TIDMSPDI
RNS Number : 8692D
Secure Property Dev & Inv PLC
28 June 2019
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
28 June 2019
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
2018 Audited Annual Results
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property company, is pleased to
announce its full year audited financial results for the year ended
31 December 2018.
Full year Net Equity standing at a 100%+ premium to SPDI's
market valuation, similar to last year's premium, while operating
results and EBITDA remain positive at EUR0,4m and EUR1,8m
respectively, despite sale of the fully let BigBlueBox in
Romania
Full Year Financial Highlights
Second successive annual positive operating result after finance
and tax expenses:
-- Operating result after finance and tax expenses of EUR0.414m (31 Dec 2017: EUR1,5m)
-- EBITDA of EUR1,8m compared to EUR3,7m in 2017 - year on year
reduction largely due to the sale of the fully let BigBlueBox in
Romania
Significant asset backing behind the Company:
-- Net Equity of EUR35,6 million as at 31 December 2018 (31 Dec 2017: EUR36,3 million)
-- NAV per share stood at GBP 0.25 as at 31 December 2018 -
current share price trading at a ca. 72% discount to NAV per
share
Ongoing successful management of cost base:
-- 14% reduction in business costs to EUR2,021 million (2017:
EUR2,35 million) - builds on 10% reduction in costs in 2017
-- 41% reduction in interest costs to EUR1,2m compared to
EUR2,0m in 2017 - builds on 36% reduction in interest costs in
2017
Operational Highlights
Successfully executing strategy to realise value of South
Eastern European property portfolio:
-- EUR2.5m cash generated net to SPDI following profitable sale
of BigBlueBox in Romania at a Gross Asset Value of EUR6,5m
-- Sale of nine residential units in Romania and Bulgaria for a
total gross consideration of EUR980,000 resulting in EUR0.7m
reduction in SPDI's residential property asset debt to EUR11.5m and
EUR280,000 free cash
-- Conditional Sale of Non-Greek assets at a deemed EUR29.25
million valuation, a 95% premium to SPDI's total current market
capitalisation
o Three stage completion process - Stage 1 covers assets in
Ukraine and Bulgaria; Stages 2 and 3 include assets in Romania as
well as the remaining assets in Ukraine
o Subject to, inter alia, shareholder and regulatory approval,
SPDI to receive ca. 2.1m shares in and ca. 0.5m warrants over
Arcona Property Fund N.V. an Amsterdam-listed company focused on
Central Eastern European commercial property
o Signing of the various transaction documents and Closing of
Stage 1, subject to any necessary approvals being obtained,
expected within July 2019
-- Following receipt of a number of expressions of interest,
SPDI is in the final stages of negotiations with one particular
party with regards to signing an agreement, subject to a number of
conditions precedent, including all necessary approvals being
granted, to sell Victini Logistics in Greece - finalisation of the
agreement expected to occur in July 2019, which will then be
followed by negotiations on definitive documentation.
Corporate Highlights
-- Appointment of Mr Michael Beys as Non-Executive Chairman
-- Post period end - formation of a smaller and more efficient
Board comprised of Michael Beys (Chairman), Harin Thaker
(Vice-Chairman), Ian Domaille (Non-executive Director), Tony Kaffas
(Non-executive) and Lambros Anagnostopoulos (Chief Executive
Officer)
-- Post period end - formation of an Advisory Council to provide
strategic advice and support to the Board
Lambros G. Anagnostopoulos, Chief Executive Officer, said,
"Representing 15% of our current market capitalisation, our EUR1.8m
EBITDA for the full year validates what we have been saying for a
long time, specifically a huge disconnect has opened up between how
the industry and how the stock market value our portfolio of South
Eastern European properties. We continue to focus on closing this
valuation gap which still stands at >70%.
"The December 2018 announcement on the conditional sale of our
non-Greek portfolio for EUR29,25m, a 95% premium to our then market
cap, to Amsterdam-listed Arcona Property Fund N.V. will go some way
to achieving this. Not only does the sale value equate to a more
realistic valuation of our properties, the all share transaction
exposes our shareholders to a dividend-paying fund with a
diversified portfolio of income producing properties in Central
Eastern Europe valued after closing at ca. EUR161 million. We are
working hard to close the transaction in 2019, at which point we
would have taken a major step towards delivering on our objective
to build a leading property company focused on the fast-growing
economies and strategic intercontinental trade routes of South
Eastern Europe."
Copies of the Annual report and Accounts are being posted to
Shareholders today and are available on the Company's website at
www.secure-property.eu.
Note to readers: Following the 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) and has
restated accordingly 2017 figures for comparative purposes.
* *S * *
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Ritchie Balmer
Jack Botros
Jon Belliss Novum Securities Limited Tel: +44 (0) 207 399 9400
Cosima Akerman St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Frank Buhagiar
Notes to Editors
Secure Property Development and Investment plc is an AIM listed
property development and investment company focused on the South
East European markets. The Company's strategy is focused on
generating healthy investment returns principally derived from: the
operation of income generating commercial properties and capital
appreciation through investment in high yield real estate assets.
The Company is focused primarily on commercial and industrial
property in populous locations with blue chip tenants on long term
rental contracts. The Company's senior management consists of a
team of executives that possess extensive experience in managing
real estate companies both in the private and the publicly listed
sector, in various European countries.
1. Chairman Statement
During 2018, the favorable fundamentals of our target markets
continued to prevail, with Romania continuing its leading growth
within the EU, and Greece finally and firmly on a path to recovery.
In general, property markets in our region have continued to
experience steady yield compression, as the global search for yield
has compelled new investors to allocate funds to these markets.
During the period, SPDI continued to pursue opportunities to
implement its strategic objective of growing while simultaneously
disposing of non-core assets, in order to generate value for its
shareholders. Indeed, in 2018 we sold our Praktiker asset in
Craiova, the only Romanian property that was not located in
Bucharest, and also examined a number of partnership opportunities
to grow our asset base.
During the current year, we have intensified such efforts,
aiming to consummate a merger-like transaction with Arcona, which
we hope and expect to close by year's end.
Michael Beys
Chairman of the Board
2. Letter to Shareholders
Dear Shareholders,
2018 has been a year when SPDI's vision, strategy and asset
portfolio attracted a number of third parties interested in joining
forces with our Company. In fact, our long standing diligent effort
to establish SPDI as the regional property company of reference in
South Eastern Europe, proved key to SPDI attracting such interest
and most of the year was taken up evaluating various options in
order to capitalize on such efforts and generate value for our
shareholders.
As the regional economies and related property markets SPDI is
present in continued their respective growth trends, SPDI was not
only able to sell one of its non-core assets in a substantial cash
generating transaction in Q3, but was able to choose among the
various options of value-add opportunities available to it.
Specifically, as announced in December (with further updates being
provided during 2019), we commenced a potential merger like
transaction with the Amsterdam and Prague listed Arcona Property
Fund N.V. (APF) with assets in Poland, Czech Republic and Slovakia.
The closing of the transaction, should we be able to bring it to
fruition and subject to the necessary approvals being obtained as
expected within 2019, will see our non-Greek assets moving under
the corporate umbrella of APF and our shareholders gaining relative
exposure to a much larger and broader East European regional
property company, as per our original plan. The value that the
Arcona transaction places on SPDI is its real Net Asset Value
(NAV). Our shareholders will benefit from owning shares and
warrants of APF equivalent to NAV, confirming our age old argument
that the market has not reflected SPDI's true potential by applying
a >50% discount to such value.
In 2018, Romania continued being the fastest growing economy of
the European Union and saw property prices continue rising across
all sectors, facilitating our residential sales and confirming our
choice not to have gone all out on selling such assets the years
before. At the same time Bulgarian property market prices,
especially in the residential sector, saw a substantial increase
allowing us to prepare the ground for the sale of further
residential units in Boyana. Finally, Greece turned the corner and
experienced for the first time in years increased output for the
year, with its own property market showing signs of strengthening.
This led to numerous expressions of interest for our Athens
logistics terminal, a property not included in the APF potential
deal.
The combination of higher values and sales prices, as well as
increased interest in our assets and our platform as a whole, gives
us the ability to generate more cash through the sale of non-core
assets but also the confidence that one way or another we will be
able to reach our objective of generating value for our
shareholders through our well placed and efficiently run asset
portfolio. The consolidation of our Board of Directors to an
active, leaner unit and a strong advisory council we can tap on,
offers management the necessary support to continue its all-out
efforts and effect the moves needed to achieve SPDI's objectives
and ensure that the exercises under way will result in transforming
the Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
3. Management Report
3.1 Corporate Overview & Financial Performance
SPDI's core property asset portfolio consists of South Eastern
European prime commercial and industrial real estate, the majority
of which is let to blue chip tenants on long leases. During 2018,
management continued to focus on its strategy to dispose of
non-core assets, while at the same time continued to source
partnerships which are able to effectively set the grounds for
further value creation.
With this in mind, during the period the Company sold the
BlueBigBox asset fully let to Praktiker, a regional DIY retailer in
Craiova, Romania, generating more than EUR2,5m in cash.
Most importantly, 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. The transaction values the SPDI
assets at EUR29m, or 225% higher than the current market value of
the Company as a whole. If one takes into consideration and assumes
the warrants that will be issued together with the ARCONA shares,
the transaction values the SPDI assets at their Net Asset
Value.
Such 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 which will be distributed eventually 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.
Regarding the economic environment in which the Company
operates, the Romanian economy continued to grow strongly with a
4,1% increase, whilst maintaining record low unemployment.
Bucharest is bustling with property development and it is expected
that the following year will set new records especially in
Logistics and Office markets, backed by international and domestic
investor interest.
Greece exited the financing and stabilization programme and
experienced economic growth for the second consecutive year. It
posted a 4%+ primary surplus, and in 2019 is expected to be able to
go to the markets to support its development plans with a number of
property investors knocking on its door. While a series of
elections are planned for the coming year (national, municipal,
European) many analysts believe that Greece is on the growth turn
and such growth may prove to be faster than expected.
Following the successful sale of BlueBigBox asset in Craiova in
2018 and the sale of the Ukrainian asset, Terminal Brovary in Kiev
in 2017, SPDI's operating income reduced by 32%. Consequently,
2018, EBITDA decreased to EUR1,8m compared to EUR3,7m in 2017.
Finance costs dropped to EUR1,2m and overall corporate and
administration costs were reduced by 14% following continued
successful cost management by the Company.
Table 1
EUR 2018 2017
------------------------------------------------------------- -------------------------------------------------------------
Continued Discontinued Total Continued Discontinued Total
Operations Operations Operations Operations
----------------- ------------------- -------------------- ------------------ --------------------- -------------------- ----------------
Rental,
Utilities,
Management
& Sale of
electricity
Income 769,463 2,378,875 3,148,338 2,180,502 2,445,466 4,625,968
Net gain/(loss)
on disposal
of investment
property 421,257 636,521 1,057,778 - 195,273 195,273
Income from
Operations
of Investments 1,190,720 3,015,396 4,206,116 2,180,502 2,640,739 4,821,241
Asset operating
expenses (118,319) (606,069) (724,388) (123,261) (629,842) (753,103)
Net Operating
Income from
Investments 1,072,401 2,409,327 3,481,728 2,057,241 2,010,897 4,068,138
Share of
profits from
associates - 364,920 364,920 - 390,217 390,217
Impairment
allowance for
inventory and
provisions - - - 150,000 - 150,000
Gain on
disposal of
subsidiaries - - - 1,483,737 - 1,483,737
Total Income 1,072,401 2,774,247 3,846,648 3,690,978 2,401,114 6,092,092
Administration
expenses (1,768,847) (260,714) (2,029,561) (1,994,481) (353,532) (2,348,013)
Operating
Result
(EBITDA) (696,446) 2,513,533 1,817,087 1,696,497 2,047,582 3,744,079
Finance Cost,
net 332,442 (1,532,601) (1,200,159) (385,928) (1,651,475) (2,037,403)
Income tax
expense (106,306) (96,567) (202,873) (124,805) (71,910) (196,715)
Operating
Result after
Finance and
Tax Expenses (470,310) 884,365 414,055 1,185,764 324,197 1,509,961
Other income /
(expenses),
net (31,716) (363,435) (395,151) (378,076) 2,668 (375,408)
Income Tax -
One off (506,728) - (506,728) (399,450) - (399,450)
Fair value
adjustments
from
Investment
Properties (1,266,438) (1,916,596) (3,183,034) 181,102 (88,919) 92,183
Gain realized
on acquisition
of
subsidiaries - - - - 23,921 23,921
Foreign
exchange
differences,
net (71,390) (10,233) (81,623) (38,047,966) (1,335,517) (39,383,483)
Result for the
year (2,346,582) (1,405,899) (3,752,481) (37,458,626) (1,073,650) (38,532,276)
Exchange
difference on
I/C
loans to
foreign
holdings - 1,850 1,850 37,349,385 - 37,349,385
Exchange
difference on
translation
due to
presentation
currency - 421,086 421,086 - (615,583) (615,583)
Total
Comprehensive
Income
for the year (2,346,582) (982,963) (3,329,545) (109,241) (1,689,233) (1,798,474)
----------------- ------------------- -------------------- ------------------ --------------------- -------------------- ----------------
3.2 Property Holdings
The Company's portfolio at year-end consists of commercial
income producing and residential properties in Romania, Greece and
Bulgaria, as well as land plots in Ukraine, Bulgaria and
Romania.
Commercial Property Location Key Features
Victini Logistics
Athens, Greece Gross Leaseable Area: 17.756 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: Kuehne + Nagel and GE Dimitriou SA
-------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
EOS Business Park
=====================================================================================================================
Bucharest, Romania Gross Leaseable Area: 3.386 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: Danone Romania (lease runs to 2025)
-------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
Delenco (SPDI has a 24,35% interest)
=====================================================================================================================
Bucharest, Romania Gross Leaseable Area: 10.280 sqm
-------------------- --------------------------- -------------------------------------------
Anchor Tenant: ANCOM (Romanian telecoms regulator)
-------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
Innovations Logistics Park
Bucharest, Romania Gross Leaseable Area: 16.570 sqm
===================== ==================== =========================== ===========================================
Anchor Tenant: Favorit Business Srl
-------------------- --------------------------- -------------------------------------------
Occupancy Rate 2018: 37%
---------------------------------------------------------------------- -------------------------------------------
Occupancy Rate Currently: 83%
---------------------------------------------------------------------- -------------------------------------------
Kindergarten
=====================================================================================================================
Bucharest, Romania Gross Leaseable Area: 1.400 sqm
--------------------- -------------------- --------------------------- -------------------------------------------
Anchor Tenant: International School for Primary Education
--------------------- -------------------- --------------------------- -------------------------------------------
Occupancy Rate: 100%
---------------------------------------------------------------------- -------------------------------------------
Land & Residential Assets Location Key Features
Bela Logistic Park Odessa, Ukraine Plot of land ( th. sqm): 224
Kiyanovskiy Residence Kiev, Ukraine Plot of land ( th. sqm): 6
Tsymlyanskiy Residence Kiev, Ukraine Plot of land ( th. sqm): 4
Balabino Project Zaporozhye, Ukraine Plot of land ( th. sqm): 264
Rozny Lane Kiev, Ukraine Plot of land ( th. sqm): 420
Boyana Land Sofia, Bulgaria Plot of land ( th. sqm): 20
GreenLake Land
(SPDI has a 44% interest) Bucharest, Romania Plot of land ( th. sqm): 40
Romfelt, Monaco, Blooming,
GreenLake, Boyana Romania & Bulgaria Sold units during 2018: 24
Romfelt, Monaco, Blooming,
GreenLake, Boyana Romania & Bulgaria Available units (end 2018): 118
In 2018, the Company's accredited valuers, namely CBRE Ukraine
for the Ukrainian Assets, and Real Act for the Romanian, Bulgarian
and Greek Assets, remained appointed. The valuations have been
carried out by the appraisers on the basis of Market Value in
accordance with the current Practice Statements contained within
the Royal Institution of Chartered Surveyors ("RICS") Valuation -
Global Standards (2017) (the "Red Book") and are also compliant
with the International Valuation Standards (IVS).
In recent years, following the successful implementation of the
Company's strategy, SPDI's portfolio became even more diversified
in terms of geography, as well as asset class. At the end of the
reporting period, taking into account the % participation in the
properties that the Company holds directly, Romania is the prime
country of operations (48%) in terms of Gross Asset Value, despite
the fact that, following the sale of Praktiker retail center, its
exposure reduced by 10%.
In respect of the Company's income generation capacity, Romania
is the prime source with 63%, with the remaining income deriving
from Greece (36%) and Cyprus (1%).
The table below summarizes the main financial position of each
of the Company's assets (representing the Company's participation
in each asset) at the end of the reporting period.
Table 2
PROPERTY COUNTRY GAV* 2018 NAV
EURm
Debt (principal)*
Innovations Logistics Park Rom 10,6 7,0 3,6
----------------- ----- ------------------- -----
Eos Business Park Rom 7,6 3,9 3,7
----------------- ----- ------------------- -----
Delenco (associate) Rom 5,6 0,5 5,1
----------------- ----- ------------------- -----
Victini Logistics Gr 16,1 10,7 5,4
----------------- ----- ------------------- -----
Kindergarten Rom 0,7 0,4 0,3
----------------- ----- ------------------- -----
Residential units Rom & Bul 9,3 4,8 4,5
----------------- ----- ------------------- -----
Land banking Rom & Ukr & Bul 20,6 3,8 16,8
----------------- ----- ------------------- -----
Total Value 70,5 31,1 39,5
----- ------------------- -----
Other balance sheet items, net ** -3,8
----- ------------------- -----
Net Asset Value Total 35,6
-----
Net Asset Value total 35,6
Market Cap 31/12/2018 (Share price at GBP0,095) 13,5
Market Cap 27/06/2019 (Share price at GBP0,090) 12,8
Discount of Market Cap (at the date of this report) vs
NAV (at 31/12/2018) -62%
* Reflects the Company's participation at each asset
**Refer to balance sheet and related notes of the financial statements
The Net Equity attributable to the shareholders as at 31
December 2018 stood at EUR35,6m vs EUR36,3m in 2017. The NAV per
share as at 31 December 2018 stood at GBP 0,25 and the discount of
the Market Value vis a vis the Company's NAV increased to 62% at
year-end.
3.3 Financial and Risk Management
The Group's overall bank principal debt exposure at the end of
the reporting period was EUR30,6m (including fully consolidated
properties, calculating relative to the Company's percentage
shareholding in each), comprised of the following:
a) EUR3,4m finance lease of EOS Business Park with Alpha Leasing
Romania and EUR0,5m debt facility received by First Phase from
Alpha Bank Romania.
b) EUR7m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
c) EUR10,7m debt financing of Victini Logistics (ex GED) and photovoltaic park with Eurobank.
d) EUR0,4m being the Company's portion on debt financing of the
Kindergarten with Eurobank Ergasias.
e) EUR4,9m being the Company's portion on the residential portfolio debt financing.
f) EUR3,8m being the Company's portion on land plot related debt
financing in Romania and Bulgaria.
Throughout 2018, the Company focused on managing and preserving
liquidity through cash flow optimization. In this context, the
BlueBigBox asset in Craiova, Romania, was sold, and the Company is
focused on completing the aforementioned transaction with Arcona
Property Fund N.V.
3.4 2019 and beyond
2019 is expected to be a landmark year for the Company when
completion of the transformative transaction with Arcona Property
Fund N.V. is expected to take place.
Following the conditional implementation agreement signed in
December 2018 by the two parties, during the first half of the
year, the parties engaged in extensive discussions to put the deal
into specific frameworks, conducting at the same time mutual due
diligence and third-party property valuations. Currently both sides
are engaged in agreeing binding terms for the first step of the
transaction. Overall completion of the transaction planned in two
further steps is expected to be executed within H2 2019.
The finalization of the transaction with Arcona Property Fund
N.V. marks effectively the maximization of the Company's value from
the current asset portfolio, providing the Company's shareholders
the opportunity to gain direct exposure to a property fund of
significantly larger size, listed on two stock exchanges, having a
strong dividend distribution policy, and active in a fast-growing
area (Central and South Eastern Europe) of the European property
market.
4. Regional Economic Developments(1)
[1] Sources: World Bank Group, Eurostat, EBRD, National Bank of
Greece, Elstat, Eurobank Research, and Economic Research Division,
National Institute of Statistics- Romania, National Statistical
Institute -Republic of Bulgaria, National Institute of Statistics -
Ukraine, SigmaBleyzer, IMF, European Commission, Oxford
Economics.
The Romanian economy is undergoing strong growth. The labor
market benefited from the economic growth with unemployment
reaching historical lows of 3,6%. Romania's economy continued its
exceptional growth, gaining one place to rank 15th by Gross
Domestic Product (GDP) values according to Eurostat, ranking it
above Portugal, but slightly under Czech Republic (EUR206,8
billion). Romania's Real GDP (GDP adjusted for price changes -
inflation/deflation) growth for 2018 was 4,1%.
The strong growth has been fueled by domestic private
consumption, on the back of a multi-year fiscal expansion and
minimum wage hikes. These led to inflationary pressures, which
forced the National Bank of Romania to increase the policy rate
repeatedly during 2018.
Macroeconomic data and forecasts
Romania 2012 2013 2014 2015 2016 2017 2018e
----- ----- ----- ----- ----- ----- -----
GDP (EUR bn) 133,2 143,8 150,5 160,3 170,4 187,5 202,9
----- ----- ----- ----- ----- ----- -----
Population (mn) 20,1 20,0 20,0 19,9 19,8 19,6 19,5
----- ----- ----- ----- ----- ----- -----
Real GDP (y-o-y %) 2,1 3,5 3,4 3,9 4,8 7,0 4,1
----- ----- ----- ----- ----- ----- -----
CPI (average, y-o-y
%) 3,3 4,0 1,1 -0,6 -1,5 1,3 4,6
----- ----- ----- ----- ----- ----- -----
Unemployment rate
(%) 6,8 7,1 6,8 6,8 5,9 4,3 3,6
----- ----- ----- ----- ----- ----- -----
In Bulgaria, driven mainly by private consumption and renewed
investment, due to the recovery in EU investment funding, Real GDP
(GDP adjusted for price changes - inflation/deflation) growth for
2018 was 3,2%, while the unemployment rate fell to a post-crisis
low of 5,2%.
Fiscal performance remained positive on the back of improved
revenue collection, strong economic activity, better compliance,
and higher minimum wages, while despite higher public wages the
fiscal accounts remained in surplus at 0,8%.
Macroeconomic data and forecasts
Bulgaria 2012 2013 2014 2015 2016 2017 2018e
----- ----- ----- ----- ----- ----- ------
GDP (EUR bn) 42,0 41,9 42,8 45,3 48,1 51,7 55,2
----- ----- ----- ----- ----- ----- ------
Population (mn) 7,3 7,2 7,2 7,2 7,1 7,1 7,0
----- ----- ----- ----- ----- ----- ------
Real GDP (y-o-y
%) 0,0 0,5 1,8 3,5 3,9 3,8 3,2
----- ----- ----- ----- ----- ----- ------
CPI (average,
y-o-y %) 3,0 0,9 -1,4 -0,1 -0,8 2,1 2,8
----- ----- ----- ----- ----- ----- ------
Unemployment
rate (%) 12,3 13,0 11,4 9,2 7,6 6,3 5,2
----- ----- ----- ----- ----- ----- ------
The Greek economy experienced growth in terms of Real GDP (GDP
adjusted for price changes - inflation/deflation) for the second
consecutive year (2018: 2,1%, 2017: 1,5%), primarily due to a rise
in exports, but also due to an increase in domestic demand,
recording a primary surplus over 4%, exceeding medium-term
target.
2018 was a landmark year for the Greek economy, as not only the
economic recovery that started in 2017 continued, but it also
marked the exit of Greece from the financing and stabilization
programme. Greek Government Bonds fell to their lowest yield since
2006, shrinking the "trust gap" between Greece and the rest of
Europe.
Still, public debt remains high. Reducing it will require
sustained pro-growth reforms, high primary surpluses and additional
debt restructuring. Commitment to full reform implementation is key
to strengthening inclusive growth.
The unemployment rate improved from a low of 27,5% in 2013,
falling to 19,3% in 2018. Although the Greek labour market cannot
be called positive, the peak of the employment crisis has passed.
Tight access to finance continues to constrain business
investment.
Banks are making inroads into their high levels of
non-performing loans, which fell to 44,7% of outstanding loans in
December 2018. E-auctions of collateral in default are becoming
more common, but foreclosures have also increased.
Some of the sectors that recorded the deepest downturns, such as
construction and real estate, are finally recovering, as record
tourist arrivals are leading to new accommodation developments.
Macroeconomic data and forecasts
Greece 2012 2013 2014 2015 2016 2017 2018e
------ ------ ------ ------ ------ ------ ------
GDP (EUR bn) 191,2 180,7 178,7 177,3 176,5 180,2 184,7
------ ------ ------ ------ ------ ------ ------
Population (mn) 11,1 11,0 10,9 10,9 10,8 10,8 10,7
------ ------ ------ ------ ------ ------ ------
Real GDP (y-o-y
%) -7,3 -3,2 0,7 -0,4 -0,2 1,5 2,1
------ ------ ------ ------ ------ ------ ------
CPI (average,
y-o-y %) 1,5 -0,9 -1,3 -1,7 -0,8 1,1 0,6
------ ------ ------ ------ ------ ------ ------
Unemployment
rate (%) 24,5 27,5 26,6 25,0 23,6 21,4 19,3
------ ------ ------ ------ ------ ------ ------
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%).
From a trading perspective, the economy has demonstrated a
refocusing on the EU market since 2017, which was a result of the
signed Association Agreement with the EU in January 2016 which
established the Deep and Comprehensive Free Trade Area ("DCFTA").
Implementation of DCFTA commenced in January 2017.
In March 2015, Ukraine signed a four-year Extended Fund Facility
("EFF") with the IMF that will last until March 2019. The total
programme amounted 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. The Stand-By Arrangement
expires in March 2020.
Macroeconomic data and forecasts
Ukraine 2012 2013 2014 2015 2016 2017 2018e
------ ------ ----- ----- ----- ----- ------
GDP (EUR bn) 136,7 135,2 98,4 81,6 84,4 99,4 105,4
------ ------ ----- ----- ----- ----- ------
Population (mn) 45,4 45,2 42,8 42,6 42,4 42,2 42,0
------ ------ ----- ----- ----- ----- ------
Real GDP (y-o-y
%) 0,2 0,0 -6,6 -9,8 2,4 2,5 3,3
------ ------ ----- ----- ----- ----- ------
CPI (average,
y-o-y %) 0,6 -0,2 12,1 48,7 13,9 14,4 11,0
------ ------ ----- ----- ----- ----- ------
Unemployment
rate (%) 7,5 7,2 9,3 9,1 9,4 9,5 8,8
------ ------ ----- ----- ----- ----- ------
5. Real Estate Market Developments(2)
2 Sources : Danos Research, NAIRealAct, Eurobank, Jones Lang
LaSalle, DTZ Research, CBRE Research, Colliers International,
Cushman & Wakefield, Crosspoint Real Estate, Savills Plc,
Knight Frank, Coldwell Banker Research, National Institute of
Statistics- Romania.
5.1 Romania
The 2018 property investment volume for Romania is estimated at
almost EUR1,03 billion, slightly lower than in 2017. Market volumes
were dominated by office segment (63%) and retail transactions
(30%), while industrial and hotels accounted for 6% and 1%,
respectively.
Prime office and retail yields are at 7,25% and 7% respectively,
while prime industrial yields are at 8,50%. Yields for office and
retail have slightly compressed by 25 bps since 2017, while
industrial yields have remained stable over the year.
Approximately 455.000 sqm, a new record in the industrial
market, delivered in 2018, setting the total industrial stock at
3,75 million sqm. The rental level has remained relatively stable,
with prime headline rents around 4,25EUR/sqm/month.
The Industrial sector registered solid leasing activity coupled
with a record volume of new supply delivered at the national level.
Demand counted for 520.000 sqm of major leases at the national
level, with most of the deals being new leases.
Bucharest concentrated almost 58% of the registered demand,
while Cluj and Timisoara are the following largest markets,
concentrating a combined 30% of the total demand.
2018 saw the delivery of 190.000 sqm of new office spaces,
taking the total stock to over 2,9 million sqm, while 2019 is
expected to be a record year, with 360.000 sqm planned for
delivery. In areas like Floreasca/Barbu Vacarescu and the Western
submarket the lowest vacancy rates are observed, while the vacancy
rate for the South sub-market exceeds 20%. Overall, the increasing
demand led to a historically low vacancy rate of 7%, 1,5% lower
than the vacancy at the end of last year.
Macroeconomic changes in Romania resulted in a decline in the
residential market in 2018. Additionally, the 'Prima Cas '
programme which had created a more favourable climate for the
Residential Market, as well as both for investors and the end
consumers, recorded a decrease in demand, while construction
companies rank second in the top companies under insolvency, mainly
due to lack of a qualified workforce and price increases for
construction materials. According to the National Institute of
Statistics, residential construction works volume reduced by 31%
y-o-y, while demand on the residential segment dropped by 18%.
The increased construction costs, as well as other macroeconomic
factors, resulted in 5% price increases on average in Bucharest.
However, Bucharest's residential market recorded the highest demand
in the country, and is estimated to remain high, with smart and
green buildings, especially medium sized dwellings with access to
public transportation, concentrating the highest interest. More
than 300 projects were in progress during 2018 and are expected to
be complete during the period 2018-2020. Upon completion, the
available new residential units will exceed 55.000, with the most
units located in the 6th and 4th districts with 20.000 and 103.00
respectively.
5.2 Bulgaria
The 2018 property investment volume for Bulgaria is estimated at
almost EUR668 million, considerably lower than in 2017 (record year
with EUR957 million of transactions). Market volumes were dominated
by office segment (57%) and retail transactions (29%), with the
remaining transaction concerning development land, industrial
properties and hotels.
Prime yields have slightly compressed since the beginning of the
year, being 8% for office space, 7,25% for retail and 9,5% for
industrial properties.
Growth in the economy, low interest rates and an increase in the
availability of credit play a key role in the residential market
and is estimated to continue to do so.
Residential stock of newly completed projects in Sofia marked an
8% increase. The number of residential units grew to 8,870
(apartments / row or single houses), mainly concentrated in the
Southern neighbourhoods and at the foot of Vitosha Mountain.
Despite the emergence of new attractive locations for buyers,
the established areas such as the Sofia city center, the Lozenets
district and the region around the Doctor's Monument remain leading
in terms of the number of deals. At the same time, an appreciation
in the value of the properties has led to an outflow of buyers in
the region of Doctor's Monument, although the supply there has been
rising over the past year. Higher price levels were less likely to
meet buyer expectations, resulting in a reduced number of
deals.
The shortage of completed quality projects maintained the surge
in sales of residential properties under construction (trend
remaining in place since 2015), representing 60% of the total deal
volume in 2018.
Overall, sales and rental prices maintained their levels, with
luxury properties reporting minimal price increases, while the
overall market has been subdued. The flat growth in supply and the
reaching of buy-in prices have exhausted the potential of the
market for appreciation and the expectations for 2019 are for
levels already reached to be maintained.
Additionally, a noticeable trend is that the market is driven by
buyers, with more than 70% of the deals having been negotiated with
a discount on the offer price. Statistics show that the average
discount in 2018 was 7,4% (under 7% for apartments and over 10% for
houses). The biggest share of sales in 2018 has been achieved with
a 5% discount, which is a sign of a gradual balancing of the
market. The discount transactions trend is expected to continue,
which will likely lead to overvalued properties staying on the
market for months.
5.3 Greece
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.
The geographic location of Greece offers high potential to the
logistics sector, which is considered to be one of the pillars of
the country's economic development, while new business
opportunities have been created upon the granting of management
concessions 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), which are in progress.
In Athens and Thessaloniki, the average yields for quality
logistics properties are around 11%, while the vacancy rate for
Grade A properties is as low as 5%. In Aspropyrgos, the investment
yields range from 9,75% to 10,75% and average vacancy rate is 10%,
while for Grade A properties reaches 5%. The rental values remained
stable or marginally increased during 2018. 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.
5.4 Ukraine
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. Continuous low 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 and to noticeable rental growth.
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, with large land plots sales in 2017, 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 the prices in the city up during 2018, while outside the
city the prices remained relatively stable. No significant
alterations are expected in the land prices during the following
year as well.
6. Property Assets
6.1 Victini Logistics (ex GED), Athens, Greece
The 17.756 sqm complex that consists of industrial and office
space is situated on a 44.268 sqm land plot in the West Attica
Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki
Odos (the Athens ring road) and is 20 minutes from the port of
Piraeus (where Cosco runs a container port handling more than 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).
Currently, Kuehne & Nagel (the German transportation and
logistics company), occupies all the warehouse space and almost all
of the office space until 2023.
6.2 EOS Business Park - Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class "A"
office building of 3.386 sqm GLA and 90 parking places. It is
located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road.
The Park is very close to Bucharest's ring road and the DN 2
national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
The Company acquired the office building in November 2014. The
complex is fully let to Danone Romania, the French multinational
food company, until 2025. The asset is planned to be part of the
Arcona transaction.
6.3 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of
two underground levels, a ground floor and ten above-ground floors.
The building is strategically located in the very center of
Bucharest, close to three main squares of the city: Unirii, Alba
Iulia and Muncii, only 300 m from the metro station.
The Company acquired 24,35% of the property in May 2015. As at
the year end 2018, 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.
6.4 Innovations Logistics Park, Romania
The park incorporates approximately 8.470 sqm of multipurpose
warehousing space, 6.395 sqm of cold storage and 1.705 sqm of
office space. It is located in the area of Clinceni, south west of
Bucharest center, 200 m from the city's ring road and 6km from
Bucharest-Pitesti (A1) highway. Its construction was completed in
2008 and was tenant specific. It comprises four separate
warehouses, two of which offer cold storage.
In April 2017, the Company signed a lease agreement with Aquila
Srl, a large Romanian logistics operator, for 5.740 sqm of ambient
space in the warehouse which expired during April 2018 without
being extended. During 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 under discussions for extension. 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
year end, the terminal was 37% leased, while based on current
agreements occupancy for the forthcoming period has reached 83%.
The asset is planned to be part of the Arcona transaction.
6.5 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake,
a standalone building on ground and first floor, is used as a
nursery by one of the Bucharest's leading private schools.
The building is erected on 1.428,59 sqm plot with a total gross
area of 1.198 sqm.
The property is 100% leased to International School for Primary
Education until 2032. The asset is planned to be part of the Arcona
transaction.
6.6 Residential Portfolio
-- Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Romfelt Plaza is a residential complex located in Bucharest,
Sector 2, relatively close to the city center, easily accessible by
public transport and nearby supporting facilities and green
areas.
During 2018, 10 units were sold and, at the end of 2018, four
apartments were available. The asset is planned to be part of the
Arcona transaction.
-- Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in South
Bucharest, Sector 4, enjoying good car access due to the large
boulevards, public transportation, and a shopping mall (Sun Plaza)
reachable within a short driving distance or easily accessible by
subway.
At the end of 2018, 22 apartments were available, four 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
Blooming House is a residential development project located in
Bucharest, Sector 3, a residential area with the biggest
development and property value growth in Bucharest, offering a
number of supporting facilities such as access to Vitan Mall,
kindergartens, café, schools and public transportation (both bus
and tram).
At the end of 2018, 8 apartments were available while one was
rented. The asset is planned to be part of the Arcona
transaction.
-- GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of
apartments and villas, situated on the banks of Grivita Lake, in
the northern part of the Romanian capital - the only residential
property in Bucharest with a 200 meters frontage to a lake. The
compound also includes facilities such as one of Bucharest's
leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally,
GreenLake includes land plots totaling 40.360 sqm. SPDI owns 43% of
this property asset portfolio.
During 2018, six apartments and villas were sold while at the
end of the year, of the 50 units that were unsold, 10 were let. The
asset is planned to be part of the Arcona transaction.
-- Boyana Residence, Sofia, Bulgaria
A residential compound, which consisted at acquisition date (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.
During 2018 three apartments were sold, with 34 remaining unsold
at the end of 2018. The asset is planned to be part of the Arcona
transaction.
6.7 Land Assets
-- Aisi Bela - Bela Logistics Park, Odessa, Ukraine
The site consists of a 22,4 Ha plot of land with zoning
allowance to construct up to 103.000 sqm GBA industrial properties
and is situated on the main Kiev - Odessa highway, 20 km from
Odessa port, in an area of high demand for logistics and
distribution warehousing.
Development has been put on hold. The asset is planned to be
part of the Arcona transaction.
-- Kiyanovskiy Residence - Kiev, Ukraine
The site consists of a 22,4 Ha plot of land with zoning
allowance to construct up to 103.000 sqm GBA industrial properties
and is situated on the main Kiev - Odessa highway, 20 km from
Odessa port, in an area of high demand for logistics and
distribution warehousing.
Development has been put on hold. The asset is planned to be
part of the Arcona transaction.
-- Tsymlyanskiy Residence - Kiev, Ukraine
The 0,36 Ha plot is located in the historic and rapidly
developing Podil District in Kiev. The Company owns 55% of the
plot, with a local co-investor owning the remaining 45%.
Discussions are ongoing with interested parties with a view to
partnering in the development or sale of this property. The asset
is planned to be part of the Arcona transaction.
-- Balabino Project, Zaporozhye, Ukraine
The 26,38 Ha site is situated on the south entrance of
Zaporozhye city, 3km away from the administrative border of
Zaporozhye. It borders the Kharkov-Simferopol Highway (which
connects eastern Ukraine and Crimea and runs through the two
largest residential districts of the city), as well as another
major artery accessing the city center.
The site is zoned for retail and entertainment. Development has
been put on hold. The asset is planned to be part of the Arcona
transaction.
-- Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be
developed as a residential complex. Following a protracted legal
battle, it has been registered under the Company pursuant to a
legal decision in July 2015.
The Company is evaluating potential commercialization options to
maximize the property's value. The asset is planned to be part of
the Arcona transaction.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2018
Note 2018 2017
Restated*
EUR EUR
Continued Operations
Income 10 769.463 2.180.502
Asset operating expenses 11 (118.319) (123.261)
Net Operating Income 651.144 2.057.241
Administration expenses 12 (1.768.847) (1.994.481)
Valuation gains from Investment Property 13 - 181.102
Net loss on disposal of investment
property 14b (845.181) -
Provisions 15 - 150.000
Gain on disposal of subsidiaries 21b - 1.483.737
Other operating expenses, net 16 (31.716) (378.076)
Operating profit / (loss) (1.994.600) 1.499.523
Finance income 17 686.183 3.563
Finance costs 17 (353.741) (389.491)
Profit / (loss) before tax and foreign (1.662.158) 1.113.595
exchange differences
Foreign exchange (loss), net 18a (71.390) (695.043)
Forex transfer on disposal of foreign 18b - (37.352.923)
operation
Loss before tax (1.733.548) (36.934.371)
Income tax expense 19 (613.034) (524.255)
Loss for the year from continuing operations (2.346.582) (37.458.626)
Loss from discontinued operations 9b (1.405.899) (1.073.650)
Loss for the year (3.752.481) (38.532.276)
Other comprehensive income
Exchange difference on I/C loans to
foreign holdings 18b 1.850 37.349.385
Exchange difference on translation
of foreign operations 30 421.086 (615.583)
Total comprehensive income for the (3.329.545) (1.798.474)
year
Loss for the year from continued operations
attributable to:
Owners of the parent (2.346.582) (37.458.626)
Non-controlling interests - -
(2.346.582) (37.458.626)
Loss for the year from discontinued
operations attributable to:
Owners of the parent (699.271) (1.985.925)
Non-controlling interests (706.628) 912.275
(1.405.899) (1.073.650)
Loss for the year attributable to:
Owners of the parent (3.045.853) (39.444.551)
Non-controlling interests (706.628) 912.275
(3.752.481) (38.532.276)
Total comprehensive income attributable
to:
Owners of the parent (2.463.822) (2.962.061)
Non-controlling interests (865.723) 1.163.587
(3.329.545) (1.798.474)
Earnings/(losses) per share (Euro
per share): 39b
Basic earnings/(losses) for the year
attributable to ordinary equity owners
of the parent (0,03) (0,40)
Diluted earnings/(losses) for the
year attributable to ordinary equity
owners of the parent (0,03) (0,38)
*Restatement due to IFRS 5.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2018
Note 2018 2017
EUR EUR
ASSETS
Non--current assets
Investment properties 20.4a - 74.732.502
Investment properties under development 20.4b - 4.586.009
Tangible and intangible assets 24 3.674 70.504
Long-term receivables and prepayments 25 850 316.788
Investments in associates 22 - 5.115.587
4.524 84.821.390
Current assets
Inventory 26 - 4.812.550
Prepayments and other current 27 5.585.408 5.846.584
assets
Cash and cash equivalents 28 282.713 831.124
--------------------- -------------
5.868.121 11.490.258
Assets classified as held for 9d 79.678.738 -
sale
85.546.859 11.490.258
Total assets 85.551.383 96.311.648
EQUITY AND LIABILITIES
Issued share capital 29 1.272.702 1.035.893
Share premium 71.381.259 123.126.328
Foreign currency translation reserve 30 9.874.757 9.294.576
Exchange difference on I/C loans
to foreign holdings 41.3 (215.820) (217.670)
Accumulated losses (46.704.622) (96.888.569)
Equity attributable to equity 35.608.276 36.350.558
holders of the parent
Non-controlling interests 31 7.535.691 8.401.414
Total equity 43.143.967 44.751.972
Non--current liabilities
Borrowings 32 380.256 25.324.378
Finance lease liabilities 37 - 10.435.241
Bonds issued 33 1.033.842 1.033.842
Trade and other payables 34 - 417.791
Taxes payables 36 362.010 602.200
Provision on taxes 36 399.450 399.450
Deposits from tenants 35 - 187.976
2.175.558 38.400.878
Current liabilities
Borrowings 32 22.034 5.162.087
Finance lease liabilities 37 - 391.002
Bonds issued 33 88.628 20.495
Trade and other payables 34 4.174.936 6.920.308
Taxes payable 36 652.324 613.859
Provisions on taxes 36 43 51.047
--------------------- -------------
4.937.965 13.158.798
Liabilities directly associated
with assets classified as held
for sale 9d 35.293.893 -
40.231.858 13.158.798
Total liabilities 42.407.416 51.559.676
Total equity and liabilities 85.551.383 96.311.648
Net Asset Value (NAV) EUR per share: 39c
Basic NAV attributable to equity
holders of the parent 0,28 0,43
Diluted NAV attributable to equity
holders of the parent 0,28 0,38
On 28 June 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
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
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 loans translation interest
non-controlling to foreign reserve(4)
interest(2) holdings(3)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31
December
2016 900.145 122.874.268 (57.444.020) (37.567.055) 10.161.471 38.924.809 7.237.827 46.162.636
Loss for the
year - - (2.091.626) - - (2.091.626) 912.275 (1.179.351)
Issue of
share
capital
(Note 29) 135.748 252.060 - - - 387.808 - 387.808
Exchange
difference
on
I/C loans to
foreign
holdings
which
disposed
(Note 18b) - - (37.352.923) 37.352.923 - - - -
Exchange
difference
on
I/C loans
to foreign
holdings
(Note 18b) - - - (3.538) - (3.538) - (3.538)
Foreign
currency
translation
reserve - - - - (866.895) (866.895) 251.312 (615.583)
Balance 1
January 2018
as initially
reported 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 IFRS 9,
net of tax - - (339.495) - - (339.495) - (339.495)
Balance 1
January 2018
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 - - (3.045.853) - - (3.045.853) (706.628) (3.752.481)
Issue of
share
capital
(Note 29) 66.044 810.522 - - - 876.566 - 876.566
Exchange
difference
on
I/C loans
to foreign
holdings
(Note 18b) - - - 1.850 - 1.850 - 1.850
Share
premium set
off with
accumulated
losses (Note
29.7) - (53.569.295) 53.569.295 - - - - -
Expenses for
capital
raising - (735.623) - - - (735.623) - (735.623)
Exercised
warrants
(Note
29.4) 170.765 1.749.327 - - - 1.920.092 1.920.092
Foreign
currency
translation
reserve - - - 580.181 580.181 (159.095) 421.086
Balance - 31
December
2018 1.272.702 71.381.259 (46.704.622) (215.820) 9.874.757 35.608.276 7.535.691 43.143.967
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defense at
20% will be payable on such deemed dividends to the extent that the
shareholders (companies and individuals) are Cyprus tax residents.
The amount of deemed distribution is reduced by any actual
dividends paid out of the profits of the relevant year at any time.
This special contribution for defense is payable on account of the
shareholders.
(3) Exchange differences on intercompany loans to foreign
holdings arose as a result of devaluation of the Ukrainian Hryvnia
during previous years. The Group treats the mentioned loans as a
part of the net investment in foreign operations (Note 41.3).
(4) Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted for
directly to the foreign currency translation reserve. The foreign
currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local
currencies against the euro in the countries where the Group's
subsidiaries own property assets.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
Note 2018 2017
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling interests-continued
operations (1.733.548) (36.934.371)
Loss before tax and non-controlling interests-discontinued
operations 9b (1.309.332) (1.001.740)
Loss before tax and non-controlling interests (3.042.880) (37.936.111)
Adjustments for:
(Gains) on revaluation of investment property 13 1.218.297 (326.961)
Net loss/(gain) on disposal of investment
property 14b 893.406 (4.366)
Other non-cash movements 113 411
Write offs of prepayments 16 - 44.040
Impairment charge on receivables 16 415.289 -
Accounts payable written off 16 (85) (21.860)
Depreciation/ Amortization charge 12 27.384 44.128
Interest income 17 (696.162) (13.376)
Interest expense 17 1.836.590 1.929.583
Share of losses/(profit) from associates 22 (364.920) (390.217)
Gain on acquisition of subsidiaries 21a - (23.921)
Reversal of provision 15 - (150.000)
Gain on disposal of subsidiaries 21b - (1.483.737)
Effect of foreign exchange differences 18a 81.623 2.030.561
Forex transfer on disposal of foreign operation 18b - 37.349.385
----------- ------------
Cash flows from/(used in) operations before
working capital changes 368.655 1.047.559
Change in inventory 26 208.506 215.706
Change in prepayments and other current
assets 27 15.564 (497.198)
Change in trade and other payables 34 708.591 (585.447)
Change in VAT and other taxes receivable 27 240.255 103.009
Change in provisions 36 14.998 408.331
Change in other taxes payables 36 (543.861) (423.658)
Increase in deposits from tenants 35 55.345 (108.196)
Cash generated from operations 1.068.053 160.106
Income tax paid (368.156) (152.416)
Net cash flows provided in operating activities 699.897 7.690
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment
property 14b 8.016.573 363.985
Dividend received from associates 22 143.263 231.363
Interest received 405 1.543
Increase in long term receivables 45.667 (65.606)
Cash inflow on disposal of subsidiaries 21b - 2.844.494
Loan granted for property acquisition 27 (350.000) (3.345.000)
Net cash flows from / (used in) investing
activities 7.855.908 30.779
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 29 - 135.748
Bonds issue 33 - 1.033.842
Proceeds from bank and non-bank loans 32 1.044.408 1.455.336
Repayment of bank and non-bank loans 32 (7.558.655) (1.437.587)
Interest and financial charges paid (1.528.913) (1.774.925)
Decrease in financial lease liabilities 37 (356.231) (320.766)
Net cash flows from / (used in) financing
activities (8.399.391) (908.352)
Net increase/(decrease) in cash at banks 156.414 (869.883)
Cash:
At beginning of the year 831.124 1.701.007
At end of the year 28 987.538 831.124
----------- ------------
Notes to the Consolidated Financial Statements
For the year ended 31 December 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 31 December 2018, the companies of the Group employed
and/or used the services of 15 full time equivalent people, (2017 à
19 full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union (EU) and the requirements of the
Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified
by the revaluation of investment property and investment property
under construction.
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) and has restated accordingly
2017 figures for comparative purposes.
Going concern basis
The financial statements have been prepared on a going concern
basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for
the foreseeable future.
In particular, the Company is in a process of disposing of its
non-Greek portfolio of assets in an all share transaction with
Arcona Property Fund N.V., meaning that as soon as this transaction
consummates the Company will be left with its Greek asset, as well
as its corporate receivables and liabilities.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern within the next twelve
months from the date these financial statements are available to be
issued. The ability to continue as a going concern is dependent
upon positive future cash flows.
Management believes that the Company will be able to finance its
needs given the fact that the Greek asset may contribute
considerable free cash flow in case it is sold. In such case, when
coupled with the additional corporate receivables, then all
corporate liabilities can be effectively discharged. At the same
time, the transaction with Arcona Property Fund N.V., which is a
cash flow generating entity, will result in the Company being for
at least the initial period a 45% shareholder, entitled to
dividends according to the dividend policy of Arcona Property Fund
N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year, the Company adopted all the new and
revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods
beginning on 1 January 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 the comparative information.
The comparative 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.
3. Adoption of new and revised Standards and Interpretations
(continued)
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.
3. Adoption of new and revised Standards and Interpretations
(continued)
(i) IFRS 9 "Financial instruments" (continued)
The Company's new accounting policies following adoption of IFRS
9 at 1 January 2018 are set out in note.
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 the current
period. The comparative period disclosures repeat those disclosures
made in the prior year.
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.
3. Adoption of new and revised Standards and Interpretations
(continued)
b. Impact on the statement of comprehensive income (continued)
(i) IFRS 9 "Financial instruments" (continued)
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.
The Company's new accounting policies following adoption of IFRS
15 at 1 January 2018 are set out below in note 5.
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 consolidated 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
consolidated financial statements unless otherwise stated.
4. Significant accounting policies (continued)
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:
4. Significant accounting policies (continued)
4.2 Functional and presentation currency (continued)
-- All assets and liabilities are translated at closing rate;
-- Equity of the Group has been translated using the historical rates;
-- Income and expense items are translated using exchange rates
at the dates of the transactions, or where this is not practicable
the average rate has been used;
-- All resulting exchange differences are recognized as a separate component of equity;
-- When a foreign operation is disposed of through sale,
liquidation, repayment of share capital or abandonment of all, or
part of that entity, the exchange differences deferred in equity
are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
-- Monetary items receivable from foreign operations for which
settlement is neither planned nor likely to occur in the
foreseeable future and in substance are part of the Group's net
investment in those foreign operations are recongised initially in
other comprehensive income and reclassified from equity to profit
or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central
banks used in translating the financial information of the entities
from the functional currencies into Euro are as follows:
Average 31 December
Currency 2018 2017 2018 2017 2016
------------------- -------- -------- -------- --------
USD 1,1810 1,1293 1,1450 1,1993 1,0541
------------------- -------- -------- -------- --------
UAH 32,1341 30,0129 31,7141 33,4954 28,4226
------------------- -------- -------- -------- --------
RON 4,6535 4,5681 4,6639 4,6597 4,5411
------------------- -------- -------- -------- --------
BGN 1,9558 1,9558 1,9558 1,9558 1,9558
------------------- -------- -------- -------- --------
4.3 Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single coordinated plan to dispose of a separate
major line of business or geographic area of operations; or
-- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
4.4 Investment Property at fair value
Investment property, comprising freehold and leasehold land,
investment properties held for future development, warehouse and
office properties, as well as the residential property units, is
held for long term rental yields and/or for capital appreciation
and is not occupied by the Group. Investment property and
investment property under construction are carried at fair value,
representing open market value determined annually by external
valuers. Changes in fair values are recorded in the statement of
comprehensive income and are included in other operating
income.
A number of the land leases (all in Ukraine) are held for
relatively short terms and place an obligation upon the lessee to
complete development by a prescribed date. It is important to note
that the rights to complete a development may be lost or at least
delayed if the lessee fails to complete a permitted development
within the timescale set out by the ground lease.
In addition, in the event that a development has not commenced
upon the expiry of a lease then the City Authorities are entitled
to decline the granting of a new lease on the basis that the land
is not used in accordance with the designation. Furthermore, where
all necessary permissions and consents for the development are not
in place, this may provide the City Authorities with grounds for
rescinding or non-renewal of the ground lease. However Management
believes that the possibility of such action is remote and was made
only under limited circumstances in the past.
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.
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
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 2018:
-- 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.
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
With regard to each of the properties considered, in those
instances where project documentation has been agreed with the
respective local authorities, opinions of the appraisers of value
have been based on such agreements.
In those instances where the properties are held in part
ownership, the valuations assume that these interests are saleable
in the open market without any restriction from the co-owner and
that there are no encumbrances within the share agreements which
would impact the sale ability of the properties concerned.
The valuation is exclusive of VAT and no allowances have been
made for any expenses of realization or for taxation which might
arise in the event of a disposal of any property.
In some instances the appraisers constructed a Discounted Cash
Flow (DCF) model. DCF analysis is a financial modeling technique
based on explicit assumptions regarding the prospective income and
expenses of a property or business. The analysis is a forecast of
receipts and disbursements during the period concerned. The
forecast is based on the assessment of market prices for comparable
premises, build rates, cost levels etc. from the point of view of a
probable developer.
To these projected cash flows, an appropriate, market-derived
discount rate is applied to establish an indication of the present
value of the income stream associated with the property. In this
case, it is a development property and thus estimates of capital
outlays, development costs, and anticipated sales income are used
to produce net cash flows that are then discounted over the
projected development and marketing periods. The Net Present Value
(NPV) of such cash flows could represent what someone might be
willing to pay for the site and is therefore an indicator of market
value. All the payments are projected in nominal US Dollar/Euro
amounts and thus incorporate relevant inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the
appraisers have taken into account in arriving at Market Value the
following:
Pre Development
In those instances where the nature of the 'Project' has been
defined, it was assumed that the subject property will be developed
in accordance with this blueprint. The final outcome of the
development of the property is determined by the Board of Directors
decision, which is based on existing market conditions,
profitability of the project, ability to finance the project and
obtaining required construction permits.
Development
In terms of construction costs, the budgeted costs have been
taken into account in considering opinions of value. However, the
appraisers have also had regard to current construction rates
prevailing in the market which a prospective purchaser may deem
appropriate to adopt in constructing each individual scheme.
Although in some instances the appraisers have adopted the budgeted
costs provided, in some cases the appraisers' own opinions of costs
were used.
Post Development
Rental values have been assessed as at the date of valuation but
having regard to the existing occupational markets taking into
account the likely supply and demand dynamics during the
anticipated development period. The standard letting fees were
assumed within the valuations. In arriving at their estimates of
gross development value ("GDV"), the appraisers have capitalized
their opinion of net operating income, having deducted any
anticipated non-recoverable expenses, such as land payments, and
permanent void allowance, which has then been capitalized into
perpetuity.
The capitalization rates adopted in arriving at the opinions of
GDV reflect the appraisers' opinions of the rates at which the
properties could be sold as at the date of valuation.
In terms of residential developments, the sales prices per sq.
m. again reflect current market conditions and represent those
levels the appraisers consider to be achievable at present. It was
assumed that there are no irrecoverable operating expenses and that
all costs will be recovered from the occupiers/owners by way of a
service charge.
The valuations take into account the requirement to pay ground
rental payments and these are assumed not to be recoverable from
the occupiers. In terms of ground rent payments, the appraisers
have assessed these on the basis of information available, and if
not available they have calculated these payments based on current
legislation defining the basis of these assessments. Property tax
is not presently payable in Ukraine.
4.5 Investment Property under development
Property that is currently being constructed or developed, for
future use as investment property is classified as investment
property under development carried at cost until construction or
development is complete, or its fair value can be reliably
determined. This applies even if the works have temporarily being
stopped.
4. Significant accounting policies (continued)
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. Significant accounting policies (continued)
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.
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.2 Classification and subsequent measurement (continued)
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.
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.2 Classification and subsequent measurement (continued)
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.
4.11.5 Derivative financial instruments and hedge accounting
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.
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.5 Derivative financial instruments and hedge accounting
(continued)
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. Significant accounting policies (continued)
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. Significant accounting policies (continued)
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. Significant accounting policies (continued)
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.
The Group's Management does not intend to dispose of any asset,
unless a significant opportunity arises. In the event that a
decision is taken in the future to dispose of any asset it is the
Group's intention to dispose of shares in subsidiaries rather than
assets. The corporate income tax exposure on disposal of
subsidiaries is mitigated by the fact that the sale would represent
a disposal of the securities by a non--resident shareholder and
therefore would be exempt from tax. The Group is therefore in a
position to control the reversal of any temporary differences and
as such, no deferred tax liability has been provided for in the
financial statements.
4.26.4 Withholding Tax
The Group follows the applicable legislation as defined in all
double taxation treaties (DTA) between Cyprus and any of the
countries of Operations (Romania, Ukraine, 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. Significant accounting policies (continued)
4.28 Operating segments analysis
Segment reporting is presented on the basis of Management's
perspective and relates to the parts of the Group that are defined
as operating segments. Operating segments are identified on the
basis of their economic nature and through internal reports
provided to the Group's Management who oversee operations and make
decisions on allocating resources serve. These internal reports are
prepared to a great extent on the same basis as these consolidated
financial statements.
For the reporting period the Group has identified the following
material reportable segments, where the Group is active in
acquiring, holding, managing and disposing:
Commercial-Industrial Residential Land Assets
* Warehouse segment * Residential segment * Land assets - the Group owns a number of land assets
which are either available for sale or for potential
development
* Office segment
* Retail segment
------------------------------- ----------------------------------------------------------------
The Group also monitors investment property assets on a
Geographical Segmentation, namely the country where its property is
located.
4.29 Earnings and Net Assets value per share
The Group presents basic and diluted earnings per share (EPS)
and net asset value per share (NAV) for its ordinary shares.
Basic EPS amounts are calculated by dividing net profit/loss for
the year, attributable to ordinary equity holders of the Company by
the weighted average number of ordinary shares outstanding during
the year. Basic NAV amounts are calculated by dividing net asset
value as at year end, attributable to ordinary equity holders of
the Company by the number of ordinary shares outstanding at the end
of the year.
Diluted EPS is calculated by dividing net profit/loss for the
year, attributable to ordinary equity holders of the parent, by the
weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would
be issued on conversion of all the potentially dilutive ordinary
shares into ordinary shares.
Diluted NAV is calculated by dividing net asset value as at year
end, attributable to ordinary equity holders of the parent with the
number of ordinary shares outstanding at year end plus the number
of ordinary shares that would be issued on conversion of all the
potentially dilutive ordinary shares into ordinary shares.
4.30 Comparative Period
Where necessary, comparative figures have been adjusted to
conform to changes in presentation in the current year.
5. New accounting pronouncement
Standards issued but not yet effective
Up to the date of approval of the financial statements, certain
new standards, interpretations and amendments to existing standards
have been published that are not yet effective for the current
reporting period and which the Company has not early adopted, as
follows:
(i) Issued by the IASB and adopted by the European Union
-- IFRS 16 "Leases" (effective for annual periods beginning on
or after 1 January 2019).
-- Amendments to IFRS 9: Prepayment Features with Negative
Compensation (issued on 12 October 2017) (effective for annual
periods beginning on or after 1 January 2019).
-- IAS 28: Long-term Interests in Associates and Joint Ventures (amendments)
-- IFRIC Interpretation 23: Uncertainty over Income Tax Treatments
-- IFRS 3: Business Combinations (amendments)
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors:
Definition of 'material' (amendments)
-- Conceptual Framework in IFRS standards
(ii) Issued by the IASB but not yet adopted by the European
Union
New standards
-- IFRS 17 "Insurance Contracts" (effective for annual periods
beginning on or after 1 January 2021).
5. New accounting pronouncement (continued)
(ii) Issued by the IASB but not yet adopted by the European
Union (continued)
Amendments
-- Amendments to IAS 28: Long term Interests in Associates and
Joint Ventures (issued on 12 October 2017) (effective for annual
periods beginning on or after 1 January 2019).
-- Amendments to IAS 19: Plan Amendment, Curtailment or
Settlement (issued on 7 February 2018) (effective for annual
periods beginning on or after 1 January 2019).
-- Annual Improvements to IFRSs 2015 2017 Cycle (issued on 12
December 2017) (effective for annual periods beginning on or after
1 January 2019)
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective for annual periods beginning on or after 1
January 2020)
-- IFRS 10 (Amendments) and IAS 28 (Amendments) "Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture(effective date postponed indefinitely).
New IFRICs
-- IFRIC Interpretation 23 "Uncertainty over Income Tax
Treatments" (effective for annual periods beginning on or after 1
January 2019).
The above are expected to have no significant impact on the
Company's financial statements when they become effective.
Amendments
-- Amendments to IAS 28: Long term Interests in Associates and
Joint Ventures (issued on 12 October 2017) (effective for annual
periods beginning on or after 1 January 2019).
-- Amendments to IAS 19: Plan Amendment, Curtailment or
Settlement (issued on 7 February 2018) (effective for annual
periods beginning on or after 1 January 2019).
-- Annual Improvements to IFRSs 2015 2017 Cycle (issued on 12
December 2017) (effective for annual periods beginning on or after
1 January 2019)
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective for annual periods beginning on or after 1
January 2020)
-- IFRS 10 (Amendments) and IAS 28 (Amendments) "Sale or
Contribution of Assets between an Investor and its Associate or
Joint Venture(effective date postponed indefinitely).
New IFRICs
IFRIC Interpretation 23 "Uncertainty over Income Tax Treatments"
(effective for annual periods beginning on or after 1 January
2019).
The above are expected to have no significant impact on the
Company's financial statements when they become effective.
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Group's accounting policies. It also requires the use
of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates
are based on Management's best knowledge of current events and
actions and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual
results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the
future, the resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
-- Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence
of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the
state's ability to pay its dues (VAT receivable). If indications of
non-recoverability exist, the recoverable amount is estimated and a
respective provision for impairment of receivables is made. The
amount of the provision is charged through profit or loss. The
review of credit risk is continuous and the methodology and
assumptions used for estimating the provision are reviewed
regularly and adjusted accordingly. As at the reporting date
Management did not consider necessary to make a provision for
impairment of receivables.
-- Fair value of 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 20.2).
-- 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.
6. Critical accounting estimates and judgments (continued)
-- Impairment of tangible assets
Assets that are subject to depreciation are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
-- Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of
the investment property and investment property under development
as the Group is able to control the timing of the reversal of this
temporary difference and the Management has intention not to
reverse the temporary difference in the foreseeable future. The
properties are held by subsidiary companies in Ukraine, Greece and
Romania. Management estimates that the assets will be realized
through a share deal rather than through an asset deal. Should any
subsidiary be disposed of, the gains generated from the disposal
will be exempt from any tax.
-- Application of IFRS 10
The Group has considered the application of IFRS 10 and
concluded that the Company is not an Investment Entity as defined
by IFRS 10 and it should continue to consolidate all of its
investments, as in 2016. The reasons for such conclusion are among
others that the Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development,
allocation of capital expenditure for its properties, marketing
etc.) in order to provide benefits other than capital appreciation
and/or investment income,
c) to have investments that are not bound by time in relation to
the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as
well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its
investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making
investment decisions. The latter is being based on metrics like
IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate
property holding and development associated risks, property market
price risk, interest rate risk, credit risk, liquidity risk,
currency risk, other market price risk, operational risk,
compliance risk, litigation risk, reputation risk, capital risk and
other risks arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these
risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and
economic environment of countries in which it operates.
Notably:
7.1.1.1 Ukraine
In 2018, the Ukrainian economy proceeded recovery from the
economic and political crisis of previous years and demonstrated
sound real GDP growth of around 3.4% (2017: 2.5%), modest annual
inflation of 9.8% (2017: 13.7%), and slight devaluation of national
currency by around 2.4% to USD and 8.2% to EUR comparing to
previous year averages. 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 Russian's export and import 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, cooperation with the International Monetary Fund
("IMF"), and smooth transition through presidential and
parliamentary elections, due in March and October 2019,
respectively.
7.1.1.2 Greece
Greek economy experienced growth for the second consecutive year
coupled with lower unemployment rate, rise in domestic demand and
over 4% primary surplus.
Following the agreement with the credit institutions
(EU/ECB/IMF/ESM), Greek economy exited relevant support program in
August 2018, with Greek Government Bonds falling to their lowest
yields since 2006.
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
become common, while at the same time bank financing is tight
putting constraints in business and investments.
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.1 Operating Country Risks (continued)
7.1.1.2 Greece (continued)
Officially in a pre-election period, Greece will benefit from a
continuous reform program and tight economic policies that will be
adopted by any new government, which will allow Greece to do to the
markets and strengthen its recovery signs. On the other hand, any
political instability will have negative impact on the economy, and
consequently the results and financial position of Group's Greek
operations could be negatively affected to some extent, in a manner
not currently determinable.
7.1.1.3 Romania
Romanian economy continued its growth in 2018, gaining one place
to rank 15th by Gross Domestic Product (GDP) values according to
Eurostat. The strong growth has been fueled by domestic private
consumption, with investment and net exports both having a negative
influence.
The economy maintains balanced economic variables with a widen
current deficit at around 4% of GDP, public debt less than 35% of
GDP and rising inflation rate. Unemployment rate of 3,6% 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 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.
7.1.2 Risks associated with property holding and development
associated risks
Several factors may affect the economic performance and value of
the Group's properties, including:
-- risks associated with construction activity at the
properties, including delays, the imposition of liens and defects
in workmanship;
-- the ability to collect rent from tenants, on a timely basis
or at all, taking also into account 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.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group's
portfolio investments will fluctuate as a result of changes in
market prices. The Group's assets are susceptible to market price
risk arising from uncertainties about future prices of the
investments. The Group's market price risk is managed through
diversification of the investment portfolio, continuous elaboration
of the market conditions and active asset management. To quantify
the value of its assets and/or indicate the possibility of
impairment losses, the Group commissioned internationally acclaimed
valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest
rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest--bearing assets apart from its cash balances
that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates
expose the Group to fair value interest rate risk. All of the
Group's borrowings are issued at a variable interest rate.
Management monitors the interest rate fluctuations on a continuous
basis and acts accordingly.
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to
discharge their obligations could reduce the amount of future cash
inflows from financial assets at hand at the end of the reporting
period. Cash balances are held with high credit quality financial
institutions and the Group has policies to limit the amount of
credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates.
Currency risk arises when future commercial transactions and
recognized assets and liabilities are denominated in a currency
that is not the Group's functional currency. Excluding the
transactions in Ukraine all of the Group's transactions, including
the rental proceeds are denominated or pegged to EUR. In Ukraine,
even though there is no steady income stream, the fluctuations of
UAH against EUR entails significant FX risk for the Group in terms
of its local assets valuation. Management monitors the exchange
rate fluctuations on a continuous basis and acts accordingly. It
should be noted that the current political uncertainty in Ukraine,
and any currency devaluation may affect the Group's financial
position.
Management is monitoring foreign exchange fluctuations closely
and acts accordingly.
7.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. The Group's core strategy is described in Note 44.1 of the
consolidated financial statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines
and other penalties, which arises from non--compliance with laws
and regulations of each country the Group is present, as well as
from the stock exchange where the Company is listed. Although the
Group is trying to limit such risk, the uncertain environment in
which it operates in various countries increases the complexities
handled by Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of
the Group's operations or any other undesirable situation that
arises from the possibility of non--execution or violation of legal
contracts and consequentially of lawsuits. The risk is restricted
through the contracts used by the Group to execute its
operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet
its financial obligations towards a lender as debts become due.
Addressing and resolving any insolvency issues is usually a slow
moving process in the Region. Management is closely involved in
discussions with creditors when/if such cases arise in any
subsidiary of the Group aiming to effect alternate repayment plans
including debt repayment so as to minimize the effects of such
situations on the Group's asset base.
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies
relating to the Group's information technology and control systems,
as well as the risk of human error and natural disasters. The
Group's systems are evaluated, maintained and upgraded
continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the end of the reporting
period.
8. Investment in subsidiaries
The Company has direct and indirect holdings in other companies,
collectively called the Group, that were included in the
consolidated financial statements, and are detailed below.
Holding %
Name Country of Related Asset as at as at
incorporation 31 Dec 31 Dec 2017
2018
---------------- --------------------- -------- -------------
SC Secure Capital Limited Cyprus 100 100
--------------------------------------- -------- -------------
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100
---------------- --------------------- -------- -------------
LLC Trade Center Ukraine 100 100
--------------------------------------- -------- -------------
Tsymlyanskiy
LLC Almaz--Pres--Ukraine Ukraine Residence 55 55
---------------- --------------------- -------- -------------
Bela Logistic
Park
LLC Aisi Bela Ukraine Balabino Project 100 100
---------------- --------------------- -------- -------------
LLC Retail Development
Balabino Ukraine 100 100
--------------------------------------- -------- -------------
LLC Interterminal Ukraine 100 100
--------------------------------------- -------- -------------
LLC Aisi Ilvo Ukraine 100 100
--------------------------------------- -------- -------------
Myrnes Innovations Innovations
Park Limited Cyprus Logistics Park 100 100
---------------- --------------------- -------- -------------
Best Day Real Estate
Srl Romania 100 100
--------------------------------------- -------- -------------
EOS Business
Yamano Holdings Limited Cyprus Park 100 100
---------------- --------------------- -------- -------------
Secure Property Development
and Investment Srl Romania - 100
--------------------------------------- -------- -------------
N-E Real Estate Park
First Phase Srl Romania 100 100
--------------------------------------- -------- -------------
Victini Holdings Limited Cyprus Victini Logistics 100 100
---------------- --------------------- -------- -------------
Victini Logistics Park
S.A. (ex SPDI Logistics
S.A.) Greece 100 100
--------------------------------------- -------- -------------
Zirimon Properties Delea Nuova
Limited Cyprus (Delenco) 100 100
---------------- --------------------- -------- -------------
Bluehouse Accession
Project IX Limited Cyprus 100 100
--------------------------------------- -------- -------------
Bluehouse Accession
Project IV Limited Cyprus 100 100
--------------------------------------- -------- -------------
BlueBigBox 3 Srl Romania 100 100
--------------------------------------- -------- -------------
SPDI Real Estate Srl Romania Kindergarten 50 50
---------------- --------------------- -------- -------------
SEC South East Continent
Unique Real Estate
Investments II Limited Cyprus 100 100
--------------------------------------- -------- -------------
SEC South East Continent
Unique Real Estate
(Secured) Investments
Limited Cyprus 100 100
--------------------------------------- -------- -------------
Residential
Diforio Holdings Limited Cyprus and Land portfolio 100 100
---------------- --------------------- -------- -------------
Demetiva Holdings Limited Cyprus 100 100
--------------------------------------- -------- -------------
Ketiza Holdings Limited Cyprus 90 90
--------------------------------------- -------- -------------
Frizomo Holdings Limited Cyprus 100 100
--------------------------------------- -------- -------------
SecMon Real Estate
Srl Romania - 100
--------------------------------------- -------- -------------
SecVista Real Estate
Srl Romania - 100
--------------------------------------- -------- -------------
SecRom Real Estate
Srl Romania - 100
--------------------------------------- -------- -------------
Ketiza Real Estate
Srl Romania 90 90
--------------------------------------- -------- -------------
Edetrio Holdings Limited Cyprus 100 100
--------------------------------------- -------- -------------
Emakei Holdings Limited Cyprus 100 100
--------------------------------------- -------- -------------
RAM Real Estate Management
Limited Cyprus 50 50
--------------------------------------- -------- -------------
Iuliu Maniu Limited Cyprus 45 45
--------------------------------------- -------- -------------
Moselin Investments
Srl Romania 45 45
--------------------------------------- -------- -------------
Rimasol Enterprises
Limited Cyprus 44,24 44,24
--------------------------------------- -------- -------------
Rimasol Real Estate
Srl Romania 44,24 44,24
--------------------------------------- -------- -------------
Ashor Ventures Limited Cyprus 44,24 44,24
--------------------------------------- -------- -------------
Ashor Development Srl Romania 44,24 44,24
--------------------------------------- -------- -------------
Jenby Ventures Limited Cyprus 44,30 44,30
--------------------------------------- -------- -------------
Jenby Investments Srl Romania 44,30 44,30
--------------------------------------- -------- -------------
Ebenem Limited Cyprus 44,30 44,30
--------------------------------------- -------- -------------
Ebenem Investments
Srl Romania 44,30 44,30
--------------------------------------- -------- -------------
Sertland Properties
Limited Cyprus 100 100
--------------------------------------- -------- -------------
Boyana Residence ood Bulgaria 100 100
--------------------------------------- -------- -------------
Mofben Investments
Limited Cyprus 100 100
--------------------------------------- -------- -------------
SPDI Management Srl Romania 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.
8. Investment in subsidiaries (continued)
The Group has resolved to streamline its structure in Cyprus and
Romania for cost cutting and tax optimization purposes. Towards
this goal, during the reporting period the following mergers have
been finalized:
. merger by absorption of SecVista Real Estate Srl acting as
Absorbed Company, with Best Day Real Estate Srl acting as Absorbing
Company,
. 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.
A restructuring in 2017 was implemented at GreenLake project and
the Kindergarten together with one villa were passed to another
SPV, namely SPDI Real Estate Srl (Note 21a). As far as disposals is
concerned during 2017 the Company concluded successfully the sale
of its Terminal Brovary in Ukraine, as well as the sale of Delia
land plot in Bucharest, Romania (Note 21b).
Following extended but unsuccessful negotiations for more than 2
years with Tonescu Finance Srl, the company which has acquired
Monaco Towers property's loan, SecMon Real Estate Srl entered
voluntarily in January 2018 into insolvency process, in order to
protect its interests against its creditor, given that the value of
the assets is higher than the value of the relevant loan. The
entering of SecMon Real Estate Srl in the insolvency process means
loss of control as per the definition of IFRS 10. As such SecMon
Real Estate Srl is not consolidated in the present consolidated
financial statements.
9. Discontinued operations
9.(a) Description
The Company announced at 18 December 2018 that it has entered
into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties ('the
Non-Greek Portfolio'), in an all-share transaction to Arcona
Property Fund N.V.. The transaction is subject to, among other
things, asset and tax due diligence (including third party asset
valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission
to listing of the new Arcona Property Fund N.V. shares), as well as
successful negotiating and signature of transaction documents. If
successful, the Company and Arcona expect to close the transaction
during H2 2019.
Additionally, the Company is entertaining strong interest to
sell also the Greek Logistic property during 2019 and it is in
discussions with various possible buyers.
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).
9. Discontinued operations (continued)
9.(b) Results of discontinued operations
Note 2018 2017
EUR EUR
Income 10 2.378.875 2.445.466
Asset operating expenses 11 (606.069) (629.842)
------------ ------------
Net Operating Income 1.772.806 1.815.624
Administration expenses 12 (260.714) (353.532)
Share of profits/(losses) from associates 22 364.920 390.217
Valuation gains/(losses) from Investment
Property 13 (1.218.297) 145.859
Net loss on disposal of inventory 14a (13.553) (43.871)
Net gain/(loss) on disposal of investment
property 14b (48.225) 4.366
Gain realized on acquisition of assets 21a - 23.921
Other operating income/(expenses), net 16 (363.435) 2.668
Operating profit / (loss) 233.502 1.985.252
Finance income 17 9.979 9.813
Finance costs 17 (1.542.580) (1.661.288)
Profit / (loss) before tax and foreign
exchange differences (1.299.099) 333.777
Foreign exchange (loss), net 18a (10.233) (1.335.517)
Loss before tax (1.309.332) (1.001.740)
Income tax expense 19 (96.567) (71.910)
Loss for the year (1.405.899) (1.073.650)
Loss attributable to:
Owners of the parent (699.271) (1.985.925)
Non-controlling interests (706.628) 912.275
(1.405.899) (1.073.650)
9.(c) Cash flows from(used in) discontinued operation
31 Dec 2018 31 Dec 2017
EUR EUR
------------- ------------
Net cash flows provided in operating activities 2.930.026 338.194
------------- ------------
Net cash flows from / (used in) financing
activities (3.910.958) 589.605
------------- ------------
Net cash flows from / (used in) investing 1.287.742 (2.112.036)
activities
------------- ------------
Net increase/(decrease) from discontinued 306.810 (1.184.237)
operations
------------- ------------
9.(d) Assets and liabilities of disposal group classified as
held for sale
The following assets and liabilities were reclassified as held
for sale in relation to the discontinued operation as at 31
December 2018:
Note 31 Dec 2018 31 Dec 2017
EUR EUR
------ ------------ ------------
Assets classified as held for sale
------ ------------ ------------
Investment properties 20.4a 63.345.537 67.232.502
------ ------------ ------------
Investment properties under development 20.4b 4.716.157 4.586.009
------ ------------ ------------
Tangible and intangible assets 24 42.534 61.711
------ ------------ ------------
Long-term receivables and prepayments 25 270.271 270.301
------ ------------ ------------
Investments in associates 22 5.313.235 5.115.587
------ ------------ ------------
Financial asset at fair value through
OCI 23 1 -
------ ------------ ------------
Inventory 26 4.604.044 4.812.550
------ ------------ ------------
Prepayments and other current assets 27 682.134 1.008.456
------ ------------ ------------
Cash and cash equivalents 28 704.825 477.809
------ ------------ ------------
Total assets of group held for sale 79.678.738 83.564.925
------ ------------ ------------
Liabilities directly related with assets
classified as held for sale
------ ------------ ------------
Borrowings 32 22.605.474 25.577.585
------ ------------ ------------
Finance lease liabilities 37 10.470.012 10.826.243
------ ------------ ------------
Trade and other payables 34 1.500.603 1.389.189
------ ------------ ------------
Taxes payables 36 432.528 474.253
------ ------------ ------------
Provision on taxes 36 66.002 -
------ ------------ ------------
Deposits from tenants 35 219.274 187.976
------ ------------ ------------
Total liabilities of group held for 35.293.893 38.455.246
sale
------ ------------ ------------
10. Income
Income from continued operations for the year ended 31 December
2018 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.
b) income from third parties and /or partners for consulting and
managing real estate properties (sale of property Praktiker
Craiova, GreenLake etc., Terminal Brovary for 2017).
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Rental income 631.636 986.748
------------ ------------
Service charges and utilities income 9.534 30.206
------------ ------------
Service and property management income 128.293 1.163.548
------------ ------------
Total income 769.463 2.180.502
------------ ------------
Income from discontinued operations for the year ended 31
December 2018 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, and;
d) income from third parties and /or partners for consulting and managing real estate properties
Discontinued operations (Note 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Rental income 1.963.724 1.985.059
------------ ------------
Sale of electricity 294.773 321.365
------------ ------------
Service charges and utilities income 118.211 135.936
------------ ------------
Service and property management income 2.167 3.106
------------ ------------
Total income 2.378.875 2.445.466
------------ ------------
Occupancy rates in the various income producing assets of the
Group as at 31 December 2018 were as follows:
Income producing assets
% 31 Dec 2018 31 Dec 2017
--------- ------------ ------------
EOS Business Park Romania 100 100
--------- ------------ ------------
Innovations Logistics
Park Romania 37 60
--------- ------------ ------------
Victini Logistics Greece 100 100
--------- ------------ ------------
Praktiker Craiova Romania - 100
--------- ------------ ------------
Kindergarten Romania 100 100
--------- ------------ ------------
11. Asset operating expenses
The Group incurs expenses related to the proper operation and
maintenance of all properties in Kiev, Bucharest, Athens, Sofia and
Craiova. A part of these expenses is recovered from the tenants
through the service charges and utilities recharge (Note 10).
Under continued operations are all the expenses related to
Praktiker Craiova.
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Property related taxes (77.723) (57.638)
------------ ------------
Property management fees - (26.923)
------------ ------------
Repairs and technical maintenance (4.150) (3.465)
------------ ------------
Utilities - (25.234)
------------ ------------
Property security - (1.742)
------------ ------------
Property insurance (36.446) (6.072)
------------ ------------
Leasing expenses - (2.187)
------------ ------------
Total (118.319) (123.261)
------------ ------------
11. Asset operating expenses (continued)
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 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Property related taxes (227.819) (194.024)
------------ ------------
Property management fees (120.630) (124.629)
------------ ------------
Repairs and technical maintenance (69.377) (121.605)
------------ ------------
Utilities (73.715) (73.500)
------------ ------------
Property security (37.301) (46.515)
------------ ------------
Property insurance (32.638) (36.101)
------------ ------------
Leasing expenses (44.258) (32.142)
------------ ------------
Other operating expenses (331) (1.326)
------------ ------------
Total (606.069) (629.842)
------------ ------------
Property related taxes reflect local taxes related to land and
building properties (in the form of land taxes, building taxes,
garbage fees, etc.).
Property Management fees relate to Property Management
Agreements for Innovations Logistics Park, Victini Logistics and
Praktiker Craiova with third party managers outsourcing the related
services.
Leasing expenses reflect expenses related to long term land
leasing.
12. Administration Expenses
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Salaries and Wages (556.580) (770.545)
------------ ------------
Advisory fees (438.423) (349.344)
------------ ------------
Public group expenses (210.097) (228.373)
------------ ------------
Corporate registration and maintenance fees (65.234) (170.815)
------------ ------------
Audit and accounting fees (100.141) (76.523)
------------ ------------
Legal fees (193.644) (70.121)
------------ ------------
Depreciation/Amortization charge (5.502) (35.407)
------------ ------------
Corporate operating expenses (199.226) (293.353)
------------ ------------
Total Administration Expenses (1.768.847) (1.994.481)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Salaries and Wages (43.073) (54.803)
------------ ------------
Advisory fees (26.666) (65.697)
------------ ------------
Corporate registration and maintenance fees (54.903) (43.936)
------------ ------------
Audit and accounting fees (65.690) (83.017)
------------ ------------
Legal fees (20.650) (40.227)
------------ ------------
Depreciation/Amortization charge (21.882) (8.722)
------------ ------------
Corporate operating expenses (27.850) (57.130)
------------ ------------
Total Administration Expenses (260.714) (353.532)
------------ ------------
Salaries and wages include the remuneration of the CEO, the CFO,
the Group Commercial Director, the Group Investment Director (until
his departure in April 2017) and the Country Managers of Ukraine
and Romania who have accepted a temporary reduction in their
remuneration, as well as the salary cost of personnel employed in
the various Company's offices in the region which has been reduced
following the completion of Terminal Brovary sale in Ukraine.
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
2018 includes one-off elements related to the disposal of Praktiker
asset (EUR 180k) and due diligence expenses (EUR 90k) for
non-consummated transactions, in relation to the acquisitions of
logistic asset portfolios in Greece and Romania.
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 compliance with AIM listing, as well as
one-off fees associated with legal services and advise in relation
to due diligence process and capital raising campaigns (EUR 80k)
and legal support for the disposal of the Praktiker Craiova asset
(EUR 60k).
12. Administration Expenses (continued)
Corporate operating expenses include office expenses, travel
expenses, (tele)communication expenses, D&O insurance and all
other general expenses for Cypriot, Romanian, Ukrainian, Bulgarian
and Greek operations.
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the
reporting period, excluding foreign exchange translation
differences which are incorporated in the table of Note 21.2, are
presented in the tables below.
Continued operations
Property Name (EUR) Valuation gains/(losses)
----------------------------
31 Dec 2018 31 Dec 2017
-------------- ------------
EUR EUR
-------------- ------------
Delia Lebada - (13.618)
-------------- ------------
Praktiker Craiova - 194.720
-------------- ------------
Total - 181.102
-------------- ------------
Discontinued operations (Note 9)
Property Name (EUR) Valuation gains/(losses)
---------------------------
31 Dec 2018 31 Dec 2017
------------- ------------
EUR EUR
------------- ------------
Bela Logistic Park (125.768) 356.575
------------- ------------
Kiyanovskiy Residence (23.024) (166.603)
------------- ------------
Tsymlyanskiy Residence (7.914) 35.379
------------- ------------
Balabino Project (97.707) 51.460
------------- ------------
Rozny Lane (35.932) (54.446)
------------- ------------
Innovations Logistics Park 610.366 (734.463)
------------- ------------
EOS Business Park 422.971 524.922
------------- ------------
Residential Portfolio 1.362 121.357
------------- ------------
GreenLake (1.107.293) 510.107
------------- ------------
Kindergarten 44.642 491.571
------------- ------------
Victini Logistics (900.000) (500.000)
------------- ------------
Boyana Land - (490.000)
------------- ------------
Total (1.218.297) 145.859
------------- ------------
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling
properties classified under either Investment Property (Romanian
residential assets) or Inventory (Bulgarian residential assets),
both designated as non-core assets. The gain/ (losses) from
disposal of such properties are presented below:
14a Inventory (Note 26)
During 2018 the Group sold 3 apartments in Bulgaria (2017: 3
apartments).
Discontinued operations (Note 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Income from sale of inventory 194.953 171.833
------------ ------------
Cost of inventory (208.504) (215.704)
------------ ------------
Loss from disposal of inventory (13.553) (43.871)
------------ ------------
14b Investment property
During October 2018, the Company proceeded with the sale of
Praktiker Craiova.
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Income from sale of investment property 6.517.181 -
------------ ------------
Cost of investment property (7.362.362) -
------------ ------------
Loss from disposal of investment property (845.181) -
------------ ------------
During 2018 the Group sold 10 apartments in Romfelt Plaza
(Doamna Ghica) and 5 apartments and 2 parking spaces in Zizin while
during 2017 the Group sold 4 apartments in Romfelt Plaza and 2
apartments in Zizin. Additionally a villa in SPDI Real Estate Srl
was sold during 2018.
Discontinued operations (Note 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Income from sale of investment property 1.499.392 363.985
------------ ------------
Cost of investment property (1.547.617) (359.619)
------------ ------------
(Loss)/ Gain from disposal of investment property (48.225) 4.366
------------ ------------
15. Provisions
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------- ------------
Provisions (Note 42.3) - 150.000
------------- ------------
Total - 150.000
------------- ------------
Provision was taken by management in 2015 for Delia Lebada
amounting to EUR700.000 while finally the Company as part of the
sale of the asset and the release of the corporate guarantee paid
EUR550.000 and as such the difference of EUR150.000 was reversed in
2017 (Note 42.3).
16. Other operating income/(expenses), net
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Accounts payable written off - 1.126
------------ ------------
Other income - 5
------------ ------------
Other income - 1.131
------------ ------------
Impairment of prepayments and other current
assets (26.389) (378.925)
------------ ------------
Penalties (4.959) (133)
------------ ------------
Other expenses (368) (149)
------------ ------------
Other expenses (31.716) (379.207)
------------ ------------
Other operating income/(expenses), net (31.716) (378.076)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Accounts payable written off 85 20.735
------------ ------------
Other income 30.010 11.360
------------ ------------
Other income 30.095 32.095
------------ ------------
Impairment of prepayments and other current
assets (388.900) (2.680)
------------ ------------
Penalties (4.334) (22.553)
------------ ------------
Other expenses (296) (4.194)
------------ ------------
Other expenses (393.530) (29.427)
------------ ------------
Other operating income/(expenses), net (363.435) 2.668
------------ ------------
Total impairment of prepayments and other current assets
includes the expected credit loss provision due to adoption of
IFRS9 which amounts to EUR118.089 (continued operations EUR26.389
and discontinued operations EUR91.700), and in discontinued
operations impairment of EUR297.200 for Monaco Towers (Note
23).
17. Finance costs and income
Continued operations
Finance income 31 Dec 2018 31 Dec 2017
------------ ------------
EUR EUR
------------ ------------
Interest received from non-bank loans (Note
41.1.1) 685.778 2.467
------------ ------------
Interest income associated with banking accounts 405 1.096
------------ ------------
Total finance income 686.183 3.563
------------ ------------
Finance costs 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Interest expenses (bank) (140.903) (256.079)
------------ ------------
Interest expenses (non-bank) (Note 41.1.2) (120.376) (29.975)
------------ ------------
Finance charges and commissions (24.329) (36.175)
------------ ------------
Bonds interest (68.133) (20.495)
------------ ------------
Other finance expenses - (46.767)
------------ ------------
Total finance costs (353.741) (389.491)
------------ ------------
Net finance result 332.442 (385.928)
------------ ------------
17. Finance costs and income (continued)
Discontinued operations (Note 9)
Finance income 31 Dec 2018 31 Dec 2017
------------ ------------
EUR EUR
------------ ------------
Interest received from non-bank loans (Note
41.1.1) 9.979 9.796
------------ ------------
Interest income associated with banking accounts - 17
------------ ------------
Total finance income 9.979 9.813
------------ ------------
Finance costs 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Interest expenses (bank) (986.466) (1.021.618)
------------ ------------
Interest expenses (non-bank) (Note 41.1.2) (7.251) (33.565)
------------ ------------
Finance leasing interest expenses (513.461) (567.850)
------------ ------------
Finance charges and commissions (35.402) (31.810)
------------ ------------
Other finance expenses - (6.445)
------------ ------------
Total finance costs (1.542.580) (1.661.288)
------------ ------------
Net finance result (1.532.601) (1.651.475)
------------ ------------
Interest income from non-bank loans, reflects income from loans
granted by the Group for financial assistance of associates. For
2018 this amount includes also interest on Loan receivables from
3(rd) parties provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians
portfolio) in Romania. The loan provided under an agreement
incorporating a convertibility option exercisable until 28 February
2018. Such option was not exercised and the loan is payable in a 12
month period from the exercise date or the relevant 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. Such interest
calculated in 2018 for all amounts withdrawn under this loan
agreement and their respective interest periods.
Borrowing interest expense represents interest expense charged
on bank and non-bank borrowings (Note 32).
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group (Note 37).
Finance charges and commissions include regular banking
commissions and various fees paid to the banks.
Bonds interest represent interest calculated for the bonds
issued by the Company during 2017 (Note 33).
Other finance expenses for 2017 includes interest on tax for
prior years related to Cyprus companies.
18. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans
and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December
2018 from continued operations amounted to EUR71.390 (2017: loss
EUR695.043).
The exchange loss from discontinued operations for the year
ended 31 December 2018 amounted to EUR10.233 (2017: loss
EUR1.335.517) (Note 9).
b. Exchange difference on intercompany loans to foreign holdings
The Company has loans receivable from foreign group subsidiaries
which are considered as part of the Group's net investments in
those foreign operations (Note 41.3). For these intercompany loans
the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During
2018, the Group recognized a foreign exchange profit of EUR1.850
(2017:loss EUR3.538). Upon disposal of such foreign operations and
thus of Terminal Brovary during 2017, the accumulated foreign
exchange difference amounting to EUR37.352.923 was transferred to
the Consolidated Profit or Loss for the year.
19. Tax Expense
Continued operations 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Income and defence tax expense (613.034) (524.255)
------------ ------------
Taxes (613.034) (524.255)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Income and defence tax expense (96.567) (71.910)
------------ ------------
Taxes (96.567) (71.910)
------------ ------------
19. Tax Expense (continued)
For the year ended 31 December 2018, 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%. For 2018 the amount of tax recorded
mainly related to an amount of EUR506.728 which was derived from
the sale of asset in Craiova while for 2017 the amount of tax
recorded includes also an amount of EUR241.435 which represent tax
provisions for fiscal years 2015 and 2016 related to Cyprus
companies.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 2018 31 Dec 2017
EUR EUR
------------ -------------
Profit / (loss) before tax (6.759.507) (34.334.671)
------------ -------------
Tax calculated on applicable rates (990.634) (4.307.875)
------------ -------------
Expenses not recognized for tax purposes 1.357.212 4.538.828
------------ -------------
Tax effect of allowances and income not subject
to tax (303.862) (153.916)
------------ -------------
Tax effect on tax losses for the year 653.310 139.129
------------ -------------
Tax effect on tax losses brought forward (16.981) (88.352)
------------ -------------
10% additional tax 10.514 5.811
------------ -------------
Defence tax - 6
------------ -------------
Overseas tax in excess of credit claim used
during the year 42 847
------------ -------------
Prior year tax - 461.687
------------ -------------
Total Tax 709.601 596.165
------------ -------------
20. Investment Property
20.1 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 37% leased at the end
of the reporting period while currently is 83%.
-- During 2017 the Company proceeded with an internal
reorganization and the Kindergarten asset of GreenLake which was
under the ownership of the associate GreenLake Development Srl was
acquired by a separate entity (SPDI Real Estate). The Kindergarten
is fully let to one of Bucharest's leading private schools and
produces an annual rent inflow of EUR115.000.
Residential Assets
The Company owns a residential portfolio, consisting at the end
of the reporting period of 26 apartments and villas across four
separate complexes located in different residential areas of
Bucharest (Residential portfolio: Romfelt Plaza, Blooming House,
GreenLake Residential: GreenLake Parcel K). During 2017 Tonescu
Finance (the company which acquired the Monaco Towers related loan)
commenced against SecMon Real Estate Srl legal proceedings and in
order for SecMon Real Estate Srl to protect itself it entered
voluntarily into insolvency process in January 2018. The entering
of SecMon Real Estate Srl in the insolvency process means loss of
control as per the definition of IFRS 10. As such SecMon Real
Estate Srl is not consolidated in the present financial statements.
(Note 8)
Land Assets
-- Bela Logistic Park is a 22,4 Ha plot in Odessa situated on
the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000
sqm GBA logistic center commenced. Construction was put on hold in
2009.
-- 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 22). 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.
20. Investment Property (continued)
20.2 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
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) 2018 to Assets 2018 amount
as at translation based on held for as at
31/12/2018 difference local sale 31/12/2017
(a) currency
valuations
(b)
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Bela Logistic Land - - - - (4.586.009) - 4.586.009
Park
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Kiyanovskiy Land - - - - (2.668.223) - 2.668.223
Residence
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Tsymlyanskiy
Residence Land - - - - (917.202) - 917.202
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Balabino Land - - - - (1334.111) - 1.334.111
Project
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Rozny Lane Land - - - - (1.083.966) - 1.083.966
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Ukraine - - - - (10.589.511) - 10.589.511
------------ ------------- ------------- ------------ ------------- ---------- --------------
Innovations Warehouse - - - - (10.000.000) - 10.000.000
Logistics
Park
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
EOS Business Office - - - - (7.200.000) - 7.200.000
Park
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Residential Residential - - - - (4.023.000) - 4.023.000
portfolio
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
GreenLake Land - - - - (17.963.000) - 17.963.000
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Kindergarten Retail - - - - (1.713.000) - 1.713.000
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Praktiker Retail - - - (7.500.000) - - 7.500.000
Craiova
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Romania - - - (7500.000) (40.899.000) - 48.399.000
------------ ------------- ------------- ------------ ------------- ---------- --------------
Boyana Land - - - - (4.230.000) - 4.230.000
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Bulgaria - - - - (4.230.000) - 4.230.000
------------ ------------- ------------- ------------ ------------- ---------- --------------
Victini Warehouse - - - - (16.100.000) - 16.100.000
Logistics
------------- ------------ ------------- ------------- ------------- ------------- ---------- --------------
Total Greece - - - - (16.100.000) - 16.100.000
------------ ------------- ------------- ------------ ------------- ---------- --------------
TOTAL - - - (7.500.000) (71.818.511) - 79.318.511
------------ ------------- ------------- ------------ ------------- ---------- --------------
Discontinued Operations
2018 (EUR) Fair Value movements Asset Value at
the Beginning
of the period
or at
Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair value Transfer Disposals Transfer Carrying
amount exchange gain/(loss) to FA 2018 from amount
as at translation based on at fair Continued as at
31/12/2018 difference local value Operations 31/12/2017
(a) currency through
valuations OCI (Note
(b) 23)
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Bela Logistic
Park Land 4.716.157 255.916 (125.768) - - 4.586.009 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Kiyanovskiy
Residence Land 2.794.760 149.561 (23.024) - - 2.668.223 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Tsymlyanskiy
Residence Land 960.699 51.411 (7.914) - - 917.202 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Balabino
Project Land 1.310.044 73.639 (97.707) - - 1.334.111 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Rozny Lane Land 1.048.034 - (35.932) - - 1.083.966 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Ukraine 10.829.694 530.527 (290.345) - - 10.589.511 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
Innovations
Logistics
Park Warehouse 10.600.000 (10.366) 610.366 - - 10.000.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
EOS Business
Park Office 7.600.000 (7.392) 407.392 - - 7.200.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Residential
portfolio Residential 1.354.000 (2.322) 16.939 (1.486.000) (1.197.617) 4.023.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
GreenLake Land 16.842.000 (13.707) (1.107.293) - - 17.963.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Kindergarten Retail 1.406.000 (1.642) 44.642 - (350.000) 1.713.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Romania 37.802.000 (35.429) (27.954) (1.486.000) (1.547.617) 40.899.000 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
Boyana Land 4.230.000 - - 4.230.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Bulgaria 4.230.000 - - 4.230.000 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
Victini Warehouse
Logistics 15.200.000 (900.000) - - 16.100.000 -
------------- ----------- ------------ ------------ ------------ ------------ ----------- ------------
Total Greece 15.200.000 (900.000) - - 16.100.000 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
TOTAL 68.061.694 495.098 (1.218.299) (1.486.000) (1.547.617) 71.818.511 -
----------- ------------ ------------ ------------ ------------ ----------- ------------
20. Investment Property (continued)
20.2 Investment Property Movement during the reporting period
(continued)
2017 (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) 2017 from 2017 amount
as at translation based Inventory as at
31/12/2017 difference on local 31/12/2016
(a) currency
valuations
(b)
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Terminal Warehouse - - - (14.900.000) - - 14.900.000
Brovary
Logistics
Park
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Bela Logistic
Park Land 4.586.009 (798.552) 356.575 - - - 5.027.986
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Kiyanovskiy
Residence Land 2.668.223 (485.542) (166.603) - - - 3.320.368
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Tsymlyanskiy
Residence Land 917.202 (161.721) 35.379 - - - 1.043.544
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Balabino
Project Land 1.334.111 (235.232) 51.460 - - - 1.517.883
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Rozny Lane Land 1.083.966 - (54.446) - - - 1.138.412
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Total Ukraine 10.589.511 (1.681.047) 222.365 (14.900.000) - - 26.948.193
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Innovations
Logistics
Park Warehouse 10.000.000 (265.537) (734.463) - - - 11.000.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
EOS Business
Park Office 7.200.000 (184.922) 524.922 - - - 6.860.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Residential
portfolio Residential 4.023.000 (113.738) 121.357 (359.619) - - 4.375.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
GreenLake Land 17.963.000 (466.107) 510.107 - - 17.919.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Delia Lebada Land - 13.618 (13.618) (4.860.000) - - 4.860.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Kindergarten Retail 1.713.000 (43.571) 491.571 - - 1.265.000 -
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Praktiker
Craiova Retail 7.500.000 (194.720) 194.720 - - - 7.500.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Total Romania 48.399.000 (1.254.977) 1.094.596 (5.219.619) - 1.265.000 52.514.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Boyana Land 4.230.000 - (490.000) - - - 4.720.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Total 4.230.000 - (490.000) - - - 4.720.000
Bulgaria
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Victini
Logistics Warehouse 16.100.000 - (500.000) - - 100.000 16.500.000
------------- ----------- ------------ ------------ ------------- ---------- ---------- ------------
Total Greece 16.100.000 - (500.000) - - 100.000 16.500.000
----------- ------------ ------------ ------------- ---------- ---------- ------------
TOTAL 79.318.511 (2.936.024) 326.961 (20.119.619) - 1.365.000 100.682.193
----------- ------------ ------------ ------------- ---------- ---------- ------------
The two components comprising the fair value movements are
presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation profit due to the devaluation of local
currencies of EUR495.098 (a) (2017: loss EUR2.936.024) is presented
as part of the exchange difference on translation of foreign
operations in other comprehensive income in the statement of
comprehensive income and then carried forward in the Foreign
currency translation reserve; and,
b. The fair value loss in terms of the local functional
currencies amounting to EUR1.218.299 (b) (2017: gain EUR326.961),
is presented as Valuation gains/(losses) from investment properties
in the statement of comprehensive income and is carried forward in
Accumulated losses.
20. Investment Property (continued)
20.3 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
31 Dec 31 Dec 31 Dec
2018 2018 2017
------------ ----------------- ---------------------- ------------- ------------- -----------
Continued Discontinued
operations operations
------------ ----------------- ---------------------- ------------- ------------- -----------
EUR EUR EUR
------------ ----------------- ---------------------- ------------- ------------- -----------
Bela Logistic Odesa Land and LLC Aisi Bela - 4.716.157 4.586.009
Park Development
Works for
Warehouse
------------ ----------------- ---------------------- ------------- ------------- -----------
Kiyanovskiy Podil, Land for LLC Aisi Ukraine - 2.794.760 2.668.223
Residence Kiev City residential LLC Trade
Center development Center
------------ ----------------- ---------------------- ------------- ------------- -----------
Podil, Land for
Tsymlyanskiy Kiev City residential LLC
Residence Center Development Almaz--Pres--Ukraine - 960.699 917.202
------------ ----------------- ---------------------- ------------- ------------- -----------
Balabino Zaporizhia Land for retail LLC Aisi Bela - 1.310.044 1.334.111
Project development
------------ ----------------- ---------------------- ------------- ------------- -----------
Rozny Lane Brovary Land for SC Secure - 1.048.034 1.083.966
district, residential Capital Limited
Kiev Development
------------ ----------------- ---------------------- ------------- ------------- -----------
Total Ukraine - 10.829.694 10.589.511
---------- ------------- -----------
Innovations Clinceni, Warehouse Myrnes Innovations - 10.600.000 10.000.000
Logistics Bucharest Park Limited
Park Best Day Real
Estate Srl
------------ ----------------- ---------------------- ------------- ------------- -----------
EOS Business Bucharest Office building Yamano Holdings - 7.600.000 7.200.000
Park Limited,
N-E Real Estate
Park First
Phase Srl
------------ ----------------- ---------------------- ------------- ------------- -----------
Praktiker Craiova Big Box retail Bluehouse - - 7.500.000
Craiova Accession
Project IX
Limited
Bluehouse
Accession
Project IV
Limited
BlueBigBox
3 Srl
------------ ----------------- ---------------------- ------------- ------------- -----------
Kindergarten Bucharest Retail SPDI Real - 1.406.000 1.713.000
Estate Srl
------------ ----------------- ---------------------- ------------- ------------- -----------
Residential Bucharest Residential SEC South - 1.354.000 4.023.000
Portfolio apartments East Continent
(12 in total Unique Real
in 2 complexes) Estate Investments
II Limited
Demetiva Holdings
Limited (in
2017)
Diforio Holdings
Limited (in
2017)
Frizomo Holdings
Limited (in
2017)
Ketiza Holdings
Limited
SecRom Real
Estate Srl
(in 2017)
SecVista Real
Estate Srl
(in 2017)
SecMon Real
Estate Srl
(in 2017)
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 - 16.842.000 17.963.000
villas (14 East Continent
villas) Unique Real
& Estate (Secured)
land for Investments
residential 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 - 37.802.000 48.399.000
---------- ------------- -----------
Boyana Sofia Land Boyana Residence - 4.230.000 4.230.000
ood,
Sertland Properties
Limited
------------ ----------------- ---------------------- ------------- ------------- -----------
Total Bulgaria - 4.230.000 4.230.000
---------- ------------- -----------
Victini Logistics Athens Warehouse Victini Holdings - 15.200.000 16.100.000
Limited,
Victini Logistics
Park S.A.
------------ ----------------- ---------------------- ------------- ------------- -----------
Total Greece - 15.200.000 16.100.000
---------- ------------- -----------
TOTAL - 68.061.694 79.318.511
---------- ------------- -----------
20. Investment Property (continued)
20.4 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).
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
-------------- -------------- -------------
EUR EUR EUR
-------------- -------------- -------------
At 1 January 74.732.502 - 95.654.207
-------------- -------------- -------------
Acquisitions of investment property - - 1.265.000
-------------- -------------- -------------
Disposal of investment Property (7.500.000) (3.033.617) (20.119.619)
-------------- -------------- -------------
Transfer from Inventory/prepayments made - - 100.000
-------------- -------------- -------------
Revaluation (loss)/gain on investment
property - (1.092.530) (29.614)
-------------- -------------- -------------
Translation difference - 239.182 (2.137.472)
-------------- -------------- -------------
Transferred to Assets held for sale (67.232.502) 67.232.502 -
-------------- -------------- -------------
At 31 December - 63.345.537 74.732.502
-------------- -------------- -------------
Acquisitions of Investment properties represent the internal
reorganization to which the Company proceeded during 2017 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) (Note 21a).
Disposals of Investment Properties mainly represent the sales of
Praktiker in Craiova and for 2017 the sale of Terminal Brovary
logistics Park in Ukraine, as well as the Delia Lebada land plot in
Romania (Note 21b).
b. Investment Properties Under Development
As at 31 December 2018 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.
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
------------- ------------- ----------
EUR EUR EUR
------------- ------------- ----------
At 1 January 4.586.009 - 5.027.986
------------- ------------- ----------
Revaluation on investment property - (125.768) 356.575
------------- ------------- ----------
Translation difference - 255.916 (798.552)
------------- ------------- ----------
Transferred to Assets held for sale (4.586.009) 4.586.009 -
------------- ------------- ----------
At 31 December - 4.716.157 4.586.009
------------- ------------- ----------
20.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the
following table represents an analysis based on the various
valuation methods. The different levels as defined by IFRS have
been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and
liquid markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived
from prices). Level 2 fair values of investment properties have
been derived using the market value approach by comparing the
subject asset with similar assets for which price information is
available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred
recently in the market. The most significant input into this
valuation approach is price per sqm.
- Level 3 relates to inputs for the asset or liability that are
not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using
the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
20. Investment Property (continued)
20.5 Investment Property valuation method presentation
(continued)
To derive Fair Values the Group has adopted a combination of
income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements at 31 (Level (Level (Level Total
Dec 2018 (EUR) 1) 2) 3)
Recurring fair value measurements
-------- ----------- ----------- -----------
Balabino Project - Zaporizhia 1.310.044 1.310.044
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center 960.699 960.699
----------- ----------- -----------
Bela Logistics Park - Odessa 4.716.157 4.716.157
----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center 2.794.760 2.794.760
----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast 1.048.034 1.048.034
----------- ----------- -----------
Innovations Logistics Park -
Bucharest 10.600.000 10.600.000
----------- ----------- -----------
EOS Business Park - Bucharest,
City Center 7.600.000 7.600.000
----------- ----------- -----------
Residential Portfolio (ex GreenLake)
- Bucharest 1.354.000 1.354.000
----------- ----------- -----------
GreenLake - Bucharest 16.842.000 16.842.000
----------- ----------- -----------
Praktiker - Craiova
----------- ----------- -----------
Kindergarten - Bucharest 1.406.000 1.406.000
----------- ----------- -----------
Victini Logistics - Athens 15.200.000 15.200.000
----------- ----------- -----------
Boyana- Land, Bulgaria 4.230.000 4.230.000
----------- ----------- -----------
Totals 28.539.537 39.522.157 68.061.694
----------- ----------- -----------
Fair value measurements at 31 (Level (Level (Level Total
Dec 2017 (EUR) 1) 2) 3)
-
-------- ----------- ----------- -----------
Recurring fair value measurements
-------- ----------- ----------- -----------
Balabino Project - Zaporizhia - 1.334.111 - 1.334.111
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 917.202 - 917.202
-------- ----------- ----------- -----------
Bela Logistics Park - Odessa - - 4.586.009 4.586.009
-------- ----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center - 2.668.223 - 2.668.223
-------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast - 1.083.966 - 1.083.966
-------- ----------- ----------- -----------
Innovations Logistics Park -
Bucharest - - 10.000.000 10.000.000
-------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - - 7.200.000 7.200.000
-------- ----------- ----------- -----------
Residential Portfolio (ex GreenLake)
- Bucharest - 4.023.000 - 4.023.000
-------- ----------- ----------- -----------
GreenLake - Bucharest - 17.963.000 - 17.963.000
-------- ----------- ----------- -----------
Praktiker - Craiova - - 7.500.000 7.500.000
-------- ----------- ----------- -----------
Kindergarten - Bucharest - - 1.713.000 1.713.000
-------- ----------- ----------- -----------
Victini Logistics - Athens - - 16.100.000 16.100.000
-------- ----------- ----------- -----------
Boyana- Land, Bulgaria - 4.230.000 - 4.230.000
-------- ----------- ----------- -----------
Totals - 32.219.502 47.099.009 79.318.511
-------- ----------- ----------- -----------
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level 3 Bela Innovations EOS Business Praktiker Victini Kindergarten Total
Fair value Logistics Logistics Park Craiova Logistics
measurements Park Park
at 31 Dec
2018 (EUR)
Opening
balance 4.586.009 10.000.000 7.200.000 7.500.000 16.100.000 1.713.000 47.099.009
------------- ------------ ------------- ------------ ------------- ------------- -------------
Disposals - - - (7.500.000) - - (7.500.000)
------------- ------------ ------------- ------------ ------------- ------------- -------------
Profit/(loss)
on
revaluation (125.768) 610.366 407.392 - (900.000) 44.642 36.632
------------- ------------ ------------- ------------ ------------- ------------- -------------
Translation
difference 255.916 (10.366) (7.392) - - (351.642) (113.484)
------------- ------------ ------------- ------------ ------------- ------------- -------------
Closing
balance 4.716.157 10.600.000 7.600.000 - 15.200.000 1.406.000 39.522.157
------------- ------------ ------------- ------------ ------------- ------------- -------------
20. Investment Property (continued)
20.5 Investment Property valuation method presentation
(continued)
Level 3 Bela Logistics Innovations EOS Business Praktiker Victini Kindergarten Total
Fair value Park Logistics Park Craiova Logistics
measurements Park
at 31 Dec
2017 (EUR)
Opening 16.500.000 -
balance 5.027.986 11.000.000 6.860.000 7.500.000 46.887.986
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Transfer
to and from
level 2
due to change
of valuation
methods - - - - - - -
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Acquisitions - - - - - 1.265.000 1.265.000
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Additions - - - - - - -
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Disposals - - - - 100.000 - 100.000
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Profit/(loss)
on revaluation 356.575 (734.463) 524.922 194.720 (500.000) 491.571 333.325
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Translation
difference (798.552) (265.537) (184.922) (194.720) - (43.571) (1.487.302)
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Closing
balance 4.586.009 10.000.000 7.200.000 7.500.000 16.100.000 1.713.000 47.099.009
--------------- ------------ ------------- ---------- ----------- ------------- ------------
Information about Level 3 Fair Values is presented below:
Fair Fair value Valuation Unobservable Relationship of
value at technique inputs unobservable inputs
at 31 Dec 2017 to fair value
31 Dec
2018
EUR EUR EUR EUR EUR
----------- ------------- ----------- ---------------------- ----------------------
Bela Logistic 4.716.157 4.586.009 Combined Percentage of The higher the
Park - Odessa market development percentage of
and cost works completion, completion the
approach deterioration higher the fair
rate value. The higher
the deterioration
rate, the lower
fair value
----------- ------------- ----------- ---------------------- ----------------------
Innovations 10.600.000 10.000.000 Income Future rental The higher the
Logistics approach income and costs rental income
Park - Bucharest for 10 years, the higher the
discount rate fair value. The
higher the discount
rate, the lower
fair value
----------- ------------- ----------- ---------------------- ----------------------
EOS Business 7.600.000 7.200.000 Income Future rental The higher the
Park - Bucharest, approach income and costs rental income
City Center for 10 years, the higher the
discount rate fair value. The
higher the discount
rate, the lower
fair value
----------- ------------- ----------- ---------------------- ----------------------
Praktiker - 7.500.000 Income Future rental The higher the
Craiova approach income and costs rental income
for 10 years, the higher the
discount rate fair value. The
higher the discount
rate, the lower
fair value
----------- ------------- ----------- ---------------------- ----------------------
Victini 15.200.000 16.100.000 Income Future rental The higher the
Logistics approach income and costs rental/PV income
for 10 years, the higher the
discount rate fair value. The
for real estate higher the discount
property and rate, the lower
for Photovoltaic(PV) fair value
13 + 4 years
----------- ------------- ----------- ---------------------- ----------------------
Kindergarten 1.406.000 1.713.000 Income Future rental The higher the
approach income and costs rental income
of discount the higher the
rate, vacancy fair value. The
rate higher the discount
rate and the vacancy
rate, the lower
fair value
----------- ------------- ----------- ---------------------- ----------------------
Total 39.522.157 47.099.009
----------- ------------- ----------- ---------------------- ----------------------
21. Investment Property Acquisitions, Goodwill Movement and
Disposals
a. Investment Property Acquisitions
Acquisitions of investment property represents the internal
reorganization which the Company undertook during 2017 whereby the
Kindergarten asset of GreenLake which was under the ownership of
the associate GreenLake Development Srl was acquired by a separate
subsidiary entity (SPDI Real Estate Srl).
EUR
Fair value of investment property 1.265.000
acquired
------------
Consideration paid (1.241.079)
------------
Gain on acquisition of assets 23.921
------------
Non-controlling interest 11.960,50
------------
SPDI equity holders 11.960,50
------------
21. Investment Property Acquisitions, Goodwill Movement and
Disposals (continued)
b. Disposal of subsidiaries
At 27 January 2017 the SL Logistics Group (Terminal Brovary
related) was sold to Temania Enterprises Ltd (company related to
Rozetka Group). The transaction was concluded at a Gross Asset
Value of EUR15 million (before the deduction of the outstanding
EBRD loan, which was transferred to the buyer, while the SPDI
guarantee to EBRD loan was cancelled). The transaction generated a
profit for SPDI of EUR2,7 million, already included in the 2016
financial statements by way of presenting the property at a fair
value equal to the transaction value, as well as a cash inflow of
EUR3million. As part of the transaction the Group also sold SL
SECURE Logistics Ltd, and thus transferred its loan towards
Terminal Brovary to the buyer.
The Company had loans receivable from foreign group subsidiaries
which are considered as part of the Group's net investments in
those foreign operations (Note 41.3). For these intercompany loans
the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. Upon
disposal of such foreign operations and thus of Terminal Brovary
during 2017, the accumulated foreign exchange difference amounting
to EUR37.352.923 is transferred to the Consolidated Profit or Loss
for the year.
The table below shows the Balance Sheet of the Terminal Brovary
Group at the disposal date.
ASSETS EUR
Non-current assets
------------
Investment property 14.900.000
------------
Tangibles and intangibles assets 43.240
------------
Current assets
------------
Prepayments and other current
assets 40.740
------------
Cash and cash equivalents 4.693
------------
Total assets 14.988.673
------------
Non-current liabilities
------------
Finance lease liability 235.560
------------
Current liabilities
------------
Borrowings 11.370.804
------------
Trade and other payables 46.366
------------
Deposits from tenants 264.547
------------
Finance lease liability 219
------------
Total liabilities 11.917.496
------------
Net assets disposed (3.071.177)
------------
Financed by
------------
Cash consideration received 2.849.187
------------
Total result from Terminal
Brovary disposal (221.990)
------------
On 26 July 2017 the Company announced the disposal of Delia
Lebada, a 40.000 sqm (4 hectare) plot of land in east Bucharest on
the shore of Pantelimon Lake in which SPDI owned a 65% stake. The
sale price was EUR2,4 million and simultaneously, the associated
property loan (principal and interest) totalling EUR6.594.396 with
Bank of Cyprus was settled through a liquidation process, and the
associated corporate guarantee was released. The loan was repaid at
a rate of 45 cents / Euro (totalling EUR2,95 million) using a
combination of the Land Disposal proceeds (EUR2,4 million) and an
additional payment of EUR550.000 (Note 15).
Overall the transaction had a positive result of EUR1.705.727 in
the Consolidated Statement of Comprehensive Income, EUR761.197
being attributed to the equity holders of the Company.
ASSETS EUR
Non-current assets
------------
Investment property 4.860.000
------------
Current assets
------------
Prepayments and other current
assets 92.990
------------
Cash and cash equivalents 106
------------
Total assets 4.953.096
------------
Current liabilities
------------
Borrowings 4.569.725
------------
Interest due on borrowings 2.024.671
------------
Other liabilities 1.057.357
------------
Total liabilities 7.651.753
------------
Net assets disposed (2.698.657)
------------
Non-controlling interest -
------------
Gain on disposal of subsidiaries 2.698.657
------------
Write off intercompany loans
of SPDI group to Delia (992.930)
------------
Total result from Delia disposal 1.705.727
------------
Non-controlling interest 944.530
------------
Net effect of Delia disposal
for SPDI equity holders 761.197
------------
Total gain from disposal of subsidiaries 1.483.737
(Brovary and Delia)
22. Investments in associates
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
------------- ------------- ----------
EUR EUR EUR
------------- ------------- ----------
Cost of investment in associates at
the beginning of the period 5.115.587 - 5.217.310
------------- ------------- ----------
Share of profits /(losses) from associates - 364.920 390.217
------------- ------------- ----------
Dividend Income - (143.263) (231.363)
------------- ------------- ----------
Foreign exchange difference - (24.009) (260.577)
------------- ------------- ----------
Transfer to assets classified as held
for sale (5.115.587) 5.115.587 -
------------- ------------- ----------
Total - 5.313.235 5.115.587
------------- ------------- ----------
Dividend Income reflects dividends received from Delenco Srl,
owner of the Delea Nuova building, where the Group maintains a
24,35% participation.
The share of profit from the associate GreenLake Development Srl
was limited up to the interest of the Group in the associate.
As at 31 December 2018, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value, total liabilities, revenues and profit or loss, were
as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
Lelar
Holdings
Limited
and S.C.
Delea Delenco
Nuova Construct Office
Project Srl 24.272.364 (2.455.680) 1.498.399 24,354 364.920 Romania building
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 9.202.949 (11.567.196) (839.107) 40,35 - Romania assets
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
Total 33.475.313 (14.022.876) 659.292 364.920
------------ ------------- ---------- -------- ------------- -------- ------------
As at 31 December 2017, 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 23.980.063 (2.974.921) 1.602.270 24,354 390.217 Romania building
------------- ------------ -------------- ------------- -------- ----------- -------- ------------
GreenLake GreenLake 10.228.889 (12.329.782) (3.560.862) 40,35 - Romania Residential
Project Development assets
- Phase Srl
A
------------- ------------ -------------- ------------- -------- ----------- -------- ------------
Total 34.208.952 (15.304.703) (1.958.592) 390.217
------------ -------------- ------------ -------- ----------- -------- ------------
23. 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 8) and as such it was
reclassified as Financial assets at fair value through OCI as per
table below (where the fair value of the property was adjusted at
80% of its value):
Discontinued operations (Note 9)
Unadjusted Adjusted
------------ ------------
ASSETS EUR EUR
------------ ------------
Non-current assets
------------ ------------
Investment property 1.486.000 1.188.800
------------ ------------
Current assets
------------ ------------
Prepayments and other current assets 20.447 20.447
------------ ------------
Cash and cash equivalents 10.321 10.321
------------ ------------
Total assets 1.516.768 1.219.568
------------ ------------
Current liabilities
------------ ------------
Borrowings (1.075.176) (1.075.176)
------------ ------------
Other liabilities (19.433) (19.433)
------------ ------------
Intercompany loans (1.845.700) (124.958)
------------ ------------
Total liabilities (2.940.309) (1.219.567)
------------ ------------
Total Net equity (1.423.541) 1
------------ ------------
Add back Intercompany loans 1.845.700 -
------------ ------------
Total Net equity (excluding IC) 422.159 1
------------ ------------
Financial Asset at fair value through OCI 1
------------ ------------
Loan receivable from 3(rd) parties (Note 27) 124.958
------------ ------------
Impairment charge for Monaco Towers (Adjusted
less Unadjusted NAV) (297.200)
------------ ------------
24. Tangible and intangible assets
As at 31 December 2018 the intangible assets were composed of
the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of EUR103.193
(2017: EUR103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to EUR100.800 (2017:
EUR96.642) and therefore net value amounts to EUR2.393 (2017:
EUR6.551).
As at 31 December 2018 the tangible non-current assets under
continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of EUR1.281 (2017:
EUR2.242).
As at 31 December 2018 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 EUR129.516
(2017:EUR134.483). Accumulated depreciation as at the reporting
date amounts to EUR86.982 (2017: EUR72.772).
25. Long Term Receivables and prepayments
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
------------ ------------- --------
EUR EUR EUR
------------ ------------- --------
Long Term Receivables 850 270.271 316.788
------------ ------------- --------
Total 850 270.271 316.788
------------ ------------- --------
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.
26. Inventory
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
------------- ------------- ----------
EUR EUR EUR
------------- ------------- ----------
At 1 January 4.812.550 - 5.028.254
------------- ------------- ----------
Sale of Inventories (Note 14a) - (208.506) (215.704)
------------- ------------- ----------
Transfer to assets classified as held
for sale (4.812.550) 4.812.550 -
------------- ------------- ----------
At 31 December - 4.604.044 4.812.550
------------- ------------- ----------
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 20.2) and since then is treated under IAS 40.
27. Prepayments and other current assets
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
------------ ------------- ----------
EUR EUR EUR
------------ ------------- ----------
Trade and other receivables 102.243 569.210 741.691
------------ ------------- ----------
VAT and other tax receivables 123.975 93.331 275.446
------------ ------------- ----------
Deferred expenses 72.630 1.254 222.797
------------ ------------- ----------
Receivables due from related parties 54.689 1.010 14.459
------------ ------------- ----------
Loan receivables from 3(rd) parties 5.312.919 124.958 4.345.000
------------ ------------- ----------
Loan to associates (Note 41.4) 8.374 282.842 273.476
------------ ------------- ----------
Allowance for impairment of prepayments
and other current assets (89.422) (390.471) (26.285)
------------ ------------- ----------
Total 5.585.408 682.134 5.846.584
------------ ------------- ----------
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.
Deferred expenses include legal, advisory, consulting and
marketing expenses related to ongoing share capital increase and
due diligence expenses related to the possible acquisition of
investment properties.
Loan receivables from 3(rd) parties include an amount of
EUR4.580.000 provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians
portfolio) in Romania, as well as associated interest of
EUR610.853. The loan provided under an agreement incorporating a
convertibility option exercisable until 28 February 2018. Such
option was not exercised and the loan is payable in a 12 month
period from the exercise date or the relevant 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
23).
Loan to associates reflects a loan receivable from GreenLake
Development Srl, holding company of GreenLake Project-Phase A
(Notes 22 and 41.4).
28. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
------------ ------------- --------
EUR EUR EUR
------------ ------------- --------
Cash with banks in USD 45.134 2.621 68.007
------------ ------------- --------
Cash with banks in EUR 205.679 233.184 365.736
------------ ------------- --------
Cash with banks in UAH 71 1.498 2.021
------------ ------------- --------
Cash with banks in RON 31.829 465.062 389.123
------------ ------------- --------
Cash with banks in BGN - 2.460 6.237
------------ ------------- --------
Total 282.713 704.825 831.124
------------ ------------- --------
29. Share capital
Number of Shares during 2018 and 2017
31 December 28 April 30 June 31 December 26 January 26 5 June 31 December
2016 2017 2017 2017 2018 January 2018 2018
2018
Increase Exercise Exercise Increase
of share of of of share
capital warrants warrants & capital
options
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Authorised
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Ordinary 989.869.935 - - 989.869.935 - - - 989.869.935
shares of
EUR0,01
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Total 989.869.935 - - 989.869.935 - - - 989.869.935
ordinary
shares
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
RCP Class A
Shares of
EUR0,01 785.000 - - 785.000 - - (785.000) -
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
RCP Class B 8.618.997 - - 8.618.997 - - - 8.618.997
Shares of
EUR0,01
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Total 9.403.997 - - 9.403.997 - - (785.000) 8.618.997
redeemable
shares
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Issued and
fully paid
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Ordinary 90.014.723 626.133 12.948.694 103.589.550 17.076.560 6.604.371 - 127.270.481
shares of
EUR0,01
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Total 90.014.723 626.133 12.948.694 103.589.550 17.076.560 6.604.371 - 127.270.481
ordinary
shares
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
RCP Class A - - - - - - - -
Shares of
EUR0,01
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
RCP Class B - - - - - - - -
Shares of
EUR0,01
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Total - - - - - - - -
redeemable
shares
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Total 90.014.723 626.133 12.948.694 103.589.550 17.076.560 6.604.371 - 127.270.481
------------ ---------- ----------- ------------- ----------- ---------- ---------- -------------
Nominal value (EUR) for 2018 and 2017
EUR 31 28 April 30 June 31 26 January 26 January 5 June 2018 31 December
December 2017 2017 December 2018 2018 2018
2016 2017
Increase Exercise Exercise Increase
of share of of of share
capital warrants warrants & capital
options
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Authorised
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Ordinary 9.898.699 - - 9.898.699 - - - 9.898.699
shares of
EUR0,01
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Total 9.898.699 - - 9.898.699 - - - 9.898.699
ordinary
shares
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
RCP Class A
Shares of
EUR0,01 7.850 - - 7.850 - - (7.850) -
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
RCP Class B
Shares of
EUR0,01 86.190 - - 86.190 - - - 86.190
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Total
redeemable
shares 94.040 - - 94.040 - - (7.850) 86.190
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Issued and
fully paid
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Ordinary
shares of
EUR0,01 900.145 6.261 129.487 1.035.893 170.765 66.044 - 1.272.702
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Total
ordinary
shares 900.145 6.261 129.487 1.035.893 170.765 66.044 - 1.272.702
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
RCP Class A - - - - - - - -
Shares of
EUR0,01
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
RCP Class B - - - - - - - -
Shares of
EUR0,01
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Total - - - - - - - -
redeemable
shares
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
Total 900.145 6.261 129.487 1.035.893 170.765 66.044 - 1.272.702
----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------
29. Share capital (continued)
29.1 Authorised share capital
As at the end of 2017, the authorized share capital of the
Company was 989.869.935 Ordinary Shares of EUR0,01 nominal value
each, 785.000 Redeemable Preference Class A Shares of EUR0,01
nominal value each and 8.618.997 Redeemable Preference Class B
Shares of EUR0,01 nominal value each.
The Company cancelled the Redeemable Preference Class A Shares
following the AGM decision of 29 December 2017 and the subsequent
court approval obtained during H1 2018 while Redeemable Preference
Class B Shares (Note 29.6) remain to be cancelled.
Following the cancellation of the Redeemable Preference Class A
Shares completed within H1 2018 the authorised share capital of the
Company as at the date of issuance of this report is as
follows:
a) 989.869.935 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 29.6).
29.2 Issued Share Capital
As at the end of 2017, the issued share capital of the Company
was as follows:
a) 103.589.550 Ordinary Shares of EUR0,01 nominal value
each,
b) 392.500 Redeemable Preference Class A Shares of EUR0,01
nominal value each, cancelled during 2018 as per the Annual General
Meeting decision of 29 December 2017 (Note 29.6)
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each.
In respect of the Redeemable Preference Class A Shares, issued
in connection to the Innovations Logistics Park acquisition and the
Redeemable Preference Class A Shares, issued in connection to the
acquisition of Craiova Praktiker, following the holders of such
shares notifying the Company of their intent to redeem within 2016,
the Company:
- actually proceeded with full redemption of the Redeemable
Preference Class A Shares (392.500) which was finalized in Q1-2017
while it obtained during the Annual General Meeting of 29 December
2017 the necessary approval for cancelling them during 2018.
- for the Redeemable Preference Class B Shares, in lieu of
redemption the Company gave its 20% holding in Autounion (Note
29.6) in October 2016, to the Craiova Praktiker seller BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. and final settlement for
any resulting difference is expected to be provided by Cypriot
Courts (Note 42.4). As soon as the case is settled, the Company
will proceed with the cancellation of the Redeemable Preference
Class B Shares.
On 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 (Notes 34 and 41.2). 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 date of issuance of this
report 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 29.6).
29.3 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.
29. Share capital (continued)
29.3 Option schemes (continued)
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 may be exercised within 2018 and as at the
date this report none have been exercised.
The Company considers that all option schemes are currently out
of money and therefore has not made any relevant provision.
29.4 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, (Note 27) issued a financial instrument, 35%
of which consists of a convertible bond and 65% of which is made up
of a warrant. Pursuant to issuing the instrument, the Company
issued 17.066.560 Class A warrants which were exercised during 2017
at an exercise price of GBP0,10 per ordinary share and the Company
proceeded at, beginning of 2018, with the issuance of 17.066.560
new ordinary shares corresponding to these warrants.
There are no Class A warrants in circulation as at the issuance
date of the financial statements.
29.5 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.
29.6 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) 31 December 2018 (as at) 31 December 2017
Ordinary shares of EUR0,01 Issued and Listed on AIM 127.270.481 103.589.550
------------------------- ------------------------- -------------------------
Class A Warrants -
------------------------- ------------------------- -------------------------
Class B Warrants -
------------------------- ------------------------- -------------------------
Total number of Shares Non-Dilutive Basis 127.270.481 103.589.550
------------------------- ------------------------- -------------------------
Total number of Shares Full Dilutive Basis 127.270.481 103.589.550
------------------------- ------------------------- -------------------------
Options
------------------------- ------------------------- -------------------------
Shares issued in 2018 for exercise
of warrants and options in 2017 17.076.560
------------------------- ------------------------- -------------------------
29. Share capital (continued)
29.6 Capital Structure as at the end of the reporting period
(continued)
Redeemable Preference Class A Shares
The Redeemable Preference Class A Shares which do not have
voting or dividend rights where issued as part of the Innovations
Logistics Park acquisition consideration. As at the reporting date
all of the Redeemable Preference Class A Shares have been redeemed
and the Company, following the approval received by the AGM on 29
December 2017, proceeded in their cancellation within 2018.
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker
Craiova asset acquisition do not have voting rights but have
economic rights at par with ordinary shares. As at the reporting
date all of the Redeemable Preference Class B Shares have been
redeemed but the Company is in legal proceedings with the vendor in
respect of a final settlement (Notes 34, 42.4).
29.7 Other share capital related matters
Pursuant to decisions taken by the AGM of 30(th) December 2016,
the Board has been authorised and empowered to:
- issue up to 200.000.000 ordinary shares of EUR0,01 each at an
issue price as the Board may from time to time determine (with such
price being at a discount to the net asset value per share) so as
to facilitate the profitable growth of the Group. Such explicit
authority for the issuance of such shares expires on 31 December
2018. Since 31 December 2016 and until the date of this report, the
Board had issued 37.255.758 shares under its mandated
authority.
- issue Class A Warrants, to subscribe for up to 350% of the
outstanding ordinary shares at the time of issuance of the Class A
Warrants, upon such terms and conditions as may be determined by
the Board (with such price being at a discount to the net asset
value per share). Such Class A Warrants may be offered to various
third-party entities a) for participating in the capital raising of
the Company, b) for their contribution in creating value for the
Group and c) for their assistance with fundraising. Such explicit
authority for the issuance of such warrants expires on 31 December
2018. The Company issued 17.066.560 Class A warrants under this
authority during 2017 which were also exercised.
Pursuant to decisions taken by the AGM of 29(th) December 2017,
the Company proceeded with the following actions H1 2018 (which
finalized during June:
- That the balance of the share premium account of the Company
will be reduced by EUR53.569.295 and will be set off against
carried forward losses of the Company amounting to
EUR53.569.295.
- That the balance of the share premium account of the Company
will be reduced by EUR698.650 and that the said amount will be set
off against any outstanding balances between the Company, Myrian
Nes Ltd and Theandrion Estates Ltd related to the Redeemable
Preference Class A Shares.
- That the authorised share capital of the Company, as well as
the issued share capital of the Company each will be reduced, by
the cancellation of 785.000 Redeemable Preference Class A Shares of
EUR0,01 each, namely 777.150 Redeemable Preference Class A Shares
of EUR0,01 each in the name of Myrian Nes Ltd and 7.850 Redeemable
Preference Class A Shares of EUR0,01 each in the name of Theandrion
Estates Ltd and the amount reduced will be set off against any
outstanding balances between the Company, Myrian Nes Ltd and
Theandrion Estates Ltd.
- That the articles of association of the Company will be
amended by adding the following new Regulation 3.10 after
Regulation 3.9:
"Subject to the provisions of the Law, the Company may purchase
its own shares (including any redeemable shares)."
Pursuant to decisions taken by the AGM of 31(st) December 2018,
the Board has been authorized and empowered to:
- issue and allot up to 20.000.000 ordinary shares of euro 0,01
each, at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a
discount to the net asset value per share in the Company which is
in issue immediately prior to the issue of the new shares) and for
such purpose any rights of pre-emption and other rights the
Company's shareholders have or may have by operation of law and/or
pursuant to the articles of association of the Company and/or
otherwise in connection with the authority conferred on the Board
for the issue and allotment of shares in the Company as
contemplated in this resolutions or the issue of shares in the
Company pursuant to such authority be and are hereby irrevocably
and unconditionally waived. The authority conferred by this
resolution 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.
30. Foreign Currency Translation Reserve
Exchange differences related to the translation from the
functional currency to EUR of the Group's subsidiaries are
accounted by entries made directly to the foreign currency
translation reserve. The foreign exchange translation reserve
represents unrealized profits or losses related to the appreciation
or depreciation of the local currencies against EUR in the
countries where the Company's subsidiaries' functional currencies
are not EUR.
31. Non-Controlling Interests
Non-controlling interests represent the percentage
participations in the respective entities not owned by the
Group:
% Non-controlling
interest portion
Group Company 31 Dec 2018 31 Dec
2017
------------ -------
LLC Almaz-Press-Ukraine 45,00 45,00
------------ -------
Ketiza Holdings Limited 10,00 10,00
------------ -------
Ketiza Real Estate Srl 10,00 10,00
------------ -------
Ram Real Estate Management Limited 50,00 50,00
------------ -------
Iuliu Maniu Limited 55,00 55,00
------------ -------
Moselin Investments Srl 55,00 55,00
------------ -------
Rimasol Enterprises Limited 55,76 55,76
------------ -------
Rimasol Real Estate Srl 55,76 55,76
------------ -------
Ashor Ventures Limited 55,76 55,76
------------ -------
Ashor Development Srl 55,76 55,76
------------ -------
Jenby Ventures Limited 55,70 55,70
------------ -------
Jenby Investments Srl 55,70 55,70
------------ -------
Ebenem Limited 55,70 55,70
------------ -------
Ebenem Investments Srl 55,70 55,70
------------ -------
SPDI Real Estate Srl 50,00 50,00
------------ -------
32. Borrowings
Project 31 Dec 2018 31 Dec 2018 31 Dec 2017
Continued Discontinued
operations operations
------------------- ------------ ------------- ------------
EUR EUR EUR
------------------- ------------ ------------- ------------
Principal of bank Loans
------------------- ------------ ------------- ------------
Banca Comerciala Romana
/Tonescu Finance Monaco Towers - - 924.562
------------------- ------------ ------------- ------------
Bancpost SA Blooming House - 614.441 1.080.834
------------------- ------------ ------------- ------------
Alpha Bank Romania Romfelt Plaza - 191.723 686.693
------------------- ------------ ------------- ------------
EOS Business
Alpha Bank Romania Park - 485.663 828.599
------------------- ------------ ------------- ------------
Bancpost SA GreenLake - 3.249.926
Parcel K - 3.249.926
------------------- ------------ ------------- ------------
Alpha Bank Bulgaria Boyana Residence - 2.258.128 2.404.187
------------------- ------------ ------------- ------------
Boyana Residence
Alpha Bank Bulgaria (Sertland Loan) - 666.474 678.162
------------------- ------------ ------------- ------------
Eurobank Ergasias SA Victini Logistics - 10.658.950 11.235.480
------------------- ------------ ------------- ------------
Piraeus Bank SA GreenLake-Phase 2.525.938
2 - 2.525.938
------------------- ------------ ------------- ------------
Marfin Bank Romania Praktiker Craiova - - 4.298.128
------------------- ------------ ------------- ------------
Kindergarten
Bancpost SA - SPDI RE - 773.206 912.790
------------------- ------------ ------------- ------------
Loans from other 3(rd)
parties and related
parties (Note 41.5) 387.683 177.473 738.742
------------ ------------- ------------
Overdrafts 499 1.420 6.581
------------ ------------- ------------
Total principal of
bank and non-bank Loans 388.182 21.603.342 29.570.622
------------------- ------------ ------------- ------------
Interest accrued on
bank loans 1 960.075 698.200
------------ ------------- ------------
Interests accrued on
non-bank loans 14.107 42.057 217.643
------------ ------------- ------------
Total 402.290 22.605.474 30.486.465
------------ ------------- ------------
31 Dec 2018 31 Dec 2018 31 Dec 2017
Continued Discontinued
operations operations
------------ ------------- ------------
EUR EUR EUR
------------ ------------- ------------
Current portion 22.034 1.652.875 5.162.087
------------ ------------- ------------
Non-current portion 380.256 20.952.599 25.324.378
------------ ------------- ------------
Total 402.290 22.605.474 30.486.465
------------ ------------- ------------
32. Borrowings (continued)
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. As at the end of
the reporting period the balance of the loan was EUR924.562 and
bears interest of EURIBOR 3M plus 5%. In June 2016, Banca
Comerciala Romana has assigned the loan, 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 8).
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 EUR614.441. 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 EUR191.723, 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 EUR10.658.950 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 EUR471.112 and bears interest of
EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution. The
loan matured in September 2023
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 EUR485.663, 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 EUR773.206 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 41.5).
32. Borrowings (continued)
) Loans from Directors reflects loans provided from 3 Directors
as bridge financing for future property acquisitions. The loans
bear interest 8% annually and are repayable on 31 March 2019. The
Directors have accepted the extension of the loans until year end
and relevant documentation process is currently in place.
) PM Capital Inc., one of the Company's largest shareholders
lent the Company in January 2018 EUR1m to be used for general
working capital purposes 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.
33. Bonds
The Company in order to acquire up to a 50% interest in a
portfolio of fully let logistics properties in Romania, the
Olympians Portfolio, (Notes 27 and 29.4) issued a financial
instrument, 35% of which consists of a convertible bond and 65% of
which is made up of a warrant. The convertible loan element of the
instrument which was in the value of EUR1.033.842 bears a 6,5%
coupon, has a 7 year term and is convertible into ordinary shares
of the Company at the option of the holder at 25p. starting from 1
January 2018.
34. Trade and other payables
The fair value of trade and other payables due within one year
approximate their carrying amounts as presented below.
31 Dec 2018 31 Dec 31 Dec
2018 2017
Continued Discontinued
operations operations
------------ ------------- ----------
EUR EUR EUR
------------ ------------- ----------
Payables to third parties 3.213.848 924.137 3.640.233
------------ ------------- ----------
Payables to related parties (Note 41.2) 743.139 - 2.673.808
------------ ------------- ----------
Deferred income from tenants - 8.316 39.431
------------ ------------- ----------
Accruals 94.905 150.324 459.690
------------ ------------- ----------
Payables due for construction - 417.826 408.436
------------ ------------- ----------
Pre-sale advances 123.044 - 116.501
------------ ------------- ----------
Total 4.174.936 1.500.603 7.338.099
------------ ------------- ----------
31 Dec 2018 31 Dec 31 Dec
2018 2017
Continued Discontinued
operations operations
------------- ------------- ----------
EUR EUR EUR
------------- ------------- ----------
Current portion 4.174.936 1.074.460 6.920.308
------------- ------------- ----------
Non-current portion - 426.143 417.791
------------- ------------- ----------
Total 4.174.936 1.500.603 7.338.099
------------- ------------- ----------
Payables to third parties represents: a) payables due to
Bluehouse Capital as a result the Redeemable Convertible Class B
share redemption (Note 29.6) which is under legal proceedings for a
final settlement (Note 42.4) 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.
Payables to related parties represent amounts due to directors
and accrued management remuneration, as well as the balances with
Secure Management Ltd and Grafton Properties (Note 41.2).
Furthermore as of 31 December 2017 an amount of EUR1.916.392
represents advances received by the investors who participated in
the warrant instrument issued by the Company in 2017 and for which
shares were issued during January 2018.
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 also include an amount of EUR245.000 payable to
Boyana's constructor which has been withheld as Good Performance
Guarantee.
Pre-sale advances reflect the advance received in relation to
Kiyanovskiy Residence pre-sale agreement which upon non closing of
the said sale part of which will be returned to the prospective
buyer.
35. Deposits from Tenants
31 Dec 31 Dec 2018 31 Dec
2018 2017
Continued Discontinued
operations operations
------------- ------------- --------
EUR EUR EUR
------------- ------------- --------
Deposits from tenants non-current - 219.274 187.976
------------- ------------- --------
Total - 219.274 187.976
------------- ------------- --------
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.
36. Provisions and Taxes Payables
31 Dec 2018 31 Dec 31 Dec
2018 2017
Continued Discontinued
operations operations
------------ ------------- ----------
EUR EUR EUR
------------ ------------- ----------
Corporate income tax - non current 333.881 - 489.019
------------ ------------- ----------
Defence tax - non current 28.129 15 24.373
------------ ------------- ----------
Other taxes including VAT payable -
non current - - 88.808
------------ ------------- ----------
Tax provision - non current 399.450 - 399.450
------------ ------------- ----------
Corporate income tax - current 620.557 67.296 195.040
------------ ------------- ----------
Other taxes including VAT payable -
current 31.767 365.217 418.819
------------ ------------- ----------
Provisions - current 43 66.002 51.047
------------ ------------- ----------
Total Provisions and Taxes Payables 1.413.827 498.530 1.666.556
------------ ------------- ----------
Corporate income tax represents taxes payable in Cyprus and
Romania.
Other taxes represent local property taxes and VAT payable in
Ukraine, Romania, Greece, Bulgaria and Cyprus.
Non-current amounts represent the part of the settlement plan
agreed with the Cyprus tax authorities to be paid within the next
five years.
37. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR10.076.579 and the current portion
of EUR393.433 (31 December 2017: EUR10.435.241 and EUR391.002,
accordingly).
Discontinued operations
31 Dec 2018 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- ---------- -----------
44.2
&
Less than one year 44.6 886.771 494.098 392.673
------- -------------- ---------- -----------
Between two and five years 3.666.346 1.768.504 1.897.842
------- -------------- ---------- -----------
More than five years 8.861.576 686.781 8.174.795
------- -------------- ---------- -----------
13.414.693 2.949.383 10.465.310
------- -------------- ---------- -----------
Accrued Interest 4.702
-------------- ---------- -----------
Total Finance Lease Liabilities 10.470.012
-------------- ---------- -----------
31 Dec 2017 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- ---------- -----------
44.2
&
Less than one year 44.6 899.834 508.853 390.981
------- -------------- ---------- -----------
Between two and five years 3.583.886 1.832.599 1.751.287
------- -------------- ---------- -----------
More than five years 9.747.325 1.064.231 8.683.094
------- -------------- ---------- -----------
14.231.045 3.405.683 10.825.362
------- -------------- ---------- -----------
Accrued Interest 881
-------------- ---------- -----------
Total Finance Lease Liabilities 10.826.243
-------------- ---------- -----------
37.1 Land Plots Financial Leasing
The Group holds land plots in Ukraine under leasehold agreements
which in terms of the accounts are classified as finance leases.
Lease obligations are denominated in UAH. The fair value of lease
obligations approximate to their carrying amounts as included
above. Following the appropriate discounting, finance lease
liabilities are carried at EUR60.498 under current and non-current
portion. The Group's obligations under finance leases are secured
by the lessor's title to the leased assets.
37. Finance Lease Liabilities (continued)
37.2 Sale and Lease Back Agreements
A. Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations
Logistics Park in Bucharest, owned by Best Day Real Estate Srl,
through a sale and lease back agreement with Piraeus Leasing
Romania SA. As at the end of the reporting period the balance is
EUR7.007.476, 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.
In late February 2017 the Group finally agreed and signed
(following twelve months of discussions) an amended sale and lease
back agreement with Piraeus Leasing Romania for Innovations
Logistics Park in Bucharest, governing the allocation of the Nestle
Romania, early termination fee of EUR1,6 million payable to
SPDI.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by N-E Real Estate Park First
Phase Srl, through a sale and lease back agreement with Alpha Bank
Romania SA. As at the end of the reporting period the balance is
EUR3.402.040 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.
38. Restructuring of the business
During 2016 the non-controlling shareholders of the companies
related to GreenLake project (Moselin Investments Srl, Iuliu Maniu
Limited, RAM Real Estate Management Limited, Rimasol Enterprises
Limited, Rimasol Real Estate Srl, Ashor Ventures Limited, Ashor
Development Srl, Ebenem Limited, Ebenem Investments Srl, Jenby
Ventures Limited and Jenby Investments Srl) in agreement with the
Group capitalized the bigger part of their capital injections by
means of shareholder loans and payables effected from 2008 onwards.
An amount of EUR6.641.997 from such loans and payables have been
transferred to the equity section while the process of
capitalization was partially finalised in 2017 with the remaining
finalised within 2018.
39. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
31 Dec 2018 31 Dec 2017
Issued ordinary shares capital 127.270.481 103.589.550
------------ ------------
Weighted average number of ordinary shares (Basic) 125.644.043 96.991.423
------------ ------------
Diluted weighted average number of ordinary shares 125.644.043 103.326.122
------------ ------------
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2018 31 Dec 2017
EUR EUR
------------ -------------
Loss after tax attributable to owners of the parent (3.752.481) (38.532.276)
------------ -------------
Basic (0,03) (0,40)
------------ -------------
Diluted (0,03) (0,37)
------------ -------------
39. Earnings and net assets per share attributable to equity
holders of the parent (continued)
c. Net assets per share
Net assets per share 31 Dec 2018 31 Dec 2017
EUR EUR
------------ ------------
Net assets attributable to equity holders of the parent 35.608.276 36.350.558
------------ ------------
Number of ordinary shares 127.270.481 103.589.550
------------ ------------
Diluted number of ordinary shares 125.644.043 103.589.550
------------ ------------
Basic 0,28 0,35
------------ ------------
Diluted 0,28 0,35
------------ ------------
40. Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment - Victini Logistics, Innovations Logistics
Park, Terminal Brovary Logistics Park
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - Craiova Praktiker and Kindergarten of GreenLake
Residential
-- Residential segment
Land Assets
-- Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent
investment property (including investment properties under
development and prepayments made for the investment properties).
Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
Continued Operations
Profit and Loss for the year 2018
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- ------------- ------------ ------------- ---------- -------------
Segment profit
---------- ---------- ------------- ------------ ------------- ---------- -------------
Property Sales - - 6.517.181 - - - 6.517.181
income (Note 14)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Cost of Property - - (7.362.362) - - - (7.362.362)
sold (Note 14)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Rental income (Note10) - - 494.347 - - 137.289* 631.636
---------- ---------- ------------- ------------ ------------- ---------- -------------
Service charges
and utilities income
(Note 10) - - - - - 9.534* 9.534
---------- ---------- ------------- ------------ ------------- ---------- -------------
Service and Property
Management income
(Note 10) - - - - - 128.293 128.293
---------- ---------- ------------- ------------ ------------- ---------- -------------
Asset operating
expenses
(Note 11) - - (116.770) - (1.549) - (118.319)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Profit from
discontinued
operation (Note
9) 934.156 1.377.516 68.206 (317.594) (1.501.833) - 560.451
---------- ---------- ------------- ------------ ------------- ---------- -------------
Segment profit 934.156 1.377.516 (399.398) (317.594) (1.503.382) 275.116 366.414
---------- ---------- ------------- ------------ ------------- ---------- -------------
Administration
expenses
(Note 12) (1.768.847)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Other
(expenses)/income,
net (Note 16) (31.716)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Finance income
(Note 17) 686.183
---------- ---------- ------------- ------------ ------------- ---------- -------------
Interest expenses
(Note 17) (329.412)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Other finance costs
(Note 17) (24.329)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Foreign exchange
losses, net (Note
18a) (71.390)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Income tax expense
(Note 19) (613.034)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Profit from
discontinued
operations (Note
9) (1.966.350)
---------- ---------- ------------- ------------ ------------- ---------- -------------
Exchange difference
on I/C loan to
foreign holdings
(Note 18b) 1.850
---------- ---------- ------------- ------------ ------------- ---------- -------------
Exchange difference
on translation
foreign holdings
(Note 30) 421.086
---------- ---------- ------------- ------------ ------------- ---------- -------------
Total Comprehensive
Income (3.329.545)
---------- ---------- ------------- ------------ ------------- ---------- -------------
40. Segment information (continued)
* 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 year 2017
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR
----------- ----------- ---------- ------------ ----------- ---------- -------------
Segment profit
----------- ----------- ---------- ------------ ----------- ---------- -------------
Rental income (Note
10) 386.245 - 600.503 - - 986.748
----------- ----------- ---------- ------------ ----------- ---------- -------------
Service charges
and utilities income
(Note 10) 30.206 - - - - 30.206
----------- ----------- ---------- ------------ ----------- ---------- -------------
Service and Property
Management income
(Note 10) 928.697 - - 223.080 11.771 1.163.548
----------- ----------- ---------- ------------ ----------- ---------- -------------
Valuation gains/(losses)
from investment
property (Note
13) - - 194.720 - (13.618) 181.102
----------- ----------- ---------- ------------ ----------- ---------- -------------
Gain on disposal
of subsidiary (Note
21b) (221.990) - - - 1.705.727 1.483.737
----------- ----------- ---------- ------------ ----------- ---------- -------------
Asset operating
expenses
(Note 11) (34.581) - (84.768) - (3.912) (123.261)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Impairment of inventory
and provisions
(Note 15) - - - - 150.000 150.000
----------- ----------- ---------- ------------ ----------- ---------- -------------
Profit from discontinued
operation (Note
9) (16.008) 1.497.628 591.381 (322.927) 586.044 - 2.336.118
----------- ----------- ---------- ------------ ----------- ---------- -------------
Segment profit 1.072.569 1.497.628 1.301.836 (99.847) 2.424.241 11.771 6.208.198
----------- ----------- ---------- ------------ ----------- ---------- -------------
Administration
expenses
(Note 12) (1.994.481)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Other (expenses)/income,
net (Note 16) (378.076)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Finance income
(Note 17) 3.563
----------- ----------- ---------- ------------ ----------- ---------- -------------
Interest expenses
(Note 17) (306.549)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Other finance costs
(Note 17) (82.942)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Profit from discontinued
operations (Note
9) (3.409.768)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Foreign exchange
losses, net (Note
18a) (695.043)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Forex transfer
on disposal of
foreign operation
(Note 18b) (37.352.923)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Income tax expense
(Note 19) (524.255)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Exchange difference
on I/C loan to
foreign holdings
(Note 18b) 37.349.385
----------- ----------- ---------- ------------ ----------- ---------- -------------
Exchange difference
on translation
foreign holdings
(Note 30) (615.583)
----------- ----------- ---------- ------------ ----------- ---------- -------------
Total Comprehensive
Income (1.798.474)
----------- ----------- ---------- ------------ ----------- ---------- -------------
40. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2018
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
----------- ----------- ---------- ------------ ------------ ---------- -------------
Segment profit
----------- ----------- ---------- ------------ ------------ ---------- -------------
Property Sales
income (Note 14) - - 271.437 1.227.954 194.952 - 1.694.343
----------- ----------- ---------- ------------ ------------ ---------- -------------
Cost of Property
sold (Note 14) - - (350.000) (1.265.023) (141.098) - (1.756.121)
----------- ----------- ---------- ------------ ------------ ---------- -------------
Rental income (Note
10) 1.214.772 598.123 115.625 34.507 697 - 1.963.724
----------- ----------- ---------- ------------ ------------ ---------- -------------
Service charges
and utilities income
(Note 10) 36.365 78.015 - 3.352 479 - 118.211
----------- ----------- ---------- ------------ ------------ ---------- -------------
Sale of electricity
(Note 10) 294.773 - - - - - 294.773
----------- ----------- ---------- ------------ ------------ ---------- -------------
Service and Property
Management income
(Note 10) - - - 2.167 - - 2.167
----------- ----------- ---------- ------------ ------------ ---------- -------------
Valuation gains/(losses)
from investment
property (Note
13) (289.633) 422.971 44.642 1.361 (1.397.638) - (1.218.297)
----------- ----------- ---------- ------------ ------------ ---------- -------------
Share of
profits/(losses)
from associates
(Note 22) - 364.920 - - - - 364.920
----------- ----------- ---------- ------------ ------------ ---------- -------------
Asset operating
expenses
(Note 11) (322.122) (86.513) (13.498) (24.711) (159.225) - (606.069)
----------- ----------- ---------- ------------ ------------ -------------
Other (expenses)/income,
net (Note 16) - - - (297.200) (297.200)
----------- ----------- ---------- ------------ ------------ ---------- -------------
Segment profit 934.155 1.377.516 68.206 (317.593) (1.501.833) - 560.451
----------- ----------- ---------- ------------ ------------ ---------- -------------
Administration
expenses
(Note 12) (260.714)
----------- ----------- ---------- ------------ ------------ ---------- -------------
Other (expenses)/income,
net (Note 16) (66.235)
Finance income
(Note 17) 9.979
----------- ----------- ---------- ------------ ------------ ---------- -------------
Interest expenses
(Note 17) (1.507.178)
----------- ----------- ---------- ------------ ------------ ---------- -------------
Other finance costs
(Note 17) (35.402)
----------- ----------- ---------- ------------ ------------ ---------- -------------
Foreign exchange
losses, net (Note
18a) (10.233)
----------- ------------ ------------ -------------
Income Tax (Note
19) (96.567)
----------- ------------ ------------ -------------
Loss for the year (1.405.899)
----------- ----------- ---------- ------------ ------------ ---------- -------------
40. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2017
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------- ---------- --------- ------------ -----------
Segment profit
------------- ---------- --------- ------------ -----------
Property Sales
income (Note 14) - - - 535.818 - - 535.819
------------- ---------- --------- ------------ -----------
Cost of Property
sold (Note 14) - - - (575.323) - - (575.324)
------------- ---------- --------- ------------ -----------
Rental income (Note
10) 1.227.266 581.567 76.676 99.550 - - 1.985.059
------------- ---------- --------- ------------ -----------
Service charges
and utilities income
(Note 10) 36.092 75.550 - 24.294 - - 135.936
------------- ---------- --------- ------------ -----------
Sale of electricity
(Note 10) 321.365 - - - - - 321.365
------------- ---------- --------- ------------ -----------
Service and Property
Management income
(Note 10) - 900 - 2.206 - - 3.106
------------- ---------- --------- ------------ -----------
Valuation gains/(losses)
from investment
property (Note
13) (1.234.463) 524.922 491.571 (368.642) 732.471 - 145.859
------------- ---------- --------- ------------ -----------
Gain/(loss) realized
on acquisition
of assets/subsidiary
(Note 21a) - - 23.921 - - - 23.921
------------- ---------- --------- ------------ -----------
Share of profits/(losses)
from associates
(Note 22) - 390.217 - - - - 390.217
------------- ---------- --------- ------------ -----------
Asset operating
expenses
(Note 11) (366.268) (75.528) (788) (40.831) (146.427) - (629.842)
------------- ---------- --------- ------------ -----------
Segment profit (16.008) 1.497.628 591.380 (322.928) 586.044 - 2.336.116
------------- ---------- --------- ------------ -----------
Administration
expenses
(Note 12) (353.532)
------------- ---------- --------- ------------ -----------
Other (expenses)/income,
net (Note 16) 2.668
------------- ---------- --------- ------------ -----------
Finance income
(Note 17) 9.813
------------- ---------- --------- ------------ -----------
Interest expenses
(Note 17) (1.623.033)
------------- ---------- --------- ------------ -----------
Other finance costs
(Note 17) (38.255)
------------- ---------- --------- ------------ -----------
Foreign exchange
losses, net (Note
18a) (1.335.517)
------------- ---------- --------- ------------ -----------
Income tax expense
(Note 19) (71.910)
------------- ---------- --------- ------------ -----------
Loss for the year (1.073.650)
------------- ---------- --------- ------------ -----------
Total Operations
Balance Sheet as at 31 December 2018
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------ ------------ ----------- ------------- ------------ ---------- -----------
Assets
------------ ------------ ----------- ------------- ------------ ---------- -----------
Long-term receivables
and prepayments - - - - - 850 850
Assets held
for sale 26.070.000 13.229.506 1.406.000 5.767.003 30.816.594 2.389.635 79.678.738
------------ ------------ ----------- ------------- ------------ ---------- -----------
Segment assets 26.070.000 13.229.506 1.406.000 5.767.003 30.816.594 2.390.485 79.679.588
------------ ------------ ----------- ------------- ------------ ---------- -----------
Tangible and
intangible assets 3.674
Prepayments
and other current
assets 5.585.408
-------- --------- ---------- ----------- -------------
Cash and cash
equivalents 282.713
-------- --------- ---------- ----------- -------------
Total assets 85.551.383
-------- --------- ---------- ----------- -------------
Liabilities
associated with
assets classified
as held for
disposal 17.882.585 4.079.598 967.338 618.113 9.747.126 1.999.133 35.293.893
------------ ----------- -------- --------- ---------- ----------- -------------
Borrowings - - - 41 459 401.790 402.290
------------ ----------- -------- --------- ---------- ----------- -------------
Segment liabilities 17.882.585 4.079.598 967.338 618.154 9.747.585 2.400.923 35.696.183
------------ ----------- -------- --------- ---------- ----------- -------------
Trade and other
payables 4.174.936
-------- --------- ---------- ----------- -------------
Taxes payable
and provisions 1.413.827
-------- --------- ---------- ----------- -------------
Bonds 1.122.470
-------- --------- ---------- ----------- -------------
Total liabilities 42.407.416
40. Segment information (continued)
Total Operations
Balance Sheet as at 31 December 2017
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR
----------- ----------- ---------- ------------ ----------- ---------- -----------
Assets
----------- ----------- ---------- ------------ ----------- ---------- -----------
Investment properties 26.100.000 7.200.000 9.213.000 4.023.000 28.196.502 - 74.732.502
----------- ----------- ---------- ------------ ----------- ---------- -----------
Investment properties
under development - - - - 4.586.009 - 4.586.009
----------- ----------- ---------- ------------ ----------- ---------- -----------
Long-term receivables
and prepayments 315.636 - - 301 - 851 316.788
Investments
in associates - 5.115.587 - - - - 5.115.587
----------- ----------- ---------- ------------ ----------- ---------- -----------
Inventory - - - 4.812.550 - - 4.812.550
----------- ----------- ---------- ------------ ----------- ---------- -----------
Segment assets 26.415.636 12.315.587 9.213.000 8.835.851 32.782.511 851 89.563.436
----------- ----------- ---------- ------------ ----------- ---------- -----------
Tangible and
intangible assets 70.504
Prepayments
and other current
assets 5.846.584
----------- ---------- ---------- ---------- ---------- -------- -----------
Cash and cash
equivalents 831.124
----------- ---------- ---------- ---------- ---------- -------- -----------
Total assets 96.311.648
----------- ---------- ---------- ---------- ---------- -------- -----------
Borrowings 11.263.690 828.797 5.412.006 8.745.351 3.642.295 594.326 30.486.465
----------- ---------- ---------- ---------- ---------- -------- -----------
Finance lease
liabilities 7.157.476 3.629.853 - - 38.914 - 10.826.243
----------- ---------- ---------- ---------- ---------- -------- -----------
Deposits from
tenants 180.621 - - 7.355 - - 187.976
----------- ---------- ---------- ---------- ---------- -------- -----------
Redeemable preference
shares - - - - - - -
----------- ---------- ---------- ---------- ---------- -------- -----------
Segment liabilities 18.601.787 4.458.650 5.412.006 8.752.706 3.681.209 594.326 41.500.684
----------- ---------- ---------- ---------- ---------- -------- -----------
Trade and other
payables 7.338.099
----------- ---------- ---------- ---------- ---------- -------- -----------
Taxes payable
and provisions 1.666.556
----------- ---------- ---------- ---------- ---------- -------- -----------
Bonds 1.054.337
Total liabilities 51.559.676
Discontinued operations
Assets and Liabilities held for sale 2018
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
----------- ----------- ----------- ------------ ------------ ----------- ------------
Assets
----------- ----------- ----------- ------------ ------------ ----------- ------------
Investment properties 25.800.000 7.916.000 1.406.000 1.038.000 26.100.437 1.085.100 63.345.537
----------- ----------- ----------- ------------ ------------ ----------- ------------
Investment properties
under development - - - - 4.716.157 - 4.716.157
----------- ----------- ----------- ------------ ------------ ----------- ------------
Long-term receivables
and prepayments 270.000 271 - - - - 270.271
Investments
in associates - 5.313.235 - - - - 5.313.235
----------- ----------- ----------- ------------ ------------ ----------- ------------
Financial asset
at fair value
through OCI 1 1
----------- ----------- ----------- ------------ ------------ ----------- ------------
Inventory - - - 4.604.044 - - 4.604.044
----------- ----------- ----------- ------------ ------------ ----------- ------------
Segment assets 26.070.000 13.229.506 1.406.000 5.642.045 30.816.594 1.085.100 78.249.245
----------- ----------- ----------- ------------ ------------ ----------- ------------
Tangible and
intangible assets 42.534
Prepayments
and other current
assets 682.134
------------ ----------- --------- --------- ---------- --- ------------
Cash and cash
equivalents 704.825
------------ ----------- --------- --------- ---------- --- ------------
Total assets 79.678.738
------------ ----------- --------- --------- ---------- --- ------------
Borrowings 10.658.951 677.558 967.338 614.999 9.686.628 - 22.605.474
------------ ----------- --------- --------- ---------- --- ------------
Finance lease
liabilities 7.007.474 3.402.040 - - 60.498 - 10.470.012
------------ ----------- --------- --------- ---------- --- ------------
Deposits from
tenants 216.160 - - 3.114 - - 219.274
------------ ----------- --------- --------- ---------- --- ------------
Segment liabilities 17.882.585 4.079.598 967.338 618.113 9.747.126 - 33.294.760
------------ ----------- --------- --------- ---------- --- ------------
Trade and other
payables 1.500.603
------------ ----------- --------- --------- ---------- --- ------------
Taxes payable
and provisions 498.530
------------ ----------- --------- --------- ---------- --- ------------
Total liabilities 35.293.893
40. Segment information (continued)
Geographical information
31 Dec 2018 31 Dec 31 Dec
2018 2017
Income (Note 10) Continued Discontinued
operations operations
------------ ------------- ----------
EUR EUR EUR
------------ ------------- ----------
Ukraine - - 148.799
------------ ------------- ----------
Romania 594.566 1.098.059 1.939.048
------------ ------------- ----------
Greece - 1.280.119 1.319.891
------------ ------------- ----------
Bulgaria - 697 10.509
------------ ------------- ----------
Cyprus * 174.897 - 1.207.723
------------ ------------- ----------
Total 769.463 2.378.875 4.625.970
------------ ------------- ----------
* It is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through
the SPV, is planned to be transferred as part of the transaction
with Arcona Property Fund N.V. Upon a final agreement for such
transfer, the Company will negotiate with the lender its release
from the aforementioned lease agreement, and if succeeds, upon
completion such income will be also transferred.
Loss from disposal of inventory (Note 31 Dec 2018 31 Dec 31 Dec
14a) 2018 2017
------------ ------------- ----------
Continued Discontinued
operations operations
------------ ------------- ----------
EUR EUR EUR
------------ ------------- ----------
Bulgaria - (13.553) (43.870)
------------ ------------- ----------
Total - (13.553) (43.870)
------------ ------------- ----------
Gain/(loss) from disposal of investment 31 Dec 2018 31 Dec 31 Dec
properties (Note 14b) 2018 2017
------------ ------------- ----------
Continued Discontinued
operations operations
------------ ------------- ----------
EUR EUR EUR
------------ ------------- ----------
Romania (845.181) (285.098) 4.366
------------ ------------- ----------
Total (845.181) (285.098) 4.366
------------ ------------- ----------
31 Dec 2018 31 Dec 31 Dec
2018 2017
Continued Discontinued
operations operations
EUR EUR EUR
----------- -----------
Carrying amount of assets (investment
properties, associates, inventory and
Financial asset at fair value through
OCI)
Ukraine - 10.829.694 10.589.511
----------- -----------
Romania - 42.917.588 53.514.587
Greece - 15.200.000 16.100.000
----------- -----------
Bulgaria - 8.834.044 9.042.550
Total - 77.781.326 89.246.648
41. Related Party Transactions
The following transactions were carried out with related
parties:
41.1 Income/ Expense
41.1.1 Income
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
EUR EUR
Interest Income on loan to related parties 4.600 - 2.466
Interest Income from loan to associates 325 9.366 9.367
Total 4.925 9.366 11.833
Interest income on loan to related parties relates to interest
income from Delia Lebada Srl and interest income from associates
relates to interest income from GreenLake Development Srl.
41. Related Party Transactions (continued)
41.1 Income/ Expense (continued)
41.1.2 Expenses
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
EUR EUR EUR
Management Remuneration (Note 12) 391.359 - 562.584
Interest expenses on Narrowpeak and Secure
Management Limited loan (Note 17) 637 - 8.392
Total 391.996 - 570.976
Management remuneration includes the remuneration of the CEO,
the CFO, the Group Commercial Director, the Group Investment
Director (until his departure in April 2017) and that of the
Country Managers of Ukraine and Romania pursuant to the decisions
of the remuneration committee.
41.2 Payables to related parties (Note 34)
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
EUR EUR EUR
Board of Directors & Committees remuneration 80.776 231.461
Grafton Properties 123.549 - 123.549
Secure Management Services Ltd 19.319 13.341
------------
Management Remuneration 519.495 - 387.464
Advances for warrants and options exercise - - 1.917.993
Total 743.139 - 2.673.808
41.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to
Non-Executive Directors until the end of the reporting period. The
members of the Board of Directors pursuant to a recommendation by
the remuneration committee and in order to facilitate the Company's
cash flow, 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.
41.2.2 Loan payable to Grafton Properties
During the Company restructuring in 2011 and under the
Settlement Agreement of July 2011, the Company undertook the
obligation to 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.
41.2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO of the Company.
41.2.4 Advances for warrants and options exercise
During 2017 (Note 29.4) the Company issued a warrant instrument
and received by investors the amount of EUR1.916.392 for which it
issued 17.066.560 ordinary shares during 2018. The Company issued
also 10.000 shares to an ex-employee for exercise of his option for
the amount of EUR1.601.
41.3 Loans from SC Secure Capital Limited to the Group's
subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs. The following table presents the amounts of such
loans which are eliminated for consolidation purposes, but their
related exchange difference affects the equity of the Consolidated
Statement of Financial Position.
Borrower Limit Principal Principal
-as at as at as at
31 Dec 31 Dec 31 Dec
2018 2018 2017
EUR EUR EUR
---------
LLC "Aisi Ukraine" 23.062.351 21.711 12.488
----------- --------- ---------
LLC "Almaz-Press-Ukraine" 8.236.554 189.938 58.656
----------- --------- ---------
LLC "Aisi Ilvo" 150.537 78.890 66.897
----------- --------- ---------
Total 31.449.442 290.539 138.041
----------- --------- ---------
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 (EUR23.950)/ EUR13.804 respectively, estimated on balances held
at 31 December 2018.
41. Related Party Transactions (continued)
41.4 Loans to associates (Note 27)
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
EUR EUR EUR
Loans to GreenLake Development Srl 8.374 282.842 273.476
------------
Total 8.374 282.842 273.476
The loan was given to GreenLake Development Srl from Edetrio
Holdings Limited. The agreement with Edetrio Holdings Limited was
signed on 17 February 2012 and bears interest 5%. The maturity date
is 30 April 2020.
41.5 Loans from related parties (Note 32)
31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
EUR EUR EUR
Loan from Narrowpeak Consultants 5.256 - 55.032
Loan from Directors 375.000 - 500.000
Interest accrued on loans from related
parties 14.107 - 27.298
Total 394.363 - 582.330
Loans from Directors reflects loans provided from 3 Directors as
bridge financing for future property acquisitions. The loans bear
interest 8% annually and are repayable on 31 March 2019. The
Directors have accepted the extension of the loans until year end
and relevant documentation process is currently in place.
42. Contingent Liabilities
42.1 Tax Litigation
The Group performed during the reporting period part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may
remain open for longer. Overall following the sale of Terminal
Brovary the exposure of the Group in Ukraine was significantly
reduced.
The Group performed during the reporting period part of its
operations also in Romania, Greece and Bulgaria. In respect of
Romanian, Bulgarian and Greek taxation systems all are subject to
varying interpretation and to constant changes, which may be
retroactive. In certain circumstances the tax authorities can be
arbitrary in certain cases.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
developed tax systems. Management believes that it has 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 consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant.
42.2 Construction related litigation
There are no material claims from contractors due to the
postponement of projects or delayed delivery other than those
disclosed in the financial statements.
42.3 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
(Note 20.2). 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 (Note 21b).
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 (Note 15).
42. Contingent Liabilities (continued)
42.4 Bluehouse accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. filed in
Cypriot courts in December 2018 lawsuit against the Company for the
total amount of EUR5.042.421,87, in relation to the Praktiker
Craiova acquisition in 2015, and the redemption of the Redeemable
Preference Class A shares which were issued as part of the
transaction to the vendor. The redemption of such shares was
requested in 2016, and in lieu of such redemption the Company
transferred to the vendor the 20% holding in Autounion asset which
was used as a guarantee to the transaction for the effective
redemption of the Redeemable Preference Class A shares. At the same
time the Company has posted in its accounts a relevant payable
provision for BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. in
the amount of EUR2.521.211 (Note 34). Management believes the
Company has good grounds of defence and the amount already provided
is adequate to cover an eventual final settlement.
42.5 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.
42.6 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2018.
43. Commitments
The Group had no other commitments as at 31 December 2018.
44. Financial Risk Management
44.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will
be able to implement its stated growth strategy in order to
maximize the return to stakeholders through the optimization of the
debt-equity structure and value enhancing actions in respect of its
portfolio of investments. The capital structure of the Group
consists of borrowings (Note 32), bonds (Note 33), trade and other
payables (Note 34) deposits from tenants (Note 35), financial
leases (Note 37), taxes payable (Note 36) and equity attributable
to ordinary or preferred shareholders.
Management reviews the capital structure on an on-going basis.
As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each
investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of
equity (issuance of shares to the Group's shareholders) or in the
form of debt. Management balances the capital structure of the
Group with a view of maximizing the shareholder's Return on Equity
(ROE) while adhering to the operational requirements of the
property assets and exercising prudent judgment as to the extent of
gearing.
44.2 Categories of Financial Instruments
Note 31 Dec 31 Dec 31 Dec
2018 2018 2017
Continued Discontinued
operations operations
EUR EUR EUR
Financial Assets
Cash at Bank 28 282.713 704.825 831.124
Long-term Receivables and prepayments 25 850 270.271 316.788
Prepayments and other receivables 27 5.585.408 682.134 5.846.584
Financial Asset at fair value through
OCI 23 - 1 -
Total 5.868.971 1.657.231 6.994.496
Financial Liabilities
Borrowings 32 402.290 22.605.474 30.486.465
Trade and other payables 34 4.174.936 1.500.603 7.338.099
Deposits from tenants 35 - 219.274 187.976
Finance lease liabilities 37 - 10.470.012 10.826.243
Taxes payable and provisions 36 1.413.827 498.530 1.666.556
Bonds 33 1.122.470 - 1.054.337
Total 7.113.523 35.293.893 51.559.676
44. Financial Risk Management (continued)
44.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk, as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not
entered into any derivative contracts.
44.4 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 December 31(st) , 2018,
cash and cash equivalent (including continued and discontinued
operations) financial assets amounted to EUR987.537 (2017:
EUR831.124) of which approx. EUR1.569 in UAH and EUR496.891 in RON
(Note 28) while the remaining are mainly denominated in either USD
or EUR.
The Group is exposed to interest rate risk in relation to its
borrowings (including continued and discontinued operations)
amounting to EUR23.007.764 (31 December 2017: EUR30.486.465) as
they are issued at variable rates tied to the Libor or Euribor.
Management monitors the interest rate fluctuations on a continuous
basis and evaluates hedging options to align the Group's strategy
with the interest rate view and the defined risk appetite. Although
no hedging has been applied for the reporting period, such may take
place in the future if deemed necessary in order to protect the
cash flow of a property asset through different interest rate
cycles.
Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's
strategy with the interest rate view and the defined risk appetite.
Although no hedging has been applied for the reporting period, such
may take place in the future if deemed necessary in order to
protect the cash flow of a property asset through different
interest rate cycles.
As at 31 December 2018 the weighted average interest rate for
all the interest bearing borrowing and financial leases of the
Group stands at 3,83% (31 December 2017: 4,67%).
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 sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2017 is presented below:
Actual +100 bps +200 bps
as at 31.12.2017
Weighted average interest
rate 4,67% 5,67% 6,67%
Influence on yearly finance
costs (403.580) (807.159)
The Group's exposures to financial risk are discussed also in
Note 7.
44.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. 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.
44. Financial Risk Management (continued)
44.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which applies a framework for the Group's
short, medium and long term funding and liquidity management
requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and
budgets while maintaining adequate reserves. The following table
details the Group's contractual maturity of its financial
liabilities. The tables below have been drawn up based on the
undiscounted contractual maturities including interest that will be
accrued.
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 1.262.552 1.752.291 (850.999) 1.234.300 1.368.990
----------- -----------
Discontinued Operations
31 December 2018 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
----------- -----------
Financial assets
----------- -----------
Cash at Bank 704.825 704.825 704.825 - -
----------- -----------
Prepayments and other
receivables 682.134 682.134 682.134 - -
----------- -----------
Financial asset at
fair value through
OCI 1 1 1 - -
----------- -----------
Long-term Receivables
and prepayments 270.271 270.271 - - 270.271
----------- -----------
Total Financial assets 1.657.231 1.657.231 1.386.960 - 270.271
-----------
Financial liabilities
----------- -----------
Borrowings 22.605.474 22.387.725 4.817.752 2.784.025 14.785.948
----------- -----------
Trade and other payables 1.500.603 1.500.603 1.074.460 - 426.143
-----------
Deposits from tenants 219.274 219.274 - - 219.274
----------- -----------
Finance lease liabilities 10.470.012 13.414.693 886.771 856.269 11.671.653
----------- -----------
Taxes payable and
provisions 498.530 498.530 452.665 45.865 -
----------- -----------
Total Financial liabilities 35.293.893 38.020.825 7.231.648 3.686.159 27.103.018
-----------
Total net liabilities 33.636.662 36.363.594 5.844.688 3.686.159 26.832.747
----------- -----------
44. Financial Risk Management (continued)
44.6 Liquidity Risk Management
31 December 2017 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 831.124 831.124 831.124 - -
----------- -----------
Prepayments and other
receivables 5.846.584 5.846.584 5.846.584 - -
----------- -----------
Long-term Receivables
and prepayments 316.788 316.788 - - 316.788
----------- -----------
Total Financial assets 6.994.496 6.994.496 6.677.708 - 316.788
----------- -----------
Financial liabilities
----------- -----------
Borrowings 30.486.465 30.486.465 5.162.087 4.072.514 21.251.864
----------- -----------
Trade and other payables 7.338.099 7.338.099 6.920.308 - 417.791
----------- -----------
Deposits from tenants 187.976 187.976 - - 187.976
----------- -----------
Finance lease liabilities 10.826.243 14.231.045 899.834 880.913 12.450.298
----------- -----------
Bonds issued 1.054.337 1.054.337 20.495 - 1.033.842
----------- -----------
Taxes payable and
provisions 1.666.556 1.666.556 664.906 1.001.650 -
----------- -----------
Total Financial liabilities 51.559.676 54.964.478 13.667.630 5.955.077 35.341.771
----------- -----------
Total net liabilities 44.565.180 47.969.982 6.989.922 5.955.077 35.024.983
----------- -----------
45. 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 been engaged in extensive
discussions for formulating the transaction which has been decided
to be consummated in three steps.
During H1 2019, the parties conducted mutual due diligence,
engaged in extensive discussions with the lending institutions from
which relevant waivers and approvals have been requested, and
performed third party property valuations. Currently the parties
negotiate terms for the Framework Agreement, which will superintend
the total process, and the transaction terms of the first step of
the transaction which includes assets in Ukraine and Bulgaria. The
first step of the transaction is expected to close within July 2019
and the overall transaction to be finalized within the current
year.
b) Loans from shareholders
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. In particular the Company borrowed from Badoli
Investments Limited the amount of EUR200.000 at 8% interest rate
payable by 30 June 2019, and from Mount Nelson S.A. the amount of
EUR300.000 at 8% interest rate payable by 30 June 2019. For both
loans there is an agreement for an extension of a short term
period.
c) Sale of Victini Logistics Park S.A.
Following receipt of a number of expressions of interest, the
Company is in the final stages of negotiations with one particular
party with regards to signing an agreement, subject to a number of
conditions precedent, including all necessary approvals being
granted, to sell Victini Logistics Park S.A. - finalization of the
agreement expected to occur during July 2019, which will then be
followed by negotiations on definitive documentation.
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
FR BDGDLRBDBGCI
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