operations
9.(a) Description
The Company announced at 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 currently it is negotiating
with Arcona the sale of the assets included in Stage 2 of the
transaction, EOS and Delenco assets in Romania, as well as the
Tsymlyanskiy and Kiyanovskiy assets in Ukraine. Stage 2 of the
transaction is expected to close by the end of 2020 subject to
COVID-19 effects.
Additionally, the Company also sold 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:
-- Bulgaria : Boyana Residence ood (sold during 2019)
-- Cyprus : Ashor Ventures Limited, Ebenem Limited, Jenby
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
-- Greece : Victini Logistics Park S.A. (sold during 2019)
-- 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
-- Ukraine : LLC Aisi Bela (sold during 2019), 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 & 4.10).
9. Discontinued operations (continued)
9.(b) Results of discontinued operations
For the year ended 31 December 2019
Note 2019 2018
EUR EUR
Income 10 1.891.708 2.378.875
Asset operating expenses 11 (591.811) (606.069)
------------ ------------
Net Operating Income 1.299.897 1.772.806
Administration expenses 12 (220.509) (260.714)
Share of profits/(losses) from associates 21 297.985 364.920
Valuation gains/(losses) from Investment
Property 13 417.852 (1.218.297)
Net loss on disposal of inventory 14a - (13.553)
Net gain/(loss) on disposal of investment
property 14b (7.404) (48.225)
Gain/(loss) on disposal of subsidiaries 20 (4.992.763) -
Other operating income/(expenses), net 15 312.801 (363.435)
Operating profit / (loss) (2.892.141) 233.502
Finance income 16 10.022 9.979
Finance costs 16 (1.430.529) (1.542.580)
Profit / (loss) before tax and foreign (4.312.648) (1.299.099)
exchange differences
Foreign exchange (loss), net 17a (436.880) (10.233)
Loss before tax (4.749.528) (1.309.332)
Income tax expense 18 (52.315) (96.567)
Loss for the year (4.801.843) (1.405.899)
Loss attributable to:
Owners of the parent (4.846.634) (699.271)
Non-controlling interests 44.791 (706.628)
(4.801.843) (1.405.899)
9.(c) Cash flows from(used in) discontinued operation
31 Dec 2019 31 Dec 2018
EUR EUR
------------- ------------
Net cash flows provided in operating activities 1.897.780 2.930.026
------------- ------------
Net cash flows from / (used in) financing (2.770.679) (3.910.958)
activities
------------- ------------
Net cash flows from / (used in) investing 2.677.920 1.287.742
activities
------------- ------------
Net increase/(decrease) from discontinued
operations 1.805.021 306.810
------------- ------------
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 2019:
Note 31 Dec 2019 31 Dec 2018
EUR EUR
------ ------------ ------------
Assets classified as held for sale
------ ------------ ------------
Investment properties 19.4a 42.180.852 63.345.537
------ ------------ ------------
Investment properties under development 19.4b - 4.716.157
------ ------------ ------------
Tangible and intangible assets 23 14.342 42.534
------ ------------ ------------
Long-term receivables and prepayments 24 315.265 270.271
------ ------------ ------------
Investments in associates 21 5.380.021 5.313.235
------ ------------ ------------
Financial Asset at FV through OCI 22 1 1
------ ------------ ------------
Inventory 25 - 4.604.044
------ ------------ ------------
Prepayments and other current assets 26 1.470.772 682.134
------ ------------ ------------
Cash and cash equivalents 28 530.374 704.825
------ ------------ ------------
Total assets of group held for sale 49.891.627 79.678.738
------ ------------ ------------
Liabilities directly related with assets
classified as held for sale
------ ------------ ------------
Borrowings 32 8.949.660 22.605.474
------ ------------ ------------
Finance lease liabilities 37 10.084.470 10.470.012
------ ------------ ------------
Trade and other payables 34 1.015.266 1.500.603
------ ------------ ------------
Taxation 36 216.563 498.530
------ ------------ ------------
Deposits from tenants 35 67.269 219.274
------ ------------ ------------
Total liabilities of group held for 20.333.228 35.293.893
sale
------ ------------ ------------
10. Income
Income from continued operations for the year ended 31 December
2019 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) and
Praktiker Craiova (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.
Continued operations 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Rental income 364.034 631.636
------------ ------------
Service charges and utilities income 93.416 9.534
------------ ------------
Service and property management income - 128.293
------------ ------------
Total income 457.450 769.463
------------ ------------
Income from discontinued operations for the year ended 31
December 2019 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), EOS
Business Park (Romania), and Victini Logistics (Greece) until the
date of disposal,
b) income from the sale of electricity by Victini Logistics to
the Greek grid until the same of disposal,
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
Discontinued operations (Note 9) 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Rental income 1.726.978 1.963.724
------------ ------------
Sale of electricity 128.623 294.773
------------ ------------
Service charges and utilities income 33.982 118.211
------------ ------------
Service and property management income 2.125 2.167
------------ ------------
Total income 1.891.708 2.378.875
------------ ------------
Occupancy rates in the various income producing assets of the
Group as at 31 December 201 9 were as follows:
Income producing assets
% 31 Dec 2019 31 Dec 2018
--------- ------------ ------------
EOS Business Park Romania 100 100
--------- ------------ ------------
Innovations Logistics
Park Romania 70 37
--------- ------------ ------------
Victini Logistics Greece - 100
--------- ------------ ------------
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, Athens, Sofia and
Craiova. A part of these expenses is recovered from the tenants
through the service charges and utilities recharge (Note 10 ).
Under continued operations are all the expenses related to
Praktiker Craiova in 2018.
Continued operations 31 Dec 2019 31 Dec 2018
EUR EUR
------------- ------------
Property related taxes - (77.723)
------------- ------------
Repairs and technical maintenance - (4.150)
------------- ------------
Property insurance - (36.446)
------------- ------------
Total - (118.319)
------------- ------------
11. Asset operating expenses (continued)
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 2019 31 Dec 2018
EUR EUR
------------ ------------
Property related taxes (199.725) (227.819)
------------ ------------
Property management fees - (120.630)
------------ ------------
Repairs and technical maintenance (195.428) (69.377)
------------ ------------
Utilities (95.688) (73.715)
------------ ------------
Property security (35.191) (37.301)
------------ ------------
Property insurance (17.184) (32.638)
------------ ------------
Leasing expenses (48.329) (44.258)
------------ ------------
Other operating expenses (266) (331)
------------ ------------
Total (591.811) (606.069)
------------ ------------
Property related taxes reflect local taxes of land and building
properties (in the form of land taxes, building taxes, garbage
fees, etc.).
Property Management fees in 2018 relate to Property Management
Agreements for Victini Logistics Park with third party managers
outsourcing the related services. The Park was sold during 2019 and
no such services were rendered during the period.
Repairs and technical maintenance increased substantially during
the period due to relevant works performed in Innovations Logistics
Park in Bucharest, essential for hosting successfully new tenant in
the cold spaces of the property.
Leasing expenses reflect expenses related to long term land
leasing.
12. Administration Expenses
Continued operations 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Salaries and Wages (459.789) (556.580)
------------ ------------
Incentives to Management (280.000) -
------------ ------------
Advisory fees (614.315) (438.423)
------------ ------------
Public group expenses (100.084) (210.097)
------------ ------------
VAT expensed (112.815) -
------------ ------------
Corporate registration and maintenance fees (60.905) (65.234)
------------ ------------
Audit fees (86.031) (85.300)
------------ ------------
Accounting fees (23.879) (14.841)
------------ ------------
Legal fees (442.051) (193.644)
------------ ------------
Depreciation /Amortization charge (3.399) (5.502)
------------ ------------
Directors Renumeration (73.108) -
------------ ------------
Corporate operating expenses (185.795) (199.226)
------------ ------------
Total Administration Expenses (2.442.171) (1.768.847)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Salaries and Wages (44.753) (43.073)
------------ ------------
Advisory fees (29.496) (26.666)
------------ ------------
Corporate registration and maintenance fees (38.721) (54.903)
------------ ------------
Audit and accounting fees (54.560) (64.848)
------------ ------------
Accounting fees (12.141) (841)
------------ ------------
Legal fees (11.406) (20.650)
------------ ------------
Depreciation /Amortization charge (2.497) (21.882)
------------ ------------
Corporate operating expenses (26.935) (27.850)
------------ ------------
Total Administration Expenses (220.509) (260.714)
------------ ------------
Salaries and wages include the remuneration of the CEO, 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 during 2019 for the successful
disposal of Victini Logistics Park, and the completion of Stage 1
of the transaction with Arcona which was fully paid in shares of
the Company.
Advisory fees are mainly related to advisors, brokers 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 2019 the advisory fees includes EUR
145k paid in Company's shares to advisors engaged with the
successful completion of Stage 1 of the transaction with Arcona, as
well as EUR 28k for due diligence expenses related to the Arcona
transaction. In 2018 the advisory fees includes one-off elements
related to the disposal of Praktiker asset (EUR 180k) and due
diligence expenses (EUR 90k) for non consummated transactions, in
relation to the acquisitions of logistic asset portfolios in Greece
and Romania.
12. Administration Expenses (continued)
Audit and accounting expenses include the audit fees and
accounting fees for the Company and all the subsidiaries.
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.
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.
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. The
increase in 2019 came as a result of an over EUR 350k relevant
costs for legal advices and support related to the transaction with
Arcona.
Directors fees for the period H1 2019 were paid fully in
Company's shares.
Corporate operating expenses include office expenses, travel
expenses, (tele)communication expenses, D&O insurance and all
other general expenses for Cypriot, Romanian, Ukrainian, Bulgarian
and Greek operations.
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 2019 31 Dec 2018
------------- ------------
EUR EUR
------------- ------------
Bela Logistic Park - (125.768)
------------- ------------
Kiyanovskiy Residence (543.263) (23.024)
------------- ------------
Tsymlyanskiy Residence (77.541) (7.914)
------------- ------------
Balabino Project - (97.707)
------------- ------------
Rozny Lane 20.152 (35.932)
------------- ------------
Innovations Logistics Park 257.785 610.366
------------- ------------
EOS Business Park 285.545 422.971
------------- ------------
Residential Portfolio 27.366 1.362
------------- ------------
GreenLake 381.385 (1.107.293)
------------- ------------
Kindergarten 66.423 44.642
------------- ------------
Victini Logistics - (900.000)
------------- ------------
Total 417.852 (1.218.297)
------------- ------------
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling
properties classified under either Investment Property (Romanian
residential assets) or Inventory (Bulgarian residential assets),
both designated as non-core assets. The gain/ (losses) from
disposal of such properties are presented below:
14a Inventory
During 2019 the Group completely disposed of the Boyana
Residence, which was classified as inventory (Notes 20 &
26).
Discontinued operations (Note 9) 31 Dec 2019 31 Dec 2018
EUR EUR
------------- ------------
Income from sale of inventory - 194.953
------------- ------------
Cost of inventory - (208.504)
------------- ------------
Loss from disposal of inventory - (13.553)
------------- ------------
14b Investment property
During October 2018, the Company proceeded with the sale of
Praktiker Craiova.
Continued operations 31 Dec 2019 31 Dec 2018
EUR EUR
------------- ------------
Income from sale of investment property - 6.517.181
------------- ------------
Cost of investment property - (7.362.362)
------------- ------------
Loss from disposal of investment property - (845.181)
------------- ------------
14. Gain/ (Loss) from disposal of properties (continued)
14b Investment property (continued)
During 2019 the Group sold 3 apartments in Romfelt Plaza (Doamna
Ghica) and 4 apartments and 2 parking spaces in Zizin while during
2018 the Group sold 10 apartments in Romfelt Plaza and 5 apartments
and 2 parking spaces in Zizin. Additionally a villa in SPDI Real
Estate Srl was sold during 2018.
Discontinued operations (Note 9) 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Income from sale of investment property 608.073 1.499.392
------------ ------------
Cost of investment property (615.477) (1.547.617)
------------ ------------
Loss from disposal of investment property (7.404) (48.225)
------------ ------------
15. Other operating income/(expenses), net
Continued operations 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Other income 114.166 -
------------ ------------
Other income 114.166 -
------------ ------------
Assets Written off (2.007) -
------------ ------------
Impairment on Receivable from Arcona (Note
25) (211.310) -
------------ ------------
Provisions and Impairment of prepayments and
other current assets (222.363) (26.389)
------------ ------------
Penalties (7.213) (4.959)
------------ ------------
Other expenses (113.902) (368)
------------ ------------
Other expenses (556.795) (31.716)
------------ ------------
Other operating income/(expenses), net (442.629) (31.716)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Accounts payable written off 462.198 85
------------ ------------
Other income 9.910 30.010
------------ ------------
Other income 472.108 30.095
------------ ------------
Provisions and Impairment of prepayments and
other current assets (157.764) (388.900)
------------ ------------
Penalties (1.458) (4.334)
------------ ------------
Other expenses (85) (296)
------------ ------------
Other expenses (159.307) (393.530)
------------ ------------
Other operating income/(expenses), net 312.801 (363.435)
------------ ------------
Provision and impairment of prepayments and other current assets
, include expected credit loss per IFRS9
Impairment on receivables from Arcona is related to the fair
value adjustment of the receivable Arcona shares held in escrow
from the disposal of the Boyana asset in Bulgaria. In particular,
the 315.591 consideration Arcona shares valued at year end
according to the NAV per share at that date and a loss of
EUR211.310 was realized.
The accounts payable write off in 2019 of a total of EUR462.198
is related to Aisi Bela and Boyana payables for construction. The
settlement for the former was reached in late 2011 on the basis of
maintaining the construction contract in an inactive state (to be
reactivated at the option of the Group), while upon reactivation of
the contract or termination of it (due to a sale of the asset) the
Group would have to pay an additional UAH 5.400.000 (USD 160.000)
payable upon such event occurring. Due to the uncertainness of the
payment period the latter amount used to be discounted at current
discount rates in Ukraine presented as a non-current liability.
This amount was written off during 2019 as a result of the
forthcoming disposal of the asset during the year. Payables for
construction write off related to Boyana asset, refer to an amount
of EUR245.000 payable to the constructor of the project as part of
the withholding of a Good Performance Guarantee. The amount has
been written off during 2019 as a result of statute of
limitations.
16. Finance costs and income
Continued operations
Finance income 31 Dec 2019 31 Dec 2018
------------ ------------
EUR EUR
------------ ------------
Interest received from non-bank loans (Note
41.1.1) 474.583 685.778
------------ ------------
Interest income associated with banking accounts 1 405
------------ ------------
Total finance income 474.584 686.183
------------ ------------
Finance costs 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Interest expenses (bank) (699) (140.903)
------------ ------------
Interest expenses (non-bank) (Note 41.1.2) (50.693) (120.376)
------------ ------------
Finance charges and commissions (17.725) (24.329)
------------ ------------
Bonds interest (68.133) (68.133)
------------ ------------
Total finance costs (137.250) (353.741)
------------ ------------
Net finance result 337.334 332.442
------------ ------------
Discontinued operations (Note 9)
Finance income 31 Dec 2019 31 Dec 2018
------------ ------------
EUR EUR
------------ ------------
Interest received from non-bank loans (Note
41.1.1) 9.366 9.366
------------ ------------
Interest income from bank deposits 656 613
------------ ------------
Total finance income 10.022 9.979
------------ ------------
Finance costs 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Interest expenses (bank) (901.896) (986.466)
------------ ------------
Interest expenses (non-bank) (Note 41.1.2) (7.155) (7.251)
------------ ------------
Finance leasing interest expenses (496.950) (513.461)
------------ ------------
Finance charges and commissions (24.528) (35.402)
------------ ------------
Total finance costs (1.430.529) (1.542.580)
------------ ------------
Net finance result (1.420.507) (1.532.601)
------------ ------------
Interest income from non-bank loans, reflects income from loans
granted by the Group for financial assistance of 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 loan provided initially with a
convertibility option which was not exercised. According to the
last addendum, the loan had certain one-off and monthly payments
for a period until 30 June 2020. The two parties are currently
engaged in discussions for agreeing and signing a new addendum with
a new re-payment schedule. The loan is bearing a fixed interest
rate of 10% and secured by relevant corporate guarantees, while 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.
Borrowing interest expense represents interest expense charged
on bank and non-bank borrowings (Note 32).
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group ( Note 37).
Finance charges and commissions include regular banking
commissions and various fees paid to the banks.
Bonds interest represent interest calculated for the bonds
issued by the Company during 2018 (Note 33).
Other finance expenses for 2019 includes interest on tax for
prior years related to Cyprus companies.
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
2019 from continued operations amounted to EUR74.779 (2018: loss
EUR71.390).
The exchange loss from discontinued operations for the year
ended 31 December 2019 amounted to EUR436.880 (2018: loss
EUR10.233) (Note 9).
17. Foreign exchange profit / (losses) (continued)
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 41.3). For these intercompany loans
the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During
2019, the Group recognized a foreign exchange profit of EUR66.557
(2018:profit EUR1.850).
18. Tax Expense
Continued operations 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Income and defence tax expense (36.380) (613.034)
------------ ------------
Taxes (36.380) (613.034)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2019 31 Dec 2018
EUR EUR
------------ ------------
Income and defence tax expense (52.315) (96.567)
------------ ------------
Taxes (52.315) (96.567)
------------ ------------
For the year ended 31 December 2019, 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%. For 2018 the amount of tax recorded mainly related to an
amount of EUR506.728 which was derived from the sale of asset in
Craiova, Romania.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 2019 31 Dec 2018
EUR EUR
------------- ------------
Profit / (loss) before tax (10.975.189) (6.759.507)
------------- ------------
Tax calculated on applicable rates (1.644.485) (990.634)
------------- ------------
Expenses not recognized for tax purposes 1.879.661 1.357.212
------------- ------------
Tax effect of allowances and income not subject
to tax (413.424) (303.862)
------------- ------------
Tax effect on tax losses for the year 289.577 653.310
------------- ------------
Tax effect on tax losses brought forward (25.108) (16.981)
------------- ------------
10% additional tax 4.074 10.514
------------- ------------
Overseas tax in excess of credit claim used
during the year 20 42
------------- ------------
Tax effect of Group tax relief (1.620) -
------------- ------------
Total Tax 88.695 709.601
------------- ------------
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
-- Victini Logistics (ex GED) is a logistics park comprising
17.756 gross leasable sqm. It is fully let to the German
multinational transportation and logistics company, Kuehne &
Nagel and to a Greek commercial company trading electrical
appliances GE Dimitriou SA. On the roof of the warehouse there is a
1MW photovoltaic park installed with the electricity generated
being sold to Greek Electric Grid on a long term contract. The
asset was sold within 2019.
-- 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 was 70% leased at the end
of the reporting period while currently is 83%.
-- During 2017 the Company proceeded with an internal
reorganization and the Kindergarten asset of GreenLake which was
under the ownership of the associate GreenLake Development Srl was
acquired by a separate entity (SPDI Real Estate). The Kindergarten
is fully let to one of Bucharest's leading private schools and
produces an annual rent inflow of EUR115.000.
Residential Assets
The Company owns a residential portfolio, consisting at the end
of the reporting period of 19 apartments and villas across four
separate complexes located in different residential areas of
Bucharest (Residential portfolio: Romfelt Plaza, Blooming House,
GreenLake Residential: GreenLake Parcel K ). During 2017 Tonescu
Finance (the company which acquired the Monaco Towers related loan)
commenced against SecMon Real Estate Srl legal proceedings and in
order for SecMon Real Estate Srl to protect itself it entered
voluntarily into insolvency process in January 2018. The entering
of SecMon Real Estate Srl in the insolvency process means loss of
control as per the definition of IFRS 10. As such SecMon Real
Estate Srl is not consolidated in the present financial statements.
(Note 8)
Land Assets
-- Bela Logistic Park is a 22,4 Ha plot in Odessa situated on
the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000
sqm GBA logistic center commenced. Construction was put on hold in
2009. The asset was sold within 2019.
-- 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.
-- 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.
-- Balabino Project is a 26,38 Ha plot of land situated on the
south entrance of Zaporizhia, a city in the south of Ukraine with a
population of 800.000 people. Balabino Project is zoned for retail
and entertainment development.
-- 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.
-- Boyana Land: The complex of Boyana Residence ood includes
adjacent land plots available for sale or development of 22.000 sqm
of gross buildable area. The asset was sold within 2019.
19. Investment Property (continued)
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.
Continued Operations
In 2019 , the Company did not have any Investment Property
assets classified within continued operations.
2019 ( EUR ) Fair Value movements Asset Value at the Beginning
of the period or at Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair value Disposals Transfer Additions Carrying
amount exchange gain/(loss) 2018 to Assets 2018 amount
as at translation based on held for as at
31/12/2018 difference local sale 31/12/2017
(a) currency
valuations
(b)
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Bela Logistic Land - - - - (4.586.009) - 4.586.009
Park
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Kiyanovskiy Land - - - - (2.668.223) - 2.668.223
Residence
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Tsymlyanskiy
Residence Land - - - - (917.202) - 917.202
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Balabino Land - - - - (1334.111) - 1.334.111
Project
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Rozny Lane Land - - - - (1.083.966) - 1.083.966
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Ukraine - - - - (10.589.511) - 10.589.511
------------ ------------- ------------- ------------ ------------- ---------- --------------
Innovations Warehouse - - - - (10.000.000) - 10.000.000
Logistic
s Park
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
EOS Business Office - - - - (7.200.000) - 7.200.000
Park
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Residential Residential - - - - (4.023.000) - 4.023.000
portfolio
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
GreenLake Land - - - - (17.963.000) - 17.963.000
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Kindergarten Retail - - - - (1.713.000) - 1.713.000
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Praktiker Retail - - - (7.500.000) - - 7.500.000
Craiova
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Romania - - - (7.500.000) (40.899.000) - 48.399.000
------------ ------------- ------------- ------------ ------------- ---------- --------------
Boyana Land - - - - (4.230.000) - 4.230.000
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Bulgaria - - - - (4.230.000) - 4.230.000
------------ ------------- ------------- ------------ ------------- ---------- --------------
Victini Warehouse - - - - (16.100.000) - 16.100.000
Logistics
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Greece - - - - (16.100.000) - 16.100.000
------------ ------------- ------------- ------------ ------------- ---------- --------------
TOTAL - - - (7.500.000) (71.818.511) - 79.318.511
------------ ------------- ------------- ------------ ------------- ---------- --------------
Discontinued
2019 ( EUR ) Fair Value movements Asset Value at the Beginning
of the period or at
Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair value Disposals Transfer Additions Carrying
amount exchange gain/(loss) 2019 to 2019 amount
as at translation based on Assets as at
31/12/2019 difference local held for 31/12/2018
(a) currency sale
valuations
(b)
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Bela Logistic Land - - - (4.716.157) - - 4.716.157
Park
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Kiyanovskiy
Residence Land 2.759.480 507.983 (543.263) - - - 2.794.760
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Tsymlyanskiy
Residence Land 1.068.186 185.028 (77.541) - - - 960.699
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Balabino Land - - - (1.310.044) - - 1.310.044
Project
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Rozny Lane Land 1.068.186 20.152 - - - 1.048.034
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Total Ukraine 4.895.852 693.011 (600.652) (6.026.201) - - 10.829.694
----------- ------------ ------------ ------------- --------- ---------- ------------
Innovations
Logistic
s Park Warehouse 10.600.000 (257.785) 257.785 - - - 10.600.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
EOS Business
Park Office 7.700.000 (185.545) 285.545 - - - 7.600.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Residential
portfolio Residential 733.000 (32.889) 27.366 (615.477) - - 1.354.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
GreenLake Land 16.814.000 (409.385) 381.385 - - - 16.842.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Kindergarten Retail 1.438.000 (34.423) 66.423 - - - 1.406.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Total Romania 37.285.000 (920.027) 1.018.504 (615.477) - - 37.802.000
----------- ------------ ------------ ------------- --------- ---------- ------------
Boyana Land - - - (4.230.000) - - 4.230.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Total - - - (4.230.000) - - 4.230.000
Bulgaria
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Victini Warehouse - - - (15.200.000) - - 15.200.000
Logistics
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Total Greece - - - (15.200.000) - - 15.200.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
TOTAL 42.180.852 (227.016) 417.852 (26.071.678) - - 68.061.694
----------- ------------ ------------ ------------- --------- ---------- ------------
19. Investment Property (continued)
19.2 Investment Property Movement during the reporting period
(continued)
Discontinued Operations
2018 ( EUR ) Fair Value movements Asset Value at
the Beginning
of the period
or at
Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair value Transfer Disposals Transfer Carrying
amount exchange gain/(loss) to FA 2018 from amount
as at translation based on at fair Continued as at
31/12/2018 difference local value Operations 31/12/2017
(a) currency through
valuations OCI (Note
(b) 22)
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Bela Logistic
Park Land 4.716.157 255.916 (125.768) - - 4.586.009 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Kiyanovskiy
Residence Land 2.794.760 149.561 (23.024) - - 2.668.223 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Tsymlyanskiy
Residence Land 960.699 51.411 (7.914) - - 917.202 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Balabino
Project Land 1.310.044 73.639 (97.707) - - 1.334.111 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Rozny Lane Land 1.048.034 - (35.932) - - 1.083.966 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Ukraine 10.829.694 530.527 (290.345) - - 10.589.511 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
Innovations
Logistic
s Park Warehouse 10.600.000 (10.366) 610.366 - - 10.000.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
EOS Business
Park Office 7.600.000 (7.392) 407.392 - - 7.200.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Residential
portfolio Residential 1.354.000 (2.322) 16.939 (1.486.000) (1.197.617) 4.023.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
GreenLake Land 16.842.000 (13.707) (1.107.293) - - 17.963.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Kindergarten Retail 1.406.000 (1.642) 44.642 - (350.000) 1.713.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Romania 37.802.000 (35.429) (27.954) (1.486.000) (1.547.617) 40.899.000 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
Boyana Land 4.230.000 - - 4.230.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Bulgaria 4.230.000 - - 4.230.000 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
Victini Warehouse
Logistics 15.200.000 (900.000) - - 16.100.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Greece 15.200.000 (900.000) - - 16.100.000 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
TOTAL 68.061.694 495.098 (1.218.299) (1.486.000) (1.547.617) 71.818.511 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
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 227.016 (a) (2018: profit EUR 495.098 ) 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 gain in terms of the local functional
currencies amounting to EUR 417.852 (b) (2018: loss EUR 1.218.299)
, is presented as Valuation gains/(losses) from investment
properties in the statement of comprehensive income and is carried
forward in Accumulated losses.
19. Investment Property (continued)
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
2019 2019 2018 2018
------------ ------------- ------------- ------------ -------------- ------------- -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------- ------------ -------------- ------------- -------------
EUR EUR EUR
------------ ------------- ------------- ------------ -------------- ------------- -------------
Bela Logistic Odesa Land and LLC Aisi - - 4.716.157
Park Development Bela -
Works for
Warehouse
------------ ------------- ------------- ------------ -------------- ------------- -------------
Kiyanovskiy Podil, Land for LLC Aisi 2.759.480 -
Residence Kiev residential Ukraine - 2.794.760
City Development LLC Trade
Center Center
------------ ------------- ------------- ------------ -------------- ------------- -------------
Podil,
Kiev Land for LLC Almaz
Tsymlyanskiy City residential -- Pres --
Residence Center Development Ukraine - 1.068.186 - 960.699
------------ ------------- ------------- ------------ -------------- ------------- -------------
Balabino Zaporizhia Land for LLC Aisi - - - 1.310.044
Project retail Bela
development
------------ ------------- ------------- ------------ -------------- ------------- -------------
Rozny Lane Brovary Land for SC Secure - 1.068.186 - 1.048.034
district, residential Capital
Kiev Development Limited
------------ ------------- ------------- ------------ -------------- ------------- -------------
Total Ukraine - 4.895.852 - 10.829.694
------------ -------------- ---------- -------------
Innovations Clinceni, Warehouse Myrnes - 10.600.000 -
Logistics Bucharest Innovations 10.600.000
Park Park
Limited
Best Day
Real Estate
Srl
------------ ------------- ------------- ------------ -------------- ------------- -------------
EOS Business Bucharest Office Yamano Ltd - 7.700.000 - 7.600.000
Park building SPDI SRL
First Phase
srl
------------ ------------- ------------- ------------ -------------- ------------- -------------
Praktiker Craiova Big Box Bluehouse - - - -
Craiova retail Accession
Project IX
Limited
Bluehouse
Accession
Project IV
Limited
BlueBigBox
3 Srl
------------ ------------- ------------- ------------ -------------- ------------- -------------
Kindergarten Bucharest Retail SPDI Real - 1.438.000 - 1.406.000
Estate Srl
------------ ------------- ------------- ------------ -------------- ------------- -------------
Residential Bucharest Residential Secure II, 733.000 -
Portfolio apartments Demetiva
(5 in total Ltd
in 2 Diforio - 1.354.000
complexes) Ltd,
Frizomo
Ltd,
Ketiza Ltd,
Sec Rom Ltd
Sec Vista
Srl, Sec
Mon Ltd,
Ketiza Srl
------------ ------------- ------------- ------------ -------------- ------------- -------------
GreenLake Bucharest Residential Edetrio 16.814.000 -
villas (14 Holdings
villas) Limited
& Emakei
land for Holdings
Residential Limited
Development Iuliu Maniu
Limited 16.842.000
Moselin -
Investments
srl
Rimasol
Limited
Rimasol
Real
Estate Srl
Ashor
Ventures
Limited
Ashor
Develpoment
Srl
Jenby
Ventures
Limited
Jenby
Investments
Srl
Ebenem
Limited
Ebenem
Investments
Srl
SPDI Real
Estate
------------ ------------- ------------- ------------ -------------- ------------- -------------
Total Romania - 37.285.000 - 37.802.000
------------ -------------- ---------- -------------
Boyana Sofia Land Boyana - - 4.230.000
Residence -
ood,
Sertland
Properties
Limited
------------ ------------- ------------- ------------ -------------- ------------- -------------
Total Bulgaria - - - 4.230.000
------------ -------------- ---------- -------------
Victini Athens Warehouse Victini - - 15.200.000
Logistics Holdings -
Limited,
Victini
Logistics
Park S.A.
------------ ------------- ------------- ------------ -------------- ------------- -------------
Total Greece - - - 15.200.000
------------ -------------- ---------- -------------
TOTAL - 42.180.852 - 68.061.694
------------ -------------- ---------- -------------
19. Investment Property (continued)
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Innovations Logistics park, EOS Business Park, Kindergarten of
GreenLake, the Residential Portfolio (consisting of apartments in 2
complexes) 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
2019 2019 2018 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
(Note 9) (Note 9)
------------- ------------- ------------- -------------
EUR EUR EUR EUR
------------- ------------- ------------- -------------
At 1 January - 63.345.537 74.732.502 -
------------- ------------- ------------- -------------
Disposal of investment Property - (21.355.521) (7.500.000) (3.033.617)
------------- ------------- ------------- -------------
Revaluation (loss)/gain on investment
property - 417.852 - (1.092.530)
------------- ------------- ------------- -------------
Translation difference - (227.016) - 239.182
------------- ------------- ------------- -------------
Transferred to Assets held for
sale - - (67.232.502) 67.232.502
------------- ------------- ------------- -------------
At 31 December - 42.180.852 - 63.345.537
------------- ------------- ------------- -------------
Disposals of Investment Properties represent the sales of
Balabino land plot in Ukraine, the Boyana Residence in Bulgaria and
the Victini Logistics asset in Greece. All these assets were sold
during 2019.
b. Investment Properties Under Development
As at 31 December 2019 investment property under development
represents the carrying value of Bela Logistic Park property, which
has reached the +10% construction in late 2008 but it is stopped
since then. This property sold during December 2019.
31 Dec 31 Dec 31 Dec 31 Dec
2019 2019 2018 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
(Note 9) (Note 9)
------------- -------------- ------------- -------------
EUR EUR EUR EUR
------------- -------------- ------------- -------------
At 1 January - 4.716.157 4.586.009 -
------------- -------------- ------------- -------------
Revaluation on investment property - - - (125.768)
------------- -------------- ------------- -------------
Disposal of IP - (4.716.157) - -
------------- -------------- ------------- -------------
Translation difference - - - 255.916
------------- -------------- ------------- -------------
Transferred to Assets held for - - (4.586.009)
sale 4.586.009
------------- -------------- ------------- -------------
At 31 December - - - 4.716.157
------------- -------------- ------------- -------------
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).
19. Investment Property (continued)
19.5 Investment Property valuation method presentation
(continued)
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 2019 (EUR) 1) 2) 3)
- - - - -
-------- ----------- ------------ -----------
Recurring fair value measurements - - - -
-------- ----------- ------------ -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 1.068.186 - 1.068.186
-------- ----------- ------------ -----------
Kiyanovskiy Residence - Podil,
Kiev City Center - 2.759.480 - 2.759.480
-------- ----------- ------------ -----------
Rozny Lane - Brovary district,
Kiev oblast - 1.068.186 - 1.068.186
-------- ----------- ------------ -----------
Innovations Logistics Park -
Bucharest - - 10.600.000 10.600.000
-------- ----------- ------------ -----------
EOS Business Park - Bucharest,
City Center - - 7.700.000 7.700.000
-------- ----------- ------------ -----------
Residential Portfolio (ex GreenLake)
- Bucharest - 733.000 - 733.000
-------- ----------- ------------ -----------
GreenLake - Bucharest - 16.814.000 - 16.814.000
-------- ----------- ------------ -----------
Kindergarten - Bucharest - - 1.438.000 1.438.000
-------- ----------- ------------ -----------
Totals - 22.442.852 19.738.000 42.180.852
-------- ----------- ------------ -----------
Fair value measurements at 31 (Level (Level (Level Total
Dec 2018 (EUR) 1) 2) 3)
- - - -
-------- ----------- ----------- -----------
Recurring fair value measurements - -- - -
-------- ----------- ----------- -----------
Balabino Project - Zaporizhia - 1.310.044 - 1.310.044
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 960.699 - 960.699
-------- ----------- ----------- -----------
Bela Logistics Park - Odessa - 4.716.157 4.716.157
-------- ----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center -- 2.794.760 - 2.794.760
-------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast - 1.048.034 - 1.048.034
-------- ----------- ----------- -----------
Innovations Logistics Park -
Bucharest - 10.600.000 10.600.000
-------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - 7.600.000 7.600.000
-------- ----------- ----------- -----------
Residential Portfolio (ex GreenLake)
- Bucharest - 1.354.000 - 1.354.000
-------- ----------- ----------- -----------
GreenLake - Bucharest - 16.842.000 - 16.842.000
-------- ----------- ----------- -----------
Kindergarten - Bucharest - 1.406.000 1.406.000
-------- ----------- ----------- -----------
Victini Logistics - Athens - - 15.200.000 15.200.000
-------- ----------- ----------- -----------
Boyana- Land, Bulgaria - 4.230.000 4.230.000
-------- ----------- ----------- -----------
Totals 28.539.537 39.522.157 68.061.694
----------- ----------- -----------
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level 3 Bela Logistics Innovations EOS Business Victini Kindergarten Total
Fair value Park Logistics Park Logistics
measurements Park
at 31 Dec
2019 (EUR)
Opening 15.200.000 1.406.000
balance 4.716.157 10.600.000 7.600.000 39.522.157
---------------- ------------ ------------- ------------- ------------- -------------
Profit/(loss)
on revaluation - 257.785 285.545 - 66.423 609.753
---------------- ------------ ------------- ------------- ------------- -------------
Translation
difference (4.716.157) (257.785) (185.545) (15.200.000) (34.423) (20.393.910)
---------------- ------------ ------------- ------------- ------------- -------------
Closing
balance - 10.600.000 7.700.000 - 1.438.000 19.738.000
---------------- ------------ ------------- ------------- ------------- -------------
19. Investment Property (continued)
19.5 Investment Property valuation method presentation
(continued)
Level 3 Bela Innovations EOS Business Praktiker Victini Kindergarten Total
Fair value Logistics Logistics Park Craiova Logistics
measurements Park Park
at 31 Dec
2018 (EUR)
Opening
balance 4.586.009 10.000.000 7.200.000 7.500.000 16.100.000 1.713.000 47.099.009
------------- ------------ ------------- ------------ ------------- ------------- -------------
Disposals - - - (7.500.000) - - (7.500.000)
------------- ------------ ------------- ------------ ------------- ------------- -------------
Profit/(loss)
on
revaluation (125.768) 610.366 407.392 - (900.000) 44.642 36.632
------------- ------------ ------------- ------------ ------------- ------------- -------------
Translation
difference 255.916 (10.366) (7.392) - - (351.642) (113.484)
------------- ------------ ------------- ------------ ------------- ------------- -------------
Closing
balance 4.716.157 10.600.000 7.600.000 - 15.200.000 1.406.000 39.522.157
------------- ------------ ------------- ------------ ------------- ------------- -------------
Information about Level 3 Fair Values is presented below:
Fair value Fair value Valuation Unobservable Relationship
at at technique inputs of unobservable
31 Dec 31 Dec inputs to
2019 2018 fair value
EUR EUR EUR EUR EUR
----------- ----------- ---------------------- -------------------------- -----------------
Bela Logistic - 4.716.157 Combined Percentage The higher
Park - Odessa market and of development the percentage
cost approach(2018) works completion, of completion
deterioration the higher
rate(2018) the fair
value. The
higher the
deterioration
rate, the
lower fair
value(2018)
----------- ----------- ---------------------- -------------------------- -----------------
Innovations 10.600.000 10.600.000 Income approach Future rental The higher
Logistics Park income and the rental
- Bucharest costs for income the
10 years, higher the
discount fair value.
rate The higher
the discount
rate, the
lower fair
value
----------- ----------- ---------------------- -------------------------- -----------------
EOS Business 7.700.000 7.600.000 Income approach Future rental The higher
Park - Bucharest, income and the rental
City Center costs for income the
10 years, higher the
discount fair value.
rate The higher
the discount
rate, the
lower fair
value
----------- ----------- ---------------------- -------------------------- -----------------
Praktiker Craiova - - Income approach(2018) Future rental The higher
income and the rental
costs for income the
10 years, higher the
discount fair value.
rate(2018) The higher
the discount
rate, the
lower fair
value(2018)
----------- ----------- ---------------------- -------------------------- -----------------
Victini Logistics - 15.200.000 Income approach(2018) Future rental The higher
income and the rental/PV
costs for income the
10 years, higher the
discount fair value.
rate for The higher
real estate the discount
property rate, the
and for Photovoltaic(PV) lower fair
13 + 4 years value(2018)
(2018)
----------- ----------- ---------------------- -------------------------- -----------------
Kindergarten 1.438.000 1.406.000 Income approach Future rental The higher
income and the rental
costs of income the
discount higher the
rate, vacancy fair value.
rate The higher
the discount
rate and
the vacancy
rate, the
lower fair
value
----------- ----------- ---------------------- -------------------------- -----------------
Total 19.738.000 39.522.157
----------- ----------- ---------------------- -------------------------- -----------------
20. Investment Property Acquisitions, Goodwill Movement and
Disposals
Disposal of subsidiaies
Victini Logistics Aisi Bela Boyana Total
Park AE
ASSETS EUR EUR EUR EUR
------------------ ------------ ----------- ------------
Non-current assets
------------------ ------------ ----------- ------------
Investment property 15.200.000 1.318.104 4.230.000 20.748.104
------------------ ------------ ----------- ------------
Investment property - 4.745.167 - 4.745.167
under construction
------------------ ------------ ----------- ------------
Tangibles and intangibles
assets 16.994 - - 16.994
------------------ ------------ ----------- ------------
15.216.994 6.063.271 4.230.000 25.510.265
------------------ ------------ ----------- ------------
Current assets
------------------ ------------ ----------- ------------
Inventories - - 4.604.044 4.604.044
------------------ ------------ ----------- ------------
Prepayments and other
current assets 475.143 938 1.255 477.336
------------------ ------------ ----------- ------------
Cash and cash equivalents 35.994 27 2.187 38.208
------------------ ------------ ----------- ------------
511.137 965 4.607.486 5.119.588
------------------ ------------ ----------- ------------
Total assets 15.728.131 6.064.236 8.837.486 30.629.853
------------------ ------------ ----------- ------------
Non-current liabilities
------------------ ------------ ----------- ------------
Borrowings 10.082.370 - 2.257.980 12.340.350
------------------ ------------ ----------- ------------
Deposits from tenants 151.930 - - 151.930
------------------ ------------ ----------- ------------
10.234.300 - 2.257.980 12.492.280
------------------ ------------ ----------- ------------
Current liabilities
------------------ ------------ ----------- ------------
Borrowings - - 336.329 336.329
------------------ ------------ ----------- ------------
Trade and other payables 586.870 78.068 24.046 688.984
------------------ ------------ ----------- ------------
Tax Payable 180.883 - 136.138 317.021
------------------ ------------ ----------- ------------
Provisions 42.512 - - 42.512
------------------ ------------ ----------- ------------
810.265 78.068 496.513 1.384.846
------------------ ------------ ----------- ------------
Total liabilities 11.044.565 78.068 2.754.493 13.877.126
------------------ ------------ ----------- ------------
Net assets disposed 4.683.566 5.986.168 6.082.993 16.752.727
------------------ ------------ ----------- ------------
Financed by
------------------ ------------ ----------- ------------
Cash consideration 2.030.624 - - 2.030.624
received
------------------ ------------ ----------- ------------
Retained receivables
from tenants 337.600 - - 337.600
------------------ ------------ ----------- ------------
Financial assets received - 3.735.555 4.241.544 7.977.099
------------------ ------------ ----------- ------------
Bank Loan pending
transfer (Notes 26
& 45c) - - 775.641 775.641
------------------ ------------ ----------- ------------
Net deferred consideration
in the form of a loan
receivable - - 639.000 639.000
------------------ ------------ ----------- ------------
Total result from (2.315.342) (2.250.613) (426.808) (4.992.763)
disposal (Note 9)
------------------ ------------ ----------- ------------
On 8 August 2019 Victini Logistcs Park AE the owner of Victini
Logistics property in Athens, Greece, was sold at a Gross Asset
Value of EUR 12,5m payable in cash, excluding the receivables from
the tenant of the property G. Dimitriou S.A. of a total of EUR
337.600 plus all future rent invoicing until 31/12/2020. The
transaction resulted in a cash inflow of EUR 2,03m, plus the amount
to be recovered in the future from G.Dimitriou S.A.
On 1 November 2019 the Company announced the disposal of Aisi
Bella, the owner company of Bella and Balabino assets in Ukraine,
to Arcona in exchange for the issue to the Company of 277.943 new
shares in Arcona and 67.063 warrants over shares in Arcona. Based
on the NAV per Arcona share the consideration corresponds to EUR
3,7m (excluding the issue of warrants), while the price paid for
the warrants was EUR1. The warrants give the Company the right to
receive ordinary shares in Arcona of EUR 5 each nominal value,
exercisable before 1 November 2024 and when the shares have traded
at a volume weighted average price of EUR 8,10.
On 5 December 2019 the Company announced the disposal of Boyana
Residence, the owner company of Boyana assets in Sofia, Bulgaria,
to Arcona in exchange of 315.591 new shares in Arcona and 77.201
warrants over shares in Arcona. Based on the NAV per Arcona share
the consideration corresponds to EUR 4,2m (excluding the issue of
warrants), while the price paid for the warrants was EUR1. The
Company also maintained as part of the transaction, a Sellers Loan
with Boyana Residence equal to EUR 750k, as adjusted finally by a
reverse liability of EUR 111k to a net amount of EUR 639k,
receivable by the end of 2020. Moreover, as part of the transaction
it was agreed that an associated to Boyana loan from Alpha Bank at
Sertland level of EUR 0,77m will be transferred to Arcona. The
transfer completed successfully in August 2020. The warrants give
the Company the right to receive ordinary shares in Arcona of EUR 5
each nominal value, exercisable before 1 November 2024 and when the
shares have traded at a volume weighted average price of EUR 8,10.
The shares and the warrants issued to the Company in relation to
this transaction held in escrow, to be released upon agreement on
the terms of the extension of the loan associated with the asset.
As at the reporting period, the shares and warrants were still in
escrow, released successfully in February 2020.
21. Investments in associates
31 Dec 2019 31 Dec 31 Dec 2018 31 Dec
2019 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Cost of investment in associates -
at the beginning of the period 5.313.235 5.115.587 -
------------- ------------- ------------ -------------
Share of profits /(losses) from
associates (Note 9) - 297.985 - 364.920
------------- ------------- ------------ -------------
Dividend Income - (121.772) - (143.263)
------------- ------------- ------------ -------------
Foreign exchange difference - (109.427) - (24.009)
------------- ------------- ------------ -------------
Transfer to assets classified -
as held for sale - (5.115.587) 5.115.587
------------- ------------- ------------ -------------
Total - 5.380.021 - 5.313.235
------------- ------------- ------------ -------------
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 2019, 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 24.263.233 (2.172.318) 1.223.558 24,35 297.985 Romania building
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 8.403.831 (11.474.393) (954.837) 40,35 - Romania assets
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
Total 32.667.064 (13.646.711) 268.721 297.985
------------ ------------- ---------- -------- ------------- -------- ------------
As at 31 December 2018, 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 24.272.364 (2.455.680) 1.498.399 24,354 364.920 Romania building
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 9.202.949 (11.567.196) (839.107) 40,35 - Romania assets
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
Total 33.475.313 (14.022.876) 659.292 364.920
------------ ------------- ---------- -------- ------------- -------- ------------
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 (Note 8) 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): In 2019, the Management believes that the
fair value of the Financial asset at fair value through OCI should
remain the same as last year.
Discontinued operations (Note 9)
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 2019 the intangible assets were composed of
the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of EUR103.193
(2018: EUR103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to EUR103.193 (2018:
EUR100.800) and therefore net value amounts to EUR0 (2018:
EUR2.393).
As at 31 December 2019 the tangible non-current assets under
continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of EUR565 (2018:
EUR1.281).
As at 31 December 2019 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, Romania, Greece and Bulgaria, amount to EUR60.741
(2018:EUR129.516). Accumulated depreciation as at the reporting
date amounts to EUR46.399 (2018: EUR86.982).
24. Long Term Receivables and prepayments
31 Dec 31 Dec 31 Dec 31 Dec
2019 2019 2018 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Long Term Receivables 852 315.265 850 270.271
------------ ------------- ------------ -------------
Total 852 315.265 850 270.271
------------ ------------- ------------ -------------
Long term receivables mainly include the cash collateral
existing in favor of Piraeus Leasing and the guarantee deposit from
a tenant in Innovations Logistics Park.
25. Inventory
31 Dec 31 Dec 31 Dec 31 Dec 2018
2019 2019 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- -------------- ------------- -------------
EUR EUR EUR EUR
------------- -------------- ------------- -------------
At 1 January - 4.604.044 4.812.550 -
------------- -------------- ------------- -------------
Sale of Inventories (Note 14a) - - - (208.506)
------------- -------------- ------------- -------------
Disposal of the asset (Note
19) - (4.604.044) - -
------------- -------------- ------------- -------------
Transfer to assets classified
as held for sale - - (4.812.550) 4.812.550
------------- -------------- ------------- -------------
At 31 December - - - 4.604.044
------------- -------------- ------------- -------------
The residential portfolio in Boyana, Sofia, Bulgaria is
classified as Inventory.
Boyana residential portfolio was sold within 2019.
26. Prepayments and other current assets
31 Dec 31 Dec 31 Dec 31 Dec 2018
2019 2019 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Trade and other receivables 1.062.508 437.183 102.243 569.210
------------ ------------- ------------ -------------
Bank Loan pending transfer 775.641 -
(Note 20) - -
------------ ------------- ------------ -------------
Receivable from Arcona (Note - -
20) 4.030.233 -
------------ ------------- ------------ -------------
VAT and other tax receivables 145.910 111.350 123.975 93.331
------------ ------------- ------------ -------------
Deferred expenses 14.533 15.245 72.630 1.254
------------ ------------- ------------ -------------
Receivables due from related
parties 71.147 6.927 54.689 1.010
------------ ------------- ------------ -------------
Loan receivables from 3(rd)
parties 5.575.555 124.958 5.312.919 124.958
------------ ------------- ------------ -------------
Loan to associates (Note 41.4) - 292.208 8.374 282.842
------------ ------------- ------------ -------------
Allowance for impairment of
prepayments and other current
assets (65.974) (292.740) (89.422) (390.471)
------------ ------------- ------------ -------------
Total 10.833.913 1.470.772 5.585.408 682.134
------------ ------------- ------------ -------------
Trade and other receivables mainly include receivables from
tenants and prepayments made for services.
Bank Loan pending transfer refers to the agreement, as part of
the transaction for the sale of Boyana to Arcona, of the transfer
of the relevant loan at Sertland level to Arcona upon signing
relevant documentation with Alpha Bank. The transfer completed
effectively in August 2020 (Note 20 & Note 45c).
Receivables from Arcona refer to the consideration shares and
warrants in relation to the disposal of Boyana asset, which at year
end were in escrow account, agreed then to be released to the
Company upon agreement of the extension terms of the associated
loans. The consideration shares and warrants were released
effectively in February 2020. The initial amount of the Receivable
is EUR4.241.544 and the impairment charge at the year end is
EUR211.310, resulting in a net amount EUR4.030.233 (Note 20 &
Note 45c).
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.
Loan receivables from 3(rd) parties include an amount of
EUR4.580.000 provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians
portfolio) in Romania, as well as associated interest of EUR845.638
(2018 EUR610.853). The loan provided initially with a
convertibility option which was not exercised. According to the
last addendum the loan had certain one-off and monthly payments for
a period until 30 June 2020. The two parties are currently engaged
in discussions for agreeing and signing a new addendum with a new
re-payment schedule.The loan is bearing a fixed interest rate of
10% and secured by relevant corporate guarantees, while 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.
Moreover, Loans receivables from 3(rd) parties include an amount
of EUR750.000 which represents effectively part of the
consideration for the disposal of Boyana asset to Arcona deferred
until 31/12/2020 in the form of a loan. The loan has a scaling
structure of interest rates: 6% until 31/3/2020, 8% until 30/6/2020
and 10% until 31/12/2020. Final agreement involved also a reverse
payable of the Company of EUR111k which is classified
appropriately.
Loans receivables from 3(rd) parties also include an amount of
EUR115.000 provided to the SPV that acquired Delia Lebada asset, as
part of an agreement of obtaining a 5% stake on the property.
Loan receivable from 3(rd) parties under discontinued operations
include a loan receivable from SecMon Real Estate Srl which since
January 2018 is classified as Financial Asset at Fair value through
OCI (Note 22).
Loan to associates reflects a loan receivable from GreenLake
Development Srl, holding company of GreenLake Project-Phase A
(Notes 21 and 41.4).
27. 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 2019 31 Dec 2018
EUR EUR
------------ ------------
Arcona shares 3.735.555 -
------------ ------------
FV change in Arcona (186.102) -
shares
------------ ------------
Arcona shares at reporting 3.549.453 -
date
------------ ------------
Cost of Warrants over 1 -
Arcona shares
------------ ------------
FV change in warrants 32.189 -
------------ ------------
Arcona warrants at 32.190 -
reporting date
------------ ------------
Total Financial Assets 3.581.643 -
at FV
------------ ------------
FV change in Arcona (186.102) ---
shares
------------ ------------
FV change in warrants 32.189 -
------------ ------------
Fair Value loss on (153.913) -
Financial Assets at
FV through P&L
------------ ------------
The Company received during the year 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. At the
time of the transaction the shares represented a total value of EUR
3.735.555 based on the NAV per share of Arcona at that time. At the
end of the period the shares are re-valued to fair value based on
the NAV per share of Arcona at that date, and as a result a
relevant fair value loss of EUR 186.102 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. The warrants are
exercisable upon the volume weighted average price of the 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 32.189 is recognized. The terms and
assumptions used for such warrant re-valuation are:
-- Current stock price (as retrieved from Amsterdam Stock
Exchange): EUR 6 per share
-- Strike price of the warrants: EUR 8,10 per share
-- Expiration date: 1 November 2024
-- Standard deviation of stock price: 20,78%
-- Annualized dividend yield on shares: 0,10%
-- 5 year Government Bond rate (weighted average rate of
Government Bonds of countries that Arcona is exposed): 0,521%
28. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec 31 Dec 31 Dec 2018
2019 2019 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Cash with banks in USD 15.700 - 45.134 2.621
------------ ------------- ------------ -------------
Cash with banks in EUR 151.349 51.539 205.679 233.184
------------ ------------- ------------ -------------
Cash with banks in UAH 59 95 71 1.498
------------ ------------- ------------ -------------
Cash with banks in RON 40.143 478.740 31.829 465.062
------------ ------------- ------------ -------------
Cash with banks in BGN - - - 2.460
------------ ------------- ------------ -------------
Total 207.251 530.374 282.713 704.825
------------ ------------- ------------ -------------
29. Share capital
Number of Shares during 2019 and 2018
31 December 26 January 26 January 5 June 2018 31 December 24 December 31 December
2017 2018 2018 2018 2019 2019
Exercise of Increase of Increase of
warrants & share share
options capital capital
------------- ------------- ------------- ------------ ------------- ------------- -------------
Authorised
------------- ------------- ------------- ------------ ------------- ------------- -------------
Ordinary 989.869.935 - - - 989.869.935 - 989.869.935
shares of EUR
0,01
------------- ------------- ------------- ------------ ------------- ------------- -------------
Total 989.869.935 - - - 989.869.935 - 989.869.935
ordinary
shares
------------- ------------- ------------- ------------ ------------- ------------- -------------
RCP Class A
Shares of
EUR0,01 785.000 - - (785.000) - - -
------------- ------------- ------------- ------------ ------------- ------------- -------------
RCP Class B 8.618.997 - - - 8.618.997 - 8.618.997
Shares of
EUR0,01
------------- ------------- ------------- ------------ ------------- ------------- -------------
Total 9.403.997 - - (785.000) 8.618.997 - 8.618.997
redeemable
shares
------------- ------------- ------------- ------------ ------------- ------------- -------------
Issued and
fully paid
------------- ------------- ------------- ------------ ------------- ------------- -------------
Ordinary 103.589.550 17.076.560 6.604.371 - 127.270.481 1.920.961 129.191.442
shares of
EUR0,01
------------- ------------- ------------- ------------ ------------- ------------- -------------
Total 103.589.550 17.076.560 6.604.371 - 127.270.481 1.920.961 129.191.442
ordinary
shares
------------- ------------- ------------- ------------ ------------- ------------- -------------
RCP Class A - - - - - - -
Shares of
EUR0,01
------------- ------------- ------------- ------------ ------------- ------------- -------------
RCP Class B - - - - - - -
Shares of
EUR0,01
------------- ------------- ------------- ------------ ------------- ------------- -------------
Total - - - - - - -
redeemable
shares
------------- ------------- ------------- ------------ ------------- ------------- -------------
Total 103.589.550 17.076.560 6.604.371 - 127.270.481 1.920.961 129.191.442
------------- ------------- ------------- ------------ ------------- ------------- -------------
Nominal value (EUR) for 2019 and 2018
EUR 31 December 26 January 26 January 5 June 2018 31 December 24 December 31 December
2017 2018 2018 2018 2019 2019
Exercise of Increase of Increase of
warrants & share capital share capital
options
------------- ------------- -------------
Authorised
------------- ------------- -------------
Ordinary 9.898.699 - - - 9.898.699 - 9.898.699
shares of EUR
0,01
------------- ------------- -------------
Total ordinary 9.898.699 - - - 9.898.699 - 9.898.699
shares
RCP Class A
Shares of
EUR0,01 7.850 - - (7.850) - - -
------------- ------------- -------------
RCP Class B
Shares of
EUR0,01 86.190 - - - 86.190 - 86.190
------------- ------------- -------------
Total
redeemable
shares 94.040 - - (7.850) 86.190 - 86.190
Issued and
fully paid
------------- ------------- -------------
Ordinary
shares of
EUR0,01 1.035.893 170.765 66.044 - 1.272.702 19.209 1.291.911
------------- ------------- -------------
Total ordinary
shares 1.035.893 170.765 66.044 - 1.272.702 19.209 1.291.911
RCP Class A - - - - - - -
Shares of
EUR0,01
------------- ------------- -------------
RCP Class B - - - - - - -
Shares of
EUR0,01
------------- ------------- -------------
Total - - - - - - -
redeemable
shares
Total 1.035.893 170.765 66.044 - 1.272.702 19.209 1.291.911
29. Share capital (continued)
29.1 Authorised share capital
As at the end of 2017, the authorized share capital of the
Company was 989.869.935 Ordinary Shares of EUR0,01 nominal value
each, 785.000 Redeemable Preference Class A Shares of EUR0,01
nominal value each and 8.618.997 Redeemable Preference Class B
Shares of EUR0,01 nominal value each.
The Company cancelled the Redeemable Preference Class A Shares
following the AGM decision of 29 December 2017 and the subsequent
court approval obtained during H1 2018 while Redeemable Preference
Class B Shares (Note 29.6) remain to be cancelled.
Following the cancellation of the Redeemable Preference Class A
Shares completed within H1 2018 the 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 29.6) .
29.2 Issued Share Capital
As at the end of 2018, the issued share capital of the Company
was as follows:
a) 127.270.481 Ordinary Shares of EUR0,01 nominal value
each,
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
29.6) 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 42.4). 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 29.6) .
29.3 Class A Warrants issued
The Company in order to acquire up to a 50% interest in a
portfolio of fully let logistics properties in Romania, the
Olympians Portfolio, (Note 26) issued a financial instrument, 35%
of which consists of a convertible bond and 65% of which is made up
of a warrant. Pursuant to issuing the instrument, the Company
issued 17.066.560 Class A warrants which were exercised during 2017
at an exercise price of GBP0,10 per ordinary share and the Company
proceeded at, beginning of 2018, with the issuance of 17.066.560
new ordinary shares corresponding to these warrants.
There are no Class A warrants in circulation as at the issuance
date of the financial statements.
29.4 Class B Warrants issued
On 8 August 2011 the Company issued an amount of Class B
Warrants for an aggregate corresponding to 12,5% of the issued
share capital of the Company after the exercise date. Further to
the resolution approved at the AGM of 30 December 2016 the exercise
period of the Class B Warrants was extended until 30 June 2017, at
an exercise price of the nominal value per Ordinary Share as at the
date of exercise. The Class B Warrant Instruments have
anti-dilution protection so that, in the event of further share
issuances by the Company, the number of Ordinary Shares to which
the holder of a Class B Warrant is entitled will be adjusted so
that he receives the same percentage of the issued share capital of
the Company (as nearly as practicable), as would have been the case
had the issuances not occurred. This anti-dilution protection will
freeze on the earlier of (i) the expiration of the Class B
Warrants; and (ii) capital increase(s) undertaken by the Company
generating cumulative gross proceeds in excess of USD
100.000.000.
As at 30 June 2017 there were 12.948.694 warrants in circulation
corresponding to an equal amount of ordinary shares (1:1) and the
Company received valid notices from holders of Class B warrants for
the full exercise of their warrants and proceeded with the issue of
12.948.694 new ordinary shares.
There are no Class B warrants in circulation.
29. Share capital (continued)
29.5 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 2019 (as at) 31 December 2018
Ordinary shares of EUR0,01 Issued and Listed on AIM 129.191.442 127.270.481
Total number of Shares Non-Dilutive Basis 129.191.442 127.270.481
Total number of Shares Full Dilutive Basis 129.191.442 127.270.481
Options - - -
Shares issued in 2018 for exercise of
warrants and options in 2017 - - -
Redeemable Preference Class A Shares
The Redeemable Preference Class A Shares which do not have
voting or dividend rights where issued as part of the Innovations
Logistics Park acquisition consideration. As at the reporting date
all of the Redeemable Preference Class A Shares have been redeemed
and the Company, following the approval received by the AGM on 29
December 2017, proceeded in their cancellation within 2018.
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 34, 42.4).
29.6 Other share capital related matters
Pursuant to decisions taken by the AGM of 29(th) December 2017,
the Company proceeded with the following actions in H1 2018
(finalized during June):
- That the balance of the share premium account of the Company
will be reduced by EUR53.569.295 and will be set off against
carried forward losses of the Company amounting to
EUR53.569.295.
- That the balance of the share premium account of the Company
will be reduced by EUR698.650 and that the said amount will be set
off against any outstanding balances between the Company, Myrian
Nes Ltd and Theandrion Estates Ltd related to the Redeemable
Preference Class A Shares.
- That the authorised share capital of the Company, as well as
the issued share capital of the Company each will be reduced, by
the cancellation of 785.000 Redeemable Preference Class A Shares of
EUR0,01 each, namely 777.150 Redeemable Preference Class A Shares
of EUR0,01 each in the name of Myrian Nes Ltd and 7.850 Redeemable
Preference Class A Shares of EUR0,01 each in the name of Theandrion
Estates Ltd and the amount reduced will be set off against any
outstanding balances between the Company, Myrian Nes Ltd and
Theandrion Estates Ltd.
- That the articles of association of the Company will be
amended by adding the following new Regulation 3.10 after
Regulation 3.9:
"Subject to the provisions of the Law, the Company may purchase
its own shares (including any redeemable shares)."
Pursuant to decisions taken by the AGM of 31(st) December 2018,
the Board has been authorized and empowered to:
- issue and allot up to 20.000.000 ordinary shares of euro 0,01
each, at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a
discount to the net asset value per share in the Company which is
in issue immediately prior to the issue of the new shares) and for
such purpose any rights of pre-emption and other rights the
Company's shareholders have or may have by operation of law and/or
pursuant to the articles of association of the Company and/or
otherwise in connection with the authority conferred on the Board
for the issue and allotment of shares in the Company as
contemplated in this resolutions or the issue of shares in the
Company pursuant to such authority be and are hereby irrevocably
and unconditionally waived. The authority conferred by this
resolution expired on 31 December 2019. Under this authority and
following relevant Board resolution on 11/12/2019, the Company
issued 1.920.961 ordinary shares of euro 0,01 each.
- issue up to 15.000.000 Class A Warrants, being convertible to
up to 15.000.000 ordinary share of euro 0,01 each in the Company
upon exercise of the Warrants, with such terms and conditions and
at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a
discount to the net asset value per share in the Company which is
in issue immediately prior to the issue of the Warrants)and for
such purpose any rights of pre-emption and other rights the
Company's shareholders have or may have by operation of law and/or
pursuant to the articles of association of the Company and/or
otherwise in connection with the authority conferred on the Board
for the issue and allotment of shares or Warrants in the Company as
contemplated in this resolution or the issue and allotment of
shares or Warrants in the Company pursuant to such authority be and
are hereby irrevocably and unconditionally waived. The authority
conferred by this resolution shall expire on 31 December 2019. The
Company did not issue any Class A Warrants under this
authority.
30. Foreign Currency Translation Reserve
Exchange differences related to the translation from the
functional currency to EUR of the Group's subsidiaries are
accounted 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 the Company's subsidiaries' functional currencies
are not EUR. The Company had foreign exchange gains on translation
due to presentation currency of EUR223.133 for 2019, in comparison
to EUR421.086 relevant gains for 2018.
31. 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
201 9 201 8
--------- --------
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 55,76 55,76
--------- --------
Rimasol Real Estate Srl 55,76 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
--------- --------
32. Borrowings
Project 31 Dec 2019 31 Dec 2019 31 Dec 31 Dec 2018
2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Principal of bank
Loans
------------ ------------- ------------ -------------
Bancpost SA Blooming House - 277.802 - 614.441
------------ ------------- ------------ -------------
A lpha B ank Romania Romfelt Plaza - 51.594 - 191.723
------------ ------------- ------------ -------------
EOS Business
Alpha Bank Romania Park - 293.466 - 485.663
------------ -------------
Bancpost SA GreenLake - 3.249.926 3.249.926
Parcel K - -
------------ -------------
Alpha Bank Bulgaria Boyana Residence - - 2.258.128
Boyana Residence
Alpha Bank Bulgaria (Sertland Loan) - 666.468 - 666.474
Eurobank Ergasias Victini Logistics - 10.658.950
SA - -
-------------
Piraeus Bank SA GreenLake-Phase 2.525.938 2.525.938
2 - -
Kindergarten
Bancpost SA - SPDI RE - 732.107 - 773.206
Loans from other
3(rd) parties and
related parties
(Note 41.5) 382.455 177.686 387.683 177.473
Overdrafts 459 2.546 499 1.420
Total principal
of bank and non-bank
Loans 382.914 7.977.533 388.182 21.603.342
Interest accrued
on bank loans - 922.073 1 960.075
Interests accrued
on non-bank loans 45.086 50.054 14.107 42.057
Total 428.000 8.949.660 402.290 22.605.474
------------ ------------- -------------
31 Dec 2019 31 Dec 2019 31 Dec 31 Dec 2018
2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Current portion 420.751 3.451.833 22.034 1.652.875
------------ ------------- ------------ -------------
Non-current portion 7.249 5.497.827 380.256 20.952.599
------------ ------------- ------------ -------------
Total 428.000 8.949.660 402.290 22.605.474
------------ ------------- -------------
32. Borrowings (continued)
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. As at
the end of the reporting period the balance of the loan was
EUR277.802. The loan bears interest of EURIBOR 3M plus 3,5% and
secured by all assets of Ketiza Real Estate Srl, as well as its
shares and is being repaid through sales proceeds. The loan has
been repaid in full during 2020.
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. As at the end of the reporting period, the
balance of the loan was EUR51.594, bears interest of EURIBOR
1M+4.25% and is repayable on the basis of investment property
sales. The loan is secured by all assets of SecRom Real Estate Srl,
currently held by N-E Real Estate Park First Phase Srl, as well as
its shares and is being repaid through sales proceeds with a
maturity in 2021.
Moselin Investments Srl entered in 2010 into a construction loan
agreement with Bancpost SA covering the construction works of
Parcel K GreenLake project. As at the end of the reporting period
the balance of the loan was EUR3.249.926 and bears interest of
EURIBOR 3M plus 2,5%. Following restructuring implemented during
2017 the loan maturity was extended to 2022. The loan is secured
with the property itself and the shares of Moselin Investments Srl
and is being repaid through sales proceeds.
Boyana Residence ood entered in 2011 into a loan agreement with
Alpha Bank Bulgaria for a construction loan related to the
construction of the Boyana Residence project which finished in
2014. The loan bears interest of EURIBOR 3M plus 5,75%, secured
through a mortgage over the property and a pledge over the
company's shares, as well as those of Sertland Properties Limited.
Boyana Residence ood was sold during 2019 (Note 20).
Sertland Properties Limited entered in 2008 into a loan
agreement with Alpha Bank Bulgaria for an acquisition loan related
to the acquisition of 70% of Boyana Residence ood. As at the end of
the reporting period the balance of the loan was EUR666.468 and
bears interest of EURIBOR 3M plus 5,75%. The loan has been agreed
to be transferred to Arcona as part of the transaction of the sale
of Boyana Residence ood in Bulgaria on 5 December 2019. The
relevant agreement between Sertland, Arcona and Alpha Bank was
signed in August 2020 when the transfer of the loan from Sertland
to Arcona effectively enforced (Note20).
Victini Logistics Park S.A. entered in April 2015 into a loan
agreement with EUROBANK SA to refinance the existing debt facility
related to Victini Logistics asset. The loan bear interest of
EURIBOR 6M plus 3,2%+30% of an asset swap which if negative total
spread is accounted for 4,9%. The loan is repayable by 2022, has a
balloon payment of EUR8.660.000 and is secured by all assets of
Victini Logistics Park S.A., as well as its shares. Victini
Logistics Park S.A. was sold during 2019(Note 20).
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 EUR471.112 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 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. As at the end of the
reporting period, the balance of the loan was EUR293.466, bears
interest of EURIBOR 1M+4,5% and is repayable from the free cash
flow resulting from the rental income of company's property. The
loan matures in April 2024 and is 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.
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 EUR732.107 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
continued operations includes also loans from related parties
provided as bridge financing for future property acquisitions (Note
41.5).
) Loans from Directors reflects loans provided from 3 Directors
as bridge financing for future property acquisitions. The loans
bear interest 8% annually and are repayable on 31 March 2020. The
Company discusses with the Directors the extension of the loans
until year end and relevant documentation process is currently in
place.
) PM Capital Inc., one of the Company's largest shareholders
lent the Company in January 2018 EUR1m to be used for general
working capital purposes. The Loan had interest initially at a rate
of 8,5% until the end of Q1 2018, when increased to 11% until its
full repayment on 8 October 2018.
Loans from other 3(rd) parties and related parties under
discontinued operations includes borrowings from non-controlling
interest. 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.
33. 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, (Notes 26 and 29.4) 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.
34. 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 2019 31 Dec 2019 31 Dec 2018 31 Dec
2018
Continued Discontinued Continued Discontinued
operations operations operations operations
-------------
EUR EUR EUR EUR
-----------
Payables to third parties 3.729.592 854.974 3.213.848 924.137
-------------
Payables to related parties
(Note 41.2) 606.214 177 743.139 -
-------------
Deferred income from tenants - 8.216 - 8.316
-------------
Accruals 99.744 151.899 94.905 150.324
-------------
Payables due for construction - - - 417.826
-------------
Pre-sale advances (Advances
received for sale of properties) 144.045 - 123.044 -
-------------
Total 4.579.595 1.015.266 4.174.936 1.500.603
31 Dec 2019 31 Dec 2019 31 Dec 2018 31 Dec
2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------ -------------
Current portion 4.579.595 1.007.050 4.174.936 1.074.460
------------- ------------ -------------
Non-current portion - 8.216 - 426.143
------------- ------------ -------------
Total 4.579.595 1.015.266 4.174.936 1.500.603
-------------
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 29.6) which
is under legal proceedings for a final settlement (Note 42.4) , 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
41.2). 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.
Payables for construction represent amounts payable to the
contractor of Bela Logistic Park in Odessa and Boyana asset in
Sofia. The settlement for the former was reached in late 2011 on
the basis of maintaining the construction contract in an inactive
state (to be reactivated at the option of the Group), while upon
reactivation of the contract or termination of it (due to a sale of
the asset) the Group would have to pay an additional UAH 5.400.000
(USD 160.000) payable upon such event occurring. Due to the
uncertainness of the payment period the latter amount had been
discounted at current discount rates in Ukraine and used to be
presented as a non-current liability. This amount was written off
during 2019 as a result of the forthcoming disposal of the asset.
Payables for construction related to Boyana asset, refers to an
amount of EUR245.000 payable to the constructor of the project as
part of the withholding of a Good Performance Guarantee. The amount
has been written off during 2019 as a result of statute of
limitations.
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.
35. Deposits from Tenants
31 Dec 2019 31 Dec 2019 31 Dec 2018 31 Dec 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Deposits from tenants non-current - 67.269 - 219.274
------------ ------------- ------------ -------------
Total - 67.269 - 219.274
Deposits from tenants appearing under non-current liabilities
include the amounts received from the tenants of Innovations
Logistics Park, EOS Business Park, Victini Logistics (in 2018 only)
and companies representing residential segment as
advances/guarantees and are to be reimbursed to these clients at
the expiration of the lease agreements.
36. Taxation
31 Dec 2019 31 Dec 2019 31 Dec 2018 31 Dec 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Corporate income tax - non
current 167.961 43.535 333.881 -
------------ ------------- ------------ -------------
Defence tax - non current 28.130 15 28.129 15
------------ ------------- ------------ -------------
Tax provision - non current 399.450 - 399.450 -
------------ ------------- ------------ -------------
Corporate income tax - current 450.450 56.865 620.557 67.296
------------ ------------- ------------ -------------
Other taxes including VAT
payable - current 99.669 93.322 31.767 365.217
------------ ------------- ------------ -------------
Provisions - current 43 22.826 43 66.002
------------ ------------- ------------ -------------
Total Provisions and Taxes
Payables 1.145.703 216.563 1.413.827 498.530
Corporate income tax represents taxes payable in Cyprus and
Romania.
Other taxes represent local property taxes and VAT payable in
Ukraine, Romania, Greece, Bulgaria and Cyprus.
Non current amounts represent the part of the settlement plan
agreed with the Cyprus tax authorities to be paid within the next
five years.
37. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR9.699.050 and the current portion
of EUR385.420 (31 December 2018: EUR10.076.579 and EUR393.433,
accordingly).
Discontinued operations
31 Dec 2019 Note Minimum lease Interest Principal
payments
EUR EUR EUR
44.2
&
Less than one year 44.6 861.304 475.884 385.420
Between two and five years 5.637.702 1.611.343 4.026.359
More than five years 6.053.782 381.375 5.672.407
12.552.788 2.468.602 10.084.186
Accrued Interest 284
Total Finance Lease Liabilities 10.084.470
(Note 9d)
31 Dec 2018 Note Minimum lease Interest Principal
payments
EUR EUR EUR
44.2
Less than one year & 44.6 886.771 494.098 392.673
Between two and five years 3.666.346 1.768.504 1.897.842
More than five years 8.861.576 686.781 8.174.795
13.414.693 2.949.383 10.465.310
Accrued Interest 4.702
Total Finance Lease Liabilities 10.470.012
(Note 9d)
37 .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 EUR54.195 under current and non-current
portion. The Group's obligations under finance leases are secured
by the lessor's title to the leased assets.
37.2 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
EUR6.857.475, 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.
37. Finance Lease Liabilities (continued)
37.2 Sale and Lease Back Agreements (continued)
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 bank towards
the liabilities of Best Day Real Estate Srl arising from the sale
and lease back agreement.
In late February 2017 the Group finally agreed and signed
(following twelve months of discussions) an amended sale and lease
back agreement with Piraeus Leasing Romania for Innovations
Logistics Park in Bucharest, governing the allocation of the Nestle
Romania, early termination fee of EUR1,6 million payable to
SPDI.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by N-E Real Estate Park First
Phase Srl, through a sale and lease back agreement with Alpha Bank
Romania SA. As at the end of the reporting period the balance is
EUR3.172.800 bearing interest rate at 3M Euribor plus 5,25% margin,
being repayable in monthly tranches until 2024 with a balloon
payment of EUR2.546.600. At the maturity of the lease agreement and
upon payment of the balloon N-E Real Estate Park First Phase Srl
will become owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. N-E Real Estate Park First Phase Srl pledged its future receivables from its tenants.
2. N-E Real Estate Park First Phase Srl pledged Bank Guarantee receivables from its tenants.
3. N-E Real Estate Park First Phase Srl pledged its shares.
4. N-E Real Estate Park First Phase Srl pledged all current and
reserved accounts opened in Alpha Bank Romania SA.
5. N-E Real Estate Park First Phase Srl is obliged to provide
cash collateral in the amount of EUR300.000 in Alpha Bank Romania
SA, in equal annual installments starting with the 5(th) year of
the agreement.
6. SPDI provided a corporate guarantee in favor of the bank
towards the liabilities of N-E Real Estate Park First Phase Srl
arising from the sales and lease back agreement.
38. Restructuring of the business
During 2016 the non-controlling shareholders of the companies
related to GreenLake project (Moselin Investments Srl, Iuliu Maniu
Limited, RAM Real Estate Management Limited, Rimasol Enterprises
Limited, Rimasol Real Estate Srl, Ashor Ventures Limited, Ashor
Development Srl, Ebenem Limited, Ebenem Investments Srl, Jenby
Ventures Limited and Jenby Investments Srl) in agreement with the
Group capitalized the bigger part of their capital injections by
means of shareholder loans and payables effected from 2008 onwards.
An amount of EUR6.641.997 from such loans and payables have been
transferred to the equity section while the process of
capitalization was partially finalised in 2017 with the remaining
finalised within 2018.
39. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
31 Dec 201 9 31 Dec 201 8
Issued ordinary shares capital 129.191.442 127.270.481
Weighted average number of ordinary shares (Basic) 127.275.743 125.644.043
Diluted weighted average number of ordinary shares 127.275.743 125.644.043
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 201 9 31 Dec 201 8
EUR EUR
Loss after tax attributable to owners of the parent (7.201.720) (3.045.853)
Basic (0,06) (0,03)
Diluted (0,06) (0,03)
c. Basic diluted and adjusted earnings per share from discontinued operations
Earnings per share 31 Dec 201 9 31 Dec 201 8
EUR EUR
Loss after tax from discontinued operations attributable to owners of the parent (4.846.634) (699.271)
Basic (0,04) (0,01)
Diluted (0,04) (0,01)
d. Net assets per share
Net assets per share 31 Dec 201 9 31 Dec 201 8
EUR EUR
Net assets attributable to equity holders of the parent 29.392.468 35.608.276
Number of ordinary shares 129.191.442 127.270.481
Diluted number of ordinary shares 129.191.442 125.644.043
Basic 0,23 0,28
Diluted 0,23 0,28
40. 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 - Victini Logistics (sold within 2019), Innovations Logistics Park
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - Craiova Praktiker (sold within 2018) and 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 2019
Warehouse Office Retail Residential Land Corporate Total
Plots
EUR EUR EUR EUR EUR EUR EUR
------------ ---------- ------------
Segment profit
Rental income (Note 10) - - - - - 364.034 364.034
------------ ---------- ------------
Service charges and utilities
income (Note 10) - - - - - 93.416 93.416
------------ ---------- ------------
Impairment of financial
investments (Note 27) (153.913) (153.913)
------------ ---------- ------------
Impairment of inventory
and provisions (Note 15) - - - - - - -
------------ ---------- ------------
Profit from discontinued
operation (Note 9b) (1.233.371) 1.307.445 171.395 (88.634) (3.049.171) (92.097) (2.984.433)
------------ ---------- ------------
Segment profit (1.233.371) 1.307.445 171.395 (88.634) (3.203.084) 365.353 (2.680.896)
Administration expenses
(Note 12) - - - - - - (2.442.171)
------------ ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - (442.629)
------------ ---------- ------------
Finance income (Note 16) - - - - - - 474.584
------------ ---------- ------------
Interest expenses (Note
16) - - - - - - (119.525)
------------ ---------- ------------
Other finance costs (Note
16) - - - - - - (17.725)
------------ ---------- ------------
Profit from discontinued
operations (Note 9b) - - - - - - (1.817.410)
------------ ---------- ------------
Foreign exchange losses,
net (Note 17a) - - - - - - (74.779)
Income tax expense (Note
18) - - - - - - (36.380)
Exchange difference on
I/C loan to foreign holdings
(Note 17b) - - - - - - 66.557
Exchange difference on
translation foreign holdings
(Note 30) - - - - - - 223.135
Total Comprehensive Income - - - - - - (6.867.239)
40. Segment information (continued)
Continued Operations
Profit and Loss for the year 2018
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------
Segment profit
Property Sales - - 6.517.181 - - - 6.517.181
income (Note 14)
------------
Cost of Property - - (7.362.362) - - - (7.362.362)
sold (Note 14)
------------
137.289
Rental income (Note10) - - 494.347 - - * 631.636
------------
Service charges
and utilities income 9.534
(Note 10) - - - - - * 9.534
Service and Property
Management income
(Note 10) - - - - - 128.293 128.293
Asset operating
expenses
(Note 11) - - (116.770) - (1.549) - (118.319)
------------
Profit from discontinued
operation (Note
9) 934.156 1.377.516 68.206 (317.594) (1.501.833) - 560.451
------------
Segment profit 934.156 1.377.516 (399.398) (317.594) (1.503.382) 275.116 366.414
Administration
expenses
(Note 12) - - - - - (1.768.847)
------------
Other (expenses)/income,
net (Note 15) - - - - (31.716)
------------
Finance income
(Note 16) - - - - - - 686.183
------------
Interest expenses
(Note 16) - - - - - - (329.412)
------------
Other finance costs
(Note 16) - - - - - (24.329)
------------
Foreign exchange
losses, net (Note
17a) - - - - - - (71.390)
Income tax expense
(Note 18) - - - - - - (613.034)
Profit from discontinued -
operations (Note
9) - - - - (1.966.350)
Exchange difference
on I/C loan to
foreign holdings
(Note 17b) - - - - - - 1.850
Exchange difference
on translation
foreign holdings
(Note 30) - - - - - - 421.086
Total Comprehensive -
Income - - - - - (3.329.545)
* 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.
40. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2019
Warehouse Office Retail Residential Land Corporate Total
Plots
EUR EUR EUR EUR EUR EUR EUR
----------- ---------- ------------
Segment profit
Property Sales
income (Note
14) - 244.212 - 363.861 - - 608.073
----------- ---------- ------------
Cost of Property
sold (Note 14) - (135.242) - (480.235) - - (615.477)
----------- ---------- ------------
Rental income
(Note 10) 952.902 640.651 114.320 18.688 417 - 1.726.978
----------- ---------- ------------
Service charges
and utilities
income (Note
10) 28.574 4.698 - 710 - - 33.982
----------- ---------- ------------
Sale of electricity
(Note 10) 128.623 - - - - - 128.623
----------- ---------- ------------
Service and Property
Management income
(Note 10) - - - 2.125 - - 2.125
----------- ---------- ------------
Valuation gains/(losses)
from investment
property (Note
13) 257.785 293.711 66.423 19.200 (219.267) - 417.852
----------- ---------- ------------
Gain/(loss) realized
on acquisition
of assets/subsidiary
(Note 20) - - - - - - -
----------- ---------- ------------
Loss on disposal
of subsidiary (2.315.
(Note 20) 343 ) (2.677.420) (992.763
----------- ---------- ------------
Share of profits/(losses)
from associates
(Note 21) 297.985 297.985
----------- ---------- ------------
Asset operating
expenses
(Note 11) (285.912) (38.570) (9.348) (12.983) (152.901) (92.097) (591.811)
----------- ---------- ------------
Segment profit (1.233.371) 1.307.445 171.395 (88.634) (3.049.171) (92.097) (2.984.433)
Administration
expenses
(Note 12) - - - - - - (220.509)
----------- ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - 312.801
----------- ---------- ------------
Finance income
(Note 16) - - - - - - 10.022
----------- ---------- ------------
Interest expenses
(Note 16) - - - - - - (1.406.001)
----------- ---------- ------------
Other finance
costs (Note 16) - - - - - - (24.528)
----------- ---------- ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (436.880)
Income tax expense
(Note 18) - - - - - - (52.315)
Loss for the
year - - - - - - (4.801.843)
40. Segment information (continued
Discontinued Operations
Profit and Loss for the year 2018
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
Segment profit
Property Sales
income (Note 14) - - 271.437 1.227.954 194.952 - 1. 694.343
Cost of Property (1.265.02 (1.756.12
sold (Note 14) - - (350.000) 3 ) (141.098) - 1 )
Rental income (Note 1.214.77 115.62 1.963.72
10) 2 598.123 5 34.507 697 - 4
Service charges
and utilities income
(Note 10) 36.365 78.015 - 3.352 479 - 118.211
Sale of electricity
(Note 10) 294.773 - - - - - 294.773
Service and Property
Management income
(Note 10) - - - 2.167 - - 2.167
Valuation gains/(losses)
from investment
property (Note ( 1.218.297
13) (289.633) 422.971 44.642 1.361 (1.397.638) - )
Share of profits/(losses)
from associates
(Note 21) - 364.920 - - - - 364.920
Asset operating
expenses (Note ( 322.122 ( 606.069
11) ) (86.513) (13.498) (24.711) (159.225) - )
Other (expenses)/income,
net (Note 15) - - - (297.200) (297.200)
Segment profit 934.155 1.377.516 68.206 (317.593) (1.501.833) - 560.451
Administration
expenses
(Note 12) - - - - - - (260.714)
Other (expenses)/income,
net (Note 15) - - - - - - (66.235)
Finance income
(Note 16) - - - - - - 9.979
Interest expenses (1 .507.178
(Note 16) - - - - - - )
Other finance costs
(Note 16) - - - - - - (35.402)
Foreign exchange
losses, net (Note
17a) - - - - - - (10.233)
Income Tax (Note
18) - - - - - - (96.567)
Loss for the year - - - - - - (1.405.899)
40. Segment information (continued)
Total Operations
Balance Sheet as at 31 December 2019
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR
----------- ----------- ---------- ------------ ------------ -----------
Assets
Long-term receivables
and prepayments 852 - - - - - 852
Financial Assets
at FV through
P&L - - - - (4.395.456) 7.977.099 3.581.643
----------- ----------- ---------- ------------ ------------ -----------
Assets held
for sale 10.915.000 13.146.286 1.438.000 667.001 21.709.852 2.015.488 49.891.627
----------- ----------- ---------- ------------ ------------ -----------
Segment assets 10.915.852 13.146.286 1.438.000 667.001 17.314.396 9.992.587 53.474.122
Tangible and
intangible assets - - - - - - 566
Prepayments
and other current
assets - - - - - - 10.833.913
---------- ---------- -------- -------- ---------- -----------
Cash and cash
equivalents - - - - - - 207.251
---------- ---------- -------- -------- ---------- -----------
Total assets - - - - - - 64.515.852
Liabilities
associated with
assets classified
as held for
disposal 6.921.741 3.518.711 930.730 281.399 7.448.818 1.231.829 20.333.228
---------- ---------- -------- -------- ---------- -----------
Borrowings 7.248 - - - 459 420.293 428.000
---------- ---------- -------- -------- ---------- -----------
Segment liabilities 6.928.989 3.518.711 930.730 281.399 7.449.277 1.652.122 20.761.228
Trade and other
payables - - - - - - 4.579.595
---------- ---------- -------- -------- ---------- -----------
Taxation - - - - - - 1.145.703
---------- ---------- -------- -------- ---------- -----------
Bonds - - - - - - 1.190.603
Total liabilities - - - - - - 27.677.129
Total Operations
Balance Sheet as at 31 December 2018
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------ ------------ ----------- ------------- ------------ ---------- -----------
Assets
Long-term receivables
and prepayments - - - - - 850 850
Assets held
for sale 26.070.000 13.229.506 1.406.000 5.767.003 30.816.594 2.389.635 79.678.738
------------ ------------ ----------- ------------- ------------ ---------- -----------
Segment assets 26.070.000 13.229.506 1.406.000 5.767.003 30.816.594 2.390.485 79.679.588
Tangible and
intangible assets - - - - - - 3.674
Prepayments
and other current
assets - - - - - - 5.585.408
------------ ----------- -------- -------- ---------- ---------- -------------
Cash and cash
equivalents - - - - - - 282.713
------------ ----------- -------- -------- ---------- ---------- -------------
Total assets - - - - - - 85.551.383
Liabilities
associated with
assets classified
as held for
disposal 17.882.585 4.079.598 967.338 618.113 9.747.126 1.999.133 35.293.893
------------ ----------- -------- -------- ---------- ---------- -------------
Borrowings - - - 41 459 401.790 402.290
------------ ----------- -------- -------- ---------- ---------- -------------
Segment liabilities 17.882.585 4.079.598 967.338 618.154 9.747.585 2.400.923 35.696.183
Trade and other
payables - - - - - - 4.174.936
------------ ----------- -------- -------- ---------- ---------- -------------
Taxes payable
and provisions - - - - - - 1.413.827
------------ ----------- -------- -------- ---------- ---------- -------------
Bonds - - - - - - 1.122.470
------------ ----------- -------- -------- ---------- ---------- -------------
Total liabilities - - - - - - 42.407.416
40. Segment information (continued)
Discontinued operations
Assets and Liabilities held for sale 2019
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
----------- ---------- ---------- ------------ ----------- -----------
Assets
Investment properties 10.600.000 7.766.000 1.438.000 667.000 21.709.852 - 42.180.852
----------- ---------- ---------- ------------ ----------- -----------
Long-term receivables
and prepayments 315. 000 265 - - - - 315. 265
Investments
in associates - 5.380.021 - - - - 5.380.021
----------- ---------- ---------- ------------ ----------- -----------
Financial Asset
at FV through
OCI - - - 1 - - 1
----------- ---------- ---------- ------------ ----------- -----------
Segment assets 10.915.000 13.146.286 1.438.000 667.001 21.709.852 - 47.876.139
Tangible and
intangible assets - - - - - - 14.342
Prepayments
and other current
assets - - - - - - 1.470.772
---------- ---------- -------- -------- ---------- -----------
Cash and cash
equivalents - - - - - - 530.374
---------- ---------- -------- -------- ---------- -----------
Total assets - - - - - - 49.891.627
Borrowings 36 345.911 930.730 278.360 7.394.623 - 8.949.660
---------- ---------- -------- -------- ---------- -----------
Finance lease
liabilities 6.857.475 3.172.800 - - 54.195 - 10.084.470
---------- ---------- -------- -------- ---------- -----------
Deposits from
tenants 64.230 - 3.039 - - 67.269
---------- ---------- -------- -------- ---------- -----------
Segment liabilities 6.921.741 3.518.711 930.730 281.399 7.448.818 19.101.399
Trade and other
payables - - - - - - 1.015.266
---------- ---------- -------- -------- ---------- -----------
Taxation - - - - - - 216.563
---------- ---------- -------- -------- ---------- -----------
Total liabilities - - - - - - 20.333.228
Discontinued operations
Assets and Liabilities held for sale 2018
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
----------- ----------- ----------- ------------ ------------ -------------
Assets
Investment properties 25.800.000 7.916.000 1.406.000 1.038.000 26.100.437 1.085.100 63. 345.537
----------- ----------- ----------- ------------ ------------ -------------
Investment properties
under development - - - - 4.716.157 - 4.716.157
----------- ----------- ----------- ------------ ------------ -------------
Long-term receivables
and prepayments 270.000 271 - - - - 270.271
Investments
in associates - 5.313.235 - - - - 5.313.235
----------- ----------- ----------- ------------ ------------ -------------
Financial asset
at fair value
through OCI 1 1
----------- ----------- ----------- ------------ ------------ -------------
Inventory - - - 4.604.044 - - 4.604.044
----------- ----------- ----------- ------------ ------------ -------------
Segment assets 26.070.000 13.229.506 1.406.000 5.642.045 30.816.594 1.085.100 78.249.245
Tangible and
intangible assets - - - - - - 42.534
Prepayments
and other current
assets - - - - - - 682.134
------------ ----------- --------- --------- ---------- ------------
Cash and cash
equivalents - - - - - - 704.825
------------ ----------- --------- --------- ---------- ------------
Total assets - - - - - - 79.678.738
Borrowings 10.658.951 677.558 967.338 614.999 9.686.628 - 22.605.474
------------ ----------- --------- --------- ---------- ------------
Finance lease
liabilities 7.007.474 3.402.040 - - 60.498 - 10.470.012
------------ ----------- --------- --------- ---------- ------------
Deposits from
tenants 216.160 - - 3.114 - - 219.274
------------ ----------- --------- --------- ---------- ------------
Segment liabilities 17.882.585 4.079.598 967.338 618.113 9.747.126 - 33.294.760
Trade and other
payables - - - - - - 1.500.603
------------ ----------- --------- --------- ---------- ------------
Taxes payable
and provisions - - - - - - 498.530
------------ ----------- --------- --------- ---------- ------------
Total liabilities - - - - - - 35.293.893
40. Segment information (continued)
Geographical information
31 Dec 31 Dec 31 Dec 2018 31 Dec
2019 2019 2018
Income (Note 10) Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Ukraine - - - -
------------- ------------- ------------ -------------
Romania - 1.038.158 594.566 1.098.059
------------- ------------- ------------ -------------
Greece - 853.133 - 1.280.119
------------- ------------- ------------ -------------
Bulgaria - 417 - 697
------------- ------------- ------------ -------------
Cyprus * 457.450 - 174.897 -
------------- ------------- ------------ -------------
Total 457.450 1.891.708 769.463 2.378.875
------------
* 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.
Loss from disposal of inventory 31 Dec 31 Dec 31 Dec 2018 31 Dec
(Note 1 4a) 2019 2019 2018
------------- ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Bulgaria - - - (13.553)
------------- ------------- ------------ -------------
Total - - - (13.553)
------------
Gain/(loss) from disposal of 31 Dec 31 Dec 31 Dec 2018 31 Dec
investment properties (Note 1 2019 2019 2018
4b)
------------- ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Romania - (7.404) (845.181) (285.098)
------------- ------------- ------------ -------------
Total - (7.404) (845.181) (285.098)
------------
31 Dec 31 Dec 31 Dec 2018 31 Dec
2019 2019 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
----------- ----------- ------------
Carrying amount of assets ( investment
properties, associates, inventory
and Financial asset at fair value
through OCI)
Ukraine - 4.895.852 - 10.829.694
----------- ----------- ------------
Romania - 42.665.022 - 42.917.588
Greece - - - 15.200.000
----------- ----------- ------------
Bulgaria - - - 8.834.044
Total - 47.560.874 - 77.781.326
41. Related Party Transactions
The following transactions were carried out with related
parties:
41.1 Income/ Expense
41.1.1 Income
31 Dec 31 Dec 31 Dec 31 Dec
201 9 201 9 201 8 201 8
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR
Interest Income on loan to related
parties 4.600 - 4.600 -
Interest Income from loan to associates 2.372 9.366 325 9.366
Total 6.972 9.366 4.925 9.366
Interest income on loan to related parties relates to interest
income from Delia Lebada Srl and interest income from associates
relates to interest income from GreenLake Development Srl.
41. Related Party Transactions (continued)
41.1 Income/ Expense (continued)
41.1.2 Expenses
31 Dec 31 Dec 31 Dec 31 Dec
201 9 201 9 201 8 201 8
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Management Remuneration and incentives
(Note 12) 646.309 - 391.359 -
Interest expenses on Narrowpeak
loan (Note 16) 232 - 637 -
Interest expenses on Director
Loans 30.417 - 38.444 -
Total 676.958 - 430.440 -
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.
41.2 Payables to related parties (Note 34)
31 Dec 31 Dec 31 Dec 2018 31 Dec
2019 2019 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Board of Directors & Committees
remuneration 364 - 80.776
Grafton Properties - - 123.549 -
Secure Management Services Ltd 177 - 19.319 -
------------
Management Remuneration 605.850 - 519.495 -
Total 606.391 - 743.139 -
41 .2.1 Board of Directors & Committees
The amount payable represents remuneration 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 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 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.
41 .2.2 Loan payable to Grafton Properties
During the Company restructuring in 2011 and under the
Settlement Agreement of July 2011, the Company undertook the
obligation to pay to certain lenders who had contributed funds for
the operating needs of the Company between 2009-2011, by lending to
AISI Realty Capital LLC as was the SC Secure Capital Limited name
then, a total fee of USD 450.000. Part of this liability towards
Grafton Properties (the representative of the Lenders), equal to
USD 150.000, remained unpaid and eventually wtitten off during
2019, because it was contingent on the Group raising USD 50m of
capital in the markets, something that never took place.
41 .2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO of the Company.
41.3 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 2018 31 Dec
2019 2019 2018
EUR EUR EUR EUR
LLC "Aisi Ukraine" 23.062.351 57.865 23.062.351 21.711
LLC " Almaz-Press-Ukraine " 8.236.554 263.330 8.236.554 189.938
LLC "Aisi Ilvo" 150.537 28.597 150.537 78.890
Total 31.449.442 349.792 31.449.442 290.539
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 EUR35.559, estimated on balances held at 31 December 2019.
41. Related Party Transactions (continued)
41.4 Loans to associates (Note 27)
31 Dec 31 Dec 31 Dec 31 Dec
201 9 201 9 201 8 201 8
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loans to GreenLake Development
Srl 8.700 292.208 8.374 282.842
Total 8.700 292.208 8.374 282.842
The loan was given to GreenLake Development Srl from Edetrio
Holdings Limited. The agreement with Edetrio Holdings Limited was
signed on 17 February 2012 and bears interest 5%. The maturity date
is 30 April 2020.
41.5 Loans from related parties (Note 32)
31 Dec 31 Dec 31 Dec 31 Dec
201 9 201 9 201 8 201 8
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loan from Narrowpeak Consultants 206 - 5.256 -
Loan from Directors 375.000 - 375.000 -
Interest accrued on loans from
related parties 45.086 - 14.107 -
Total 420.292 - 394.363 -
Loans from Directors reflects loans provided from 3 Directors as
bridge financing for future property acquisitions. The loans bear
interest 8% annually and are repayable on 31 March 2020. The
Company and the Directors are discussing the extension of the loans
until year end and relevant documentation process is currently in
place.
42. Contingent Liabilities
42.1 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 sale of Terminal
Brovary, the exposure of the Group in Ukraine was significantly
reduced.
The Group performed during the reporting period part of its
operations also in Romania, Greece and Bulgaria. In respect of
Romanian, Bulgarian and Greek taxation systems all are subject to
varying interpretation and to constant changes, which may be
retroactive. In certain circumstances the tax authorities can be
arbitrary in certain cases.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
developed 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.
42.2 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.
42.3 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 EUR5.042.421,87, 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 34). In addition, 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.
42. Contingent Liabilities (continued)
42.4 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.
42.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2019.
43. Commitments
The Group had no other commitments as at 31 December 2019.
44. Financial Risk Management
44.1 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 32 ), bonds (Note 33), trade and other
payables (Note 34) deposits from tenants (Note 35), financial
leases (Note 37), taxes payable (Note 36 ) 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.
44.2 Categories of Financial Instruments
Note 31 Dec 31 Dec 31 Dec 31 Dec
201 9 201 9 201 8 201 8
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Financial Assets
Cash at Bank 28 207.251 530.374 282.713 704.825
Long-term Receivables and
prepayments 24 852 315.265 850 270.271
Financial Assets at FV
through P&L 27 3.581.643 -
Prepayments and other receivables 26 10.833.913 1.470.772 5.585.408 682.134
Financial Asset at FV through
OCI 22 - 1 - 1
Total 14.623.6659 2.316.412 5.868.971 1.657.231
Financial Liabilities
Borrowings 32 428.000 8.949.660 402.290 22.605.474
Trade and other payables 34 4.579.595 1.015.266 4.174.936 1.500.603
Deposits from tenants 35 - 67.269 - 219.274
Finance lease liabilities 37 - 10.084.470 - 10.470.012
Taxation 36 1.145.703 216.563 1.413.827 498.530
Bonds 33 1.190.603 - 1.122.470 -
Total 7.343.901 20.333.228 7.113.523 35.293.893
44.3 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.
44. Financial Risk Management (continued)
44.4 Economic Market Risk Management
The Group operates in Romania, Bulgaria, Greece 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) ,
2019, cash and cash equivalent (including continued and
discontinued operations) financial assets amounted to EUR737.624,57
(2018: EUR987.537) of which approx . EUR153,9 in UAH and EUR518.883
in RON (Note 28) while the remaining are mainly denominated in
either USD or EUR.
The Group is exposed to interest rate risk in relation to its
borrowings (including continued and discontinued operations)
amounting to EUR9.378.060 (31 December 2018: EUR23.007.764 ) 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.
As at 31 December 2019 the weighted average interest rate for
all the interest bearing borrowing and financial leases of the
Group stands at 4,07% (31 December 201 8 : 3,83%).
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2019 is presented below:
Actual +100 bps +200 bps
as at 31.12.2019
Weighted average interest
rate 4,07% 5,07% 6,07%
Influence on yearly finance
costs 180.076 360.152
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2018 is presented below:
Actual +100 bps +200 bps
as at 31.12.2018
Weighted average interest
rate 3,83% 4,83% 5,83%
Influence on yearly finance
costs (324.007) (648.014)
The Group's exposures to financial risk are discussed also in
Note 7.
44.5 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.
44.6 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.
44. Financial Risk Management (continued)
44.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2019 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 207.251 207.251 207.251 - -
------------
Prepayments and other
receivables 10.833.913 10.833.913 10.833.913 - -
------------
Financial Assets
at FV through P&L 3.581.643 3.581.643 3.581.643 - -
------------
Long-term Receivables
and prepayments 852 852 - - 852
------------
Total Financial assets 14.623.659 14.623.659 14.622.807 - 852
------------
Financial liabilities
------------
Borrowings 428.000 484.060 64.668 419.392 -
------------
Trade and other payables 4.579.595 4.579.595 4.579.595 -
------------
Bonds issued 1.190.603 1.661.001 223.961 67.200 1.369.841
------------
Taxes payable and
provisions 1.145.703 1.145.703 550.163 595.541 -
------------
Total Financial liabilities 7.343.901 7.870.359 5.418.387 1.082.133 1.369.841
------------
Total net assets/(liabilities) 7.279.758 6.753.300 9.204.420 (1.082.133) (1.368.989)
------------
Discontinued Operations
31 December 2019 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 530.374 530.374 530.374 - -
------------
Prepayments and other
receivables 1.470.772 1.470.772 1.470.772 - -
------------
Financial Asset at
FV through OCI 1 1 1 - -
------------
Long-term Receivables
and prepayments 315.265 315.265 - - 315.265
------------
Total Financial assets 2.316.412 2.316.412 2.001.147 - 315.265
------------
Financial liabilities
------------
Borrowings 8.949.660 6.918.573 2.113.369 3.513.894 1.291.310
------------
Trade and other payables 1.015.266 1.015.266 1.007.050 - 8.216
------------
Deposits from tenants 67.269 67.269 - - 67.269
------------
Finance lease liabilities 10.084.470 12.552.787 861.304 912.841 10.778.642
------------
Bonds issued - - - - -
------------
Taxation 216.563 216.563 173.012 43.551 -
------------
Total Financial liabilities 20.333.228 20.770.458 4.154.735 4.470.286 12.145.437
------------
Total net assets/(liabilities) (18.016.816) (18.454.046) (2.153.588) (4.470.286) (11.830.172)
------------
Continued Operations
31 December 2018 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 282.713 282.713 282.713 - -
----------- -----------
Prepayments and other
receivables 5.585.408 5.585.408 5.585.408 - -
----------- -----------
Long-term Receivables
and prepayments 850 850 - - 850
----------- -----------
Total Financial
assets 5.868.971 5.868.971 5.868.121 - 850
----------- -----------
Financial liabilities
----------- -----------
Borrowings 420.290 439.631 33.991 405.640 -
----------- -----------
Trade and other payables 4.174.936 4.174.936 4.174.936
----------- -----------
Bonds issued 1.122.470 1.592.868 155.828 67.200 1.369.840
----------- -----------
Taxation 1.413.827 1.413.827 652.367 761.460 -
----------- -----------
Total Financial
liabilities 7.131.523 7.621.262 5.017.122 1.234.300 1.369.840
----------- -----------
Total net assets/(liabilities) 1.262.552 1.752.291 (850.999) 1.234.300 1.368.990
-----------
Discontinued Operations
31 December 2018 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 704.825 704.825 704.825 - -
----------- -----------
Prepayments and other
receivables 682.134 682.134 682.134 - -
----------- -----------
Financial Asset at
FV through OCI 1 1 1 - -
----------- -----------
Long-term Receivables
and prepayments 270.271 270.271 - - 270.271
----------- -----------
Total Financial
assets 1.657.231 1.657.231 1.386.960 - 270.271
----------- -----------
Financial liabilities
----------- -----------
Borrowings 22.605.474 22.387.725 4.817.752 2.784.025 14.785.948
----------- -----------
Trade and other payables 1.500.603 1.500.603 1.074.460 - 426.143
----------- -----------
Deposits from tenants 219.274 219.274 - - 219.274
----------- -----------
Finance lease liabilities 10.470.012 13.414.693 886.771 856.269 11.671.653
----------- -----------
Taxes payable and
provisions 498.530 498.530 452.665 45.865 -
----------- -----------
Total Financial
liabilities 35.293.893 38.020.825 7.231.648 3.686.159 27.103.018
----------- -----------
Total net assets/(liabilities) 33.636.662 36.363.594 5.844.688 3.686.159 26.832.747
-----------
45. Events after the end of the reporting period
a) COVID-19 effects
As a result of Group's property operations being focused on the
food and the telco sectors, the Group did not suffer any material
adverse effects from the COVID-19 pandemic crisis which started
during Q1 2020 and continues until the date of this report. All of
the large/anchor tenants in Group's properties in Bucharest,
including Favorit, a 3PL logistics operator servicing Carrefour;
Danone, the international food company; ANCOM, the Romanian
Telecoms Regulatory Authority; and the supermarket chain Mega
Image, have experienced little or no disruption from either the
COVID-19 crisis or the lockdown in Romania.
However, like other companies all over the world, during the
pandemic, SPDI has experienced both delayed payment receipts as
well as general delays when interacting with associates who were/
are home bound, while carrying out its business activities.
Moreover, the overall investment apetite for real estate has been
affected by the ongoing crisis, and this will be reflected in
Group's investment activities and future valuation exercises of its
properties.
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 non-Greek 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 have been engaged in extensive discussions
for formulating and agreeing the specific terms of Stage 2 of the
transaction which involves EOS and Delenco assets in Romania, and
Kiyanovskiy and Tsymlyanskiy land plots in Ukraine.
Despite the problems and the slow progression of the discussions
during the pandemic which affected all related participants in all
jurisdictions of the two parties (Holland, Czech Republic, Ukraine,
Romania, Cyprus, UK), provided that final agreements are reached,
signing and closing of Stage 2 is expected close to year end
subject to COVID-19 effects.
c) Closing of Boyana transaction with Arcona
As part of the closing of the sale of Boyana to Arcona in 2019,
the 315.591 Arcona shares and the 77.201 warrants over Arcona
shares that served as consideration of the transaction, held
initially in escrow, agreed to be released upon agreement of the
extension terms of the associated loans. The consideration shares
and warrants were in such escrow as at the end of the period and
released effectively in February 2020 when the transaction closed
successfully. Moreover, as part of the transaction, the parties
agreed the transfer of an Alpha Bank loan of EUR 0,77m at the level
of Sertland to Arcona. The loan was transferred successfully during
August 2020.
d) Loan from a third party
During Q2 2020 the Company received a short term loan from an
unrelated third party, of an amount of EUR 500.000 at 10% interest,
with the purpose of funding operating needs. The loan is payable
within 2020, following the re-payment of the Sellers Loan that the
Company has granted as part of the sale of Boyana Residences to
Arcona.
45. Events after the end of the reporting period (continued)
e) Blooming House loan re-payment
Following cash proceeds from apartment sales during H1 2020,
Ketiza Real Estate Srl re-paid fully the loan with Eurobank, used
to finance the acquisition and construction of Blooming House
asset, therefore being able to utilize freely the proceeds from the
remaining three units.
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