TIDMSPDI
RNS Number : 0406O
Secure Property Dev & Inv PLC
30 September 2019
Secure Property Development & Investment PLC/ Index: AIM /
Epic: SPDI / Sector: Real Estate
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
Half-year Report
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property company, is pleased to
announce its unaudited half-year report for the period ended 30
June 2019.
Realising value from a portfolio of prime South Eastern European
real estate
Financial Highlights
Positive financial trend in:
-- EBITDA - increased to EUR0.47m compared to EUR0.31m in H1 2018, an increase of 52%
-- Operating loss after finance and tax expenses - reduced to -EUR0.09m (H1 2018: -EUR0.29m)
Significant asset backing behind the Company:
-- Net Equity of EUR35.7million as at 30 June 2019 (H1 2018: EUR35.6million)
-- EUR0.28 NAV per share as at 30 June 2019 represents a c. 250%
premium to current share price
Recent Operational Development Highlights
Sale of Non-Greek assets at a premium to SPDI's total current
market capitalisation
-- Progressing staged completion process of conditional sale of
the Company's Non-Greek asset portfolio to Arcona Property Fund
N.V, an Amsterdam-listed company focused on Central Eastern
European commercial property, in exchange for the issue of shares
and warrants in ARCONA
-- Closing of Stage 1 now expected in October 2019
-- Progress continues on Stage 2 and further updates will be provided as and when appropriate
Ongoing discussions regarding the Olympians logistics portfolio
in Romania
Lambros Anagnostopoulos, Chief Executive Officer of SPDI, said;
"Much progress has been made during the summer towards completing
the exchange of our non-Greek assets for shares and warrants in the
Amsterdam listed property fund Arcona. We expect closing of Phase
one and signing of Phase 2 to take place in the months to come. At
this point, SPDI will be issued with equity in a dividend-paying
Central East European fund with a diversified portfolio of income
producing properties."
* *S * *
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
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Cosima Akerman
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.
1. Management Report
In Summary
SPDI's core property asset portfolio currently consists of South
Eastern European prime commercial and industrial real estate, the
majority of which is let to blue chip tenants on long leases.
In 2018 the Company, in line with its strategy to maximise value
for shareholders, entered into a conditional 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, 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.
Such a sale of the Company's non-Greek portfolio, together with
existing debt, is to be settled through the issuance of new Arcona
Property Fund N.V. shares and warrants which will be distributed to
existing SPDI shareholders pro-rata to their shareholding in the
Company's shares.
The combination of the two complimentary asset portfolios is
expected to create a significant European Property company,
benefiting both the Company's and the buyer's respective
shareholders.
During H1 2019, and thereafter, management engaged together with
the Company's consultants in the implementation of the
aforementioned transaction, which among others, included
structuring of each asset transaction individually, conducting due
diligence on Arcona's assets, drafting relevant framework and sale
and purchase agreements, and negotiating with Banks for relevant
consents and approvals.
During the same period, the Company enjoyed strong interest from
potential buyers of its Greek logistics property, and management
engaged in evaluating relevant offers and discussions for the best
utilization of the property. Finally, the property sold during
early H2 2019 at a valuation of EUR12,5m. This excludes a
receivable of EUR0,6m due to be received by the Company within the
next 18 months from the property's previous owner.
Regarding the economic environment in which the Company
operates, the Romanian economy continued to grow strongly with a
5,1% increase. Whilst maintaining record low unemployment.
Bucharest is bustling with property development and it is expected
that this year will set new records especially in Logistics and
Office markets, backed by international and domestic investor
interest.
Greece, which exited the financing and stabilisation programme,
experiences economic growth for the third consecutive year and,
following recent elections, has a strong new government in place.
The country maintains a strong primary surplus, and with
considerably lower spreads, entered the markets for debt
re-financing in 2019. As a result, Greece is now back on the radar
for a number of property investors.
P&L
The table below presents the operating performance for H1 2019
compared to H1 2018. EBITDA reached EUR0,47m compared to EUR0,31m
in H1 2018, net finance costs reduced by 3% to EUR0,54m, and
operating result after finance and tax expenses increased by 61% to
-EUR0,09m from -EUR0,29m in H1 2018.
EUR 30 June 2019 30 June 2018
------------------------------------------------------------- --------------------------------------------------------------------------
Continued Discontinued Total Continued Discontinued Total
Operations Operations Operations Operations
----------------- ------------------- -------------------- ------------------ --------------------- ---------------------------- ---------------------
Rental,
Utilities,
Management
& Sale of
electricity
Income 150.041 1.203.928 1.353.969 371.724 1.094.433 1.466.157
Net gain/(loss)
on disposal
of investment
property - 120.022 120.022 - 162.731 162.731
Income from
Operations
of Investments 150.041 1.323.950 1.473.991 371.724 1.257.164 1.628.888
Asset operating
expenses - (319.445) (319.445) (45.789) (212.419) (258.208)
Net Operating
Income from
Investments 150.041 1.004.505 1.154.546 325.935 1.044.745 1.370.680
Share of
profits from
associates - 224.177 224.177 - 138.637 138.637
Impairment
allowance for
inventory and
provisions - - - - (297.200) (297.200)
Total Income 150.041 1.228.682 1.378.723 325.935 886.182 1.212.117
Administration
expenses (800.710) (111.352) (912.062) (800.186) (100.478) (900.664)
Operating
Result
(EBITDA) (650.669) 1.117.330 466.661 (474.251) 785.704 311.453
Finance Cost,
net 165.067 (701.091) (536.024) 247.117 (797.826) (550.709)
Income tax
expense (2.212) (16.368) (18.580) (9.923) (37.364) (47.287)
Operating
Result after
Finance and
Tax Expenses (487.814) 399.871 (87.943) (237.057) (49.486) (286.543)
Other income /
(expenses),
net 66.056 237.474 303.530 (370) 26.937 26.567
Income Tax - - - - - - -
One off
Fair value
adjustments
from
Investment
Properties - 286.595 286.595 (999.313) (791.721) (1.791.034)
Gain realized - - - - - -
on acquisition
of subsidiaries
Foreign
exchange
differences,
net (43.865) (274.005) (317.870) (14.311) (1.369) (15.680)
Result for the
year (465.623) 649.935 184.312 (1.251.051) (815.639) (2.066.690)
Exchange
difference on
I/C
loans to
foreign
holdings - 21.828 21.828 - 14.449 14.449
Exchange
difference on
translation
due to
presentation
currency - (183.153) (183.153) - 880.539 880.539
Total
Comprehensive
Income
for the year (465.623) 488.610 22.987 (1.251.051) 79.349 (1.171.702)
----------------- ------------------- -------------------- ------------------ --------------------- ---------------------------- ---------------------
2. Regional Economic Developments
Romania
Following annual growth of 4,1% in 2018, real GDP growth in
Romania accelerated in the first quarter of 2019 to 5,1%
year-on-year. Private consumption remained the main driver,
increasing 7,0% year on-year thanks to still double-digit wage
growth. Investment picked up, mainly due to the recovery in
construction, and by recent fiscal stimulus.
The strong real GDP growth in the first months of the year led
to an upward revision of growth for the whole year. Annual real GDP
growth is forecast to reach 4% in 2019 and 3,7% in 2020. However,
it is important that the composition of growth is now expected to
be more balanced as a pick-up in private investment will strengthen
total investment.
In 2018, HICP inflation stood at 4,1%, one of the the highest in
the EU. Inflation remained strong in the first quarter of 2019, at
3,8%, and is expected to have exceeded 4% in the second quarter,
before decelerating again during the next period. Rising food
prices led to upward price dynamics coupled by a depreciation of
the currency at the beginning of the year and strong consumption
and wage growth. As a result, annual inflation is expected to
average 4,2% in 2019, before decreasing to 3,7% in 2020. The
decrease in 2020 is expected to follow moderate wage pressures and
softer domestic demand.
Bulgaria
Real GDP growth strengthened from 3,1% in 2018 to 3,5%
year-on-year in the first quarter of 2019. The recovery in exports
that had begun in the second half of 2018 continued in the first
months of 2019 and contributed strongly to the economic expansion.
Private consumption continued to exhibit strong growth, underpinned
by favourable labour market outcomes and strong lending
activity.
Investment increased only slightly but positive expectations
about future economic activity and high capacity utilisation in
industry, imply increases in private investment. As a result, real
GDP growth is forecast to recover to 3,3% in 2019 and 3,4% in
2020.
Inflation dropped at the end of 2018 as the effects of high
energy prices dissipated closing at 2,6% at a year-on-year basis.
In the first five months of 2019, however, inflation gathered pace
again due to higher fuel prices and the continued rise of food
prices. In the second half of the year, the effects from energy and
services price increases will gradually disappear, and inflation is
expected to ease to 2,4% in 2019 and 1,7% in 2020.
Greece
The Greek economy experienced 1,9% growth in terms of Real GDP
in 2018 for the second consecutive year (2017: 1,5%), primarily due
to a rise in exports, but also due to an increase in domestic
demand. In the first quarter of 2019 the growth rate weakened to
1,3% (year-on-year), down from 1,5% in the previous quarter. This
slowdown highlights the fragile nature of Greece's recovery. Growth
in the first quarter was mainly driven by a rebound in investment,
particularly in non-residential construction and equipment
investment, while the external sector was a considerable drag on
growth, and public consumption declined as well.
Private consumption is expected to pick up in the rest of the
year and thus compensate for some of the unfavourable developments
in the external sector. In addition to the positive effect of the
minimum wage increase to household disposable income, which may be
more pronounced in the second quarter, fiscal measures legislated
in May 2019 should provide further support to private consumption.
Overall, real GDP growth is forecast to reach 2,1% in 2019 and
accelerate slightly to 2,2% in 2020 as private investment picks
up.
Downside risks are related to the stronger-than-expected
pass-through of the weakening external environment and
underexecution of the budget. Price pressures remain muted, with
consumer price inflation at 0,6% in May, which corresponds to a
0,8% rise over the first five months of the year. Recent decreases
in the VAT rate indicate downside risks to the inflation forecast,
but the effect of the tax changes could be offset by the
consumption stimulus.
Ukraine
The Ukrainian economy recovered from the economic and political
crisis of previous years, achieving Real GDP (GDP adjusted for
price changes - inflation/deflation) growth for the third
consecutive year (2018: 3,3%, 2017: 2,5% & 2016: 2,3%).
According to the estimates, GDP growth increased to a more than
two-year high in the second quarter of 2019, marking one of the
highest readings seen in the past decade. This was based on robust
household spending as a result of rising wages and reviving
consumer confidence. GDP growth is forecasted to reach 2,9% in 2019
and 3,0% in 2020.
On the political front, the new government was sworn in on 29
August, targeting a full political cycle that should allow it to
focus on implementing IMF-mandated reforms. Securing a new deal
will be at the top of the government's agenda to maintain
sentiment, as the current arrangement expires at the end of this
year. In March 2015, Ukraine signed a four-year Extended Fund
Facility ("EFF") with the IMF with the total programme amounting to
US$17,5 billion. In 2018, Ukraine renewed its cooperation with the
International Monetary Fund (IMF), EU, and WBG to cover is current
account deficit and to rebuild international reserves that reached
US$20,8 billion.
3. Real Estate Market Developments
3.1 Romania
General
The first half of 2019 saw property investment volume in Romania
closed at almost EUR345 million, slightly lower than last year's
EUR357 million. 2017. Market volumes were dominated by the office
segment which accounted for c.62% of the total investment
volumes.
Prime office and retail yields are at 7,25% and 6,5%
respectively, while prime industrial yields are at 8,25%. Yields
for office remained unchanged while retail and industrial yields
have compressed by 50 and 25 bps, respectively, since H1 2018.
Logistics Market
Approximately 300.000 sqm of new modern storage space came onto
the market in the first half of 2019. Bucharest accounted for over
40% of the total deliveries. Outside the capital, investments
continue to be mostly geared towards cities in the region of
Transylvania, which accounted for over one third of new industrial
and logistics space. The market absorbed 240,000 sqm in the first
semester, more than double the H1 2018 figure of 110,000 sqm.
Office Market
The first half of 2019 saw deliveries of some 185.000 sqm in
Bucharest, taking the city's modern office stock to 2,6 million
sqm. This is an increase of over 10% compared to last year's
end-June stock, making Bucharest the most dynamic among CEE
capitals. Total demand for modern office buildings stood at 188.000
sqm in Bucharest in the January-June period, the best first
semester in the post-crisis period.
Residential Market
In 2019, the main drivers of the Romanian residential market are
expected to be developments in the local economy, and also the
National Bank's decision to limit the population's level of
indebtedness to 40% of net incomes. Effects will come also from the
application of 5% VAT to any number of residential acquisitions by
individuals (max. 120 sqm usable and 100.000 Euro value). Major
developers continue to show optimism especially as the "First
House" programme will continue unchanged throughout 2019. Prices
have the potential to register a stable / up evolution in 2019,
depending on product availability from one area to another.
3.2 Bulgaria
General
During the first half of 2019, the total value of investment
transactions was slightly above EUR167 million. Development land
transactions constituted about 42% of the volume, followed by
offices (32%), and hotels (19%).
Prime yields retained their 2018 year-end values: 8% for office
space, 7,25% for retail and 9,5% for industrial space
properties.
Residential Market
Growth in the economy, low interest rates and an increase in the
availability of credit all play a key role in the residential
market and are estimated to continue to do so.
In the first half of 2019, the mid-plus and high-end residential
segment of the market recorded 11% supply growth thus raising the
total stock to c.10.000 residential units. An insignificant 1%
decline in vacant residential units contributed to 6% total market
vacancy.
The shortage in the supply of completed projects continued
during the reported period, and as a result, 60% of the residential
units under construction in the segment were pre-sold.
Average sales and rental prices remained stable in the first
half of 2019. It is estimated that the mid-plus and high-end
residential market will remain stable until the end of 2019, while
average sales and rental prices in the segment will be stable.
3.3 Greece
General
Following the upwards trend of the Greek economy, the local real
estate market has shown signs of solid growth during the last two
years. A number of projects, from privatization to long term leases
of infrastructure, moved ahead, revitalizing a subdued sector,
which is deemed instrumental in disengaging the state's resources
and attracting privately held funds, local and international alike.
Office, retail and residential property segments followed positive
trends during 2018 and this trend continued during the first six
months of 2019.
Logistics Market
Greece's geographic location offers high potential to the
logistics sector which, is considered to be one of the pillars of
the country's economic development. New business opportunities have
been created upon the granting of management concessions including
for Piraeus port to COSCO, Thessaloniki port to the Deutsche
Invest- Terminal Link-Belterrra consortium, and TRAINOSE to Italian
Stet owned company Ferrovie Delo Stato, as well as the development
of new logistic centers in Athens (Thriasio) and Thessaloniki (Str.
Gonou), all of which are in progress.
In Athens the average yields for quality logistics properties
are around 10.5%, and in Thessaloniki around 11,5%, while the
vacancy rate for Grade A properties is as low as 5%. In
Aspropyrgos, the investment yields range from 9,75% to 10,25% and
the average vacancy rate is 10%, while for Grade A properties this
falls to 5%. Rental values marginally increased during H1 2019.
Nevertheless, the low vacancy rates, along with the slow, yet
substantial, increase in demand and the lack of large, high quality
logistics properties, due to bureaucratic barriers, lack of an
effective urban planning system and the defined land uses, will
eventually result in rental values increasing and investment yields
decreasing.
3.4 Ukraine
General
The economic growth the country has experienced in recent years
has affected the real estate market, creating an upwards trend,
despite many problems created during the economic crisis being
still in place.
Low development activity and increased demand in the office
segment has led to a decrease in primary vacancies and an increase
in prime rents. Continued low levels of new supply and
strengthening occupier demand in the warehousing and logistics
segment forced the market-wide vacancy to significantly low levels.
Likewise, scant new supply and rising absorption of previously
vacant space in the retail segment has led to a substantial decline
in average market vacancy rates and to noticeable rental
growth.
Land Market
With regards to the Ukrainian land market, due to lack of
finance, many potential investors are placing unfinished projects
in the market. However, particularly in Kiev, there is scarcity of
undeveloped land plots near the city center 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, reflecting the existing positive investment trend.
Devaluation of the national currency had led to land price
decreases during the previous years. Since 2017, the supply of high
quality land plots mainly for residential, but also for commercial,
development near Kiev has led the land market up. That, along with
the growth of the economy and the business activity in the country
forced prices in the city up during 2018, while outside the city
prices remained relatively stable. This trend continued during H1
2019 and no significant alterations are expected in land prices
during the year.
4. Property Assets
4.1 Victini (ex GED) Logistics center, Athens Greece
Property description
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 4
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).
Current status
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 sold during early H2
2019.
4.2 EOS Business Park - Danone headquarters, Romania
Property description
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.
Current status
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.
4.3 Delenco office building, Romania
Property description
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.
Current status
The Company acquired 24,35% of the property in May 2015.
Currently, 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.
4.4 Innovations Logistics Park, Romania
Property description
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.
Current status
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 Q3 2018 the Company signed a short term
lease agreement for 2.000 sqm of ambient storage space with Chipita
Romania Srl, one of the fastest growing regional food companies,
currently extended until 31/10/2019. 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. As at the end
of the current period, the terminal was 83% leased. The asset is
planned to be part of the Arcona transaction.
4.5 Kindergarten , Romania
Property description
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.
Current status
The property is 100% leased to International School for Primary
Education until 2032. The asset is planned to be part of the Arcona
transaction.
4.6 Residential portfolio
Romfelt Plaza, Bucharest, Romania
Property description
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.
Current status
During H1 2019, 1 unit was sold and, at the end of June 2019, 3
apartments were available. The asset is planned to be part of the
Arcona transaction.
Monaco Towers, Bucharest, Romania
Property description
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.
Current status
At the end of H1 2019, 19 apartments were available, 4 of which
were rented. 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 involved parties and the judicial administrator's
approval, 3 units were sold. The asset is planned to be part of the
Arcona transaction.
Blooming House, Bucharest, Romania
Property description
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).
Current status
During H1 2019 2 units were sold and at the end of the period, 6
apartments were available while 1 was rented. The asset is planned
to be part of the Arcona transaction.
GreenLake, Bucharest, Romania
Property description
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 meter 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.
Current status
During H1 2019, 1 apartment was sold while at the end of June
2019, of the 49 units that were unsold, 11 were let. The asset is
planned to be part of the Arcona transaction.
Boyana Residence, Sofia, Bulgaria
Property description
A residential compound, which consisted at the date of
acquisition (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.
Current status
At the end of June 2019, 34 remaining unsold at the end of June
2019. The asset is planned to be part of the Arcona
transaction.
4.7 Land Assets
Aisi Bela - Bela Logistic Park, Odessa, Ukraine
Property description
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.
Current status
Development has been put on hold. The asset is planned to be
part of the Arcona transaction
Kiyanovskiy Residence - Kiev, Ukraine
Property description
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.
Current status
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
Property description
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%.
Current status
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
Property description
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.
Current status
The site is zoned for retail and entertainment. Development has
been put on hold. The asset is planned to be part of the Arcona
transaction.
Rozny Lane - Kiev Oblast, Kiev, Ukraine
Property description
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.
Current status
The Company is evaluating potential commercialization options to
maximize the property's value. The asset is planned to be part of
the Arcona transaction.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2019
Note 30 June 30 June
2019 2018
EUR EUR
Continued Operations
Income 9 150.041 371.724
Asset operating expenses 10 - (45.789)
---------- --------------
Net Operating Income 150.041 325.935
Administration expenses 11 (800.710) (800.186)
Valuation gains from investment property 12 - 2.256
Allowance recognized for investment 14 - (1.001.569)
property
Other operating income/(expenses),
net 15 66.056 (370)
Operating profit loss (584.613) (1.473.934)
Finance income 16 232.715 449.210
Finance costs 16 (67.648) (202.093)
Loss before tax and foreign exchange (419.546) (1.226.817)
differences
Foreign exchange (loss), net 17a (43.865) (14.311)
Loss before tax (463.411) (1.241.128)
Income tax expense 18 (2.212) (9.923)
Loss for the period from continuing (465.623) (1.251.051)
operations
Profit/(Loss) from discontinued operations 8b 649.935 (815.639)
Profit/(Loss) for the period 184.312 (2.066.690)
Other comprehensive income
Exchange difference on I/C loans to
foreign holdings 17b 21.828 14.449
Exchange difference on translation
of foreign operations 28 (183.153) 880.539
Total comprehensive income for the 22.987 (1.171.702)
period
Loss for the period from continued
operations attributable to:
Owners of the parent (465.623) (1.251.051)
Non-controlling interests - -
(465.623) (1.251.051)
Profit/(Loss) for the period from discontinued
operations attributable to:
Owners of the parent 513.193 (745.657)
Non-controlling interests 136.742 (69.982)
649.935 (815.639)
Profit/(Loss) for the period attributable
to:
Owners of the parent 47.570 (1.996.708)
Non-controlling interests 136.742 (69.982)
184.312 (2.066.690)
Total comprehensive income attributable
to:
Owners of the parent 73.392 (1.033.480)
Non-controlling interests (50.405) (138.222)
22.987 (1.171.702)
Earnings/(losses) per share (Euro
per share): 37b
Basic earnings/(losses) for the period
attributable to ordinary equity owners
of the parent 0,0004 (0,02)
Diluted earnings/(losses) for the
period attributable to ordinary equity
owners of the parent 0,0004 (0,02)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the six months ended 30 June 2019
Note 30 June 31 December
2019 2018
EUR
ASSETS
Non--current assets
Investment Properties 19.4a - -
Tangible and intangible assets 22 2.272 3.674
Long-term receivables and prepayments 23 860 850
------------- -------------
3.132 4.524
Current assets
Prepayments and other current assets 25 5.649.333 5.585.408
Cash and cash equivalents 26 175.785 282.713
------------- -------------
5.825.118 5.868.121
Assets classified as held for sale 8d 79.647.565 79.678.738
85.472.683 85.546.859
Total assets 85.475.815 85.551.383
EQUITY AND LIABILITIES
Issued share capital 27 1.272.702 1.272.702
Share premium 71.381.259 71.381.259
Foreign currency translation reserve 28 9.878.750 9.874.757
Exchange difference on I/C loans to
foreign holdings 39.3 (193.992) (215.820)
Accumulated losses (46.657.052) (46.704.622)
Equity attributable to equity holders 35.681.667 35.608.276
of the parent
Non-controlling interests 29 7.485.286 7.535.691
Total equity 43.166.953 43.143.967
Non--current liabilities
Borrowings 30 919.502 380.256
Trade and other payables 32 - -
Bonds issued 31 1.033.842 1.033.842
Taxes payables 34 307.622 362.010
Provision on taxes 34 399.450 399.450
2.660.416 2.175.558
Current liabilities
Borrowings 30 7.815 22.034
Bonds issued 31 122.414 88.628
Trade and other payables 32 4.411.052 4.174.936
Taxes payable 34 601.933 652.324
Provisions on taxes 34 42 43
------------- -------------
5.143.256 4.937.965
Liabilities directly associated with
assets classified as held for sale 8d 34.505.190 35.293.893
39.648.446 40.231.858
Total liabilities 42.308.862 42.407.416
Total equity and liabilities 85.475.815 85.551.383
Net Asset Value (NAV) EUR per share: 37c
Basic NAV attributable to equity holders
of the parent 0,28 0,28
Diluted NAV attributable to equity holders
of the parent 0,28 0,28
On 27 September 2019 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 Finance Director
Officer of the Board
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 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 to reserve(4)
interest(2) foreign
holdings(3)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31 December
2017 1.035.893 123.126.328 (96.888.569) (217.670) 9.294.576 36.350.558 8.401.414 44.751.972
Adjustment on initial
application
of IFR9, net of tax - - (339.495) - - (339.495) - (339.495)
Balance 1 January 2018
as restated 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 - - (1.996.708) - - (1.996.708) (69.982) (2.066.690)
Issue of share capital
(Note 27) 66.044 810.522 - - - 876.566 - 876.566
Exchange difference on
I/C loans to foreign
holdings
(Note 17b) - - - 14.449 - 14.449 - 14.449
Share premium set off
with
accumulated losses
(Note
27.7) - (53.569.295) 53.569.295 - - - - -
Expenses for capital
raising - (720.623) - - - (720.623) - (720.623)
Exercised warrants
(Note
27.4) 170.765 1.749.327 - - - 1.920.092 - 1.920.092
Foreign currency
translation
reserve - - - - 948.779 948.779 (68.240) 880.539
Balance 30 June 2018 1.272.702 71.396.259 (45.655.477) (203.221) 10.243.355 37.053.618 8.263.192 45.316.810
Loss for the year - - (1.049.145) - - (1.049.145) (636.646) (1.685.791)
Exchange difference on
I/C loans to foreign
holdings
(Note 17b) - - - (12.599) - (12.599) - (12.599)
Expenses for capital
raising - (15.000) - - - (15.000) - (15.000)
Foreign currency
translation
reserve - - - - (368.598) (368.598) (90.855) (459.453)
Balance 31 December
2018 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 - - 47.570 - - 47.570 136.742 184.312
Exchange difference on
I/C loans to foreign
holdings
(Note 17b) - - - 21.828 - 21.828 - 21.828
Foreign currency
translation
reserve - - - - 3.993 3.993 (187.147) (183.154)
Balance - 30 June 2019 1.272.702 71.381.259 (46.657.052) (193.992) 9.878.750 35.681.667 7.485.286 43.166.953
(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 39.3).
(4) Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted for
directly to the foreign currency translation reserve. The foreign
currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local
currencies against the euro in the countries where the Group's
subsidiaries own property assets.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2019
30 June
Note 30 June 2019 2018
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling interests-continued
operations (463.411) (1.241.128)
Profit/(Loss )before tax and non-controlling
interests-discontinued operations 8b 666.303 (778.275)
Profi/(Loss) before tax and non-controlling
interests 202.892 (2.019.403)
Adjustments for:
(Gains)/losses on revaluation of investment
property 12 (408.684) 610.163
Net loss on disposal of investment properties 13b 2.067 3.016
Accounts payable written off 15 (238.399) (84)
Allowance recognized for investment properties 14 - 1.298.769
Depreciation/ Amortization charge 11 12.348 11.120
Finance income 16 (237.756) (454.056)
Interest expense 16 764.151 988.863
Share of profit from associates 20 (224.177) (138.637)
Effect of foreign exchange differences 17a 317.870 15.680
Cash flows from/(used in) operations before
working capital changes 190.312 315.431
Change in inventory 24 - 208.506
Change in prepayments and other current
assets 25 43.265 (389.542)
Change in trade and other payables 32 194.198 492.049
Change in VAT and other taxes receivable 25 (20.315) 53.678
Change in other taxes payables 34 37.955 (76.283)
Change in provisions 34 (451) -
Change in deposits from tenants 33 (47) 35.081
Cash generated from operations 444.917 638.920
Income tax paid (107.836) (94.035)
Net cash flows provided/(used) in operating
activities 337.081 544.885
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment
property 13b 249.600 283.976
Dividend received from associates 20 121.772 -
Interest received 801 454.055
Decrease
in long term receivable 23 43 37.644
Loan granted for property acquisition 25 - (350.000)
Net cash flows from / (used in) investing
activities 372.216 425.675
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank and non-bank loans 30 500.000 947.595
Repayment of principle amount of borrowings (660.788) (756.769)
Interest and financial charges paid (523.335) (881.847)
Decrease in financial lease liabilities 35 (196.500) (189.921)
Net cash flows from / (used in) financing
activities (880.623) (880.942)
Net increase/(decrease) in cash at banks (171.326) 89.618
Cash:
At beginning of the period 942.489 831.124
At end of the period 26 771.163 920.742
------------ -----------
Notes to the Condensed Consolidated Interim Financial
Statements
For the six months ended 30 June 2018
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 11 Bouboulinas Avenue,
4th floor, office No. 48, 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, in Kiev,
Ukraine, in Bucharest, Romania and in Athens, Greece.
As at the reporting date, the companies of the Group employed
and/or used the services of 16 full time equivalent people, (2018
15 full time equivalent people).
2. Basis of preparation
The condensed consolidated interim 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 condensed
consolidated interim financial statements have been prepared under
the historical cost as modified by the revaluation of investment
property and investment property under construction.
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). In continued operations, the
Company classifies Praktiker asset (applied in H1 2018 since the
asset was sold during H2 2018), and Company's operations, including
income from Innovations from the sub-leases of the space for which
the Company acts as main tenant according to the agreement with the
leasing company. By the time the asset is sold to Arcona Property
Fund N.V., and given relevant consents of the lender, such
operations will be also transferred. All other assets with their
operations are classified in discontinued operations.
3. Adoption of new and revised Standards and Interpretations
The accounting policies adopted for the preparation of these
condensed consolidated interim financial statements for the six
months ended 30 June 2019 are consistent with those followed for
the preparation of the annual financial statements for the year
ended 31 December 2018.
During 2018, 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 2018. This adoption had a material effect on
the accounting policies of the Company as follows:
-- IFRS 9 "Financial Instruments"
As explained below, in accordance with the transition provisions
of IFRS 9 and IFRS 15, the Company has elected the simplified
approach for adoption of the standards. Accordingly, IFRS 9 and
IFRS 15 were adopted without restating 2017 information. 2017
information is prepared in accordance with IAS 39, IAS 18 and IAS
11, and the impact of adoption has been recognised in the opening
accumulated losses reserve.
The following table summarizes the impact of adoption of the new
standard on each individual line item of the statement of financial
position. Line items that were not affected by the changes have not
been included. As a result, the sub totals and totals disclosed
cannot be recalculated from the numbers provided. The adjustments
are explained in more detail by standard below.
a. Impact on the statement of financial position
Balance Re-classifications 31 December Effect Effect 1 January
at 31 December 2017 under of adoption of adoption 2018 under
2017 as IAS 18 of of IFRS 15
previously and IFRS 15 IFRS and
presented IAS 39 9 IFRS
EUR EUR EUR EUR EUR EUR
---------------- ------------------- ------------ ------------- ------------- -------------
Trade and other
Receivables 715.406 - - - (15.009) 700.397
---------------- ------------------- ------------ ------------- ------------- -------------
Loan Receivables 4.618.476 - - - (316.926) 4.301.550
---------------- ------------------- ------------ ------------- ------------- -------------
Cash and cash
equivalents 831.124 - - - (7.560) 823.564
---------------- ------------------- ------------ ------------- ------------- -------------
Accumulated
Losses 96.888.569 - - - 339.495 97.228.064
---------------- ------------------- ------------ ------------- ------------- -------------
The Company has voluntarily changed the presentation of certain
amounts in the comparative statement of financial position as
disclosed in the table above to reflect the terminology of IFRS 15
and IFRS 9.
(i) IFRS 9 "Financial instruments"
IFRS 9 "Financial instruments" replaces the provisions of IAS 39
that relate to recognition and derecognition of financial
instruments and classification and measurement of financial assets
and financial liabilities. IFRS 9 further introduces new principles
for hedge accounting and a new forward looking impairment model for
financial assets.
The new standard requires debt financial assets to be classified
into two measurement categories: those to be measured subsequently
at fair value (either through other comprehensive income (FVOCI) or
through profit or loss (either FVTPL or FVPL) and those to be
measured at amortized cost). The determination is made at initial
recognition. For debt financial assets the classification depends
on the entity's business model for managing its financial
instruments and the contractual cash flows characteristics of the
instruments. For equity financial assets it depends on the entity's
intentions and designation.
In particular, assets that are held for collection of
contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost.
Assets that are held for collection of contractual cash flows and
for selling the financial assets, where the assets' cash flows
represent solely payments of principal and interest, are measured
at fair value through other comprehensive income. Lastly, assets
that do not meet the criteria for amortised cost or fair value
through other comprehensive income are measured at fair value
through profit or loss.
For investments in equity instruments that are not held for
trading, the classification depends on whether the entity has made
an irrevocable election at the time of initial recognition to
account for the equity investment at fair value through other
comprehensive income. If no such election has been made or the
investments in equity instruments are held for trading, they are
required to be classified at fair value through profit or loss.
IFRS 9 also introduces a single impairment model applicable for
debt instruments at amortised cost and fair value through other
comprehensive income and removes the need for a triggering event to
be necessary for recognition of impairment losses. The new
impairment model under IFRS 9 requires the recognition of
allowances for doubtful debts based on expected credit losses
(ECL), rather than incurred credit losses as under IAS 39. The
standard further introduces a simplified approach for calculating
impairment on trade receivables, as well as for calculating
impairment on contract assets and lease receivables; which also
fall within the scope of the impairment requirements of IFRS 9.
For financial liabilities, the standard retains most of the
requirements of IAS 39. The main change is that, in case where the
fair value option is taken for financial liabilities, the part of a
fair value change due to the entity's own credit risk is recorded
in other comprehensive income rather than in profit or loss, unless
this creates an accounting mismatch.
With the introduction of IFRS 9 "Financial Instruments", the
IASB confirmed that gains or losses that result from modification
of financial liabilities that do not result in derecognition shall
be recognized in profit or loss.
IFRS 9 relaxes the requirements for hedge effectiveness by
replacing the bright line hedge effectiveness tests. It requires an
economic relationship between the hedged item and hedging
instrument and for the "hedge ratio" to be the same as the one
management actually use for risk management purposes.
Contemporaneous documentation is still required but is different to
that previously prepared under IAS 39.
The Company has adopted IFRS 9 with a date of transition of 1
January 2018, which resulted in changes in accounting policies for
recognition, classification and measurement of financial assets and
liabilities and impairment of financial assets.
Impact of adoption
In accordance with the transition provisions in IFRS 9, the
Company has elected the simplified transition method for adopting
the new standard. Accordingly, the effect of transition to IFRS 9
was recognised as at 1 January 2018 as an adjustment to the opening
accumulated losses (or other components of equity, as appropriate).
In accordance with the transition method elected by the Company for
implementation of IFRS 9 the comparatives have not been restated,
but are stated based on the previous policies which comply with IAS
39. Consequently, the revised requirements of IFRS 7 "Financial
Instruments: Disclosures" have only been applied to 2018.
On 1 January 2018 for debt instruments held by the Company,
management has assessed which business models apply to the
financial assets and whether the contractual cash flows represent
solely payments of principal and interest (SPPI test). In addition,
separate assessment for equity instruments held by the Company was
performed, in respect of whether they are held for trading or not.
As a result of both assessments, Management has classified its debt
and equity instruments into the appropriate IFRS 9 categories.
As a result of the adoption of IFRS 9, the Company revised its
impairment methodology for each class of assets subject to the new
impairment requirements. From 1 January 2018, the Company assesses
on a forward looking basis the expected credit losses associated
with its debt instruments carried at amortised cost and FVOCI, cash
and cash equivalents and bank deposits with original maturity over
3 months and loan commitments and financial guarantees. The
impairment methodology applied depends on whether there has been a
significant increase in credit risk and whether the debt
instruments qualify as low credit risk.
The Company has the following types of assets that are subject
to IFRS 9's new expected credit loss model: trade receivables,
contract assets, financial assets at amortised cost, cash and cash
equivalents, bank deposits with original maturity over 3 months,
debt financial assets at FVOCI, loans commitments and financial
guarantees.
The Company has adopted the simplified expected credit loss
model for its trade receivables, trade receivables with significant
financing component, lease receivables and contract assets, as
required by IFRS 9, paragraph 5.5.15, and the general expected
credit loss model for financial assets at amortised cost, cash and
cash equivalents, bank deposits with original maturity over 3
months, and loan commitments and financial guarantees.
The following table reconciles the carrying amounts of financial
instruments, from their previous measurement categories in
accordance with IAS 39 into their new measurement categories upon
transition to IFRS 9 on 1 January 2018:
Measurement Carrying Effect of IFRS 9 Carrying
category value value
per IAS per IFRs
39 9 (opening
(closing balance
at 31 at 1
December January
2017) 2018)
IAS 39 IFRS9 Re-measurement Re-measurement Re- Re-
ECL Other classification classification
Mandatory Voluntary
----------- --------------- --------------- --------------- ---------------
EUR EUR EUR EUR EUR EUR
----------- ----------- --------------- --------------- --------------- --------------- -----------
Trade
and other Amortised
Receivables Cost 715.406 (15.009) - - - 700.397
----------- ----------- --------------- --------------- --------------- --------------- -----------
Loans
and Amortised
Receivables Cost 4.618.476 (316.926) - - - 4.301.550
----------- ----------- --------------- --------------- --------------- --------------- -----------
Cash and
cash Amortised
equivalents Cost 831.124 (7.560) - - - 823.564
----------- ----------- --------------- --------------- --------------- --------------- -----------
Total 6.165.006 (339.495) - - - 5.825.511
----------- --------------- --------------- --------------- --------------- -----------
Borrowings:
Under IFRS 9, all gains or losses resulting from the
modifications of borrowings that did not result in derecognition
should be recognised in profit or loss. Previously, under IAS 39,
the Company has amortised modification impact via adjusting the
effective interest rate. The Company has assessed the above and
concluded that there was no impact on the borrowings balances
existing on the date of adoption of IFRS 9.
-- Other financial instruments:
For all other financial assets Management assessed that the
Company's business model for managing the assets is "hold to
collect" and these assets meet SPPI tests. As a result, all other
financial assets were classified as financial assets at amortised
cost and reclassified from the category "loans and receivables"
under IAS 39, which was "retired". Previously, under IAS 39, these
financial assets were also measured at amortised cost. Thus there
were no impact of adoption of IFRS 9 as of 1 January 2018.
At 31 December 2017, all of the Company's financial liabilities
were carried at amortised cost. Starting from 1 January 2018 the
Company's financial liabilities continued to be classified at
amortised cost.
The assessment of the impact of adoption of IFRS 9 on the
Company's accounting policies required management to make certain
critical judgments in the process of applying the principles of the
new standard.
Reconciliation of provision for impairment at 31 December 2017
and credit loss allowance at 1 January 2018.
The following table reconciles the prior period's closing
provision for impairment measured in accordance with incurred loss
model under IAS 39 to the new credit loss allowance measured in
accordance with expected loss model under IFRS 9 at 1 January
2018:
Provision Effect Effect
under of adoption
IAS 39 of IFRS
or IAS 9
37 at
31 December
2017
1 January
2018
Reclassification Reclassification Remeasurement
to FVTPL to FVOCI from incurred
to expected
loss
------------------- ------------------- ----------------
EUR EUR EUR EUR EUR
------------- ------------------- ------------------- ---------------- -------------
Trade and other
Receivables (26.285) - - (15.009) (41.294)
------------- ------------------- ------------------- ---------------- -------------
Loan Receivables - - - (316.926) (316.926)
------------- ------------------- ------------------- ---------------- -------------
Cash and Cash
equivalents - - - (7.560) (7.560)
------------- ------------------- ------------------- ---------------- -------------
Total (26.285) - - (339.495) (365.780)
------------- ------------------- ------------------- ---------------- -------------
The impact of these changes on the Group's equity is as
follows:
Effect on Total
accumulated
losses
EUR EUR
------------- ----------
Trade and other Receivables (15.009) (15.009)
------------- ----------
Loan Receivables (316.926) (316.926)
------------- ----------
Cash and Cash equivalents (7.560) (7.560)
------------- ----------
Total (339.495) (339.495)
------------- ----------
(ii) IFRS 15 "Revenue from Contracts with Customers"
IFRS 15 "Revenue from contracts with customers" and related
amendments superseded IAS 18 "Revenue", IAS 11 "Construction
Contracts" and related interpretations. The new standard replaces
the separate models for recognition of revenue for the sale of
goods, services and construction contracts under previous IFRS and
establishes uniform requirements regarding the nature, amount and
timing of revenue recognition. IFRS 15 introduces the core
principle that revenue must be recognised in such a way to depict
the transfer of goods or services to customers and reflect the
consideration that the entity expects to be entitled to in exchange
for transferring those goods or services to the customer; the
transaction price.
The new standard provides a principle based five step model that
must be applied to all categories of contracts with customers. Any
bundled goods or services must be assessed as to whether they
contain one or more performance obligations (that is, distinct
promises to provide a good or service). Individual performance
obligations must be recognised and accounted for separately and any
discounts or rebates in the contract price must generally be
allocated to each of them.
The amendments to IFRS 15 clarify how to identify a performance
obligation in a contract, how to determine whether a Company is a
principal (that is, the provider of a good or service) or an agent
(responsible for arranging for the good or service to be provided)
and how to determine whether the revenue from granting a license
should be recognised at a point in time or over time. In addition
to the clarifications, the amendments include two additional
reliefs to reduce cost and complexity for a Company when it first
applies the new standard.
Impact of adoption
In accordance with the transition provisions of IFRS 15, the
Company has elected the simplified transition method for adopting
the new standard. Accordingly, there is no impact on the Group
results by the adoption of this standard.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of
these condensed consolidated interim financial statements are set
out below. Apart from the accounting policy changes resulting from
the adoption of IFRS 9 and IFRS 15 effective from 1 January 2018,
these policies have been consistently applied to all years
presented in these condensed consolidated interim 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.
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 for the period Closing as at
Currency 1 Jan 2019 - 30 1 Jan 2018 - 31 1 Jan 2018 - 30 30 June 2019 31 December 2018 30 June 2018
June 2019 Dec 2018 June 2018
----------------- ------------------ ------------------ ------------- ----------------- -------------
USD 1,1298 1,1810 1,2108 1,1380 1,1450 1,1658
----------------- ------------------ ------------------ ------------- ----------------- -------------
UAH 30,4277 32,1341 32,4092 29,7302 31,7141 30,5680
----------------- ------------------ ------------------ ------------- ----------------- -------------
RON 4,7414 4,6535 4,6538 4,7351 4,6639 4,6611
----------------- ------------------ ------------------ ------------- ----------------- -------------
BGN 1,9558 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.
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. The
operating lease is accounted for as if it were a finance lease.
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 period ended 30 June 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 sqm.
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 finance 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, deferred tax assets, employee benefit assets,
investment property or biological assets, 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.
Once classified as held-for-sale, intangible assets and
property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investee is no longer equity
accounted.
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 - Policy applicable from 1 January 2018
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: Policy applicable
from 1 January 2018
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: Policy applicable from 1
January 2018
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:
Policy applicable from 1 January 2018
Financial assets at FVTPL
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.
Financial assets - Policy applicable before 1 January 2018
The Group classified its financial assets into one of the
following categories:
- loans and receivables;
- held to maturity;
- available for sale; and
- at FVTPL, and within this category as:
o held for trading;
o derivative hedging instruments; or
o designated as at FVTPL.
Financial assets - Subsequent measurement and gains and losses:
Policy applicable before 1 January 2018
Financial assets at FVTPL
Measured at fair value and changes therein, including any
interest or dividend income, were recognised in profit or loss.
However for derivatives designated as hedging instruments.
Held-to-maturity financial assets
Measured at amortised cost using the effective interest
method.
Loans and receivables
Measured at amortised cost using the effective interest
method.
Available-for-sale financial assets
Measured at fair value and changes therein, other than
impairment losses, interest income and foreign currency differences
on debt instruments, were recognised in OCI and accumulated in the
fair value reserve. When these assets were derecognised, the gain
or loss accumulated in equity was reclassified to profit or
loss.
Financial liabilities - Classification, subsequent measurement
and gains and losses
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL if
it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised
cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognised in profit or loss.
Any gain or loss on derecognition is also recognised in 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.
Derivative financial instruments and hedge accounting - Policy
applicable from 1 January 2018
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.
Derivative financial instruments and hedge accounting - Policy
applicable before 1 January 2018
The policy applied in the comparative information presented for
2017 is similar to that applied for 2018. However, for all cash
flow hedges, including hedges of transactions resulting in the
recognition of non-financial items, the amounts accumulated in the
cash flow hedge reserve were reclassified to profit or loss in the
same period or periods during which the hedged expected future cash
flows affected profit or loss. Furthermore, for cash flow hedges
that were terminated before 2017, forward points were recognised
immediately in profit or loss.
4.12 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.
4.13 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.
4.14 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.
4.15 Share Capital
Ordinary shares are classified as equity.
4.16 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.
4.17 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.
4.18 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.
4.19 Leased assets
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are recognized as assets of the
Group at their fair value at the inception of the lease or, if
lower, at the present value of the minimum lease payments. The
corresponding liability to the lessor is included in the
consolidated statement of financial position as a finance lease
obligation. Lease payments are apportioned between finance charges
and reduction of the lease obligation so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance
charges are charged to profit or loss, unless they are directly
attributable to qualifying assets, in which case they are
capitalized in accordance with the Group's general policy on
borrowing costs (see above).
Lease payments are analyzed between capital and interest
components so that the interest element of the payment is charged
to the statement of comprehensive income over the period of the
lease and represents a constant proportion of the balance of
capital repayments outstanding. The capital part reduces the amount
payable to the lessor.
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.
4.26 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, Greece, Bulgaria and Romania, while the Parent and some
holding companies are incorporated in Cyprus. The Group's
management and control is exercised in Cyprus.
In the event that a decision is taken 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, Greece, Bulgaria). 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.
-- 20% on Bulgarian domestic sales and imports of goods, works
and services and 0% on export of goods and provision of services to
taxable persons outside Bulgaria.
-- 24% on Greek domestic sales and imports of goods, works and
services (increased from 23% from 1 June 2016) and 0% on export of
goods and provision of works or services to be used outside
Romania.
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. 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 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 2018 (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
6. Risk Management
6.1 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.
6.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and
economic environment of countries in which it operates.
Notably:
6.1.1.1 Ukraine
The Ukrainian economy proceeded recovery from the economic and
political crisis of previous years and demonstrated sound real GDP
growth of around 2,5% year on year for the six-month periods ended
30 June 2019 (2018: 2,8%), modest annual inflation of 9,0% (2018:
13,2%), and stabilization of national currency. Also Ukraine
continued to limit its political and economic ties with Russia,
given annexation of Crimea, an autonomous republic of Ukraine, and
a frozen armed conflict with separatists in certain parts of
Luhanska and Donetska regions. Amid such events, the Ukrainian
economy demonstrated further refocusing on the European Union
("EU") market realizing all potentials of established Deep and
Comprehensive Free Trade Area with EU, in such a way effectively
reacting to mutual trading restrictions imposed between Ukraine and
Russia. As a result, the weight of the export and import to/from
Russia substantially fell from 18,2% and 23,3% in 2014 to around
7,7% and 14,2% in 2018, respectively. In terms of currency
regulations, the new currency law was adopted in 2018 and came into
force on 7 February 2019. It purports to enable the NBU to
promulgate more liberal currency regulation and soften a number of
currency restrictions, such as: requirement to register loans
obtained from non-residents with the NBU, 180-day term for making
payments in foreign economic transactions, required 50% share of
mandatory sale of foreign currency proceeds, etc.
Further economic growth depends, to a large extent, upon success
of the Ukrainian government in realization of planned reforms and
cooperation with the International Monetary Fund ("IMF").
6.1.1.2 Greece
Greek economy experiences in 2019 growth for the third
consecutive year coupled with lower unemployment rate, rise in
domestic demand and significant rise in export activity.
Following the exit of the financing and stabilization programme
and following recent elections which resulted in a strong new
government, the Greek Government Bonds have fallen to their lowest
yields since 2006, and many investors in different economic sectors
knock on its door.
However, public debt remains at high levels, and further
reduction requires sustainable pro-growth reforms, high future
primary surpluses and additional debt restructuring. Moreover,
banking sector continues to face difficulties, with non-performing
loans standing at 45% of outstanding bank loan portfolio, and as a
result foreclosures and e-auctions of collaterals in default have
being initiated, while at the same time bank financing is tight
putting constraints in business and investments. Moreover, any
political instability will have negative impact on the economy, and
consequently the results and financial position of Group's Greek
operations.
6.1.1.3 Romania
Romanian economy continues its growth in 2019, fueled by
domestic private consumption, and investment increase due to the
recovery in construction and fiscal stimulus.
The economy maintains balanced economic variables with a widen
current deficit at around 4% of GDP, public debt less than 35% of
GDP and strong inflation rate, currently at 3,8% . Unemployment
rate of 3,5% is the lowest it has been for the past 20 years,
driving wages up, but still labor cost is one of the lowest in
European Union attracting continuously foreign investment in
production and services sectors. The labor market is expected to
remain tight but inflation is expected to ease in 2019 from its
2018 high. Finally, budget deficit is forecast to continue
increasing, driven by increase on public wages and pensions.
Possible overheating of the economy in the future may emerge
risks, as economic activity will slow down, prices will drop, and
the local activities of the Group could be negatively affected. The
Group monitors closely the performance of the Romanian economy, and
the local political and fiscal developments, in order to detect
negative signs and being able to adjust effectively its local
strategy and its operations in the country.
6.1.2 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 the UAH rapid devaluation;
-- 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.
6.1.3 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.
6.1.4 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.
6.1.5 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.
6.1.6 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.
6.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. The Group's core strategy is described in Note 42.1 of the
consolidated financial statements.
6.1.8 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.
6.1.9 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.
6.1.10 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.
6.2. 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.
6.3. 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.
7. Investment in subsidiaries
The Company has direct and indirect holdings in other companies,
collectively called the Group, that were included in the
consolidated financial statements, and are detailed below.
Holding %
Name Country Related Asset as at as at as at
30 June 2019 31 Dec 2018 30 June 2018
---------- ----------------------------- -------------- ------------- --------------
SC Secure Capital Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
LLC Aisi Ukraine Ukraine Kiyanovskiy Residence 100 100 100
---------- ----------------------------- -------------- ------------- --------------
LLC Trade Center Ukraine 100 100 100
----------------------------------------- -------------- ------------- --------------
LLC Almaz--Pres--Ukraine Ukraine Tsymlyanskiy Residence 55 55 55
---------- ----------------------------- -------------- ------------- --------------
Bela Logistic Park
LLC Aisi Bela Ukraine Balabino Project 100 100 100
---------- ----------------------------- -------------- ------------- --------------
LLC Retail Development
Balabino Ukraine 100 100 100
----------------------------------------- -------------- ------------- --------------
LLC Interterminal Ukraine 100 100 100
----------------------------------------- -------------- ------------- --------------
LLC Aisi Ilvo Ukraine 100 100 100
----------------------------------------- -------------- ------------- --------------
Myrnes Innovations Park
Limited Cyprus Innovations Logistics Park 100 100 100
---------- ----------------------------- -------------- ------------- --------------
Best Day Real Estate Srl Romania 100 100 100
----------------------------------------- -------------- ------------- --------------
Yamano Holdings Limited Cyprus EOS Business Park 100 100 100
---------- ----------------------------- -------------- ------------- --------------
Secure Property Development
and Investment Srl Romania - - 100
----------------------------------------- -------------- ------------- --------------
N-E Real Estate Park First
Phase Srl Romania 100 100 100
----------------------------------------- -------------- ------------- --------------
Victini Holdings Limited Cyprus Victini Logistics 100 100 100
---------- ----------------------------- -------------- ------------- --------------
Victini Logistics Park S.A.
(ex SPDI Logistics S.A.) Greece 100 100 100
----------------------------------------- -------------- ------------- --------------
Zirimon Properties Limited Cyprus Delea Nuova (Delenco) 100 100 100
---------- ----------------------------- -------------- ------------- --------------
Bluehouse Accession Project
IX Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
Bluehouse Accession Project
IV Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
BlueBigBox 3 Srl Romania 100 100 100
----------------------------------------- -------------- ------------- --------------
SPDI Real Estate Srl Romania Kindergarten 50 50 -
---------- ----------------------------- -------------- ------------- --------------
SEC South East Continent
Unique Real Estate
Investments II Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
SEC South East Continent
Unique Real Estate
(Secured) Investments
Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
Residential and Land
Diforio Holdings Limited Cyprus portfolio 100 100 100
---------- ----------------------------- -------------- ------------- --------------
Demetiva Holdings Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
Ketiza Holdings Limited Cyprus 90 90 90
----------------------------------------- -------------- ------------- --------------
Frizomo Holdings Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
SecMon Real Estate Srl Romania - - 100
----------------------------------------- -------------- ------------- --------------
SecVista Real Estate Srl Romania - - 100
----------------------------------------- -------------- ------------- --------------
SecRom Real Estate Srl Romania - - 100
----------------------------------------- -------------- ------------- --------------
Ketiza Real Estate Srl Romania 90 90 90
----------------------------------------- -------------- ------------- --------------
Edetrio Holdings Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
Emakei Holdings Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
RAM Real Estate Management
Limited Cyprus 50 50 50
----------------------------------------- -------------- ------------- --------------
Iuliu Maniu Limited Cyprus 45 45 45
----------------------------------------- -------------- ------------- --------------
Moselin Investments Srl Romania 45 45 45
----------------------------------------- -------------- ------------- --------------
Rimasol Enterprises Limited Cyprus 44,24 44,24 44,24
----------------------------------------- -------------- ------------- --------------
Rimasol Real Estate Srl Romania 44,24 44,24 44,24
----------------------------------------- -------------- ------------- --------------
Ashor Ventures Limited Cyprus 44,24 44,24 44,24
----------------------------------------- -------------- ------------- --------------
Ashor Development Srl Romania 44,24 44,24 44,24
----------------------------------------- -------------- ------------- --------------
Jenby Ventures Limited Cyprus 44,30 44,30 44,30
----------------------------------------- -------------- ------------- --------------
Jenby Investments Srl Romania 44,30 44,30 44,30
----------------------------------------- -------------- ------------- --------------
Ebenem Limited Cyprus 44,30 44,30 44,30
----------------------------------------- -------------- ------------- --------------
Ebenem Investments Srl Romania 44,30 44,30 44,30
----------------------------------------- -------------- ------------- --------------
Sertland Properties Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
Boyana Residence ood Bulgaria 100 100 100
----------------------------------------- -------------- ------------- --------------
Mofben Investments Limited Cyprus 100 100 100
----------------------------------------- -------------- ------------- --------------
SPDI Management Srl Romania 100 100 100
----------------------------------------- -------------- ------------- --------------
During the reporting period the Group did not proceed with any
acquisitions or disposals, however BlueBigBox 3 Srl sold its
property, Praktiker Craiova to a 3(rd) party in 2018.
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:
Á. merger by absorption of SecVista Real Estate Srl acting as
Absorbed Company, with Best Day Real Estate Srl acting as Absorbing
Company,
Â. 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.
8. Discontinued operations
8.(a) Description
The Company announced on 18 December 2018 that it has entered
into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties ('the
Non-Greek Portfolio'), in an all-share transaction to Arcona
Property Fund N.V.. The transaction is subject to, among other
things, asset and tax due diligence (including third party asset
valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission
to listing of the new Arcona Property Fund N.V. shares), as well as
successful negotiating and signature of transaction documents.
Following this agreement, the two parties have signed relevant
Framework Agreements, SPA's, and associated documentation for the
first phase of the transaction which includes the SPVs associated
with Boyana, Bela, Balabino, and Tsymliankiy. The first phase of
the transaction is planned to close by the end of October 2019,
while the two parties have already commenced the process for
implementing the second phase, which includes SPVs associated with
EOS, Monaco, Romfelt, Blooming House, and Delenco.
Additionally, the Company during H2 2019 has agreed and
proceeded to the disposal of the Greek Logistic property.
The companies that are classified under discontinued operations
are the followings:
-- Bulgaria: Boyana Residence ood
-- 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.
-- 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, 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).
8.(b) Results of discontinued operations
Note 30 June 2019 30 June 2018
EUR EUR
Income 9 1.203.928 1.094.433
Asset operating expenses 10 (319.445) (212.419)
------------- -------------
Net Operating Income 884.483 882.014
Administration expenses 11 (111.352) (100.478)
Share of profits from associates 20 224.177 138.637
Valuation gains/(losses) from Investment Property 12 408.684 (612.419)
Allowance recognized for investment property 14 - (297.200)
Net loss on disposal of inventory 13a - (13.555)
Net loss on disposal of investment property 13b (2.067) (3.016)
Other operating income/(expenses), net 15 237.474 26.937
Operating profit 1.641.399 20.920
Finance income 16 5.041 4.846
Finance costs 16 (706.132) (802.672)
Profit /(Loss) before tax and foreign exchange differences 940.308 (776.906)
Foreign exchange (loss), net 17a (274.005) (1.369)
Profit/(Loss) before tax 666.303 (778.275)
Income tax expense 18 (16.368) (37.364)
Profit/(Loss) for the year 649.935 (815.639)
Profit/(Loss) attributable to:
Owners of the parent 513.193 (69.982)
Non-controlling interests 136.742 (745.657)
649.935 (815.639)
8.(c) Cash flows from(used in) discontinued operation
30 June 2019 30 June 2018
EUR EUR
------------- -------------
Net cash flows provided in operating activities 947.288 1.852.133
------------- -------------
Net cash flows from / (used in) financing activities (1.380.187) 288.851
------------- -------------
Net cash flows from / (used in) investing activities 371.819 (1.828.537)
------------- -------------
Net increase/(decrease) from discontinued operations (61.080) 312.447
------------- -------------
8.(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 30 June
2019:
Note 30 June 2019 31 Dec 2018
EUR EUR
------ ------------- ------------
Assets classified as held for sale
------ ------------- ------------
Investment properties 19.4a 63.131.476 63.345.537
------ ------------- ------------
Investment properties under development 19.4b 4.745.167 4.716.157
------ ------------- ------------
Tangible and intangible assets 22 28.919 42.534
------ ------------- ------------
Long-term receivables and prepayments 23 315.267 315.320
------ ------------- ------------
Investments in associates 20 5.357.672 5.313.235
------ ------------- ------------
Financial asset at fair value through OCI 21 1 1
------ ------------- ------------
Inventory 24 4.604.044 4.604.044
------ ------------- ------------
Prepayments and other current assets 25 869.641 682.134
------ ------------- ------------
Cash and cash equivalents 26 595.378 659.776
------ ------------- ------------
Total assets of group held for sale 79.647.565 79.678.738
------ ------------- ------------
Liabilities directly related with assets classified as held for sale
------ ------------- ------------
Borrowings 30 22.133.750 22.605.474
------ ------------- ------------
Finance lease liabilities 35 10.273.512 10.470.012
------ ------------- ------------
Trade and other payables 32 1.327.143 1.500.603
------ ------------- ------------
Taxes payables 34 486.006 432.528
------ ------------- ------------
Provision on taxes 34 65.552 66.002
------ ------------- ------------
Deposits from tenants 33 219.227 219.274
------ ------------- ------------
Total liabilities of group held for sale 34.505.190 35.293.893
------ ------------- ------------
9. Income
Income from continued operations for the period ended 30 June
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 30 June 2019 30 June 2018
EUR EUR
------------- -------------
Rental income 132.025 357.651
------------- -------------
Service charges and utilities income 18.016 14.073
------------- -------------
Total income 150.041 371.724
------------- -------------
Income from discontinued operations for the period ended 30 June
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).
b) income from the sale of electricity by Victini Logistics to the Greek grid.
c) rental income and service charges by tenants of the Residential Portfolio.
d) income from third parties and /or partners for consulting and
managing real estate properties.
Discontinued operations (Note 8) 30 June 2019 30 June 2018
EUR EUR
------------- -------------
Rental income 1.076.619 875.958
------------- -------------
Sale of electricity 82.965 152.618
------------- -------------
Service charges and utilities income 43.281 64.774
------------- -------------
Service and property management income 1.063 1.083
------------- -------------
Total income 1.203.928 1.094.433
------------- -------------
Occupancy rates in the various income producing assets of the
Group as at 30 June 2019 were as follows:
Income producing assets
% 30 June 2019 30 June 2018
--------- ------------- -------------
EOS Business Park Romania 100 100
--------- ------------- -------------
Innovations Logistics Park Romania 83 37
--------- ------------- -------------
Victini Logistics Greece 100 100
--------- ------------- -------------
Praktiker Craiova Romania - 100
--------- ------------- -------------
Kindergarten Romania 100 100
--------- ------------- -------------
10. 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 9).
Under continued operations are all the expenses related to
Praktiker Craiova.
Continued operations 30 June 2019 30 June 2018
EUR EUR
-------------- -------------
Property related taxes - (38.063)
-------------- -------------
Repairs and technical maintenance - (4.149)
-------------- -------------
Property insurance - (3.577)
-------------- -------------
Total - (45.789)
-------------- -------------
Under discontinued operations are all the expenses related to
Innovations Logistics Park (Romania), EOS Business Park (Romania),
Victini Logistics (Greece), Residential Portfolio (Romania),
GreenLake (Romania), Boyana Residence (Bulgaria) and all Ukrainian
properties.
Discontinued operations (Note 8) 30 June 2019 30 June 2018
EUR EUR
------------- -------------
Property related taxes (103.884) (96.810)
------------- -------------
Repairs and technical maintenance (134.613) (26.500)
------------- -------------
Utilities (23.630) (36.953)
------------- -------------
Property security (22.282) (16.341)
------------- -------------
Property insurance (11.805) (15.932)
------------- -------------
Leasing expenses (23.231) (19.883)
------------- -------------
Total (319.445) (212.419)
------------- -------------
Property related taxes reflect local taxes related to land and
building properties (in the form of land taxes, building taxes,
garbage fees, etc.).
Repairs and technical maintenance expenses include EUR122k
related to repairs made at Innovation Logistics Park during H1
2019.
Leasing expenses reflect expenses related to long term land
leasing.
11. Administration Expenses
Continued operations 30 June 30 June
2019 2018
EUR EUR
---------- ----------
Salaries and Wages (247.355) (282.164)
---------- ----------
Advisory fees (146.649) (149.821)
---------- ----------
Due Dilligence expenses for non acquired projects (60.410) -
---------- ----------
Public group expenses (38.583) (86.783)
---------- ----------
Corporate registration and maintenance fees (31.765) (58.756)
---------- ----------
Vat Expensed (84.423) (6.237)
---------- ----------
Audit and accounting fees (55.504) (29.527)
---------- ----------
Legal fees (59.293) (98.712)
---------- ----------
Depreciation/Amortization charge (1.699) (2.765)
---------- ----------
Corporate operating expenses (75.029) (85.421)
---------- ----------
Total Administration Expenses (800.710) (800.186)
---------- ----------
Discontinued operations (Note 8) 30 June 30 June
2019 2018
EUR EUR
---------- ----------
Salaries and Wages (20.015) (19.468)
---------- ----------
Advisory fees (5.589) (5.078)
---------- ----------
Corporate registration and maintenance fees (22.329) (9.615)
---------- ----------
Vat Expensed (4.179) (5.032)
---------- ----------
Audit and accounting fees (30.059) (39.504)
---------- ----------
Legal fees (8.224) (1.593)
---------- ----------
Depreciation/Amortization charge (10.649) (8.355)
---------- ----------
Corporate operating expenses (10.308) (11.833)
---------- ----------
Total Administration Expenses (111.352) (100.478)
---------- ----------
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.
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 particular, the total amount in
2019 includes one-off elements related to the Arcona
transaction.
Due diligence expenses for non acquired projects refer to
capitalized amounts in previous periods related to due diligence
for the acquisition of investments, re-clasified as expenses during
the period due to the fact that the acquisitions did not
materialize.
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 and Cyprus, compliance with AIM listing, as well
as one-off fees associated with legal services and advise in
relation to due diligence process associated with the Arcona
transaction.
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.
12. 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.
Continued operations
Property Name (EUR) Valuation gains/(losses)
----------------------------
30 June 30 June
2019 2018
-------------- ------------
EUR EUR
-------------- ------------
Praktiker Craiova - 2.256
-------------- ------------
Total - 2.256
-------------- ------------
Discontinued operations (Note 8)
Property Name (EUR) Valuation gains/(losses)
---------------------------
30 June 30 June
2019 2018
------------ -------------
EUR EUR
------------ -------------
Bela Logistic Park (79.758) (289.945)
------------ -------------
Kiyanovskiy Residence (47.264) (168.695)
------------ -------------
Tsymlyanskiy Residence (16.247) (57.989)
------------ -------------
Balabino Project (22.155) (84.348)
------------ -------------
Rozny Lane 6.448 (23.298)
------------ -------------
Innovations Logistics Park 159.177 3.008
------------ -------------
EOS Business Park 114.127 2.166
------------ -------------
Residential Portfolio 20.333 763
------------ -------------
GreenLake 252.911 5.404
------------ -------------
Kindergarten 21.112 515
------------ -------------
Total 408.684 (612.419)
------------ -------------
13. 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:
13a Inventory (Note 24)
During H1 2018 the Group sold 3 apartments in Bulgaria .
Discontinued operations (Note 8) 30 June 30 June
2019 2018
EUR EUR
--------- ----------
Income from sale of inventory - 194.951
--------- ----------
Cost of inventory - (208.506)
--------- ----------
Loss from disposal of inventory - (13.555)
--------- ----------
13b Investment property
During H1 2019 the Group sold 1 apartments in Romfelt Plaza
(Doamna Ghica) and 2 apartments and 1 parking spaces in Zizin while
during H1 2018 the Group sold 4 apartments in Romfelt .
Discontinued operations (Note 8) 30 June 30 June
2019 2018
EUR EUR
---------- ----------
Income from sale of investment property 249.600 283.976
---------- ----------
Cost of investment property (251.667) (286.992)
---------- ----------
Loss from disposal of investment property (2.067) (3.016)
---------- ----------
14. Allowance recognized for investment property
Allowance recognized for investment property includes an amount
of EUR1.000.000 impairment which refers to Praktiker Craiova
property, following discussions that Company has for the possible
sale of assets. The asset finally sold during H2 2018.
Continued operations 30 June 30 June
2019 2018
EUR EUR
--------- ------------
Impairment charge recognided in P&L for Praktiker - (1.000.000)
Craiova property (Note 19.2)
--------- ------------
Forex impact on Impairment charge - (1.569)
--------- ------------
Total - (1.001.569)
--------- ------------
The Group proceeded with an impairment of EUR297.200 for Monaco
Towers (company SecMon Real Estate Srl) for which following the
court decision for entering into insolvency in January 2018, the
Company lost the control over the asset and as such it was
reclassified as Financial assets at fair value through OCI as per
table below (where the fair value of the property was adjusted at
80% of its value):
Discontinued operations 30 June 30 June
2019 2018
EUR EUR
--------- ----------
Impairment charge recognided in P&L for Monaco
Towers (Note 21) - (297.200)
--------- ----------
Total - (297.200)
--------- ----------
15. Other operating income/(expenses), net
Continued operations 30 June 30 June
2019 2018
EUR EUR
-------- --------
Other income 66.810 -
-------- --------
Other income 66.810 -
-------- --------
Penalties (754) (2)
-------- --------
Other expenses - (368)
-------- --------
Other expenses (754) (370)
-------- --------
Other operating income/(expenses), net 66.056 (370)
-------- --------
Discontinued operations (Note 8) 30 June 30 June
2019 2018
EUR EUR
-------- --------
Accounts payable written off 238.399 84
-------- --------
Other income - 30.010
-------- --------
Other income 238.399 30.094
-------- --------
Penalties (452) (3.014)
-------- --------
Other expenses (473) (143)
-------- --------
Other expenses (925) (3.157)
-------- --------
Other operating income/(expenses), net 237.474 26.937
-------- --------
Given that the Group has already changed the intended use of
Boyana property from construction to inventory, rendering the Good
Performance Guarantee no longer required and therefore written off
during H1 2019.
Other income represent income received related to the sale of
Terminal Brovary as after sale price adjustment according to the
relevant sale and purchase agreement.
16. Finance costs and income
Continued operations
Finance income 30 June 30 June
2019 2018
-------- --------
EUR EUR
-------- --------
Interest received from non-bank loans (Note
39.1.1) 232.715 449.045
-------- --------
Interest income associated with banking accounts - 165
-------- --------
Total finance income 232.715 449.210
-------- --------
Finance costs 30 June 30 June
2019 2018
EUR EUR
--------- ----------
Interest expenses (bank) (700) (93.229)
--------- ----------
Interest expenses (non-bank) (Note 39.1.2) (24.837) (64.870)
--------- ----------
Finance charges and commissions (8.324) (10.207)
--------- ----------
Bonds interest (33.787) (33.787)
--------- ----------
Total finance costs (67.648) (202.093)
--------- ----------
Net finance result 165.067 247.117
--------- ----------
Discontinued operations (Note 8)
Finance income 30 June 30 June
2019 2018
-------- --------
EUR EUR
-------- --------
Interest received from non-bank loans (Note
39.1.1) 4.645 4.846
-------- --------
Interest income associated with banking accounts 396 -
-------- --------
Total finance income 5.041 4.846
-------- --------
Finance costs 30 June 30 June
2019 2018
EUR EUR
---------- ----------
Interest expenses (bank) (454.405) (537.110)
---------- ----------
Interest expenses (non-bank) (Note 39.1.2) (3.550) (3.522)
---------- ----------
Finance leasing interest expenses (246.872) (256.345)
---------- ----------
Finance charges and commissions (1.305) (5.695)
---------- ----------
Total finance costs (706.132) (802.672)
---------- ----------
Net finance result (701.091) (797.826)
---------- ----------
Interest income from non-bank loans, reflects income from loans
granted by the Group for financial assistance of associates, and
interest on Loan receivables from 3(rd) parties provided as part of
a participation option in an investment property portfolio
(Olympians portfolio) in Romania, 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 Loan
Agreement.
Borrowing interest expense represents interest expense charged
on bank and non-bank borrowings (Note 30).
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group (Note 35).
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 2017 (Note 31).
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 period ended 30 June
2019 from continued operations amounted to EUR43.865 (30 June 2018:
loss EUR14.311).
The exchange loss from discontinued operations for the period
ended 30 June 2019 amounted to EUR274.005 (30 June 2018: loss
EUR1.369) (Note 8).
b. Exchange difference on intercompany loans to foreign holdings
The Company has loans receivable from foreign group subsidiaries
which are considered as part of the Group's net investments in
those foreign operations (Note 39.3). For these intercompany loans
the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During
the period 30 June 2019, the Group recognized a foreign exchange
profit of EUR21.828 (30 June 2018:profit EUR14.449).
18. Tax Expense
Continued operations 30 June 30 June
2019 2018
EUR EUR
-------- --------
Income and defence tax expense (2.212) (9.923)
-------- --------
Taxes (2.212) (9.923)
-------- --------
Discontinued operations (Note 8) 30 June 30 June
2019 2018
EUR EUR
--------- ---------
Income and defence tax expense (16.368) (37.364)
--------- ---------
Taxes (16.368) (37.364)
--------- ---------
For the period ended 30 June 2019, the corporate income tax rate
for the Group's subsidiaries are as follows: in Ukraine 18%, in
Romania 16%, in Greece 29% and in Bulgaria 10%. The corporate tax
that is applied to the qualifying income of the Company and its
Cypriot subsidiaries is 12,5.
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.
-- 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 83% leased at the end
of the reporting period .
-- 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 23 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 in January 2018 into insolvency process. 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 7).
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.
-- 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 20). 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.
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
30 June 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) and change from 30/06/2019 amount
30/06/2019 translation based in prepayments as at
difference on local allowance made for 31/12/2018
currency for investments
valuations investment
property
for H1
2019
------- ------------ ------------ ------------ ----------- ------------ ------------ ------------
Praktiker Retail - - - - - - -
Craiova
------- ------------ ------------ ------------ ----------- ------------ ------------ ------------
Total - - - - - - -
Romania
------- ------------ ------------ ------------ ----------- ------------ ------------ ------------
Total - - - - - - -
------- ------------ ------------ ------------ ----------- ------------ ------------ ------------
30 June 2018 Fair Value movements Asset Value at the Beginning
(EUR) of the period or at
Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair value Disposals Transfer Additions Carrying
amount exchange gain/(loss) and change from 30/06/2018 amount
30/06/2018 translation based in prepayments as at
difference on local allowance made for 31/12/2017
currency for investments
valuations investment
property
for H1
2018
-------- ------------- ------------ ------------ ------------ ------------ ----------- ------------
Praktiker
Craiova Retail 7.500.000 (2.256) 2.256 - - - 7.500.000
-------- ------------- ------------ ------------ ------------ ------------ ----------- ------------
Total Romania 7.500.000 (2.256) 2.256 - - 7.500.000
------------ ------------ ------------ ------------ ------------ ----------- ------------
Allowance
(Note 14) (1.000.000) - - (1.000.000)
-------- ------------- ------------ ------------ ------------ ------------ ----------- ------------
Total 6.500.000 (2.256) 2.256 (1.000.000) - - 7.500.000
------------ ------------ ------------ ------------ ------------ ----------- ------------
Discontinued Operations
30 June 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 Transfer Disposals Transfer Carrying
amount exchange gain/(loss) to FA and change from amount
as at translation based on at fair in Continued as at
30/06/2019 difference local value allowance Operations 31/12/2018
currency through for
valuations OCI investment
(Note property
21) for H1
2019
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Bela Logistic
Park Land 4.745.167 108.768 (79.758) - - - 4.716.157
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Kiyanovskiy
Residence Land 2.811.951 64.455 (47.264) - - - 2.794.760
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Tsymlyanskiy
Residence Land 966.608 22.156 (16.247) - - - 960.699
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Balabino
Project Land 1.318.102 30.213 (22.155) - - - 1.310.044
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Rozny Lane Land 1.054.482 - 6.448 - - - 1.048.034
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Total Ukraine 10.896.310 225.592 (158.976) - - - 10.829.694
----------- ------------ ------------ --------- ----------- ----------- ------------
Innovations
Logistics
Park Warehouse 10.600.000 (159.177) 159.177 - - - 10.600.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
EOS Business
Park Office 7.600.000 (114.127) 114.127 - - - 7.600.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Residential
portfolio Residential 1.102.333 (20.333) 20.333 - (251.667) - 1.354.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
GreenLake Land 16.842.000 (252.910) 252.910 - - - 16.842.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Kindergarten Retail 1.406.000 (21.113) 21.113 - - - 1.406.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Total Romania 37.550.333 (567.660) 567.660 - (251.667) - 37.802.000
----------- ------------ ------------ --------- ----------- ----------- ------------
Boyana Land 4.230.000 - - - - - 4.230.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Total
Bulgaria 4.230.000 - - - - - 4.230.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Victini Warehouse
Logistics 15.200.000 - - - - - 15.200.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
Total Greece 15.200.000 - - - - - 15.200.000
------------- ----------- ------------ ------------ --------- ----------- ----------- ------------
TOTAL 67.876.643 (342.068) 408.684 - (251.667) - 68.061.694
----------- ------------ ------------ --------- ----------- ----------- ------------
Discontinued Operations
30 June 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 Disposals Transfer Additions Carrying
amount exchange gain/(loss) and change from 30/06/2018 amount
30/06/2018 translation based in prepayments as at
difference on local allowance made for 31/12/2017
currency for investments
valuations investment
property
for H1
2018
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Bela Logistic
Center Land 4.717.790 421.726 (289.945) - - - 4.586.009
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Kyianovskiy
Lane Land 2.744.895 245.367 (168.695) - - - 2.668.223
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Tsymlianskiy
Lane Land 943.558 84.345 (57.989) - - - 917.202
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Balabyne Land 1.372.448 122.685 (84.348) - - - 1.334.111
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Rozny Lane Land 1.115.114 54.446 (23.298) - - - 1.083.966
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Ukraine 10.893.805 928.569 (624.275) - - - 10.589.511
----------- ------------ ------------ ------------ ------------ ----------- ------------
Innovations
Logistics
Park Warehouse 10.000.000 (3.008) 3.008 - - - 10.000.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
EOS Business
Park Office 7.200.000 (2.166) 2.166 - - - 7.200.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Residential
portfolio Residential 2.257.001 (763) 763 (1.765.999) - - 4.023.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Greenlake Land 17.963.000 (5.404) 5.404 - - - 17.963.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Pantelimon Land
Lake - - - - - - -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Greenlake
-kindergarten Commercial 1.713.000 (515) 515 - - 1.713.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Romania 39.133.001 (11.856) 11.856 (1.765.999) - 40.899.000
----------- ------------ ------------ ------------ ------------ ----------- ------------
Boyana Land 4.230.000 - - - - - 4.230.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Bulgaria 4.230.000 - - - - - 4.230.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Victini Warehouse
Logistics 16.100.000 - - - - - 16.100.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Greece 16.100.000 - - - - - 16.100.000
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total 70.356.806 916.713 (612.419) (1.765.999) - - 71.818.511
----------- ------------ ------------ ------------ ------------ ----------- ------------
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 Companies Carrying amount as at
Operation
30 June 2019 31 Dec 2018
------------ ---------------- ---------------------- --------------------------- --------------------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
EUR EUR EUR
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Bela Logistic Odesa Land and LLC Aisi Bela - 4.745.167 - 4.716.157
Park Development
Works for
Warehouse
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Kiyanovskiy Podil, Land for LLC Aisi Ukraine - 2.811.951 - 2.794.760
Residence Kiev City residential LLC Trade Center
Center development
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Podil, Land for
Tsymlyanskiy Kiev City residential LLC
Residence Center Development Almaz--Pres--Ukraine - 966.608 - 960.699
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Balabino Zaporizhia Land for retail LLC Aisi Bela - 1.318.102 - 1.310.044
Project development
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Rozny Lane Brovary Land for SC Secure Capital - 1.054.482 - 1.048.034
district, residential Limited
Kiev Development
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Total Ukraine - 10.896.310 - 10.829.694
--------- ------------- ----------- -------------
Innovations Clinceni, Warehouse Myrnes Innovations - 10.600.000 - 10.600.000
Logistics Bucharest Park Limited
Park Best Day Real Estate
Srl
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
EOS Business Bucharest Office building Yamano Holdings - 7.600.000 - 7.600.000
Park Limited,
N-E Real Estate Park
First Phase Srl
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Kindergarten Bucharest Retail SPDI Real Estate Srl - 1.406.000 - 1.406.000
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Residential Bucharest Residential SEC South East - 1.102.333 - 1.354.000
Portfolio apartments Continent Unique
(9 in total in Real Estate
2 complexes) Investments II
Limited
Ketiza Holdings
Limited
Ketiza Real Estate
Srl
N-E Real Estate Park
First Phase Srl (in
2018 after merger
with SecRom Real
Estate Srl)
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
GreenLake Bucharest Residential SEC South East - 16.842.000 - 16.842.000
villas Continent Unique
(14 villas) & Real Estate
land for (Secured)
residential Investments Limited
development Edetrio Holdings
Limited
Emakei Holdings
Limited
Iuliu Maniu Limited
Ram Real Estate
Management Limited
Moselin Investments
Srl
Rimasol Enterprises
Limited
Rimasol Real Estate
Srl
Ashor Ventures
Limited
Ashor Development
Srl
Jenby Investments
Srl
Ebenem Investments
Srl
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Total Romania - 37.550.333 - 37.802.000
--------- ------------- ----------- -------------
Boyana Sofia Land Boyana Residence ood, - 4.230.000 - 4.230.000
Sertland Properties
Limited
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Total Bulgaria - 4.230.000 - 4.230.000
--------- ------------- ----------- -------------
Victini Athens Warehouse Victini Holdings - 15.200.000 - 15.200.000
Logistics Limited,
Victini Logistics
Park S.A.
------------ ---------------- ---------------------- ------------ ------------- ----------- -------------
Total Greece - 15.200.000 - 15.200.000
--------- ------------- ----------- -------------
TOTAL - 67.876.643 - 68.061.694
--------- ------------- ----------- -------------
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Innovations Logistics park, EOS Business Park, Victini Logistics,
Praktiker Craiova (sold during October 2018), 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 Residence, Balabino
Project and Rozny Lane in Ukraine, and GreenLake in Romania, as
well as the land in Sofia, Bulgaria (Boyana).
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
---------------------- ---------------------- --------------------- ----------------------
EUR EUR EUR EUR
---------------------- ---------------------- --------------------- ----------------------
At the beginning of
the reporting period - 63.345.537 74.732.502 -
---------------------- ---------------------- --------------------- ----------------------
Disposal of investment
Property - (251.667) (7.500.000) (3.033.617)
---------------------- ---------------------- --------------------- ----------------------
Revaluation
(loss)/gain on
investment property - 488.442 - (1.092.530)
---------------------- ---------------------- --------------------- ----------------------
Translation difference - (450.836) - 239.182
---------------------- ---------------------- --------------------- ----------------------
Transferred to Assets
held for sale - - (67.232.502) 67.232.502
---------------------- ---------------------- --------------------- ----------------------
As at the end of the
reporting period - 63.131.476 - 63.345.537
---------------------- ---------------------- --------------------- ----------------------
Disposals of Investment Properties mainly represent the sales of
Praktiker in Craiova .
a. Investment Properties Under Development
As at 30 June 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.
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
---------------------- ---------------------- --------------------- ----------------------
EUR EUR EUR EUR
---------------------- ---------------------- --------------------- ----------------------
At 1 January - 4.716.157 4.586.009 -
---------------------- ---------------------- --------------------- ----------------------
Revaluation on
investment property - (79.758) - (125.768)
---------------------- ---------------------- --------------------- ----------------------
Translation difference - 108.768 - 255.916
---------------------- ---------------------- --------------------- ----------------------
Transferred to Assets - - (4.586.009)
held for sale 4.586.009
---------------------- ---------------------- --------------------- ----------------------
At 31 December - 4.745.167 - 4.716.157
---------------------- ---------------------- --------------------- ----------------------
20. Investments in associates
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
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 from
associates - 224.177 - 364.920
---------------------- ---------------------- --------------------- ----------------------
Dividend Income - (121.772) - (143.263)
---------------------- ---------------------- --------------------- ----------------------
Foreign exchange
difference - (57.968) - (24.009)
---------------------- ---------------------- --------------------- ----------------------
Transfer to assets
classified as held
for sale - - (5.115.587) 5.115.587
---------------------- ---------------------- --------------------- ----------------------
Total - 5.357.672 - 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 30 June 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 24.180.906 (2.181.762) 920.493 24,35% 224.177 Romania building
-------------- ------------ -------------- --------- -------- -------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 9.171.101 (11.379.751) (26.150) 40,35% - Romania assets
-------------- ------------ -------------- --------- -------- -------------- -------- ------------
Total 33.352.007 (13.561.513) 894.343 224.177
------------ ------------- --------- -------- -------------- -------- ------------
As at 30 June 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 25.144.408 (2.744.771) 569.257 24,35% 138.637 Romania building
-------------- ------------ -------------- -------- -------- --------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 9.850.899 (11.491.790) 31.766 40,35% - Romania assets
-------------- ------------ -------------- -------- -------- --------------- -------- ------------
Total 34.995.307 (14.236.561) 601.023 138.637
------------ ------------- -------- -------- --------------- -------- ------------
21. Financial assets at fair value through OCI
The Group proceeded with an impairment of EUR297.200 for Monaco
Towers (company SecMon Real Estate Srl) for which following the
court decision for entering into insolvency in January 2018, the
Company lost the control over the asset (Note 7) 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):
Discontinued operations (Note 8)
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
------------ ------------
Loan receivable from 3(rd) parties (Note 25) 124.958
------------ ------------
Impairment charge for Monaco Towers (Adjusted
less Unadjusted NAV) (Note 14) (297.200)
------------ ------------
22. Tangible and intangible assets
As at 30 June 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 (31 Dec
2018: EUR103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to EUR101.962 (31 Dec
2018: EUR100.800 ) and therefore net value amounts to EUR1.231 (31
Dec 2018: EUR2.393).
As at 30 June 2019 the tangible non-current assets under
continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of EUR1.041 (31 Dec 2018:
EUR1.281).
As at 30 June 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 EUR122.948 (31 Dec
2018:EUR129.516). Accumulated depreciation as at the reporting date
amounts to EUR94.029 (31 Dec 2018: EUR86.982).
23. Long Term Receivables and prepayments
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
--------------------- ---------------------- --------------------- -----------------------
EUR EUR EUR EUR
--------------------- ---------------------- --------------------- -----------------------
Long Term Receivables 860 315.267 850 315.320
--------------------- ---------------------- --------------------- -----------------------
Total 860 315.267 850 315.320
--------------------- ---------------------- --------------------- -----------------------
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.
24. Inventory
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
---------------------- ---------------------- ---------------------- ----------------------
EUR EUR EUR EUR
---------------------- ---------------------- ---------------------- ----------------------
At 1 January - 4.604.044 4.812.550 -
---------------------- ---------------------- ---------------------- ----------------------
Sale of Inventories
(Note 13a) - - - (208.506)
---------------------- ---------------------- ---------------------- ----------------------
Transfer to assets
classified as held
for sale - - (4.812.550) 4.812.550
---------------------- ---------------------- ---------------------- ----------------------
As at the end of the
reporting period - 4.604.044 - 4.604.044
---------------------- ---------------------- ---------------------- ----------------------
The residential portfolio in Boyana, Sofia, Bulgaria is
classified as Inventory.
During 2016 after a decision of the Board of Directors of Boyana
to change the initial plan from construction on the land to hold
this land for capital appreciation, the amount of EUR4.686.000
which was related to the land was transferred under Investment
Properties (Note 19.2) and since then is treated under IAS 40.
25. Prepayments and other current assets
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
--------------------- ---------------------- --------------------- -----------------------
EUR EUR EUR EUR
--------------------- ---------------------- --------------------- -----------------------
Trade and other
receivables 73.420 670.250 102.243 569.210
--------------------- ---------------------- --------------------- -----------------------
VAT and other tax
receivables 116.017 107.467 123.975 93.331
--------------------- ---------------------- --------------------- -----------------------
Deferred expenses 55 71.489 72.630 1.254
--------------------- ---------------------- --------------------- -----------------------
Receivables due from
related parties 50.189 1.010 54.689 1.010
--------------------- ---------------------- --------------------- -----------------------
Loan receivables from
3(rd) parties 5.490.698 124.958 5.312.919 124.958
--------------------- ---------------------- --------------------- -----------------------
Loan to associates
(Note 39.4) 8.024 287.487 8.374 282.842
--------------------- ---------------------- --------------------- -----------------------
Allowance for
impairment of
prepayments and other
current assets (89.070) (393.020) (89.422) (390.471)
--------------------- ---------------------- --------------------- -----------------------
Total 5.649.333 869.641 5.585.408 682.134
--------------------- ---------------------- --------------------- -----------------------
Trade and other receivables mainly include receivables from
tenants (including the Greek electricity grid administrator) and
prepayments made for services.
VAT receivable represent VAT which is refundable in Romania,
Bulgaria, Greece, Cyprus and Ukraine.
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
EUR771.125. The loan provided under an agreement incorporating a
convertibility option which was not exercised and the loan is
payable in a 12 month period from notification date, 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 Loan Agreement.
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) partied under discontinued operations
include a loan receivable from SecMon Real Estate Srl which is in
the comparative figures of these Financial Statements was
classified as a subsidiary, while from January 2018 it is
classified as Financial Asset at Fair value through OCI (Note
21).
Loan to associates reflects a loan receivable from GreenLake
Development Srl, holding company of GreenLake Project-Phase A
(Notes 20 and 39.4).
26. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
--------------------- ---------------------- --------------------- ----------------------
EUR EUR EUR EUR
--------------------- ---------------------- --------------------- ----------------------
Cash with banks in USD 15.706 2 45.134 2.621
--------------------- ---------------------- --------------------- ----------------------
Cash with banks in EUR 123.146 167.309 205.679 233.184
--------------------- ---------------------- --------------------- ----------------------
Cash with banks in UAH 51 2.939 71 1.498
--------------------- ---------------------- --------------------- ----------------------
Cash with banks in RON 36.882 422.788 31.829 420.013
--------------------- ---------------------- --------------------- ----------------------
Cash with banks in BGN - 2.340 - 2.460
--------------------- ---------------------- --------------------- ----------------------
Total 175.785 595.378 282.713 659.776
--------------------- ---------------------- --------------------- ----------------------
27. Share capital
Number of Shares
30 June 2019 31 Dec 2018
Authorised
------------- ------------
Ordinary shares of EUR0,01 989.869.935 989.869.935
------------- ------------
Total ordinary shares 989.869.935 989.869.935
------------- ------------
RCP Class A Shares of EUR0,01 - -
------------- ------------
RCP Class B Shares of EUR0,01 8.618.997 8.618.997
------------- ------------
Total redeemable shares 8.618.997 8.618.997
------------- ------------
Issued and fully paid
------------- ------------
Ordinary shares of EUR0,01 127.270.481 127.270.481
------------- ------------
Total ordinary shares 127.270.481 127.270.481
------------- ------------
RCP Class A Shares of EUR0,01 - -
------------- ------------
RCP Class B Shares of EUR0,01 - -
------------- ------------
Total redeemable shares - -
------------- ------------
Total 127.270.481 127.270.481
------------- ------------
Nominal value (EUR)
EUR 30 June 2019 31 Dec 2018
EUR EUR
------------- ------------
Authorised
------------- ------------
Ordinary shares of EUR0,01 9.898.699 9.898.699
------------- ------------
Total ordinary shares 9.898.699 9.898.699
------------- ------------
RCP Class A Shares of EUR0,01 - -
------------- ------------
RCP Class B Shares of EUR0,01 86.190 86.190
------------- ------------
Total redeemable shares 86.190 86.190
------------- ------------
Issued and fully paid
------------- ------------
Ordinary shares of EUR0,01 1.272.702 1.272.702
------------- ------------
Total ordinary shares 1.272.702 1.272.702
------------- ------------
RCP Class A Shares of EUR0,01 - -
------------- ------------
RCP Class B Shares of EUR0,01 - -
------------- ------------
Total redeemable shares - -
------------- ------------
Total 1.272.702 1.272.702
------------- ------------
27.1 Authorised share capital
Following the cancellation of the Redeemable Preference Class A
Shares completed within H1 2018 the authorised share capital of the
Company as at the end of the reporting period 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 27.6).
27.2 Issued Share Capital
On 26(th) January 2018 the Company announced that 17.066.560
Class A warrants (at a price of GBP0,10 per warrant) have been
exercised and accordingly, 17.066.560 new ordinary shares were
issued and admitted to trading on AIM. The consideration for these
shares was paid during 2017. Furthermore the Company proceeded with
the issue of 344.371 new Ordinary Shares to the Non-Executive
Directors of the Company who were in office in 2016 in lieu of fees
accrued in 2016, as well as the issue of 10.000 new Ordinary Shares
to an ex-employee of the Company, who exercised 10.000 options held
over Ordinary Shares (exercisable at GBP0,15 per share) and
6.260.000 new Ordinary Shares (at an average price of GBP0,10 per
new Ordinary Share) to certain advisers in lieu of cash fees for
services offered to the Company for raising capital and
facilitating capital markets strategies.
The Company proceeded during H1 2018 with the necessary actions,
i.e. court applications, in order to implement the decisions of the
AGM of 29 December 2017 for the cancellation of the 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.
Following shares issuance completed within H1 2018, as well as
cancellation of Redeemable Preference Class A Shares the issued
share capital of the Company as at the end of the reporting period
is as follows:
a) 127.270.481 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 27.6).
27.3 Option schemes
A. Under the scheme adopted in 2007, each of the Directors
serving at the time, who is still a Director of the Company is
entitled to subscribe for 2.631 Ordinary Shares exercisable as set
out below:
Exercise Price Number of
USD Shares
--------------- ----------
Exercisable until 1 August 2017 57 1.754
--------------- ----------
Exercisable until 1 August 2017 83 877
--------------- ----------
The Company received no notice for exercising the options and as
a result, as at the end of the reporting period the options have
expired.
B. Under a second scheme also adopted in 2007, director Franz M.
Hoerhager is entitled to subscribe for 1.829 ordinary shares
exercisable as set out below:
Exercise Price Number of
GBP Shares
--------------- ----------
Exercisable until 1 August 2017 40 1.219
--------------- ----------
Exercisable until 1 August 2017 50 610
--------------- ----------
The Company received no notice for exercising the options and as
a result as at the end of the reporting period the options have
expired.
C. Under a scheme adopted in 2015, pursuant to an approval by
the AGM of 30/12/2013, the Company proceeded in 2015 in issuing
590.000 options to its employees, as a reward for their effort and
support during the previous year. Each option entitles the Option
holder to one Ordinary Share. Exercise price stands at GBP 0,15.
The Option holders may not exercise any option from the moment they
cease to offer their services to the Company. The CEO and the CFO
of the Company did not receive any options.
a. 147.500 Options were exercisable within 2016 and none were exercised.
b. 147.500 Options were exercisable within 2017, out of which
10.000 options were exercised by an ex-employee of the Company
while the rest have lapsed.
c. 295.000 Options should have been exercised within 2018.
The Company considers that all option schemes are currently out
of money and therefore has not made any relevant provision.
27.4 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, 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.
27.5 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.
27.6 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) 30 June 2019 (as at) 31 December 2018
Ordinary shares of EUR0,01 Issued and Listed on AIM 127.270.481 127.270.481
------------------------- --------------------- -------------------------
Class A Warrants - -
------------------------- --------------------- -------------------------
Class B Warrants - -
------------------------- --------------------- -------------------------
Total number of Shares Non-Dilutive Basis 127.270.481 127.270.481
------------------------- --------------------- -------------------------
Total number of Shares Full Dilutive Basis 127.270.481 127.270.481
------------------------- --------------------- -------------------------
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 32, 40.4).
27.7 Other share capital related matters
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 shall expire on 31 December 2019.
- 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.
28. 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.
29. 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 30 June 31 Dec 2018
2019
---------- ---------------
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
---------- ---------------
30. Borrowings
Project 30 June 2019 31 Dec 2018
Continued Discontinued Continued Discontinued
operations operations operations operations
------------------ ------------------ ------------------ ------------------ ------------------
EUR EUR EUR EUR
------------------ ------------------ ------------------ ------------------ ------------------
Principal of bank
Loans
------------------ ------------------ ------------------ ------------------ ------------------
Bancpost SA Blooming House - 455.593 - 614.441
------------------ ------------------ ------------------ ------------------ ------------------
Alpha Bank
Romania Romfelt Plaza - 104.226 - 191.723
------------------ ------------------ ------------------ ------------------ ------------------
Alpha Bank
Romania EOS Business Park - 427.616 - 485.663
------------------ ------------------ ------------------ ------------------ ------------------
Bancpost SA GreenLake -
Parcel K - 3.249.926 - 3.249.926
------------------ ------------------ ------------------ ------------------ ------------------
Alpha Bank Boyana Residence
Bulgaria - 2.258.128 - 2.258.128
------------------ ------------------ ------------------ ------------------ ------------------
Alpha Bank Boyana Residence
Bulgaria (Sertland Loan) - 666.474 - 666.474
------------------ ------------------ ------------------ ------------------ ------------------
Eurobank Ergasias Victini Logistics
SA - 10.328.160 - 10.658.950
------------------ ------------------ ------------------ ------------------ ------------------
Piraeus Bank SA GreenLake-Phase 2 - 2.525.938 - 2.525.938
------------------ ------------------ ------------------ ------------------ ------------------
Kindergarten -
Bancpost SA SPDI RE - 753.415 - 773.206
------------------ ------------------ ------------------ ------------------ ------------------
Loans from other 3(rd) parties and
related parties (Note 39.5) 887.613 177.599 387.683 177.473
------------------ ------------------ ------------------ ------------------
Overdrafts 499 2.614 499 1.420
------------------ ------------------ ------------------ ------------------
Total principal of bank and non-bank
Loans 888.112 20.949.689 388.182 21.603.342
------------------ ------------------ ------------------ ------------------
Interest accrued on bank loans - 1.137.733 1 960.075
------------------ ------------------ ------------------ ------------------
Interests accrued on non-bank loans 39.205 46.328 14.107 42.057
------------------ ------------------ ------------------ ------------------
Total 927.317 22.133.750 402.290 22.605.474
------------------ ------------------ ------------------ ------------------
SecMon Real Estate Srl entered (2011) into a loan agreement with
Banca Comerciala Romana for a credit facility for financing part of
the acquisition of the Monaco Towers apartments. The facility bears
interest of EURIBOR 3M plus 5%. In June 2016, Banca Comerciala
Romana has assigned the loan amounted to EUR924.562, all rights and
securities to Tonescu Finance Srl. The loan, which is currently
expired, is secured by all assets of SecMon Real Estate Srl, as
well as its shares. During 2017 Tonescu Finance commenced against
SecMon Real Estate Srl legal proceedings and in order for SecMon
Real Estate Srl to protect itself entered voluntarily into an
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 Sec Mon Srl is not consolidated
in the present financial statements (Note 7).
Ketiza Real Estate Srl entered (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 EUR455.593. The loan
bears interest of EURIBOR 3M plus 3,5% and matures in 2019. The
bank loan is secured by all assets of Ketiza Real Estate Srl, as
well as its shares and is being repaid through sales proceeds. The
Company has requested extension of the loan and waiver in relation
to the Arcona transaction in order the SPV with its loan to be
transferred effectively. An approval for all pending requests is
expected in the following period.
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 EUR104.226, 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 2021.
Moselin Investments Srl entered (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 (2011) into a loan agreement with
Alpha Bank Bulgaria for a construction loan related to the
construction of the Boyana Residence project (finished in 2014). As
at the end of the reporting period the balance of the loan was
EUR2.258.128 and bears interest of EURIBOR 3M plus 5,75%. The loan
maturity was extended following negotiation with the bank to March
2019. The loan currently is being repaid through sales proceeds.
The facility is secured through a mortgage over the property and a
pledge over the company's shares, as well as those of Sertland
Properties Limited. The Company has provided corporate guarantees
for this loan. The Company has requested extension of the loan and
waiver in relation to the Arcona transaction in order the SPV with
its loan to be transferred effectively. An approval for all pending
requests is expected in the following period.
Sertland Properties Limited entered (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 EUR666.474 and bears
interest of EURIBOR 3M plus 5,75%. The loan maturity was extended
following negotiation with the bank to March 2019. The loan
currently is being repaid through sales proceeds of Boyana
Residence apartments. The loan is secured with a pledge on
company's shares, and a corporate guarantee by SEC South East
Continent Unique Real Estate (Secured) Investments Limited. The
Company has requested extension of the loan and waiver in relation
to the Arcona transaction in order the loan to be transferred
effectively. An approval for all pending requests is expected in
the following period.
Victini Logistics Park S.A. entered (April 2015) into a loan
agreement with EUROBANK SA to refinance the existing debt facility
related to Victini Logistics. As at the end of the reporting period
the balance of the loan is EUR10.328.160 and bears 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.
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 EUR562.533 and bears interest of
EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution. The
loan matures in September 2023 but the Bnak has called the loan
back and the Company is in discussions for resolving the issue.
During 2018, BlueBigBox 3 Srl (Praktiker Craiova) sold its
property and repaid its loan to Marfin Bank Romania.
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 EUR427.616, 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 EUR753.415 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 includes
borrowings from non-controlling interests. During the last eight
years and in order to support the GreenLake project the
non-controlling shareholders of Moselin Investments Srl, Rimasol
Enterprises Limited and SPDI Real Estate (other than the Group)
have contributed their share of capital injections by means of
shareholder loans. The loans bear interest between 5% and 7%
annually.
Loans from other 3(rd) parties and related parties includes also
loans from related parties provided as bridge financing for future
property acquisitions (Note 39.5).
Á) 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 December
2019.
Â) 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 and for staged payments towards the
acquisition of up to a 50% interest in a portfolio of fully let
logistics properties in Romania, the Olympians Portfolio. 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.
C) During Q1 2019 the Company received two short terms loans
from two of its shareholders, with the purpose of financing working
capital needs and expenses related to the transaction with Arcona
Property Fund N.V. The total amount of the loans was EUR500.000 at
8% interest rate. Both loans have been repaid during H2 2019.
31. 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 25 and 27.4) 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.
32. Trade and other payables
The fair value of trade and other payables due within one year
approximate their carrying amounts as presented below.
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
--------------------- ---------------------- --------------------- -----------------------
EUR EUR EUR EUR
--------------------- ---------------------- --------------------- -----------------------
Payables to third
parties 3.371.299 927.242 3.213.848 924.137
--------------------- ---------------------- --------------------- -----------------------
Payables to related
parties (Note 39.2) 861.846 - 743.139 -
--------------------- ---------------------- --------------------- -----------------------
Deferred income from
tenants - 9.986 - 8.316
--------------------- ---------------------- --------------------- -----------------------
Accruals 46.652 201.555 94.905 150.324
--------------------- ---------------------- --------------------- -----------------------
Payables due for
construction - 188.360 - 417.826
--------------------- ---------------------- --------------------- -----------------------
Pre-sale advances 131.255 - 123.044 -
--------------------- ---------------------- --------------------- -----------------------
Total 4.411.052 1.327.143 4.174.936 1.500.603
--------------------- ---------------------- --------------------- -----------------------
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
---------------------- ----------------------- --------------------- -----------------------
EUR EUR EUR EUR
---------------------- ----------------------- --------------------- -----------------------
Current portion 4.411.052 1.128.796 4.174.936 1.074.460
---------------------- ----------------------- --------------------- -----------------------
Non-current portion - 198.347 - 426.143
---------------------- ----------------------- --------------------- -----------------------
Total 4.411.052 1.327.143 4.174.936 1.500.603
---------------------- ----------------------- --------------------- -----------------------
Payables to third parties represents: a) payables due to
Bluehouse Capital as a result the Redeemable Convertible Class B
share redemption (Note 27.6) which is under legal proceedings for a
final settlement(under continued operations) (Note 40.4) and b)
amounts payable to various service providers including auditors,
legal advisors, consultants and third party accountants related to
the current operations of the Group (under both continued and
discontinued operations).
Payables to related parties represent amounts due to directors
and accrued management remuneration, as well as the balances with
Secure Management Services Ltd and Grafton Properties (Note
39.2).
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. The settlement 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 (because of the sale of the asset) the Group would have to
pay an additional UAH 5.400.000 (USD 160.000) payable upon such
event occurring. Since it is uncertain when the latter amount is to
be paid, it has been discounted at the current discount rates in
Ukraine and is presented as a non-current liability. Payables for
construction at 31 December 2018 also include an amount of
EUR245.000 payable to Boyana's constructor which has been withheld
as Good Performance Guarantee. This amount was written off during
the period (Note15).
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.
33. Deposits from Tenants
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
---------------------- ---------------------- --------------------- ----------------------
EUR EUR EUR EUR
---------------------- ---------------------- --------------------- ----------------------
Deposits from tenants
non-current - 219.227 - 219.274
---------------------- ---------------------- --------------------- ----------------------
Total - 219.227 - 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 and companies
representing residential segment as advances/guarantees and are to
be reimbursed to these clients at the expiration of the lease
agreements.
34. Provisions and Taxes Payables
30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
--------------------- ---------------------- --------------------- -----------------------
EUR EUR EUR EUR
--------------------- ---------------------- --------------------- -----------------------
Corporate income tax -
non current 279.493 39.832 333.881 45.850
--------------------- ---------------------- --------------------- -----------------------
Defence tax - non
current 28.129 15 28.129 15
--------------------- ---------------------- --------------------- -----------------------
Tax provision - non
current 399.450 - 399.450 -
--------------------- ---------------------- --------------------- -----------------------
Corporate income tax -
current 594.430 18.722 620.557 21.446
--------------------- ---------------------- --------------------- -----------------------
Other taxes including
VAT payable - current 7.503 427.437 31.767 365.217
--------------------- ---------------------- --------------------- -----------------------
Provisions - current 42 65.552 43 66.002
--------------------- ---------------------- --------------------- -----------------------
Total Provisions and
Taxes Payables 1.309.047 551.558 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 3
years.
35. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR9.888.217 and the current portion
of EUR385.295 (31 December 2018: EUR10.076.579 and EUR393.433,
accordingly).
Discontinued operations
30 June 2019 Note Minimum lease Interest Principal
payments
EUR EUR EUR
--------- -------------- ---------- -----------
42.2
Less than one year & 42.6 867.587 484.123 383.464
--------- -------------- ---------- -----------
Between two and 5.779.339 1.703.975 4.075.363
five years
--------- -------------- ---------- -----------
More than five years 6.318.767 512.065 5.806.702
--------- -------------- ---------- -----------
12.965.693 2.700.163 10.265.529
--------- -------------- ---------- -----------
Accrued Interest - - 7.983
-------------- ---------- -----------
Total Finance Lease - - 10.273.512
Liabilities
-------------- ---------- -----------
31 Dec 2018 Note Minimum lease Interest Principal
payments
EUR EUR EUR
--------- -------------- ---------- -----------
42.2
Less than one year & 42.6 886.771 494.098 392.673
--------- -------------- ---------- -----------
Between two and 3.666.346 1.768.504 1.897.842
five years
--------- -------------- ---------- -----------
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 - - 10.470.012
Liabilities
-------------- ---------- -----------
35.1 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 EUR57.247 under current and non-current
portion. The Group's obligations under finance leases are secured
by the lessor's title to the leased assets.
35.2 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
EUR6.932.475, 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 Best Day Real Estate Srl will become owner of the
asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. Best Day Real Estate Srl pledged its future receivables from its tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved
accounts opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash
collateral in the amount of EUR250.000 in Piraeus Leasing Romania,
which had been deposited as follows, half in May 2014 and half in
May 2015.
SPDI provided a corporate guarantee in favor of the bank towards
the liabilities of Best Day Real Estate Srl arising from the sale
and lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by 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
EUR3.283.790 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 by
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.
36. 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.
37. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
30 June 2019 31 Dec 2018 30 June 2018
Issued ordinary shares capital 127.270.481 127.270.481 127.270.481
------------- ------------ -------------
Weighted average number of ordinary shares (Basic) 127.270.481 125.644.043 123.981.462
------------- ------------ -------------
Diluted weighted average number of ordinary shares 127.270.481 125.644.043 123.981.462
------------- ------------ -------------
b. Basic diluted and adjusted earnings per share
Earnings per share 30 Jun 2019 30 Jun 2018
EUR EUR
------------ ------------
Loss after tax attributable to owners of the parent 47.570 (1.996.708)
------------ ------------
Basic 0,0004 (0,02)
------------ ------------
Diluted 0,0004 (0,02)
------------ ------------
c. Net assets per share
Net assets per share 30 June 2019 31 Dec 2018
EUR EUR
------------- ------------
Net assets attributable to equity holders of the parent 35.681.667 35.608.276
------------- ------------
Number of ordinary shares 127.270.481 127.270.481
------------- ------------
Diluted number of ordinary shares 127.270.481 125.644.043
------------- ------------
Basic 0,28 0,28
------------- ------------
Diluted 0,28 0,28
------------- ------------
38. Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment - Victini Logistics, Innovations Logistics Park,
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - Craiova Praktiker (only for H1 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 period ended 30 June 2019
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- -------- ------- ------------ ----------- ---------- ----------
Segment profit
---------- -------- ------- ------------ ----------- ---------- ----------
Rental income (Note
9) - - - - - 132.025* 132.025
---------- -------- ------- ------------ ----------- ---------- ----------
Service charges
and utilities income
(Note 9) - - - - - 18.016* 18.016
---------- -------- ------- ------------ ----------- ---------- ----------
Profit from discontinued
operation (Note
8) 790.870 686.203 62.908 (20.259) 17.012 (21.457) 1.515.277
---------- -------- ------- ------------ ----------- ---------- ----------
Segment profit 790.870 686.203 62.908 (20.259) 17.012 128.584 1.665.318
---------- -------- ------- ------------ ----------- ---------- ----------
Administration expenses
(Note 11) (800.710)
----------
Other (expenses)/income,
net (Note 15) 66.056
---------- ----------
Finance income (Note
16) 232.715
---------- ----------
Interest expenses
(Note 16) (59.324)
---------- ----------
Other finance costs
(Note 16) (8.324)
---------- ----------
Foreign exchange
losses, net (Note
17a) (43.865)
Income tax expense
(Note 18) (2.212)
Profit from discontinued
operations (Note
8) (865.342)
Exchange difference
on I/C loan to foreign
holdings (Note 17b) 21.828
Exchange difference
on translation foreign
holdings (Note 28) (183.153)
Total Comprehensive
Income 22.987
* 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
Profit and Loss for the period ended 30 June 2018
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- -------- ------------ ------------ ----------- ---------- ------------
Segment profit
Rental income (Note
9) 57.140 - 314.584 - - - 371.724
---------- -------- ------------ ------------ ----------- ---------- ------------
Valuation gains/(losses)
from investment
property (Note 12) - - 2.256 - - - 2.256
---------- -------- ------------ ------------ ----------- ---------- ------------
Asset operating
expenses
(Note 10) - - (45.789) - - - (45.789)
---------- -------- ------------ ------------ ----------- ---------- ------------
Impairment of investment
property (Note 14) - - (1.001.569) - - - (1.001.569)
---------- -------- ------------ ------------ ----------- ---------- ------------
Profit from discontinued
operation (Note
8) 597.558 438.447 50.661 (299.322) (692.883) - 94.461
---------- -------- ------------ ------------ ----------- ---------- ------------
Segment profit 654.698 438.447 (679.857) (299.322) (692.883) - (578.917)
Administration expenses
(Note 11) (800.186)
---------- -------- ------------ ------------ ----------- ---------- ------------
Other (expenses)/income,
net (Note 15) (370)
---------- -------- ------------ ------------ ----------- ---------- ------------
Finance income (Note
16) 449.210
---------- -------- ------------ ------------ ----------- ---------- ------------
Interest expenses
(Note 16) (191.885)
---------- -------- ------------ ------------ ----------- ---------- ------------
Other finance costs
(Note 16) (10.208)
---------- -------- ------------ ------------ ----------- ---------- ------------
Profit from discontinued
operations (Note
8) (910.100)
---------- -------- ------------ ------------ ----------- ---------- ------------
Foreign exchange
losses, net (Note
17a) (14.311)
Income tax expense
(Note 18) (9.923)
Exchange difference
on I/C loan to foreign
holdings (Note 17b) 14.449
Exchange difference
on translation foreign
holdings (Note 28) 880.539
Total Comprehensive
Income (1.171.702)
Discontinued Operations
Profit and Loss for the period ended 30 June 2019
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- -------- -------- ------------ ----------- ---------- ----------
Segment profit
---------- -------- -------- ------------ ----------- ---------- ----------
Property Sales income
(Note 13) - 83.893 - 165.707 - - 249.600
Cost of Property
sold (Note 13) - (47.216) - (204.451) - - (251.667)
Rental income (Note
9) 704.632 305.928 57.250 8.392 417 - 1.076.619
Service charges and
utilities income
(Note 9) 22.567 20.004 - 710 - - 43.281
Sale of electricity
(Note 9) 82.965 - - - - - 82.965
Service and Property
Management income
(Note 9) - - - 1.063 - - 1.063
Valuation gains/(losses)
from investment property
(Note 12) 159.177 118.872 21.113 15.587 93.935 - 408.684
Share of profits/(losses)
from associates (Note
20) - 224.177 - - - - 224.177
Asset operating expenses
(Note 10) (178.471) (19.455) (15.455) (7.267) (77.340) (21.457) (319.445)
Segment profit 790.870 686.203 62.908 (20.259) 17.012 (21.457) 1.515.277
---------- -------- -------- ------------ ----------- ---------- ----------
Administration expenses
(Note 11) (111.352)
Other (expenses)/income,
net (Note 15) 237.474
Finance income (Note
16) 5.041
Interest expenses
(Note 16) (704.827)
Other finance costs
(Note 16) (1.305)
Foreign exchange
losses, net (Note
17a) (274.005)
Income Tax (Note
18) (16.368)
Total Comprehensive
Income 649.935
Discontinued Operations
Profit and Loss for the period ended 30 June 2018
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- --------- -------- ------------ -----------
Segment profit
Property Sales
income (Note 13) - - - 478.927 - - 478.927
---------- --------- -------- ------------ -----------
Cost of Property
sold (Note 13) - - - (495.498) - - (495.498)
---------- --------- -------- ------------ -----------
Rental income (Note
9) 497.401 297.578 57.393 23.586 - - 875.958
---------- --------- -------- ------------ -----------
Service charges
and utilities income
(Note 9) 26.407 36.717 - 1.650 - - 64.774
---------- --------- -------- ------------ -----------
Sale of electricity
(Note 9) 152.618 - - - - - 152.618
---------- --------- -------- ------------ -----------
Service and Property
Management income
(Note 9) - - - 1.083 - - 1.083
---------- --------- -------- ------------ -----------
Valuation gains/(losses)
from investment
property (Note
12) 3.008 2.166 515 764 (618.872) - (612.419)
---------- --------- -------- ------------ -----------
Share of profits/(losses)
from associates
(Note 20) - 138.637 - - - - 138.637
---------- --------- -------- ------------ -----------
Asset operating
expenses
(Note 10) (81.876) (36.651) (7.247) (12.634) (74.011) - (212.419)
---------- --------- -------- ------------ -----------
Impairment of investment
property (Note
14) - - - (297.200) - - (297.200)
---------- --------- -------- ------------ -----------
Segment profit 597.558 438.447 50.661 (299.322) (692.883) - 94.461
Administration
expenses
(Note 11) (100.478)
---------- --------- -------- ------------ -----------
Other (expenses)/income,
net (Note 15) 26.937
---------- --------- -------- ------------ -----------
Finance income
(Note 16) 4.846
---------- --------- -------- ------------ -----------
Interest expenses
(Note 16) (796.977)
---------- --------- -------- ------------ -----------
Other finance costs
(Note 16) (5.695)
---------- --------- -------- ------------ -----------
Foreign exchange
losses, net (Note
17a) (1.369)
Income tax expense
(Note 18) (37.364)
Total Comprehensive
Income (815.639)
Total Operations
Balance Sheet as at 30 June 2019
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
----------- ----------- ---------- ------------ ----------- ---------- -----------
Assets
Long-term receivables
and prepayments - - - - - 860 860
Assets held
for sale 26.115.000 13.187.272 1.406.000 2.205.169 34.196.186 2.537.938 79.647.565
----------- ----------- ---------- ------------ ----------- ---------- -----------
Segment assets 26.115.000 13.187.272 1.406.000 2.205.169 34.196.186 2.538.798 79.648.425
Tangible and
intangible assets 2.272
Prepayments
and other current
assets 5.649.333
-------- -------- ---------- ---------- -----------
Cash and cash
equivalents 175.785
-------- -------- ---------- ---------- -----------
Total assets 85.475.815
Liabilities
associated with
assets classified
as held for
disposal 17.476.869 3.816.492 954.040 460.148 9.918.939 1.878.702 34.505.190
------------ ----------- -------- -------- ---------- ---------- -----------
Borrowings - - - 41 459 926.817 927.317
------------ ----------- -------- -------- ---------- ---------- -----------
Segment liabilities 17.476.869 3.816.492 954.040 460.189 9.919.398 2.805.519 35.432.507
Trade and other
payables 4.411.052
-------- -------- ---------- ---------- -----------
Taxes payable
and provisions 1.309.047
-------- -------- ---------- ---------- -----------
Bonds 1.156.256
-------- -------- ---------- ---------- -----------
Total liabilities 42.308.862
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
Discontinued operations
Assets and Liabilities held for sale 30 June 2019
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
----------- ----------- ----------- ------------ ------------ ---------- ------------
Assets
Investment properties 25.800.000 7.829.333 1.406.000 873.000 26.179.143 1.044.000 63.131.476
----------- ----------- ----------- ------------ ------------ ---------- ------------
Investment properties
under development - - - - 4.745.167 - 4.745.167
----------- ----------- ----------- ------------ ------------ ---------- ------------
Long-term receivables
and prepayments 315.000 267 - - - - 315.267
Investments
in associates - 5.357.672 - - - - 5.357.672
----------- ----------- ----------- ------------ ------------ ---------- ------------
Financial asset
at fair value
through OCI 1 1
----------- ----------- ----------- ------------ ------------ ---------- ------------
Inventory - - - 4.604.044 - - 4.604.044
----------- ----------- ----------- ------------ ------------ ---------- ------------
Segment assets 26.115.000 13.187.272 1.406.000 5.477.045 30.924.310 1.044.000 78.153.627
Tangible and
intangible assets 28.919
Prepayments
and other current
assets 869.641
------------ ---------- -------- --------- ---------- --- -----------
Cash and cash
equivalents 595.378
------------ ---------- -------- --------- ---------- --- -----------
Total assets 79.647.565
Borrowings 10.328.233 532.702 954.040 457.081 9.861.694 - 22.133.750
------------ ---------- -------- --------- ---------- --- -----------
Finance lease
liabilities 6.932.476 3.283.790 - - 57.246 - 10.273.512
------------ ---------- -------- --------- ---------- --- -----------
Deposits from
tenants 216.160 - - 3.067 - - 219.227
------------ ---------- -------- --------- ---------- --- -----------
Segment liabilities 17.476.869 3.816.492 954.040 460.148 9.918.940 - 32.626.489
Trade and other
payables 1.327.143
------------ ---------- -------- --------- ---------- --- -----------
Taxes payable
and provisions 551.558
------------ ---------- -------- --------- ---------- --- -----------
Total liabilities 34.505.190
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 315.049 271 - - - - 315.320
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 26.115.049 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 659.776
------------ ----------- --------- --------- ---------- --- ------------
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
Geographical information
30 June 2019 30 June 2018
Income (Note 9) Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Ukraine - - - -
Romania - 521.618 314.584 550.161
Greece - 681.893 - 543.575
Bulgaria - 417 - 697
Cyprus * 150.041 - 57.140 -
Total 150.041 1.203.928 371.724 1.094.433
* 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 successful, upon completion such income will
be also transferred.
Loss from disposal of 30 June 2019 30 June 2018
inventory (Note 13a)
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Bulgaria - - - (13.555)
Total - - - (13.555)
Gain/(loss) from 30 June 2019 30 June 2018
disposal of investment
properties (Note 13b)
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Romania - (2.067) - (3.016)
Total - (2.067) - (3.016)
30 June 2019 31 Dec 2018
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR
Carrying amount of
assets (investment
properties, associates,
inventory and Financial
asset
at fair value through
OCI)
Ukraine - 10.896.310 - 10.829.694
Romania - 42.908.006 - 43.115.236
Greece - 15.200.000 - 15.200.000
Bulgaria - 8.834.044 - 8.834.044
Total - 77.838.360 - 77.978.974
39. Related Party Transactions
The following transactions were carried out with related
parties:
39.1 Income/ Expense
39.1.1 Income
30 June 2019 30 June 2018
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Interest Income on loan
to related parties 2.281 - 2.281 -
Interest Income from
loan to associates 161 4.645 - 4.645
Total 2.442 4.645 2.281 4.645
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.
39.1.2 Expenses
30 June 2019 30 June 2018
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Management Remuneration
(Note 11) 203.870 - 190.636 -
Interest expenses on
Related party loans 24.837 - 64.870 -
Total 228.707 - 255.506 -
Management remuneration includes the remuneration of the CEO,
the CFO, the Group Commercial Director and that of the Country
Managers of Ukraine and Romania pursuant to the decisions of the
remuneration committee.
39.2 Payables to related parties (Note 32)
30 June 2019 31 Dec 2018
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Board of Directors &
Committees remuneration 74.162 80.776
Grafton Properties 123.549 - 123.549 -
Secure Management
Services Ltd 15.319 19.319
Management Remuneration 648.816 - 519.495 -
Total 861.846 - 743.139 -
39.2.1 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, will receive part of 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.
39.2.2 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 repay 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, the total amount of USD 450.000. As at the
reporting date the liability towards Grafton Properties,
representing the Lenders, was USD 150.000, which is contingent on
the Group raising USD 50m of capital in the markets.
39.2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO of the Company.
39.3 Loans from SC Secure Capital Limited to the Group's
subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs. The following table presents the amounts of such
loans which are eliminated for consolidation purposes, but their
related exchange difference affects the equity of the Consolidated
Statement of Financial Position.
Borrower Limit Principal Principal
as at as at
30 June 31 Dec
2019 2018
EUR EUR EUR
LLC "Aisi Ukraine" 23.062.351 21.887 21.711
LLC "Almaz-Press-Ukraine" 8.236.554 249.674 189.938
LLC "Aisi Ilvo" 150.537 28.076 78.890
LLC "Trade Center" 5.694 -
Total 31.449.442 305.331 290.539
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 (EUR30.533)/ EUR30.533 respectively, estimated on balances held
at 30 June 2019.
39.4 Loans to associates (Note 25)
Borrower Limit Principal Principal
as at as at
30 June 31 Dec
2019 2018
EUR EUR EUR
---------
LLC "Aisi Ukraine" 23.062.351 21.887 21.711
LLC "Almaz-Press-Ukraine" 8.236.554 249.674 189.938
LLC "Aisi Ilvo" 150.537 28.076 78.890
LLC "Trade Center" 5.694 -
Total 31.449.442 305.331 290.539
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.
39.5 Loans from related parties (Note 30)
30 June 2019 31 Dec 2018
Continued operations Discontinued operations Continued operations Discontinued operations
EUR EUR EUR EUR
Loan from Narrowpeak
Consultants 5.297 - 5.256 -
Loan from Directors 875.000 - 375.000 -
Interest accrued on
loans from related
parties 39.205 - 14.107 -
Total 919.502 - 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 December 2019.
40. Contingent Liabilities
40.1 Tax Litigation
The Group performed during the reporting period part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may
remain open for longer. Overall following the sale of Terminal
Brovary in January 2017 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 adequately
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 condensed consolidated interim financial
statements, if the authorities were successful in enforcing their
interpretations, could be significant.
40.2 Construction related litigation
There are no material claims from contractors due to the
postponement of projects or delayed delivery other than those
disclosed in the financial statements.
40.3 Delia Lebada Srl debt towards Bank of Cyprus
Sec South East Continent Unique Real Estate (SECURED) Investment
Limited has provided in 2007 a corporate guarantee to Bank of
Cyprus in respect to the loan provided by the latter to its
subsidiary Delia Lebada Srl, the owner of the Pantelimon Lake plot
. As the loan was in default, the bank had initiated an insolvency
procedure. In July 2017 the Company concluded its discussions with
the bank and settled all debts and guarantees following successful
disposal of Delia Lebada plot . Provision was taken by management
in 2015 for EUR700.000 while finally the Company as part of the
sale of the asset and cancellation of the corporate guarantee paid
EUR550.000 in final settlement and as such the difference of
EUR150.000 was reversed in 2017 .
40.4 Bluehouse Accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. filed in
Cypriot courts in December 2018 a 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. 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 the 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 ACCESSION PROPERTY HOLDINGS III S.A.R.L. in
the amount of EUR2.521.211 (Note 32). Management believes the
Company has good grounds of defence and the amount already provided
is adequate to cover an eventual final settlement.
40.5 Other Litigation
The Group has a number of other minor legal cases pending.
Management does not believe that the result of these will have a
substantial overall effect on the Group's financial position.
Consequently no such provision is included in the current financial
statements.
40.6 Other Contingent Liabilities
The Group had no other contingent liabilities as at 30 June
2019.
41. Commitments
The Group had no other commitments as at 30 June 2019.
42. Financial Risk Management
42.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will
be available 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 30), bonds (Note 31), trade and other
payables (Note 32) deposits from tenants (Note 33), financial
leases (Note 35), taxes payable (Note 34) 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 shareholders' Return on Equity
(ROE) while adhering to the operational requirements of the
property assets and exercising prudent judgment as to the extent of
gearing.
42.2 Categories of Financial Instruments
Note 30 June 2019 31 Dec 2018
Continued operations Discontinued Continued operations Discontinued
operations operations
EUR EUR EUR EUR
Financial Assets
Cash at Bank 26 175.785 595.378 282.713 659.776
Long-term Receivables
and prepayments 23 860 315.267 850 315.320
Prepayments and other
receivables 25 5.649.333 869.641 5.585.408 682.134
Financial Asset at
fair value through
OCI 21 - 1 - 1
Total 5.825.978 1.780.287 5.868.971 1.657.231
Financial Liabilities
Borrowings 30 927.317 22.133.750 402.290 22.605.474
Trade and other 32 4.411.052 1.327.143 4.174.936 1.500.603
payables
Deposits from tenants 33 - 219.227 - 219.274
Finance lease
liabilities 35 - 10.273.512 - 10.470.012
Taxes payable and
provisions 34 1.309.047 551.558 1.413.827 498.530
Bonds 31 1.156.256 - 1.122.470 -
Total 7.803.672 34.505.190 7.113.523 35.293.893
42.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk, as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not
entered into any derivative contracts.
42.4 Economic Market Risk Management
The Group operates in Romania, 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 interest-bearing assets. On June 30(th) , 2019, cash
and cash equivalent (including continued and discontinued
operations) financial assets amounted to EUR771.163 (31 December
2018: EUR942.489 ) of which approx. EUR2.990 in UAH and EUR459.670
in RON (Note 26) 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 EUR23.061.067 (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 30 June 2019 the weighted average interest rate for all
the interest bearing borrowing and financial leases of the Group
stands at 3,16% (31 December 2018: 3,83%).
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 30 June 2019 is presented below:
Actual +100 bps +200 bps
as at 30.06.2019
Weighted average interest
rate 3,16% 4,16% 5,16%
Influence on yearly finance
costs (218.378) (436.756)
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 6.
42.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The Credit risk of
receivables is reduced as the majority of the receivables represent
VAT to be offset through VAT income in the future. In respect of
receivables from tenants these are kept to a minimum of 2 months
and are monitored closely.
42.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which applies a framework for the Group's
short, medium and long term funding and liquidity management
requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and
budgets while maintaining adequate reserves. The following table
details the Group's contractual maturity of its financial
liabilities. The tables below have been drawn up based on the
undiscounted contractual maturities including interest that will be
accrued.
Continued Operations
30 June 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 175.785 175.785 175.785 - -
------------ ------------
Prepayments and other 5.649.333 5.649.333 5.649.333 - -
receivables
------------ ------------
Long-term Receivables
and prepayments 860 860 - 860
------------ ------------
Total Financial assets 5.825.978 5.825.978 5.825.118 - 860
Financial liabilities
------------ ------------
Borrowings (927.317) (1.008.636) (84.086) (924.550) -
------------ ------------
Trade and other payables (4.411.052) (4.411.052) (4.411.052) - -
Bonds issued (1.156.256) (1.626.655) (189.614) (67.200) (1.369.841)
------------ ------------
Taxes payable and
provisions (1.309.046) (1.309.046) (601.974) (707.072) -
------------ ------------
Total Financial liabilities (7.803.671) (8.355.389) (5.286.726) (1.698.822) (1.369.841)
Total net (liabilities)/
assets (1.977.693) (2.529.411) 538.392 (1.698.822) (1.368.981)
------------
Discontinued Operations
30 June 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 595.378 595.378 595.378 - -
------------
Prepayments and other
receivables 869.641 869.641 869.641 - -
------------
Long-term Receivables
and prepayments 315.267 315.267 - - 315.267
------------
Financial Asset at
fair Value through
OCI 1 1 1 - -
------------
Total Financial assets 1.780.287 1.780.287 1.465.020 - 315.267
Financial liabilities
------------
Borrowings (22.133.750) (22.206.049) (3.669.108) (7.054.814) (11.482.127)
------------
Trade and other payables (1.327.143) (1.327.143) (1.128.796) - (198.347)
Deposits from tenants (219.227) (219.227) - - (219.227)
------------
Finance lease liabilities (10.273.512) (12.965.693) (867.587) (855.834) (11.242.272)
------------
Taxes payable and
provisions (551.558) (551.558) (511.710) (39.848) -
------------
Total Financial liabilities (34.505.190) (37.269.670) (6.177.201) (7.950.496) (23.141.973)
Total net liabilities (32.724.903) (35.489.383) (4.712.181) (7.950.496) (22.826.706)
------------
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)
------------ ------------
Taxes payable and
provisions (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 (liabilities)/
assets (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 659.776 659.776 659.776 - -
------------
Prepayments and other
receivables 682.134 682.134 682.134 - -
------------
Long-term Receivables
and prepayments 315.320 315.320 - - 315.320
------------
Total Financial assets 1.657.230 1.657.230 1.341.910 - 315.320
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 liabilities (33.636.663) (36.363.595) (5.889.738) (3.686.159) (26.787.698)
------------
43. Events after the end of the reporting period
a) 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, the two parties have signed relevant Framework
Agreements, SPA's, and associated documentation for the first phase
of the transaction which includes the SPVs associated with Boyana,
Bela, Balabino, and Tsymliankiy. The first phase of the transaction
is planned to close by the end of October 2019, while the two
parties have already commenced the process for implementing the
second phase, which includes SPVs associated with EOS, Monaco,
Romfelt, Blooming House, and Delenco.
b) Loans from shareholders
During August 2019 the Company repaid the two short-term loans
from shareholders amounting to EUR500.000 which were received
during H1 2019 with the purpose of providing working capital.
c) Sale of Victini Logistics Park S.A.
On 8 August 2019 the Company sold Victini Logistics Park S.A.,
the owner company of the Victini Logistics warehouse in
Aspropyrgos, Greece. The valuation of the asset was agreed at
EUR12,5 milion, while the Company retains a receivable from the
previous owner of EUR0,6 milion due within the following 18
months.
d) Loan agreement termination
On 13 September 2019 the Company received a termination notice
from Piraeus Bank in relation to the loan of SEC South East
Continent Unique Real Estate (Secured) Investments Limited, for an
amount totalling EUR3.088.471. Currently the Company is in relevant
discussions with the Bank for finding a mutual agreed solution.
e) Developments on Bluehouse Accession case
In July 2019 the courts in Cyprus ordered that until the hearing
of the Bluehouse Accession claim against the Company which has not
been set yet, the Company is not allowed to reduce its net equity
below EUR5 million, which is double the claim of Bluehouse
Accession. The Company's net asset value at the end of the current
period is EUR36 milion. In September 2019 the Company filed a
counterclaim against Bluehouse Accession for an amount of EUR2,6
milion for which a hearing has not been set yet.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KMGZLMRFGLZM
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