TIDMSPDI
RNS Number : 5563D
Secure Property Dev & Inv PLC
30 June 2021
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
30 June 2021
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
2020 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 2020.
Operational Highlights
Advancing strategy to realise value of South Eastern European
property portfolio despite ongoing disruption caused by
Covid-19:
-- Central to strategy continues to be the staged transfer of
remaining property portfolio to Arcona Property Fund N.V. (Arcona),
to create a significant European focused property company
o Arcona transaction values the SPDI assets to be transferred at
EUR29m, or three times the current market value of the Company as a
whole
o Arcona is an Amsterdam and Prague listed company which invests
in commercial property in Central Europe
-- Stage 1 completed in 2019 and involved exchange of two land
plots in Ukraine, Bella and Balabino plots, and the Boyana asset in
Bulgaria together with its attached debt, for a total of 593.534
Arcona shares and 144.264 warrants over Arcona shares
-- Stage 2 discussions impacted by Covid-19 but activity picked
up in H2 2020 resulting in post period end signing of relevant
transaction agreements in June 2021
-- Stage 2 involves transfer of certain SPDI assets in Romania
and Ukraine in exchange for Arcona shares and warrants and EUR1m
cash
o Total estimated EUR8.2 million value of Stage 2 alone is
almost at par with SPDI's overall current market capitalisation,
highlighting significant divergence between real asset value within
the Company and market value of the Company
-- Closing of the Stage 2 expected to take place in H2 2021
o Discussions regarding Stage 3 will commence on closing of
Stage 2
Financial Highlights
Significant asset backing:
o NAV per share of GBP 0.17 as at 31 December 2020 compared to
GBP as 0.2 as at 31 December 2019, with most of the drop reflecting
(COVID induced) property valuation declines
o Current share price trading at a ca. 63% discount to NAV per
share
Resilience of income generating portfolio:
-- FY 2020 operating income EUR2.12 million (FY2019:
EUR2.3million) highlights resilience of income generating portfolio
which is largely let out to tenants operating in defensive sectors
such food and telco
-- 74% increase in operating income from continued operations to
EUR795,700 compared to EUR457,450 in 2019 after taking into account
2019 sale of Victini and Boyana assets
-- Significant improvement in EBITDA on continued operations
reducing the loss by half from EUR1,307,507 in 2019 to EUR654,134
in 2020
-- Improvement in operating loss after finance and tax for the
year closed of - EUR1m compared to -EUR1,1m in 2019
-- 45% reduction in FY finance costs to EUR0.6m compared to
EUR1.1m in FY 2019 following the disposal of Victini and Boyana
assets in 2019
Lambros G. Anagnostopoulos, Chief Executive Officer, said , "To
be able to report across the board improvements at the operating
income and EBITDA levels for our continued operations is a
creditable outcome in any year but particularly during one that was
dominated by pandemic and lockdowns that substantially affected the
global real estate markets The positive operational performance is
testament to the resilience of our income generating properties,
all of which are now located in Romania, the defensive sectors in
which our tenants operate and the extra effort by the management
team who ensured that all necessary response moves to counter any
pandemic effects were made in time.
"NAV per share almost three times higher than our current market
cap, highlights the strong asset backing behind the Company. It
also highlights the disconnect between how the industry and how the
market value our portfolio. The primary aim of the Arcona
transaction, which values the SPDI's assets that are to be
transferred at EUR29m, or three times the current market value of
the Company as a whole, is to create a significant European focused
property company, but it will, in our view, serve to confirm that
the industry valuation of our portfolio of prime real estate is
much closer to the mark than that of the market's. With this in
mind, the estimated EUR8.2 million consideration we are due to
receive at closing of Stage 2 n Arcona shares, warrants and in
cash, will be an important milestone for our shareholders."
Chairman's Statement
The global pandemic that came upon the world early in 2020
affected life, health and businesses alike, and caused substantial
delays in our efforts to merge with Arcona Property Fund ("APF"),
the Central European property fund listed in Amsterdam. While
SPDI's assets were largely unaffected by the pandemic, both due to
their "covid-resistant" tenancy selection in the food and telco
sectors, and due to the immediate and steady response of our
directors and management, Arcona Property Fund experienced a higher
degree of covid-related impact. Nevertheless, as the pandemic seems
to be subsiding, we expect the favorable fundamentals of our target
markets to help lead a pan-European economic resurgence. As we
managed to sign the Stage 2 documents just before this annual
report was issued, we are confident the APF transaction, still the
preferred option for generating value for our shareholders, will
now move forward at a speedier pace. The Company's management and
board are committed to generating value for our shareholders in
markets that are strong and growing and, no matter the temporary
difficulties, will attempt to do whatever is necessary to realize
that end.
Michael Beys
Chairman of the Board
Copies of the Annual report and Accounts are being posted to
Shareholders today and are available on the Company's website at
www.secure-property.eu .
* *S * *
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Ritchie Balmer
Georgia Langoulant
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. Letter to Shareholders
28 June 2021
Dear Shareholders,
AS already presented to you last July, 2020 was to be the year
when the merger with the Amsterdam and Prague listed Arcona
Property Fund N.V. (APF - with assets in Poland, Czech Republic and
Slovakia) would have been finalised, confirming SPDI's strategy to
establish itself as the regional property company of reference in
South Eastern Europe and offering to our shareholders exposure to a
much larger and broader East European regional property company, as
per our original plan and additional liquidity in the shares. While
the complication of joining forces in six different jurisdictions,
with corporate entities in two additional ones, proved an obstacle
difficult to overcome (meaning that by the end of 2019, SPDI and
APF had only closed one sixth of the transaction), the pandemic
then developed and 2020 proved even slower and inactive than we
could have imagined.
In 2020 with health and loss of life becoming the major concern
of humanity, with mask, social distancing and Zoom becoming the
world's new buzzwords and with major lockdowns affecting business
across Europe, we were able to a) ensure that almost all our income
producing properties remained fully let, experience only minor
COVID-19 related disruptions, and extended any leases that were
coming up for renewal, while at the same time b) increase the sales
pace of our residential property portfolio which followed a growing
market in Romania. Having therefore rebuffed any issues caused by
the pandemic, we were just waiting for the markets to come back to
normalcy and for APF to be ready to proceed with Stage 2 of our
transaction, which we managed to sign in mid-June 2021.
As 2021 brought with it vaccines that are expected to alleviate
the human pain as well as restart the global economies, we are
fully prepared and ready to push forward for a swift closing of the
APF Transaction, the preferred way of safeguarding value for our
shareholder and offering them the option of further value
generation, if they so choose. Management directors, and advisors
of SPDI are committed to see a swift conclusion of the transaction
that will ensure the transformation of our Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
2. Management Report
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 2020,
management in line with Company's strategy to maximise value for
shareholders, continued the discussions with Arcona Property Fund
N.V (Arcona) in relation to the conditional implementation agreement
for the sale of Company's property portfolio, excluding its Greek
logistics property (which has now also separately been sold),
in an all-share transaction to Arcona, an Amsterdam and Prague
listed company that invests in commercial property in Central
Europe. Arcona currently holds high yielding real estate investments
in Czech Republic, Poland and Slovakia, with the transaction valueing
the SPDI assets NAV at EUR29m, significantly higher than the
current market value of the Company as a whole.
Following the completion of Stage 1 of the transaction in 2019,
which involved the sale of two land plots in Ukraine and residential
and land assets in Bulgaria and resulted in Company receiving
a total of 595.534 Arcona shares and 144.264 warrants over Arcona
shares, during 2020 the two parties engaged in negotiating and
planning Stage 2 of the transaction. This Stage is centred on
the sale of two commercial income producing assets in Romania
and land plots in Ukraine. 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.
However, the rapid development of COVID-19 outbreak and its effects
on all related countries and therefore on all participants in
this process, have caused major delays. Lockdowns, travel restrictions,
remote working and other similar measures, have affected the effective
completion of all relevant actions and therefore brought barriers
to the successful completion of the negotiations.
Finally, in June 2021 the two parties signed relevant SPAs for
Stage 2, which involves transfer of EOS and Delenco assets in
Romania and the Kiyanovskiy and Rozny land plots in Ukraine in
exchange of approximately 605.000 new ordinary shares in Arcona
and approximately 145.000 warrants over shares in Arcona, as well
as EUR1m in cash, subject to, inter alia, standard form adjustment
and finalization in accordance with the relevant agreements. Stage
2 is likely to be dependent on shareholder approval, and is expected
to close within 2021 at which point the Company will be issued
the relevant shares in Arcona and the warrants.
Regarding the economic environment in which the Company operates,
the Romanian economy which constitutes the main operating market
of the Company, contracted by 3,9% in 2020 as a result of the
COVID-19 pandemic and its impact on economic activity. Investment
volume dropped to almost half the one registered in 2019 and returned
back to 2015 levels, with Office properties being the most in
demand type of properties and logistics being the second due to
limited supply of product despite strong demand.
Following the successful sales of Victini Logistics in Athens
in 2019, rental and related income reduced by 9,5% during 2020,
while net income from operations reduced by 6%.
Overall, the administration costs adjusted by the one-off costs
associated with the transaction with Arcona and by previous
periods' transaction costs decreased by 16%, however the loss
incurred from associate as a result of reduced valuation of the
asset at the end of the period, resulted in reduced recurring
EBITDA at -EUR0,2m compared to EUR0,06m in 2019. Finance costs
dropped to EUR0,6m from EUR1,1m in 2019 following the disposal of
Victini and Boyana assets in 2019.
EUR 2020 2019
------------------------------------------------------------------- -----------------------------------------------------------------------
Continued Discontinued Total Continued Discontinued Total
Operations Operations Operations Operations
---------------- ------------------- -------------------- ------------------------ --------------------- -------------------- --------------------------
Rental,
Utilities,
Management
& Sale of
electricity
Income 795.700 1.323.232 2.118.932 457.450 1.884.304 2.341.754
Income from
Operations 795.700 1.323.232 2.118.932 457.450 1.884.304 2.341.754
Asset operating
expenses - (470.548) (470.548) - (591.811) (591.811)
Net Operating
Income 795.700 852.684 1.648.384 457.450 1.292.493 1.749.943
Share of
profits from
associates - (179.775) (179.775) - 297.985 297.985
Net Operating
Income from
investments 795.700 672.909 1.468.609 457.450 1.590.478 2.047.928
Administration
expenses (1.449.834) (217.988) (1.667.822) (1.764.957) (220.509) (1.985.466)
Operating
Result
(EBITDA) (654.134) 454.921 (199.213) (1.307.507) 1.369.969 62.462
Finance Cost,
net 228.776 (861.559) (632.783) 337.334 (1.420.507) (1.083.173)
Income tax
expense (117.656) (44.387) (162.043) (36.380) (52.315) (88.695)
Operating Result
after Finance
and Tax
Expenses (543.014) (451.025) (994.039) (1.006.553) (102.853) (1.109.406)
Other income /
(expenses),
net 191.222 3.058 194.280 (442.629) 312.801 (129.828)
One of costs
associated
to Arcona
transaction (81.346) (81.346) (677.213) - (677.213)
One of costs
associated
with previous
periods
disposals (170.000) - (170.000) - - -
Fair value
adjustments
from
Investment
Properties - (3.495.700) (3.495.700) - 417.852 417.852
Net gain/(loss) - - - (4.992.763) (4.992.763)
on disposal
of investment
property
Fair Value
adjustment on
financial
investments (824.634) - (824.634) (153.913) - (153.913)
Foreign
exchange
differences,
net (60.142) (318.925) (379.067) (74.779) (436.880) (511.659)
Result for the (1.487.914) (4.262.592) (5.750.506) (2.355.087) (4.801.843) (7.156.930)
year
Exchange
difference on
I/C
loans to
foreign
holdings - (61.936) (61.936) - 66.557 66.557
Exchange
difference on
translation
due to
presentation
currency - (1.392.153) (1.392.153) - 223.133 223.133
Total (1.487.914) (5.716.681) (7.204.597) (2.355.086) (4.512.153) (6.867.239)
Comprehensive
Income
for the year
---------------- ------------------- -------------------- ------------------------ --------------------- -------------------- --------------------------
As a result, operating results after finance and tax for the
year closed at - EUR1m as compared to -EUR1,1m in 2019.
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial
income producing and residential properties in Romania, as well as
land plots in Ukraine and Romania.
Commercial Property Location Key Features
EOS Business Park
Gross Leaseable
Bucharest, Romania Area: 3.386 sqm
-------------------- --------------------- --------------------
Anchor Tenant: Danone Romania
-------------------- --------------------- --------------------
Occupancy Rate: 100%
---------------------------------------------------------------- --------------------
Delenco (SPDI has a 24,35% interest)
Gross Leaseable
Bucharest, Romania Area: 10.280 sqm
-------------------- --------------------- --------------------
ANCOM (Romanian
Anchor Tenant: telecoms regulator)
-------------------- --------------------- --------------------
Occupancy Rate: 99%
---------------------------------------------------------------- --------------------
Innovations Logistics Park
Gross Leaseable
Bucharest, Romania Area: 16.570 sqm
-------------------- --------------------- --------------------
Favorit Business
Anchor Tenant: Srl
-------------------- --------------------- --------------------
Occupancy Rate: 77%
---------------------------------------------------------------- --------------------
Kindergarten
Gross Leaseable
Bucharest, Romania Area: 1.400 sqm
-------------------- --------------------- --------------------
International
School for Primary
Anchor Tenant: Education
-------------------- --------------------- --------------------
Occupancy Rate: 100%
---------------------------------------------------------------- --------------------
Land & Residential Assets Location Key Features
Kiyanovskiy Residence Kiev, Ukraine Plot of land ( th. sqm): 6
-------------------- ----------------------------- ----
Tsymlyanskiy Residence Kiev, Ukraine Plot of land ( th. sqm): 4
-------------------- ----------------------------- ----
Rozny Lane Kiev, Ukraine Plot of land ( th. sqm): 420
-------------------- ----------------------------- ----
GreenLake Land
(SPDI has a 44% interest) Bucharest, Romania Plot of land ( th. sqm): 40
-------------------- ----------------------------- ----
Romfelt, Monaco, Blooming,
GreenLake Romania Sold units during 2019: 35
-------------------- ----------------------------- ----
Monaco, Blooming,
GreenLake Romania Available units (end 2019): 33
-------------------- ----------------------------- ----
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 2020
Property Country GAV* EURm Debt * NAV
------------ ------ ------------ ------
Innovations Logistics Park Rom 10,1 6,7 3,4
------------ ------ ------------ ------
Eos Business Park Rom 6,7 2,95 3,7
------------ ------ ------------ ------
Delenco (associate) Rom 5,06 0,2 4,9
------------ ------ ------------ ------
Kindergarten Rom 0,7 0,34 0,4
------------ ------ ------------ ------
Residential units Rom 1,4 0,86 0,5
------------ ------ ------------ ------
Land banking Rom & Ukr 8,0 3,5 4,5
------------ ------ ------------ ------
Total Value 32,0 14,6 17,4
------ ------------ ------
Other balance sheet items, net ** +6,3
------ ------------ ------
Net Asset Value total 23,7
------ ------------ ------
Market Cap in EUR as at 31/12/2020 (Share price at GBP0,065) 9 , 3
------
Market Cap in EUR as at 21/06/2021 (Share price at GBP0,0635) 9 , 5
------
Discount of Market Cap in EUR at 21/06/2021 vs NAV at 31/12/2020 -60%
------
* Reflects the Company's participation at each asset
**Refer to balance sheet and related notes of the financial statements
The Net Equity attributable to the shareholders as at 31
December 2020 stood at EUR23,7m vs EUR29,3m in 2019. The table
below depicts the discount of Market Share Price over NAV since
2012.
The NAV per share as at 31 December 2020 stood at GBP 0,17 and
the discount of the Market Value vis a vis the Company's NAV
denominated in GBP stands at 61% at year-end.
1.1 Financial and Risk Management
The Group's overall bank debt exposure at the end
of the reporting period was EUR14,5m (calculating
relative to the Company's percentage shareholding
in each), comprising the following:
a) EUR2,95m finance lease of EOS Business Park with
Alpha Leasing Romania and EUR0,3m debt facility received
by First Phase from Alpha Bank Romania.
b) EUR6,7m finance lease of Innovations Logistics
Park with Piraeus Leasing Romania.
c) EUR0,34m being the Company's portion on debt financing
of the Kindergarten with Eurobank Ergasias.
d) EUR0,86m being the Company's portion on the residential
portfolio debt financing.
e) EUR3,5m being the Company's portion on land plot
related debt financing in Romania.
f) EUR0,2m being the Company's portion on debt financing
of Delenco asset.
Throughout 2020, the Company focused on managing and
preserving liquidity through cash flow optimization.
In this context, Management secured a) bridge financing
for working capital purposes, b) continuous sale of
residential assets and c) advancement of discussions
related to transaction with Arcona Property Fund N.V.
1.2 2021 and beyond
During 2021 the Company is concentrated in closing
Stage 2 of the transaction with Arcona. Following
slow progress of the process during the first half
of the year due to the COVID-19 effects, the signing
of relevant SPA's in June 2021 took place, involving
the transfer of two assets in Romania and two land
plots in Ukraine. In particular, Stage 2 involves
the two office buildings in Bucharest, EOS and Delenco,
as well as Rozny and Kiyanovskiy land plots in Kiev.
Currently, main target of the Company is the successful
closing of the Stage 2 transactions within H2 2021,
which will likely be dependent on SPDI shareholder
approval.
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 Company's shareholders the opportunity to
gain direct exposure to a listed property fund of
significantly larger size, having a strong dividend
distribution policy, and active in a faster-growing
over the long-term area (Central and South Eastern
Europe) of the European property market.
2. Regional Economic Developments [1]
The Romanian economy contracted by 3,9% in 2020 due
to the impact of the COVID-19 pandemic. Trade and
services decreased by 4,7%, while certain sectors,
such as tourism and hospitality, remained heavily
affected. Industry contracted by 9,3%, reflecting
weakened external demand and supply chain disruptions.
The biggest contraction was seen in agriculture, linked
to persistent droughts affecting crops. The unemployment
rate reached 5,5% during 2020 before edging down to
5,2% in December.
The Government provided a fiscal stimulus of 4,4%
of GDP in 2020 in response to the COVID-19 crisis.
In the first COVID wave, poor and vulnerable households
were less supported by the fiscal response measures,
which extended more directly to those in formal employment
structures; subsequent programs for daily wage and
seasonal workers extended protections to typically
more vulnerable segments.
The economy is projected to grow at around 4,3% in
2021. The strength of the recovery will depend on
the success of the COVID-19 vaccine rollout and the
policy response to the health crisis, as well as on
developments in the EU. In view of the limited fiscal
space, the impact of the EU-level stimulus will play
a crucial role in the economic recovery. Romania is
expected to receive EUR79,9 billion from the EU by
2027 under the Multiannual Financial Framework 2021-2027
(EUR49,5 billion) and the economic recovery plan (EUR30,4
billion).
Macroeconomic data
Romania 2014 2015 2016 2017 2018 2019 2020f
----- ----- ----- ----- ----- ----- -----
GDP (EUR bn) 150,5 160,3 170,4 187,5 202,9 223,4 217,8
----- ----- ----- ----- ----- ----- -----
Population (mn) 20,0 19,9 19,8 19,6 19,5 19,5 19,3
----- ----- ----- ----- ----- ----- -----
Real GDP (y-o-y
%) 3,4 3,9 4,8 7,0 4,1 4,1 -3,9
----- ----- ----- ----- ----- ----- -----
CPI (average, y-o-y
%) 1,1 -0,6 -1,5 1,3 4,6 3,3 2,1
----- ----- ----- ----- ----- ----- -----
Unemployment rate
(%) 6,8 6,8 5,9 4.3 3,6 3,1 5,2
----- ----- ----- ----- ----- ----- -----
With an estimated contraction of 4,5%, the economic
impact of COVID-19 has been smaller than in most other
countries, nevertheless the pandemic has caused a
heavy toll on households and weakened the commitment
by the government to undertake critical reforms. The
COVID-19 outbreak redirected government policy from
structural reforms towards ad-hoc reactive measures,
and as a result, macro fiscal risks have increased.
Public sector financial needs are expected to grow
due to increases in minimum wages and social transfers,
limiting space for public investment, and fueling
inflationary presuures in a supply-constrained economy.
Additionally, large government domestic borrowings
are crowding out much needed private investment. Holdings
of government securities already represent close to
30% of total assets of the state-owned banks while
corporate lending continues to stagnate. Stronger
fiscal discipline is needed to reduce risks for medium-term
growth prospects.
On the supply side, retail and wholesale trade grew
7,9% yoy in 2020 and made a significant positive contribution
to GDP. At the same time agriculture output fell almost
12%.
Ukraine's economic recovery in 2021 is expected to
be mild given high uncertainty associated with the
vaccine rollout and the direction of economic policies
to address problems in investment and safeguard macroeconomic
sustainability. GDP is projected to grow by 3,8% in
2021.
Macroeconomic data
Ukraine 2014 2015 2016 2017 2018 2019 2020f
---- ---- ---- ----- ----- ----- -----
GDP (USD bn) 98,4 87,5 92,3 113,0 130,9 154,7 142,2
---- ---- ---- ----- ----- ----- -----
Population (mn) 42,8 42,6 42,4 42,2 42,0 41,9 41,5
---- ---- ---- ----- ----- ----- -----
Real GDP (y-o-y
%) -6,6 -9,8 2,4 3,5 3,3 1,9 -4,5
---- ---- ---- ----- ----- ----- -----
CPI (average, y-o-y
%) 12,1 43,3 12,4 13,7 9,8 4,1 5,0
---- ---- ---- ----- ----- ----- -----
Unemployment rate
(%) 9,3 9,1 9,3 9,5 8,8 8,2 8,9
---- ---- ---- ----- ----- ----- -----
_____________________________
[1] Sources: World Bank Group, Eurostat, EBRD, National
Institute of Statistics- Romania, National Institute
of Statistics - Ukraine, IMF, European Commission.
3. Real Estate Market Developments [2]
3.1 Romania
Total investment volume in Romania reached in 2020
826,5 million Euros, increased by 20% as compared
to previous period. Although throughout the first
six months of 2020 investor's activity was disrupted
by the COVID-19 outbreak, the second half of the year
their level of confidence widened and led to investment
activity totalling 625 milion Euros. Investment volume
was dominated by the office segment (86%), with logistics/
industrial being the next most in demand type of properties
(9%) mainly due to limited supply of product. Retail
followed with 4%.
In 2020 there were no major variations regarding the
evolution of prime yields which continued to be amongst
the highest in Europe. Prime office properties achieve
yields of around 7,25%, while for the prime industrial
properties, the yield stands at 7,75% and is expected
to compress as investors' appetite for logisti products
is strong. Prime retail yields have slightly decompressed
as compared to 2019 at 7%.
With c.630.000 sqm delivered in 2020, the prime industrial/
logistics stock in Romania exceeded 5,2 milion sqm
which accounts for an impressive evolution of more
than double during the last five years. Bucharest
attracted 66% of total deliveries in 2020 and reached
a total prime industrial stock of 2,4 milion sqm.
For 2021, developers have planned the delivery of
over 700.000 sqm of prime industrial/ logistics spaces,
more than 50% in Bucharest. Other cities attracting
new developments are Timisoara and Craiova. Total
leasing activity volume in 2020 reached a record high
figure of 876.000 sqm, comprised by renewal of existing
contracts and new demand. It is expected that industrial/
logistics leasing activity and prime stock evolution
will continue strong in the next 5-year period when
country's stock is projected to reach 8 milion sqm.
During 2020 new office spaces were delivered to the
market with a total gross leasable area of 155.000
considerably lower than previous years. Major office
location is Bucharest, where at the end of 2020, modern
office stock reached 2,9 milion sqm, 63% respectively
being class A. Such new delivery forced the increase
in vacancy rate, since aside from the pandemic and
relevant economic factors, new supply was leased at
70% on average due to decreased relevant demand as
a result of the COVID-19 pandemic impact. 243.000
sqm were transacted in Bucharest, out of which 58%
take ups and the rest renewals/ renegotiations. IT
and Consumer Services & Leisure sectors maintained
their leading position as demand drivers, representing
37% and 23% of the total space transacted, while Central-West
sub-market attracted the largest share of leasing
activity.
Sales of residential units in Romania during 2020
increased by 8,2% yoy, meaning that approximately
123.000 units sold during the period. Almost a third
were in Bucharest (37.000 units sold) and the rest
in regional cities. Average price asked per sqm remained
unchanged, c.1.350 Euros per sqm for older units and
c.1450 Euros per sqm for new ones. Despite the devaluation
of Ron in terms of Euro and the introduction of the
Consumer Credit Referece Index (IRCC), replacing ROBOR
for consumer loans in Romania, demand was witnessed
robust and expected to continue to be so.
3.2 Ukraine
Real estate investment in Ukraine during 2020 is reported
weak. The COVID-19 pandemic impact, tensions with
Russia, and lack of financing are considered the main
factors for lack of significant investment activity.
However, a new law on the increase of support to large
investors, passed in December 2020, backed by a most
probable retreat of the pandemic, can sharpen investors'
appetite for Ukrainian real estate during 2021. The
new law exempts large investors from income tax, value-added
tax, import duty on new equipment and its components,
and provides financial support in the construction
of infrastructure relevant to investment projects.
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 centre with access to public transportation
and especially to metro stations. On the supply side,
the sellers pool consists of development companies,
unable to develop due to the lack of finance, companies
or individuals having speculatively acquired land
plots prior to the crisis with the intention to sell
on and banks possessing mortgaged land upon default
of previous owners. The demand for land plots has
started increasing since 2016, especially for ones
suitable for commercial development, a trend which
stopped in 2020 mainly due to the effects of COVID-19
pandemic. Under condition of economic recovery in
2021, gradual rebound in demand is anticipated by
the end of the year.
5. Property Assets
5.1 EOS Business Park - Danone headquarters, Romania
The park consists of 5.000 sqm of land including a
class "A" office building of 3.386 sqm GLA and 90
parking places. It is located next to the Danone factory,
in the North-Eastern part of Bucharest with access
to the Colentina Road and the Fundeni Road. The 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 part of Stage 2 of the Arcona transaction
and relevant SPA for its disposal has already been
signed in June 2021 with closing to be expected within
H2 2021.
5.2 Delenco office building, Romania
The property is a 10.280 sqm office building, which
consists of two underground levels, a ground floor
and ten above-ground floors. The building is strategically
located in the very center of Bucharest, close to
three main squares of the city: Unirii, Alba Iulia
and Muncii, only 300m from the metro station.
The Company acquired 24,35% of the property in May
2015. As at the year end 2019, the building is 99%
let, with ANCOM (the Romanian Telecommunications Regulator)
being the anchor tenant (81% of GLA). The asset is
part of Stage 2 of the Arcona transaction and relevant
SPA for its disposal has already been signed in June
2021 with closing to be expected within H2 2021.
5.3 Innovations Logistics Park, Romania Property description
The park incorporates approximately 8.470 sqm of multipurpose
warehousing space, 6.395 sqm of cold storage and 1.705
sqm of office space. It is located in the area of
Clinceni, south west of Bucharest center, 200m from
the city's ring road and 6km from Bucharest-Pitesti
(A1) highway. Its construction was completed in 2008
and was tenant specific. It comprises four separate
warehouses, two of which offer cold storage.
In April 2017, the Company signed a lease agreement
with Aquila Srl, a large Romanian logistics operator,
for 5.740 sqm of ambient space in the warehouse which
expired during April 2018 without being extended.
During Q1 2019 the Company signed with Favorit Business
Srl a lease agreement for 3,000 sqm of cold storage
space, 506 sqm of ambient storage space, and 440 sqm
of office space. In Q2 2019 the Company agreed with
Favorit Business Srl a lease of an extra 3.000 sqm
of cold storage space, and an extra 210 sqm of office
space to accommodate their new business line which
involves as end user Carrefour. Moreover, during 2019
and H1 2020 the Company signed short term lease agreements
for 2.000 sqm of ambient storage space with Chipita
Romania Srl, one of the fastest growing regional food
companies. As at the year end, the terminal was 77%
leased. The asset is planned to be part of Stage 3
of the Arcona transaction.
5.4 Kindergarten, Romania
Situated on the GreenLake compound on the banks of
Grivita Lake, a standalone building on ground and
first floor, is used as a nursery by one of the Bucharest's
leading private schools.
The building is erected on 1.428.59 sqm plot with
a total gross area of 1.198 sqm.
The property is 100% leased to International School
for Primary Education until 2032.
a. Residential portfolio
-- Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in
South Bucharest, Sector 4, enjoying good car access
due to the large boulevards, public transportation,
and a shopping mall (Sun Plaza) reachable within a
short driving distance or easily accessible by subway.
Following extended negotiations for two years with
the company which acquired Monaco's loan, the SPV
holding Monaco units entered in 2019 into insolvency
status in order to protect itself from its creditors.
During 2019, based on regulatory procedures for disposing
of assets held by the debtor and upon agreement of
all parties and the judicial administrator's approval,
5 units were sold. During 2020 another 12 units were
sold and as a result the relevant loan has been fully
re-paid. Currently, the SPV has exited insolvency
status and the Company is in the process of re-gaining
full control. At the end of 2020, 5 apartments were
available, 2 of which were rented.
-- Blooming House, Bucharest, Romania
Blooming House is a residential development project
located in Bucharest, Sector 3, a residential area
with the biggest development and property value growth
in Bucharest, offering a number of supporting facilities
such as access to Vitan Mall, kindergartens, café,
schools and public transportation (both bus and tram).
At the end of 2020, 1 apartment was available. During
2020, 3 units and I commercial space were sold.
-- GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists
of apartments and villas, situated on the banks of
Grivita Lake, in the northern part of the Romanian
capital - the only residential property in Bucharest
with a 200 meters frontage to a lake. The compound
also includes facilities such as one of Bucharest's
leading private schools (International School for
Primary Education), outdoor sports courts and a mini-market.
Additionally GreenLake includes land plots totaling
40.360 sqm. SPDI owns 43% of this property asset
portfolio.
During 2020, 19 apartments and villas were sold while
at the end of the year 27 units remained unsold. The
asset is planned to be part of Stage 3 of the Arcona
transaction.
-- 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 2020, the last unit of the complex was effectively
sold.
b. Land Assets
-- Kiyanovskiy Residence - Kiev, Ukraine
The property consists of 0,55 Ha of land located at
Kiyanovskiy Lane, near Kiev city center. It is destined
for the development of businesses and luxury residences
with beautiful protected views overlooking the scenic
Dnipro River, St. Michaels' Spires and historic Podil.
The asset is part of Stage 2 of the Arcona transaction
and relevant SPA for its disposal has already been
signed in June 2021 with closing to be expected within
H2 2021.
-- 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
Stage 3 of the Arcona transaction.
-- Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined
to be developed as a residential complex. Following
a protracted legal battle, it has been registered
under the Company pursuant to a legal decision in
July 2015.
The asset is part of Stage 2 of the Arcona transaction
and relevant SPA for its disposal has already been
signed in June 2021 with closing to be expected within
H2 2021.
Independent Auditor's Report
To the Members of Secure Property Development & Investment
Plc
Report on the Audit of the Consolidated Financial
Statements
Qualified Opinion
We have audited the consolidated financial statements
of Secure Property Development & Investment Plc (the
"Company") and its subsidiaries (the "Group"),
which are presented in pages 38 to 99 and comprise
the consolidated statement of financial position as
at 31 December 2020, and the consolidated statements
of comprehensive income, changes in equity and cash
flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant
accounting policies.
In our opinion, except for the possible effects of
the matter described in the Basis for Qualified Opinion
section of our report, the accompanying consolidated
financial statements give a true and fair view of
the consolidated financial position of the Group as
at 31 December 2020, and of its consolidated financial
performance and its consolidated cash flows for the
year then ended in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union and the requirements of the Cyprus Companies
Law, Cap. 113.
Basis for Qualified Opinion
As at 31 December 2020, the Group had a loan receivable
from a third party which appears on the Consolidated
Statement of Financial Position within Prepayments
and other current assets at the value of EUR5.597.015.
We were not provided with appropriate and reliable
audit evidence to determine the recoverable amount
of the loan receivable. As a result, we were unable
to determine whether any adjustment would be required
on the value of the loan receivable from the third
party.
We conducted our audit in accordance with International
Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the
"Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements" section of our
report. We are independent of the Group in accordance
with the International Ethics Standards Board for
Accountants' International Code of Ethics for Professional
Accountants (including International Independence
Standards) (IESBA Code) together with the ethical
requirements that are relevant to our audit of the
consolidated financial statements in Cyprus, and we
have fulfilled our other ethical responsibilities
in accordance with these requirements and the IESBA
Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our qualified opinion.
Material Uncertainty Related to Going Concern
We draw attention to Notes 2 and 9 to the consolidated
financial statements which refer to Management's assessment
of going concern and the transactions that the Group
plans to complete in the foreseeable future. The Group's
financial position and cash flows will be significantly
affected in a manner which cannot be determined with
certainty at this stage. These conditions indicate
the existence of a material uncertainty which casts
significant doubt as to the Group's ability to continue
as a going concern. Our opinion is not modified in
respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of
the consolidated financial statements of the current
period. These matters were addressed in the context
of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the
key audit matter
Value of investment properties presented within assets classified
as held for sale
Refer to Note 4 - Significant Our audit procedures included
accounting policies, Note 9 - assessment of the valuers'
Discontinued operations and Note qualifications and expertise
19 - Investment Property . and considered their engagement
The Group holds investment properties with the Group to determine
which are presented within assets whether there were any matters
classified as held for sale. As that might have affected their
at 31 December 2020 these are objectivity or may have imposed
carried at a value of EUR34.903.480. scope limitations upon their
We focused in this area as significant work.
judgment and assumptions are made We obtained and read the valuation
to result in the fair value of reports for every property,
each property. to confirm that the valuation
The valuation of the Group's properties approach for each property
is inherently subjective due to was appropriate and suitable
unique nature, location and expected for use in determining the
future prospects of each property. fair value used in the consolidated
The methodology applied in determining financial statements.
the fair values is set out in
Note 19 of the consolidated financial We have also evaluated the
statements. Valuations, as disclosed mathematical precision of
in Note 4, are carried out by the methodologies used and
third-party valuers. The Valuers the relevance of the key assumptions
performed their work in accordance used, comparing that with
with the Royal Institution of general economic expectations
Chartered Surveyors ("RICS") Valuation to assess whether the assumptions
- Professional Standards and is used were reasonable.
also compliant with the International
Valuation Standards (IVS), taking We have engaged independent
into account property specific valuators where we considered
information. this necessary to assess the
fair values of specific properties.
----------------------------------------
Emphasis of matter
We draw attention to Note 41.3 to the consolidated financial
statements, which describe the Contingent liabilities of the Group
arising from the lawsuits for the Bluehouse accession case. The
ultimate outcome of the matter cannot be reliably determined at
present. The Group has recognized a liability of EUR2.521.211 in
these consolidation financial statements. Our opinion is not
modified in respect of this matter.
Other information
The Board of Directors is responsible for the other information.
The other information comprises the information included in the
Annual Report, the Chairman's Statement and the Management Report,
but does not include the consolidated financial statements and our
auditor's report thereon.
Our opinion on the consolidated financial statements does not
cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Responsibilities of the Board of Directors for the Consolidated
Financial Statements
The Board of Directors is responsible for the preparation of
consolidated financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as
adopted by the European Union and the requirements of the Cyprus
Companies Law, Cap. 113, and for such internal control as the Board
of Directors determines is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of
Directors is responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Board of Directors either intends to
liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors is responsible for overseeing the Group's
financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group's internal control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the Board of Directors.
-- Conclude on the appropriateness of the Board of Directors'
use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on
the Group's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Group to cease
to continue as a going concern.
-- Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves a true
and fair view.
-- Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with the Board of Directors regarding, among
other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we
have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we
determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of
2017, we report the following:
-- In our opinion, the Management Report has been prepared in
accordance with the requirements of the Cyprus Companies Law, Cap
113, and the information given is consistent with the consolidated
financial statements.
-- In our opinion, and in the light of the knowledge and
understanding of the Group and its environment obtained in the
course of the audit, we have not identified material misstatements
in the Management Report.
Other Matters
This report, including the opinion, has been prepared for and
only for the Group's members as a body in accordance with Section
69 of the Auditors Law of 2017 and for no other purpose. We do not,
in giving this opinion, accept or assume responsibility for any
other purpose or to any other person to whose knowledge this report
may come to.
The engagement partner on the audit resulting in this
independent auditor's report is Andreas Pittakas.
Andreas Pittakas
Certified Public Accountant and Registered Auditor
for and on behalf of
Baker Tilly Klitou
Certified Public Accountants and Registered Auditors
Corner C. Hatzopoulou and 30 Griva Digheni Avenue
1066 Nicosia, Cyprus
Nicosia, 28 June 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
Note 2020 2019
EUR EUR
Continued Operations
Income 10 795.700 457.450
Net Operating Income 795.700 457.450
Administration expenses 12 (1.701.180) (2.442.171)
Fair Value loss on Financial Assets
at FV through P&L 27 (824.634) (153.913)
Other operating income/ (expenses),
net 15 191.222 (442.629)
Operating profit / (loss) (1.538.892) (2.581.263)
Finance income 16 503.527 474.584
Finance costs 16 (274.751) (137.250)
Profit / (loss) before tax and foreign (1.310.116) (2.243.929)
exchange differences
Foreign exchange loss, net 17a (60.142) (74.779)
Loss before tax (1.370.258) (2.318.708)
Income tax expense 18 (117.656) (36.380)
Loss for the year from continuing operations (1.487.914) (2.355.088)
Loss from discontinued operations 9b (4.262.592) (4.801.843)
Loss for the year (5.750.506) (7.156.931)
Other comprehensive income
Exchange difference on I/C loans to
foreign holdings 17b (61.936) 66.557
Exchange difference on translation
of foreign operations 30 (1.392.155) 223.135
Total comprehensive income for the (7.204.597) (6.867.239)
year
Loss for the year from continued operations
attributable to:
Owners of the parent (1.487.914) (2.355.088)
Non-controlling interests - -
(1.487.914) (2.355.088)
Loss for the year from discontinued
operations attributable to:
Owners of the parent (2.851.952) (4.846.634)
Non-controlling interests (1.410.640) 44.791
(4.262.592) (4.801.843)
Loss for the year attributable to:
Owners of the parent (4.339.866) (7.201.722)
Non-controlling interests (1.410.640) 44.791
(5.750.506) (7.156.931)
Total comprehensive income attributable
to:
Owners of the parent (7.115.161) (6.777.803)
Non-controlling interests (89.436) (89.436)
(7.204.597) (6.867.239)
Earnings/(losses) per share (Euro 39b,c
per share):
Basic earnings/(losses) for the year
attributable to ordinary equity owners
of the parent 38b (0,03) (0,06)
Diluted earnings/(losses) for the
year attributable to ordinary equity
owners of the parent 38b (0,03) (0,06)
Basic earnings/(losses) for the year
from discontinued operations attributable
to ordinary equity owners of the parent 38c (0,02) (0,04)
Diluted earnings/(losses) for the
year from discontinued operations
attributable to ordinary equity owners
of the parent 38c (0,02) (0,04)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2020
Note 2020 2019
EUR EUR
ASSETS
Non--current assets
Tangible and intangible assets 23 2.859 566
Long-term receivables and prepayments 24 836 852
Financial Assets at FV through 27 6.787.244 3.581.643
P&L
6.790.939 3.583.061
------------- -------------
Current assets
Prepayments and other current 26 6.880.076 10.833.913
assets
Cash and cash equivalents 28 129.859 207.251
------------- -------------
7. 009.935 11.041.164
Assets classified as held for 9d 41.791.409 49.891.627
sale
Total assets 55.592.283 64.515.852
EQUITY AND LIABILITIES
Issued share capital 29 1.291.281 1.291.281
Share premium 72.107.265 72.107.265
Foreign currency translation reserve 30 8.954.426 10.232.119
Exchange difference on I/C loans
to foreign holdings 40.3 (211.199) (149.263)
Accumulated losses ( 58.428.800 (54.088.934)
)
Equity attributable to equity 23.712.973 29.392.468
holders of the parent
Non-controlling interests 31 5.921.153 7.446.255
Total equity 29.634.126 36.838.723
Non--current liabilities
Borrowings 32 95.977 7.249
Bonds issued 33 1.033.842 1.033.842
Tax payable and provisions 36 570.523 595.541
1.700.342 1.636.632
------------- -------------
Current liabilities
Borrowings 32 2.054.400 420.751
Bonds issued 33 225.081 156.761
Trade and other payables 34 4.036.962 4.579.595
Tax payable and provisions 36 712.904 550.162
7.029.347 5.707.269
Liabilities directly associated
with assets classified as held
for sale 9d 17.228.468 20.333.228
24.257.815 26.040.497
Total liabilities 25.958.157 27.677.129
Total equity and liabilities 55.592.283 64.515.852
Net Asset Value (NAV) EUR per share: 38d
Basic NAV attributable to equity
holders of the parent 0,18 0,23
Diluted NAV attributable to equity
holders of the parent 0,18 0,23
On 28 June 2021 the Board of Directors of SECURE PROPERTY
DEVELOPMENT & INVESTMENT PLC authorised these financial
statements for issue.
Lambros Anagnostopoulos Michael Beys Theofanis Antoniou
Director & Chief Executive Director & Chairman CFO
Officer of the Board
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Attributable to owners of the Company
---------------------------------------------------------------------------------- ------------ --------------
Share Share Accumulated Exchange Foreign Total Non- Total
capital premium, losses, difference currency controlling
Net(1) net of on I/C translation interest
non-controlling loans reserve
interest(2) to foreign (4)
holdings
(3)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31
December
201 8 1.272.072 71.564.479 (46.887.212) (215.820) 9.874.757 35.608.276 7.535.691 43.143.967
Loss for the
year - - (7.201.722) - - (7.201.722) 44.791 (7.156.931)
Issue of
share
capital
( Note 29) 19.209 542.786 - - - 561.995 - 561.995
Exchange
difference
on
I/C loans
to foreign
holdings
( Note 17b) - - - 66.557 - 66.557 - 66.557
Foreign
currency
translation
reserve - - - - 357.362 357.362 (134.227) 223.135
Balance - 31
December
2019 1.291.281 72.107.265 (54.088.934) (149.263) 10.232.119 29.392.468 7.446.255 36.838.723
Loss for the
year - - (4.339.866) - - (4.339.866) (1.410.640) (5.750.506)
Exchange
difference
on
I/C loans
to foreign
holdings
( Note 17b) - - - (61.936) - (61.936) - (61.936)
Foreign (1.277.693) (114.462)
currency
translation
reserve - - - - (1.277.693) (1.392.155)
Balance - 31
December
2020 1.291.281 72.107.265 (58.428.800) (211.199) 8.954.426 23.712.973 5.921.153 29.634.126
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defence at
17% and GHS contribution at 1,7%-2,65% for deemed distributions
after 1 March 2019 will be payable on such deemed dividends to the
extent that the ultimate shareholders are both Cyprus tax resident
and Cyprus domiciled. The amount of deemed distribution is reduced
by any actual dividends paid out of the profits of the relevant
year at any time. This special contribution for defence is payable
by the Company for the account of the shareholders.
(3) Exchange differences on intercompany loans to foreign
holdings arose as a result of devaluation of the Ukrainian Hryvnia
during previous years. The Group treats the mentioned loans as a
part of the net investment in foreign operations (Note 40.3).
(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 2020
Note 2020 2019
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling interests-continued
operations (1.370.258) (2.318.706)
Loss before tax and non-controlling interests-discontinued
operations 9b (4.218.205) (4.749.528)
----------- -----------
Loss before tax and non-controlling interests (5.588.463) (7.068.234)
Adjustments for:
(Gain)/Loss on revaluation of investment
property 13 3.495.700 (417.852)
Net loss on disposal of investment property 14.1 (281.886) 7.404
Other non-cash movements - 35
Fair Value loss on Financial Assets at
FV through P&L 27 824.634 153.913
(Reversal) /Impairment of prepayments and
other current assets 15 (16.035) 380.127
Impairment on Receivable from Arcona 15 - 211.310
Accounts payable written off 15 (253.957) (462.198)
Depreciation/ Amortization charge 12 4.883 5.896
Interest income 16 (512.919) (484.606)
Interest expense 16 1.071.822 1.525.526
Share of profit from associates 21 179.775 (297.985)
Loss on disposal of subsidiaries 20 - 4.992.763
Effect of foreign exchange differences 17a 379.067 511.659
Cash flows from/(used in) operations before
working capital changes (697.379) (942.242)
Change in prepayments and other current
assets 26 (104.272) (456.878)
Change in trade and other payables 34 (687.428) 1.170.302
Change in VAT and other taxes receivable 26 (87.279) (39.954)
Change in provisions 36 6.080 (665)
Change in other taxes payables 36 136.512 145.045
Change in deposits from tenants 35 (3.038) (75)
Cash generated from operations (1.436.804) (124.467)
Income tax paid (206.194) (391.616)
Net cash flows provided in operating activities (1.642.998) (516.083)
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment
property 14.1 2.427.184 608.073
Dividend received from associates 21 242.403 121.772
Interest received - 657
Increase/(Decrease) in long term receivables 24 (281) (44.994)
Cash inflow on disposal of subsidiaries 20 - 2.030.624
Repayment of interest of loan receivable 26 240.000 229.576
Net cash flows from / (used in) investing
activities 2.909.306 2.945.708
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank and non-bank loans 32 1.729.400 503.871
Repayment of bank and non-bank loans 32 (2.083.700) (1.795.665)
Interest and financial charges paid (386.545) (1.002.202)
Decrease in financial lease liabilities 37 (392.441) (385.542)
Net cash flows from / (used in) financing
activities (1.133.286) (2.679.538)
Net increase/(decrease) in cash at banks 133.022 (249.913)
Cash:
At beginning of the year 28 737.625 987.538
At end of the year 28 870.647 737.625
----------- -----------
Notes to the Consolidated Financial Statements
For the year ended 31 December 2020
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the "Company")
was incorporated in Cyprus on 23 June 2005 and is a public limited
liability company, listed on the London Stock Exchange (AIM): ISIN
CY0102102213. Its registered office is at Kyriakou Matsi 16, Eagle
House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its
principal place of business is in Cyprus at 6 Nikiforou Foka
Street, 1060 Nicosia, Cyprus.
Principal activities
The principal activities of the Group are to invest directly or
indirectly in and/or manage real estate properties, as well as real
estate development projects in South East Europe (the "Region").
These include the acquisition, development, commercializing,
operating and selling of property assets in the Region.
The Group maintains offices in Nicosia, Cyprus, Bucharest,
Romania and Kiev, Ukraine.
As at 31 December 2020, the companies of the Group employed
and/or used the services of 15 full time equivalent people, (2019 à
14 full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union (EU) and the requirements of the
Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified
by the revaluation of investment property and investment property
under construction, of financial assets at fair value through other
comprehensive income and of financial assets at fair value through
profit and loss.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Company's accounting policies. It also requires the
use of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on Management's best knowledge of current
events and actions, actual results may ultimately differ from those
estimates.
Following certain conditional agreement signed in December 2018
with Arcona Property Fund N.V for the sale of Company's non-Greek
portfolio of assets, the Company has classified its assets in 2018
as discontinued operations (Note 4.3) .
Going concern basis
The financial statements have been prepared on a going concern
basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for
the foreseeable future.
In particular, the Company is in a process of disposing of its
portfolio of assets in an all share transaction with Arcona
Property Fund N.V., meaning that as soon as this transaction
consummates the Company will be left with its corporate receivables
and liabilities.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern within the next twelve
months from the date these financial statements are available to be
issued. The ability to continue as a going concern is dependent
upon positive future cash flows.
Management believes that the Company will be able to finance its
needs given the fact that the additional corporate receivables, as
well as the consideration received in the form of Arcona shares is
estimated that it can effectively discharge all corporate
liabilities. At the same time, the transaction with Arcona Property
Fund N.V., which is a cash flow generating entity, will result in
the Company being a 45% shareholder, entitled to dividends
according to the dividend policy of Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year the Company adopted all the new and
revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods
beginning on 1 January 2020. This adoption did not have a material
effect on the accounting policies of the Company.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented in
these consolidated financial statements unless otherwise
stated.
Local statutory accounting principles and procedures differ from
those generally accepted under IFRS. Accordingly, the consolidated
financial information, which has been prepared from the local
statutory accounting records for the entities of the Group
domiciled in Cyprus, Romania, Ukraine, Greece and Bulgaria,
reflects adjustments necessary for such consolidated financial
information to be presented in accordance with IFRS.
4.1 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities (including special purpose
entities) controlled by the Company (its subsidiaries).
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognizes any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognized amounts of acquiree's identifiable net
assets.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such
re-measurement are recognized in profit or loss.
Any contingent consideration to be transferred by the Group is
recognized at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognized in accordance with
IAS 39, either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured and its subsequent settlement is
accounted for within equity.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognized, to reflect new
information obtained about facts and circumstances that existed at
the acquisition date that, if known, would have affected the
amounts recognized at that date.
Business combinations that took place prior to 1 January 2010
were accounted for in accordance with the previous version of IFRS
3.
Inter-company transactions, balances and unrealized gains on
transactions between group companies are eliminated. Unrealized
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the Group's
accounting policies.
Changes in ownership interests in subsidiaries without change of
control and Disposal of Subsidiaries
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals of
non-controlling interests are also recorded in equity.
When the Group ceases to have control, any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognized in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognized in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognized in other comprehensive
income are reclassified to profit or loss.
4.2 Functional and presentation currency
Items included in the Group's financial statements are measured
applying the currency of the primary economic environment in which
the entities operate ("the functional currency"). The national
currency of Ukraine, the Ukrainian Hryvnia, is the functional
currency for all the Group's entities located in Ukraine, the
Romanian leu is the functional currency for all Group's entities
located in Romania, and the Euro is the functional currency for all
Cypriot subsidiaries.
4. Significant accounting policies (continued)
4.2 Functional and presentation currency (continued)
The consolidated financial statements are presented in Euro,
which is the Group's presentation currency.
As Management records the consolidated financial information of
the entities domiciled in Cyprus, Romania, Ukraine in their
functional currencies, in translating financial information of the
entities domiciled in these countries into Euro for inclusion in
the consolidated financial statements, the Group follows a
translation policy in accordance with IAS 21, "The Effects of
Changes in Foreign Exchange Rates", and the following procedures
are performed:
-- All assets and liabilities are translated at closing rate;
-- Equity of the Group has been translated using the historical rates;
-- Income and expense items are translated using exchange rates
at the dates of the transactions, or where this is not practicable
the average rate has been used;
-- All resulting exchange differences are recognized as a separate component of equity;
-- When a foreign operation is disposed of through sale,
liquidation, repayment of share capital or abandonment of all, or
part of that entity, the exchange differences deferred in equity
are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
-- Monetary items receivable from foreign operations for which
settlement is neither planned nor likely to occur in the
foreseeable future and in substance are part of the Group's net
investment in those foreign operations are recongised initially in
other comprehensive income and reclassified from equity to profit
or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central
banks used in translating the financial information of the entities
from the functional currencies into Euro are as follows:
Average 31 December
Currency 2020 2019 2020 2019 2018
-------- -------- -------- ------- --------
USD 1,1422 1,1195 1,2270 1,1234 1,1450
-------- -------- -------- ------- --------
UAH 30,8013 28,9406 34,7396 26,422 31,7141
-------- -------- -------- ------- --------
RON 4,8371 4,7453 4,8694 4,7793 4,6639
-------- -------- -------- ------- --------
BGN 1,9558 1,9558 1,9558 1,9558 1,9558
-------- -------- -------- ------- --------
4.3 Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single coordinated plan to dispose of a separate
major line of business or geographic area of operations; or
-- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
4.4 Investment Property at fair value
Investment property, comprising freehold and leasehold land,
investment properties held for future development, warehouse and
office properties, as well as the residential property units , is
held for long term rental yields and/or for capital appreciation
and is not occupied by the Group. Investment property and
investment property under construction are carried at fair value,
representing open market value determined annually by external
valuers. Changes in fair values are recorded in the statement of
comprehensive income and are included in other operating
income.
A number of the land leases (all in Ukraine) are held for
relatively short terms and place an obligation upon the lessee to
complete development by a prescribed date. It is important to note
that the rights to complete a development may be lost or at least
delayed if the lessee fails to complete a permitted development
within the timescale set out by the ground lease.
In addition, in the event that a development has not commenced
upon the expiry of a lease then the City Authorities are entitled
to decline the granting of a new lease on the basis that the land
is not used in accordance with the designation. Furthermore, where
all necessary permissions and consents for the development are not
in place, this may provide the City Authorities with grounds for
rescinding or non-renewal of the ground lease. However Management
believes that the possibility of such action is remote and was made
only under limited circumstances in the past.
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Management believes that rescinding or non-renewal of the ground
lease is remote if a project is on the final stage of development
or on the operating cycle. In undertaking the valuations reported
herein, the valuer of Ukrainian properties CBRE has made the
assumption that no such circumstances will arise to permit the City
Authorities to rescind the land lease or not to grant a
renewal.
Land held under operating lease is classified and accounted for
as investment property when the rest of the definition is met.
Investment property under development or construction initially
is measured at cost, including related transaction costs.
The property is classified in accordance with the intention of
the management for its future use. Intention to use is determined
by the Board of Directors after reviewing market conditions,
profitability of the projects, ability to finance the project and
obtaining required construction permits.
The time point, when the intention of the management is
finalized is the date of start of construction. At the moment of
start of construction, freehold land, leasehold land and investment
properties held for a future redevelopment are reclassified into
investment property under development or inventory in accordance to
the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including
related transaction costs. Investment properties are derecognized
when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic
benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognized in
the consolidated statement of comprehensive income in the period of
retirement or disposal.
Transfers are made to investment property when, and only when,
there is a change in use, evidenced by the end of owner occupation,
or the commencement of an operating lease to third party. Transfers
are made from investment property when, and only when, there is a
change in use, evidenced by commencement of owner occupation or
commencement of development with a view to sale.
If an investment property becomes owner occupied, it is
reclassified as property, plant and equipment, and its fair value
at the date of reclassification becomes its cost for accounting
purposes. Property that is being constructed or developed for
future use as investment property is classified as investment
property under construction until construction or development is
complete. At that time, it is reclassified and subsequently
accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated
at fair value. Gains or losses arising from changes in the fair
value of investment property are included in the statement of
comprehensive income in the period in which they arise.
If a valuation obtained for an investment property held under a
lease is net of all payments expected to be made, any related
liabilities/assets recognized separately in the statement of
financial position are added back/reduced to arrive at the carrying
value of the investment property for accounting purposes.
Subsequent expenditure is charged to the asset's carrying amount
only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance costs are
charged to the statement of comprehensive income during the
financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial
position date. These valuations are prepared annually by chartered
surveyors (hereafter "appraisers"). The Group appointed valuers in
2014, which remain the same in 2020:
-- CBRE Ukraine, for all its Ukrainian properties,
-- NAI Real Act for all its Romanian properties.
The valuations have been carried out by the appraisers on the
basis of Market Value in accordance with the appropriate sections
of the current Practice Statements contained within the Royal
Institution of Chartered Surveyors ("RICS") Valuation - Global
Standards (2018) (the "Red Book") and is also compliant with the
International Valuation Standards (IVS).
"Market Value" is defined as: "The estimated amount for which a
property should be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm's-length transaction
after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion".
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
In expressing opinions on Market Value, in certain cases the
appraisers have estimated net annual rentals/income from sale.
These are assessed on the assumption that they are the best
rent/sale prices at which a new letting/sale of an interest in
property would have been completed at the date of valuation
assuming: a willing landlord/buyer; that prior to the date of
valuation there had been a reasonable period (having regard to the
nature of the property and the state of the market) for the proper
marketing of the interest, for the agreement of the price and terms
and for the completion of the letting/sale; that the state of the
market, levels of value and other circumstances were, on any
earlier assumed date of entering into an agreement for lease/sale,
the same as on the valuation date; that no account is taken of any
additional bid by a prospective tenant/buyer with a special
interest; that the principal deal conditions assumed to apply are
the same as in the market at the time of valuation; that both
parties to the transaction had acted knowledgeably, prudently and
without compulsion.
A number of properties are held by way of ground leasehold
interests granted by the City Authorities. The ground rental
payments of such interests may be reviewed on an annual basis, in
either an upwards or downwards direction, by reference to an
established formula. Within the terms of the lease, there is a
right to extend the term of the lease upon expiry in line with the
existing terms and conditions thereof. In arriving at opinions of
Market Value, the appraisers assumed that the respective ground
leases are capable of extension in accordance with the terms of
each lease. In addition, given that such interests are not
assignable, it was assumed that each leasehold interest is held by
way of a special purpose vehicle ("SPV"), and that the shares in
the respective SPVs are transferable.
With regard to each of the properties considered, in those
instances where project documentation has been agreed with the
respective local authorities, opinions of the appraisers of value
have been based on such agreements.
In those instances where the properties are held in part
ownership, the valuations assume that these interests are saleable
in the open market without any restriction from the co-owner and
that there are no encumbrances within the share agreements which
would impact the sale ability of the properties concerned.
The valuation is exclusive of VAT and no allowances have been
made for any expenses of realization or for taxation which might
arise in the event of a disposal of any property.
In some instances the appraisers constructed a Discounted Cash
Flow (DCF) model. DCF analysis is a financial modeling technique
based on explicit assumptions regarding the prospective income and
expenses of a property or business. The analysis is a forecast of
receipts and disbursements during the period concerned. The
forecast is based on the assessment of market prices for comparable
premises, build rates, cost levels etc. from the point of view of a
probable developer.
To these projected cash flows, an appropriate, market-derived
discount rate is applied to establish an indication of the present
value of the income stream associated with the property. In this
case, it is a development property and thus estimates of capital
outlays, development costs, and anticipated sales income are used
to produce net cash flows that are then discounted over the
projected development and marketing periods. The Net Present Value
(NPV) of such cash flows could represent what someone might be
willing to pay for the site and is therefore an indicator of market
value. All the payments are projected in nominal US Dollar/Euro
amounts and thus incorporate relevant inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the
appraisers have taken into account in arriving at Market Value the
following:
Pre Development
In those instances where the nature of the 'Project' has been
defined, it was assumed that the subject property will be developed
in accordance with this blueprint. The final outcome of the
development of the property is determined by the Board of Directors
decision, which is based on existing market conditions,
profitability of the project, ability to finance the project and
obtaining required construction permits.
Development
In terms of construction costs, the budgeted costs have been
taken into account in considering opinions of value. However, the
appraisers have also had regard to current construction rates
prevailing in the market which a prospective purchaser may deem
appropriate to adopt in constructing each individual scheme.
Although in some instances the appraisers have adopted the budgeted
costs provided, in some cases the appraisers' own opinions of costs
were used.
Post Development
Rental values have been assessed as at the date of valuation but
having regard to the existing occupational markets taking into
account the likely supply and demand dynamics during the
anticipated development period. The standard letting fees were
assumed within the valuations. In arriving at their estimates of
gross development value ("GDV"), the appraisers have capitalized
their opinion of net operating income, having deducted any
anticipated non-recoverable expenses, such as land payments, and
permanent void allowance, which has then been capitalized into
perpetuity.
The capitalization rates adopted in arriving at the opinions of
GDV reflect the appraisers' opinions of the rates at which the
properties could be sold as at the date of valuation.
In terms of residential developments, the sales prices per sq.
m. again reflect current market conditions and represent those
levels the appraisers consider to be achievable at present. It was
assumed that there are no irrecoverable operating expenses and that
all costs will be recovered from the occupiers/owners by way of a
service charge.
The valuations take into account the requirement to pay ground
rental payments and these are assumed not to be recoverable from
the occupiers. In terms of ground rent payments, the appraisers
have assessed these on the basis of information available, and if
not available they have calculated these payments based on current
legislation defining the basis of these assessments. Property tax
is not presently payable in Ukraine.
4.5 Investment Property under development
Property that is currently being constructed or developed, for
future use as investment property is classified as investment
property under development carried at cost until construction or
development is complete, or its fair value can be reliably
determined. This applies even if the works have temporarily being
stopped.
4.6 Goodwill
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to
each of the Group's cash-generating units (or Groups of
cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is
tested for impairment annually, or more frequently when there is
indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of
the unit pro rata based on the carrying amount of each asset in the
unit. Any impairment loss for goodwill is recognized directly in
profit or loss in the consolidated statement of comprehensive
income. An impairment loss recognized for goodwill is not reversed
in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
4.7 Property, Plant and equipment and intangible assets
Property, plant and equipment and intangible non-current assets
are stated at historical cost less accumulated depreciation and
amortization and any accumulated impairment losses.
Properties in the course of construction for production, rental
or administrative purposes, or for purposes not yet determined and
intangibles not inputted into exploitation, are carried at cost,
less any recognized impairment loss. Cost includes professional
fees and, for qualifying assets, borrowing costs capitalized in
accordance with the Group's accounting policy. Depreciation of
these assets, on the same basis as other property assets, commences
when the assets are ready for their intended use.
Depreciation and amortization are calculated on the
straight--line basis so as to write off the cost of each asset to
its residual value over its estimated useful life. The annual
depreciation rates are as follows:
Type %
Leasehold 20
IT hardware 33
Motor vehicles 25
Furniture, fixtures and office equipment 20
Machinery and equipment 15
Software and Licenses 33
No depreciation is charged on land.
Assets held under leases are depreciated over their expected
useful lives on the same basis as owned assets or, where shorter,
the term of the relevant lease.
The assets residual values and useful lives are reviewed, and
adjusted, if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its
estimated recoverable amount, the asset is written down immediately
to its recoverable amount.
Expenditure for repairs and maintenance of tangible and
intangible assets is charged to the statement of comprehensive
income of the year in which it is incurred. The cost of major
renovations and other subsequent expenditure are included in the
carrying amount of the asset when it is probable that future
economic benefits in excess of the originally assessed standard of
performance of the existing asset will flow to the Group. Major
renovations are depreciated over the remaining useful life of the
related asset.
An item of tangible and intangible assets is derecognized upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognized in
the statement of comprehensive income.
4.8 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.
4.9 Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
than through continuing use.
Such assets, or disposal groups, are generally measured at the
lower of their carrying amount and fair value less costs to sell.
Any impairment loss on a disposal group is allocated first to
goodwill, and then to the remaining assets and liabilities on a pro
rata basis, except that no loss is allocated to inventories,
financial assets or investment property, which continue to be
measured in accordance with the Group's other accounting policies.
Impairment losses on initial classification as held-for-sale or
held-for-distribution and subsequent gains and losses on
remeasurement are recognised in profit or loss.
4.10 Financial Instruments
4.10.1 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.
4.10.2 Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as
measured at: amortised cost; FVOCI - debt investment; FVOCI -
equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding .
A debt investment is measured at FVOCI if it meets both of the
following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
4.11.2 Classification and subsequent measurement (continued)
Financial assets - Business model assessment:
The Group makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level
because this best reflects the way the business is managed and
information is provided to management. The information considered
includes:
- the stated policies and objectives for the portfolio and the
operation of those policies in practice. These include whether
management's strategy focuses on earning contractual interest
income, maintaining a particular interest rate profile, matching
the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows
through the sale of the assets;
- how the performance of the portfolio is evaluated and reported
to the Group's management;
- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
- how managers of the business are compensated - e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in
prior periods, the reasons for such sales and expectations about
future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the Group's continuing recognition of
the assets.
Financial assets that are held for trading or are managed and
whose performance is evaluated on a fair value basis are measured
at FVTPL.
Financial assets - Assessment whether contractual cash flows are
solely payments of principal and interest:
For the purposes of this assessment, 'principal' is defined as
the fair value of the financial asset on initial recognition.
'Interest' is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative
costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely
payments of principal and interest, the Group considers the
contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group
considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable-rate features;
- prepayment and extension features; and
- terms that limit the Group's claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of
principal and interest criterion if the prepayment amount
substantially represents unpaid amounts of principal and interest
on the principal amount outstanding, which may include reasonable
additional compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or
requires prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional compensation
for early termination) is treated as consistent with this criterion
if the fair value of the prepayment feature is insignificant at
initial recognition.
Financial assets - Subsequent measurement and gains and
losses:
These assets are subsequently measured at fair value. Net gains
and losses, including any interest or dividend income, are
recognised in profit or loss. However for derivatives designated as
hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or
loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest
income calculated using the effective interest method, foreign
exchange gains and losses and impairment are recognised in profit
or loss. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified
to profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends
are recognised as income in profit or loss unless the dividend
clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in OCI and
are never reclassified to profit or loss.
4.10.3 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 .10.4 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 .10.5 Derivative financial instruments and hedge
accounting
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its
foreign currency and interest rate risk exposures. Embedded
derivatives are separated from the host contract and accounted for
separately if the host contract is not a financial asset and
certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to
initial recognition, derivatives are measured at fair value, and
changes therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments
to hedge the variability in cash flows associated with highly
probable forecast transactions arising from changes in foreign
exchange rates and interest rates and certain derivatives and
non-derivative financial liabilities as hedges of foreign exchange
risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the Group
documents the risk management objective and strategy for
undertaking the hedge. The Group also documents the economic
relationship between the hedged item and the hedging instrument,
including whether the changes in cash flows of the hedged item and
hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of
the derivative is recognised in OCI and accumulated in the hedging
reserve. The effective portion of changes in the fair value of the
derivative that is recognised in OCI is limited to the cumulative
change in fair value of the hedged item, determined on a present
value basis, from inception of the hedge. Any ineffective portion
of changes in the fair value of the derivative is recognised
immediately in profit or loss.
The Group designates only the change in fair value of the spot
element of forward exchange contracts as the hedging instrument in
cash flow hedging relationships. The change in fair value of the
forward element of forward exchange contracts ('forward points') is
separately accounted for as a cost of hedging and recognised in a
costs of hedging reserve within equity.
When the hedged forecast transaction subsequently results in the
recognition of a non-financial item such as inventory, the amount
accumulated in the hedging reserve and the cost of hedging reserve
is included directly in the initial cost of the non-financial item
when it is recognised.
For all other hedged forecast transactions, the amount
accumulated in the hedging reserve and the cost of hedging reserve
is reclassified to profit or loss in the same period or periods
during which the hedged expected future cash flows affect profit or
loss.
If the hedge no longer meets the criteria for hedge accounting
or the hedging instrument is sold, expires, is terminated or is
exercised, then hedge accounting is discontinued prospectively.
When hedge accounting for cash flow hedges is discontinued, the
amount that has been accumulated in the hedging reserve remains in
equity until, for a hedge of a transaction resulting in the
recognition of a non-financial item, it is included in the
non-financial item's cost on its initial recognition or, for other
cash flow hedges, it is reclassified to profit or loss in the same
period or periods as the hedged expected future cash flows affect
profit or loss.
If the hedged future cash flows are no longer expected to occur,
then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to
profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial
liability is designated as the hedging instrument in a hedge of a
net investment in a foreign operation, the effective portion of,
for a derivative, changes in the fair value of the hedging
instrument or, for a non-derivative, foreign exchange gains and
losses is recognised in OCI and presented in the translation
reserve within equity. Any ineffective portion of the changes in
the fair value of the derivative or foreign exchange gains and
losses on the non-derivative is recognised immediately in profit or
loss. The amount recognised in OCI is reclassified to profit or
loss as a reclassification adjustment on disposal of the foreign
operation.
4.11 Leases
At inception of a contract, the Company assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Company assesses
whether:
the contract involves the use of an identified asset this may be
specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a
physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
the Company has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of
use; and
the Company has the right to direct the use of the asset. The
Company has this right when it has the decision making rights that
are most relevant to changing how and for what purpose the asset is
used. In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Company has the
right to direct the use of the asset if either:
the Company has the right to operate the asset; or
the Company designed the asset in a way that predetermines how
and for what purpose it will be used.
At inception or on reassessment of a contract that contains a
lease component, the Company allocates the consideration in the
contract to each lease component on the basis of their relative
stand alone prices. However, for the leases of land and buildings
in which it is a lessee, the Company has elected not to separate
non lease components and account for the lease and non lease
components as a single lease component.
The Company as lessor
When the Company acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an operating
lease.
To classify each lease, the Company makes an overall assessment
of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is
the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Company considers
certain indicators such as whether the lease is for the major part
of the economic life of the asset.
When the Company is an intermediate lessor, it accounts for its
interests in the head lease and the sub lease separately. It
assesses the lease classification of a sub lease with reference to
the right of use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short term
lease to which the Company applies the exemption described above,
then it classifies the sub lease as an operating lease.
If an arrangement contains lease and non lease components, the
Company applies IFRS 15 to allocate the consideration in the
contract.
The Company recognises lease payments received under operating
leases as income on a straight line basis over the lease term as
part of 'other income'.
The accounting policies applicable to the Company as a lessor in
the comparative period were not different from IFRS 16. However,
when the Company was an intermediate lessor the sub leases were
classified with reference to the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease
liability at the lease commencement date. The right of use asset is
initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The right of use asset is subsequently depreciated using the
straight line method from the commencement date to the earlier of
the end of the useful life of the right of use asset or the end of
the lease term. The estimated useful lives of the right of use
assets are determined on the same basis as those of property and
equipment. In addition, the right of use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise the following:
fixed payments, including in substance fixed payments;
variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
amounts expected to be payable under a residual value guarantee;
and
the exercise price under a purchase option that the Company is
reasonably certain to exercise, lease payments in an optional
renewal period if the Company is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Company is reasonably certain not to terminate
early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Company's estimate of the amount
expected to be payable under a residual value guarantee, or if the
Company changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right of use asset, or is recorded in profit or loss if the
carrying amount of the right of use asset has been reduced to
zero.
The Company presents its right of use assets that do not meet
the definition of investment property in 'Property, plant and
equipment' in the statement of financial position.
The lease liabilities are presented in 'loans and borrowings'in
the statement of financial position.
Short term leases and leases of low value assets
The Company has elected not to recognise the right of use assets
and lease liabilities for short term leases that have a lease term
of 12 months or less and leases of low value assets (i.e. IT
equipment, office equipment etc.). The Company recognises the lease
payments associated with these leases as an expense on a straight
line basis over the lease term.
4.12 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in profit
or loss over the period of the borrowings, using the effective
interest method, unless they are directly attributable to the
acquisition, construction or production of a qualifying asset, in
which case they are capitalized as part of the cost of that
asset.
Fees paid on the establishment of loan facilities are recognized
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extend there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalized as a prepayment and
amortised over the period of the facility to which it relates.
Borrowing costs are interest and other costs that the Group
incurs in connection with the borrowing of funds, including
interest on borrowings, amortization of discounts or premium
relating to borrowings, amortization of ancillary costs incurred in
connection with the arrangement of borrowings, finance lease
charges and exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to
interest costs.
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset,
being an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale, are capitalised as part
of the cost of that asset, when it is probable that they will
result in future economic benefits to the Group and the costs can
be measured reliably.
Borrowings are classified as current liabilities, unless the
Group has an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date.
4.13 Tenant security deposits
Tenant security deposits represent financial advances made by
lessees as guarantees during the lease and are repayable by the
Group upon termination of the contracts. Tenant security deposits
are recognized at nominal value.
4.14 Impairment of tangible and intangible assets other than
goodwill
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. Where a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which
a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment loss
annually, and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre--tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash--generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash--generating unit) is reduced to its
recoverable amount. An impairment loss is recognized immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash--generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognized
for the asset (cash--generating unit) in prior years. A reversal of
an impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
4.15 Share Capital
Ordinary shares are classified as equity.
4.16 Share premium
The difference between the fair value of the consideration
received by the shareholders and the nominal value of the share
capital being issued is taken to the share premium account.
4.17 Share-based compensation
The Group had in the past and intends in the future to operate a
number of equity-settled, share-based compensation plans, under
which the Group receives services from Directors and/or employees
as consideration for equity instruments (options) of the Group. The
fair value of the Director and employee cost related to services
received in exchange for the grant of the options is recognized as
an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market service and performance vesting
conditions. The total amount expensed is recognized over the
vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At each financial position
date, the Group revises its estimates on the number of options that
are expected to vest based on the non-marketing vesting conditions.
It recognizes the impact of the revision to original estimates, if
any, in the statement of comprehensive income, with a corresponding
adjustment to equity. The proceeds received net of any directly
attributable transaction costs are credited to share capital and
share premium when the options are exercised.
4.18 Provisions
Provisions are recognized when the Group has a present
obligation (legal, tax or constructive) as a result of a past
event, it is probable that the Group will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. As at the reporting date the Group has settled all its
construction liabilities.
The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognized as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
4.19 Non--current liabilities
Non--current liabilities represent amounts that are due in more
than twelve months from the reporting date.
4.20 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances. It is recognized to
the extent that it is probable that the economic benefits
associated with the transaction will flow to the Group and the
revenue can be measured reliably. Revenue earned by the Group is
recognized on the following bases:
4.20.1 Income from investing activities
Income from investing activities includes profit received from
disposal of investments in the Company's subsidiaries and
associates and income accrued on advances for investments
outstanding as at the year end.
4.20.2 Dividend income
Dividend income from investments is recognized when the
shareholders' right to receive payment has been established
(provided that it is probable that the economic benefits will flow
to the Group and the amount of income can be measured
reliably).
4.20.3 Interest income
Interest income is recognized on a time-proportion (accrual)
basis, using the effective interest rate method.
4.20.4 Rental income
Rental income arising from operating leases on investment
property is recognized on an accrual basis in accordance with the
substance of the relevant agreements.
4.21 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized
on an accrual basis.
4.22 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.
4.23 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.
4.24 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.
4.25 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
4.25.1 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. 25.2 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.
4.25.3 Current and deferred tax for the year
Current and deferred tax are recognized in the statement of
comprehensive income, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in
which case, the current and deferred tax are also recognized in
other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included
in the accounting for the business combination.
The operational subsidiaries of the Group are incorporated in
Ukraine and Romania, while the Parent and some holding companies
are incorporated in Cyprus. The Group's management and control is
exercised in Cyprus.
The Group's Management does not intend to dispose of any asset,
unless a significant opportunity arises. In the event that a
decision is taken in the future to dispose of any asset it is the
Group's intention to dispose of shares in subsidiaries rather than
assets. The corporate income tax exposure on disposal of
subsidiaries is mitigated by the fact that the sale would represent
a disposal of the securities by a non--resident shareholder and
therefore would be exempt from tax. The Group is therefore in a
position to control the reversal of any temporary differences and
as such, no deferred tax liability has been provided for in the
financial statements.
4.25.4 Withholding Tax
The Group follows the applicable legislation as defined in all
double taxation treaties (DTA) between Cyprus and any of the
countries of Operations (Romania, Ukraine,). In the case of
Romania, as the latter is part of the European Union, through the
relevant directives the withholding tax is reduced to NIL subject
to various conditions.
4.25.5 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.
4.26 Value added tax
VAT levied at various jurisdictions were the Group is active,
was at the following rates, as at the end of the reporting
period:
-- 20% on Ukrainian domestic sales and imports of goods, works
and services and 0% on export of goods and provision of works or
services to be used outside Ukraine.
-- 19 % on Cyprus domestic sales and imports of goods, works and
services and 0% on export of goods and provision of works or
services to be used outside Cyprus.
-- 19% on Romanian domestic sales and imports of goods, works
and services (decreased from 20% from 1 January 2017) and 0% on
export of goods and provision of works or services to be used
outside Romania.
4.27 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.
4.28 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.
4.29 Comparative Period
Where necessary, comparative figures have been adjusted to
conform to changes in presentation in the current year.
5. New accounting pronouncement
Standards issued but not yet effective
Up to the date of approval of the financial statements, certain
new standards, interpretations and amendments to existing standards
have been published that are not yet effective for the current
reporting period and which the Company has not early adopted,
as follows :
(i) Issued by the IASB and adopted by the European Union
* Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16: Interest Rate Benchmark Reform -- Phase 2 (issued
on 27 August 2020) (effective for annual periods
beginning on or after 1 January 2021).
* Amendments to IFRS 16 Leases -- Covid 19--Related
Rent Concessions (issued on 28 May 2020) (effective
for annual periods beginning on or after 1 June
2020).
(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 2023).
Amendments
* Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current
or Non--current (issued on 23 January 2020 and 15
July 2020 respectively) (effective for annual periods
beginning on or after 1 January 2023).
* Amendments to IFRS 3 Business Combinations; IAS 16
Property, Plant and Equipment; IAS 37 Provisions,
Contingent Liabilities and Contingent Assets; Annual
Improvements 2018--2020 (All issued 14 May 2020)
(effective for annual periods beginning on or after 1
January 2022).
* The above are expected to have no significant impact
on the Company's financial statements when they
become effective.
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Group's accounting policies. It also requires the use
of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates
are based on Management's best knowledge of current events and
actions and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual
results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the
future, the resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
-- Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence
of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the
state's ability to pay its dues (VAT receivable). If indications of
non-recoverability exist, the recoverable amount is estimated and a
respective provision for impairment of receivables is made. The
amount of the provision is charged through profit or loss. The
review of credit risk is continuous and the methodology and
assumptions used for estimating the provision are reviewed
regularly and adjusted accordingly. As at the reporting date
Management did not consider necessary to make a provision for
impairment of receivables.
-- Fair value of financial assets
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Company uses its judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at
each reporting date. The fair value of the financial assets at fair
value through other comprehensive income has been estimated based
on the fair value of these individual assets .
-- Fair value of investment property
The fair value of investment property is determined by using
various valuation techniques. The Group selects accredited
professional valuers with local presence to perform such
valuations. Such valuers use their judgment to select a variety of
methods and make assumptions that are mainly based on market
conditions existing at each financial reporting date. The fair
value has been estimated as at 31 December 2020 (Note 19.2).
-- Income taxes
Significant judgment is required in determining the provision
for income taxes. There are transactions and calculations for which
the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognizes liabilities for
anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
-- Impairment of tangible assets
Assets that are subject to depreciation are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
-- Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of
the investment property and investment property under development
as the Group is able to control the timing of the reversal of this
temporary difference and the Management has intention not to
reverse the temporary difference in the foreseeable future. The
properties are held by subsidiary companies in Ukraine, Greece and
Romania. Management estimates that the assets will be realized
through a share deal rather than through an asset deal. Should any
subsidiary be disposed of, the gains generated from the disposal
will be exempt from any tax.
-- Application of IFRS 10
The Group has considered the application of IFRS 10 and
concluded that the Company is not an Investment Entity as defined
by IFRS 10 and it should continue to consolidate all of its
investments, as in 2016. The reasons for such conclusion are among
others that the Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development,
allocation of capital expenditure for its properties, marketing
etc.) in order to provide benefits other than capital appreciation
and/or investment income,
c) to have investments that are not bound by time in relation to
the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as
well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its
investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making
investment decisions. The latter is being based on metrics like
IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate
property holding and development associated risks, property market
price risk, interest rate risk, credit risk, liquidity risk,
currency risk, other market price risk, operational risk,
compliance risk, litigation risk, reputation risk, capital risk and
other risks, arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these
risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and
economic environment of countries in which it operates.
Notably:
7.1.1.1 Ukraine
Ukraine has continued to limit its economic ties with Russia,
taking into account the annexation of Crimea, the autonomous
republic of Ukraine, and armed conflict in certain parts of Luhansk
and Donetsk regions. Amid these events, the Ukrainian economy has
demonstrated further refocusing on the European Union ("EU")
market, realizing the potential of established Deep and
Comprehensive Free Trade Area ("DCFTA") with EU, thus effectively
responding to mutual trade restrictions between Ukraine and
Russia.
Starting from April 2019, the National Bank of Ukraine ("NBU")
began to liberalize its monetary policy and for the first time in
recent years significantly reduced its discount rate (from 18% on
15.03.2019 to 6% on 12.06.2020 and at the end of 2020), which is
supported by stable inflation forecast.
On 12 June 2020, the international rating agency Moody's
Investors Service upgraded Ukraine's long-term sovereign credit
rating in national and foreign currencies to B3 level from Caa1
level and changed the positive forecast to the stable forecast. On
11 September 2020, the international agency Standard & Poor's
confirmed the long-term and short-term sovereign credit rating of
Ukraine in foreign and national currencies at the "B/B" level with
a stable forecast. Also, Standard & Poor's reaffirmed Ukraine's
national scale rating at the level "uaA".
At the same time, in the second half of 2019, in the Ukrainian
economy, there were emerging trends that continued in 2020, namely:
a slight decline in industrial output, certain reforms and new
legislative initiatives due to changes in political power in
Ukraine. All these factors affect business activity, and create
certain risks unusual for markets with a stable economy, cause an
unfavourable investment climate and lead to an economic slowdown.
The inflation rate in Ukraine in 2020 was 5% (2019: 4.1%), and the
national currency has significantly weakened (hryvnia exchange rate
against US dollar as of 31 December 2019 - UAH/USD 23.6862; as of
31 December 2020 - UAH/USD 28.2746).
Significant public debt payments were planned for 2020 in
Ukraine, which required the mobilization of significant financial
resources both inside and outside the country, in an environment
where the challenges for developing economies are -growing. In June
2020, the International Monetary Fund (IMF) approved an 18-month
(stand-by) program equivalent to $5 billion to ensure a balance of
payments and budget support to help the Ukrainian government
address the challenges posed by the COVID-19 pandemic. The approval
of the agreement allowed the immediate payment of the equivalent of
$2.1 billion.
At the end of 2019, news about the COVID-19 coronavirus arrived
from China for the first time. In early 2020, the coronavirus
spread around the world and its negative impact gained momentum.
The global spread of COVID-19 has caused significant instability,
uncertainty, and economic downturn in Ukraine and the world
throughout 2020. The coronavirus has spread to more than 200
countries and continues to have a negative impact on the economic
situation and the healthcare sector. There is considerable
uncertainty about the extent to which COVID-19 will continue to
spread, as well as the extent and duration of governmental measures
to slow the spread of the coronavirus, such as quarantine, remote
work, suspension of business operations, and other
restrictions.
7.1.1.2 Romania
The Romanian economy contracted by 3,9% in 2020 due to the
impact of the COVID-19 pandemic. Trade and services decreased by
4,7%, while certain sectors, such as tourism and hospitality,
remained heavily affected. Industry contracted by 9,3%, reflecting
weakened external demand and supply chain disruptions. The biggest
contraction was seen in agriculture, linked to persistent droughts
affecting crops. The unemployment rate reached 5,5% during 2020
before edging down to 5,2% in December. National Bank of Romania
cut the monetary policy rate to 1,50% in order to address the
economic rebound and to maintain in the medium term the inflation
rate in line with target. CPI estimated at 2,1%.
The Government provided a fiscal stimulus of 4,4% of GDP in 2020
in response to the COVID-19 crisis. In the first COVID wave, poor
and vulnerable households were less supported by the fiscal
response measures, which extended more directly to those in formal
employment structures; subsequent programs for daily wage and
seasonal workers extended protections to typically more vulnerable
segments. As a result budget deficit widened from 4,5% in 2019 to
an estimated 10,4% in 2020 making the impact of the agreed
EU-stimulus of c.80 milion Euro, crucial for economic recovery.
7. Risk Management
7.1 Financial risk factors
7.1.2 Risks associated with property holding and development
associated risks
Several factors may affect the economic performance and value of
the Group's properties, including:
-- risks associated with construction activity at the
properties, including delays, the imposition of liens and defects
in workmanship;
-- the ability to collect rent from tenants on a timely basis or
at all, taking also into account currency rapid devaluation
risk;
-- the amount of rent and the terms on which lease renewals and
new leases are agreed being less favorable than current leases;
-- cyclical fluctuations in the property market generally;
-- local conditions such as an oversupply of similar properties
or a reduction in demand for the properties;
-- the attractiveness of the property to tenants or residential purchasers;
-- decreases in capital valuations of property;
-- changes in availability and costs of financing, which may
affect the sale or refinancing of properties;
-- covenants, conditions, restrictions and easements relating to the properties;
-- changes in governmental legislation and regulations,
including but not limited to designated use, allocation,
environmental usage, taxation and insurance;
-- the risk of bad or unmarketable title due to failure to
register or perfect our interests or the existence of prior claims,
encumbrances or charges of which we may be unaware at the time of
purchase;
-- the possibility of occupants in the properties, whether
squatters or those with legitimate claims to take possession;
-- the ability to pay for adequate maintenance, insurance and
other operating costs, including taxes, which could increase over
time; and
-- political uncertainty, acts of terrorism and acts of nature,
such as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group's
portfolio investments will fluctuate as a result of changes in
market prices. The Group's assets are susceptible to market price
risk arising from uncertainties about future prices of the
investments. The Group's market price risk is managed through
diversification of the investment portfolio, continuous elaboration
of the market conditions and active asset management. To quantify
the value of its assets and/or indicate the possibility of
impairment losses, the Group commissioned internationally acclaimed
valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest
rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest--bearing assets apart from its cash balances
that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates
expose the Group to fair value interest rate risk. All of the
Group's borrowings are issued at a variable interest rate.
Management monitors the interest rate fluctuations on a continuous
basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to
discharge their obligations could reduce the amount of future cash
inflows from financial assets at hand at the end of the reporting
period. Cash balances are held with high credit quality financial
institutions and the Group has policies to limit the amount of
credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates.
Currency risk arises when future commercial transactions and
recognized assets and liabilities are denominated in a currency
that is not the Group's functional currency. Excluding the
transactions in Ukraine all of the Group's transactions, including
the rental proceeds are denominated or pegged to EUR. In Ukraine,
even though there is no recurring income stream, the fluctuations
of UAH against EUR entails significant FX risk for the Group in
terms of its local assets valuation. Management monitors the
exchange rate fluctuations on a continuous basis and acts
accordingly, although there are no available financial tools for
hedging the exposure on UAH. It should be noted though that the
current political uncertainty in Ukraine, and any probable currency
devaluation may affect the Group's financial position.
7. Risk Management
7.1 Financial risk factors
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 43.1 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
2020 2019
---------------- --------------------- -------- --------
SC Secure Capital Limited Cyprus 100 100
--------------------------------------- -------- --------
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100
---------------- --------------------- -------- --------
LLC Trade Center Ukraine 100 100
--------------------------------------- -------- --------
Tsymlyanskiy
LLC Almaz--Pres--Ukraine Ukraine Residence 55 55
---------------- --------------------- -------- --------
LLC Retail Development
Balabino Ukraine 100 100
--------------------------------------- -------- --------
LLC Interterminal Ukraine 100 100
--------------------------------------- -------- --------
LLC Aisi Ilvo Ukraine 100 100
--------------------------------------- -------- --------
Myrnes Innovations Innovations
Park Limited Cyprus Logistics Park 100 100
---------------- --------------------- -------- --------
Best Day Real Estate
Srl Romania 100 100
--------------------------------------- -------- --------
EOS Business
Yamano Holdings Limited Cyprus Park 100 100
---------------- --------------------- -------- --------
N-E Real Estate Park
First Phase Srl Romania 100 100
--------------------------------------- -------- --------
Victini Holdings Limited Cyprus 100 100
--------------------------------------- -------- --------
Zirimon Properties Delea Nuova
Limited Cyprus (Delenco) 100 100
---------------- --------------------- -------- --------
Bluehouse Accession
Project IX Limited Cyprus 100 100
--------------------------------------- -------- --------
Bluehouse Accession
Project IV Limited Cyprus 100 100
--------------------------------------- -------- --------
BlueBigBox 3 Srl Romania 100 100
--------------------------------------- -------- --------
SPDI Real Estate Srl Romania Kindergarten 50 50
---------------- --------------------- -------- --------
SEC South East Continent
Unique Real Estate
Investments II Limited Cyprus 100 100
--------------------------------------- -------- --------
SEC South East Continent
Unique Real Estate
(Secured) Investments
Limited Cyprus 100 100
--------------------------------------- -------- --------
Residential
Diforio Holdings Limited Cyprus and Land portfolio 100 100
---------------- --------------------- -------- --------
Demetiva Holdings Limited Cyprus 100 100
--------------------------------------- -------- --------
Ketiza Holdings Limited Cyprus 90 90
--------------------------------------- -------- --------
Frizomo Holdings Limited Cyprus 100 100
--------------------------------------- -------- --------
Ketiza Real Estate
Srl Romania 90 90
--------------------------------------- -------- --------
Edetrio Holdings Limited Cyprus 100 100
--------------------------------------- -------- --------
Emakei Holdings Limited Cyprus 100 100
--------------------------------------- -------- --------
RAM Real Estate Management
Limited Cyprus 50 50
--------------------------------------- -------- --------
Iuliu Maniu Limited Cyprus 45 45
--------------------------------------- -------- --------
Moselin Investments
Srl Romania 45 45
--------------------------------------- -------- --------
Rimasol Enterprises
Limited Cyprus 44,24 44,24
--------------------------------------- -------- --------
Rimasol Real Estate
Srl Romania 44,24 44,24
--------------------------------------- -------- --------
Ashor Ventures Limited Cyprus 44,24 44,24
--------------------------------------- -------- --------
Ashor Development Srl Romania 44,24 44,24
--------------------------------------- -------- --------
Jenby Ventures Limited Cyprus 44,30 44,30
--------------------------------------- -------- --------
Jenby Investments Srl Romania 44,30 44,30
--------------------------------------- -------- --------
Ebenem Limited Cyprus 44,30 44,30
--------------------------------------- -------- --------
Ebenem Investments
Srl Romania 44,30 44,30
--------------------------------------- -------- --------
Sertland Properties
Limited Cyprus 100 100
--------------------------------------- -------- --------
Mofben Investments
Limited Cyprus 100 100
--------------------------------------- -------- --------
SPDI Management Srl Romania 100 100
--------------------------------------- -------- --------
During 2019 the Group proceeded with the disposal of Aisi Bela
in Ukraine as well as with the disposal of the Boyana Residence in
Bulgaria, as part of the Arcona's transaction. In addition the
Group also disposed of Victini Logistics Park AE in Greece.
Following extended but unsuccessful negotiations for more than 2
years with Tonescu Finance Srl, the company which had acquired
Monaco Towers property's loan, SecMon Real Estate Srl entered
voluntarily in January 2018 into insolvency process, in order to
protect its interests against its creditor, given that the value of
the assets was higher than the value of the relevant loan. The
entering of SecMon Real Estate Srl in the insolvency process meant
loss of control as per the definition of IFRS 10. As such SecMon
Real Estate Srl is not consolidated in the present consolidated
financial statements. However, currently SecMon Real Estate Srl has
re-paid the relevant property loan and exited effectively the
insolvency process. The Company is participating in the required
procedures to re-gain full control of the subsidiary (Note
44.b).
9. Discontinued operations
9.(a) Description
The Company announced on 18 December 2018 that it has entered
into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties ('the
Non-Greek Portfolio'), in an all-share transaction to Arcona
Property Fund N.V. The transaction is subject to, among other
things, asset and tax due diligence (including third party asset
valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission
to listing of the new Arcona Property Fund N.V. shares), as well as
successful negotiating and signature of transaction documents.
During 2019 and as part of the Arcona transaction the Company sold
the Boyana Residence asset in Bulgaria, as well as the Bela and
Balabino land plots in Ukraine, while in June 2021 has signed SPAs
related to Stage 2 of the transaction, namely for the EOS and
Delenco assets in Romania, as well as the Kiyanovskiy and Rozny
assets in Ukraine, which are expected to close in Q4 2021.
Additionally, the Company also sold during 2019 the Greek
logistics property Victini Logistics, which was not part of the
Arcona transaction.
The companies that are classified under discontinued operations
are the followings:
-- Bulgaria: Boyana Residence ood (sold during 2019)
-- Cyprus: Ashor Ventures Limited, Ebenem Limited, Jenby
Ventures Limited, Edetrio Holdings Limited, Rimasol Enterprises
Limited, Emakei Holdings Limited, Iuliu Maniu Limited, Ram Real
Estate Management Limited, Frizomo Holdings Limited, Ketiza
Holdings Limited
-- Greece: Victini Logistics Park S.A. (sold during 2019)
-- Romania: Ashor Development Srl, Ebenem Investments Srl, Jenby
Investments Srl, Rimasol Real Estate Srl, Moselin Investments Srl,
Best Day Real Estate Srl, N-E Real Estate Park First Phase Srl,
Ketiza Real Estate Srl, SPDI Real Estate Srl
-- Ukraine: LLC Aisi Bela (sold during 2019), LLC Aisi Ukraine,
LLC Almaz--Pres--Ukraine, LLC Trade Center, LLC Retail Development
Balabino
As a result, the Company has reclassified all assets and
liabilities related to these properties as held for sale according
to IFRS 5 (Note 4.3 & 4.9).
9.(b) Results of discontinued operations
For the year ended 31 December 2020
Note 2020 2019
EUR EUR
----- ----------------------- ------------
Income 10 1.041.346 1.891.708
----- ----------------------- ------------
Asset operating expenses 11 ( 470.548) (591.811)
----- ----------------------- ------------
Net Operating Income 570.798 1.299.897
----- ----------------------- ------------
Administration expenses 12 (217.988) (220.509)
----- ----------------------- ------------
Share of profits/(losses) from associates 21 (179.775) 297.985
----- ----------------------- ------------
Valuation gains/(losses) from Investment
Property 13 (3.495.700) 417.852
----- ----------------------- ------------
Net gain/(loss) on disposal of investment
property 14.1 281.886 (7.404)
----- ----------------------- ------------
Loss on disposal of subsidiaries 20 - (4.992.763)
----- ----------------------- ------------
Other operating income/(expenses), net 15 3.058 312.801
----- ----------------------- ------------
Operating profit / (loss) (3.037.721) (2.892.141)
----- ----------------------- ------------
Finance income 16 9.392 10.022
----- ----------------------- ------------
Finance costs 16 (870.951) (1.430.529)
----- ----------------------- ------------
Profit / (loss) before tax and foreign (3.899.280) (4.312.648)
exchange differences
----- ----------------------- ------------
Foreign exchange (loss), net 17a (318.925) (436.880)
----- ----------------------- ------------
Loss before tax (4.218.205) (4.749.528)
----- ----------------------- ------------
Income tax expense 18 (44.387) (52.315)
----- ----------------------- ------------
Loss for the year (4.262.592) (4.801.843)
----- ----------------------- ------------
Loss attributable to:
----- ----------------------- ------------
Owners of the parent (2.851.952) (4.846.634)
----- ----------------------- ------------
Non-controlling interests (1.410.640) 44.791
----- ----------------------- ------------
(4.262.592) (4.801.843)
----- ----------------------- ------------
9.(c) Cash flows from(used in) discontinued operation
31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Net cash flows provided in operating activities 961.997 1.897.780
------------ ------------
Net cash flows from / (used in) financing (3.880.653) (2.770.679)
activities
------------ ------------
Net cash flows from / (used in) investing 2.670.120 2.677.920
activities
------------ ------------
Net increase/(decrease) from discontinued (248.536) 1.805.021
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 2020:
Note 31 Dec 2020 31 Dec 2019
EUR EUR
------ ------------ ------------
Assets classified as held for sale
------ ------------ ------------
Investment properties 19.4a 34.903.480 42.180.852
------ ------------ ------------
Tangible and intangible assets 23 12.357 14.342
------ ------------ ------------
Long-term receivables and prepayments 24 315.000 315.265
------ ------------ ------------
Investments in associates 21 5.071.656 5.380.021
------ ------------ ------------
Financial Asset at FV through OCI 22 1 1
------ ------------ ------------
Prepayments and other current assets 26 748.127 1.470.772
------ ------------ ------------
Cash and cash equivalents 28 740.788 530.374
------ ------------ ------------
Total assets of group held for sale 41.791.409 49.891.627
------ ------------ ------------
Liabilities directly related with assets
classified as held for sale
------ ------------ ------------
Borrowings 32 6.324 .461 8.949.660
------ ------------ ------------
Finance lease liabilities 37 9.692.029 10.084.470
------ ------------ ------------
Trade and other payables 34 870.472 1.015.266
------ ------------ ------------
Taxation 36 277.275 216.563
------ ------------ ------------
Deposits from tenants 35 64.231 67.269
------ ------------ ------------
Total liabilities of group held for 17.228.468 20.333.228
sale
------ ------------ ------------
10. Income
Income from continued operations for the year ended 31 December
2020 represents:
a) rental income, as well as service charges and utilities
income collected from tenants as a result of the rental agreements
concluded with tenants of Innovations Logistics Park (Romania). It
is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through the
SPV, is planned to be transferred as part of the transaction with
Arcona Property Fund N.V. Upon a final agreement for such transfer,
the Company will negotiate with the lender its release from the
aforementioned lease agreement, and if succeeds, upon completion
such income will be also transferred.
Continued operations 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Rental income 583.683 364.034
------------ ------------
Service charges and utilities income 192.017 93.416
------------ ------------
Service and property management income 20.000 -
------------ ------------
Total income 795.700 457.450
------------ ------------
Income from discontinued operations for the year ended 31
December 2020 represents:
a) rental income, as well as service charges and utilities
income collected from tenants as a result of the rental agreements
concluded with tenants of Innovations Logistics Park (Romania), EOS
Business Park (Romania), and Victini Logistics (Greece) until the
date of its disposal during 2019,
b) income from the sale of electricity by Victini Logistics to
the Greek grid until the date of disposal during 2019,
b) rental income and service charges by tenants of the Residential Portfolio, and;
c) income from third parties and /or partners for consulting and
managing real estate properties
Discontinued operations (Note 9) 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Rental income 1.008.294 1.726.978
------------ ------------
Sale of electricity - 128.623
------------ ------------
Service charges and utilities income 31.064 33.982
------------ ------------
Service and property management income 1.988 2.125
------------ ------------
Total income 1.041.346 1.891.708
------------ ------------
Occupancy rates in the various income producing assets of the
Group as at 31 December 2020 were as follows:
Income producing assets
% 31 Dec 2020 31 Dec 2019
--------- ------------ ------------
EOS Business Park Romania 100 100
--------- ------------ ------------
Innovations Logistics
Park Romania 77 70
--------- ------------ ------------
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 (2019),
and Sofia (2019). Part of these expenses is recovered from the
tenants through the service charges and utilities recharge (Note 10
).
Under continued operations, there are no such expenses related
to operation of the Assets.
Under discontinued operations are all the expenses related to
Innovations Logistics Park (Romania), EOS Business Park (Romania),
Residential Portfolio (Romania), GreenLake (Romania), and all
Ukrainian properties .
Discontinued operations (Note 9) 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Property related taxes (99.949) (199.725)
------------ ------------
Property management fees (9.054) -
------------ ------------
Repairs and technical maintenance (101.757) (195.428)
------------ ------------
Utilities (179.268) (95.688)
------------ ------------
Property security (33.223) (35.191)
------------ ------------
Property insurance (6.932) (17.184)
------------ ------------
Leasing expenses (40.267) (48.329)
------------ ------------
Other operating expenses (98) (266)
------------ ------------
Total (470.548) (591.811)
------------ ------------
Property related taxes reflect local taxes of land and building
properties (in the form of land taxes, building taxes, garbage
fees, etc.). Relevant decrease in 2020 resulted from the sale of
properties during 2019.
Repairs and technical maintenance decreased substantially during
the period since in 2019 extensive works in Innovations Logistics
Park in Bucharest took place, essential for hosting successfully
the new tenant in the cold spaces of the property.
Utilities increased as a result of the use of the premises by
the new tenant in Innovations Logistics Park in Bucharest, with the
relevant income at Company's level increasing respectively through
service charges.
Leasing expenses reflect expenses related to long term land
leasing.
12. Administration Expenses
Continued operations 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Salaries and Wages (368.684) (459.789)
------------ ------------
Incentives to Management (120.000) (280.000)
------------ ------------
Advisory fees (609.191) (614.315)
------------ ------------
Public group expenses (134.153) (100.084)
------------ ------------
VAT expensed (7.514) (123.855)
------------ ------------
Corporate registration and maintenance fees (30.697) (49.865)
------------ ------------
Audit fees (86.000) (86.031)
------------ ------------
Accounting and related fees (40.311) (23.879)
------------ ------------
Legal fees (77.688) (442.051)
------------ ------------
Depreciation /Amortization charge (2.200) (3.399)
------------ ------------
Directors Renumeration (129.000) (73.108)
------------ ------------
Corporate operating expenses (95.742) (185.795)
------------ ------------
Total Administration Expenses (1.701.180) (2.442.171)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Salaries and Wages (46.177) (44.753)
------------ ------------
Advisory fees (35.897) (29.496)
------------ ------------
Corporate registration and maintenance fees (31.978) (38.721)
------------ ------------
Audit fees (40.800) (54.560)
------------ ------------
Accounting and related fees (31.823) (15.505)
------------ ------------
Legal fees (6.821) (11.406)
------------ ------------
Depreciation /Amortization charge (2.683) (2.497)
------------ ------------
Corporate operating expenses (21.809) (23.571)
------------ ------------
Total Administration Expenses (217.988) (220.509)
------------ ------------
Salaries and wages include the remuneration of the CEO, the CFO,
the Group Commercial Director and the Country Managers of Ukraine
and Romania, as well as the salary cost of personnel employed in
the various Company's offices in the region.
Incentives to Management provided in 2019 for the successful
completion of Stage 1 of the transaction with Arcona, fully paid in
Company's shares, while in 2020 provided for the sussessful
disposal of Victini Logistics Park.
Advisory fees are mainly related to advisors, brokers, valuers
and other professionals engaged in relevant transactions and
capital raising campaigns, as well as outsourced human resources
support on the basis of relevant contracts. In 2019, advisory fees
include EUR 145k paid in Company's shares to advisors engaged with
the successful completion of Stage 1 of the transaction with
Arcona, as well as EUR 28k for due diligence expenses related to
the Arcona transaction. In 2020, such fees include EUR 52k of
services related to Arcona transaction and EUR 170k brokerage fees
for past successful disposals.
Accounting and related fees include fees from external
accounting services, as well as fees for transfer pricing and tax
consulting services. In particular, certain Group entities
proceeded during 2020 in preparation of Transfer Pricing file,
essential in such cases under recent local tax legislation.
Public group expenses include among others fees paid to the
AIM:LSE stock exchange and the Nominated Adviser of the Company, as
well as other expenses related to the listing of the Company, such
as public relations and registry expenses. Relevant increase in
2020 came as a result of the extra fees associated with the process
of changing the custodian of the shares of the Company, which came
as requirement following Brexit.
Corporate registration and maintenance fees represent fees
charged for the annual maintenance of the Company and its
subsidiaries, as well as fees and expenses related to the normal
operation of the companies including charges by the relevant local
authorities.
Legal fees represent legal expenses incurred by the Group in
relation to asset operations (rentals, sales, etc.), ongoing legal
cases in Ukraine, Cyprus and Romania, compliance with AIM listing,
as well as one-off fees associated with legal services and advise
in relation to due diligence processes, and transactions. In 2019
an amount of EUR 350k was included, associated with legal advices
and support related to the transaction with Arcona. In 2020 the
amount related to Arcona transaction reached EUR 29k.
Directors fees for H12019 paid in Company's shares, while for H2
2019 and 2020 are payable in cash (Note 40.1.2).
Corporate operating expenses include office expenses, travel
expenses, (tele)communication expenses, D&O insurance and all
other general expenses for Cypriot, Romanian and Ukrainian
operations, as well as Bulgarian and Greek ones for 2019.
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the
reporting period, excluding foreign exchange translation
differences which are incorporated in the table of Note 19.2, are
presented in the tables below.
Discontinued operations (Note 9)
Property Name (EUR) Valuation gains/(losses)
---------------------------
31 Dec 2020 31 Dec 2019
------------- ------------
EUR EUR
------------- ------------
Kiyanovskiy Residence 390.469 (543.263)
------------- ------------
Tsymlyanskiy Residence 94.811 (77.541)
------------- ------------
Rozny Lane (171.690) 20.152
------------- ------------
Innovations Logistics Park (305.894) 257.785
------------- ------------
EOS Business Park (863.251) 285.545
------------- ------------
Residential Portfolio (1.950) 27.366
------------- ------------
GreenLake (2.664.980) 381.385
------------- ------------
Kindergarten 26.785 66.423
------------- ------------
Total (3.495.700) 417.852
------------- ------------
Such gains and losses result not only from the differences in
the values of the properties as reported by valuers at the
different points in time, but also from the fluctuation of the FX
rate between the denominated currency of the valuation report
itself and the functional currency of the company which posts
valuation amount in its accounting books. For example, valuations
of Ukrainian assets are denominated in USD and translated to UAH
for entering effectively in the accounting books of the local
entities. Similarly, valuations of Romanian assets are denominated
in EUR and translated to RON for accounting purposes.
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling
properties classified under Investment Property (Romanian
residential assets) designated as non-core assets. The gain/
(losses) from disposal of such properties are presented below:
14.1 Investment property
During 2020 the Group sold 5 villas in Greenlake Parcel K, 1
apartment and 3 parking spaces in Romfelt Plaza (Doamna Ghica) and
3 apartments, 3 parking spaces and 1 commercial space in Zizin. In
2019 the Group sold 3 apartments in Romfelt Plaza (Doamna Ghica)
and 4 apartments and 2 parking spaces in Zizin.
Discontinued operations (Note 9) 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Income from sale of investment property 2.427.184 608.073
------------ ------------
Cost of investment property (2.145.298) (615.477)
------------ ------------
Profit/(Loss) from disposal of investment property 281.886 (7.404)
------------ ------------
15. Other operating income/(expenses), net
Continued operations 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Other income 115.039 114.166
------------ ------------
Accounts payable written off 124.007 -
------------ ------------
Reversal of provisions and Impairment of prepayments
and other current assets 16.035 -
------------ ------------
Other income 255.081 114.166
------------ ------------
Assets Written off (55.128) (2.007)
------------ ------------
Impairment on Receivables from Arcona (Note
26) - (211.310)
------------ ------------
Provisions and Impairment of prepayments and
other current assets - (222.363)
------------ ------------
Penalties (2.184) (7.213)
------------ ------------
Other expenses (6.547) (113.902)
------------ ------------
Other expenses (63.859) (556.795)
------------ ------------
Other operating income/(expenses), net 191.222 (442.629)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Accounts payable written off 129.950 462.198
------------ ------------
Other income 23 9.910
------------ ------------
Other income 129.973 472.108
------------ ------------
Provisions and Impairment of prepayments and
other current assets - (157.764)
------------ ------------
Penalties (1.201) (1.458)
------------ ------------
Other expenses (125.714) (85)
------------ ------------
Other expenses (126.915) (159.307)
------------ ------------
Other operating income/(expenses), net 3.058 312.801
------------ ------------
Continued operations
Other income, represents income from services and sale price
adjustment of the sale of Terminal Brovary pursuant to the relevant
sale and purchase agreement.
The accounts payable write off in 2020 under continued
operations are mainly related to writing off an old balance due to
a vendor.
Impairment on receivables from Arcona in 2019 is related to the
fair value adjustment of the receivable Arcona shares held in
escrow from the disposal of the Boyana asset in Bulgaria. In
particular, the 315.591 consideration Arcona shares valued at 2019
year end according to the NAV per share at that date and a loss of
EUR211.310 was realized.
15. Other operating income/(expenses), net (continued)
Discontinued operations
The accounts payable write off in 2020 under discontinued
operations are mainly related to revesal of accrued expenses which
after a long period of time were never realized.
The accounts payable write off in 2019 under discontinued
operations of a total of EUR462.198 is related to Aisi Bela and
Boyana payables for construction. The settlement for the former was
reached in late 2011 on the basis of maintaining the construction
contract in an inactive state (to be reactivated at the option of
the Group), while upon reactivation of the contract or termination
of it (due to a sale of the asset) the Group would have to pay an
additional UAH 5.400.000 (USD 160.000) payable upon such event
occurring. Due to the uncertainness of the payment period the
latter amount used to be discounted at current discount rates in
Ukraine presented as a non-current liability. This amount was
written off during 2019 as a result of the forthcoming disposal of
the asset during the year. Payables for construction write off
related to Boyana asset, refer to an amount of EUR245.000 payable
to the constructor of the project as part of the withholding of a
Good Performance Guarantee. The amount has been written off during
2019 as a result of statute of limitations.
Other expenses under discontinued operations of a total of
EUR125.915 relate mostly to VAT imposed to Jenby Srl after relevant
tax investigation by authorities, associated with past VAT activity
of the company.
Provision and impairment of prepayments and other current assets
(both continued and discontinued), include expected credit loss as
per IFRS9.
16. Finance costs and income
Continued operations
Finance income 31 Dec 2020 31 Dec 2019
------------ ------------
EUR EUR
------------ ------------
Interest received from non-bank loans 503.527 474.583
------------ ------------
Interest income associated with banking accounts - 1
------------ ------------
Total finance income 503.527 474.584
------------ ------------
Finance costs 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Interest expenses (bank) - (699)
------------ ------------
Interest expenses (non-bank) (140.489) (50.693)
------------ ------------
Finance charges and commissions (6.645) (17.725)
------------ ------------
Bonds interest (68.320) (68.133)
------------ ------------
Interest on taxes (59.297) -
------------ ------------
Total finance costs (274.751) (137.250)
------------ ------------
Net finance result 228.776 332.442
------------ ------------
Discontinued operations (Note 9)
Finance income 31 Dec 2020 31 Dec 2019
------------ ------------
EUR EUR
------------ ------------
Interest received from non-bank loans (Note
40.1.1) 9.392 9.366
------------ ------------
Interest income from bank deposits - 656
------------ ------------
Total finance income 9 .392 10.022
------------ ------------
Finance costs 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Interest expenses (bank) (378.793) (901.896)
------------ ------------
Interest expenses (non-bank) (7.172) (7.155)
------------ ------------
Finance leasing interest expenses (477.048) (496.950)
------------ ------------
Finance charges and commissions (2.585) (24.528)
------------ ------------
Interest on taxes (5.353) -
------------ ------------
Total finance costs (870.951) (1.430.529)
------------ ------------
Net finance result (861.559) (1.420.507)
------------ ------------
Interest income from non-bank loans reflects income from loans
granted by the Group for financial assistance to associates. This
amount includes also interest on Loan receivables from 3(rd)
parties provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians
portfolio) in Romania. The loan provided initially with a
convertibility option which was not exercised.
According to the last addendum, the loan had certain one-off and
monthly payments for a period until 30 June 2020 and is re-payable
by 30 June 2021.The two parties are currently engaged in
discussions for agreeing and signing a new addendum with a new
re-payment schedule. The loan is bearing a fixed interest rate of
10% and the Company is in the process of getting agreed security in
the form of pledge of shares following relevant provisions in the
initial Loan Agreement.
Borrowing interest expense represents interest expense charged
on Bank and non-Bank borrowings (Note 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 Banks.
Bonds interest represent interest calculated for the bonds
issued by the Company during 2018 (Note 33).
Interest on taxes posted in 2020 is related to interest charges
on taxes associated with the tax audit of all Cypriot entities of
the Group for all periods up to 2015, which follow a certain
repayment schedule via the local Ariadne repayment program.
17. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans
and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December
2020 from continued operations amounted to EUR60.142 (2019: loss
EUR74.779).
The exchange loss from discontinued operations for the year
ended 31 December 2020 amounted to EUR318.925 (2019: loss
EUR436.880) (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 40.3). For these intercompany loans
the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During
2020, the Group recognized a foreign exchange loss of EUR61.936
(2019: profit EUR66.557).
18. Tax Expense
Continued operations 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Income and defence tax expense (117.656) (36.380)
------------ ------------
Taxes (117.656) (36.380)
------------ ------------
Discontinued operations (Note 9) 31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Income and defence tax expense (44.387) (52.315)
------------ ------------
Taxes (44.387) (52.315)
------------ ------------
For the year ended 31 December 2020, the corporate income tax
rate for the Group's subsidiaries are as follows: in Ukraine 18%,
and in Romania 16%. The corporate tax that is applied to the
qualifying income of the Company and its Cypriot subsidiaries is
12,5%.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Profit / (loss) before tax (5.588.463) (7.068.236)
------------ ------------
Tax calculated on applicable rates (177.663) (1.644.485)
------------ ------------
Expenses not recognized for tax purposes 1.132.008 1.879.661
------------ ------------
Tax effect of allowances and income not subject
to tax (844.478) (413.424)
------------ ------------
Tax effect on tax losses for the year 801.574 289.577
------------ ------------
Tax effect on tax losses brought forward (874.138) (25.108)
------------ ------------
10% additional tax 20.616 4.074
------------ ------------
Overseas tax in excess of credit claim used
during the year 636 20
------------ ------------
Tax effect of Group tax relief (1.322) (1.620)
------------ ------------
Defence contribution current year 13.860 -
------------ ------------
Prior year tax 90.950 -
------------ ------------
Total Tax 162.043 88.695
------------ ------------
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
-- Victini Logistics (ex GED) is a logistics park comprising
17.756 gross leasable sqm. It is fully let to the German
multinational transportation and logistics company, Kuehne &
Nagel and to a Greek commercial company trading electrical
appliances GE Dimitriou SA. On the roof of the warehouse there is a
1MW photovoltaic park installed with the electricity generated
being sold to Greek Electric Grid on a long term contract. The
asset was sold within 2019.
-- EOS Business Park consists of 3.386 sqm gross leasable area
and includes a Class A office Building in Bucharest, which is
currently fully let to Danone Romania until 2025.
-- Innovations Logistics Park is a 16.570 sqm gross leasable
area logistics park located in Clinceni in Bucharest, which
benefits from being on the Bucharest ring road. Its construction
was tenant specific, was completed in 2008 and is separated in four
warehouses, two of which offer cold storage (freezing temperature),
the total area of which is 6.395 sqm. Innovations Logistics Park
was acquired by the Group in May 2014 and is 77% leased at the end
of the reporting period
-- During 2017 the Company proceeded with an internal
reorganization and the Kindergarten asset of GreenLake which was
under the ownership of the associate GreenLake Development Srl was
acquired by a separate entity (SPDI Real Estate). The Kindergarten
is fully let to one of Bucharest's leading private schools and
produces an annual rent inflow of EUR115.000.
Residential Assets
The Company owns a residential portfolio, consisting at the end
of the reporting period of 10 apartments and villas across two
separate complexes located in different residential areas of
Bucharest (Residential portfolio: Blooming House, GreenLake
Residential: GreenLake Parcel K, Green Lake Developments Srl owns
18 more units in the Green Lake Residential complex, classified
under associates Note 21). Regarding Monaco Towers complex, 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. Currently, the SPV has re-paid the loan and
exited effectively insolvency status and the Company is in the
procees of re-gaining full control. At the end of 2020, 5
apartments were available in Monaco Towers (Note 8).
Land Assets
-- Bela Logistic Park is a 22,4 Ha plot in Odessa situated on
the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000
sqm GBA logistic center commenced. Construction was put on hold in
2009. The asset was sold within 2019.
-- Kiyanovskiy Residence consists of four adjacent plots of
land, totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael's Spires and
historic Podil neighborhood .
-- Tsymlyanskiy Residence is a 0,36 Ha plot of land located in
the historic Podil District of Kiev and is destined for the
development of a residential complex.
-- Rozny Lane is a 42 Ha land plot located in Kiev Oblast,
destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in
2015.
-- Balabino Project is a 26,38 Ha plot of land situated on the
south entrance of Zaporizhia, a city in the south of Ukraine with a
population of 800.000 people. Balabino Project is zoned for retail
and entertainment development. The asset was sold within 2019.
-- GreenLake land is a 40.360 sqm plot and is adjacent to the
GreenLake part of the Company's residential portfolio, which is
classified under Investments in Associates (Note 21). It is
situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI owns 44% of these plots, but has effective
management control.
-- Boyana Land: The complex of Boyana Residence ood includes
adjacent land plots available for sale or development of 22.000 sqm
of gross buildable area. The asset was sold within 2019.
19. Investment Property (continued)
19.2 Investment Property Movement during the reporting
period
The table below presents a reconciliation of the Fair Value
movements of the investment property during the reporting period
broken down by property and by local currency vs. reporting
currency.
Discontinued Operations
2020 ( 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) 2020 to 2020 amount
as at translation based on Assets as at
31/12/2020 difference local held for 31/12/2019
(a) currency sale
valuations
(b)
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kiyanovskiy
Residence Land 2.444.988 (704.961) 390.469 - - - 2.759.480
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Tsymlyanskiy
Residence Land 896.496 (266.501) 94.811 - - - 1.068.186
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Rozny Lane Land 896.496 - (171.690) - - - 1.068.186
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Ukraine 4.237.980 (971.462) 313.590 - - - 4.895.852
----------- ------------ ------------ ------------ --------- ---------- ------------
Innovations
Logistic
s Park Warehouse 10.100.000 (194.106) (305.894) - - - 10.600.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
EOS Business
Park Office 6.700.000 (136.749) (863.251) - - - 7.700.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Residential
portfolio Residential 152.500 (13.835) (1.950) (564.715) - - 733.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
GreenLake Land 12.275.000 (293.437) (2.664.980) (1.580.583) - - 16.814.000
& Resi
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kindergarten Retail 1.438.000 (26.785) 26.785 - - - 1.438.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Romania 30.665.500 (664.912) (3.809.290) (2.145.298) - - 37.285.000
----------- ------------ ------------ ------------ --------- ---------- ------------
TOTAL 34.903.480 (1.636.374) (3.495.700) (2.145.298) - - 42.180.852
----------- ------------ ------------ ------------ --------- ---------- ------------
Discontinued Operations
2019 ( EUR ) Fair Value movements Asset Value at the Beginning
of the period or at
Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair value Disposals Transfer Additions Carrying
amount exchange gain/(loss) 2019 to 2019 amount
as at translation based on Assets as at
31/12/2019 difference local held for 31/12/2018
(a) currency sale
valuations
(b)
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Bela Logistic Land - - - (4.716.157) - - 4.716.157
Park
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Kiyanovskiy
Residence Land 2.759.480 507.983 (543.263) - - - 2.794.760
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Tsymlyanskiy
Residence Land 1.068.186 185.028 (77.541) - - - 960.699
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Balabino Land - - - (1.310.044) - - 1.310.044
Project
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Rozny Lane Land 1.068.186 20.152 - - - 1.048.034
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Total Ukraine 4.895.852 693.011 (600.652) (6.026.201) - - 10.829.694
----------- ------------ ------------ ------------- --------- ---------- ---------------
Innovations
Logistic
s Park Warehouse 10.600.000 (257.785) 257.785 - - - 10.600.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
EOS Business
Park Office 7.700.000 (185.545) 285.545 - - - 7.600.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Residential
portfolio Residential 733.000 (32.889) 27.366 (615.477) - - 1.354.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Land
GreenLake & Resi 16.814.000 (409.385) 381.385 - - - 16.842.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Kindergarten Retail 1.438.000 (34.423) 66.423 - - - 1.406.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Total Romania 37.285.000 (920.027) 1.018.504 (615.477) - - 37.802.000
----------- ------------ ------------ ------------- --------- ---------- ---------------
Boyana Land - - - (4.230.000) - - 4.230.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Total - - - (4.230.000) - - 4.230.000
Bulgaria
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Victini Warehouse - - - (15.200.000) - - 15.200.000
Logistics
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
Total Greece - - - (15.200.000) - - 15.200.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ---------------
TOTAL 42.180.852 (227.016) 417.852 (26.071.678) - - 68.061.694
----------- ------------ ------------ ------------- --------- ---------- ---------------
The two components comprising the fair value movements are
presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation loss due to the devaluation of local
currencies of EUR 1.636.374 (a) (2019: loss EUR 227.016 ) is
presented as part of the exchange difference on translation of
foreign operations in other comprehensive income in the statement
of comprehensive income and then carried forward in the Foreign
currency translation reserve; and,
b. The fair value loss in terms of the local functional
currencies amounting to EUR 3.495.700 (b) (2019: gain EUR 417.852)
, is presented as Valuation gains/(losses) from investment
properties in the statement of comprehensive income and is carried
forward in Accumulated losses.
19. Investment Property (continued)
19.3 Investment Property Carrying Amount per asset as at the
reporting date
The table below presents the values of the individual assets as
appraised by the appointed valuer as at the reporting date.
Asset Name Location Principal Related Carrying amount as at
Operation Companies
31 Dec 31 Dec 31 Dec 31 Dec
2020 2020 2019 2019
------------ -------------- ------------- ------------- ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ -------------- ------------- ------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------ -------------- ------------- ------------- ------------- ------------ -------------
Kiyanovskiy Podil, Land for LLC Aisi 2.444.988 2.759.480
Residence Kiev residential Ukraine - -
City Development LLC Trade
Center Center
------------ -------------- ------------- ------------- ------------- ------------ -------------
Tsymlyanskiy Podil, Land for LLC Almaz - 896.496 - 1.068.186
Residence Kiev residential -- Pres --
City Development Ukraine
Center
------------ -------------- ------------- ------------- ------------- ------------ -------------
Rozny Lane Brovary Land for SC Secure - 896.496 - 1.068.186
district, residential Capital
Kiev Development Limited
------------ -------------- ------------- ------------- ------------- ------------ -------------
Total Ukraine - 4.237.980 - 4.895.852
------------ -------------- ------------- ------------- ------------- ------------ -------------
Innovations Clinceni, Warehouse Myrnes - 10.100.000 - 10.600.000
Logistics Bucharest Innovations
Park Park Limited
Best Day
Real Estate
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
EOS Business Bucharest Office Yamano Ltd - 6.700.000 - 7.700.000
Park building First Phase
srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Kindergarten Bucharest Retail Yamano Ltd - 1.438.000 - 1.438.000
SPDI Real
Estate Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Residential Secure II
Residential apartments Ketiza Ltd,
Portfolio Bucharest (1 aprtment) Ketiza Srl - 152.500 - 733.000
------------ -------------- ------------- ------------- ------------- ------------ -------------
GreenLake Bucharest Residential Edetrio
villas (9 Holdings
villas) Limited 16.814.000
& Emakei 12.275.000
Land for Holdings
Residential Limited - -
Development Iuliu Maniu
Limited
Moselin
Investments
srl
Rimasol
Limited
Rimasol
Real
Estate Srl
Ashor
Ventures
Limited
Ashor
Develpoment
Srl
Jenby
Investments
Srl
Ebenem
Investments
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Total Romania - 30.665.500 - 37.285.000
---------- ------------- ------------ -------------
TOTAL - 34.903.480 - 42.180.852
---------- ------------- ------------ -------------
19. Investment Property (continued)
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Innovations Logistics park, EOS Business Park, Kindergarten in
GreenLake, the Residential Portfolio (apartment in 1 complex -
Blooming house) and GreenLake parcel K, as well as all the land
assets namely Kiyanovskiy Residence, Tsymlyanskiy Residenceand
Rozny Lane in Ukraine, and GreenLake in Romania
31 Dec 31 Dec 31 Dec 31 Dec
2020 2020 2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
(Note 9) (Note 9)
------------- -------------- ------------- -------------
EUR EUR EUR EUR
------------- -------------- ------------- -------------
At 1 January - 42.180.852 - 63.345.537
------------- -------------- ------------- -------------
Disposal of Investment Property - (2.145.298) - (21.355.521)
------------- -------------- ------------- -------------
Revaluation (loss)/gain on investment
property - (3.495.700) - 417.852
------------- -------------- ------------- -------------
Translation difference - (1.636.374) - (227.016)
------------- -------------- ------------- -------------
At 31 December - 34.903.480 - 42.180.852
------------- -------------- ------------- -------------
Disposals of Investment Properties represent the sales of
apartments and parking spaces in Residential Portfolio and villas
in GreenLake parcel K.
b. Investment Properties Under Development
The investment property under development represents the
carrying value of Bela Logistic Park property, which has reached
the +10% construction in late 2008 but it is stopped since then.
This property sold during December 2019.
31 Dec 31 Dec 31 Dec 31 Dec
2020 2020 2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
(Note 9) (Note 9)
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
At 1 January - - - 4.716.157
------------ ------------- ------------ -------------
Disposal of IP - - - (4.716.157)
------------ ------------- ------------ -------------
At 31 December - - - -
------------ ------------- ------------ -------------
19.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the
following table represents an analysis based on the various
valuation methods. The different levels as defined by IFRS have
been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and
liquid markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived
from prices). Level 2 fair values of investment properties have
been derived using the market value approach by comparing the
subject asset with similar assets for which price information is
available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred
recently in the market. The most significant input into this
valuation approach is price per sqm.
- Level 3 relates to inputs for the asset or liability that are
not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using
the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of
income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements at 31 (Level (Level (Level Total
Dec 2020 (EUR) 1) 2) 3)
- - - -
-------- ----------- ----------- -----------
Recurring fair value measurements
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 896.496 - 896.496
-------- ----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center - 2.444.988 - 2.444.988
-------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast - 896.496 - 896.496
-------- ----------- ----------- -----------
Innovations Logistics Park -
Bucharest - - 10.100.000 10.100.000
-------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - - 6.700.000 6.700.000
-------- ----------- ----------- -----------
Residential Portfolio (ex GreenLake)
- Bucharest - 152.500 - 152.500
-------- ----------- ----------- -----------
GreenLake - Bucharest - 12.275.000 - 12.275.000
-------- ----------- ----------- -----------
Kindergarten - Bucharest - - 1.438.000 1.438.000
-------- ----------- ----------- -----------
Totals - 16.665.480 18.238.000 34.903.480
-------- ----------- ----------- -----------
Fair value measurements at 31 (Level (Level (Level Total
Dec 2019 (EUR) 1) 2) 3)
Recurring fair value measurements - - - -
-------- ----------- ------------ -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center - 1.068.186 - 1.068.186
-------- ----------- ------------ -----------
Kiyanovskiy Residence - Podil,
Kiev City Center - 2.759.480 - 2.759.480
-------- ----------- ------------ -----------
Rozny Lane - Brovary district,
Kiev oblast - 1.068.186 - 1.068.186
-------- ----------- ------------ -----------
Innovations Logistics Park -
Bucharest - - 10.600.000 10.600.000
-------- ----------- ------------ -----------
EOS Business Park - Bucharest,
City Center - - 7.700.000 7.700.000
-------- ----------- ------------ -----------
Residential Portfolio (ex GreenLake)
- Bucharest - 733.000 - 733.000
-------- ----------- ------------ -----------
GreenLake - Bucharest - 16.814.000 - 16.814.000
-------- ----------- ------------ -----------
Kindergarten - Bucharest - - 1.438.000 1.438.000
-------- ----------- ------------ -----------
Totals - 22.442.852 19.738.000 42.180.852
-------- ----------- ------------ -----------
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level 3 Fair Innovations EOS Business Kindergarten Total
value measurements Logistics Park Park
at 31 Dec 2020
(EUR)
Opening balance 10.600.000 7.700.000 1.438.000 19.738.000
---------------- ------------- ------------- ------------
Profit/(loss)
on revaluation (305.894) (863.251) 26.785 (1.142.360)
---------------- ------------- ------------- ------------
Translation difference (194.106) (136.749) (26.785) (357.640)
---------------- ------------- ------------- ------------
Closing balance 10.100.000 6.700.000 1.438.000 18.238.000
---------------- ------------- ------------- ------------
Level 3 Fair Bela Logistics Innovations EOS Business Victini Kindergarten Total
value measurements Park Logistics Park Logistics
at 31 Dec Park
2019 (EUR)
Opening balance
4.716.157 10.600.000 7.600.000 15.200.000 1.406.000 39.522.157
---------------- ------------ ------------- ------------- ------------- -------------
Profit/(loss)
on revaluation - 257.785 285.545 - 66.423 609.753
---------------- ------------ ------------- ------------- ------------- -------------
Translation
difference - (257.785) (185.545) - (34.423) (20.393.910)
---------------- ------------ ------------- ------------- ------------- -------------
Disposal
of Investment
property (4.716.157) - - (15.200.000) - (15.200.000)
---------------- ------------ ------------- ------------- ------------- -------------
Closing balance - 10.600.000 7.700.000 - 1.438.000 19.738.000
---------------- ------------ ------------- ------------- ------------- -------------
Information about Level 3 Fair Values is presented below:
Fair value Fair value Valuation Unobservable Relationship
at at technique inputs of unobservable
31 Dec 31 Dec inputs to
2020 2019 fair value
EUR EUR EUR EUR EUR
----------- ----------- ---------------- --------------- -----------------
Innovations 10.100.000 10.600.000 Income approach Future rental The higher
Logistics Park income and the rental
- Bucharest costs for income the
10 years, higher the
discount fair value.
rate The higher
the discount
rate, the
lower fair
value
----------- ----------- ---------------- --------------- -----------------
EOS Business 6.700.000 7.700.000 Income approach Future rental The higher
Park - Bucharest, income and the rental
City Center costs for income the
10 years, higher the
discount fair value.
rate The higher
the discount
rate, the
lower fair
value
----------- ----------- ---------------- --------------- -----------------
Kindergarten 1.438.000 1.438.000 Income approach Future rental The higher
income and the rental
costs of income the
discount higher the
rate, vacancy fair value.
rate The higher
the discount
rate and
the vacancy
rate, the
lower fair
value
----------- ----------- ---------------- --------------- -----------------
Total 18.238.000 19.738.000
----------- ----------- ---------------- --------------- -----------------
20. Investment Property Acquisitions, Goodwill Movement and
Disposals
Disposal of subsidiaries in 2019
Victini Logistics Aisi Bela Boyana Total
Park AE
ASSETS EUR EUR EUR EUR
------------------ ------------ ----------- ------------
Non-current assets
------------------ ------------ ----------- ------------
Investment property 15.200.000 1.318.104 4.230.000 20.748.104
------------------ ------------ ----------- ------------
Investment property - 4.745.167 - 4.745.167
under construction
------------------ ------------ ----------- ------------
Tangibles and intangibles
assets 16.994 - - 16.994
------------------ ------------ ----------- ------------
15.216.994 6.063.271 4.230.000 25.510.265
------------------ ------------ ----------- ------------
Current assets
------------------ ------------ ----------- ------------
Inventories - - 4.604.044 4.604.044
------------------ ------------ ----------- ------------
Prepayments and other
current assets 475.143 938 1.255 477.336
------------------ ------------ ----------- ------------
Cash and cash equivalents 35.994 27 2.187 38.208
------------------ ------------ ----------- ------------
511.137 965 4.607.486 5.119.588
------------------ ------------ ----------- ------------
Total assets 15.728.131 6.064.236 8.837.486 30.629.853
------------------ ------------ ----------- ------------
Non-current liabilities
------------------ ------------ ----------- ------------
Borrowings 10.082.370 - 2.257.980 12.340.350
------------------ ------------ ----------- ------------
Deposits from tenants 151.930 - - 151.930
------------------ ------------ ----------- ------------
10.234.300 - 2.257.980 12.492.280
------------------ ------------ ----------- ------------
Current liabilities
------------------ ------------ ----------- ------------
Borrowings - - 336.329 336.329
------------------ ------------ ----------- ------------
Trade and other payables 586.870 78.068 24.046 688.984
------------------ ------------ ----------- ------------
Tax Payable 180.883 - 136.138 317.021
------------------ ------------ ----------- ------------
Provisions 42.512 - - 42.512
------------------ ------------ ----------- ------------
810.265 78.068 496.513 1.384.846
------------------ ------------ ----------- ------------
Total liabilities 11.044.565 78.068 2.754.493 13.877.126
------------------ ------------ ----------- ------------
Net assets disposed 4.683.566 5.986.168 6.082.993 16.752.727
------------------ ------------ ----------- ------------
Financed by
------------------ ------------ ----------- ------------
Cash consideration 2.030.624 - - 2.030.624
received
------------------ ------------ ----------- ------------
Retained receivables
from tenants 337.600 - - 337.600
------------------ ------------ ----------- ------------
Financial assets received - 3.735.555 4.241.544 7.977.099
------------------ ------------ ----------- ------------
Bank Loan transfer
(Notes 26) - - 775.641 775.641
------------------ ------------ ----------- ------------
Net deferred consideration
in the form of a loan
receivable - - 639.000 639.000
------------------ ------------ ----------- ------------
Total result from (2.315.342) (2.250.613) (426.808) (4.992.763)
disposal (Note 9)
------------------ ------------ ----------- ------------
On 8 August 2019 Victini Logistcs Park AE the owner of Victini
Logistics property in Athens, Greece, was sold at a Gross Asset
Value of EUR 12,5m payable in cash, excluding the receivables from
the tenant of the property G. Dimitriou S.A. of a total of EUR
337.600 plus all future rent invoicing until 31/12/2020. The
transaction resulted in a cash inflow of EUR 2,03m, plus the amount
to be recovered in the future from G.Dimitriou S.A.
On 1 November 2019 the Company announced the disposal of Aisi
Bella, the owner company of Bella and Balabino assets in Ukraine,
to Arcona in exchange for the issue to the Company of 277.943 new
shares in Arcona and 67.063 warrants over shares in Arcona. Based
on the NAV per Arcona share the consideration corresponds to EUR
3,7m (excluding the issue of warrants), while the price paid for
the warrants was EUR1. The warrants give the Company the right to
receive ordinary shares in Arcona of EUR 5 each nominal value,
exercisable before 1 November 2024 and when the shares have traded
at a volume weighted average price of EUR 8,10.
On 5 December 2019 the Company announced the disposal of Boyana
Residence, the owner company of Boyana assets in Sofia, Bulgaria,
to Arcona in exchange of 315.591 new shares in Arcona and 77.201
warrants over shares in Arcona. Based on the NAV per Arcona share
the consideration corresponds to EUR 4,2m (excluding the issue of
warrants), while the price paid for the warrants was EUR1. The
Company also maintained as part of the transaction, a Sellers Loan
with Boyana Residence equal to EUR 750k, as adjusted finally by a
reverse liability of EUR 111k to a net amount of EUR 639k,
receivable by the end of 2020. Moreover, as part of the transaction
it was agreed that an associated to Boyana loan from Alpha Bank at
Sertland level of EUR 0,77m will be transferred to Arcona. The
transfer completed successfully in August 2020. The warrants give
the Company the right to receive ordinary shares in Arcona of EUR 5
each nominal value, exercisable before 1 November 2024 and when the
shares have traded at a volume weighted average price of EUR 8,10.
The shares and the warrants issued to the Company in relation to
this transaction held in escrow, to be released upon agreement on
the terms of the extension of the loan associated with the asset.
The shares and warrants released successfully in February 2020.
21. Investments in associates
31 Dec 31 Dec 31 Dec 31 Dec
2020 2020 2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Cost of investment in associates - -
at the beginning of the period 5.380.021 5.313.235
------------- ------------- ------------ -------------
Share of profits /(losses) from
associates (Note 9) - (179.775) - 297.985
------------- ------------- ------------ -------------
Dividend Income - (242.403) - (121.772)
------------- ------------- ------------ -------------
Foreign exchange difference - 113.813 - (109.427)
------------- ------------- ------------ -------------
Total - 5.071.656 - 5.380.021
------------- ------------- ------------ -------------
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 2020, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value , total liabilities, revenues and profit or loss,
were as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
------------- ------------ -------------- ------------ -------- ------------ -------- ------------
Lelar
Holdings
Limited
and S.C.
Delea Delenco
Nuova Construct Office
Project Srl 21.926.174 (1.101.439) (738.176) 24,35 (179.775) Romania building
------------- ------------ -------------- ------------ -------- ------------ -------- ------------
GreenLake GreenLake 5.420.444 (9.455.683) (2.344.699) 40,35 - Romania Residential
Project Development assets
- Phase Srl
A
------------- ------------ -------------- ------------ -------- ------------ -------- ------------
Total 27.346.618 (10.557.122) (3.082.875) (179.775)
------------ ------------- ------------ -------- ------------ -------- ------------
As at 31 December 2019, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value, total liabilities, revenues and profit or loss, were
as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
Lelar
Holdings
Limited
and S.C.
Delea Delenco
Nuova Construct Office
Project Srl 24.263.233 (2.172.318) 1.223.558 24,35 297.985 Romania building
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 8.403.831 (11.474.393) (954.837) 40,35 - Romania assets
-------------- ------------ -------------- ---------- -------- ------------- -------- ------------
Total 32.667.064 (13.646.711) 268.721 297.985
------------ ------------- ---------- -------- ------------- -------- ------------
22. Financial Assets at FV through OCI
The Group proceeded with an impairment of EUR297.200 for Monaco
Towers (company SecMon Real Estate Srl) in 2018 for which following
the court decision for entering into insolvency in January 2018,
the Company lost the control over the asset (Note 8) and as such it
was reclassified as Financial assets at fair value through OCI as
per table below (where the fair value of the property was adjusted
at 80% of its value) and maintained as such in 2019. Although,
during 2021 the SPV has exited insolvency status and the Group is
in process of re-gaining full control, for 2020, the Management
maintained the fair value of the Financial asset at fair value
through OCI the same as last year.
Discontinued operations (Note 9)
Unadjusted Adjusted
------------ ------------
ASSETS EUR EUR
------------ ------------
Non-current assets
------------ ------------
Investment property 1.486.000 1.188.800
------------ ------------
Current assets
------------ ------------
Prepayments and other current assets 20.447 20.447
------------ ------------
Cash and cash equivalents 10.321 10.321
------------ ------------
Total assets 1.516.768 1.219.568
------------ ------------
Current liabilities
------------ ------------
Borrowings (1.075.176) (1.075.176)
------------ ------------
Other liabilities (19.433) (19.433)
------------ ------------
Intercompany loans (1.845.700) (124.958)
------------ ------------
Total liabilities (2.940.309) (1.219.567)
------------ ------------
Total Net equity (1.423.541) 1
------------ ------------
Add back Intercompany loans 1.845.700 -
------------ ------------
Total Net equity (excluding IC) 422.159 1
------------ ------------
Financial Asset at fair value through OCI 1
------------ ------------
23. Tangible and intangible assets
As at 31 December 2020 the intangible assets were composed of
the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of EUR103.193
(2019: EUR103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to EUR103.193 (2018:
EUR103.193) and therefore net value amounts to EUR0 (2019:
EUR0).
As at 31 December 2020 the tangible non-current assets under
continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of EUR2.859 (2019:
EUR566).
As at 31 December 2020 the tangible non-current assets under
discontinued operations mainly consisted of the machinery and
equipment used for servicing the Group's investment properties in
Ukraine and Romania (Greece and Bulgaria only for 2019), amount to
EUR77.977 (2019:EUR60.741). Accumulated depreciation as at the
reporting date amounts to EUR65.621 (2019: EUR46.399).
24. Long Term Receivables and prepayments
31 Dec 31 Dec 31 Dec 31 Dec
2020 2020 2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Long Term Receivables 836 315.000 852 315.265
------------ ------------- ------------ -------------
Total 836 315.000 852 315.265
------------ ------------- ------------ -------------
Long term receivables mainly include the cash collateral
existing in favor of Piraeus Leasing.
25. Inventory
31 Dec 31 Dec 31 Dec 31 Dec 2019
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
At 1 January - - - 4.604.044
------------ ------------- ------------ -------------
Disposal of the asset (Note
20) - - - (4.604.044)
------------ ------------- ------------ -------------
At 31 December - - - -
------------ ------------- ------------ -------------
The residential portfolio in Boyana, Sofia, Bulgaria is
classified as Inventory.
Boyana residential portfolio was sold within 2019.
26. Prepayments and other current assets
31 Dec 31 Dec 31 Dec 31 Dec 2019
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Trade and other receivables 307.549 487.185 1.053.809 437.183
------------ ------------- ------------ -------------
Bank Loan pending transfer
(Note 20) - - - 775.641
------------ ------------- ------------ -------------
Receivable from Arcona (Note - -
20) - 4.030.233
------------ ------------- ------------ -------------
VAT and other tax receivables 239.191 105.348 145.910 111.350
------------ ------------- ------------ -------------
Deferred expenses - 1.095 14.533 15.245
------------ ------------- ------------ -------------
Receivables due from related
parties 45.077 10.783 71.147 6.927
------------ ------------- ------------ -------------
Loan receivables from 3(rd)
parties 6.365.654 124.958 5.575.555 124.958
------------ ------------- ------------ -------------
Loan to associates (Note 40.4) 9.026 301.600 -8.700 292.208
------------ ------------- ------------ -------------
Allowance for impairment of
prepayments and other current
assets (86.421) (282.842) (65.974) (292.740)
------------ ------------- ------------ -------------
Total 6.880.076 748.127 10.833.913 1.470.772
------------ ------------- ------------ -------------
Trade and other receivables mainly include receivables from
tenants and prepayments made for services.
Bank Loan pending transfer refers to the agreement, as part of
the transaction for the sale of Boyana to Arcona, of the transfer
of the relevant loan at Sertland level to Arcona upon signing
relevant documentation with Alpha Bank. The transfer completed
effectively in August 2020 (Note 20).
Receivables from Arcona refer to the consideration shares and
warrants in relation to the disposal of Boyana asset, which in 2019
at year end were in escrow account, agreed then to be released to
the Company upon agreement of the extension terms of the associated
loans. The consideration shares and warrants were released
effectively in February 2020. The initial amount of the Receivable
is EUR4.241.544 and the impairment charge at the year end was
EUR211.310, resulting in a net amount EUR4.030.233 (Note 20).
Within 2020 this receivable is converted into shares.
VAT receivable represent VAT which is refundable in Romania,
Cyprus and Ukraine.
Deferred expenses include legal, advisory, consulting and
marketing expenses related to ongoing share capital increase and
due diligence expenses related to the possible acquisition of
investment properties.
Loan receivables from 3(rd) parties include an amount of
EUR4.580.000 provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians
portfolio) in Romaniaplus associated interest of EUR1.071.271 (2019
EUR845.638) less accumulated expected credit loss of EUR54.256. The
loan provided initially with a convertibility option which was not
exercised. According to the last addendum the loan had certain
one-off and monthly payments for a period until 30 June 2020 and is
fully payable 12 months afterwards. The two parties are currently
engaged in discussions for agreeing and signing a new addendum with
a new re-payment schedule.The loan is bearing a fixed interest rate
of 10% and the Company is in the process of getting agreed security
in the form of pledge of shares following the relevant process
provided in the initial Loan Agreement.
Moreover, Loans receivables from 3(rd) parties include an amount
of EUR750.000 which represents effectively part of the
consideration for the disposal of Boyana asset to Arcona deferred
until 15/6/2021 in the form of a loan. The loan that currently has
been re-paid, had a scaling structure of interest rates: 6% until
31/3/2020, 8% until 30/6/2020, 10% until 31/12/2020 and 11% until
maturity. Final agreement provides also a reverse payable of the
Company of EUR111k which is classified appropriately.
26. Prepayments and other current assets (continued)
Loan receivable from 3(rd) parties under discontinued operations
include a loan receivable from SecMon Real Estate Srl which since
January 2018 is classified as Financial Asset at Fair value through
OCI (Note 22).
Loan to associates reflects a loan receivable from GreenLake
Development Srl, holding company of GreenLake Project-Phase A
(Notes 21 and 40.4).
27. Financial Assets at FV through P&L
The table below presents the analysis of the balance of
Financial Assets at FV through P&L in relation to the continued
operations of the Company:
31 Dec 2020 31 Dec 2019
EUR EUR
------------ ------------
Arcona shares 3.549.453 3.735.555
------------ ------------
Transfer from receivables 4.030.234 -
------------ ------------
FV change in Arcona
shares (796.045) (186.102)
------------ ------------
Arcona shares at reporting 6.783.642 3.549.453
date
------------ ------------
Warrants over Arcona
shares 32.190 1
------------ ------------
Transfer from receivables 1 -
------------ ------------
FV change in warrants (28.589) 32.189
------------ ------------
Arcona warrants at
reporting date 3.602 32.190
------------ ------------
Total Financial Assets 6.787.244 3.581.643
at FV
------------ ------------
FV change in Arcona
shares (796.045) (186.102)
------------ ------------
FV change in warrants (28.589) 32.189
------------ ------------
Fair Value loss on
Financial Assets at
FV through P&L (824.634) (153.913)
------------ ------------
The Company received during 2019, 277.943 Arcona shares as part
of the disposal of Aisi Bella LLC, the owner company of Bella and
Balabino assets in Ukraine, to Arcona Property Fund N.V. Moreover,
the Company received during 2020, 315.591 Arcona shares held
previously in escrow, as part of the disposal of Boyana in Sofia,
and therefore a relevant transfer from receivables account took
place. At the end of the reporting period the shares revalued at
their fair value based on the NAV per share of Arcona at the same
date, and as a result a relevant fair value loss of EUR 796.045 is
recognized.
On top of the aforementioned shares, the Company received for
the sale of Bella and Balabino assets, 67.063 warrants over shares
in Arcona for a consideration of EUR 1, and 77.201 warrants over
Arcona shares for the sale of Boyana, held previously in escrow,
for a consideration of EUR 1. The warrants are exercisable upon the
volume weighted average price of Arcona shares traded on a
regulated market at EUR 8,10 or higher. At year end, the warrants
are re-valued to fair value and as a result a relevant loss of EUR
28.589 is recognized. The terms and assumptions used for such
warrant re-valuation are:
-- Current stock price (as retrieved from Amsterdam Stock
Exchange): EUR 3,93 per share
-- Strike price of the warrants: EUR 8,10 per share
-- Expiration date: 1 November 2024
-- Standard deviation of stock price: 19,69%
-- Annualized dividend yield on shares: 0%
-- 5 year Government Bond rate (weighted average rate of
Government Bonds of countries that Arcona is exposed): 1,104%
28. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec 31 Dec 31 Dec 2019
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Cash with banks in USD 15.755 - 15.700 -
------------ ------------- ------------ -------------
Cash with banks in EUR 33.234 216.224 151.349 51.539
------------ ------------- ------------ -------------
Cash with banks in UAH 6 418 59 95
------------ ------------- ------------ -------------
Cash with banks in RON 79.577 524.146 40.143 478.740
------------ ------------- ------------ -------------
Cash with banks in GBP 1.287 - - -
------------ ------------- ------------ -------------
Total 129.859 740.788 207.251 530.374
------------ ------------- ------------ -------------
29. Share capital
Number of Shares during 2020 and 2019
31 December 2018 24 December 2019 31 December 2019 31 December 2020
Increase of share capital
----------------- -------------------------- ----------------- -----------------
Authorised
----------------- -------------------------- ----------------- -----------------
Ordinary shares of EUR 0,01 989.869.935 - 989.869.935 989.869.935
----------------- -------------------------- ----------------- -----------------
Total ordinary shares 989.869.935 - 989.869.935 989.869.935
----------------- -------------------------- ----------------- -----------------
RCP Class A Shares of EUR0,01 - - - -
----------------- -------------------------- ----------------- -----------------
RCP Class B Shares of EUR0,01 8.618.997 - 8.618.997 8.618.997
----------------- -------------------------- ----------------- -----------------
Total redeemable shares 8.618.997 - 8.618.997 8.618.997
----------------- -------------------------- ----------------- -----------------
Issued and fully paid
----------------- -------------------------- ----------------- -----------------
Ordinary shares of EUR0,01 127.270.481 1.920.961 129.191.442 129.191.442
----------------- -------------------------- ----------------- -----------------
Total ordinary shares 127.270.481 1.920.961 129.191.442 129.191.442
----------------- -------------------------- ----------------- -----------------
Total 127.270.481 1.920.961 129.191.442 129.191.442
----------------- -------------------------- ----------------- -----------------
Nominal value (EUR) for 2020 and 2019
EUR 31 December 2018 24 December 2019 31 December 2019 31 December 2020
Increase of share capital
----------------- -------------------------- ----------------- -----------------
Authorised
----------------- -------------------------- ----------------- -----------------
Ordinary shares of EUR 0,01 9.898.699 - 9.898.699 9.898.699
----------------- -------------------------- ----------------- -----------------
Total ordinary shares 9.898.699 - 9.898.699 9.898.699
----------------- -------------------------- ----------------- -----------------
RCP Class A Shares of EUR0,01 - - - -
----------------- -------------------------- ----------------- -----------------
RCP Class B Shares of EUR0,01 86.190 - 86.190 86.190
----------------- -------------------------- ----------------- -----------------
Total redeemable shares 86.190 - 86.190 86.190
----------------- -------------------------- ----------------- -----------------
Issued and fully paid
----------------- -------------------------- ----------------- -----------------
Ordinary shares of EUR0,01 1.272.072 19.209 1.291.281 1.291.281
----------------- -------------------------- ----------------- -----------------
Total ordinary shares 1.272.072 19.209 1.291.281 1.291.281
----------------- -------------------------- ----------------- -----------------
Total 1.272.072 19.209 1.291.281 1.291.281
----------------- -------------------------- ----------------- -----------------
The comparative figures in these financial statements have been
restated to correct an identified error, which necessitated
restatement of values between the Company's equity captions. More
specifically, as at 31 December 2019 and as at 1 January 2019, the
share capital has been decreased by EUR630, the share premium has
been increased by EUR183.220 and the retained earnings have been
decreased by EUR182.590. Total equity has remained unaffected.
29.1 Authorised share capital
T he authorised share capital of the Company as at the date of
issuance of this report is as follows:
a) 989.869.935 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 29.3) .
29.2 Issued Share Capital
As at the end of 2018, the issued share capital of the Company
was as follows:
a) 127.270.481 Ordinary Shares of EUR0,01 nominal value each,
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 29.3),
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each.
In respect of the Redeemable Preference Class B Shares , issued
in connection to the acquisition of Craiova Praktiker, following
the holders of such shares notifying the Company of their intent to
redeem within 2016, the Company:
- for the Redeemable Preference Class B Shares , in lieu of
redemption the Company gave its 20% holding in Autounion (Note
29.3) in October 2016, to the Craiova Praktiker seller BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. and final settlement for
any resulting difference is expected to be provided by Cypriot
Courts (Note 41.3). As soon as the case is settled, the Company
will proceed with the cancellation of the Redeemable Preference
Class B Shares .
On 24(th) December 2019 the Company proceeded with the issue of
1.920.961 new Ordinary Shares as follows:
i. 1.219.000 new Ordinary Shares to certain advisors, directors
and executives of the Company involved in the closing of the Stage
I of the Arcona Transaction by means of settling relevant Company's
liabilities.
ii. 437.676 new Ordinary Shares to directors of the Company in
lieu of H1 2019 and before H2 2016 fees.
iii. 200.000 new Ordinary Shares to certain advisor in lieu of
cash fees for financial advisory services rendered in 2019.
iv. 64.285 new Ordinary Shares to certain executive of the
Company in lieu of cash fees for services rendered in 2018.
Following shares issuance completed within 2019, the issued
share capital of the Company as at the date of issuance of this
report is as follows:
a) 129.191.442 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 29.3) .
29.3 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as
follows:
Number of (as at) 31 December 2020 (as at) 31 December 2019
Ordinary shares of EUR0,01 Issued and Listed on AIM 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Total number of Shares Non-Dilutive Basis 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Total number of Shares Full Dilutive Basis 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Options - - -
------------------------- ------------------------- -------------------------
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker
Craiova asset acquisition do not have voting rights but have
economic rights at par with ordinary shares. As at the reporting
date all of the Redeemable Preference Class B Shares have been
redeemed but the Company is in legal proceedings with the vendor in
respect of a final settlement (Notes 34, 41.3).
29.4 Other share capital related matters
Pursuant to decisions taken by the AGM of 31(st) December 2018,
the Board has been authorized and empowered to:
- issue and allot up to 20.000.000 ordinary shares of euro 0,01
each, at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a
discount to the net asset value per share in the Company which is
in issue immediately prior to the issue of the new shares) and for
such purpose any rights of pre-emption and other rights the
Company's shareholders have or may have by operation of law and/or
pursuant to the articles of association of the Company and/or
otherwise in connection with the authority conferred on the Board
for the issue and allotment of shares in the Company as
contemplated in this resolutions or the issue of shares in the
Company pursuant to such authority be and are hereby irrevocably
and unconditionally waived. The authority conferred by this
resolution expired on 31 December 2019. Under this authority and
following relevant Board resolution on 11/12/2019, the Company
issued 1.920.961 ordinary shares of euro 0,01 each.
- issue up to 15.000.000 Class A Warrants, being convertible to
up to 15.000.000 ordinary share of euro 0,01 each in the Company
upon exercise of the Warrants, with such terms and conditions and
at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a
discount to the net asset value per share in the Company which is
in issue immediately prior to the issue of the Warrants)and for
such purpose any rights of pre-emption and other rights the
Company's shareholders have or may have by operation of law and/or
pursuant to the articles of association of the Company and/or
otherwise in connection with the authority conferred on the Board
for the issue and allotment of shares or Warrants in the Company as
contemplated in this resolution or the issue and allotment of
shares or Warrants in the Company pursuant to such authority be and
are hereby irrevocably and unconditionally waived. The authority
conferred by this resolution shall expire on 31 December 2019. The
Company did not issue any Class A Warrants under this
authority.
30. Foreign Currency Translation Reserve
Exchange differences relate to the translation from the
functional currency to EUR of Group's subsidiaries' accounts and
are recognized by entries made directly to the foreign currency
translation reserve. The foreign exchange translation reserve
represents unrealized profits or losses related to the appreciation
or depreciation of the local currencies against EUR in the
countries where Company's subsidiaries' functional currencies are
not EUR. The Company had foreign exchange losses on translation due
to presentation currency of EUR1.392.155 for 2020, in comparison to
EUR223.135 relevant gains in 2019. Current period's loss resulted
from the devaluation of UAH against EUR by 31% and RON against EUR
by 2%.
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 2020 31 Dec
201 9
------------ -------
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 31 Dec 2020 31 Dec 31 Dec
2020 2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------------ ------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------------ ------------ ------------- ------------ -------------
Principal of bank
Loans
------------------ ------------ ------------- ------------ -------------
Bancpost SA Blooming House - - - 277.802
------------------ ------------ ------------- ------------ -------------
A lpha B ank Romania Romfelt Plaza - - - 51.594
------------------ ------------ ------------- ------------ -------------
EOS Business
Alpha Bank Romania Park - - - 293.466
------------------ ------------ ------------- ------------ -------------
Bancpost SA GreenLake 1.901.094 3.249.926
- Parcel K - -
------------------ ------------ ------------- ------------ -------------
Boyana Residence
(Sertland
Alpha Bank Bulgaria Loan) - - - 666.468
------------------ ------------ ------------- ------------ -------------
Piraeus Bank SA GreenLake-Phase 2.525.938 2.525.938
2 - -
------------------ ------------ ------------- ------------ -------------
Kindergarten
Bancpost SA - SPDI RE - 670.293 - 732.107
------------------ ------------ ------------- ------------ -------------
Loans from other
3(rd) parties and
related parties
(Note 40.5) 2.061.514 235.191 382.455 177.686
------------ ------------- ------------ -------------
Overdrafts - 853 459 2.546
------------ ------------- ------------ -------------
Total principal
of bank and non-bank 5.333.369 7.977.533
Loans 2.061.514 382.914
------------------ ------------ ------------- ------------ -------------
Interest accrued
on bank loans - 952.321 - 922.073
------------ ------------- ------------ -------------
Interests accrued
on non-bank loans 88.863 38.771 45.086 50.054
------------ ------------- ------------ -------------
Total 2.150.377 6.324.461 428.000 8.949.660
------------ ------------- ------------ -------------
31 Dec 31 Dec 2020 31 Dec 31 Dec
2020 2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Current portion 2.054.400 3.510.366 420.751 3.451.833
------------ ------------- ------------ -------------
Non-current portion 95.977 2.814.095 7.249 5.497.827
------------ ------------- ------------ -------------
Total 2.150.377 6.324.461 428.000 8.949.660
------------ ------------- ------------ -------------
Continued Operations
Loans from other 3(rd) parties and related parties under
continued operations include among others:
) Loans from 3 Directors of EUR375k provided as bridge financing
for future property acquisitions . The loans bear interest 8%
annually and are repayable on 31 August 2021 (Note 40.5) .
B) Safe Growth Investments, a third party company, provided a
loan of EUR1m to the Company in November 2020 to be used for
general working capital purposes. The loan bears interest of 5,35 %
per annum and is payable by end 2021.
Discontinued Operations
Ketiza Real Estate Srl entered in 2012 into a loan agreement
with Bancpost SA for a credit facility for financing the
acquisition of the Blooming House and 100% of the remaining
(without VAT) construction works of Blooming House project. As at
the end of the reporting period the loan was fully repaid. The loan
had borne interest of EURIBOR 3M plus 3,5% and had secured by all
assets of Ketiza Real Estate Srl, as well as its shares and is
being repaid through sales proceeds
SecRom Real Estate Srl entered (2009) into a loan agreement with
Alpha Bank Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. During 2018,
SecRom Real Estate Srl was merged with N-E Real Estate Park First
Phase Srl as a result the loan was transferred to N-E Real Estate
Park First Phase Srl. As at the end of the reporting period, the
the loan was fully repaid. The loan had borne interest of EURIBOR
1M+4.25% and was repayable on the basis of investment property
sales.
Moselin Investments Srl entered in 2010 into a construction loan
agreement with Bancpost SA covering the construction works of
Parcel K GreenLake project. As at the end of the reporting period
the balance of the loan was EUR1.901.094 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.
Sertland Properties Limited entered in 2008 into a loan
agreement with Alpha Bank Bulgaria for an acquisition loan related
to the acquisition of Boyana Residence ood. As at the end of 2019,
the balance of the loan was EUR666.468 bearing interest of EURIBOR
3M plus 5,75%. On 29 July 2020 the loan was transferred to Arcona
as part of the transaction for the sale of Boyana Residence ood in
Bulgaria.
SEC South East Continent Unique Real Estate (Secured)
Investments Limited has a debt facility with Piraeus Bank for the
acquisition of the GreenLake land in Bucharest Romania. As at the
end of the reporting period the balance of the loan was
EUR2.525.938 plus accrued interest EUR948.700 and bears interest of
EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution.
During September 2019, the company received a termination notice
from Piraeus Bank and a payment order from court in relation to
this loan, and currently relevant discussions with the Bank are
taking place for a mutual agreed solution.
N-E Real Estate Park First Phase Srl entered in 2016 into a loan
agreement with Alpha Bank Romania for a credit facility of
EUR1.000.000 for working capital purposes. As at the end of the
reporting period, the balance of the loan was fully repaid. The
loan had borne interest of EURIBOR 1M+4,5% and was repayable from
the free cash flow resulting from the rental income of company's
property. The loan has a maturity in April 2024 and was 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 EUR670.293 and bears interest of Euribor 3m
plus 4,6% per annum. The loan is repayable by 2027.
Loans from other 3(rd) parties and related parties under
discontinued operations includes borrowings from non-controlling
interest parties. During the last nine years and in order to
support the GreenLake project the non-controlling shareholders of
Moselin Investments Srl and SPDI Real Estate SRL (other than the
Group) have contributed their share of capital injections by means
of shareholder loans. The loans bear interest 4% annually.
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, 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 2020 31 Dec 2020 31 Dec 31 Dec
2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Payables to third parties 3.243.465 841.122 3.729.592 854.974
------------ ------------- ------------ -------------
Payables to related parties
(Note 40.2) 582.829 - 606.214 177
------------ ------------- ------------ -------------
Deferred income from tenants - 7.965 - 8.216
------------ ------------- ------------ -------------
Accruals 101.112 21.385 99.744 151.899
------------ ------------- ------------ -------------
Pre-sale advances (Advances
received for sale of properties) 109.556 - 144.045 -
------------ ------------- ------------ -------------
Total 4.036.962 870.472 4.579.595 1.015.266
------------ ------------- ------------ -------------
31 Dec 2020 31 Dec 2020 31 Dec 31 Dec
2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Current portion 4.036.962 862.507 4.579.595 1.007.050
------------- ------------- ------------ -------------
Non-current portion - 7.965 - 8.216
------------- ------------- ------------ -------------
Total 4.036.962 870.472 4.579.595 1.015.266
------------- ------------- ------------ -------------
Payables to third parties represents: a) payables due to
Bluehouse Capital (under continued operations) as a result of the
Redeemable Convertible Class B share redemption (Note 29.3) which
is under legal proceedings for a final settlement (Note 41.3) , b)
amounts payable to various service providers including auditors,
legal advisors, consultants and third party accountants related to
the current operations of the Group, and c) guarantee amounts
collected from tenants.
Payables to related parties under continued operations represent
amounts due to directors and accrued management remuneration (Note
40.2). Payables to related parties under discontinued operations
represent payables to non-contolling intetest shareholders.
Deferred income from tenants represents advances from tenants
which will be used as future rental income and utilities
charges.
Accruals mainly include the accrued, administration fees,
accounting fees, facility management and other fees payable to
third parties.
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 2020 31 Dec 2020 31 Dec 31 Dec
2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Deposits from tenants non-current - 64.231 - 67.269
------------- ------------- ------------ -------------
Total - 64.231 - 67.269
------------- ------------- ------------ -------------
Deposits from tenants appearing under non-current liabilities
include the amounts received from the tenants of Innovations
Logistics Park, EOS Business Park and companies representing
residential segment as advances/guarantees and are to be reimbursed
to these clients at the expiration of the lease agreements.
36. Taxation
31 Dec 2020 31 Dec 2020 31 Dec 31 Dec
2019 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Corporate income tax - non
current 144.982 30.374 167.961 43.535
------------ ------------- ------------ -------------
Defence tax - non current 32.801 15 28.130 15
------------ ------------- ------------ -------------
Tax provision - non current 399.450 - 399.450 -
------------ ------------- ------------ -------------
Corporate income tax - current 535.673 58.960 450.450 56.865
------------ ------------- ------------ -------------
Other taxes including VAT
payable - current 163.972 165.521 99.669 93.322
------------ ------------- ------------ -------------
Provisions - current 6.549 22.405 43 22.826
------------ ------------- ------------ -------------
Total Provisions and Taxes
Payables 1.283.427 227.275 1.145.703 216.563
------------ ------------- ------------ -------------
Corporate income tax represents taxes payable in Cyprus and
Romania.
Other taxes represent local property taxes and VAT payable in
Romania.
Non current amounts represent the part of the settlement plan
agreed with the Cyprus tax authorities up to 2022.
37. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR9.235.266 and the current portion
of EUR456.763 (31 December 2019: EUR9.699.050 and 385.420,
accordingly).
Discontinued operations
31 Dec 2020 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- ---------- ----------
43.2
&
Less than one year 43.6 917.759 455.241 462.518
------- -------------- ---------- ----------
Between two and five years 5.265.225 1.414.550 3.850.675
------- -------------- ---------- ----------
More than five years 5.506.778 209.027 5.297.751
------- -------------- ---------- ----------
11.689.762 2.078.818 9.610.944
------- -------------- ---------- ----------
Accrued Interest 81.085
-------------- ---------- ----------
Total Finance Lease Liabilities 9.692.029
(Note 9d)
-------------- ---------- ----------
31 Dec 2019 Note Minimum lease Interest Principal
payments
EUR EUR EUR
--------- -------------- ---------- -----------
43.2
Less than one year & 43.6 861.304 475.884 385.420
--------- -------------- ---------- -----------
Between two and five years 5.637.702 1.611.343 4.026.359
--------- -------------- ---------- -----------
More than five years 6.053.782 381.375 5.672.407
--------- -------------- ---------- -----------
12.552.788 2.468.602 10.084.186
--------- -------------- ---------- -----------
Accrued Interest 284
-------------- ---------- -----------
Total Finance Lease Liabilities 10.084.470
(Note 9d)
-------------- ---------- -----------
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 EUR31.180 under current and non-current
portion. The Group's obligations under finance leases are secured
by the lessor's title to the leased assets.
37.2 Sale and Lease Back Agreements
A. Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations
Logistics Park in Bucharest, owned by Best Day Real Estate Srl,
through a sale and lease back agreement with Piraeus Leasing
Romania SA. As at the end of the reporting period the balance is
EUR6.707.475, bearing interest rate at 3M Euribor plus 4,45%
margin, being repayable in monthly tranches until 2026 with a
balloon payment of EUR5.244.926. At the maturity of the lease
agreement and upon payment of the balloon Best Day Real Estate Srl
will become owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. Best Day Real Estate Srl pledged its future receivables from its tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved
accounts opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash
collateral in the amount of EUR250.000 in Piraeus Leasing Romania,
which had been deposited as follows, half in May 2014 and half in
May 2015.
SPDI provided a corporate guarantee in favor of the Leasing
company related to the liabilities of Best Day Real Estate Srl
arising from the sale and lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by 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
EUR2.953.273 bearing interest rate at 3M Euribor plus 5,25% margin,
being repayable in monthly tranches until 2024 with a balloon
payment of EUR2.546.600. At the maturity of the lease agreement and
upon payment of the balloon, N-E Real Estate Park First Phase Srl
will become owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. N-E Real Estate Park First Phase Srl pledged its future receivables from its tenants.
2. N-E Real Estate Park First Phase Srl pledged Bank Guarantee receivables from its tenants.
3. N-E Real Estate Park First Phase Srl pledged its shares.
4. N-E Real Estate Park First Phase Srl pledged all current and
reserved accounts opened in Alpha Bank Romania SA.
5. N-E Real Estate Park First Phase Srl is obliged to provide
cash collateral in the amount of EUR300.000 in Alpha Bank Romania
SA, in equal annual installments starting with the 5(th) year of
the agreement.
6. SPDI provided a corporate guarantee in favor of the Bank
related to the liabilities of N-E Real Estate Park First Phase Srl
arising from the sales and lease back agreement.
38. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
31 Dec 2020 31 Dec 201 9
Issued ordinary shares capital 129.191.442 129.191.442
------------ -------------
Weighted average number of ordinary shares (Basic) 129.191.442 127.275.743
------------ -------------
Diluted weighted average number of ordinary shares 129.191.442 127.275.743
------------ -------------
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2020 31 Dec 201 9
EUR EUR
------------ -------------
Loss after tax attributable to owners of the parent (4.339.866) (7.201.720)
------------ -------------
Basic (0,03) (0,06)
------------ -------------
Diluted (0,03) (0,06)
------------ -------------
c. Basic diluted and adjusted earnings per share from discontinued operations
Earnings per share 31 Dec 2020 31 Dec 201 9
EUR EUR
------------ -------------
Loss after tax from discontinued operations attributable to owners of the parent (2.851.952) (4.846.634)
------------ -------------
Basic (0,02) (0,04)
------------ -------------
Diluted (0,02) (0,04)
------------ -------------
d. Net assets per share
Net assets per share 31 Dec 2020 31 Dec 201 9
EUR EUR
------------ -------------
Net assets attributable to equity holders of the parent 23.712.973 29.392.468
------------ -------------
Number of ordinary shares 129.191.442 129.191.442
------------ -------------
Diluted number of ordinary shares 129.191.442 129.191.442
------------ -------------
Basic 0,18 0,23
------------ -------------
Diluted 0,18 0,23
------------ -------------
39. Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment - Victini Logistics (sold within 2019), Innovations Logistics Park
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - 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 2020
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- -------- ------------ ------------ ---------- ------------
Segment profit
---------- ---------- -------- ------------ ------------ ---------- ------------
Rental income
(Note 10) - - - - - 583.683 583.683
---------- ---------- -------- ------------ ------------ ---------- ------------
Service charges
and utilities
income (Note
10) - - - - - 192.017 192.017
---------- ---------- -------- ------------ ------------ ---------- ------------
Property Management
income (Note
10) - - - - - 20.000 20.000
---------- ---------- -------- ------------ ------------ ---------- ------------
Impairment of
financial investments
( Note 27 ) - - - - (796.045) (28.589) (824.634)
---------- ---------- -------- ------------ ------------ ---------- ------------
Profit from discontinued
operation (Note
9b) (158.082) (419.148) 145.586 30.200 (2.243.899) (177.448) (2.822.791)
---------- ---------- -------- ------------ ------------ ---------- ------------
Segment profit (158.082) (419.148) 145.586 30.200 (3.039.944) 589.663 (2.851.725)
---------- ---------- -------- ------------ ------------ ---------- ------------
Administration
expenses
(Note 12) - - - - - - (1.701.181)
---------- ---------- -------- ------------ ------------ ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - 191.222
---------- ---------- -------- ------------ ------------ ---------- ------------
Finance income
(Note 16) - - - - - - 503.527
---------- ---------- -------- ------------ ------------ ---------- ------------
Interest expenses
(Note 16) - - - - - - (208.809)
---------- ---------- -------- ------------ ------------ ---------- ------------
Other finance
costs (Note 16) - - - - - - (65.942)
---------- ---------- -------- ------------ ------------ ---------- ------------
Profit from discontinued
operations (Note
9b) - - - - - - (1.439.801)
---------- ---------- -------- ------------ ------------ ---------- ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (60.142)
---------- ---------- -------- ------------ ------------ ---------- ------------
Income tax expense
(Note 18) - - - - - - (117.656)
---------- ---------- -------- ------------ ------------ ---------- ------------
Exchange difference
on I/C loan to
foreign holdings
(Note 17b) - - - - - - (61.936)
---------- ---------- -------- ------------ ------------ ---------- ------------
Exchange difference
on translation
foreign holdings
(Note 30) - - - - - - (1.392.155)
---------- ---------- -------- ------------ ------------ ---------- ------------
Total Comprehensive
Income - - - - - - 7.204.597
---------- ---------- -------- ------------ ------------ ---------- ------------
Continued Operations
Profit and Loss for the year 2019
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------- ----------- -------- ------------ ------------ ---------- ------------
Segment profit
------------- ----------- -------- ------------ ------------ ---------- ------------
Rental income
(Note 10) - - - - - 364.034 364.034
------------- ----------- -------- ------------ ------------ ---------- ------------
Service charges
and utilities
income (Note
10) - - - - - 93.416 93.416
------------- ----------- -------- ------------ ------------ ---------- ------------
Impairment of
financial investments
( Note 27 ) (153.913) (153.913)
-------- ------------ ------------ ---------- ------------
Profit from discontinued
operation (Note
9b) (1.233.371) 1.307.445 171.395 (88.634) (3.049.171) (92.097) (2.984.433)
------------- ----------- -------- ------------ ------------ ---------- ------------
Segment profit (1.233.371) 1.307.445 171.395 (88.634) (3.203.084) 365.353 (2.680.896)
------------- ----------- -------- ------------ ------------ ---------- ------------
Administration -
expenses
(Note 12) - - - - - (2.442.171)
------------- ----------- -------- ------------ ------------ ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - (442.629)
------------- ----------- -------- ------------ ------------ ---------- ------------
Finance income
(Note 16) - - - - - - 474.584
------------- ----------- -------- ------------ ------------ ---------- ------------
Interest expenses
(Note 16) - - - - - - (119.525)
------------- ----------- -------- ------------ ------------ ---------- ------------
Other finance
costs (Note 16) - - - - - (17.725)
------------- ----------- -------- ------------ ------------ ---------- ------------
Profit from discontinued -
operations (Note
9b) - - - - - (1.817.410)
------------- ----------- -------- ------------ ------------ ---------- ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (74.779)
------------- ----------- -------- ------------ ------------ ---------- ------------
Income tax expense
(Note 18) - - - - - (36.380)
------------- ----------- -------- ------------ ------------ ---------- ------------
Exchange difference
on I/C loan to
foreign holdings
(Note 17b) - - - - - - 66.557
------------- ----------- -------- ------------ ------------ ---------- ------------
Exchange difference
on translation
foreign holdings
(Note 30) - - - - - - 223.135
------------- ----------- -------- ------------ ------------ ---------- ------------
Total Comprehensive -
Income - - - - - (6.867.239)
------------- ----------- -------- ------------ ------------ ---------- ------------
* 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.
Discontinued Operations
Profit and Loss for the year 2020
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------ ------------
Segment profit
---------- ------------
Property Sales
income (Note
14) - - - 594.991 1.832.193 - 2.427.184
------------ ------------
Cost of Property
sold (Note
14) - - - (564.715) (1.580.583) - (2.145.298)
------------ ------------
Rental income
(Note 10) 228.820 648.499 122.928 8.047 - - 1.008.294
------------ ------------
Service charges
and utilities
income (Note
10) 27.812 942 - 2.310 - - 31.064
------------ ------------
Service and
Property Management
income (Note
10) - - 1.988 - - - 1.988
------------ ------------
Valuation gains/(losses)
from investment
property (Note
13) (305.894) (862.021) 26.785 (3.179) (2.351.391) - (3.495.700)
------------ ------------
Share of profits/(losses)
from associates
(Note 21) - (179.775) - - - - (179.775)
------------ ------------
Asset operating
expenses
(Note 11) (108.820) (26.793) (4.127) (9.242) (144.118) (177.448) (470.548)
------------ ------------
Segment profit (158.082) (419.148) 147.574 28.212 (2.243.899) (177.448) (2.822.791)
------------ ------------
Administration
expenses
(Note 12) - - - - - - (217.988)
------------ ------------
Other (expenses)/income,
net (Note 15) - - - - - - 3.058
------------ ------------
Finance income
(Note 16) - - - - - - 9.392
------------ ------------
Interest expenses
(Note 16) - - - - - - (863.013)
------------ ------------
Other finance
costs (Note
16) - - - - - - (7.938)
------------ ------------
Foreign exchange
losses, net
(Note 17a) - - - - - - (318.925)
Income tax
expense (Note
18) - - - - - - (44.387)
Loss for the
year - - - - - - (4.262592)
Discontinued Operations
Profit and Loss for the year 2019
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
------------ ---------- -------- ------------ ------------ ------------
Segment profit
------------ ---------- -------- ------------ ------------
Property Sales
income (Note 14) - 244.212 - 363.861 - - 608.073
------------ ---------- -------- ------------ ------------ ------------
Cost of Property
sold (Note 14) - (135.242) - (480.235) - - (615.477)
------------ ---------- -------- ------------ ------------ ------------
Rental income (Note
10) 952.902 640.651 114.320 18.688 417 - 1.726.978
------------ ---------- -------- ------------ ------------ ------------
Service charges
and utilities income
(Note 10) 28.574 4.698 - 710 - - 33.982
------------ ---------- -------- ------------ ------------
Sale of electricity
(Note 10) 128.623 - - - - - 128.623
------------ ---------- -------- ------------ ------------ ------------
Service and Property
Management income
(Note 10) - - - 2.125 - - 2.125
Valuation gains/(losses)
from investment
property (Note
13) 257.785 293.711 66.423 19.200 (219.267) - 417.852
------------ ---------- -------- ------------ ------------
Loss on disposal
of subsidiary ( (2.315. ( 4.992.763
Note 20) 343 ) - - - (2.677.420) - )
Share of profits/(losses)
from associates
(Note 21) - 297.985 - - - - 297.985
------------ ---------- -------- ------------ ------------ ------------
Asset operating
expenses
(Note 11) (285.912) (38.570) (9.348) (12.983) (152.901) (92.097) (591.811)
------------ ---------- -------- ------------ ------------ ------------
Segment profit (1.233.371) 1.307.445 171.395 (88.634) (3.049.171) (92.097) (2.984.433)
------------ ---------- -------- ------------ ------------ ------------
Administration
expenses
(Note 12) - - - - - - (220.509)
------------ ---------- -------- ------------ ------------ ------------
Other (expenses)/income,
net (Note 15) - - - - - - 312.801
Finance income
(Note 16) - - - - - - 10.022
------------ ---------- -------- ------------ ------------ ------------
Interest expenses
(Note 16) - - - - - - (1.406.001)
------------ ---------- -------- ------------ ------------ ------------
Other finance costs
(Note 16) - - - - - - (24.528)
------------ ---------- -------- ------------ ------------ ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (436.880)
------------ ---------- -------- ------------ ------------
Income Tax (Note
18) - - - - - - (52.315)
------------ ---------- -------- ------------ ------------
Loss for the year - - - - - - (4.801.843)
------------ ---------- -------- ------------ ------------ ------------
Total Operations
Balance Sheet as at 31 December 2020
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR
-----------
Assets
-----------
Long-term receivables
and prepayments - - - - - 836 836
Financial Assets
at FV through
P&L - - - - - 6.787.244 6.787.244
-----------
Assets held
for sale 10.415.000 11.771.656 1.438.000 152.501 15.444.794 2.569.458 41.791.409
-----------
Segment assets 10.415000 11.771.656 1.438.000 152.501 15.444.794 9.357.538 48.579.489
-----------
Tangible and
intangible assets 2.859
Prepayments
and other current
assets 6.880.076
-----------
Cash and cash
equivalents 129.859
-----------
Total assets 55.592.283
-----------
Liabilities
associated with
assets classified
as held for
disposal - - - - - 2.150.377 2.150.377
-----------
Borrowings 6.771.706 2.953.643 873.108 -5.482.264 1.147.747 17.228.468
-----------
Segment liabilities 6.771.706 2.953.643 873.108 -5.482.264 3.299.016 19.378.845
-----------
Trade and other
payables 4.036.962
-----------
Taxation 1.283.427
-----------
Bonds 1.258.923
Total liabilities 25.958.157
Total Operations
Balance Sheet as at 31 December 2019
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
Assets
Long-term receivables
and prepayments 852 - - - - - 852
Financial Assets
at FV through
P&L - - - - - 3.581.643 3.581.643
Assets held
for sale 10.915.000 13.146.286 1.438.000 667.001 21.709.852 2.015.488 49.891.627
Segment assets 10.915.852 13.146.286 1.438.000 667.001 21.709.852 5.597.131 53.474.122
Tangible and
intangible assets - - - - - - 566
Prepayments
and other current
assets - - - - - - 10.833.913
Cash and cash
equivalents - - - - - - 207.251
Total assets - - - - - - 64.515.852
Liabilities
associated with
assets classified
as held for
disposal 6.921.741 3.518.711 930.730 281.399 7.448.818 1.231.829 20.333.228
Borrowings 7.248 - - - 459 420.293 428.000
Segment liabilities 6.928.989 3.518.711 930.730 281.399 7.449.277 1.652.122 20.761.228
Trade and other
payables - - - - - - 4.579.595
Taxes payable
and provisions - - - - - - 1.145.703
Bonds - - - - - - 1.190.603
Total liabilities - - - - - - 27.677.129
Discontinued operations
Assets and Liabilities held for sale 2020
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
-----------
Assets
-----------
Investment properties 10.100.000 6.700.000 1.438.000 152.500 15.444.794 1.068.186 34.903.480
-----------
Long-term receivables
and prepayments 315.000 - - - - - 315.000
Investments
in associates - 5.071.656 - - - - 5.071.656
-----------
Financial Asset
at FV through
OCI - - - 1 - - 1
Segment assets 10.415.000 11.771.656 1.438.000 152.501 15.444.794 1.068.186 40.290.137
-----------
Tangible and
intangible assets 12.357
Prepayments
and other current
assets 748.127
-----------
Cash and cash
equivalents 740.788
-----------
Total assets 41.791.409
-----------
Borrowings - 270 873.108 -5.451.083 - 6.324.461
-----------
Finance lease
liabilities 6.707.475 2.953.373 - - 31.181 - 9.692.029
-----------
Deposits from
tenants 64.231 - - - - - 64.231
-----------
Segment liabilities 6.771.706 2.953.643 873.108 -5.482.264 - 16.080.721
-----------
Trade and other
payables 870.472
-----------
Taxation 277.275
-----------
Total liabilities 17.228.468
Discontinued operations
Assets and Liabilities held for sale 2019
Warehouse Office Retail Residential Land plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
-----------
Assets
-----------
Investment properties 10.600.000 7.766.000 1.438.000 667.000 21.709.852 - 42.180.852
-----------
Long-term receivables
and prepayments 315. 000 265 - - - - 315. 265
-----------
Investments
in associates - 5.380.021 - - - - 5.380.021
Financial Asset
at FV through
OCI - - - 1 - - 1
-----------
Segment assets 10.915.000 13.146.286 1.438.000 667.001 21.709.852 - 47.876.139
-----------
Tangible and
intangible assets - - - - - - 14.342
Prepayments
and other current
assets - - - - - - 1.470.772
-----------
Cash and cash
equivalents - - - - - - 530.374
-----------
Total assets - - - - - - 49.891.627
-----------
Borrowings 36 345.911 930.730 278.360 7.394.623 - 8.949.660
-----------
Finance lease
liabilities 6.857.475 3.172.800 - - 54.195 - 10.084.470
-----------
Deposits from
tenants 64.230 - 3.039 - - 67.269
-----------
Segment liabilities 6.921.741 3.518.711 930.730 281.399 7.448.818 - 19.101.399
-----------
Trade and other
payables - - - - - - 1.015.266
-----------
Taxes payable
and provisions - - - - - - 216.563
-----------
Total liabilities - - - - - - 20.333.228
Geographical information
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
Income ( Note 10) Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- -------------- -------------
EUR EUR EUR EUR
------------ ------------- -------------- -------------
Ukraine - - - -
------------ ------------- -------------- -------------
Romania - 1.041.346 - 1.038.158
------------ ------------- -------------- -------------
Greece - - - 853.133
------------ ------------- -------------- -------------
Bulgaria - - - 417
------------ ------------- -------------- -------------
Cyprus * 795.700 - 457.450 -
------------ ------------- -------------- -------------
Total 795.700 1.041.346 457.450 1.891.708
------------ ------------- -------------- -------------
* It is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through
the SPV, is planned to be transferred as part of the transaction
with Arcona Property Fund N.V. Upon a final agreement for such
transfer, the Company will negotiate with the lender its release
from the aforementioned lease agreement, and if succeeds, upon
completion such income will be also transferred.
Gain/(loss) from disposal of 31 Dec 31 Dec 31 Dec 2019 31 Dec
investment properties (Note 1 2020 2020 2019
4)
------------ ------------- -------------- -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- -------------- -------------
EUR EUR EUR EUR
------------ ------------- -------------- -------------
Romania - 281.886 - (7.404)
------------ ------------- -------------- -------------
Total - 281.886 - (7.404)
------------ ------------- -------------- -------------
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
----------- ----------- ------------
Carrying amount of assets ( investment
properties, associates and Financial
asset at fair value through OCI)
Ukraine - 4.237.980 - 4.895.852
----------- ----------- ------------
Romania - 35.737.157 - 42.665.022
Total - 39.975.137 - 47.560.874
40. 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 2019 31 Dec
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Interest Income on loan to related
parties 2.294 - 4.600 -
Interest Income from loan to associates 326 9.392 2.372 9.366
Total 2.620 9.392 6.972 9.366
Interest income on loan to related parties relates to interest
income from Delia Lebada Srl and interest income from associates
relates to interest income from GreenLake Development Srl.
40.1.2 Expenses
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
------------
EUR EUR EUR EUR
Management Remuneration and incentives
(Note 12) 388.925 - 646.309 -
------------ -----------
Directors fees (Note 12) 129.000 - 73.108 -
Interest expenses on Narrowpeak
loan (Note 16) 12 - 232 -
Interest expenses on Director
and Management Loans (note 16) 36.265 - 30.417 -
Total 554.202 - 750.066 -
Management remuneration includes the remuneration of the CEO,
the CFO, the Group Commercial Director, and that of the Country
Managers of Ukraine and Romania pursuant to the decisions of the
remuneration committee.
40.2 Payables to related parties (Note 34)
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Board of Directors & Committees
remuneration 129.364 - 364 -
Secure Management SRL - - - 177
Secure Management Services LTD 1.146 - - -
SecMon SRL 6.285 - -
------------
Sec South East Continet Unique
Real Esate Management Limited 7.899 -
------------
Management Remuneration 438.135 - 605.850 -
------------
Total 582.829 - 606.214 177
40 .2.1 Board of Directors & Committees
The amount payable represents remuneration and expenses payable
to Non-Executive Directors until the end of the reporting period.
The members of the Board of Directors pursuant to a recommendation
by the remuneration committee and in order to facilitate the
Company's cash flow receive their payment in shares of the Company.
During 2018 the directors received 344.371 ordinary shares in lieu
of their 2016 H1 remuneration amounting to GBP 120.530. During
2019, Non-Executive Directors received 261.000 ordinary shares
amounting to EUR 73.108 in lieu of their H1 2019 fees, and 176.576
ordinary shares amounting to EUR 74.162,04 in lieu of their before
H2 2016 fees. Any H2 2019 fees and 2020 fees has been decided that
will be paid in cash.
40 .2.2 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO of the Company.
40.3 Loans from SC Secure Capital Limited to the Group's
subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs. The following table presents the amounts of such
loans which are eliminated for consolidation purposes, but their
related exchange difference affects the equity of the Consolidated
Statement of Financial Position.
Borrower Limit Principal Limit - Principal
- as at as at as at as at
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
EUR EUR EUR EUR
LLC " Trade Center" 5.800 5.266 5.800 5.649
LLC "Aisi Ukraine" 23.062.351 137.966 23.062.351 57.865
--------- -------------
LLC " Almaz-Press-Ukraine " 8.236.554 239.079 8.236.554 263.330
--------- -------------
LLC "Aisi Ilvo" 150.537 21.750 150.537 28.597
--------- -------------
Total 31.449.424 404.061 31.455.242 355.441
--------- -------------
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 EUR40.406, estimated on balances held at 31 December 2020.
40.4 Loans to associates (Note 26)
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
---------------
EUR EUR EUR EUR
---------------
Loans to GreenLake Development
Srl 9.026 301.600 8.700 292.208
Total 9.026 301.600 8.700 292.208
The loan was provided to GreenLake Development Srl from Edetrio
Holdings Limited (continued operations) and Sc Capital
(discontinued operations). The agreement with Edetrio Holdings
Limited was signed on 17 February 2012 and bears interest 5% and
the agreement with Sc Capital Limited was signed on 4 December 2017
and bears interest 4% per annum. The maturity date is 30 April 2022
for the Edetrio loan and 4 December 2021 for the SC Capital Limted
loan.
40.5 Loans from related parties (Note 32)
31 Dec 31 Dec 31 Dec 2019 31 Dec
2020 2020 2019
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loan from Narrowpeak Consultants - - 206 -
Loan from Directors and Management 604.400 - 375.000 -
Interest accrued on loans from
related parties 77.394 - 45.086 -
Total 681.794 - 420.292 -
Loans from directors of the order of EUR 375.000 reflect loans
provided from 3 directors as bridge financing for future property
acquisitions. The loans bear interest 8% annually and are repayable
by 31 August 2021. In case needed, the Company will discuss with
the directors relevant extension of the loans.
Rest amount of the order of EUR 229.400 reflect payables of EUR
68.900 to 2 executives and of EUR 160.500 to one director,
converted to loans for facilitating Company's cash flow.
41. Contingent Liabilities
41.1 Tax Litigation
The Group performed during the reporting period part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may
remain open for longer. Overall following the sales of Terminal
Brovary, Balabino and Bela, the exposure of the Group in Ukraine
has been significantly reduced.
The Group performed during the reporting and comparative periods
part of its operations in Romania, Greece and Bulgaria. In respect
of Romanian, Bulgarian and Greek tax systems, everything is subject
to varying interpretations and frequent changes, which in many
cases have retroactive effects. In certain circumstances it is also
possible that tax authorities may act arbitrary.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
advanced tax systems. Management believes that it has adequtely
provided for tax liabilities, based on its interpretation of tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant. Nevertheless, with the sale of the Bulgarian
and Greek assets, such risk has been effectively minimized.
41.2 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.
41.3 Bluehouse accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. (Bluehouse)
filed in Cypriot courts in December 2018 lawsuit against the
Company for the total amount of EUR 5.042.421,87, in relation to
the Praktiker Craiova acquisition in 2015, and the redemption of
the Redeemable Preference Class A shares which were issued as part
of the transaction to the vendor, plus special compensations of
EUR2.500.000 associated with the related pledge agreement. The
redemption of such shares was requested in 2016, and in lieu of
such redemption the Company transferred to the vendor the 20%
holding in Autounion asset which was used as a guarantee to the
transaction for the effective redemption of the Redeemable
Preference Class A shares. At the same time the Company has posted
in its accounts a relevant payable provision for Bluehouse in the
amount of EUR2.521.211 (Note 34). In addition, the Company during
2019, as part of the judicial process, has filed a claim against
Bluehouse for concealing certain key information during the
Praktiker Craiova transaction, which if revealed would have
resulted in a significant reduction of the final acquisition price.
Management believes the Company has good grounds of defence and
valid arguments and the amount already provided is adequate to
cover an eventual final settlement between the parties. Hearing for
both cases has been set from Cypriot courts in September 2021.
41.4 Other Litigation
The Group has a number of other minor legal cases pending.
Management does not believe that the result of these will have a
substantial overall effect on the Group's financial position.
Consequently no such provision is included in the current financial
statements.
41.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2020.
42. Commitments
The Group had no other commitments as at 31 December 2020.
43. Financial Risk Management
43.1 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.
43. Financial Risk Management (continued)
43.2 Categories of Financial Instruments
Note 31 Dec 31 Dec 2020 31 Dec 31 Dec
2020 201 9 201 9
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Financial Assets
------------ ----------- ------------
Cash at Bank 28 129.859 740.788 207.251 530.374
Long-term Receivables and
prepayments 24 836 315.000 852 315.265
Financial Assets at FV
through P&L 27 6.787.244 - 3.581.643 -
Prepayments and other receivables 26 6.880.076 748.127 10.833.913 1.470.772
Financial Asset at FV through
OCI 22 - 1 - 1
Total 13.798.015 1.803.916 14.623.659 2.316.412
Financial Liabilities
Borrowings 32 2.150.377 6.324.461 428.000 8.949.660
Trade and other payables 34 4.036.962 870.472 4.579.595 1.015.266
Deposits from tenants 35 - 64.231 - 67.269
Finance lease liabilities 37 - 9.692.029 - 10.084.470
Taxation 36 1.283.427 277.275 1.145.703 216.563
Bonds 33 1.258.923 - 1.190.603 -
Total 8.729.689 17.228.468 7.343.901 20.333.228
43.3 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.
43.4 Economic Market Risk Management
The Group operates in Romania and Ukraine. The Group's
activities expose it primarily to financial risks of changes in
currency exchange rates and interest rates. The exposures and the
management of the associated risks are described below. There has
been no change in the way the Group measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized
financial assets and liabilities are denominated in a currency that
is not the Group's functional currency. Most of the Group's
financial assets are denominated in the functional currency.
Management is monitoring the net exposures and adopts policies to
encounter them so that the net effect of devaluation is
minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant floating interest-bearing assets. On December 31(st) ,
2020, cash and cash equivalent (including continued and
discontinued operations) financial assets amounted to EUR870.647
(2019: EUR737.625) of which approx . EUR424 in UAH and EUR603.723
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 EUR8.475.729 (31 December 2019: EUREUR9.377.660 ) 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 2020 the weighted average interest rate for
all the interest bearing borrowing and financial leases of the
Group stands at 4% (31 December 201 9 : 4,07%).
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2020 is presented below:
Actual +100 bps +200 bps
as at 31.12.2020
Weighted average interest
rate 4% 5% 6%
%Influence on yearly
finance costs 73.949 147.898
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2019 is presented below:
Actual +100 bps +200 bps
as at 31.12.2019
Weighted average interest
rate 4,07% 5,07% 6,07%
Influence on yearly finance
costs 180.076 360.152
The Group's exposures to financial risk are discussed also in
Note 7.
43.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. In respect of receivables
from tenants these are kept to a minimum of 2 months and are
monitored closely.
43.6 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 2020 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
-----------------
Financial assets
-----------------
Cash at Bank 129.859 129.859 129.859 - -
-----------------
Prepayments and other
receivables 836 836 - - 836
-----------------
Financial Assets
at FV through P&L 6.787.244 6.787.244 6.787.244 - -
-----------------
Long-term Receivables
and prepayments 6.880.076 6.880.076 6.880.076 - -
-----------------
Total Financial assets 13.798.015 13.798.015 13.797.179 - 836
-----------------
Financial liabilities
-----------------
Borrowings 2.150.377 2.356.528 566.938 1.789.590 -
Trade and other payables 4.036.962 4.036.962 4.036.962 - -
Bonds issued 1.258.923 1.594.922 292.281 67.200 1.235.441
-----------------
Taxes payable and
provisions 1.283.426 1.283.426 712.903 570.523 -
-----------------
Total Financial liabilities 8.729.688 9.271.838 5.609.084 2.427.313 1.235.441
-----------------
Total net assets/(liabilities) ( 2.427.313 ( 1.234.605
5.068.327 4.526.177 8.188.095 ) )
-----------------
Discontinued Operations
31 December 2020 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
------------
Financial assets
------------
Cash at Bank 740.788 740.788 740.788 - -
------------
Long-term receivables 315.000 315.000 - - 315.000
------------
Financial Asset at
FV through OCI 1 1 1 - -
------------
Prepayments and other
receivables 748.127 748.127 748.127 - -
------------
Total Financial assets 1.803.916 1.803.916 1.488.916 - 315.000
------------
Financial liabilities
------------
Borrowings 6.324.461 4.019.940 2.933.480 272.757 813.702
------------
Trade and other payables 870.472 870.472 862.507 - 7.965
------------
Deposits from tenants 64.231 64.231 - - 64.231
------------
Finance lease liabilities 9.692.029 11.689.763 917.759 953.700 9.818.303
------------
Taxation 277.275 277.275 246.885 30.390 -
------------
Total Financial liabilities 17.228.468 16.921.681 4.960.631 1.256.847 10.704.201
------------
Total net assets/(liabilities) (15.424.552) (15.117.764) (3.471.715) (1.256.847) (10.389.201)
------------
Continued Operations
31 December 2019 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
------------ ------------
Financial assets
------------ ------------
Cash at Bank 207.251 207.251 207.251 - -
------------ ------------
Prepayments and other
receivables 10.833.913 10.833.913 10.833.913 - -
------------ ------------
Financial Assets
at FV through P&L 3.581.643 3.581.643 3.581.643 - -
------------ ------------
Long-term Receivables
and prepayments 852 852 - - 852
------------ ------------
Total Financial
assets 14.623.659 14.623.659 14.622.807 - 852
------------
Financial liabilities
------------ ------------
Borrowings 428.000 484.060 64.668 419.392 -
------------ ------------
Trade and other payables 4.579.595 4.579.595 4.579.595 -
------------
Bonds issued 1.190.603 1.661.001 223.961 67.200 1.369.841
------------ ------------
Taxes payable and
provisions 1.145.703 1.145.703 550.163 595.541 -
------------ ------------
Total Financial
liabilities 7.343.901 7.870.359 5.418.387 1.082.133 1.369.841
------------
Total net assets/(liabilities) 7.279.758 6.753.300 9.204.420 (1.082.133) (1.368.989)
------------ ------------
Discontinued Operations
31 December 2019 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
Financial assets
Cash at Bank 530.374 530.374 530.374 - -
Prepayments and other
receivables 1.470.772 1.470.772 1.470.772 - -
Financial Asset at
FV through OCI 1 1 1 - -
Long-term Receivables
and prepayments 315.265 315.265 - - 315.265
Total Financial
assets 2.316.412 2.316.412 2.001.147 - 315.265
Financial liabilities
Borrowings 8.949.660 6.918.573 2.113.369 3.513.894 1.291.310
Trade and other payables 1.015.266 1.015.266 1.007.050 - 8.216
Deposits from tenants 67.269 67.269 - - 67.269
Finance lease liabilities 10.084.470 12.552.787 861.304 912.841 10.778.642
Bonds issued - - - - -
Taxation 216.563 216.563 173.012 43.551 -
Total Financial
liabilities 20.333.228 20.770.458 4.154.735 4.470.286 12.145.437
Total net assets/(liabilities) (18.016.816) (18.454.046) (2.153.588) (4.470.286) (11.830.172)
44. 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, and the completion of Stage 1 of the transaction
in February 2020 with the sale of Boyana in Bulgaria, which
followed the Ukrainian Bella and Balabino asset disposals in Q4
2019, the two parties signed in June 2021 SPAs related to Stage 2
of the transaction which involves EOS and Delenco assets in
Romania, and Kiyanovskiy and Rozny land plots in Ukraine. The total
value of the transaction is expected to reach c.EUR8,2 million,
payable in Arcona shares and warrants valued at NAV plus EUR1
million in cash.
Despite the problems and the slow progression of the discussions
during the pandemic which affects all related participants in all
jurisdictions of the two parties (Holland, Czech Republic, Ukraine,
Romania, Cyprus, UK), closing of Stage 2 is expected in Q4 2021
subject to COVID-19 effects, when SPDI will receive approximately
605.000 new ordinary shares in Arcona and approximately 145.000
warrants over ordinary shares in Arcona plus EUR1 million in cash,
while closing will likely be dependent on SPDI shareholder
approval. Final figures are subject to, inter alia, standard form
adjustment and finalization in accordance with the agreements.
b) Monaco Towers SPV exits insolvency status
During 2021 following full re-payment of its loan, SecMon Real
Estate srl, the entity that owns Monaco Towers asset and was into
insolvency status since 2019, has initiated the process of exiting
insolvency and re-gaining full control over the remaining five
apartment units of the asset. The exiting process is expected to be
completed in the following period and upon completion the remaining
units can be effectively sold by the Group.
c) Strike off process for Cypriot entities of the Group
Following recent disposals, the Group initiated in 2021 a strike
off process for six holdings companies in Cyprus which have been
left without any direct participation or other asset. The process
is expected to be finalised during Q3 2021 and will lead to
substantial reduction of Group's administration costs. At the same
time Group's business plan provides for four additional entities to
follow shortly when certain conditions related to their activities
are met.
d) Pre-agreement for the sale of Kindergarten asset
On 31 March 2021, SPDI, honoring certain commitment made in the
past with one of its partners in GreenLake project, proceeded to
signing a pre-agreement for the sale of its 50% stake in SPDI Real
Estate srl, the company which owns the Kindergarten asset in
GreenLake, Bucharest. The consideration of the transaction has been
set at EUR175.000 and the agreement is conditional on effective
payment of the price by the buyer until 31/12/2021.
e) Purchase of additional stake in Plt R, Greenlake
During Q1 2021 the Group proceeded to the purchase of an
additional 26,32% stake in Rimasol Ltd, which through Rimasol srl
owns Plot R in GreenLake, part of Second Phase of the overall
project. With this purchase the total stake of the Group in this
particular plot increased to 70,56%. The asset is a plot of 3 777
sq m situated in the perimeter of GreenLake residential
development, and currently there are ongoing discussions with an
interesting party for its co-development. The value of the
transaction reached EUR200.000 and settled through the elimination
of equal dues of the seller to the Group.
[1] Sources: World Bank Group, Eurostat, EBRD, National
Institute of Statistics- Romania, National Institute of Statistics
- Ukraine, IMF, European Commission.
[2] Sources : Eurobank, CBRE Research , Colliers International ,
Cushman & Wakefield , Crosspoint Real Estate, Knight Frank,
Coldwell Banker Research, National Institute of Statistics- Romania
, State Statistics Service-Ukraine, NAI Real Act
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