ANNUAL REPORT
2018
Table of Contents
SECTION A- Annual Report
1. Letter to Shareholders
2. Management Report
2.1 Corporate Overview & Financial Performance
2.2 Property Holdings
2.3 Financial and Risk Management
2.4 2019 and beyond
3. Regional Economic Developments
4. Real Estate Market Developments
4.1 Romania
4.2 Bulgaria
4.3 Greece
4.4 Ukraine
5. Property Assets
5.1 Victini Logistics (ex GED), Athens Greece
5.2 EOS Business Park – Danone headquarters, Romania
5.3 Delenco office building, Romania
5.5 Kindergarten, Romania
5.6 Residential portfolio
Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Monaco Towers, Bucharest, Romania
Blooming House, Bucharest, Romania
GreenLake, Bucharest, Romania
Boyana Residence, Sofia, Bulgaria
5.7 Land Assets
Aisi Bela – Bela Logistic Park, Odessa, Ukraine
Kiyanovskiy Residence – Kiev, Ukraine
Tsymlyanskiy Residence – Kiev, Ukraine
Balabino Project - Zaporozhye, Ukraine
Rozny Lane – Kiev Oblast, Kiev, Ukraine
SECTION B- Financial Statements
SECURE PROPERTY DEVELOPMENT AND INVESTMENT PLC
KIRIAKOU MATSI 16, AG. OMOLOGITES,1082, NICOSIA,CYPRUS
3
4
4
5
8
9
10
12
12
13
14
14
16
16
16
17
18
18
18
18
19
19
19
20
20
20
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ANNUAL REPORT 2018|1
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC
Key Figures
31 Dec 2018
31 Dec 2017
Change
Total Assets (€million):
86
96
-11%
Sold income producing
commercial Properties:
Number of income producing
commercial Properties:
1
5
1
6
-
-17%
Average occupancy rate of
87%
93%
-6%
income producing assets:
Operational Gearing:
39%
43%
-9%
Average borrowing cost:
3,83%
4,67%
-18%
Operating Income*(€million):
4,2
4,8
-13%
EBITDA*(€million):
1,8
3,7
-51%
Net Equity**(€million):
35,6
36,4
-2%
Issued Shares:
127.270.481
103.589.550
23%
NAV per share (€):
0,28
0,35
-20%
* Excluding fair value related impact (Table 1).
** Attributable to the shareholders.
This report may contain forward-looking statements about the Company. Such statements are predictive in nature and depend
upon or refer to future events or conditions and may include such words as ‘‘expects’’, ‘‘plans’’, ‘‘anticipates’’, ‘‘believes’’, ‘‘estimates’’
or other similar expressions. In addition, any statement regarding future performances, strategies, prospects, actions or plans is
also a forward-looking statement. Forward-looking statements are subject to known and unknown risks and uncertainties and
other factors that may cause actual results, events, activities and achievements to differ materially from those expressed or implied
by such statements. Such factors include general economic, political and market conditions, interest and foreign exchange rates,
regulatory or judicial proceedings, technological change and catastrophic events. You should consider these and other factors
carefully before making any investment decisions and before relying on forward-looking statements.
ANNUAL REPORT 2018|2
1.
Letter to Shareholders
Dear Shareholders,
28 June 2019
2018 has been a year when SPDI’s vision, strategy and asset portfolio attracted a number of third parties
interested in joining forces with our Company. In fact, our long standing diligent effort to establish SPDI
as the regional property company of reference in South Eastern Europe, proved key to SPDI attracting such
interest and most of the year was taken up evaluating various options in order to capitalize on such efforts
and generate value for our shareholders. As the regional economies and related property markets SPDI is
present in continued their respective growth trends, SPDI was not only able to sell one of its non-core
assets in a substantial cash generating transaction in Q3, but was able to choose among the various options
of value-add opportunities available to it. Specifically, as announced in December (with further updates
being provided during 2019), we commenced a potential merger like transaction with the Amsterdam and
Prague listed Arcona Property Fund N.V. (APF) with assets in Poland, Czech Republic and Slovakia. The
closing of the transaction, should we be able to bring it to fruition and subject to the necessary approvals
being obtained, as expected within 2019, will see our non-Greek assets moving under the corporate
umbrella of APF and our shareholders gaining relative exposure to a much larger and broader East European
regional property company, as per our original plan. The value that the Arcona transaction places on SPDI
is its real Net Asset Value (NAV). Our shareholders will benefit from owning shares and warrants of APF
equivalent to NAV, confirming our age old argument that the market has not reflected SPDI’s true potential
by applying a >50% discount to such value.
In 2018, Romania continued being the fastest growing economy of the European Union and saw property
prices continue rising across all sectors, facilitating our residential sales and confirming our choice not to
have gone all out on selling such assets the years before. At the same time Bulgarian property market
prices, especially in the residential sector, saw a substantial increase allowing us to prepare the ground for
the sale of further residential units in Boyana. Finally, Greece turned the corner and experienced for the
first time in years increased output for the year, with its own property market showing signs of
strengthening. This led to numerous expressions of interest for our Athens logistics terminal, a property
not included in the APF potential deal.
The combination of higher values and sales prices, as well as increased interest in our assets and our
platform as a whole, gives us the ability to generate more cash through the sale of non-core assets but
also the confidence that one way or another we will be able to reach our objective of generating value for
our shareholders through our well placed and efficiently run asset portfolio. The consolidation of our Board
of Directors to an active, leaner unit and a strong advisory council we can tap on, offers management the
necessary support to continue its all-out efforts and effect the moves needed to achieve SPDI’s objectives
and ensure that the exercises under way will result in transforming the Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
ANNUAL REPORT 2018|3
2.
Management Report
2.1 Corporate Overview & Financial Performance
SPDI’s core property asset portfolio consists of South Eastern European prime
Summary
commercial and industrial real estate, the majority of which is let to blue chip tenants
on long leases. During 2018, management continued to focus on its strategy to dispose
of non-core assets, while at the same time continued to source partnerships which are
able to effectively set the grounds for further value creation.
With this in mind, during the period the Company sold the BlueBigBox asset fully let to
Results
Praktiker, a regional DIY retailer in Craiova, Romania, generating more than €2,5m in
cash.
Most importantly, in 2018 the Company, in line with its strategy to maximize value for
shareholders, entered into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics property, in an all-share transaction to
Arcona Property Fund N.V, an Amsterdam and Prague listed company that invests in
commercial property in Central Europe. Arcona currently holds high yielding real estate
investments in Czech Republic, Poland and Slovakia. The transaction values the SPDI
assets at ~ €29m, or 225% higher than the current market value of the Company as a
whole. If one takes into consideration and assumes the warrants that will be issued
together with the ARCONA shares, the transaction values the SPDI assets at their Net
Asset Value.
Such sale of the Company’s non-Greek portfolio, together with existing debt, is to be
settled through the issuance of new Arcona Property Fund N.V. shares which will be
distributed eventually to existing SPDI shareholders pro-rata to their shareholding in the
Company’s shares.
The combination of the two complimentary asset portfolios is expected to create a
significant European Property company, benefiting both the Company’s and the buyer’s
respective shareholders.
Regarding the economic environment in which the Company operates, the Romanian
economy continued to grow strongly with a 4,1% increase, whilst maintaining record
low unemployment. Bucharest is bustling with property development and it is expected
that the following year will set new records especially in Logistics and Office markets,
Romanian
economic
Development
s
backed by international and domestic investor interest.
Greece exited the financing and stabilization programme and experienced economic
growth for the second consecutive year. It posted a 4%+ primary surplus, and in 2019
is expected to be able to go to the markets to support its development plans with a
Greek
Political and
economic
developments
number of property investors knocking on its door. While a series of elections are
ANNUAL REPORT 2018|4
planned for the coming year (national, municipal, European) many analysts believe that
Greece is on the growth turn and such growth may prove to be faster than expected.
Following the successful sale of BlueBigBox asset in Craiova in 2018 and the sale of the
Ukrainian asset, Terminal Brovary in Kiev in 2017, SPDI’s operating income reduced by
Financial
performance
32%.
Consequently, 2018, EBITDA decreased to €1,8m compared to €3,7m in 2017. Finance
costs dropped to ~€1,2m and overall corporate and administration costs were reduced
by 14% following continued successful cost management by the Company.
Table 1
The operating results after finance and tax for the year were yet again positive with the
end result being a profit of €414k.
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial income producing and
Property
residential properties in Romania, Greece and Bulgaria, as well as land plots in Ukraine,
Assets
Bulgaria and Romania.
ANNUAL REPORT 2018|5
EUR Continued Operations Discontinued Operations Total Continued Operations Discontinued Operations Total Rental, Utilities, Management & Sale of electricity Income 769.463 2.378.875 3.148.338 2.180.5022.445.466 4.625.968 Net gain/(loss) on disposal of investment property 421.257 636.521 1.057.778 - 195.273 195.273 Income from Operations of Investments 1.190.720 3.015.396 4.206.116 2.180.502 2.640.739 4.821.241 Asset operating expenses (118.319) (606.069) (724.388) (123.261) (629.842) (753.103) Net Operating Income from Investments 1.072.401 2.409.327 3.481.728 2.057.241 2.010.897 4.068.138 Share of profits from associates - 364.920 364.920 - 390.217 390.217 Impairment allowance for inventory and provisions - - - 150.000 - 150.000 Gain on disposal of subsidiaries - - - 1.483.737 - 1.483.737 Total Income 1.072.401 2.774.247 3.846.648 3.690.978 2.401.114 6.092.092 Administration expenses (1.768.847) (260.714) (2.029.561) (1.994.481) (353.532) (2.348.013) Operating Result (EBITDA) (696.446) 2.513.533 1.817.087 1.696.497 2.047.582 3.744.079 Finance Cost, net 332.442 (1.532.601) (1.200.159) (385.928) (1.651.475) (2.037.403) Income tax expense (106.306) (96.567) (202.873) (124.805) (71.910) (196.715) Operating Result after Finance and Tax Expenses (470.310) 884.365 414.055 1.185.764 324.197 1.509.961 Other income / (expenses), net (31.716) (363.435) (395.151) (378.076) 2.668 (375.408) Income Tax - One off (506.728) - (506.728) (399.450) - (399.450) Fair value adjustments from Investment Properties (1.266.438) (1.916.596) (3.183.034) 181.102 (88.919) 92.183 Gain realized on acquisition of subsidiaries - - - - 23.921 23.921 Foreign exchange differences, net (71.390) (10.233) (81.623) (38.047.966)(1.335.517) (39.383.483) Result for the year (2.346.582) (1.405.899) (3.752.481) (37.458.626) (1.073.650) (38.532.276)Exchange difference on I/C loans to foreign holdings - 1.850 1.850 37.349.385 - 37.349.385 Exchange difference on translation due to presentation currency - 421.086 421.086 - (615.583) (615.583) Total Comprehensive Income for the year (2.346.582) (982.963) (3.329.545) (109.241) (1.689.233) (1.798.474)20182017
Commercial Property
Location
Key Features
Victini Logistics
Athens, Greece
EOS Business Park
Bucharest, Romania
Delenco (SPDI has a 24,35% interest)
Bucharest, Romania
Innovations Logistics Park
Bucharest, Romania
Kindergarten
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
17.756 sqm
Kuehne + Nagel and GE Dimitriou SA
100%
Commercial
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
3.386 sqm
Danone Romania (lease runs to 2025)
100%
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
10.280 sqm
ANCOM (Romanian telecoms regulator)
100%
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate 2018:
Occupancy Rate Currently:
16.570 sqm
Favorit Business Srl
37%
83%
Bucharest, Romania
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
1.400 sqm
International School for Primary Education
100%
Land & Residential Assets
Bela Logistic Park
Kiyanovskiy Residence
Tsymlyanskiy Residence
Balabino Project
Rozny Lane
Boyana Land
GreenLake Land
(SPDI has a ~44% interest)
Romfelt, Monaco, Blooming,
GreenLake, Boyana
Romfelt, Monaco, Blooming,
GreenLake, Boyana
Location
Odessa, Ukraine
Kiev, Ukraine
Kiev, Ukraine
Zaporozhye, Ukraine
Kiev, Ukraine
Sofia, Bulgaria
Key Features
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Bucharest, Romania
Plot of land (~ th. sqm):
Romania & Bulgaria
Sold units during 2018:
224
6
4
264
420
20
40
24
Romania & Bulgaria
Available units (end 2018):
118
Land &
Residential
In 2018, the Company’s accredited valuers, namely CBRE Ukraine for the Ukrainian
Assets, and Real Act for the Romanian, Bulgarian and Greek Assets, remained appointed.
The valuations have been carried out by the appraisers on the basis of Market Value in
accordance with the current Practice Statements contained within the Royal Institution of
Chartered Surveyors (“RICS”) Valuation – Global Standards (2017) (the “Red Book”) and
Property
Asset
Valuations
are also compliant with the International Valuation Standards (IVS).
In recent years, following the successful implementation of the Company’s strategy,
SPDI’s portfolio became even more diversified in terms of geography, as well as asset
class. At the end of the reporting period, taking into account the % participation in the
properties that the Company holds directly, Romania is the prime country of operations
(48%) in terms of Gross Asset Value, despite the fact that, following the sale of Praktiker
retail center, its exposure reduced by 10%.
ANNUAL REPORT 2018|6
In respect of the Company’s income generation capacity, Romania is the prime source
with 63%, with the remaining income deriving from Greece (36%) and Cyprus (1%).
** Net Operating Income includes NOI from Innovations Logistics Park, Victini Logistics, EOS Business Park, Praktiker retail center, Kindergarten,
Residential units, GreenLake, as well as Delenco office building (dividends).
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
Asset
Contribution
to Net Asset
Value
2018
€m
Debt (principal)*
7,0
3,9
0,5
10,7
0,4
4,8
3,8
31,1
Country
Rom
Rom
Rom
Gr
Rom
Rom & Bul
Rom & Ukr & Bul
Property
Innovations Logistics Park
Eos Business Park
Delenco (associate)
Victini Logistics
Kindergarten
Residential units
Land banking
Total Value
Other balance sheet items, net **
Net Asset Value total
Market Cap 31/12/2018 (Share price at £0,095)
Market Cap 27/06/2019 (Share price at £0,090)
Discount of Market Cap (at the date of this report) vs NAV (at 31/12/2018)
* Reflects the Company’s participation at each asset
**Refer to balance sheet and related notes of the financial statements
GAV*
10,6
7,6
5,6
16,1
0,7
9,3
20,6
70,5
NAV
3,6
3,7
5,1
5,4
0,3
4,5
16,8
39,5
-3,8
35,6
13,5
12,8
-62%
ANNUAL REPORT 2018|7
The Net Equity attributable to the shareholders as at 31 December 2018 stood at ~€35,6m
Net Equity
vs ~€36,3m in 2017. The table below depicts the discount of Market Cap over NAV during
the years.
Net Asset
Value per
share
Leverage
The NAV per share as at 31 December 2018 stood at GBP 0,25 and the discount of the
Market Value vis a vis the Company’s NAV increased to 62% at year-end.
2.3 Financial and Risk Management
The Group’s overall bank principal debt exposure at the end of the reporting period
was ~€30,6m (including fully consolidated properties, calculating relative to the
Company’s percentage shareholding in each), comprised of the following:
a) €3,4m finance lease of EOS Business Park with Alpha Leasing Romania and €0,5m
debt facility received by First Phase from Alpha Bank Romania.
b) €7m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
c) €10,7m debt financing of Victini Logistics (ex GED) and photovoltaic park with
Eurobank.
d) €0,4m being the Company’s portion on debt financing of the Kindergarten with
Eurobank Ergasias.
e) €4,9m being the Company’s portion on the residential portfolio debt financing.
f) €3,8m being the Company’s portion on land plot related debt financing in Romania
and Bulgaria.
ANNUAL REPORT 2018|8
Throughout 2018, the Company focused on managing and preserving liquidity through
cash flow optimization. In this context, the BlueBigBox asset in Craiova, Romania, was
sold, and the Company is focused on completing the aforementioned transaction with
Liquidity
Management-
Cash Flow Risk
Arcona Property Fund N.V.
2.4 2019 and beyond
2019 is expected to be a landmark year for the Company when completion of the
General
transformative transaction with Arcona Property Fund N.V. is expected to take place.
Following the conditional implementation agreement signed in December 2018 by the
two parties, during the first half of the year, the parties engaged in extensive
discussions to put the deal into specific frameworks, conducting at the same time
mutual due diligence and third-party property valuations. Currently both sides are
engaged in agreeing binding terms for the first step of the transaction. Overall
completion of the transaction planned in two further steps is expected to be executed
within H2 2019.
The finalization of the transaction with Arcona Property Fund N.V. marks effectively
the maximization of the Company’s value from the current asset portfolio, providing
the Company’s shareholders the opportunity to gain direct exposure to a property fund
of significantly larger size, listed on two stock exchanges, having a strong dividend
distribution policy, and active in a fast-growing area (Central and South Eastern
Europe) of the European property market.
ANNUAL REPORT 2018|9
3.
Regional Economic Developments 1
The Romanian economy is undergoing strong growth. The labor market benefited from
Romania
the economic growth with unemployment reaching historical lows of 3,6%. Romania’s
economy continued its exceptional growth, gaining one place to rank 15th by Gross
Domestic Product (GDP) values according to Eurostat, ranking it above Portugal, but
slightly under Czech Republic (€206,8 billion). Romania’s Real GDP (GDP adjusted for
price changes – inflation/deflation) growth for 2018 was 4,1%.
The strong growth has been fueled by domestic private consumption, on the back of
a multi-year fiscal expansion and minimum wage hikes. These led to inflationary
pressures, which forced the National Bank of Romania to increase the policy rate
repeatedly during 2018.
Romania
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2015
160,3
19,9
3,9
-0,6
6,8
2014
150,5
20,0
3,4
1,1
6,8
2013
143,8
20,0
3,5
4,0
7,1
2012
133,2
20,1
2,1
3,3
6,8
2016
170,4
19,8
4,8
-1,5
5,9
2017
187,5
19,6
7,0
1,3
4,3
2018e
202,9
19,5
4,1
4,6
3,6
In Bulgaria, driven mainly by private consumption and renewed investment, due to
Bulgaria
the recovery in EU investment funding, Real GDP (GDP adjusted for price changes –
inflation/deflation) growth for 2018 was 3,2%, while the unemployment rate fell to a
post-crisis low of 5,2%.
Fiscal performance remained positive on the back of improved revenue collection,
strong economic activity, better compliance, and higher minimum wages, while despite
higher public wages the fiscal accounts remained in surplus at 0,8%.
Bulgaria
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2015
45,3
7,2
3,5
-0,1
9,2
2014
42,8
7,2
1,8
-1,4
11,4
2013
41,9
7,2
0,5
0,9
13,0
2012
42,0
7,3
0,0
3,0
12,3
2016
48,1
7,1
3,9
-0,8
7,6
2017
51,7
7,1
3,8
2,1
6,3
2018e
55,2
7,0
3,2
2,8
5,2
The Greek economy experienced growth in terms of Real GDP (GDP adjusted for price
Greece
changes – inflation/deflation) for the second consecutive year (2018: 2,1%, 2017:
1,5%), primarily due to a rise in exports, but also due to an increase in domestic
demand, recording a primary surplus over 4%, exceeding medium-term target.
2018 was a landmark year for the Greek economy, as not only the economic recovery
that started in 2017 continued, but it also marked the exit of Greece from the financing
1 Sources: World Bank Group, Eurostat, EBRD, National Bank of Greece, Elstat, Eurobank Research, and Economic Research
Division, National Institute of Statistics- Romania, National Statistical Institute –Republic of Bulgaria, National Institute of
Statistics – Ukraine, SigmaBleyzer, IMF, European Commission, Oxford Economics.
ANNUAL REPORT 2018|10
and stabilization programme. Greek Government Bonds fell to their lowest yield since
2006, shrinking the “trust gap” between Greece and the rest of Europe.
Still, public debt remains high. Reducing it will require sustained pro-growth reforms,
high primary surpluses and additional debt restructuring. Commitment to full reform
implementation is key to strengthening inclusive growth.
The unemployment rate improved from a low of 27,5% in 2013, falling to 19,3% in
2018. Although the Greek labour market cannot be called positive, the peak of the
employment crisis has passed. Tight access to finance continues to constrain business
investment.
Banks are making inroads into their high levels of non-performing loans, which fell to
44,7% of outstanding loans in December 2018. E-auctions of collateral in default are
becoming more common, but foreclosures have also increased.
Some of the sectors that recorded the deepest downturns, such as construction and
real estate, are finally recovering, as record tourist arrivals are leading to new
accommodation developments.
Greece
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2015
177,3
10,9
-0,4
-1,7
25,0
2014
178,7
10,9
0,7
-1,3
26,6
2013
180,7
11,0
-3,2
-0,9
27,5
2012
191,2
11,1
-7,3
1,5
24,5
2016
176,5
10,8
-0,2
-0,8
23,6
2017
180,2
10,8
1,5
1,1
21,4
2018e
184,7
10,7
2,1
0,6
19,3
The Ukrainian economy recovered from the economic and political crisis of previous
Ukraine
years, achieving Real GDP (GDP adjusted for price changes – inflation/deflation)
growth for the third consecutive year (2018: 3,3%, 2017: 2,5% & 2016: 2,3%).
From a trading perspective, the economy has demonstrated a refocusing on the EU
market since 2017, which was a result of the signed Association Agreement with the
EU in January 2016 which established the Deep and Comprehensive Free Trade Area
(“DCFTA”). Implementation of DCFTA commenced in January 2017.
In March 2015, Ukraine signed a four-year Extended Fund Facility (“EFF”) with the IMF
that will last until March 2019. The total programme amounted to US$17,5 billion. In
2018 Ukraine renewed its cooperation with the International Monetary Fund (IMF),
EU, and WBG to cover is current account deficit and to rebuild international reserves
that reached US$20.8 billion. The Stand-By Arrangement expires in March 2020.
Ukraine
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2015
81,6
42,6
-9,8
48,7
9,1
2014
98,4
42,8
-6,6
12,1
9,3
2013
135,2
45,2
0,0
-0,2
7,2
2012
136,7
45,4
0,2
0,6
7,5
2016
84,4
42,4
2,4
13,9
9,4
2017
99,4
42,2
2,5
14,4
9,5
2018e
105,4
42,0
3,3
11,0
8,8
ANNUAL REPORT 2018|11
4.
Real Estate Market Developments2
4.1 Romania
The 2018 property investment volume for Romania is estimated at almost €1,03 billion,
General
slightly lower than in 2017. Market volumes were dominated by office segment (63%)
and retail transactions (30%), while industrial and hotels accounted for 6% and 1%,
respectively.
Prime office and retail yields are at 7,25% and 7% respectively, while prime industrial
yields are at 8,50%. Yields for office and retail have slightly compressed by 25 bps
since 2017, while industrial yields have remained stable over the year.
Approximately 455.000 sqm, a new record in the industrial market, delivered in 2018,
setting the total industrial stock at 3,75 million sqm. The rental level has remained
Logistics
Market
relatively stable, with prime headline rents around 4,25€/sqm/month.
The Industrial sector registered solid leasing activity coupled with a record volume of
new supply delivered at the national level. Demand counted for 520.000 sqm of major
leases at the national level, with most of the deals being new leases.
Bucharest concentrated almost 58% of the registered demand, while Cluj and
Timisoara are the following largest markets, concentrating a combined 30% of the
total demand.
2018 saw the delivery of 190.000 sqm of new office spaces, taking the total stock to
Office Market
over 2,9 million sqm, while 2019 is expected to be a record year, with 360.000 sqm
planned for delivery. In areas like Floreasca/Barbu Vacarescu and the Western
submarket the lowest vacancy rates are observed, while the vacancy rate for the South
sub-market exceeds 20%. Overall, the increasing demand led to a historically low
vacancy rate of 7%, 1,5% lower than the vacancy at the end of last year.
Macroeconomic changes in Romania resulted in a decline in the residential market in
2018. Additionally, the ‘Prima Casă’ programme which had created a more favourable
Residential
Market
climate for the Residential Market, as well as both for investors and the end consumers,
recorded a decrease in demand, while construction companies rank second in the top
companies under insolvency, mainly due to lack of a qualified workforce and price
increases in construction materials. According to the National Institute of Statistics,
residential construction works volume reduced by 31% y-o-y, while demand on the
residential segment dropped by 18%.
2 Sources : Danos Research, NAIRealAct, Eurobank, Jones Lang LaSalle, DTZ Research, CBRE Research, Colliers International,
Cushman & Wakefield, Crosspoint Real Estate, Savills Plc, Knight Frank, Coldwell Banker Research, National Institute of Statistics-
Romania.
ANNUAL REPORT 2018|12
The increased construction costs, as well as other macroeconomic factors, resulted in
5% price increases on average in Bucharest. However, Bucharest’s residential market
recorded the highest demand in the country, and is estimated to remain high, with
smart and green buildings, especially medium sized dwellings with access to public
transportation, concentrating the highest interest. More than 300 projects were in
progress during 2018 and are expected to be complete during the period 2018-2020.
Upon completion, the available new residential units will exceed 55.000, with the most
units located in the 6th and 4th districts with 20.000 and 103.00 respectively.
4.2 Bulgaria
The 2018 property investment volume for Bulgaria is estimated at almost €668 million,
General
considerably lower than in 2017 (record year with €957 million of transactions). Market
volumes were dominated by office segment (57%) and retail transactions (29%), with
the remaining transaction concerning development land, industrial properties and
hotels.
Prime yields have slightly compressed since the beginning of the year, being 8% for
office space, 7,25% for retail and 9,5% for industrial properties.
Growth in the economy, low interest rates and an increase in the availability of credit
play a key role in the residential market and is estimated to continue to do so.
Residential
Market
Residential stock of newly completed projects in Sofia marked an 8% increase. The
number of residential units grew to 8,870 (apartments / row or single houses), mainly
concentrated in the Southern neighbourhoods and at the foot of Vitosha Mountain.
Despite the emergence of new attractive locations for buyers, the established areas
such as the Sofia city center, the Lozenets district and the region around the Doctor’s
Monument remain leading in terms of the number of deals. At the same time, an
appreciation in the value of the properties has led to an outflow of buyers in the region
of Doctor’s Monument, although the supply there has been rising over the past year.
Higher price levels were less likely to meet buyer expectations, resulting in a reduced
number of deals.
The shortage of completed quality projects maintained the surge in sales of residential
properties under construction (trend remaining in place since 2015), representing 60%
of the total deal volume in 2018.
Overall, sales and rental prices maintained their levels, with luxury properties reporting
minimal price increases, while the overall market has been subdued. The flat growth
in supply and the reaching of buy-in prices have exhausted the potential of the market
for appreciation and the expectations for 2019 are for levels already reached to be
maintained.
ANNUAL REPORT 2018|13
Additionally, a noticeable trend is that the market is driven by buyers, with more than
70% of the deals having been negotiated with a discount on the offer price. Statistics
show that the average discount in 2018 was 7,4% (under 7% for apartments and over
10% for houses). The biggest share of sales in 2018 has been achieved with a 5%
discount, which is a sign of a gradual balancing of the market. The discount
transactions trend is expected to continue, which will likely lead to overvalued
properties staying on the market for months.
4.3 Greece
Following the upwards trend of the Greek economy, the local real estate market has
General
Logistics
Market
shown signs of solid growth during the last two years. A number of projects, from
privatization to long term leases of infrastructure, moved ahead, revitalizing a subdued
sector, which is deemed instrumental in disengaging the state’s resources and
attracting privately held funds, local and international alike. Office, retail and
residential property segments followed positive trends during 2018.
The geographic location of Greece offers high potential to the logistics sector, which
is considered to be one of the pillars of the country’s economic development, while
new business opportunities have been created upon the granting of management
concessions for Piraeus port to COSCO, Thessaloniki port to the Deutsche Invest-
Terminal Link-Belterrra consortium, and TRAINOSE to Italian Stet owned company
Ferrovie Delo Stato, as well as the development of new logistic centers in Athens
(Thriasio) and Thessaloniki (Str. Gonou), which are in progress.
In Athens and Thessaloniki, the average yields for quality logistics properties are
around 11%, while the vacancy rate for Grade A properties is as low as 5%. In
Aspropyrgos, the investment yields range from 9,75% to 10,75% and average vacancy
rate is 10%, while for Grade A properties reaches 5%. The rental values remained
stable or marginally increased during 2018. Nevertheless, the low vacancy rates, along
with the slow, yet substantial, increase in demand and the lack of large, high quality
logistics properties, due to bureaucratic barriers, lack of an effective urban planning
system and the defined land uses, will eventually result in rental values increasing and
investment yields decreasing.
4.4 Ukraine
The economic growth the country has experienced in recent years has affected the
General
real estate market, creating an upwards trend, despite many problems created during
the economic crisis being still in place.
Low development activity and increased demand in the office segment has led to a
decrease in primary vacancies and an increase in prime rents. Continuous low new
supply and strengthening occupier demand in the warehousing and logistics segment
ANNUAL REPORT 2018|14
forced the market-wide vacancy to significantly low levels. Likewise, scant new supply
and rising absorption of previously vacant space in the retail segment has led to a
substantial decline in average market vacancy and to noticeable rental growth.
With regards to the Ukrainian land market, due to lack of finance, many potential
Land Market
investors are placing unfinished projects in the market. However, particularly in Kiev,
there is scarcity of undeveloped land plots near the city center with access to public
transportation and especially to metro stations. On the supply side, the sellers pool
consists of development companies, unable to develop due to the lack of finance,
companies or individuals having speculatively acquired land plots prior to the crisis
with the intention to sell on and banks possessing mortgaged land upon default of
previous owners. The demand for land plots has started increasing since 2016,
especially for ones suitable for commercial development, with large land plots sales in
2017, reflecting the existing positive investment trend.
Devaluation of the national currency had led to land price decreases during the
previous years. Since 2017, the supply of high quality land plots mainly for residential,
but also for commercial, development near Kiev has led the land market up. That,
along with the growth of the economy and the business activity in the country forced
the prices in the city up during 2018, while outside the city the prices remained
relatively stable. No significant alterations are expected in the land prices during the
following year as well.
ANNUAL REPORT 2018|15
5. Property Assets
5.1 Victini Logistics (ex GED), Athens Greece
The 17.756 sqm complex that consists of industrial and office space is situated on a 44.268
sqm land plot in the West Attica Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki
Odos (the Athens ring road) and is 20 minutes from the port of Piraeus (where Cosco runs a
container port handling more than 4 million containers a year) and the National Road
connecting Athens to the north of the country. The roof of the warehouse buildings houses a
photovoltaic park of 1,000 KWp.
Property
description
The buildings are characterized by high construction quality and state-of-the-art security
measures. The complex includes 100 car parking spaces, as well as two central gateways
(south and west).
Currently, Kuehne & Nagel (the German transportation and logistics company), occupies all the
Current status
warehouse space and almost all of the office space until 2023.
5.2 EOS Business Park – Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class “A” office building of 3.386 sqm GLA
and 90 parking places. It is located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road. The Park is very close to
Bucharest’s ring road and the DN 2 national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
Property
description
The Company acquired the office building in November 2014. The complex is fully let to Danone
Current status
Romania, the French multinational food company, until 2025. The asset is planned to be part
of the Arcona transaction.
ANNUAL REPORT 2018|16
5.3 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of two underground levels, a
ground floor and ten above-ground floors. The building is strategically located in the very center
of Bucharest, close to three main squares of the city: Unirii, Alba Iulia and Muncii, only 300 m
Property
description
from the metro station.
The Company acquired 24,35% of the property in May 2015. As at the year end 2018, the
Current status
building is 100% let, with ANCOM (the Romanian Telecommunications Regulator) being the
anchor tenant (70% of GLA). The asset is planned to be part of the Arcona transaction.
5.4
Innovations Logistics Park, Romania
The park incorporates approximately 8.470 sqm of multipurpose warehousing space, 6.395
sqm of cold storage and 1.705 sqm of office space. It is located in the area of Clinceni, south
west of Bucharest center, 200 m from the city’s ring road and 6km from Bucharest-Pitesti (A1)
highway. Its construction was completed in 2008 and was tenant specific. It comprises four
separate warehouses, two of which offer cold storage.
Property
description
In April 2017, the Company signed a lease agreement with Aquila Srl, a large Romanian logistics
Current status
operator, for 5.740 sqm of ambient space in the warehouse which expired during April 2018
without being extended. During Q3 2018 the Company signed a short term lease agreement
for 2.000 sqm of ambient storage space with Chipita Romania Srl, one of the fastest growing
regional food companies, currently under discussions for extension. During Q1 2019 the
Company signed with Favorit Business Srl a lease agreement for 3.000 sqm of cold storage
space, 506 sqm of ambient storage space, and 440 sqm of office space. In Q2 2019 the
Company agreed with Favorit Business Srl a lease of an extra 3.000 sqm of cold storage space,
and an extra 210 sqm of office space to accommodate their new business line which involves
as end user Carrefour. As at the year end, the terminal was ~37% leased, while based on
ANNUAL REPORT 2018|17
current agreements occupancy for the forthcoming period has reached ~83%. The asset is
planned to be part of the Arcona transaction.
5.5 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake, a standalone building on
ground and first floor, is used as a nursery by one of the Bucharest’s leading private schools.
Property
description
The building is erected on 1.428,59 sqm plot with
a total gross area of 1.198 sqm.
The property is 100% leased to International School for Primary Education until 2032. The
Current status
asset is planned to be part of the Arcona transaction.
5.6 Residential portfolio
Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Romfelt Plaza is a residential complex located in Bucharest, Sector 2, relatively close to the city
center, easily accessible by public transport and nearby supporting facilities and green areas.
Property
description
During 2018, 10 units were sold and, at the
Current status
end of 2018, four apartments were available.
The asset is planned to be part of the Arcona
transaction.
Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in South Bucharest, Sector 4, enjoying good
car access due to the large boulevards, public transportation, and a shopping mall (Sun Plaza)
Property
description
reachable within a short driving distance or easily accessible by subway.
At the end of 2018, 22 apartments were available, four
Current status
of which were rented. Following extended negotiations
for the last two years with the company which acquired
Monaco’s loan, the SPV holding Monaco units entered
into insolvency status in order to protect itself from its
creditors. During 2019, based on regulatory procedures
for disposing assets held by the debtor and upon agreement of all involved parties and the
judicial administrator’s approval, 3 units were sold. The asset is planned to be part of the
Arcona transaction.
ANNUAL REPORT 2018|18
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
Property
description
public transportation (both bus and tram).
At the end of 2018, 8 apartments were available
Current status
while one was rented. The asset is planned to be
part of the Arcona transaction.
GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of apartments and villas, situated
on the banks of Grivita Lake, in the northern part of the Romanian capital – the only residential
property in Bucharest with a 200 meters frontage to a lake. The compound also includes
facilities such as one of Bucharest’s leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally GreenLake includes land
plots totaling 40.360 sqm. SPDI owns ~43% of this property asset portfolio.
Property
description
During 2018, six apartments and villas were sold while at the end of the year, of the 50 units
Current status
that were unsold, 10 were let. The asset is planned to be part of the Arcona transaction.
Boyana Residence, Sofia, Bulgaria
A residential compound, which consisted at acquisition date (May 2015) of 67 apartments plus
83 underground parking slots developed on a land surface of 5.700 sqm, situated in the Boyana
high end suburb of Sofia, at the foot of Vitosha mountain with Gross Buildable Area (“GBA”)
totaling 11.400 sqm. The complex includes adjacent land plots available for sale or
development of ~22.000 sqm of gross buildable area.
Property
description
During 2018 three apartments were sold, with 34 remaining unsold at the end of 2018. The
Current status
asset is planned to be part of the Arcona transaction.
ANNUAL REPORT 2018|19
5.7 Land Assets
Aisi Bela – Bela Logistic Park, Odessa, Ukraine
The site consists of a 22,4 Ha plot of land with zoning allowance to construct up to 103.000
sqm GBA industrial properties and is situated on the main Kiev – Odessa highway, 20 km from
Property
description
Odessa port, in an area of high demand for logistics and distribution warehousing.
Development has been put on hold. The asset is planned to be part of the Arcona transaction. Current status
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
Property
description
views overlooking the scenic Dnipro River, St. Michaels’ Spires and historic Podil.
Discussions are ongoing with interested parties with view to sale the property. The asset is
Current status
planned to be part of the Arcona transaction.
Tsymlyanskiy Residence – Kiev, Ukraine
The 0,36 Ha plot is located in the historic and rapidly developing Podil District in Kiev. The
Company owns 55% of the plot, with a local co-investor owning the remaining 45%.
Discussions are ongoing with interested parties with a view to partnering in the development
or sale of this property. The asset is planned to be part of the Arcona transaction.
Balabino Project - Zaporozhye, Ukraine
The 26,38 Ha site is situated on the south entrance of Zaporozhye city, 3km away from the
administrative border of Zaporozhye. It borders the Kharkov-Simferopol Highway (which
connects eastern Ukraine and Crimea and runs through the two largest residential districts of
the city), as well as another major artery accessing the city center.
Property
description
Current status
Property
description
The site is zoned for retail and entertainment. Development has been put on hold. The asset
Current status
is planned to be part of the Arcona transaction.
Rozny Lane – Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be developed as a residential complex.
Following a protracted legal battle, it has been registered under the Company pursuant to a
Property
description
legal decision in July 2015.
The Company is evaluating potential commercialization options to maximize the property’s
Current status
value. The asset is planned to be part of the Arcona transaction.
ANNUAL REPORT 2018|20
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2018
CONTENTS
Corporate Information
Chairman’s Statement
Declaration
Management Report
Independent Auditor’s Report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
PAGE
23
24
25
26-29
30-33
34
35
36
37
38-99
CONSOLIDATED FINANCIAL STATEMENTS 2018| 22
Corporate Information
Board of Directors
Lambros Anagnostopoulos
Vagharshak Barseghyan (resigned 31 December 2018)
Ian Domaille
Paul Ensor (resigned 31 December 2018)
Franz Hoerhager (resigned 31 December 2018)
Antonios Kaffas
Kalypso Maria Nomikou (resigned 31 December 2018)
Alvaro Portela (resigned 31 December 2018)
Harin Thaker
Colin Jay Chapin (resigned 31 December 2018)
Michael Petros Beys (appointed on 5 April 2018)
Registered Address
16, Kyriakou Matsi Avenue,
Eagle House, 10th floor, PC 1082,
Agioi Omologites, Nicosia, Cyprus
Principal Places of Business
11, Bouboulinas Street,
4th floor, Office No. 48,
1060 Nicosia, Cyprus
10A Zizin Street, Interphone 21,
Ap. no 21, 6th floor, District 3,
Bucharest, PC 031263
Rigillis 30,
Athens 10674,
Greece
Prytys'ko-Mykilska 5
Kiev 04070,
Ukraine
Company Secretary
Chanteclair Secretarial Ltd
16, Kyriakou Matsi Avenue
Eagle House, 10th floor, PC 1082, Nicosia, Cyprus
Nominated Adviser
Strand Hanson Ltd
26 Mount Row,
Mayfair, London,
W1K 3SQ
Registrars
Broker
Novum Securities Limited
8-10 Grosvenor Gardens,
Belgravia, London,
SW1W 0DH
Computershare Investor Services PLC
The Pavillions, Bridgewater Road,
Bristol BS99 7NH, UK
Cymain Registrars Limited
P.O. Box 25719,
1311 Nicosia, Cyprus
Main Collaborating Banks
Eurobank EFG Cyprus Ltd
41, Makarios Avenue, 5th floor,
1065 Nicosia, Cyprus
Bank of Cyprus
P.O. Box 21472
1599 Nicosia, Cyprus
UNIVERSAL Bank
54/19, Avtozavodska Street., 04114
Kiev, Ukraine
Eurobank Ergasias S.A.
8, Othonos Street, 105 57
Athens, Greece
Alpha Bank Romania
Neocity 2 Building, 237B, Calea Dorobantilor Street,
District 1, Bucharest, Romania
Marfin Bank Romania
90-92 Emanoil Porumbaru Street,
1st District, Bucharest, Romania
Piraeus Leasing Romania
B-dul Nicolae Titulescu, No. 29 - 31, etaj 5
Sector 1, Bucuresti, Romania
SC Bancpost SA
Bd. Dimitrie Pompeiu No. 6A, Sector 2, 020337 Bucharest,
Romania
Solicitors
WTS Tax Legal Consulting LLC
5, Pankivska Street, 5th floor
Kiev, Ukraine, 01033
Drakopoulos Law Firm
332, Kifissias Avenue, 152 33 Halandri,
Athens, Greece
Drakopoulos Law Firm
7 David Praporgescu, District 2, 020965
Bucharest, Romania
Auditors
Baker Tilly Klitou and Partners Limited
Corner C Hatzopoulou & 30 Griva Digheni Avenue
1066 Nicosia, Cyprus
Reed Smith LLP
The Broadgate Tower 20 Primrose Street,
London EC2A 2RS, United Kingdom
Georgiades & Pelides LLC
Kyriakou Matsi Avenue,
Eagle House, 10th floor, PC 1082, Nicosia, Cyprus
Lex Consulting Ltd
103 James Baucher Blvd., floor 2, office 5
Lozenetz quarter, Sofia, Bulgaria
CONSOLIDATED FINANCIAL STATEMENTS 2018| 23
Chairman’s Statement
During 2018, the favorable fundamentals of our target markets continued to prevail, with Romania
continuing its leading growth within the EU, and Greece finally and firmly on a path to recovery. In general,
property markets in our region have continued to experience steady yield compression, as the global search
for yield has compelled new investors to allocate funds to these markets. During the period, SPDI continued
to pursue opportunities to implement its strategic objective of growing while simultaneously disposing of
non-core assets, in order to generate value for its shareholders. Indeed, in 2018 we sold our Praktiker
asset in Craiova, the only Romanian property that was not located in Bucharest, and also examined a
number of partnership opportunities to grow our asset base.
During the current year, we have intensified such efforts, aiming to consummate a merger-like transaction
with Arcona, which we hope and expect to close by year’s end.
Michael Beys
Chairman of the Board
CONSOLIDATED FINANCIAL STATEMENTS 2018| 24
DECLARATION BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE
PERSON RESPONSIBLE FOR THE PREPARATION OF THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY
We, the Members of the Board of Directors and the person responsible for the preparation of the consolidated financial statements
of SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC for the year ended 31 December 2018, based on our opinion, which is a
result of diligent and scrupulous work, declare that the elements written in the consolidated financial statements are true and
complete.
Board of Directors members:
Lambros Anagnostopoulos
Michael Petros Beys
Ian Domaille
Antonios Kaffas
Harin Thaker
Person responsible for the preparation of the consolidated financial statements for the year ended 31 December 2018:
Theofanis Antoniou
CONSOLIDATED FINANCIAL STATEMENTS 2018| 25
MANAGEMENT REPORT
The Board of Directors presents its report and the audited consolidated financial statements of SECURE PROPERTY DEVELOPMENT &
INVESTMENT PLC (“SPDI” or the “Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2018.
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, operation and selling of
property assets in the Region.
Review of current position, future developments and significant risks
During 2018 management continued to focus on its strategy to dispose of non-core assets (land and residential assets in Romania,
Bulgaria and Ukraine, as well as assets not located in capital cities or assets where the Company does not own the majority), while
at the same time continued to source partnerships which are able to effectively set the grounds for securing shareholders value.
As a result, during 2018 the Company sold the BlueBigBox 3 in Craiova, Romania, generating approximately EUR 2,5m in cash, while
at the same time reached an agreement with Arcona Property Fund N.V., a fund listed on Amsterdam and Prague Stock Exchanges,
for the effective exchange of Company’s non-Greek portfolio with fund’s shares. Such development, in line with Company’s strategy,
will combine the complimentary portfolios of the two entities, creating a significant European property company for the benefit of all
shareholders.
The “new” company will have presence in Central and South East Europe and in particular in Czech Republic, Poland, Slovakia,
Ukraine, Romania and Bulgaria, with an estimated size of ~EUR 160m and a NAV of ~EUR 78m.
Results and Dividends
The Group's results for the year are set out on page 34. No dividends were declared during the year.
Share Capital
Authorised share capital
As at the end of 2017, the authorized share capital of the Company was 989.869.935 Ordinary Shares of €0,01 nominal value each,
785.000 Redeemable Preference Class A Shares of €0,01 nominal value each and 8.618.997 Redeemable Preference Class B Shares
of €0,01 nominal value each (Note 29.1).
The Company cancelled the Redeemable Preference Class A Shares following the Annual General Meeting (“AGM”) decision of 29
December 2017 and the subsequent court approval obtained during H1 2018 while Redeemable Preference Class B Shares remain to
be cancelled.
Following the cancellation of Redeemable Preference Class A Shares completed within H1 2018 the authorised share capital of the
Company as at the date of issuance of this report is as follows:
a) 989.869.935 Ordinary Shares of €0,01 nominal value each,
b) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each, (Note 29.6).
Issued share capital
As at the end of 2017, the issued share capital of the Company was as follows:
a) 103.589.550 Ordinary Shares of €0,01 nominal value each,
b) 392.500 Redeemable Preference Class A Shares of €0,01 nominal value each, cancelled during 2018 as per the Annual General
Meeting decision of 29 December 2017 (Note 29.6),
c) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each.
In respect of the Redeemable Preference Class A Shares, issued in connection to the Innovations Logistics Park acquisition and the
Redeemable Preference Class 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:
- actually proceeded with full redemption of the Redeemable Preference Class A Shares (392.500) which was finalized in
Q1 2017 while it obtained during the Annual General Meeting of 29 December 2017 the necessary approval for cancelling
them during 2018.
- for the Redeemable Preference Class B Shares, in lieu of redemption the Company gave its 20% holding in Autounion
(Note 29.6) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L.
and final settlement for any resulting difference is expected to be provided by Cypriot Courts (Note 42.4). As soon as the
case is settled, the Company will proceed with the cancellation of the Redeemable Preference Class B Shares.
On 26th January 2018 the Company announced that 17.066.560 Class A warrants (at a price of £0,10 per warrant) have been exercised
and accordingly, 17.066.560 new ordinary shares were issued and admitted to trading on AIM. The consideration for these shares
was paid during 2017 (Notes 34 and 41.2). Furthermore the Company proceeded with the issue of 344.371 new Ordinary Shares to
the Non-Executive Directors of the Company who were in office in 2016 in lieu of fees accrued in 2016, as well as the issue of 10.000
new Ordinary Shares to an ex-employee of the Company, who exercised 10.000 options held over Ordinary Shares (exercisable at
£0,15 per share) and 6.260.000 new Ordinary Shares (at an average price of £0,10 per new Ordinary Share) to certain advisers in
lieu of cash fees for services offered to the Company for raising capital and facilitating capital markets strategies.
CONSOLIDATED FINANCIAL STATEMENTS 2018| 26
MANAGEMENT REPORT
The Company proceeded during H1 2018 with the necessary actions, i.e. court applications, in order to implement the decisions of
the AGM of 29 December 2017 for the cancellation of the 785.000 Redeemable Preference Class A Shares of €0,01 each, namely
777.150 Redeemable Preference Class A Shares of €0,01 each in the name of Myrian Nes Ltd and 7.850 Redeemable Preference Class
A Shares of €0,01 each in the name of Theandrion Estates.
Following shares issuance completed within H1 2018, as well as cancellation of Redeemable Preference Class A shares the issued
share capital of the Company as at the date of issuance of this report is as follows:
a) 127.270.481 Ordinary Shares of €0,01 nominal value each,
b) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each, (Note 29.6)
Board of Directors
The members of the Company's Board of Directors as at 31 December 2018 and at the date of this report are presented on page 23.
On 5th April 2018 the Company announced that proceeded with appointing Mr. Michael Beys, Founder and Managing Partner of Beys,
Stein & Mobargha LLP, a New York law firm covering a full range of corporate and real estate transactions and Mr. Colin Chapin,
advisor in numerous private equity investments principally focused on real estate in central and eastern Europe, to the Board as Non-
Executive Directors.
Furthermore, on 4th June 2018, the Company announced that Mr. Paul Ensor was stepping down with immediate effect as Non-
Executive Chairman of the Board of SPDI after 11 years in the role, Mr. Michael Beys was elected as Chairman and Mr. Harin Thaker
was appointed as Vice Chairman.
In accordance with the Company's Articles of Association, during the Annual General Meeting held on 31st December 2018, Mr. Ensor,
Mr. Barseghyan, Mr. Horhager, Mr. Portela and Mrs. Nomikou submitted their resignation from their office with effect as of 31st
December 2018.
There were no changes in the assignment of responsibilities of the Board of Directors.
Board Committees
The Board has constituted two committees, the audit committee and the remuneration committee.
The membership and the responsibilities of both committees remained unchanged during the reporting period:
- Audit Committee: Mr. Domaille (Chairman) and Mr. Kaffas
- Remuneration Committee: Mr. Domaille (Chairman) and Mr. Thaker
Advisory Council
An Advisory Council has been established to provide strategic advice and support to the Board. The Council is comprises of former
directors of the Company, namely Paul Ensor, Vagharshak Barseghyan, Franz Hoerhager, Kalypso Maria Nomikou, Alvaro Portela plus
Emmanuel Blouin, the Company’s in house investment banking advisor.
Remuneration Policy
The remuneration policy for the Board (non-executive members) of the Company which includes a monetary portion, as well as
equity-like instruments to further incentivize the recipients and further align their interests with those of the shareholders, remains
unchanged. Such equity-like instruments and the respective granting terms have been approved by the Annual General Meeting of
30th December 2013 and/or of 31st December 2014.
During 2017, 576.133 ordinary shares were issued to the Board members for their 2015 remuneration.
As far as the Board's remuneration is concerned, this has been adjusted to be related to the growth of the Gross Asset Value of the
Company as mandated by the policy. It should be noted that the said policy relates to payments through shares which are locked up
for the earlier of two years from the date of issue or the date following which the 30-day average traded value exceeds GBP 70.000.
Since 1st of July 2016, the BoD has decided to forego any remuneration.
The remuneration of the senior management is described in Note 41.1.2.
Board Members Options
Following the share capital restructuring of the Company, the existing option schemes are as follows:
Employees Options
As approved by the Annual General Meeting on 30th December 2013 the Company proceeded in 2015 in issuing 590.000 options to
its employees corresponding to potentially 590.000 ordinary shares. The terms of the options and the related holdings are analyzed
in Note 29.3. During 2017, an ex-employee of the Company exercised his options for 10.000 shares at GBP 0,15, which were issued
during 2018. As at 31 December 2017 285.000 options expired while another 295.000 options expired at 31 December 2018.
CONSOLIDATED FINANCIAL STATEMENTS 2018| 27
MANAGEMENT REPORT
Directors and Management Holdings in the Company
During the reporting period the following share acquisitions or allocation of shares took place in relation to the Directors:
Α. During March 2017, the Directors acquired 438.909 ordinary shares of the Company.
B. During April 2017, 576.133 new ordinary shares were allocated to the Non-executive directors of the Company who were in office
in 2015 in lieu of fees accrued in 2015.
The table below presents Directors and Management direct shareholding in the Company as at the date of issuance of this report:
Name
Michael Petros Beys
Ian Domaille *
Antonios Kaffas
Harin Thaker
Lambros Anagnostopoulos
Position
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director and CEO
Amount of Shares held
100.000
719.975
251.709
214.651
448.092
*includes a number of 83.196 shares as non-beneficial owner
Warrants issued and exercised
Class A warrants
The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio,
(Notes 27 and 29.4) issued during 2017 a financial instrument, 35% of which consists of a convertible bond and 65% of which is
made up of a warrant. Pursuant to issuing the instrument, the Company issued 17.066.560 Class A warrants which were exercised
during 2017 at an exercise price of £0,10 per ordinary share and the Company proceeded beginning of 2018 with the issuance of
17.066.560 new ordinary shares corresponding to these warrants.
There are no Class A warrants in circulation as at the issuance date of the financial statements.
Class B warrants
On 8 August 2011, the Company issued an amount of Class B Warrants for an aggregate corresponding to 12,5% of the issued share
capital of the Company after the exercise date. Further to the resolution approved at the AGM of 30 December 2016 the exercise
period of the Class B Warrants was extended until 30 June 2017, at an exercise price of the nominal value per Ordinary Share as at
the date of exercise. The Class B Warrant Instruments have anti-dilution protection so that, in the event of further share issuances
by the Company, the number of Ordinary Shares to which the holder of a Class B Warrant is entitled will be adjusted so that he
receives the same percentage of the issued share capital of the Company (as nearly as practicable), as would have been the case
had the issuances not occurred. This anti-dilution protection will freeze on the earlier of (i) the expiration of the Class B Warrants;
and (ii) capital increase(s) undertaken by the Company generating cumulative gross proceeds in excess of USD 100.000.000.
As at 30 June 2017, there were 12.948.694 warrants in circulation corresponding to an equal amount of ordinary shares (1:1) and
the Company received valid notices from holders of Class B warrants for the full exercise of their warrants and proceeded with the
issue of 12.948.694 new ordinary shares.
There are no Class B warrants in circulation.
Other share capital related matters
Pursuant to decisions taken by the AGM of 30th December 2016, the Board has been authorised and empowered to:
-
-
issue up to 200.000.000 ordinary shares of €0,01 each at an issue price as the Board may from time to time determine
(with such price being at a discount to the net asset value per share) so as to facilitate the profitable growth of the Group.
Such explicit authority for the issuance of such shares expired on 31 December 2018. Since 31 December 2016 and until
the date of this report, the Board had issued 37.255.758 shares under its mandated authority.
issue Class A Warrants, to subscribe for up to 350% of the outstanding ordinary shares at the time of issuance of the Class
A Warrants, upon such terms and conditions as may be determined by the Board (with such price being at a discount to
the net asset value per share). Such Class A Warrants may be offered to various third-party entities a) for participating in
the capital raising of the Company, b) for their contribution in creating value for the Group and c) for their assistance with
fundraising. Such explicit authority for the issuance of such warrants expired on 31 December 2018. The Company issued
17.066.560 Class A warrants under this authority during 2017 which were also exercised.
Pursuant to decisions taken by the AGM of 29th December 2017, the Company proceeded with the following actions during 2018
(which finalized during June 2018):
-
-
That the balance of the share premium account of the Company will be reduced by €53.569.295 and will be set off with
carried forward losses of the Company amounting to €53.569.295.
That the balance of the share premium account of the Company will be reduced by €698.650 and that the said amount will
be set off against any outstanding balances between the Company, Myrian Nes Ltd and Theandrion Estates Ltd related to
the Redeemable Preference Class A Shares.
CONSOLIDATED FINANCIAL STATEMENTS 2018| 28
MANAGEMENT REPORT
-
-
That the authorised share capital of the Company, as well as the issued share capital of the Company each will be reduced,
by the cancellation of 785.000 Redeemable Preference Class A Shares of €0,01 each, namely 777.150 Redeemable
Preference Class A Shares of €0,01 each in the name of Myrian Nes Ltd and 7.850 Redeemable Preference Class A Shares
of €0,01 each in the name of Theandrion Estates Ltd and the amount reduced will be set off against any outstanding
balances between the Company, Myrian Nes Ltd and Theandrion Estates Ltd.
That the articles of association of the Company will be amended by adding the following new Regulation 3.10 after
Regulation 3.9:
“Subject to the provisions of the Law, the Company may purchase its own shares (including any redeemable shares).”
Pursuant to decisions taken by the AGM of 31st December 2018, the Board has been authorized and empowered to:
-
-
issue and allot up to 20.000.000 ordinary shares of euro 0,01 each, at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a discount to the net asset value per share in the Company
which is in issue immediately prior to the issue of the new shares) and for such purpose any rights of pre-emption and
other rights the Company's shareholders have or may have by operation of law and/or pursuant to the articles of association
of the Company and/or otherwise in connection with the authority conferred on the Board for the issue and allotment of
shares in the Company as contemplated in this resolutions or the issue of shares in the Company pursuant to such authority
be and are hereby irrevocably and unconditionally waived. The authority conferred by this resolution shall expire on 31
December 2019.
issue up to 15.000.000 Class A Warrants, being convertible to up to 15.000.000 ordinary share of euro 0,01 each in the
Company upon exercise of the Warrants, with such terms and conditions and at an issue price as the Board may in its sole
unfettered discretion from time to time determine (and such price may be at a discount to the net asset value per share in
the Company which is in issue immediately prior to the issue of the Warrants) and for such purpose any rights of pre-
emption and other rights the Company's shareholders have or may have by operation of law and/or pursuant to the articles
of association of the Company and/or otherwise in connection with the authority conferred on the Board for the issue and
allotment of shares or Warrants in the Company as contemplated in this resolution or the issue and allotment of shares or
Warrants in the Company pursuant to such authority be and are hereby irrevocably and unconditionally waived. The
authority conferred by this resolution shall expire on 31 December 2019.
Events after the end of the reporting period
The significant events that occurred after the end of the reporting period are described in Note 45 to the financial statements.
Independent auditors
The Independent Auditors, Baker Tilly Klitou and Partners Limited, have expressed their willingness to continue in office.
The Audit Committee will be proposing to the Board the appointment of the Independent Auditors for 2019, authorizing the CEO and
the Finance Director to negotiate their remuneration so as to present a relevant proposal to the Annual General Meeting of the
Shareholders of the Group.
By order of the Board of Directors,
Theofanis Antoniou
Finance Director
CONSOLIDATED FINANCIAL STATEMENTS 2018| 29
Corner C. Hatzopoulou &
30 Griva Digheni Avenue
1066, Nicosia
P.O Box 27783,
2433 Nicosia, Cyprus
T: +357 22 458500
F: +357 22 751648
info@bakertillyklitou.com
www.bakertilly.com.cy
Independent Auditor's Report
To the Members of Secure Property Development & Investment Plc
Report on the Audit of the Consolidated Financial Statements
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 2018, 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, the accompanying consolidated financial statements give a true and fair view of the consolidated financial
position of the Group as at 31 December 2018, 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 Opinion
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' Code of Ethics for Professional Accountants'' (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 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 during 2019. 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.
ADVISORY ASSURANCE TAX
Baker Tilly Klitou & Partners Ltd trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of
which are separate and independent legal entities.
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
Value of investment properties and investment properties under development presented within assets
classified as held for sale
Refer to Note 4 - Significant accounting policies, Note 9 –
Discontinued operations and Note 20 - Investment
Property.
How our audit addressed the key audit matter
Our audit procedures included assessment of the
valuers’ qualifications and expertise and considered
their engagement with the Group to determine whether
there were any matters that might have affected their
objectivity or may have imposed scope limitations upon
their work.
We obtained and read the CBRE and Real Act valuation
reports for every property. We determined, based on
our expertise and experience, that the valuation
approach for each property was appropriate and
suitable for use in determining the fair value for the
consolidated financial statements.
We have also evaluated the mathematical precision of
the methodologies used and the relevance of the key
assumptions used, comparing with general economic
expectations to assess whether the assumptions used
were reasonable.
The Group holds investment properties and investment
properties under development, which are presented as
assets classified as held for sale. As at 31 December 2018
these are carried at values of €63.345.537 and
€4.716.157 respectively. A net loss on disposals of
investment properties of continued operations of
€845.181 and a net loss of disposals of investment
properties of discontinued operations €48.225 were
recognized in the Group’s consolidated statement of
comprehensive income for the year ended 31 December
2018. We focused in this area due to the existence of
significant judgment, coupled with the fact that only a
small percentage difference
individual property
valuations when aggregated could result in material
misstatement.
in
The valuation of the Group’s properties is inherently
subjective due to unique nature, location and expected
future prospects of each property. The methodology
applied in determining the fair values is set out in Note 20
of the consolidated financial statements. Valuations, as
disclosed in Note 4, are carried out by third-party valuers,
CBRE Ltd and Real Act (the “Valuers”). The Valuers
performed their work in accordance with the Royal
Institute of Chartered Surveyors (“RICS”) Valuation –
Professional Standards and is also compliant with the
International Valuation Standards (IVS), taking into
account property specific information.
Emphasis of matter
We draw attention to Notes 4, 9, 20 and 26 to the consolidated financial statements, which describe investment
properties, investment properties under development, and inventory, which are presented within assets classified as held
for sale. The values at which these assets are presented in the consolidated financial statements are based on valuations
performed by independent valuers. The values are determined by selecting a variety of methods and making assumptions
that are mainly based on conditions existing at the end of each reporting period. In the event that any of the assumptions
do not materialize the values of the Group’s investment properties, investment properties under development and
inventory will be affected accordingly. 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 Matter
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 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2018
Continued Operations
Income
Asset operating expenses
Net Operating Income
Administration expenses
Valuation gains from Investment Property
Net loss on disposal of investment property
Provisions
Gain on disposal of subsidiaries
Other operating expenses, net
Operating profit / (loss)
Finance income
Finance costs
Profit / (loss) before tax and foreign exchange differences
Foreign exchange (loss), net
Forex transfer on disposal of foreign operation
Loss before tax
Income tax expense
Note
10
11
12
13
14b
15
21b
16
17
17
18a
18b
2018
€
769.463
(118.319)
651.144
(1.768.847)
-
(845.181)
-
-
(31.716)
2017
Restated*
€
2.180.502
(123.261)
2.057.241
(1.994.481)
181.102
-
150.000
1.483.737
(378.076)
(1.994.600)
1.499.523
686.183
(353.741)
3.563
(389.491)
(1.662.158)
1.113.595
(71.390)
-
(695.043)
(37.352.923)
(1.733.548)
(36.934.371)
19
(613.034)
(524.255)
Loss for the year from continuing operations
(2.346.582)
(37.458.626)
Loss from discontinued operations
9b
(1.405.899)
(1.073.650)
Loss for the year
Other comprehensive income
(3.752.481)
(38.532.276)
Exchange difference on I/C loans to foreign holdings
Exchange difference on translation of foreign operations
Total comprehensive income for the year
18b
30
1.850
421.086
(3.329.545)
37.349.385
(615.583)
(1.798.474)
Loss for the year from continued operations attributable to:
Owners of the parent
Non-controlling interests
Loss for the year from discontinued operations attributable to:
Owners of the parent
Non-controlling interests
Loss for the year attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
Earnings/(losses) per share (Euro per share):
39b
Basic earnings/(losses) for the year attributable to ordinary equity
owners of the parent
Diluted earnings/(losses) for the year attributable to ordinary equity
owners of the parent
*Restatement due to IFRS 5 .
The notes on pages 38 to 99 form an integral part of these consolidated financial statements.
(2.346.582)
-
(2.346.582)
(37.458.626)
-
(37.458.626)
(699.271)
(706.628)
(1.405.899)
(1.985.925)
912.275
(1.073.650)
(3.045.853)
(706.628)
(3.752.481)
(39.444.551)
912.275
(38.532.276)
(2.463.822)
(865.723)
(3.329.545)
(2.962.061)
1.163.587
(1.798.474)
(0,03)
(0,03)
(0,40)
(0,38)
CONSOLIDATED FINANCIAL STATEMENTS 2018|34
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2018
ASSETS
Non-current assets
Investment properties
Investment properties under development
Tangible and intangible assets
Long-term receivables and prepayments
Investments in associates
Current assets
Inventory
Prepayments and other current assets
Cash and cash equivalents
Assets classified as held for sale
Total assets
EQUITY AND LIABILITIES
Issued share capital
Share premium
Foreign currency translation reserve
Exchange difference on I/C loans to foreign holdings
Accumulated losses
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Non-current liabilities
Borrowings
Finance lease liabilities
Bonds issued
Trade and other payables
Taxes payables
Provision on taxes
Deposits from tenants
Current liabilities
Borrowings
Finance lease liabilities
Bonds issued
Trade and other payables
Taxes payable
Provisions on taxes
Liabilities directly associated with assets classified as held for sale
Total liabilities
Total equity and liabilities
Note
20.4a
20.4b
24
25
22
26
27
28
9d
29
30
41.3
31
32
37
33
34
36
36
35
32
37
33
34
36
36
9d
2018
€
-
-
3.674
850
-
4.524
-
5.585.408
282.713
5.868.121
79.678.738
85.546.859
85.551.383
1.272.702
71.381.259
9.874.757
(215.820)
(46.704.622)
35.608.276
2017
€
74.732.502
4.586.009
70.504
316.788
5.115.587
84.821.390
4.812.550
5.846.584
831.124
11.490.258
-
11.490.258
96.311.648
1.035.893
123.126.328
9.294.576
(217.670)
(96.888.569)
36.350.558
7.535.691
8.401.414
43.143.967
44.751.972
380.256
-
1.033.842
-
362.010
399.450
-
2.175.558
22.034
-
88.628
4.174.936
652.324
43
25.324.378
10.435.241
1.033.842
417.791
602.200
399.450
187.976
38.400.878
5.162.087
391.002
20.495
6.920.308
613.859
51.047
4.937.965
13.158.798
35.293.893
40.231.858
42.407.416
-
13.158.798
51.559.676
85.551.383
96.311.648
Net Asset Value (NAV) € per share:
39c
Basic NAV attributable to equity holders of the parent
Diluted NAV attributable to equity holders of the parent
0,28
0,28
0,43
0,38
On 28 June 2019 the Board of Directors of SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC authorised these financial
statements for issue.
Lambros Anagnostopoulos
Director & Chief Executive Officer
Michael Beys
Director & Chairman of the Board
Theofanis Antoniou
Finance Director
The notes on pages 38 to 99 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2018|35
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2018
Attributable to owners of the Company
Share capital
Share
premium,
Net1
€
€
Accumulated
losses, net of
non-controlling
interest2
€
Exchange
difference on I/C
loans to foreign
holdings3
€
Foreign
currency
translation
reserve4
€
Total
Non-
controlling
interest
Total
€
€
€
Balance - 31 December 2016
900.145
122.874.268
(57.444.020)
(37.567.055) 10.161.471
38.924.809
7.237.827
46.162.636
Loss for the year
Issue of share capital (Note 29)
Exchange difference on I/C loans to foreign
holdings which disposed (Note 18b)
Exchange difference on I/C loans to foreign
holdings (Note 18b)
Foreign currency translation reserve
Balance 1 January 2018 as initially
reported
Adjustment on initial application of IFRS 9, net
of tax
-
135.748
-
252.060
(2.091.626)
-
-
-
(37.352.923)
37.352.923
-
-
-
(2.091.626)
387.808
912.275
-
(1.179.351)
387.808
-
-
-
-
-
(3.538)
-
-
(866.895)
(3.538)
(866.895)
-
251.312
(3.538)
(615.583)
-
-
-
-
-
-
1.035.893
123.126.328
(96.888.569)
(217.670)
9.294.576
36.350.558
8.401.414
44.751.972
-
-
(339.495)
-
-
(339.495)
-
(339.495)
Balance 1 January 2018 restated
Loss for the year
1.035.893
-
123.126.328
-
(97.228.064)
(3.045.853)
(217.670)
-
9.294.576
-
36.011.063
(3.045.853)
8.401.414
(706.628)
44.412.477
(3.752.481)
Issue of share capital (Note 29)
Exchange difference on I/C loans to foreign
holdings (Note 18b)
Share premium set off with accumulated losses
(Note 29.7)
Expenses for capital raising
Exercised warrants (Note 29.4)
Foreign currency translation reserve
Balance - 31 December 2018
66.044
810.522
-
-
-
170.765
-
1.272.702
-
(735.623)
1.749.327
71.381.259
-
-
-
-
1.850
-
-
-
-
-
-
-
-
(46.704.622)
-
-
(215.820)
-
580.181
9.874.757
(53.569.295)
53.569.295
876.566
1.850
-
(735.623)
1.920.092
580.181
35.608.276
-
-
-
-
(159.095)
7.535.691
876.566
1.850
-
(735.623)
1.920.092
421.086
43.143.967
1 Share premium is not available for distribution.
2 Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution
for defense at 20% will be payable on such deemed dividends to the extent that the shareholders (companies and individuals) are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of
the relevant year at any time. This special contribution for defense is payable on account of the shareholders.
3 Exchange differences on intercompany loans to foreign holdings arose as a result of devaluation of the Ukrainian Hryvnia during previous years. The Group treats the mentioned loans as a part of the net investment in foreign operations (Note 41.3).
4 Exchange differences related to the translation from the functional currency of the Group’s subsidiaries are accounted for directly to the foreign currency translation reserve. The foreign currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local currencies against the euro in the countries where the Group’s subsidiaries own property assets.
The notes on pages 38 to 99 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2018|36
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2018
Note
2018
€
2017
€
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling interests-continued operations
Loss before tax and non-controlling interests-discontinued operations
Loss before tax and non-controlling interests
Adjustments for:
(Gains) on revaluation of investment property
Net loss/(gain) on disposal of investment property
Other non-cash movements
Write offs of prepayments
Impairment charge on receivables
Accounts payable written off
Depreciation/ Amortization charge
Interest income
Interest expense
Share of losses/(profit) from associates
Gain on acquisition of subsidiaries
Reversal of provision
Gain on disposal of subsidiaries
Effect of foreign exchange differences
Forex transfer on disposal of foreign operation
Cash flows from/(used in) operations before working capital changes
Change in inventory
Change in prepayments and other current assets
Change in trade and other payables
Change in VAT and other taxes receivable
Change in provisions
Change in other taxes payables
Increase in deposits from tenants
Cash generated from operations
Income tax paid
Net cash flows provided in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment property
Dividend received from associates
Interest received
Increase in long term receivables
Cash inflow on disposal of subsidiaries
Loan granted for property acquisition
Net cash flows from / (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital
Bonds issue
Proceeds from bank and non-bank loans
Repayment of bank and non-bank loans
Interest and financial charges paid
Decrease in financial lease liabilities
Net cash flows from / (used in) financing activities
Net increase/(decrease) in cash at banks
Cash:
At beginning of the year
At end of the year
9b
13
14b
16
16
16
12
17
17
22
21a
15
21b
18a
18b
26
27
34
27
36
36
35
14b
22
21b
27
29
33
32
32
37
(1.733.548)
(1.309.332)
(36.934.371)
(1.001.740)
(3.042.880) (37.936.111)
1.218.297
893.406
113
-
415.289
(85)
27.384
(696.162)
1.836.590
(364.920)
-
-
-
81.623
-
368.655
208.506
15.564
708.591
240.255
14.998
(543.861)
55.345
(326.961)
(4.366)
411
44.040
-
(21.860)
44.128
(13.376)
1.929.583
(390.217)
(23.921)
(150.000)
(1.483.737)
2.030.561
37.349.385
1.047.559
215.706
(497.198)
(585.447)
103.009
408.331
(423.658)
(108.196)
1.068.053
160.106
(368.156)
(152.416)
699.897
7.690
8.016.573
143.263
405
45.667
-
(350.000)
7.855.908
-
-
1.044.408
(7.558.655)
(1.528.913)
(356.231)
(8.399.391)
363.985
231.363
1.543
(65.606)
2.844.494
(3.345.000)
30.779
135.748
1.033.842
1.455.336
(1.437.587)
(1.774.925)
(320.766)
(908.352)
156.414
(869.883)
831.124
1.701.007
28
987.538
831.124
The notes on pages 38 to 99 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2018|37
Notes to the Consolidated Financial Statements
For the year ended 31 December 2018
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the ''Company'') was incorporated in Cyprus on 23 June 2005 and is a public
limited liability company, listed on the London Stock Exchange (AIM): ISIN CY0102102213. Its registered office is at Kyriakou Matsi 16,
Eagle House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its principal place of business is in Cyprus at 11 Bouboulinas
Avenue, 4th floor, office No. 48, 1060 Nicosia, Cyprus.
Principal activities
The principal activities of the Group are to invest directly or indirectly in and/or manage real estate properties, as well as real estate
development projects in South East Europe (the "Region"). These include the acquisition, development, commercializing, operating and
selling of property assets in the Region.
The Group maintains offices in Nicosia, Cyprus, in Kiev, Ukraine, in Bucharest, Romania and in Athens, Greece.
As at 31 December 2018, the companies of the Group employed and/or used the services of 15 full time equivalent people, (2017 19
full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified by the revaluation of investment property and investment property
under construction.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Company's accounting policies. It also requires the use of
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates
are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
Following certain conditional agreement signed in December 2018 with Arcona Property Fund N.V for the sale of Company’s non-
Greek portfolio of assets, as well as plans and discussions regarding the Greek asset, the Company has classified its assets in 2018
as discontinued operations (Note 4.3) and has restated accordingly 2017 figures for comparative purposes.
Going concern basis
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for the foreseeable future.
In particular, the Company is in a process of disposing of its non-Greek portfolio of assets in an all share transaction with Arcona
Property Fund N.V., meaning that as soon as this transaction consummates the Company will be left with its Greek asset, as well as its
corporate receivables and liabilities.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern within the next twelve months
from the date these financial statements are available to be issued. The ability to continue as a going concern is dependent upon
positive future cash flows.
Management believes that the Company will be able to finance its needs given the fact that the Greek asset may contribute considerable
free cash flow in case it is sold. In such case, when coupled with the additional corporate receivables, then all corporate liabilities can
be effectively discharged. At the same time, the transaction with Arcona Property Fund N.V., which is a cash flow generating entity, will
result in the Company being for at least the initial period a ~45% shareholder, entitled to dividends according to the dividend policy of
Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year, the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods beginning on 1 January 2018. This adoption had a material effect on
the accounting policies of the Company as follows:
IFRS 9 ''Financial Instruments''
•
As explained below, in accordance with the transition provisions of IFRS 9 and IFRS 15, the Company has elected the simplified approach
for adoption of the standards. Accordingly, IFRS 9 and IFRS 15 were adopted without restating the comparative information. The
comparative information is prepared in accordance with IAS 39, IAS 18 and IAS 11, and the impact of adoption has been recognised in
the opening accumulated losses reserve.
CONSOLIDATED FINANCIAL STATEMENTS 2018|38
3. Adoption of new and revised Standards and Interpretations (continued)
The following table summarizes the impact of adoption of the new standard on each individual line item of the statement of financial
position. Line items that were not affected by the changes have not been included. As a result, the sub totals and totals disclosed
cannot be recalculated from the numbers provided. The adjustments are explained in more detail by standard below.
a.
Impact on the statement of financial position
Balance at
31
December
2017 as
previously
presented
Re-
classifications
31
December
Effect of
adoption
of
Effect of
adoption
of
1 January
2018 under
IFRS 15
IFRS 9
€
€
IFRS 15
and
IFRS
€
2017 under
IAS 18 and
IAS 39
€
€
€
Trade and other
Receivables
Loan Receivables
Cash and cash equivalents
Accumulated Losses
715.406
4.618.476
831.124
96.888.569
-
-
-
-
-
-
-
-
-
-
-
-
(15.009)
(316.926)
(7.560)
339.495
700.397
4.301.550
823.564
97.228.064
The Company has voluntarily changed the presentation of certain amounts in the comparative statement of financial position as
disclosed in the table above to reflect the terminology of IFRS 15 and IFRS 9.
(i) IFRS 9 ''Financial instruments''
IFRS 9 ''Financial instruments'' replaces the provisions of IAS 39 that relate to recognition and derecognition of financial instruments
and classification and measurement of financial assets and financial liabilities. IFRS 9 further introduces new principles for hedge
accounting and a new forward looking impairment model for financial assets.
The new standard requires debt financial assets to be classified into two measurement categories: those to be measured subsequently
at fair value (either through other comprehensive income (FVOCI) or through profit or loss (either FVTPL or FVPL) and those to be
measured at amortized cost). The determination is made at initial recognition. For debt financial assets the classification depends on
the entity's business model for managing its financial instruments and the contractual cash flows characteristics of the instruments. For
equity financial assets it depends on the entity's intentions and designation.
In particular, assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through other
comprehensive income. Lastly, assets that do not meet the criteria for amortised cost or fair value through other comprehensive income
are measured at fair value through profit or loss.
For investments in equity instruments that are not held for trading, the classification depends on whether the entity has made an
irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive
income. If no such election has been made or the investments in equity instruments are held for trading, they are required to be
classified at fair value through profit or loss.
IFRS 9 also introduces a single impairment model applicable for debt instruments at amortised cost and fair value through other
comprehensive income and removes the need for a triggering event to be necessary for recognition of impairment losses. The new
impairment model under IFRS 9 requires the recognition of allowances for doubtful debts based on expected credit losses (ECL), rather
than incurred credit losses as under IAS 39. The standard further introduces a simplified approach for calculating impairment on trade
receivables, as well as for calculating impairment on contract assets and lease receivables; which also fall within the scope of the
impairment requirements of IFRS 9.
For financial liabilities, the standard retains most of the requirements of IAS 39. The main change is that, in case where the fair value
option is taken for financial liabilities, the part of a fair value change due to the entity's own credit risk is recorded in other comprehensive
income rather than in profit or loss, unless this creates an accounting mismatch.
With the introduction of IFRS 9 ''Financial Instruments'', the IASB confirmed that gains or losses that result from modification of financial
liabilities that do not result in derecognition shall be recognized in profit or loss.
IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic
relationship between the hedged item and hedging instrument and for the ''hedge ratio'' to be the same as the one management
actually use for risk management purposes. Contemporaneous documentation is still required but is different to that previously prepared
under IAS 39.
The Company has adopted IFRS 9 with a date of transition of 1 January 2018, which resulted in changes in accounting policies for
recognition, classification and measurement of financial assets and liabilities and impairment of financial assets.
CONSOLIDATED FINANCIAL STATEMENTS 2018|39
3. Adoption of new and revised Standards and Interpretations (continued)
(i) IFRS 9 ''Financial instruments'' (continued)
The Company's new accounting policies following adoption of IFRS 9 at 1 January 2018 are set out in note.
Impact of adoption
In accordance with the transition provisions in IFRS 9, the Company has elected the simplified transition method for adopting the new
standard. Accordingly, the effect of transition to IFRS 9 was recognised as at 1 January 2018 as an adjustment to the opening
accumulated losses (or other components of equity, as appropriate). In accordance with the transition method elected by the Company
for implementation of IFRS 9 the comparatives have not been restated, but are stated based on the previous policies which comply with
IAS 39. Consequently, the revised requirements of IFRS 7 ''Financial Instruments: Disclosures'' have only been applied to the current
period. The comparative period disclosures repeat those disclosures made in the prior year.
On 1 January 2018 for debt instruments held by the Company, management has assessed which business models apply to the financial
assets and whether the contractual cash flows represent solely payments of principal and interest (SPPI test). In addition, separate
assessment for equity instruments held by the Company was performed, in respect of whether they are held for trading or not. As a
result of both assessments, Management has classified its debt and equity instruments into the appropriate IFRS 9 categories.
As a result of the adoption of IFRS 9, the Company revised its impairment methodology for each class of assets subject to the new
impairment requirements. From 1 January 2018, the Company assesses on a forward looking basis the expected credit losses associated
with its debt instruments carried at amortised cost and FVOCI, cash and cash equivalents and bank deposits with original maturity over
3 months and loan commitments and financial guarantees. The impairment methodology applied depends on whether there has been a
significant increase in credit risk and whether the debt instruments qualify as low credit risk.
The Company has the following types of assets that are subject to IFRS 9's new expected credit loss model: trade receivables, contract
assets, financial assets at amortised cost, cash and cash equivalents, bank deposits with original maturity over 3 months, debt financial
assets at FVOCI, loans commitments and financial guarantees.
The Company has adopted the simplified expected credit loss model for its trade receivables, trade receivables with significant financing
component, lease receivables and contract assets, as required by IFRS 9, paragraph 5.5.15, and the general expected credit loss model
for financial assets at amortised cost, cash and cash equivalents, bank deposits with original maturity over 3 months, and loan
commitments and financial guarantees.
The following table reconciles the carrying amounts of financial instruments, from their previous measurement categories in
accordance with IAS 39 into their new measurement categories upon transition to IFRS 9 on 1 January 2018:
Measurement category
IAS 39
IFRS9
Trade and
other
Receivables
Loans and
Receivables
Cash and
cash
equivalents
Total
Amortised
Cost
Amortised
Cost
Amortised
Cost
•
Borrowings:
Carrying
value per
IAS 39
(closing at
31
December
2017)
€
Re-
measurement
ECL
Effect of IFRS 9
Re-
measurement
Other
Re-
classification
Mandatory
Re-
classification
Voluntary
€
€
€
€
Carrying
value per
IFRs 9
(opening
balance at
1 January
2018)
€
715.406
(15.009)
4.618.476
(316.926)
831.124
6.165.006
(7.560)
(339.495)
-
-
-
-
-
-
-
-
-
-
-
-
700.397
4.301.550
823.564
5.825.511
Under IFRS 9, all gains or losses resulting from the modifications of borrowings that did not result in derecognition should be recognised
in profit or loss. Previously, under IAS 39, the Company has amortised modification impact via adjusting the effective interest rate. The
Company has assessed the above and concluded that there was no impact on the borrowings balances existing on the date of adoption
of IFRS 9.
•
Other financial instruments:
For all other financial assets Management assessed that the Company's business model for managing the assets is ''hold to collect'' and
these assets meet SPPI tests. As a result, all other financial assets were classified as financial assets at amortised cost and reclassified
from the category ''loans and receivables'' under IAS 39, which was ''retired''. Previously, under IAS 39, these financial assets were also
measured at amortised cost. Thus there were no impact of adoption of IFRS 9 as of 1 January 2018.
CONSOLIDATED FINANCIAL STATEMENTS 2018|40
3. Adoption of new and revised Standards and Interpretations (continued)
b.
Impact on the statement of comprehensive income (continued)
(i) IFRS 9 ''Financial instruments'' (continued)
At 31 December 2017, all of the Company's financial liabilities were carried at amortised cost. Starting from 1 January 2018 the
Company's financial liabilities continued to be classified at amortised cost.
The assessment of the impact of adoption of IFRS 9 on the Company's accounting policies required management to make certain critical
judgments in the process of applying the principles of the new standard.
Reconciliation of provision for impairment at 31 December 2017 and credit loss allowance at 1 January 2018.
The following table reconciles the prior period's closing provision for impairment measured in accordance with incurred loss model
under IAS 39 to the new credit loss allowance measured in accordance with expected loss model under IFRS 9 at 1 January 2018:
Provision
under IAS
39 or IAS
37 at 31
December
2017
€
(26.285)
-
-
(26.285)
Effect
Reclassification to
FVTPL
Reclassification
to FVOCI
Remeasurement
from incurred to
expected loss
Effect of
adoption of
IFRS 9
1 January
2018
€
€
€
€
-
-
-
-
-
-
-
-
(15.009)
(316.926)
(7.560)
(339.495)
(41.294)
(316.926)
(7.560)
(365.780)
Trade and other
Receivables
Loan Receivables
Cash and Cash equivalents
Total
The impact of these changes on the Group’s equity is as follows:
Trade and other Receivables
Loan Receivables
Cash and Cash equivalents
Total
(ii) IFRS 15 ''Revenue from Contracts with Customers''
Effect on
accumulated
losses
€
(15.009)
(316.926)
(7.560)
(339.495)
Total
€
(15.009)
(316.926)
(7.560)
(339.495)
IFRS 15 ''Revenue from contracts with customers'' and related amendments superseded IAS 18 ''Revenue'', IAS 11 ''Construction
Contracts'' and related interpretations. The new standard replaces the separate models for recognition of revenue for the sale of
goods, services and construction contracts under previous IFRS and establishes uniform requirements regarding the nature, amount
and timing of revenue recognition. IFRS 15 introduces the core principle that revenue must be recognised in such a way to depict the
transfer of goods or services to customers and reflect the consideration that the entity expects to be entitled to in exchange for
transferring those goods or services to the customer; the transaction price.
The new standard provides a principle based five step model that must be applied to all categories of contracts with customers. Any
bundled goods or services must be assessed as to whether they contain one or more performance obligations (that is, distinct
promises to provide a good or service). Individual performance obligations must be recognised and accounted for separately and any
discounts or rebates in the contract price must generally be allocated to each of them.
The amendments to IFRS 15 clarify how to identify a performance obligation in a contract, how to determine whether a Company is a
principal (that is, the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided) and
how to determine whether the revenue from granting a license should be recognised at a point in time or over time. In addition to the
clarifications, the amendments include two additional reliefs to reduce cost and complexity for a Company when it first applies the
new standard.
The Company's new accounting policies following adoption of IFRS 15 at 1 January 2018 are set out below in note 5.
Impact of adoption
In accordance with the transition provisions of IFRS 15, the Company has elected the simplified transition method for adopting the new
standard. Accordingly, there is no impact on the Group results by the adoption of this standard.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. Apart from
the accounting policy changes resulting from the adoption of IFRS 9 and IFRS 15 effective from 1 January 2018, these policies have
been consistently applied to all years presented in these consolidated financial statements unless otherwise stated.
CONSOLIDATED FINANCIAL STATEMENTS 2018|41
4. Significant accounting policies (continued)
Local statutory accounting principles and procedures differ from those generally accepted under IFRS. Accordingly, the consolidated
financial information, which has been prepared from the local statutory accounting records for the entities of the Group domiciled in
Cyprus, Romania, Ukraine, Greece and Bulgaria, reflects adjustments necessary for such consolidated financial information to be
presented in accordance with IFRS.
4.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose
entities) controlled by the Company (its subsidiaries).
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts
of acquiree’s identifiable net assets.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in
the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized
in profit or loss.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to
the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39, either
in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured
and its subsequent settlement is accounted for within equity.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about
facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.
Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses
are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting
policies.
Changes in ownership interests in subsidiaries without change of control and Disposal of Subsidiaries
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of non-controlling
interests are also recorded in equity.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is
lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously
recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
4.2 Functional and presentation currency
Items included in the Group's financial statements are measured applying the currency of the primary economic environment in which
the entities operate (''the functional currency''). The national currency of Ukraine, the Ukrainian Hryvnia, is the functional currency for
all the Group’s entities located in Ukraine, the Romanian leu is the functional currency for all Group’s entities located in Romania, the
Bulgarian lev is the functional currency for all Group’s entities in Bulgaria and the Euro is the functional currency for all the Greek and
Cypriot subsidiaries.
The consolidated financial statements are presented in Euro, which is the Group’s presentation currency.
As Management records the consolidated financial information of the entities domiciled in Cyprus, Romania, Ukraine, Greece and
Bulgaria in their functional currencies, in translating financial information of the entities domiciled in these countries into Euro for
inclusion in the consolidated financial statements, the Group follows a translation policy in accordance with IAS 21, “The Effects of
Changes in Foreign Exchange Rates”, and the following procedures are performed:
CONSOLIDATED FINANCIAL STATEMENTS 2018|42
4. Significant accounting policies (continued)
4.2 Functional and presentation currency (continued)
All assets and liabilities are translated at closing rate;
Equity of the Group has been translated using the historical rates;
Income and expense items are translated using exchange rates at the dates of the transactions, or where this is not practicable
the average rate has been used;
All resulting exchange differences are recognized as a separate component of equity;
When a foreign operation is disposed of through sale, liquidation, repayment of share capital or abandonment of all, or part
of that entity, the exchange differences deferred in equity are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
Monetary items receivable from foreign operations for which settlement is neither planned nor likely to occur in the foreseeable
future and in substance are part of the Group’s net investment in those foreign operations are recongised initially in other
comprehensive income and reclassified from equity to profit or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central banks used in translating the financial information of the entities from
the functional currencies into Euro are as follows:
Currency
USD
UAH
RON
BGN
2018
1,1810
32,1341
4,6535
1,9558
4.3 Discontinued operations
Average
31 December
2017
1,1293
30,0129
4,5681
1,9558
2018
1,1450
31,7141
4,6639
1,9558
2017
1,1993
33,4954
4,6597
1,9558
2016
1,0541
28,4226
4,5411
1,9558
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
represents a separate major line of business or geographic area of operations;
is part of a single coordinated plan to dispose of a separate major line of business or geographic area of operations; or
is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as
held-for-sale.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if
the operation had been discontinued from the start of the comparative year.
4.4 Investment Property at fair value
Investment property, comprising freehold and leasehold land, investment properties held for future development, warehouse and office
properties, as well as the residential property units, is held for long term rental yields and/or for capital appreciation and is not occupied
by the Group. Investment property and investment property under construction are carried at fair value, representing open market
value determined annually by external valuers. Changes in fair values are recorded in the statement of comprehensive income and are
included in other operating income.
A number of the land leases (all in Ukraine) are held for relatively short terms and place an obligation upon the lessee to complete
development by a prescribed date. It is important to note that the rights to complete a development may be lost or at least delayed if
the lessee fails to complete a permitted development within the timescale set out by the ground lease.
In addition, in the event that a development has not commenced upon the expiry of a lease then the City Authorities are entitled to
decline the granting of a new lease on the basis that the land is not used in accordance with the designation. Furthermore, where all
necessary permissions and consents for the development are not in place, this may provide the City Authorities with grounds for
rescinding or non-renewal of the ground lease. However Management believes that the possibility of such action is remote and was
made only under limited circumstances in the past.
Management believes that rescinding or non-renewal of the ground lease is remote if a project is on the final stage of development or
on the operating cycle. In undertaking the valuations reported herein, the valuer of Ukrainian properties CBRE has made the assumption
that no such circumstances will arise to permit the City Authorities to rescind the land lease or not to grant a renewal.
Land held under operating lease is classified and accounted for as investment property when the rest of the definition is met. The
operating lease is accounted for as if it were a finance lease.
Investment property under development or construction initially is measured at cost, including related transaction costs.
CONSOLIDATED FINANCIAL STATEMENTS 2018|43
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
The property is classified in accordance with the intention of the management for its future use. Intention to use is determined by the
Board of Directors after reviewing market conditions, profitability of the projects, ability to finance the project and obtaining required
construction permits.
The time point, when the intention of the management is finalized is the date of start of construction. At the moment of start of
construction, freehold land, leasehold land and investment properties held for a future redevelopment are reclassified into investment
property under development or inventory in accordance to the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including related transaction costs. Investment properties are derecognized when
either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit
is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the
consolidated statement of comprehensive income in the period of retirement or disposal.
Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation,
or the commencement of an operating lease to third party. Transfers are made from investment property when, and only when, there
is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale.
If an investment property becomes owner occupied, it is reclassified as property, plant and equipment, and its fair value at the date of
reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment
property is classified as investment property under construction until construction or development is complete. At that time, it is
reclassified and subsequently accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair value of
investment property are included in the statement of comprehensive income in the period in which they arise.
If a valuation obtained for an investment property held under a lease is net of all payments expected to be made, any related
liabilities/assets recognized separately in the statement of financial position are added back/reduced to arrive at the carrying value of
the investment property for accounting purposes.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are
charged to the statement of comprehensive income during the financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial position date. These valuations are prepared annually by chartered surveyors
(hereafter “appraisers”). The Group appointed valuers in 2014, which remain the same in 2018:
CBRE Ukraine, for all its Ukrainian properties,
Real Act for all its Romanian, Greek and Bulgarian properties.
The valuations have been carried out by the appraisers on the basis of Market Value in accordance with the appropriate sections of the
current Practice Statements contained within the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards (2018)
(the “Red Book”) and is also compliant with the International Valuation Standards (IVS).
“Market Value” is defined as: “The estimated amount for which a property should be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion”.
In expressing opinions on Market Value, in certain cases the appraisers have estimated net annual rentals/income from sale. These are
assessed on the assumption that they are the best rent/sale prices at which a new letting/sale of an interest in property would have
been completed at the date of valuation assuming: a willing landlord/buyer; that prior to the date of valuation there had been a
reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest,
for the agreement of the price and terms and for the completion of the letting/sale; that the state of the market, levels of value and
other circumstances were, on any earlier assumed date of entering into an agreement for lease/sale, the same as on the valuation date;
that no account is taken of any additional bid by a prospective tenant/buyer with a special interest; that the principal deal conditions
assumed to apply are the same as in the market at the time of valuation; that both parties to the transaction had acted knowledgeably,
prudently and without compulsion.
A number of properties are held by way of ground leasehold interests granted by the City Authorities. The ground rental payments of
such interests may be reviewed on an annual basis, in either an upwards or downwards direction, by reference to an established
formula. Within the terms of the lease, there is a right to extend the term of the lease upon expiry in line with the existing terms and
conditions thereof. In arriving at opinions of Market Value, the appraisers assumed that the respective ground leases are capable of
extension in accordance with the terms of each lease. In addition, given that such interests are not assignable, it was assumed that
each leasehold interest is held by way of a special purpose vehicle (“SPV”), and that the shares in the respective SPVs are transferable.
CONSOLIDATED FINANCIAL STATEMENTS 2018|44
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
With regard to each of the properties considered, in those instances where project documentation has been agreed with the respective
local authorities, opinions of the appraisers of value have been based on such agreements.
In those instances where the properties are held in part ownership, the valuations assume that these interests are saleable in the open
market without any restriction from the co-owner and that there are no encumbrances within the share agreements which would impact
the sale ability of the properties concerned.
The valuation is exclusive of VAT and no allowances have been made for any expenses of realization or for taxation which might arise
in the event of a disposal of any property.
In some instances the appraisers constructed a Discounted Cash Flow (DCF) model. DCF analysis is a financial modeling technique
based on explicit assumptions regarding the prospective income and expenses of a property or business. The analysis is a forecast of
receipts and disbursements during the period concerned. The forecast is based on the assessment of market prices for comparable
premises, build rates, cost levels etc. from the point of view of a probable developer.
To these projected cash flows, an appropriate, market-derived discount rate is applied to establish an indication of the present value of
the income stream associated with the property. In this case, it is a development property and thus estimates of capital outlays,
development costs, and anticipated sales income are used to produce net cash flows that are then discounted over the projected
development and marketing periods. The Net Present Value (NPV) of such cash flows could represent what someone might be willing
to pay for the site and is therefore an indicator of market value. All the payments are projected in nominal US Dollar/Euro amounts and
thus incorporate relevant inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the appraisers have taken into account in arriving at Market Value the following:
Pre Development
In those instances where the nature of the ‘Project’ has been defined, it was assumed that the subject property will be developed in
accordance with this blueprint. The final outcome of the development of the property is determined by the Board of Directors decision,
which is based on existing market conditions, profitability of the project, ability to finance the project and obtaining required construction
permits.
Development
In terms of construction costs, the budgeted costs have been taken into account in considering opinions of value. However, the
appraisers have also had regard to current construction rates prevailing in the market which a prospective purchaser may deem
appropriate to adopt in constructing each individual scheme. Although in some instances the appraisers have adopted the budgeted
costs provided, in some cases the appraisers’ own opinions of costs were used.
Post Development
Rental values have been assessed as at the date of valuation but having regard to the existing occupational markets taking into account
the likely supply and demand dynamics during the anticipated development period. The standard letting fees were assumed within the
valuations. In arriving at their estimates of gross development value (“GDV”), the appraisers have capitalized their opinion of net
operating income, having deducted any anticipated non-recoverable expenses, such as land payments, and permanent void allowance,
which has then been capitalized into perpetuity.
The capitalization rates adopted in arriving at the opinions of GDV reflect the appraisers’ opinions of the rates at which the properties
could be sold as at the date of valuation.
In terms of residential developments, the sales prices per sq. m. again reflect current market conditions and represent those levels the
appraisers consider to be achievable at present. It was assumed that there are no irrecoverable operating expenses and that all costs
will be recovered from the occupiers/owners by way of a service charge.
The valuations take into account the requirement to pay ground rental payments and these are assumed not to be recoverable from
the occupiers. In terms of ground rent payments, the appraisers have assessed these on the basis of information available, and if not
available they have calculated these payments based on current legislation defining the basis of these assessments. Property tax is not
presently payable in Ukraine.
4.5 Investment Property under development
Property that is currently being constructed or developed, for future use as investment property is classified as investment property
under development carried at cost until construction or development is complete, or its fair value can be reliably determined. This
applies even if the works have temporarily being stopped.
CONSOLIDATED FINANCIAL STATEMENTS 2018|45
4. Significant accounting policies (continued)
4.6 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated
impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or Groups of cash-generating
units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or
loss in the consolidated statement of comprehensive income. An impairment loss recognized for goodwill is not reversed in subsequent
periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
4.7 Property, Plant and equipment and intangible assets
Property, plant and equipment and intangible non-current assets are stated at historical cost less accumulated depreciation and
amortization and any accumulated impairment losses.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined and
intangibles not inputted into exploitation, are carried at cost, less any recognized impairment loss. Cost includes professional fees and,
for qualifying assets, borrowing costs capitalized in accordance with the Group's accounting policy. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation and amortization are calculated on the straight-line basis so as to write off the cost of each asset to its residual value over
its estimated useful life. The annual depreciation rates are as follows:
Type
Leasehold
IT hardware
Motor vehicles
Furniture, fixtures and office equipment
Machinery and equipment
Software and Licenses
No depreciation is charged on land.
%
20
33
25
20
15
33
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter,
the term of the relevant lease.
The assets residual values and useful lives are reviewed, and adjusted, if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its
recoverable amount.
Expenditure for repairs and maintenance of tangible and intangible assets is charged to the statement of comprehensive income of the
year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the
asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing
asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.
An item of tangible and intangible assets is derecognized upon disposal or when no future economic benefits are expected to arise from
the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the statement of
comprehensive income.
4.8 Inventory
Inventory principally comprises of residential property. Inventory is recognized initially at cost, including transaction costs, which
represent its fair value at the time of acquisition. Costs related to the development of land are capitalised and recognized as inventory.
Inventory is carried at the lower of cost and net realizable value.
4.9 Cash and Cash equivalents
Cash and cash equivalents include cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of
cash flows.
CONSOLIDATED FINANCIAL STATEMENTS 2018|46
4. Significant accounting policies (continued)
4.10 Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they
will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any
impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis,
except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property or
biological assets, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial
classification as held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognised in profit or
loss.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any
equity-accounted investee is no longer equity accounted.
4.11 Financial Instruments
4.11.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial
liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at
fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable
without a significant financing component is initially measured at the transaction price.
4.11.2 Classification and subsequent measurement
Financial assets – Policy applicable from 1 January 2018
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment;
or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing
financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the
change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
-
-
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
-
-
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes
in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
Financial assets – Business model assessment: Policy applicable from 1 January 2018
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because
this best reflects the way the business is managed and information is provided to management. The information considered includes:
-
-
-
-
the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether
management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile,
matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising
cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Group’s management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and
how those risks are managed;
how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets
managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations
about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose,
consistent with the Group’s continuing recognition of the assets.
CONSOLIDATED FINANCIAL STATEMENTS 2018|47
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.2 Classification and subsequent measurement (continued)
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at
FVTPL.
Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest: Policy
applicable from 1 January 2018
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined
as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms
of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
-
-
-
-
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable-rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially
represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional
compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual
par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus
accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated
as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets – Subsequent measurement and gains and losses: Policy applicable from 1 January 2018
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised
in profit or loss. However for derivatives designated as hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange
gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition,
gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified
to profit or loss.
Financial assets – Policy applicable before 1 January 2018
The Group classified its financial assets into one of the following categories:
-
-
-
-
loans and receivables;
held to maturity;
available for sale; and
at FVTPL, and within this category as:
held for trading;
derivative hedging instruments; or
designated as at FVTPL.
o
o
o
Financial assets – Subsequent measurement and gains and losses: Policy applicable before 1 January 2018
Financial assets at FVTPL
Measured at fair value and changes therein, including any interest or dividend income, were recognised in profit or loss. However for
derivatives designated as hedging instruments.
CONSOLIDATED FINANCIAL STATEMENTS 2018|48
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.2 Classification and subsequent measurement (continued)
Held-to-maturity financial assets
Measured at amortised cost using the effective interest method.
Loans and receivables
Measured at amortised cost using the effective interest method.
Available-for-sale financial assets
Measured at fair value and changes therein, other than impairment losses, interest income and foreign currency differences on debt
instruments, were recognised in OCI and accumulated in the fair value reserve. When these assets were derecognised, the gain or loss
accumulated in equity was reclassified to profit or loss.
Financial liabilities – Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified
as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and
losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
4.11.3 Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also
derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in
which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including
any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
4.11.4 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or
to realise the asset and settle the liability simultaneously.
4.11.5 Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting – Policy applicable from 1 January 2018
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives
are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are
met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable
forecast transactions arising from changes in foreign exchange rates and interest rates and certain derivatives and non-derivative
financial liabilities as hedges of foreign exchange risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking
the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
CONSOLIDATED FINANCIAL STATEMENTS 2018|49
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.5 Derivative financial instruments and hedge accounting (continued)
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative
is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is
recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from
inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in
cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (‘forward points’) is
separately accounted for as a cost of hedging and recognised in a costs of hedging reserve within equity.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount
accumulated in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item
when it is recognised.
For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified
to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised,
then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that
has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non-
financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to
profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment
in a foreign operation, the effective portion of, for a derivative, changes in the fair value of the hedging instrument or, for a non-
derivative, foreign exchange gains and losses is recognised in OCI and presented in the translation reserve within equity. Any ineffective
portion of the changes in the fair value of the derivative or foreign exchange gains and losses on the non-derivative is recognised
immediately in profit or loss. The amount recognised in OCI is reclassified to profit or loss as a reclassification adjustment on disposal
of the foreign operation.
Derivative financial instruments and hedge accounting – Policy applicable before 1 January 2018
The policy applied in the comparative information presented for 2017 is similar to that applied for 2018. However, for all cash flow
hedges, including hedges of transactions resulting in the recognition of non-financial items, the amounts accumulated in the cash flow
hedge reserve were reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows
affected profit or loss. Furthermore, for cash flow hedges that were terminated before 2017, forward points were recognised immediately
in profit or loss.
4.12 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period
of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production
of a qualifying asset, in which case they are capitalized as part of the cost of that asset.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extend there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment and amortised
over the period of the facility to which it relates.
Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on
borrowings, amortization of discounts or premium relating to borrowings, amortization of ancillary costs incurred in connection with the
arrangement of borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of that asset,
when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at
least twelve months after the reporting date.
CONSOLIDATED FINANCIAL STATEMENTS 2018|50
4. Significant accounting policies (continued)
4.13 Tenant security deposits
Tenant security deposits represent financial advances made by lessees as guarantees during the lease and are repayable by the Group
upon termination of the contracts. Tenant security deposits are recognized at nominal value.
4.14 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment loss annually, and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of
the impairment loss is treated as a revaluation increase.
4.15 Share Capital
Ordinary shares are classified as equity.
4.16 Share premium
The difference between the fair value of the consideration received by the shareholders and the nominal value of the share capital
being issued is taken to the share premium account.
4.17 Share-based compensation
The Group had in the past and intends in the future to operate a number of equity-settled, share-based compensation plans, under
which the Group receives services from Directors and/or employees as consideration for equity instruments (options) of the Group. The
fair value of the Director and employee cost related to services received in exchange for the grant of the options is recognized as an
expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of
any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which
is the period over which all of the specified vesting conditions are to be satisfied. At each financial position date, the Group revises its
estimates on the number of options that are expected to vest based on the non-marketing vesting conditions. It recognizes the impact
of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The
proceeds received net of any directly attributable transaction costs are credited to share capital and share premium when the options
are exercised.
4.18 Provisions
Provisions are recognized when the Group has a present obligation (legal, tax or constructive) as a result of a past event, it is probable
that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. As at the
reporting date the Group has settled all its construction liabilities.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect
of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable
is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
CONSOLIDATED FINANCIAL STATEMENTS 2018|51
4. Significant accounting policies (continued)
4.19 Leased assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to
the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at
the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated statement of
financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or
loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Group's general
policy on borrowing costs (see above).
Lease payments are analyzed between capital and interest components so that the interest element of the payment is charged to the
statement of comprehensive income over the period of the lease and represents a constant proportion of the balance of capital
repayments outstanding. The capital part reduces the amount payable to the lessor.
4.20 Non-current liabilities
Non-current liabilities represent amounts that are due in more than twelve months from the reporting date.
4.21 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns,
rebates and other similar allowances. It is recognized to the extent that it is probable that the economic benefits associated with the
transaction will flow to the Group and the revenue can be measured reliably. Revenue earned by the Group is recognized on the
following bases:
4.21.1 Income from investing activities
Income from investing activities includes profit received from disposal of investments in the Company’s subsidiaries and associates and
income accrued on advances for investments outstanding as at the year end.
4.21.2 Dividend income
Dividend income from investments is recognized when the shareholders’ right to receive payment has been established (provided that
it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).
4.21.3 Interest income
Interest income is recognized on a time-proportion (accrual) basis, using the effective interest rate method.
4.21.4 Rental income
Rental income arising from operating leases on investment property is recognized on an accrual basis in accordance with the substance
of the relevant agreements.
4.22 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized on an accrual basis.
4.23 Other property expenses
Irrecoverable running costs directly attributable to specific properties within the Group's portfolio are charged to the statement of
comprehensive income. Costs incurred in the improvement of the assets which, in the opinion of the directors, are not of a capital
nature are written off to the statement of comprehensive income as incurred.
4.24 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in the statement of comprehensive income in the period in which they are incurred as interest
costs which are calculated using the effective interest rate method, net result from transactions with securities, foreign exchange gains
and losses, and bank charges and commission.
CONSOLIDATED FINANCIAL STATEMENTS 2018|52
4. Significant accounting policies (continued)
4.25 Asset Acquisition Related Transaction Expenses
Expenses incurred by the Group for acquiring a subsidiary or associate company as part of an Investment Property and are directly
attributable to such acquisition are recognized within the cost of the Investment Property and are subsequently accounted as per the
Group’s accounting Policy for Investment Property subsequent measurement.
4.26 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
4.26.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that
are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
4.26.2 Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when the deferred taxes relate to the same fiscal authority.
4.26.3 Current and deferred tax for the year
Current and deferred tax are recognized in the statement of comprehensive income, except when they relate to items that are recognized
in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the business combination.
The operational subsidiaries of the Group are incorporated in Ukraine, Greece, Bulgaria and Romania, while the Parent and some holding
companies are incorporated in Cyprus. The Group’s management and control is exercised in Cyprus.
The Group’s Management does not intend to dispose of any asset, unless a significant opportunity arises. In the event that a decision
is taken in the future to dispose of any asset it is the Group’s intention to dispose of shares in subsidiaries rather than assets. The
corporate income tax exposure on disposal of subsidiaries is mitigated by the fact that the sale would represent a disposal of the
securities by a non-resident shareholder and therefore would be exempt from tax. The Group is therefore in a position to control the
reversal of any temporary differences and as such, no deferred tax liability has been provided for in the financial statements.
4.26.4 Withholding Tax
The Group follows the applicable legislation as defined in all double taxation treaties (DTA) between Cyprus and any of the countries of
Operations (Romania, Ukraine, Greece, Bulgaria). In the case of Romania, as the latter is part of the European Union, through the
relevant directives the withholding tax is reduced to NIL subject to various conditions.
4.26.5 Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which
the dividends are approved by the Company’s shareholders.
4.27 Value added tax
VAT levied at various jurisdictions were the Group is active, was at the following rates, as at the end of the reporting period:
20% on Ukrainian domestic sales and imports of goods, works and services and 0% on export of goods and provision of
works or services to be used outside Ukraine.
19% on Cyprus domestic sales and imports of goods, works and services and 0% on export of goods and provision of works
or services to be used outside Cyprus.
19% on Romanian domestic sales and imports of goods, works and services (decreased from 20% from 1 January 2017) and
0% on export of goods and provision of works or services to be used outside Romania.
20% on Bulgarian domestic sales and imports of goods, works and services and 0% on export of goods and provision of
services to taxable persons outside Bulgaria.
24% on Greek domestic sales and imports of goods, works and services (increased from 23% from 1 June 2016) and 0% on
export of goods and provision of works or services to be used outside Romania.
CONSOLIDATED FINANCIAL STATEMENTS 2018|53
4. Significant accounting policies (continued)
4.28 Operating segments analysis
Segment reporting is presented on the basis of Management’s perspective and relates to the parts of the Group that are defined as
operating segments. Operating segments are identified on the basis of their economic nature and through internal reports provided to
the Group’s Management who oversee operations and make decisions on allocating resources serve. These internal reports are prepared
to a great extent on the same basis as these consolidated financial statements.
For the reporting period the Group has identified the following material reportable segments, where the Group is active in acquiring,
holding, managing and disposing:
Commercial-Industrial
Residential
Land Assets
Warehouse segment
Office segment
Retail segment
Residential segment
Land assets – the Group owns a number of land
assets which are either available for sale or for
potential development
The Group also monitors investment property assets on a Geographical Segmentation, namely the country where its property is located.
4.29 Earnings and Net Assets value per share
The Group presents basic and diluted earnings per share (EPS) and net asset value per share (NAV) for its ordinary shares.
Basic EPS amounts are calculated by dividing net profit/loss for the year, attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year. Basic NAV amounts are calculated by dividing net asset value
as at year end, attributable to ordinary equity holders of the Company by the number of ordinary shares outstanding at the end of the
year.
Diluted EPS is calculated by dividing net profit/loss for the year, attributable to ordinary equity holders of the parent, by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be
issued on conversion of all the potentially dilutive ordinary shares into ordinary shares.
Diluted NAV is calculated by dividing net asset value as at year end, attributable to ordinary equity holders of the parent with the
number of ordinary shares outstanding at year end plus the number of ordinary shares that would be issued on conversion of all the
potentially dilutive ordinary shares into ordinary shares.
4.30 Comparative Period
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
5. New accounting pronouncement
Standards issued but not yet effective
Up to the date of approval of the financial statements, certain new standards, interpretations and amendments to existing standards
have been published that are not yet effective for the current reporting period and which the Company has not early adopted, as
follows:
(i) Issued by the IASB and adopted by the European Union
•
•
IFRS 16 ''Leases'' (effective for annual periods beginning on or after 1 January 2019).
Amendments to IFRS 9: Prepayment Features with Negative Compensation (issued on 12 October 2017) (effective for
annual periods beginning on or after 1 January 2019).
IAS 28: Long-term Interests in Associates and Joint Ventures (amendments)
IFRIC Interpretation 23: Uncertainty over Income Tax Treatments
IFRS 3: Business Combinations (amendments)
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors:
Definition of ‘material’ (amendments)
Conceptual Framework in IFRS standards
•
•
•
•
•
(ii) Issued by the IASB but not yet adopted by the European Union
New standards
•
IFRS 17 ''Insurance Contracts'' (effective for annual periods beginning on or after 1 January 2021).
CONSOLIDATED FINANCIAL STATEMENTS 2018|54
5. New accounting pronouncement (continued)
(ii) Issued by the IASB but not yet adopted by the European Union (continued)
Amendments
•
•
•
•
•
Amendments to IAS 28: Long term Interests in Associates and Joint Ventures (issued on 12 October 2017) (effective for
annual periods beginning on or after 1 January 2019).
Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (issued on 7 February 2018) (effective for annual
periods beginning on or after 1 January 2019).
Annual Improvements to IFRSs 2015 2017 Cycle (issued on 12 December 2017) (effective for annual periods beginning on
or after 1 January 2019)
Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or
after 1 January 2020)
IFRS 10 (Amendments) and IAS 28 (Amendments) ''Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture(effective date postponed indefinitely).
New IFRICs
•
IFRIC Interpretation 23 ''Uncertainty over Income Tax Treatments'' (effective for annual periods beginning on or after 1
January 2019).
The above are expected to have no significant impact on the Company's financial statements when they become effective.
Amendments
Amendments to IAS 28: Long term Interests in Associates and Joint Ventures (issued on 12 October 2017) (effective for
annual periods beginning on or after 1 January 2019).
Amendments to IAS 19: Plan Amendment, Curtailment or Settlement (issued on 7 February 2018) (effective for annual periods
beginning on or after 1 January 2019).
Annual Improvements to IFRSs 2015 2017 Cycle (issued on 12 December 2017) (effective for annual periods beginning on
or after 1 January 2019)
Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or
after 1 January 2020)
IFRS 10 (Amendments) and IAS 28 (Amendments) ''Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture(effective date postponed indefinitely).
New IFRICs
IFRIC Interpretation 23 ''Uncertainty over Income Tax Treatments'' (effective for annual periods beginning on or after 1 January 2019).
The above are expected to have no significant impact on the Company's financial statements when they become effective.
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on
Management's best knowledge of current events and actions and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Actual results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the future, the resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below:
Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the state's ability to pay its dues (VAT receivable). If indications of non-
recoverability exist, the recoverable amount is estimated and a respective provision for impairment of receivables is made. The amount
of the provision is charged through profit or loss. The review of credit risk is continuous and the methodology and assumptions used
for estimating the provision are reviewed regularly and adjusted accordingly. As at the reporting date Management did not consider
necessary to make a provision for impairment of receivables.
Fair value of investment property
The fair value of investment property is determined by using various valuation techniques. The Group selects accredited professional
valuers with local presence to perform such valuations. Such valuers use their judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at each financial reporting date. The fair value has been estimated as
at 31 December 2018 (Note 20.2).
Income taxes
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
CONSOLIDATED FINANCIAL STATEMENTS 2018|55
6. Critical accounting estimates and judgments (continued)
Impairment of tangible assets
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units).
Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of the investment property and investment property under development as
the Group is able to control the timing of the reversal of this temporary difference and the Management has intention not to reverse
the temporary difference in the foreseeable future. The properties are held by subsidiary companies in Ukraine, Greece and Romania.
Management estimates that the assets will be realized through a share deal rather than through an asset deal. Should any subsidiary
be disposed of, the gains generated from the disposal will be exempt from any tax.
Application of IFRS 10
The Group has considered the application of IFRS 10 and concluded that the Company is not an Investment Entity as defined by IFRS
10 and it should continue to consolidate all of its investments, as in 2016. The reasons for such conclusion are among others that the
Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development, allocation of capital expenditure for its properties, marketing etc.)
in order to provide benefits other than capital appreciation and/or investment income,
c) to have investments that are not bound by time in relation to the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making investment decisions. The latter is being based on metrics like
IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate property holding and development associated risks, property market price
risk, interest rate risk, credit risk, liquidity risk, currency risk, other market price risk, operational risk, compliance risk, litigation risk,
reputation risk, capital risk and other risks arising from the financial instruments it holds. The risk management policies employed by
the Group to manage these risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and economic environment of countries in which it operates. Notably:
7.1.1.1 Ukraine
In 2018, the Ukrainian economy proceeded recovery from the economic and political crisis of previous years and demonstrated sound
real GDP growth of around 3.4% (2017: 2.5%), modest annual inflation of 9.8% (2017: 13.7%), and slight devaluation of national
currency by around 2.4% to USD and 8.2% to EUR comparing to previous year averages. Also Ukraine continued to limit its political
and economic ties with Russia, given annexation of Crimea, an autonomous republic of Ukraine, and a frozen armed conflict with
separatists in certain parts of Luhanska and Donetska regions. Amid such events, the Ukrainian economy demonstrated further
refocusing on the European Union (“EU”) market realizing all potentials of established Deep and Comprehensive Free Trade Area with
EU, in such a way effectively reacting to mutual trading restrictions imposed between Ukraine and Russia. As a result, the weight of the
Russian’s export and import substantially fell from 18.2% and 23.3% in 2014 to around 7.7% and 14.2% in 2018, respectively. In terms
of currency regulations, the new currency law was adopted in 2018 and came into force on 7 February 2019. It purports to enable the
NBU to promulgate more liberal currency regulation and soften a number of currency restrictions, such as: requirement to register loans
obtained from non-residents with the NBU, 180-day term for making payments in foreign economic transactions, required 50% share
of mandatory sale of foreign currency proceeds, etc. Further economic growth depends, to a large extent, upon success of the Ukrainian
government in realization of planned reforms, cooperation with the International Monetary Fund (“IMF”), and smooth transition through
presidential and parliamentary elections, due in March and October 2019, respectively.
7.1.1.2 Greece
Greek economy experienced growth for the second consecutive year coupled with lower unemployment rate, rise in domestic demand
and over 4% primary surplus.
Following the agreement with the credit institutions (EU/ECB/IMF/ESM), Greek economy exited relevant support program in August
2018, with Greek Government Bonds falling to their lowest yields since 2006.
However, public debt remains at high levels, and further reduction requires sustainable pro-growth reforms, high future primary
surpluses and additional debt restructuring. Moreover, banking sector continues to face difficulties, with non-performing loans standing
at 45% of outstanding bank loan portfolio, and as a result foreclosures and e-auctions of collaterals in default have become common,
while at the same time bank financing is tight putting constraints in business and investments.
CONSOLIDATED FINANCIAL STATEMENTS 2018|56
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.1 Operating Country Risks (continued)
7.1.1.2 Greece (continued)
Officially in a pre-election period, Greece will benefit from a continuous reform program and tight economic policies that will be adopted
by any new government, which will allow Greece to do to the markets and strengthen its recovery signs. On the other hand, any political
instability will have negative impact on the economy, and consequently the results and financial position of Group’s Greek operations
could be negatively affected to some extent, in a manner not currently determinable.
7.1.1.3 Romania
Romanian economy continued its growth in 2018, gaining one place to rank 15th by Gross Domestic Product (GDP) values according to
Eurostat. The strong growth has been fueled by domestic private consumption, with investment and net exports both having a negative
influence.
The economy maintains balanced economic variables with a widen current deficit at around 4% of GDP, public debt less than 35% of
GDP and rising inflation rate. Unemployment rate of 3,6% is the lowest it has been for the past 20 years, driving wages up, but still
labor cost is one of the lowest in European Union attracting continuously foreign investment in production and services sectors. The
labor market is expected to remain tight but inflation is expected to ease from its 2018 high. Finally, budget deficit is forecast to continue
increasing, driven by increase on public wages and pensions.
Possible overheating of the economy in the future may emerge risks, as economic activity will slow down, prices will drop, and the local
activities of the Group could be negatively affected. The Group monitors closely the performance of the Romanian economy, and the
local political and fiscal developments, in order to detect negative signs and being able to adjust effectively its local strategy and its
operations in the country.
7.1.2 Risks associated with property holding and development associated risks
Several factors may affect the economic performance and value of the Group's properties, including:
risks associated with construction activity at the properties, including delays, the imposition of liens and defects in
workmanship;
the ability to collect rent from tenants, on a timely basis or at all, taking also into account the UAH rapid devaluation;
the amount of rent and the terms on which lease renewals and new leases are agreed being less favorable than current
leases;
cyclical fluctuations in the property market generally;
local conditions such as an oversupply of similar properties or a reduction in demand for the properties;
the attractiveness of the property to tenants or residential purchasers;
decreases in capital valuations of property;
changes in availability and costs of financing, which may affect the sale or refinancing of properties;
covenants, conditions, restrictions and easements relating to the properties;
changes in governmental legislation and regulations, including but not limited to designated use, allocation, environmental
usage, taxation and insurance;
the risk of bad or unmarketable title due to failure to register or perfect our interests or the existence of prior claims,
encumbrances or charges of which we may be unaware at the time of purchase;
the possibility of occupants in the properties, whether squatters or those with legitimate claims to take possession;
the ability to pay for adequate maintenance, insurance and other operating costs, including taxes, which could increase over
time; and
political uncertainty, acts of terrorism and acts of nature, such as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group’s portfolio investments will fluctuate as a result of changes in market prices. The
Group's assets are susceptible to market price risk arising from uncertainties about future prices of the investments. The Group's market
price risk is managed through diversification of the investment portfolio, continuous elaboration of the market conditions and active
asset management. To quantify the value of its assets and/or indicate the possibility of impairment losses, the Group commissioned
internationally acclaimed valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no
significant interest-bearing assets apart from its cash balances that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. All of the Group's borrowings
are issued at a variable interest rate. Management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
CONSOLIDATED FINANCIAL STATEMENTS 2018|57
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from
financial assets at hand at the end of the reporting period. Cash balances are held with high credit quality financial institutions and the
Group has policies to limit the amount of credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not
the Group's functional currency. Excluding the transactions in Ukraine all of the Group’s transactions, including the rental proceeds are
denominated or pegged to EUR. In Ukraine, even though there is no steady income stream, the fluctuations of UAH against EUR entails
significant FX risk for the Group in terms of its local assets valuation. Management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly. It should be noted that the current political uncertainty in Ukraine, and any currency devaluation
may affect the Group’s financial position.
Management is monitoring foreign exchange fluctuations closely and acts accordingly.
7.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders
through the optimization of the debt and equity balance. The Group’s core strategy is described in Note 44.1 of the consolidated financial
statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non-compliance with laws and
regulations of each country the Group is present, as well as from the stock exchange where the Company is listed. Although the Group
is trying to limit such risk, the uncertain environment in which it operates in various countries increases the complexities handled by
Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of the Group's operations or any other undesirable situation that arises from the
possibility of non-execution or violation of legal contracts and consequentially of lawsuits. The risk is restricted through the contracts
used by the Group to execute its operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet its financial obligations towards a lender as debts become due.
Addressing and resolving any insolvency issues is usually a slow moving process in the Region. Management is closely involved in
discussions with creditors when/if such cases arise in any subsidiary of the Group aiming to effect alternate repayment plans including
debt repayment so as to minimize the effects of such situations on the Group’s asset base.
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies relating to the Group's information technology and control systems, as well
as the risk of human error and natural disasters. The Group’s systems are evaluated, maintained and upgraded continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the end of the reporting period.
CONSOLIDATED FINANCIAL STATEMENTS 2018|58
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.
Name
SC Secure Capital Limited
LLC Aisi Ukraine
LLC Trade Center
LLC Almaz-Pres-Ukraine
LLC Aisi Bela
LLC Retail Development Balabino
LLC Interterminal
LLC Aisi Ilvo
Myrnes Innovations Park Limited
Best Day Real Estate Srl
Yamano Holdings Limited
Secure Property Development and
Investment Srl
N-E Real Estate Park First Phase Srl
Victini Holdings Limited
Victini Logistics Park S.A. (ex SPDI
Logistics S.A.)
Zirimon Properties Limited
Bluehouse Accession Project IX Limited
Bluehouse Accession Project IV Limited
BlueBigBox 3 Srl
SPDI Real Estate Srl
SEC South East Continent Unique Real
Estate Investments II Limited
SEC South East Continent Unique Real
Estate (Secured) Investments Limited
Diforio Holdings Limited
Demetiva Holdings Limited
Ketiza Holdings Limited
Frizomo Holdings Limited
SecMon Real Estate Srl
SecVista Real Estate Srl
SecRom Real Estate Srl
Ketiza Real Estate Srl
Edetrio Holdings Limited
Emakei Holdings Limited
RAM Real Estate Management Limited
Iuliu Maniu Limited
Moselin Investments Srl
Rimasol Enterprises Limited
Rimasol Real Estate Srl
Ashor Ventures Limited
Ashor Development Srl
Jenby Ventures Limited
Jenby Investments Srl
Ebenem Limited
Ebenem Investments Srl
Sertland Properties Limited
Boyana Residence ood
Mofben Investments Limited
SPDI Management Srl
Country of
incorporation
Cyprus
Ukraine
Ukraine
Ukraine
Ukraine
Related Asset
Kiyanovskiy Residence
Tsymlyanskiy Residence
Bela Logistic Park
Balabino Project
Holding %
as at
31 Dec 2018
100
100
100
55
100
as at
31 Dec 2017
100
100
100
55
100
Ukraine
Ukraine
Ukraine
Cyprus
Romania
Cyprus
Romania
Romania
Cyprus
Greece
Cyprus
Cyprus
Cyprus
Romania
Romania
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Romania
Romania
Romania
Romania
Cyprus
Cyprus
Cyprus
Cyprus
Romania
Cyprus
Romania
Cyprus
Romania
Cyprus
Romania
Cyprus
Romania
Cyprus
Bulgaria
Cyprus
Romania
Innovations Logistics Park
EOS Business Park
Victini Logistics
Delea Nuova (Delenco)
Kindergarten
Residential and Land
portfolio
100
100
100
100
100
100
-
100
100
100
100
100
100
100
50
100
100
100
100
90
100
-
-
-
90
100
100
50
45
45
44,24
44,24
44,24
44,24
44,30
44,30
44,30
44,30
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
90
100
100
100
100
90
100
100
50
45
45
44,24
44,24
44,24
44,24
44,30
44,30
44,30
44,30
100
100
100
100
During the reporting period the Group did not proceed with any acquisitions or disposals, however BlueBigBox 3 Srl sold its property,
Praktiker Craiova to a 3rd party.
CONSOLIDATED FINANCIAL STATEMENTS 2018|59
8. Investment in subsidiaries (continued)
The Group has resolved to streamline its structure in Cyprus and Romania for cost cutting and tax optimization purposes. Towards this
goal, during the reporting period the following mergers have been finalized:
Α. merger by absorption of SecVista Real Estate Srl acting as Absorbed Company, with Best Day Real Estate Srl acting as Absorbing
Company,
Β. merger by absorption of SecRom Real Estate Srl and Secure Property Development and Investment Srl acting as Absorbed Companies,
with N-E Real Estate Park First Phase Srl acting as Absorbing Company.
A restructuring in 2017 was implemented at GreenLake project and the Kindergarten together with one villa were passed to another
SPV, namely SPDI Real Estate Srl (Note 21a). As far as disposals is concerned during 2017 the Company concluded successfully the
sale of its Terminal Brovary in Ukraine, as well as the sale of Delia land plot in Bucharest, Romania (Note 21b).
Following extended but unsuccessful negotiations for more than 2 years with Tonescu Finance Srl, the company which has acquired
Monaco Towers property’s loan, SecMon Real Estate Srl entered voluntarily in January 2018 into insolvency process, in order to protect
its interests against its creditor, given that the value of the assets is higher than the value of the relevant loan. The entering of SecMon
Real Estate Srl in the insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl is not
consolidated in the present consolidated financial statements.
9. Discontinued operations
9.(a) Description
The Company announced at 18 December 2018 that it has entered into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties (‘the Non-Greek Portfolio’), in an all-share transaction to Arcona Property
Fund N.V.. The transaction is subject to, among other things, asset and tax due diligence (including third party asset valuations) and
regulatory approvals (including the approval of a prospectus required in connection with the issuance and admission to listing of the
new Arcona Property Fund N.V. shares), as well as successful negotiating and signature of transaction documents. If successful, the
Company and Arcona expect to close the transaction during H2 2019.
Additionally, the Company is entertaining strong interest to sell also the Greek Logistic property during 2019 and it is in discussions with
various possible buyers.
The companies that are classified under discontinued operations are the followings:
Bulgaria: Boyana Residence ood
Cyprus: Ashor Ventures Limited, Ebenem Limited, Jenby Ventures Limited, Edetrio Holdings Limited, Rimasol Enterprises
Limited, Emakei Holdings Limited, Iuliu Maniu Limited, Ram Real Estate Management Limited, Frizomo Holdings Limited,
Ketiza Holdings Limited
Greece: Victini Logistics Park S.A.
Romania: Ashor Development Srl, Ebenem Investments Srl, Jenby Investments Srl, Rimasol Real Estate Srl, Moselin
Investments Srl, Best Day Real Estate Srl, N-E Real Estate Park First Phase Srl, Ketiza Real Estate Srl, SPDI Real Estate Srl
Ukraine: LLC Aisi Bela, LLC Aisi Ukraine, LLC Almaz‑Pres‑Ukraine, LLC Trade Center, LLC Retail Development Balabino
As a result, the Company has reclassified all assets and liabilities related to these properties as held for sale according to IFRS 5 (Note
4.3 & 4.10).
CONSOLIDATED FINANCIAL STATEMENTS 2018|60
9. Discontinued operations (continued)
9.(b) Results of discontinued operations
For the year ended 31 December 2018
Income
Asset operating expenses
Net Operating Income
Administration expenses
Share of profits/(losses) from associates
Valuation gains/(losses) from Investment Property
Net loss on disposal of inventory
Net gain/(loss) on disposal of investment property
Gain realized on acquisition of assets
Other operating income/(expenses), net
Operating profit / (loss)
Finance income
Finance costs
Profit / (loss) before tax and foreign exchange differences
Foreign exchange (loss), net
Loss before tax
Income tax expense
Loss for the year
Loss attributable to:
Owners of the parent
Non-controlling interests
9.(c) Cash flows from(used in) discontinued operation
Net cash flows provided in operating activities
Net cash flows from / (used in) financing activities
Net cash flows from / (used in) investing activities
Net increase/(decrease) from discontinued operations
Not
e
10
11
12
22
13
14a
14b
21a
16
17
17
18a
2018
2017
€
2.378.875
(606.069)
1.772.806
(260.714)
364.920
(1.218.297)
(13.553)
(48.225)
-
(363.435)
233.502
9.979
(1.542.580)
(1.299.099)
€
2.445.466
(629.842)
1.815.624
(353.532)
390.217
145.859
(43.871)
4.366
23.921
2.668
1.985.252
9.813
(1.661.288)
333.777
(10.233)
(1.309.332)
(1.335.517)
(1.001.740)
19
(96.567)
(71.910)
(1.405.899)
(1.073.650)
(699.271)
(706.628)
(1.405.899)
(1.985.925)
912.275
(1.073.650)
31 Dec 2018
€
2.930.026
(3.910.958)
1.287.742
31 Dec 2017
€
338.194
589.605
(2.112.036)
306.810
(1.184.237)
9.(d) Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in relation to the discontinued operation as at 31 December 2018:
Assets classified as held for sale
Investment properties
Investment properties under development
Tangible and intangible assets
Long-term receivables and prepayments
Investments in associates
Financial asset at fair value through OCI
Inventory
Prepayments and other current assets
Cash and cash equivalents
Total assets of group held for sale
Liabilities directly related with assets classified as held for sale
Borrowings
Finance lease liabilities
Trade and other payables
Taxes payables
Provision on taxes
Deposits from tenants
Total liabilities of group held for sale
Note
31 Dec 2018
€
31 Dec 2017
€
20.4a
20.4b
24
25
22
23
26
27
28
32
37
34
36
36
35
63.345.537
4.716.157
42.534
270.271
5.313.235
1
4.604.044
682.134
704.825
79.678.738
67.232.502
4.586.009
61.711
270.301
5.115.587
-
4.812.550
1.008.456
477.809
83.564.925
22.605.474
10.470.012
1.500.603
432.528
66.002
219.274
35.293.893
25.577.585
10.826.243
1.389.189
474.253
-
187.976
38.455.246
CONSOLIDATED FINANCIAL STATEMENTS 2018|61
10. Income
Income from continued operations for the year ended 31 December 2018 represents:
a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded
with tenants of Innovations Logistics Park (Romania) and Praktiker Craiova (Romania). It is noted that part of the rental and service
charges/ utilities income related to Innovations Logistics Park (Romania) is currently invoiced by the Company as part of a relevant
lease agreement with the Innovations SPV and the lender, however the asset, through the SPV, is planned to be transferred as part
of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer, the Company will negotiate with the
lender its release from the aforementioned lease agreement, and if succeeds, upon completion such income will be also transferred.
income from third parties and /or partners for consulting and managing real estate properties (sale of property Praktiker Craiova,
GreenLake etc., Terminal Brovary for 2017).
b)
Continued operations
Rental income
Service charges and utilities income
Service and property management income
Total income
31 Dec 2018
€
631.636
9.534
128.293
769.463
31 Dec 2017
€
986.748
30.206
1.163.548
2.180.502
Income from discontinued operations for the year ended 31 December 2018 represents:
a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded
with tenants of Innovations Logistics Park (Romania), EOS Business Park (Romania), and Victini Logistics (Greece),
income from the sale of electricity by Victini Logistics to the Greek grid,
b)
c) rental income and service charges by tenants of the Residential Portfolio, and;
d)
income from third parties and /or partners for consulting and managing real estate properties
Discontinued operations (Note 9)
Rental income
Sale of electricity
Service charges and utilities income
Service and property management income
Total income
31 Dec 2018
€
1.963.724
294.773
118.211
2.167
2.378.875
31 Dec 2017
€
1.985.059
321.365
135.936
3.106
2.445.466
Occupancy rates in the various income producing assets of the Group as at 31 December 2018 were as follows:
Income producing assets
%
EOS Business Park
Innovations Logistics Park
Victini Logistics
Praktiker Craiova
Kindergarten
11. Asset operating expenses
Romania
Romania
Greece
Romania
Romania
31 Dec 2018
31 Dec 2017
100
37
100
-
100
100
60
100
100
100
The Group incurs expenses related to the proper operation and maintenance of all properties in Kiev, Bucharest, Athens, Sofia and
Craiova. A part of these expenses is recovered from the tenants through the service charges and utilities recharge (Note 10).
Under continued operations are all the expenses related to Praktiker Craiova.
Continued operations
Property related taxes
Property management fees
Repairs and technical maintenance
Utilities
Property security
Property insurance
Leasing expenses
Total
31 Dec 2018
€
(77.723)
-
(4.150)
-
-
(36.446)
-
(118.319)
31 Dec 2017
€
(57.638)
(26.923)
(3.465)
(25.234)
(1.742)
(6.072)
(2.187)
(123.261)
CONSOLIDATED FINANCIAL STATEMENTS 2018|62
11. Asset operating expenses (continued)
Under discontinued operations are all the expenses related to Innovations Logistics Park (Romania), EOS Business Park (Romania),
Victini Logistics (Greece), Residential Portfolio (Romania), GreenLake (Romania), Boyana Residence (Bulgaria) and all Ukrainian
properties.
Discontinued operations (Note 9)
Property related taxes
Property management fees
Repairs and technical maintenance
Utilities
Property security
Property insurance
Leasing expenses
Other operating expenses
Total
31 Dec 2018
€
(227.819)
(120.630)
(69.377)
(73.715)
(37.301)
(32.638)
(44.258)
(331)
(606.069)
31 Dec 2017
€
(194.024)
(124.629)
(121.605)
(73.500)
(46.515)
(36.101)
(32.142)
(1.326)
(629.842)
Property related taxes reflect local taxes related to land and building properties (in the form of land taxes, building taxes, garbage fees,
etc.).
Property Management fees relate to Property Management Agreements for Innovations Logistics Park, Victini Logistics and Praktiker
Craiova with third party managers outsourcing the related services.
Leasing expenses reflect expenses related to long term land leasing.
12. Administration Expenses
Continued operations
Salaries and Wages
Advisory fees
Public group expenses
Corporate registration and maintenance fees
Audit and accounting fees
Legal fees
Depreciation/Amortization charge
Corporate operating expenses
Total Administration Expenses
Discontinued operations (Note 9)
Salaries and Wages
Advisory fees
Corporate registration and maintenance fees
Audit and accounting fees
Legal fees
Depreciation/Amortization charge
Corporate operating expenses
Total Administration Expenses
31 Dec 2018
€
(556.580)
(438.423)
(210.097)
(65.234)
(100.141)
(193.644)
(5.502)
(199.226)
(1.768.847)
31 Dec 2018
€
(43.073)
(26.666)
(54.903)
(65.690)
(20.650)
(21.882)
(27.850)
(260.714)
31 Dec 2017
€
(770.545)
(349.344)
(228.373)
(170.815)
(76.523)
(70.121)
(35.407)
(293.353)
(1.994.481)
31 Dec 2017
€
(54.803)
(65.697)
(43.936)
(83.017)
(40.227)
(8.722)
(57.130)
(353.532)
Salaries and wages include the remuneration of the CEO, the CFO, the Group Commercial Director, the Group Investment Director (until
his departure in April 2017) and the Country Managers of Ukraine and Romania who have accepted a temporary reduction in their
remuneration, as well as the salary cost of personnel employed in the various Company’s offices in the region which has been reduced
following the completion of Terminal Brovary sale in Ukraine.
Advisory fees are mainly related to advisors, brokers and other professionals engaged in relevant transactions and capital raising
campaigns, as well as outsourced human resources support on the basis of relevant contracts. In particular, the total amount in 2018
includes one-off elements related to the disposal of Praktiker asset (EUR 180k) and due diligence expenses (EUR 90k) for non
consummated transactions, in relation to the acquisitions of logistic asset portfolios in Greece and Romania.
Audit and accounting expenses include the audit fees and accounting fees for the Company and all the subsidiaries.
Public group expenses include among others fees paid to the AIM:LSE stock exchange and the Nominated Adviser of the Company, as
well as other expenses related to the listing of the Company.
Corporate registration and maintenance fees represent fees charged for the annual maintenance of the Company and its subsidiaries,
as well as fees and expenses related to the normal operation of the companies including charges by the relevant local authorities.
Legal fees represent legal expenses incurred by the Group in relation to asset operations (rentals, sales, etc.), ongoing legal cases in
Ukraine and compliance with AIM listing, as well as one-off fees associated with legal services and advise in relation to due diligence
process and capital raising campaigns (EUR 80k) and legal support for the disposal of the Praktiker Craiova asset (EUR 60k).
CONSOLIDATED FINANCIAL STATEMENTS 2018|63
12. Administration Expenses (continued)
Corporate operating expenses include office expenses, travel expenses, (tele)communication expenses, D&O insurance and all other
general expenses for Cypriot, Romanian, Ukrainian, Bulgarian and Greek operations.
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the reporting period, excluding foreign exchange translation differences which
are incorporated in the table of Note 21.2, are presented in the tables below.
Continued operations
Property Name (€)
Delia Lebada
Praktiker Craiova
Total
Discontinued operations (Note 9)
Property Name (€)
Bela Logistic Park
Kiyanovskiy Residence
Tsymlyanskiy Residence
Balabino Project
Rozny Lane
Innovations Logistics Park
EOS Business Park
Residential Portfolio
GreenLake
Kindergarten
Victini Logistics
Boyana Land
Total
Valuation gains/(losses)
31 Dec 2018
€
-
-
-
31 Dec 2017
€
(13.618)
194.720
181.102
Valuation gains/(losses)
31 Dec 2018
€
(125.768)
(23.024)
(7.914)
(97.707)
(35.932)
610.366
422.971
1.362
(1.107.293)
44.642
(900.000)
-
(1.218.297)
31 Dec 2017
€
356.575
(166.603)
35.379
51.460
(54.446)
(734.463)
524.922
121.357
510.107
491.571
(500.000)
(490.000)
145.859
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling properties classified under either Investment Property (Romanian
residential assets) or Inventory (Bulgarian residential assets), both designated as non-core assets. The gain/ (losses) from disposal of
such properties are presented below:
14a Inventory (Note 26)
During 2018 the Group sold 3 apartments in Bulgaria (2017: 3 apartments).
Discontinued operations (Note 9)
Income from sale of inventory
Cost of inventory
Loss from disposal of inventory
14b Investment property
During October 2018, the Company proceeded with the sale of Praktiker Craiova.
Continued operations
Income from sale of investment property
Cost of investment property
Loss from disposal of investment property
31 Dec 2018
€
194.953
(208.504)
(13.553)
31 Dec 2017
€
171.833
(215.704)
(43.871)
31 Dec 2018
€
6.517.181
(7.362.362)
(845.181)
31 Dec 2017
€
-
-
-
During 2018 the Group sold 10 apartments in Romfelt Plaza (Doamna Ghica) and 5 apartments and 2 parking spaces in Zizin while
during 2017 the Group sold 4 apartments in Romfelt Plaza and 2 apartments in Zizin. Additionally a villa in SPDI Real Estate Srl was
sold during 2018.
Discontinued operations (Note 9)
Income from sale of investment property
Cost of investment property
(Loss)/ Gain from disposal of investment property
31 Dec 2018
€
1.499.392
(1.547.617)
(48.225)
31 Dec 2017
€
363.985
(359.619)
4.366
CONSOLIDATED FINANCIAL STATEMENTS 2018|64
15. Provisions
Continued operations
Provisions (Note 42.3)
Total
31 Dec 2018
€
-
-
31 Dec 2017
€
150.000
150.000
Provision was taken by management in 2015 for Delia Lebada amounting to €700.000 while finally the Company as part of the sale of
the asset and the release of the corporate guarantee paid €550.000 and as such the difference of €150.000 was reversed in 2017 (Note
42.3).
16. Other operating income/(expenses), net
Continued operations
Accounts payable written off
Other income
Other income
Impairment of prepayments and other current assets
Penalties
Other expenses
Other expenses
31 Dec 2018
€
31 Dec 2017
€
-
-
-
(26.389)
(4.959)
(368)
(31.716)
1.126
5
1.131
(378.925)
(133)
(149)
(379.207)
Other operating income/(expenses), net
(31.716)
(378.076)
Discontinued operations (Note 9)
Accounts payable written off
Other income
Other income
Impairment of prepayments and other current assets
Penalties
Other expenses
Other expenses
31 Dec 2018
€
31 Dec 2017
€
85
30.010
30.095
(388.900)
(4.334)
(296)
(393.530)
20.735
11.360
32.095
(2.680)
(22.553)
(4.194)
(29.427)
Other operating income/(expenses), net
(363.435)
2.668
Total impairment of prepayments and other current assets includes the expected credit loss provision due to adoption of IFRS9 which
amounts to €118.089 (continued operations €26.389 and discontinued operations €91.700), and in discontinued operations impairment
of €297.200 for Monaco Towers (Note 23).
17. Finance costs and income
Continued operations
Finance income
Interest received from non-bank loans (Note 41.1.1)
Interest income associated with banking accounts
Total finance income
Finance costs
Interest expenses (bank)
Interest expenses (non-bank) (Note 41.1.2)
Finance charges and commissions
Bonds interest
Other finance expenses
Total finance costs
Net finance result
31 Dec 2018
€
685.778
405
686.183
31 Dec 2017
€
2.467
1.096
3.563
31 Dec 2018
€
31 Dec 2017
€
(140.903)
(120.376)
(24.329)
(68.133)
-
(353.741)
(256.079)
(29.975)
(36.175)
(20.495)
(46.767)
(389.491)
332.442
(385.928)
CONSOLIDATED FINANCIAL STATEMENTS 2018|65
17. Finance costs and income (continued)
Discontinued operations (Note 9)
Finance income
Interest received from non-bank loans (Note 41.1.1)
Interest income associated with banking accounts
Total finance income
Finance costs
Interest expenses (bank)
Interest expenses (non-bank) (Note 41.1.2)
Finance leasing interest expenses
Finance charges and commissions
Other finance expenses
Total finance costs
Net finance result
31 Dec 2018
€
31 Dec 2017
€
9.979
-
9.979
9.796
17
9.813
31 Dec 2018
€
31 Dec 2017
€
(986.466)
(7.251)
(513.461)
(35.402)
-
(1.542.580)
(1.021.618)
(33.565)
(567.850)
(31.810)
(6.445)
(1.661.288)
(1.532.601)
(1.651.475)
Interest income from non-bank loans, reflects income from loans granted by the Group for financial assistance of associates. For 2018
this amount includes also interest on Loan receivables from 3rd parties provided as an advance payment for acquiring a participation in
an investment property portfolio (Olympians portfolio) in Romania. The loan provided under an agreement incorporating a convertibility
option exercisable until 28 February 2018. Such option was not exercised and the loan is payable in a 12 month period from the exercise
date or the relevant notification date, bearing a fixed interest rate of 10% and secured by relevant corporate guarantees, while the
Company is in the process of getting agreed security in the form of pledge of shares following the relevant process provided in the Loan
Agreement. Such interest calculated in 2018 for all amounts withdrawn under this loan agreement and their respective interest periods.
Borrowing interest expense represents interest expense charged on bank and non-bank borrowings (Note 32).
Finance leasing interest expenses relate to the sale and lease back agreements of the Group (Note 37).
Finance charges and commissions include regular banking commissions and various fees paid to the banks.
Bonds interest represent interest calculated for the bonds issued by the Company during 2017 (Note 33).
Other finance expenses for 2017 includes interest on tax for prior years related to Cyprus companies.
18. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December 2018 from continued operations amounted to €71.390 (2017:
loss €695.043).
The exchange loss from discontinued operations for the year ended 31 December 2018 amounted to €10.233 (2017: loss €1.335.517)
(Note 9).
b. Exchange difference on intercompany loans to foreign holdings
The Company has loans receivable from foreign group subsidiaries which are considered as part of the Group’s net investments in those
foreign operations (Note 41.3). For these intercompany loans the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During 2018, the Group recognized a foreign exchange profit of €1.850
(2017:loss €3.538). Upon disposal of such foreign operations and thus of Terminal Brovary during 2017, the accumulated foreign
exchange difference amounting to €37.352.923 was transferred to the Consolidated Profit or Loss for the year.
19. Tax Expense
Continued operations
Income and defence tax expense
Taxes
Discontinued operations (Note 9)
Income and defence tax expense
Taxes
31 Dec 2018
€
(613.034)
(613.034)
31 Dec 2017
€
(524.255)
(524.255)
31 Dec 2018
€
(96.567)
(96.567)
31 Dec 2017
€
(71.910)
(71.910)
CONSOLIDATED FINANCIAL STATEMENTS 2018|66
19. Tax Expense (continued)
For the year ended 31 December 2018, the corporate income tax rate for the Group’s subsidiaries are as follows: in Ukraine 18%, in
Romania 16%, in Greece 29% and in Bulgaria 10%. The corporate tax that is applied to the qualifying income of the Company and its
Cypriot subsidiaries is 12,5%. For 2018 the amount of tax recorded mainly related to an amount of €506.728 which was derived from
the sale of asset in Craiova while for 2017 the amount of tax recorded includes also an amount of €241.435 which represent tax
provisions for fiscal years 2015 and 2016 related to Cyprus companies.
The tax on the Group's results differs from the theoretical amount that would arise using the applicable tax rates as follows:
Profit / (loss) before tax
Tax calculated on applicable rates
Expenses not recognized for tax purposes
Tax effect of allowances and income not subject to tax
Tax effect on tax losses for the year
Tax effect on tax losses brought forward
10% additional tax
Defence tax
Overseas tax in excess of credit claim used during the year
Prior year tax
Total Tax
31 Dec 2018
€
(6.759.507)
31 Dec 2017
€
(34.334.671)
(990.634)
1.357.212
(303.862)
653.310
(16.981)
10.514
-
42
-
709.601
(4.307.875)
4.538.828
(153.916)
139.129
(88.352)
5.811
6
847
461.687
596.165
CONSOLIDATED FINANCIAL STATEMENTS 2018|67
20. Investment Property
20.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
Victini Logistics (ex GED) is a logistics park comprising 17.756 gross leasable sqm. It is fully let to the German multinational
transportation and logistics company, Kuehne & Nagel and to a Greek commercial company trading electrical appliances GE
Dimitriou SA. On the roof of the warehouse there is a 1MW photovoltaic park installed with the electricity generated being
sold to Greek Electric Grid on a long term contract.
EOS Business Park consists of 3.386 sqm gross leasable area and includes a Class A office Building in Bucharest, which is
currently fully let to Danone Romania until 2025.
Innovations Logistics Park is a 16.570 sqm gross leasable area logistics park located in Clinceni in Bucharest, which
benefits from being on the Bucharest ring road. Its construction was tenant specific, was completed in 2008 and is separated
in four warehouses, two of which offer cold storage (freezing temperature), the total area of which is 6.395 sqm. Innovations
Logistics Park was acquired by the Group in May 2014 and was 37% leased at the end of the reporting period while currently
is 83%.
During 2017 the Company proceeded with an internal reorganization and the Kindergarten asset of GreenLake which was
under the ownership of the associate GreenLake Development Srl was acquired by a separate entity (SPDI Real Estate). The
Kindergarten is fully let to one of Bucharest’s leading private schools and produces an annual rent inflow of ~€115.000.
Residential Assets
The Company owns a residential portfolio, consisting at the end of the reporting period of 26 apartments and villas across
four separate complexes located in different residential areas of Bucharest (Residential portfolio: Romfelt Plaza, Blooming
House, GreenLake Residential: GreenLake Parcel K). During 2017 Tonescu Finance (the company which acquired the Monaco
Towers related loan) commenced against SecMon Real Estate Srl legal proceedings and in order for SecMon Real Estate Srl
to protect itself it entered voluntarily into insolvency process in January 2018. The entering of SecMon Real Estate Srl in the
insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl is not consolidated
in the present financial statements. (Note 8)
Land Assets
Bela Logistic Park is a 22,4 Ha plot in Odessa situated on the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000 sqm GBA logistic center commenced. Construction was
put on hold in 2009.
Kiyanovskiy Residence consists of four adjacent plots of land, totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael’s Spires and historic Podil neighborhood.
Tsymlyanskiy Residence is a 0,36 Ha plot of land located in the historic Podil District of Kiev and is destined for the
development of a residential complex.
Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in 2015.
Balabino Project is a 26,38 Ha plot of land situated on the south entrance of Zaporizhia, a city in the south of Ukraine with
a population of 800.000 people. Balabino Project is zoned for retail and entertainment development.
GreenLake land is a 40.360 sqm plot and is adjacent to the GreenLake part of the Company’s residential portfolio, which is
classified under Investments in Associates (Note 22). It is situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI owns ~44% of these plots, but has effective management control.
Boyana Land: The complex of Boyana Residence ood includes adjacent land plots available for sale or development of
~22.000 sqm of gross buildable area.
CONSOLIDATED FINANCIAL STATEMENTS 2018|68
20. Investment Property (continued)
20.2 Investment Property Movement during the reporting period
The table below presents a reconciliation of the Fair Value movements of the investment property during the reporting period broken
down by property and by local currency vs. reporting currency.
Continued Operations
2018 (€)
Asset Name
Type
Bela Logistic Park
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Balabino Project
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Residential
portfolio
GreenLake
Kindergarten
Praktiker Craiova
Total Romania
Boyana
Total Bulgaria
Land
Land
Land
Land
Land
Warehouse
Office
Residential
Land
Retail
Retail
Land
Victini Logistics
Warehouse
Total Greece
TOTAL
Discontinued Operations
2018 (€)
Asset Name
Type
Fair Value movements
Carrying
amount as
at
31/12/2018
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on local
currency
valuations (b)
Asset Value at the Beginning of the period or
at Acquisition/Transfer date
Disposals
2018
Transfer to
Assets held for
sale
Additions
2018
Carrying
amount as
at
31/12/2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7.500.000)
(7500.000)
-
-
-
-
(4.586.009)
(2.668.223)
(917.202)
(1334.111)
(1.083.966)
(10.589.511)
(10.000.000)
(7.200.000)
(4.023.000)
(17.963.000)
(1.713.000)
-
(40.899.000)
(4.230.000)
(4.230.000)
(16.100.000)
(16.100.000)
(7.500.000)
(71.818.511)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.586.009
2.668.223
917.202
1.334.111
1.083.966
10.589.511
10.000.000
7.200.000
4.023.000
17.963.000
1.713.000
7.500.000
48.399.000
4.230.000
4.230.000
16.100.000
16.100.000
79.318.511
Fair Value movements
Carrying
amount as
at
31/12/2018
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on local
currency
valuations (b)
Transfer to
FA at fair
value
through OCI
(Note 23)
Disposals
2018
Asset Value at the Beginning
of the period or at
Acquisition/Transfer date
Carrying
amount as
at
31/12/2017
Transfer from
Continued
Operations
Land
Land
Land
Land
Land
Warehouse
Office
Residential
Land
Retail
Land
Warehouse
Bela Logistic Park
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Balabino Project
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Residential
portfolio
GreenLake
Kindergarten
Total Romania
Boyana
Total Bulgaria
Victini Logistics
Total Greece
TOTAL
4.716.157
255.916
(125.768)
2.794.760
149.561
(23.024)
960.699
1.310.044
1.048.034
10.829.694
51.411
73.639
-
530.527
10.600.000
7.600.000
(10.366)
(7.392)
(2.322)
(13.707)
(1.642)
(35.429)
1.354.000
16.842.000
1.406.000
37.802.000
4.230.000
4.230.000
15.200.000
15.200.000
(7.914)
(97.707)
(35.932)
(290.345)
610.366
407.392
16.939
(1.107.293)
44.642
(27.954)
(900.000)
(900.000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1.486.000)
-
-
(1.486.000)
-
-
-
-
(1.197.617)
-
(350.000)
(1.547.617)
-
-
-
-
4.586.009
2.668.223
917.202
1.334.111
1.083.966
10.589.511
10.000.000
7.200.000
4.023.000
17.963.000
1.713.000
40.899.000
4.230.000
4.230.000
16.100.000
16.100.000
68.061.694
495.098
(1.218.299)
(1.486.000)
(1.547.617)
71.818.511
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CONSOLIDATED FINANCIAL STATEMENTS 2018|69
20. Investment Property (continued)
20.2 Investment Property Movement during the reporting period (continued)
2017 (€)
Asset Name
Type
Fair Value movements
Carrying
amount as
at
31/12/2017
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on
local
currency
valuations
(b)
Disposals
2017
Terminal Brovary
Logistics Park
Bela Logistic Park
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Balabino Project
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Residential
portfolio
GreenLake
Delia Lebada
Kindergarten
Praktiker Craiova
Total Romania
Boyana
Total Bulgaria
Victini Logistics
Total Greece
TOTAL
Warehouse
-
-
-
(14.900.000)
Land
Land
Land
Land
Land
4.586.009
(798.552)
356.575
2.668.223
(485.542)
(166.603)
917.202
(161.721)
1.334.111
(235.232)
35.379
51.460
-
-
-
-
1.083.966
10.589.511
-
(1.681.047)
(54.446)
222.365
-
(14.900.000)
Warehouse
10.000.000
(265.537)
(734.463)
Office
7.200.000
(184.922)
Residential
4.023.000
(113.738)
Land
Land
Retail
Retail
Land
Warehouse
17.963.000
-
1.713.000
7.500.000
48.399.000
4.230.000
4.230.000
16.100.000
16.100.000
(466.107)
13.618
(43.571)
(194.720)
(1.254.977)
-
-
-
-
524.922
121.357
510.107
(13.618)
491.571
194.720
1.094.596
(490.000)
(490.000)
(500.000)
(500.000)
-
-
(359.619)
(4.860.000)
-
-
(5.219.619)
-
-
-
-
79.318.511
(2.936.024)
326.961
(20.119.619)
Asset Value at the Beginning of the period
or at Acquisition/Transfer date
Additions
2017
Carrying
amount as at
31/12/2016
Transfer
from
Inventory
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.265.000
-
1.265.000
-
-
100.000
100.000
14.900.000
5.027.986
3.320.368
1.043.544
1.517.883
1.138.412
26.948.193
11.000.000
6.860.000
4.375.000
17.919.000
4.860.000
-
7.500.000
52.514.000
4.720.000
4.720.000
16.500.000
16.500.000
1.365.000
100.682.193
The two components comprising the fair value movements are presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation profit due to the devaluation of local currencies of €495.098 (a) (2017: loss €2.936.024) is presented as part
of the exchange difference on translation of foreign operations in other comprehensive income in the statement of
comprehensive income and then carried forward in the Foreign currency translation reserve; and,
b. The fair value loss in terms of the local functional currencies amounting to €1.218.299 (b) (2017: gain €326.961), is presented
as Valuation gains/(losses) from investment properties in the statement of comprehensive income and is carried forward in
Accumulated losses.
CONSOLIDATED FINANCIAL STATEMENTS 2018|70
20. Investment Property (continued)
20.3 Investment Property Carrying Amount per asset as at the reporting date
The table below presents the values of the individual assets as appraised by the appointed valuer as at the reporting date.
Asset Name
Location
Principal Operation
Related
Companies
Carrying amount as at
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
31 Dec 2017
€
Land and Development
Works for Warehouse
LLC Aisi Bela
Land for residential
development
LLC Aisi Ukraine
LLC Trade Center
Bela Logistic Park
Odesa
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Balabino Project
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Podil,
Kiev City
Center
Podil,
Kiev City
Center
Zaporizhia
Brovary
district, Kiev
Clinceni,
Bucharest
Bucharest
Land for residential
Development
Land for retail
development
Land for residential
Development
Warehouse
Office building
Praktiker Craiova
Craiova
Big Box retail
Kindergarten
Residential Portfolio
Bucharest
Bucharest
Retail
Residential apartments
(12 in total in 2
complexes)
GreenLake
Bucharest
Residential villas (14
villas)
&
land for residential
development
Total Romania
Boyana
Total Bulgaria
Victini Logistics
Total Greece
TOTAL
Sofia
Land
Athens
Warehouse
LLC Almaz‑Pres‑Ukraine
LLC Aisi Bela
SC Secure Capital Limited
Myrnes Innovations Park
Limited
Best Day Real Estate Srl
Yamano Holdings Limited,
N-E Real Estate Park First
Phase Srl
Bluehouse Accession Project
IX Limited
Bluehouse Accession Project
IV Limited
BlueBigBox 3 Srl
SPDI Real Estate Srl
SEC South East Continent
Unique Real Estate
Investments II Limited
Demetiva Holdings Limited
(in 2017)
Diforio Holdings Limited (in
2017)
Frizomo Holdings Limited (in
2017)
Ketiza Holdings Limited
SecRom Real Estate Srl (in
2017)
SecVista Real Estate Srl (in
2017)
SecMon Real Estate Srl (in
2017)
Ketiza Real Estate Srl
N-E Real Estate Park First
Phase Srl (in 2018 after
merger with SecRom Real
Estate Srl)
SEC South East Continent
Unique Real Estate
(Secured) Investments
Limited
Edetrio Holdings Limited
Emakei Holdings Limited
Iuliu Maniu Limited
Ram Real Estate
Management Limited
Moselin Investments Srl
Rimasol Enterprises Limited
Rimasol Real Estate Srl
Ashor Ventures Limited
Ashor Development Srl
Jenby Investments Srl
Ebenem Investments Srl
Boyana Residence ood,
Sertland Properties Limited
Victini Holdings Limited,
Victini Logistics Park S.A.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.716.157
4.586.009
2.794.760
2.668.223
960.699
917.202
1.310.044
1.334.111
1.048.034
1.083.966
10.829.694
10.600.000
10.589.511
10.000.000
7.600.000
7.200.000
-
7.500.000
1.406.000
1.354.000
1.713.000
4.023.000
16.842.000
17.963.000
37.802.000
4.230.000
48.399.000
4.230.000
4.230.000
15.200.000
4.230.000
16.100.000
15.200.000
16.100.000
68.061.694
79.318.511
CONSOLIDATED FINANCIAL STATEMENTS 2018|71
20. Investment Property (continued)
20.4 Investment Property analysis
a.
Investment Properties
The following assets are presented under Investment Property: Innovations Logistics park, EOS Business Park, Victini Logistics, Praktiker
Craiova (sold during October 2018), Kindergarten of GreenLake, the Residential Portfolio (consisting of apartments in 2 complexes) and
GreenLake parcel K, as well as all the land assets namely Kiyanovskiy Residence, Tsymlyanskiy Residence, Balabino Project and Rozny
Lane in Ukraine, and GreenLake in Romania, as well as the land in Sofia, Bulgaria (Boyana).
At 1 January
Acquisitions of investment property
Disposal of investment Property
Transfer from Inventory/prepayments made
Revaluation (loss)/gain on investment property
Translation difference
Transferred to Assets held for sale
At 31 December
31 Dec 2018
31 Dec 2018 31 Dec 2017
Continued
operations
€
Discontinued
operations
€
€
74.732.502
-
- 95.654.207
-
1.265.000
(7.500.000)
(3.033.617)
(20.119.619)
-
-
-
100.000
(1.092.530)
(29.614)
-
(67.232.502)
239.182
67.232.502
(2.137.472)
-
-
63.345.537 74.732.502
Acquisitions of Investment properties represent the internal reorganization to which the Company proceeded during 2017 and the
Kindergarten asset of GreenLake which was under the ownership of the associate GreenLake Development Srl was acquired by a
separate entity (SPDI Real Estate) (Note 21a).
Disposals of Investment Properties mainly represent the sales of Praktiker in Craiova and for 2017 the sale of Terminal Brovary logistics
Park in Ukraine, as well as the Delia Lebada land plot in Romania (Note 21b).
b.
Investment Properties Under Development
As at 31 December 2018 investment property under development represents the carrying value of Bela Logistic Park property, which
has reached the +10% construction in late 2008 but it is stopped since then.
At 1 January
Revaluation on investment property
Translation difference
Transferred to Assets held for sale
At 31 December
31 Dec 2018
Continued
operations
€
31 Dec 2018 31 Dec 2017
Discontinued
operations
€
€
4.586.009
-
-
(4.586.009)
-
-
(125.768)
255.916
4.586.009
4.716.157
5.027.986
356.575
(798.552)
-
4.586.009
20.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the following table represents an analysis based on the various valuation methods.
The different levels as defined by IFRS have been defined as follows:
-
-
-
Level 1 relates to quoted prices (unadjusted) in active and liquid markets for identical assets or liabilities.
Level 2 relates to inputs other than quoted prices that are observable for the asset or liability indirectly (that is, derived from
prices). Level 2 fair values of investment properties have been derived using the market value approach by comparing the
subject asset with similar assets for which price information is available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred recently in the market. The most significant input into this valuation
approach is price per sqm.
Level 3 relates to inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using the income approach (discounted cash flow) due to the
lack of similar sales in the local market (unobservable inputs).
CONSOLIDATED FINANCIAL STATEMENTS 2018|72
20. Investment Property (continued)
20.5 Investment Property valuation method presentation (continued)
To derive Fair Values the Group has adopted a combination of income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements at 31 Dec 2018 (€)
(Level 1)
(Level 2)
(Level 3)
Total
Recurring fair value measurements
Balabino Project - Zaporizhia
Tsymlyanskiy Residence – Podil, Kiev City Center
Bela Logistics Park - Odessa
Kiyanovskiy Residence – Podil, Kiev City Center
Rozny Lane – Brovary district, Kiev oblast
Innovations Logistics Park – Bucharest
EOS Business Park – Bucharest, City Center
Residential Portfolio (ex GreenLake) – Bucharest
GreenLake – Bucharest
Praktiker - Craiova
Kindergarten - Bucharest
Victini Logistics – Athens
Boyana- Land, Bulgaria
Totals
1.310.044
960.699
2.794.760
1.048.034
1.354.000
16.842.000
4.716.157
10.600.000
7.600.000
1.406.000
15.200.000
4.230.000
28.539.537
39.522.157
1.310.044
960.699
4.716.157
2.794.760
1.048.034
10.600.000
7.600.000
1.354.000
16.842.000
1.406.000
15.200.000
4.230.000
68.061.694
Fair value measurements at 31 Dec 2017 (€)
(Level 1)
(Level 2)
(Level 3)
Total
-
Recurring fair value measurements
Balabino Project - Zaporizhia
Tsymlyanskiy Residence – Podil, Kiev City Center
Bela Logistics Park - Odessa
Kiyanovskiy Residence – Podil, Kiev City Center
Rozny Lane – Brovary district, Kiev oblast
Innovations Logistics Park – Bucharest
EOS Business Park – Bucharest, City Center
Residential Portfolio (ex GreenLake) – Bucharest
GreenLake – Bucharest
Praktiker - Craiova
Kindergarten - Bucharest
Victini Logistics – Athens
Boyana- Land, Bulgaria
Totals
1.334.111
-
917.202
-
-
-
2.668.223
-
1.083.966
-
-
-
-
-
4.023.000
-
-
17.963.000
-
-
-
-
-
-
-
4.230.000
- 32.219.502
-
-
4.586.009
-
-
10.000.000
7.200.000
-
-
7.500.000
1.713.000
16.100.000
-
47.099.009
1.334.111
917.202
4.586.009
2.668.223
1.083.966
10.000.000
7.200.000
4.023.000
17.963.000
7.500.000
1.713.000
16.100.000
4.230.000
79.318.511
The table below shows yearly adjustments for Level 3 investment property valuations:
Level 3 Fair
value
measurements
at 31 Dec
2018 (€)
Opening
balance
Disposals
Profit/(loss) on
revaluation
Translation
difference
Closing
balance
Bela
Logistics
Park
Innovations
Logistics
Park
EOS
Business
Park
Praktiker
Craiova
Victini
Logistics
Kindergarten
Total
4.586.009
-
10.000.000
-
7.200.000
-
7.500.000 16.100.000
-
(7.500.000)
1.713.000 47.099.009
(7.500.000)
-
(125.768)
610.366
407.392
255.916
(10.366)
(7.392)
-
-
(900.000)
44.642
36.632
-
(351.642)
(113.484)
4.716.157
10.600.000
7.600.000
-
15.200.000
1.406.000
39.522.157
CONSOLIDATED FINANCIAL STATEMENTS 2018|73
20. Investment Property (continued)
20.5 Investment Property valuation method presentation (continued)
Level 3 Fair
value
measurements
at 31 Dec 2017
(€)
Opening balance
Transfer to and
from level 2 due to
change of
valuation methods
Acquisitions
Additions
Disposals
Profit/(loss) on
revaluation
Translation
difference
Closing balance
Bela
Logistics
Park
Innovations
Logistics
Park
EOS
Business
Park
Praktiker
Craiova
Victini
Logistics
Kindergarten
Total
5.027.986
11.000.000
6.860.000
7.500.000 16.500.000
- 46.887.986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100.000
-
-
1.265.000
1.265.000
-
-
-
100.000
356.575
(734.463)
524.922
194.720
(500.000)
491.571
333.325
(798.552)
4.586.009
(265.537)
10.000.000
(184.922)
7.200.000
(194.720)
-
7.500.000 16.100.000
(43.571)
(1.487.302)
1.713.000 47.099.009
Information about Level 3 Fair Values is presented below:
Fair value at
31 Dec 2018
Fair value at
31 Dec 2017
Valuation
technique
Unobservable inputs
Relationship of unobservable
inputs to fair value
€
4.716.157
€
4.586.009
10.600.000
10.000.000
€
Combined
market and
cost
approach
Income
approach
€
€
Percentage of development
works completion,
deterioration rate
The higher the percentage of
completion the higher the fair
value. The higher the deterioration
rate, the lower fair value
Future rental income and
costs for 10 years, discount
rate
The higher the rental income the
higher the fair value. The higher
the discount rate, the lower fair
value
7.600.000
7.200.000
Income
approach
Future rental income and
costs for 10 years, discount
rate
Praktiker Craiova
-
7.500.000
Victini Logistics
15.200.000
16.100.000
Kindergarten
1.406.000
1.713.000
Total
39.522.157
47.099.009
Income
approach
Future rental income and
costs for 10 years, discount
rate
Income
approach
Income
approach
Future rental income and
costs for 10 years, discount
rate for real estate property
and for Photovoltaic(PV) 13 +
4 years
Future rental income and
costs of discount rate, vacancy
rate
The higher the rental income the
higher the fair value. The higher
the discount rate, the lower fair
value
The higher the rental income the
higher the fair value. The higher
the discount rate, the lower fair
value
The higher the rental/PV income
the higher the fair value. The
higher the discount rate, the lower
fair value
The higher the rental income the
higher the fair value. The higher
the discount rate and the vacancy
rate, the lower fair value
21. Investment Property Acquisitions, Goodwill Movement and Disposals
a. Investment Property Acquisitions
Acquisitions of investment property represents the internal reorganization which the Company undertook during 2017 whereby the
Kindergarten asset of GreenLake which was under the ownership of the associate GreenLake Development Srl was acquired by a
separate subsidiary entity (SPDI Real Estate Srl).
Fair value of investment property acquired
Consideration paid
Gain on acquisition of assets
Non-controlling interest
SPDI equity holders
€
1.265.000
(1.241.079)
23.921
11.960,50
11.960,50
CONSOLIDATED FINANCIAL STATEMENTS 2018|74
Bela Logistic
Park – Odessa
Innovations
Logistics Park –
Bucharest
EOS Business
Park – Bucharest,
City Center
21. Investment Property Acquisitions, Goodwill Movement and Disposals (continued)
b. Disposal of subsidiaries
At 27 January 2017 the SL Logistics Group (Terminal Brovary related) was sold to Temania Enterprises Ltd (company related to Rozetka
Group). The transaction was concluded at a Gross Asset Value of ~€15 million (before the deduction of the outstanding EBRD loan,
which was transferred to the buyer, while the SPDI guarantee to EBRD loan was cancelled). The transaction generated a profit for SPDI
of ~€2,7 million, already included in the 2016 financial statements by way of presenting the property at a fair value equal to the
transaction value, as well as a cash inflow of ~€3million. As part of the transaction the Group also sold SL SECURE Logistics Ltd, and
thus transferred its loan towards Terminal Brovary to the buyer.
The Company had loans receivable from foreign group subsidiaries which are considered as part of the Group’s net investments in those
foreign operations (Note 41.3). For these intercompany loans the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. Upon disposal of such foreign operations and thus of Terminal Brovary
during 2017, the accumulated foreign exchange difference amounting to €37.352.923 is transferred to the Consolidated Profit or Loss
for the year.
The table below shows the Balance Sheet of the Terminal Brovary Group at the disposal date.
ASSETS
Non-current assets
Investment property
Tangibles and intangibles assets
Current assets
Prepayments and other current assets
Cash and cash equivalents
Total assets
Non-current liabilities
Finance lease liability
Current liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liability
Total liabilities
Net assets disposed
Financed by
Cash consideration received
Total result from Terminal Brovary disposal
€
14.900.000
43.240
40.740
4.693
14.988.673
235.560
11.370.804
46.366
264.547
219
11.917.496
(3.071.177)
2.849.187
(221.990)
On 26 July 2017 the Company announced the disposal of Delia Lebada, a ~40.000 sqm (4 hectare) plot of land in east Bucharest on
the shore of Pantelimon Lake in which SPDI owned a 65% stake. The sale price was €2,4 million and simultaneously, the associated
property loan (principal and interest) totalling €6.594.396 with Bank of Cyprus was settled through a liquidation process, and the
associated corporate guarantee was released. The loan was repaid at a rate of 45 cents / Euro (totalling €2,95 million) using a
combination of the Land Disposal proceeds (€2,4 million) and an additional payment of €550.000 (Note 15).
Overall the transaction had a positive result of €1.705.727 in the Consolidated Statement of Comprehensive Income, €761.197 being
attributed to the equity holders of the Company.
ASSETS
Non-current assets
Investment property
Current assets
Prepayments and other current assets
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Interest due on borrowings
Other liabilities
Total liabilities
Net assets disposed
Non-controlling interest
Gain on disposal of subsidiaries
Write off intercompany loans of SPDI group to Delia
Total result from Delia disposal
Non-controlling interest
€
4.860.000
92.990
106
4.953.096
4.569.725
2.024.671
1.057.357
7.651.753
(2.698.657)
-
2.698.657
(992.930)
1.705.727
944.530
Net effect of Delia disposal for SPDI equity holders
761.197
Total gain from disposal of subsidiaries (Brovary and Delia)
1.483.737
CONSOLIDATED FINANCIAL STATEMENTS 2018|75
22. Investments in associates
Cost of investment in associates at the beginning of the period
Share of profits /(losses) from associates
Dividend Income
Foreign exchange difference
Transfer to assets classified as held for sale
Total
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
5.115.587
-
-
-
(5.115.587)
-
-
364.920
(143.263)
(24.009)
5.115.587
5.313.235
31 Dec 2017
€
5.217.310
390.217
(231.363)
(260.577)
-
5.115.587
Dividend Income reflects dividends received from Delenco Srl, owner of the Delea Nuova building, where the Group maintains a 24,35%
participation.
The share of profit from the associate GreenLake Development Srl was limited up to the interest of the Group in the associate.
As at 31 December 2018, the Group’s interests in its associates and their summarised financial information, including total assets at fair
value, total liabilities, revenues and profit or loss, were as follows:
Project
Name
Associates Total assets
Total
liabilities
Profit/
(loss)
Holding
Country Asset type
Share of
profits from
associates
€
€
€
%
€
Delea
Nuova
Project
GreenLake
Project –
Phase A
Total
Lelar Holdings
Limited and
S.C. Delenco
Construct Srl
GreenLake
Development
Srl
24.272.364
(2.455.680)
1.498.399
24,354
364.920 Romania
9.202.949
(11.567.196)
(839.107)
40,35
- Romania
33.475.313 (14.022.876)
659.292
364.920
Office
building
Residential
assets
As at 31 December 2017, the Group’s interests in its associates and their summarised financial information, including total assets at fair
value, total liabilities, revenues and profit or loss, were as follows:
Project
Name
Delea
Nuova
Project
GreenLake
Project –
Phase A
Total
Associates Total assets
Total
liabilities
Profit/
(loss)
Holding
Country Asset type
Share of
profits from
associates
€
€
€
%
€
Lelar Holdings
Limited and
S.C. Delenco
Construct Srl
GreenLake
Development
Srl
23.980.063
(2.974.921)
1.602.270
24,354
390.217 Romania
10.228.889
(12.329.782)
(3.560.862)
40,35
- Romania
34.208.952 (15.304.703) (1.958.592)
390.217
Office
building
Residential
assets
CONSOLIDATED FINANCIAL STATEMENTS 2018|76
23. Financial assets at fair value through OCI
The Group proceeded with an impairment of €297.200 for Monaco Towers (company SecMon Real Estate Srl) for which following the
court decision for entering into insolvency in January 2018, the Company lost the control over the asset (Note 8) and as such it was
reclassified as Financial assets at fair value through OCI as per table below (where the fair value of the property was adjusted at 80%
of its value):
Discontinued operations (Note 9)
ASSETS
Non-current assets
Investment property
Current assets
Prepayments and other current assets
Cash and cash equivalents
Total assets
Current liabilities
Borrowings
Other liabilities
Intercompany loans
Total liabilities
Total Net equity
Add back Intercompany loans
Total Net equity (excluding IC)
Financial Asset at fair value through OCI
Unadjusted
€
Adjusted
€
1.486.000
1.188.800
20.447
10.321
1.516.768
20.447
10.321
1.219.568
(1.075.176)
(19.433)
(1.845.700)
(2.940.309)
(1.423.541)
1.845.700
422.159
(1.075.176)
(19.433)
(124.958)
(1.219.567)
1
-
1
1
Loan receivable from 3rd parties (Note 27)
Impairment charge for Monaco Towers (Adjusted less Unadjusted NAV)
124.958
(297.200)
24. Tangible and intangible assets
As at 31 December 2018 the intangible assets were composed of the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of €103.193 (2017: €103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to €100.800 (2017: €96.642) and therefore net value amounts to €2.393 (2017: €6.551).
As at 31 December 2018 the tangible non-current assets under continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of €1.281 (2017: €2.242).
As at 31 December 2018 the tangible non-current assets under discontinued operations mainly consisted of the machinery and
equipment used for servicing the Group's investment properties in Ukraine, Romania, Greece and Bulgaria, amount to €129.516
(2017:€134.483). Accumulated depreciation as at the reporting date amounts to €86.982 (2017: €72.772).
25. Long Term Receivables and prepayments
Long Term Receivables
Total
31 Dec 2018
Continued
operations
31 Dec 2018
Discontinued
operations
31 Dec 2017
€
850
850
€
270.271
270.271
€
316.788
316.788
Long term receivables mainly include the cash collateral existing in favor of Piraeus Leasing and the guarantee deposit from a tenant in
Innovations Logistics Park.
26. Inventory
At 1 January
Sale of Inventories (Note 14a)
Transfer to assets classified as held for sale
At 31 December
31 Dec 2018
31 Dec 2018
31 Dec 2017
Continued
operations
€
Discontinued
operations
€
€
4.812.550
-
5.028.254
-
(208.506)
(215.704)
(4.812.550)
4.812.550
-
-
4.604.044
4.812.550
CONSOLIDATED FINANCIAL STATEMENTS 2018|77
26. Inventory (continued)
The residential portfolio in Boyana, Sofia, Bulgaria is classified as Inventory.
During 2016 after a decision of the Board of Directors of Boyana to change the initial plan from construction on the land to hold this
land for capital appreciation, the amount of €4.686.000 which was related to the land was transferred under Investment Properties
(Note 20.2) and since then is treated under IAS 40.
27. Prepayments and other current assets
Trade and other receivables
VAT and other tax receivables
Deferred expenses
Receivables due from related parties
Loan receivables from 3rd parties
Loan to associates (Note 41.4)
Allowance for impairment of prepayments and other current assets
Total
31 Dec 2018
Continued
operations
€
102.243
123.975
72.630
54.689
5.312.919
8.374
(89.422)
5.585.408
31 Dec 2018
Discontinued
operations
€
569.210
93.331
1.254
1.010
124.958
282.842
(390.471)
682.134
31 Dec 2017
€
741.691
275.446
222.797
14.459
4.345.000
273.476
(26.285)
5.846.584
Trade and other receivables mainly include receivables from tenants (including the Greek electricity grid administrator) and prepayments
made for services.
VAT receivable represent VAT which is refundable in Romania, Bulgaria, Greece, Cyprus and Ukraine.
Deferred expenses include legal, advisory, consulting and marketing expenses related to ongoing share capital increase and due
diligence expenses related to the possible acquisition of investment properties.
Loan receivables from 3rd parties include an amount of €4.580.000 provided as an advance payment for acquiring a participation in an
investment property portfolio (Olympians portfolio) in Romania, as well as associated interest of €610.853. The loan provided under an
agreement incorporating a convertibility option exercisable until 28 February 2018. Such option was not exercised and the loan is
payable in a 12 month period from the exercise date or the relevant notification date, bearing a fixed interest rate of 10%, and secured
by relevant corporate guarantees, while the Company is in the process of getting agreed security in the form of pledge of shares
following the relevant process provided in the Loan Agreement.
Loans receivables from 3rd parties also include an amount of €115.000 provided to the SPV that acquired Delia Lebada asset, as part of
an agreement of obtaining a 5% stake on the property.
Loan receivable from 3rd partied under discontinued operations include a loan receivable from SecMon Real Estate Srl which is in the
comparative figures of these Financial Statements was classified as a subsidiary, while from January 2018 it is classified as Financial
Asset at Fair value through OCI (Note 23).
Loan to associates reflects a loan receivable from GreenLake Development Srl, holding company of GreenLake Project-Phase A (Notes
22 and 41.4).
28. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
Cash with banks in USD
Cash with banks in EUR
Cash with banks in UAH
Cash with banks in RON
Cash with banks in BGN
Total
31 Dec 2018
31 Dec 2018
31 Dec 2017
Continued
operations
Discontinued
operations
€
€
€
45.134
205.679
71
31.829
-
282.713
2.621
233.184
1.498
465.062
2.460
704.825
68.007
365.736
2.021
389.123
6.237
831.124
CONSOLIDATED FINANCIAL STATEMENTS 2018|78
29. Share capital
Number of Shares during 2018 and 2017
31 December
2016
28 April 2017
30 June 2017
31 December
2017
26 January 2018
26 January 2018
5 June 2018
31 December
2018
Increase of
share capital
Exercise of
warrants
Exercise of
warrants & options
Increase of share
capital
Authorised
Ordinary shares of €0,01
Total ordinary shares
RCP Class A Shares of €0,01
RCP Class B Shares of €0,01
Total redeemable shares
Issued and fully paid
Ordinary shares of €0,01
Total ordinary shares
RCP Class A Shares of €0,01
RCP Class B Shares of €0,01
Total redeemable shares
Total
989.869.935
989.869.935
785.000
8.618.997
9.403.997
90.014.723
90.014.723
-
-
-
90.014.723
Nominal value (€) for 2018 and 2017
-
-
-
-
-
-
-
-
-
-
989.869.935
989.869.935
785.000
8.618.997
9.403.997
-
-
-
-
-
-
-
-
-
-
-
-
(785.000)
-
(785.000)
989.869.935
989.869.935
-
8.618.997
8.618.997
626.133
626.133
-
-
-
626.133
12.948.694
12.948.694
-
-
-
12.948.694
103.589.550
103.589.550
-
-
-
103.589.550
17.076.560
17.076.560
-
-
-
17.076.560
6.604.371
6.604.371
-
-
-
6.604.371
-
-
-
-
-
-
127.270.481
127.270.481
-
-
-
127.270.481
€
31 December
2016
28 April 2017
30 June 2017
31 December
2017
26 January 2018
26 January 2018
5 June 2018
31 December
2018
Increase of
share capital
Exercise of
warrants
Exercise of
warrants & options
Increase of share
capital
Authorised
Ordinary shares of €0,01
Total ordinary shares
RCP Class A Shares of €0,01
RCP Class B Shares of €0,01
Total redeemable shares
Issued and fully paid
Ordinary shares of €0,01
Total ordinary shares
RCP Class A Shares of €0,01
RCP Class B Shares of €0,01
Total redeemable shares
Total
9.898.699
9.898.699
7.850
86.190
94.040
900.145
900.145
-
-
-
900.145
-
-
-
-
-
6.261
6.261
-
-
-
6.261
-
-
-
-
-
129.487
129.487
-
-
-
129.487
9.898.699
9.898.699
7.850
86.190
94.040
1.035.893
1.035.893
-
-
-
1.035.893
-
-
-
-
-
170.765
170.765
-
-
-
170.765
-
-
-
-
-
-
-
(7.850)
-
(7.850)
66.044
66.044
-
-
-
66.044
-
-
-
-
-
-
9.898.699
9.898.699
-
86.190
86.190
1.272.702
1.272.702
-
-
-
1.272.702
CONSOLIDATED FINANCIAL STATEMENTS 2018|79
29. Share capital (continued)
29.1 Authorised share capital
As at the end of 2017, the authorized share capital of the Company was 989.869.935 Ordinary Shares of €0,01 nominal value each, 785.000
Redeemable Preference Class A Shares of €0,01 nominal value each and 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal
value each.
The Company cancelled the Redeemable Preference Class A Shares following the AGM decision of 29 December 2017 and the subsequent
court approval obtained during H1 2018 while Redeemable Preference Class B Shares (Note 29.6) remain to be cancelled.
Following the cancellation of the Redeemable Preference Class A Shares completed within H1 2018 the authorised share capital of the
Company as at the date of issuance of this report is as follows:
a) 989.869.935 Ordinary Shares of €0,01 nominal value each,
b) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each, (Note 29.6).
29.2 Issued Share Capital
As at the end of 2017, the issued share capital of the Company was as follows:
a) 103.589.550 Ordinary Shares of €0,01 nominal value each,
b) 392.500 Redeemable Preference Class A Shares of €0,01 nominal value each, cancelled during 2018 as per the Annual General Meeting
decision of 29 December 2017 (Note 29.6)
c) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each.
In respect of the Redeemable Preference Class A Shares, issued in connection to the Innovations Logistics Park acquisition and the
Redeemable Preference Class A Shares, issued in connection to the acquisition of Craiova Praktiker, following the holders of such shares
notifying the Company of their intent to redeem within 2016, the Company:
- actually proceeded with full redemption of the Redeemable Preference Class A Shares (392.500) which was finalized in Q1-2017
while it obtained during the Annual General Meeting of 29 December 2017 the necessary approval for cancelling them during
2018.
- for the Redeemable Preference Class B Shares, in lieu of redemption the Company gave its 20% holding in Autounion (Note
29.6) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. and final
settlement for any resulting difference is expected to be provided by Cypriot Courts (Note 42.4). As soon as the case is settled,
the Company will proceed with the cancellation of the Redeemable Preference Class B Shares.
On 26th January 2018 the Company announced that 17.066.560 Class A warrants (at a price of £0,10 per warrant) have been exercised and
accordingly, 17.066.560 new ordinary shares were issued and admitted to trading on AIM. The consideration for these shares was paid
during 2017 (Notes 34 and 41.2). Furthermore the Company proceeded with the issue of 344.371 new Ordinary Shares to the Non-Executive
Directors of the Company who were in office in 2016 in lieu of fees accrued in 2016, as well as the issue of 10.000 new Ordinary Shares to
an ex-employee of the Company, who exercised 10.000 options held over Ordinary Shares (exercisable at £0,15 per share) and 6.260.000
new Ordinary Shares (at an average price of £0,10 per new Ordinary Share) to certain advisers in lieu of cash fees for services offered to
the Company for raising capital and facilitating capital markets strategies.
The Company proceeded during H1 2018 with the necessary actions, i.e. court applications, in order to implement the decisions of the AGM
of 29 December 2017 for the cancellation of the 785.000 Redeemable Preference Class A Shares of €0,01 each, namely 777.150 Redeemable
Preference Class A Shares of €0,01 each in the name of Myrian Nes Ltd and 7.850 Redeemable Preference Class A Shares of €0,01 each in
the name of Theandrion Estates.
Following shares issuance completed within H1 2018, as well as cancellation of Redeemable Preference Class A Shares the issued share
capital of the Company as at the date of issuance of this report is as follows:
a) 127.270.481 Ordinary Shares of €0,01 nominal value each,
b) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each, (Note 29.6).
29.3 Option schemes
A. Under the scheme adopted in 2007, each of the Directors serving at the time, who is still a Director of the Company is entitled to
subscribe for 2.631 Ordinary Shares exercisable as set out below:
Exercisable until 1 August 2017
Exercisable until 1 August 2017
Exercise Price
USD
57
83
Number of
Shares
1.754
877
The Company received no notice for exercising the options and as a result, as at the end of the reporting period the options have expired.
CONSOLIDATED FINANCIAL STATEMENTS 2018|80
29. Share capital (continued)
29.3 Option schemes (continued)
B. Under a second scheme also adopted in 2007, director Franz M. Hoerhager is entitled to subscribe for 1.829 ordinary shares exercisable
as set out below:
Exercisable until 1 August 2017
Exercisable until 1 August 2017
Exercise Price
GBP
40
50
Number of
Shares
1.219
610
The Company received no notice for exercising the options and as a result as at the end of the reporting period the options have expired.
C. Under a scheme adopted in 2015, pursuant to an approval by the AGM of 30/12/2013, the Company proceeded in 2015 in issuing
590.000 options to its employees, as a reward for their effort and support during the previous year. Each option entitles the Option
holder to one Ordinary Share. Exercise price stands at GBP 0,15. The Option holders may not exercise any option from the moment
they cease to offer their services to the Company. The CEO and the CFO of the Company did not receive any options.
a.
b.
c.
147.500 Options were exercisable within 2016 and none were exercised.
147.500 Options were exercisable within 2017, out of which 10.000 options were exercised by an ex-employee of the
Company while the rest have lapsed.
295.000 Options may be exercised within 2018 and as at the date this report none have been exercised.
The Company considers that all option schemes are currently out of money and therefore has not made any relevant provision.
29.4 Class A Warrants issued
The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio,
(Note 27) issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a warrant. Pursuant
to issuing the instrument, the Company issued 17.066.560 Class A warrants which were exercised during 2017 at an exercise price of £0,10
per ordinary share and the Company proceeded at, beginning of 2018, with the issuance of 17.066.560 new ordinary shares corresponding
to these warrants.
There are no Class A warrants in circulation as at the issuance date of the financial statements.
29.5 Class B Warrants issued
On 8 August 2011 the Company issued an amount of Class B Warrants for an aggregate corresponding to 12,5% of the issued share capital
of the Company after the exercise date. Further to the resolution approved at the AGM of 30 December 2016 the exercise period of the
Class B Warrants was extended until 30 June 2017, at an exercise price of the nominal value per Ordinary Share as at the date of exercise.
The Class B Warrant Instruments have anti-dilution protection so that, in the event of further share issuances by the Company, the number
of Ordinary Shares to which the holder of a Class B Warrant is entitled will be adjusted so that he receives the same percentage of the
issued share capital of the Company (as nearly as practicable), as would have been the case had the issuances not occurred. This anti-
dilution protection will freeze on the earlier of (i) the expiration of the Class B Warrants; and (ii) capital increase(s) undertaken by the
Company generating cumulative gross proceeds in excess of USD 100.000.000.
As at 30 June 2017 there were 12.948.694 warrants in circulation corresponding to an equal amount of ordinary shares (1:1) and the
Company received valid notices from holders of Class B warrants for the full exercise of their warrants and proceeded with the issue of
12.948.694 new ordinary shares.
There are no Class B warrants in circulation.
29.6 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as follows:
Number of
Ordinary shares of €0,01
Class A Warrants
Class B Warrants
Total number of Shares
Total number of Shares
Options
Shares issued in 2018 for exercise of
warrants and options in 2017
Issued and Listed on AIM
(as at) 31 December
2018
127.270.481
Non-Dilutive Basis
Full Dilutive Basis
127.270.481
127.270.481
(as at) 31 December
2017
103.589.550
-
-
103.589.550
103.589.550
17.076.560
CONSOLIDATED FINANCIAL STATEMENTS 2018|81
29. Share capital (continued)
29.6 Capital Structure as at the end of the reporting period (continued)
Redeemable Preference Class A Shares
The Redeemable Preference Class A Shares which do not have voting or dividend rights where issued as part of the Innovations Logistics
Park acquisition consideration. As at the reporting date all of the Redeemable Preference Class A Shares have been redeemed and the
Company, following the approval received by the AGM on 29 December 2017, proceeded in their cancellation within 2018.
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker
Craiova asset acquisition do not have voting rights but have economic rights at par with ordinary shares. As at the reporting date all of the
Redeemable Preference Class B Shares have been redeemed but the Company is in legal proceedings with the vendor in respect of a final
settlement (Notes 34, 42.4).
29.7 Other share capital related matters
Pursuant to decisions taken by the AGM of 30th December 2016, the Board has been authorised and empowered to:
-
-
issue up to 200.000.000 ordinary shares of €0,01 each at an issue price as the Board may from time to time determine (with such
price being at a discount to the net asset value per share) so as to facilitate the profitable growth of the Group. Such explicit
authority for the issuance of such shares expires on 31 December 2018. Since 31 December 2016 and until the date of this report,
the Board had issued 37.255.758 shares under its mandated authority.
issue Class A Warrants, to subscribe for up to 350% of the outstanding ordinary shares at the time of issuance of the Class A
Warrants, upon such terms and conditions as may be determined by the Board (with such price being at a discount to the net
asset value per share). Such Class A Warrants may be offered to various third-party entities a) for participating in the capital
raising of the Company, b) for their contribution in creating value for the Group and c) for their assistance with fundraising. Such
explicit authority for the issuance of such warrants expires on 31 December 2018. The Company issued 17.066.560 Class A
warrants under this authority during 2017 which were also exercised.
Pursuant to decisions taken by the AGM of 29th December 2017, the Company proceeded with the following actions H1 2018 (which finalized
during June:
-
-
-
-
That the balance of the share premium account of the Company will be reduced by €53.569.295 and will be set off against carried
forward losses of the Company amounting to €53.569.295.
That the balance of the share premium account of the Company will be reduced by €698.650 and that the said amount will be
set off against any outstanding balances between the Company, Myrian Nes Ltd and Theandrion Estates Ltd related to the
Redeemable Preference Class A Shares.
That the authorised share capital of the Company, as well as the issued share capital of the Company each will be reduced, by
the cancellation of 785.000 Redeemable Preference Class A Shares of €0,01 each, namely 777.150 Redeemable Preference Class
A Shares of €0,01 each in the name of Myrian Nes Ltd and 7.850 Redeemable Preference Class A Shares of €0,01 each in the
name of Theandrion Estates Ltd and the amount reduced will be set off against any outstanding balances between the Company,
Myrian Nes Ltd and Theandrion Estates Ltd.
That the articles of association of the Company will be amended by adding the following new Regulation 3.10 after Regulation
3.9:
“Subject to the provisions of the Law, the Company may purchase its own shares (including any redeemable shares).”
Pursuant to decisions taken by the AGM of 31st December 2018, the Board has been authorized and empowered to:
-
-
issue and allot up to 20.000.000 ordinary shares of euro 0,01 each, at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a discount to the net asset value per share in the Company
which is in issue immediately prior to the issue of the new shares) and for such purpose any rights of pre-emption and other
rights the Company's shareholders have or may have by operation of law and/or pursuant to the articles of association of the
Company and/or otherwise in connection with the authority conferred on the Board for the issue and allotment of shares in the
Company as contemplated in this resolutions or the issue of shares in the Company pursuant to such authority be and are hereby
irrevocably and unconditionally waived. The authority conferred by this resolution shall expire on 31 December 2019.
issue up to 15.000.000 Class A Warrants, being convertible to up to 15.000.000 ordinary share of euro 0,01 each in the Company
upon exercise of the Warrants, with such terms and conditions and at an issue price as the Board may in its sole unfettered
discretion from time to time determine (and such price may be at a discount to the net asset value per share in the Company
which is in issue immediately prior to the issue of the Warrants)and for such purpose any rights of pre-emption and other rights
the Company's shareholders have or may have by operation of law and/or pursuant to the articles of association of the Company
and/or otherwise in connection with the authority conferred on the Board for the issue and allotment of shares or Warrants in
the Company as contemplated in this resolution or the issue and allotment of shares or Warrants in the Company pursuant to
such authority be and are hereby irrevocably and unconditionally waived. The authority conferred by this resolution shall expire
on 31 December 2019.
CONSOLIDATED FINANCIAL STATEMENTS 2018|82
30. Foreign Currency Translation Reserve
Exchange differences related to the translation from the functional currency to EUR of the Group’s subsidiaries are accounted by entries
made directly to the foreign currency translation reserve. The foreign exchange translation reserve represents unrealized profits or losses
related to the appreciation or depreciation of the local currencies against EUR in the countries where the Company’s subsidiaries’ functional
currencies are not EUR.
31. Non-Controlling Interests
Non-controlling interests represent the percentage participations in the respective entities not owned by the Group:
Non-controlling interest
portion
%
Group Company
LLC Almaz-Press-Ukraine
Ketiza Holdings Limited
Ketiza Real Estate Srl
Ram Real Estate Management Limited
Iuliu Maniu Limited
Moselin Investments Srl
Rimasol Enterprises Limited
Rimasol Real Estate Srl
Ashor Ventures Limited
Ashor Development Srl
Jenby Ventures Limited
Jenby Investments Srl
Ebenem Limited
Ebenem Investments Srl
SPDI Real Estate Srl
32. Borrowings
Principal of bank Loans
Banca Comerciala Romana /Tonescu
Finance
Bancpost SA
Alpha Bank Romania
Alpha Bank Romania
Bancpost SA
Alpha Bank Bulgaria
Alpha Bank Bulgaria
Eurobank Ergasias SA
Piraeus Bank SA
Marfin Bank Romania
Bancpost SA
Loans from other 3rd parties and
related parties (Note 41.5)
Overdrafts
Total principal of bank and non-
bank Loans
Interest accrued on bank loans
Interests accrued on non-bank loans
Total
Current portion
Non-current portion
Total
31 Dec 2017
45,00
10,00
10,00
50,00
55,00
55,00
55,76
55,76
55,76
55,76
55,70
55,70
55,70
55,70
50,00
31 Dec 2017
€
924.562
1.080.834
686.693
828.599
3.249.926
2.404.187
678.162
11.235.480
2.525.938
4.298.128
31 Dec 2018
45,00
10,00
10,00
50,00
55,00
55,00
55,76
55,76
55,76
55,76
55,70
55,70
55,70
55,70
50,00
Project
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
Monaco Towers
Blooming House
Romfelt Plaza
EOS Business Park
GreenLake – Parcel K
Boyana Residence
Boyana Residence
(Sertland Loan)
Victini Logistics
GreenLake-Phase 2
Praktiker Craiova
Kindergarten – SPDI RE
-
-
-
-
-
-
-
-
-
-
-
387.683
499
388.182
1
14.107
402.290
-
614.441
191.723
485.663
3.249.926
2.258.128
666.474
10.658.950
2.525.938
-
773.206
912.790
177.473
1.420
738.742
6.581
21.603.342
960.075
42.057
22.605.474
29.570.622
698.200
217.643
30.486.465
31 Dec 2018
Continued
operations
€
22.034
380.256
402.290
31 Dec 2018
Discontinued
operations
€
1.652.875
20.952.599
22.605.474
31 Dec 2017
€
5.162.087
25.324.378
30.486.465
CONSOLIDATED FINANCIAL STATEMENTS 2018|83
32. Borrowings (continued)
SecMon Real Estate Srl entered (2011) into a loan agreement with Banca Comerciala Romana for a credit facility for financing part of the
acquisition of the Monaco Towers apartments. As at the end of the reporting period the balance of the loan was €924.562 and bears interest
of EURIBOR 3M plus 5%. In June 2016, Banca Comerciala Romana has assigned the loan, all rights and securities to Tonescu Finance Srl.
The loan, which is currently expired, is secured by all assets of SecMon Real Estate Srl, as well as its shares. During 2017 Tonescu Finance
commenced against SecMon Real Estate Srl legal proceedings and in order for SecMon Real Estate Srl to protect itself entered voluntarily
into an insolvency process in January 2018. The entering of SecMon Real Estate Srl in the insolvency process means loss of control as per
the definition of IFRS 10. As such Sec Mon Srl is not consolidated in the present financial statements (Note 8).
Ketiza Real Estate Srl entered (2012) into a loan agreement with Bancpost SA for a credit facility for financing the acquisition of the Blooming
House and 100% of the remaining (without VAT) construction works of Blooming House project. As at the end of the reporting period the
balance of the loan was €614.441. The loan bears interest of EURIBOR 3M plus 3,5% and matures in 2019. The bank loan is secured by all
assets of Ketiza Real Estate Srl, as well as its shares and is being repaid through sales proceeds. The Company has requested extension of
the loan and waiver in relation to the Arcona transaction in order the SPV with its loan to be transferred effectively. An approval for all
pending requests is expected in the following period.
SecRom Real Estate Srl entered (2009) into a loan agreement with Alpha Bank Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. During 2018, SecRom Real Estate Srl was merged with N-E Real Estate Park First
Phase Srl as a result the loan was transferred to N-E Real Estate Park First Phase Srl. As at the end of the reporting period, the balance of
the loan was €191.723, bears interest of EURIBOR 1M+4.25% and is repayable on the basis of investment property sales. The loan is
secured by all assets of SecRom Real Estate Srl, currently held by N-E Real Estate Park First Phase Srl, as well as its shares and is being
repaid through sales proceeds with a maturity 2021.
Moselin Investments Srl entered (2010) into a construction loan agreement with Bancpost SA covering the construction works of Parcel K
GreenLake project. As at the end of the reporting period the balance of the loan was €3.249.926 and bears interest of EURIBOR 3M plus
2,5%. Following restructuring implemented during 2017 the loan maturity was extended to 2022. The loan is secured with the property
itself and the shares of Moselin Investments Srl and is being repaid through sales proceeds.
Boyana Residence ood entered (2011) into a loan agreement with Alpha Bank Bulgaria for a construction loan related to the construction
of the Boyana Residence project (finished in 2014). As at the end of the reporting period the balance of the loan was €2.258.128 and bears
interest of EURIBOR 3M plus 5,75%. The loan maturity was extended following negotiation with the bank to March 2019. The loan currently
is being repaid through sales proceeds. The facility is secured through a mortgage over the property and a pledge over the company‘s
shares, as well as those of Sertland Properties Limited. The Company has provided corporate guarantees for this loan. The Company has
requested extension of the loan and waiver in relation to the Arcona transaction in order the SPV with its loan to be transferred effectively.
An approval for all pending requests is expected in the following period.
Sertland Properties Limited entered (2008) into a loan agreement with Alpha Bank Bulgaria for an acquisition loan related to the acquisition
of 70% of Boyana Residence ood. As at the end of the reporting period the balance of the loan was €666.474 and bears interest of EURIBOR
3M plus 5,75%. The loan maturity was extended following negotiation with the bank to March 2019. The loan currently is being repaid
through sales proceeds of Boyana Residence apartments. The loan is secured with a pledge on company's shares, and a corporate guarantee
by SEC South East Continent Unique Real Estate (Secured) Investments Limited. The Company has requested extension of the loan and
waiver in relation to the Arcona transaction in order the loan to be transferred effectively. An approval for all pending requests is expected
in the following period.
Victini Logistics Park S.A. entered (April 2015) into a loan agreement with EUROBANK SA to refinance the existing debt facility related to
Victini Logistics. As at the end of the reporting period the balance of the loan is €10.658.950 and bears interest of EURIBOR 6M plus
3,2%+30% of an asset swap which if negative total spread is accounted for 4,9%. The loan is repayable by 2022, has a balloon payment
of €8.660.000 and is secured by all assets of Victini Logistics Park S.A., as well as its shares.
SEC South East Continent Unique Real Estate (Secured) Investments Limited has a debt facility with Piraeus Bank for the acquisition of the
GreenLake land in Bucharest Romania. As at the end of the reporting period the balance of the loan was €2.525.938 plus accrued interest
€471.112 and bears interest of EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution. The loan matured in September 2023
During 2018, BlueBigBox 3 Srl (Praktiker Craiova) sold its property and repaid its loan to Marfin Bank Romania.
N-E Real Estate Park First Phase Srl entered in 2016 into a loan agreement with Alpha Bank Romania for a credit facility of €1.000.000 for
working capital purposes. As at the end of the reporting period, the balance of the loan was €485.663, bears interest of EURIBOR 1M+4,5%
and is repayable from the free cash flow resulting from the rental income of company’s property. The loan matures in April 2024 and is
secured by a second rank mortgage over assets of SecRom Real Estate Srl, which has been absorbed by First Phase, as well as its shares.
SPDI Real Estate Srl (Kindergarten) has a loan agreement with Bancpost SA Romania. As at the end of the reporting period the balance of
the loan was €773.206 and bears interest of Euribor 3m plus 4,6% per annum. The loan is repayable by 2027.
Loans from other 3rd parties and related parties includes borrowings from non-controlling interests. During the last eight years and in order
to support the GreenLake project the non-controlling shareholders of Moselin Investments Srl, Rimasol Enterprises Limited and SPDI Real
Estate (other than the Group) have contributed their share of capital injections by means of shareholder loans. The loans bear interest
between 5% and 7% annually.
Loans from other 3rd parties and related parties includes also loans from related parties provided as bridge financing for future property
acquisitions (Note 41.5).
CONSOLIDATED FINANCIAL STATEMENTS 2018|84
32. Borrowings (continued)
Α) Loans from Directors reflects loans provided from 3 Directors as bridge financing for future property acquisitions. The loans bear interest
8% annually and are repayable on 31 March 2019. The Directors have accepted the extension of the loans until year end and relevant
documentation process is currently in place.
Β) PM Capital Inc., one of the Company’s largest shareholders lent the Company in January 2018 €1m to be used for general working capital
purposes and for staged payments towards the acquisition of up to a 50% interest in a portfolio of fully let logistics properties in Romania,
the Olympians Portfolio. The Loan had interest initially at a rate of 8,5% until the end of Q1 2018, when increased to 11% until its full
repayment on 8 October 2018.
33. Bonds
The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio,
(Notes 27 and 29.4) issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a warrant.
The convertible loan element of the instrument which was in the value of €1.033.842 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.
Payables to third parties
Payables to related parties (Note 41.2)
Deferred income from tenants
Accruals
Payables due for construction
Pre-sale advances
Total
Current portion
Non-current portion
Total
31 Dec 2018
Continued
operations
€
3.213.848
743.139
-
94.905
-
123.044
4.174.936
31 Dec 2018
Discontinued
operations
€
924.137
-
8.316
150.324
417.826
-
1.500.603
31 Dec 2018
Continued
operations
€
4.174.936
-
4.174.936
31 Dec 2018
Discontinued
operations
€
1.074.460
426.143
1.500.603
31 Dec 2017
€
3.640.233
2.673.808
39.431
459.690
408.436
116.501
7.338.099
31 Dec 2017
€
6.920.308
417.791
7.338.099
Payables to third parties represents: a) payables due to Bluehouse Capital as a result the Redeemable Convertible Class B share redemption
(Note 29.6) which is under legal proceedings for a final settlement (Note 42.4) and b) amounts payable to various service providers including
auditors, legal advisors, consultants and third party accountants related to the current operations of the Group.
Payables to related parties represent amounts due to directors and accrued management remuneration, as well as the balances with Secure
Management Ltd and Grafton Properties (Note 41.2). Furthermore as of 31 December 2017 an amount of €1.916.392 represents advances
received by the investors who participated in the warrant instrument issued by the Company in 2017 and for which shares were issued
during January 2018.
Deferred income from tenants represents advances from tenants which will be used as future rental income and utilities charges.
Accruals mainly include the accrued, administration fees, accounting fees, facility management and other fees payable to third parties.
Payables for construction represent amounts payable to the contractor of Bela Logistic Park in Odessa. The settlement was reached in late
2011 on the basis of maintaining the construction contract in an inactive state (to be reactivated at the option of the Group), while upon
reactivation of the contract or termination of it (because of the sale of the asset) the Group would have to pay an additional UAH 5.400.000
(~USD 160.000) payable upon such event occurring. Since it is uncertain when the latter amount is to be paid, it has been discounted at
the current discount rates in Ukraine and is presented as a non-current liability. Payables for construction also include an amount of
~€245.000 payable to Boyana’s constructor which has been withheld as Good Performance Guarantee.
Pre-sale advances reflect the advance received in relation to Kiyanovskiy Residence pre-sale agreement which upon non closing of the said
sale part of which will be returned to the prospective buyer.
CONSOLIDATED FINANCIAL STATEMENTS 2018|85
35. Deposits from Tenants
Deposits from tenants non-current
Total
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
-
-
219.274
219.274
31 Dec 2017
€
187.976
187.976
Deposits from tenants appearing under non-current liabilities include the amounts received from the tenants of Innovations Logistics Park,
EOS Business Park, Victini Logistics and companies representing residential segment as advances/guarantees and are to be reimbursed to
these clients at the expiration of the lease agreements.
36. Provisions and Taxes Payables
Corporate income tax – non current
Defence tax – non current
Other taxes including VAT payable – non current
Tax provision – non current
Corporate income tax - current
Other taxes including VAT payable - current
Provisions – current
Total Provisions and Taxes Payables
31 Dec 2018
Continued
operations
€
333.881
28.129
-
399.450
620.557
31.767
43
1.413.827
31 Dec 2018
Discontinued
operations
€
-
15
-
-
67.296
365.217
66.002
498.530
31 Dec 2017
€
489.019
24.373
88.808
399.450
195.040
418.819
51.047
1.666.556
Corporate income tax represents taxes payable in Cyprus and Romania.
Other taxes represent local property taxes and VAT payable in Ukraine, Romania, Greece, Bulgaria and Cyprus.
Non_current amounts represent the part of the settlement plan agreed with the Cyprus tax authorities to be paid within the next five years.
37. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist of the non-current portion of €10.076.579 and the current portion of €393.433
(31 December 2017: €10.435.241 and €391.002, accordingly).
Discontinued operations
31 Dec 2018
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities
31 Dec 2017
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities
37.1 Land Plots Financial Leasing
Not
e
44.2
&
44.6
Note
44.2
&
44.6
Minimum lease
payments
€
886.771
3.666.346
8.861.576
13.414.693
Minimum lease
payments
€
899.834
3.583.886
9.747.325
14.231.045
Interest
Principal
€
494.098
1.768.504
686.781
2.949.383
€
392.673
1.897.842
8.174.795
10.465.310
4.702
10.470.012
Interest
Principal
€
508.853
1.832.599
1.064.231
3.405.683
€
390.981
1.751.287
8.683.094
10.825.362
881
10.826.243
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 €60.498 under current and non-current portion. The Group's obligations
under finance leases are secured by the lessor's title to the leased assets.
CONSOLIDATED FINANCIAL STATEMENTS 2018|86
37. Finance Lease Liabilities (continued)
37.2 Sale and Lease Back Agreements
A.
Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations Logistics Park in Bucharest, owned by Best Day Real Estate Srl, through a
sale and lease back agreement with Piraeus Leasing Romania SA. As at the end of the reporting period the balance is €7.007.476, bearing
interest rate at 3M Euribor plus 4,45% margin, being repayable in monthly tranches until 2026 with a balloon payment of €5.244.926. At
the maturity of the lease agreement Best Day Real Estate Srl will become owner of the asset.
Under the current finance lease agreement the collaterals for the facility are as follows:
1. Best Day Real Estate Srl pledged its future receivables from its tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved accounts opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash collateral in the amount of €250.000 in Piraeus Leasing Romania, which had
been deposited as follows, half in May 2014 and half in May 2015.
SPDI provided a corporate guarantee in favor of the bank towards the liabilities of Best Day Real Estate Srl arising from the sale
and lease back agreement.
In late February 2017 the Group finally agreed and signed (following twelve months of discussions) an amended sale and lease back
agreement with Piraeus Leasing Romania for Innovations Logistics Park in Bucharest, governing the allocation of the Nestle Romania, early
termination fee of ~€1,6 million payable to SPDI.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS Business Park in Bucharest, owned by N-E Real Estate Park First Phase Srl,
through a sale and lease back agreement with Alpha Bank Romania SA. As at the end of the reporting period the balance is €3.402.040
bearing interest rate at 3M Euribor plus 5,25% margin, being repayable in monthly tranches until 2024 with a balloon payment of
€2.546.600. At the maturity of the lease agreement by N-E Real Estate Park First Phase Srl will become owner of the asset.
Under the current finance lease agreement the collaterals for the facility are as follows:
1. N-E Real Estate Park First Phase Srl pledged its future receivables from its tenants.
2. N-E Real Estate Park First Phase Srl pledged Bank Guarantee receivables from its tenants.
3. N-E Real Estate Park First Phase Srl pledged its shares.
4. N-E Real Estate Park First Phase Srl pledged all current and reserved accounts opened in Alpha Bank Romania SA.
5. N-E Real Estate Park First Phase Srl is obliged to provide cash collateral in the amount of €300.000 in Alpha Bank Romania SA, in
equal annual installments starting with the 5th year of the agreement.
6. SPDI provided a corporate guarantee in favor of the bank towards the liabilities of N-E Real Estate Park First Phase Srl arising
from the sales and lease back agreement.
38. Restructuring of the business
During 2016 the non-controlling shareholders of the companies related to GreenLake project (Moselin Investments Srl, Iuliu Maniu Limited,
RAM Real Estate Management Limited, Rimasol Enterprises Limited, Rimasol Real Estate Srl, Ashor Ventures Limited, Ashor Development
Srl, Ebenem Limited, Ebenem Investments Srl, Jenby Ventures Limited and Jenby Investments Srl) in agreement with the Group capitalized
the bigger part of their capital injections by means of shareholder loans and payables effected from 2008 onwards. An amount of €6.641.997
from such loans and payables have been transferred to the equity section while the process of capitalization was partially finalised in 2017
with the remaining finalised within 2018.
39. Earnings and net assets per share attributable to equity holders of the parent
a. Weighted average number of ordinary shares
Issued ordinary shares capital
Weighted average number of ordinary shares (Basic)
Diluted weighted average number of ordinary shares
b. Basic diluted and adjusted earnings per share
Earnings per share
Loss after tax attributable to owners of the parent
Basic
Diluted
31 Dec 2018
127.270.481
125.644.043
125.644.043
31 Dec 2017
103.589.550
96.991.423
103.326.122
31 Dec 2018
€
(3.752.481)
(0,03)
(0,03)
31 Dec 2017
€
(38.532.276)
(0,40)
(0,37)
CONSOLIDATED FINANCIAL STATEMENTS 2018|87
39. Earnings and net assets per share attributable to equity holders of the parent (continued)
c. Net assets per share
Net assets per share
Net assets attributable to equity holders of the parent
Number of ordinary shares
Diluted number of ordinary shares
Basic
Diluted
40. Segment information
31 Dec 2018
€
31 Dec 2017
€
35.608.276
127.270.481
125.644.043
0,28
0,28
36.350.558
103.589.550
103.589.550
0,35
0,35
All commercial and financial information related to the properties held directly or indirectly by the Group is being provided to members of
executive management who report to the Board of Directors. Such information relates to rentals, valuations, income, costs and capital
expenditures. The individual properties are aggregated into segments based on the economic nature of the property. For the reporting
period the Group has identified the following material reportable segments:
Commercial-Industrial
Warehouse segment – Victini Logistics, Innovations Logistics Park, Terminal Brovary Logistics Park
Office segment - Eos Business Park – Delea Nuova (Associate)
Retail segment - Craiova Praktiker and Kindergarten of GreenLake
Residential
Residential segment
Land Assets
Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent investment property (including investment properties under development
and prepayments made for the investment properties). Segment liabilities represent interest bearing borrowings, finance lease liabilities
and deposits from tenants.
Continued Operations
Profit and Loss for the year 2018
Segment profit
Property Sales income (Note 14)
Cost of Property sold (Note 14)
Rental income (Note10)
Service charges and utilities
income (Note 10)
Service and Property
Management income (Note 10)
Asset operating expenses
(Note 11)
Profit from discontinued
operation (Note 9)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income, net
(Note 16)
Finance income (Note 17)
Interest expenses (Note 17)
Other finance costs (Note 17)
Foreign exchange losses, net
(Note 18a)
Income tax expense (Note 19)
Profit from discontinued
operations (Note 9)
Exchange difference on I/C loan
to foreign holdings (Note 18b)
Exchange difference on
translation foreign holdings
(Note 30)
Total Comprehensive
Income
Warehouse
€
Office
€
Retail
€
Residential
€
Land Plots
€
Corporate
€
Total
€
-
-
-
-
-
-
-
-
-
-
-
6.517.181
(7.362.362)
494.347
-
-
-
(116.770)
-
-
-
-
-
-
-
-
-
-
-
-
-
137.289*
9.534*
6.517.181
(7.362.362)
631.636
9.534
128.293
128.293
(1.549)
-
(118.319)
934.156
1.377.516
68.206
(317.594)
(1.501.833)
-
560.451
934.156
1.377.516
(399.398)
(317.594)
(1.503.382)
275.116
366.414
(1.768.847)
(31.716)
686.183
(329.412)
(24.329)
(71.390)
(613.034)
(1.966.350)
1.850
421.086
(3.329.545)
CONSOLIDATED FINANCIAL STATEMENTS 2018|88
40. Segment information (continued)
* It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park (Romania) is currently invoiced
by the Company as part of a relevant lease agreement with the Innovations SPV and the lender, however the asset, through the SPV, is
planned to be transferred as part of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer, the Company
will negotiate with the lender its release from the aforementioned lease agreement, and if succeeds, upon completion such income will be
also transferred.
Continued Operations
Profit and Loss for the year 2017
Segment profit
Rental income (Note 10)
Service charges and utilities
income (Note 10)
Service and Property
Management income (Note 10)
Valuation gains/(losses) from
investment property (Note 13)
Gain on disposal of subsidiary
(Note 21b)
Asset operating expenses
(Note 11)
Impairment of inventory and
provisions (Note 15)
Profit from discontinued
operation (Note 9)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income, net
(Note 16)
Finance income (Note 17)
Interest expenses (Note 17)
Other finance costs (Note 17)
Profit from discontinued
operations (Note 9)
Foreign exchange losses, net
(Note 18a)
Forex transfer on disposal of
foreign operation (Note 18b)
Income tax expense (Note 19)
Exchange difference on I/C loan
to foreign holdings (Note 18b)
Exchange difference on
translation foreign holdings
(Note 30)
Total Comprehensive
Income
Warehouse
€
Office
€
Retail
€
Residential
€
Land Plots
€
Corporate
Total
€
386.245
30.206
928.697
-
(221.990)
(34.581)
-
-
-
-
-
-
-
-
600.503
-
-
194.720
-
(84.768)
-
-
-
-
-
986.748
30.206
223.080
11.771
1.163.548
-
-
-
-
(13.618)
1.705.727
(3.912)
150.000
181.102
1.483.737
(123.261)
150.000
(16.008)
1.072.569
1.497.628
1.497.628
591.381
1.301.836
(322.927)
(99.847)
586.044
2.424.241
-
11.771
2.336.118
6.208.198
(1.994.481)
(378.076)
3.563
(306.549)
(82.942)
(3.409.768)
(695.043)
(37.352.923)
(524.255)
37.349.385
(615.583)
(1.798.474)
CONSOLIDATED FINANCIAL STATEMENTS 2018|89
40. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2018
Warehouse
€
Office
€
Retail
€
Residential Land Plots Corporate
€
€
€
Total
€
Segment profit
Property Sales income (Note 14)
Cost of Property sold (Note 14)
Rental income (Note 10)
Service charges and utilities
income (Note 10)
Sale of electricity (Note 10)
Service and Property
Management income (Note 10)
Valuation gains/(losses) from
investment property (Note 13)
Share of profits/(losses) from
associates
(Note 22)
Asset operating expenses
(Note 11)
Other (expenses)/income, net
(Note 16)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income, net
(Note 16)
Finance income (Note 17)
Interest expenses (Note 17)
Other finance costs (Note 17)
Foreign exchange losses, net
(Note 18a)
Income Tax (Note 19)
Loss for the year
-
-
1.214.772
-
-
598.123
271.437
(350.000)
115.625
1.227.954
(1.265.023)
34.507
194.952
(141.098)
697
36.365
294.773
78.015
-
-
-
-
-
-
3.352
-
2.167
479
-
-
-
-
-
-
-
-
1.694.343
(1.756.121)
1.963.724
118.211
294.773
2.167
(289.633)
422.971
44.642
1.361
(1.397.638)
-
(1.218.297)
-
364.920
-
-
-
-
364.920
(322.122)
(86.513)
(13.498)
(24.711)
(159.225)
-
(606.069)
-
-
934.155 1.377.516
-
68.206
(297.200)
(317.593) (1.501.833)
-
(297.200)
560.451
(260.714)
(66.235)
9.979
(1.507.178)
(35.402)
(10.233)
(96.567)
(1.405.899)
CONSOLIDATED FINANCIAL STATEMENTS 2018|90
40. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2017
Warehouse
€
Office
€
Retail
€
Residential Land Plots Corporate
€
€
€
-
-
1.227.266
-
-
581.567
-
-
76.676
535.818
(575.323)
99.550
36.092
321.365
75.550
-
-
900
-
-
-
24.294
-
2.206
-
-
-
-
-
-
(1.234.463)
524.922
491.571
(368.642)
732.471
-
-
23.921
-
390.217
-
-
-
-
-
(75.528)
(366.268)
(16.008) 1.497.628
(788)
591.380
(40.831)
(322.928)
(146.427)
586.044
-
-
-
-
-
-
-
-
-
-
-
Segment profit
Property Sales income (Note 14)
Cost of Property sold (Note 14)
Rental income (Note 10)
Service charges and utilities
income (Note 10)
Sale of electricity (Note 10)
Service and Property
Management income (Note 10)
Valuation gains/(losses) from
investment property (Note 13)
Gain/(loss) realized on
acquisition of assets/subsidiary
(Note 21a)
Share of profits/(losses) from
associates
(Note 22)
Asset operating expenses
(Note 11)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income, net
(Note 16)
Finance income (Note 17)
Interest expenses (Note 17)
Other finance costs (Note 17)
Foreign exchange losses, net
(Note 18a)
Income tax expense (Note 19)
Loss for the year
Total
€
535.819
(575.324)
1.985.059
135.936
321.365
3.106
145.859
23.921
390.217
(629.842)
2.336.116
(353.532)
2.668
9.813
(1.623.033)
(38.255)
(1.335.517)
(71.910)
(1.073.650)
Total Operations
Balance Sheet as at 31 December 2018
Warehouse
€
Office
€
Retail
€
Residential
€
Land plots
€
Corporate
€
Total
€
Assets
Long-term receivables and
prepayments
Assets held for sale
Segment assets
Tangible and intangible
assets
Prepayments and other
current assets
Cash and cash equivalents
Total assets
Liabilities associated with
assets classified as held
for disposal
Borrowings
Segment liabilities
Trade and other payables
Taxes payable and
provisions
Bonds
Total liabilities
-
26.070.000
-
13.229.506
26.070.000 13.229.506
-
1.406.000
1.406.000
-
5.767.003
-
30.816.594
5.767.003 30.816.594
850
2.389.635
850
79.678.738
2.390.485 79.679.588
17.882.585
-
17.882.585
4.079.598
-
4.079.598
967.338
-
967.338
618.113
41
618.154
9.747.126
459
9.747.585
3.674
5.585.408
282.713
85.551.383
1.999.133
401.790
35.293.893
402.290
2.400.923 35.696.183
4.174.936
1.413.827
1.122.470
42.407.416
CONSOLIDATED FINANCIAL STATEMENTS 2018|91
40. Segment information (continued)
Total Operations
Balance Sheet as at 31 December 2017
Warehouse
€
Office
€
Retail
€
Residential
€
Land plots Corporate
€
Total
€
Assets
Investment properties
Investment properties
under development
Long-term receivables and
prepayments
Investments in associates
Inventory
Segment assets
Tangible and intangible
assets
Prepayments and other
current assets
Cash and cash equivalents
Total assets
Borrowings
Finance lease liabilities
Deposits from tenants
Redeemable preference
shares
Segment liabilities
Trade and other payables
Taxes payable and
provisions
Bonds
Total liabilities
26.100.000
7.200.000
9.213.000
4.023.000
28.196.502
-
-
315.636
-
-
-
5.115.587
-
-
-
-
-
26.415.636 12.315.587 9.213.000
-
4.586.009
301
-
4.812.550
-
-
-
8.835.851 32.782.511
-
-
851
-
-
851
74.732.502
4.586.009
316.788
5.115.587
4.812.550
89.563.436
70.504
5.846.584
831.124
96.311.648
11.263.690
7.157.476
180.621
828.797
3.629.853
-
5.412.006
-
-
8.745.351
-
7.355
3.642.295
38.914
-
594.326
-
-
30.486.465
10.826.243
187.976
-
18.601.787
-
4.458.650
-
5.412.006
-
8.752.706
-
3.681.209
-
594.326
-
41.500.684
7.338.099
1.666.556
1.054.337
51.559.676
Discontinued operations
Assets and Liabilities held for sale 2018
Warehouse
€
Office
€
Retail
€
Residential
€
Land plots Corporate
€
€
Total
€
Assets
Investment properties
Investment properties
under development
Long-term receivables and
prepayments
Investments in associates
Financial asset at fair
value through OCI
Inventory
Segment assets
Tangible and intangible
assets
Prepayments and other
current assets
Cash and cash equivalents
Total assets
Borrowings
Finance lease liabilities
Deposits from tenants
Segment liabilities
Trade and other payables
Taxes payable and
provisions
Total liabilities
25.800.000
7.916.000
1.406.000
1.038.000
26.100.437
1.085.100
63.345.537
-
-
270.000
-
271
5.313.235
-
-
-
-
-
-
26.070.000 13.229.506 1.406.000
-
4.716.157
-
-
-
-
-
-
-
4.716.157
270.271
5.313.235
1
-
4.604.044
5.642.045 30.816.594 1.085.100
-
1
4.604.044
78.249.245
10.658.951
7.007.474
216.160
17.882.585
677.558
3.402.040
-
4.079.598
967.338
-
-
967.338
614.999
-
3.114
618.113
9.686.628
60.498
-
9.747.126
-
-
-
-
42.534
682.134
704.825
79.678.738
22.605.474
10.470.012
219.274
33.294.760
1.500.603
498.530
35.293.893
CONSOLIDATED FINANCIAL STATEMENTS 2018|92
40. Segment information (continued)
Geographical information
Income (Note 10)
Ukraine
Romania
Greece
Bulgaria
Cyprus *
Total
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
-
594.566
-
-
174.897
769.463
-
1.098.059
1.280.119
697
-
2.378.875
31 Dec 2017
€
148.799
1.939.048
1.319.891
10.509
1.207.723
4.625.970
* It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with the Innovations SPV and the lender, however the asset, through
the SPV, is planned to be transferred as part of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer,
the Company will negotiate with the lender its release from the aforementioned lease agreement, and if succeeds, upon completion such
income will be also transferred.
Loss from disposal of inventory (Note 14a)
Bulgaria
Total
Gain/(loss) from disposal of investment properties (Note 14b)
Romania
Total
Carrying amount of assets (investment properties, associates, inventory
and Financial asset at fair value through OCI)
Ukraine
Romania
Greece
Bulgaria
Total
41. Related Party Transactions
The following transactions were carried out with related parties:
41.1 Income/ Expense
41.1.1 Income
Interest Income on loan to related parties
Interest Income from loan to associates
Total
31 Dec 2018
Continued
operations
€
-
-
31 Dec 2018
Discontinued
operations
€
(13.553)
(13.553)
31 Dec 2017
€
(43.870)
(43.870)
31 Dec 2018
Continued
operations
€
(845.181)
(845.181)
31 Dec 2018
Discontinued
operations
€
(285.098)
(285.098)
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
31 Dec 2017
€
4.366
4.366
31 Dec 2017
€
-
-
-
-
-
10.829.694
42.917.588
15.200.000
8.834.044
77.781.326
10.589.511
53.514.587
16.100.000
9.042.550
89.246.648
31 Dec 2018
31 Dec 2018
31 Dec 2017
Continued
operations
€
4.600
325
4.925
Discontinued
operations
-
9.366
9.366
€
2.466
9.367
11.833
Interest income on loan to related parties relates to interest income from Delia Lebada Srl and interest income from associates relates to
interest income from GreenLake Development Srl.
CONSOLIDATED FINANCIAL STATEMENTS 2018|93
41. Related Party Transactions (continued)
41.1 Income/ Expense (continued)
41.1.2 Expenses
Management Remuneration (Note 12)
Interest expenses on Narrowpeak and Secure Management Limited loan (Note
17)
Total
31 Dec 2018
Continued
operations
€
391.359
637
391.996
31 Dec 2018
Discontinued
operations
€
-
-
-
31 Dec 2017
€
562.584
8.392
570.976
Management remuneration includes the remuneration of the CEO, the CFO, the Group Commercial Director, the Group Investment Director
(until his departure in April 2017) and that of the Country Managers of Ukraine and Romania pursuant to the decisions of the remuneration
committee.
41.2 Payables to related parties (Note 34)
Board of Directors & Committees remuneration
Grafton Properties
Secure Management Services Ltd
Management Remuneration
Advances for warrants and options exercise
Total
31 Dec 2018
Continued
operations
31 Dec 2018
Discontinued
operations
31 Dec 2017
€
80.776
123.549
19.319
519.495
-
743.139
€
€
231.461
123.549
13.341
387.464
1.917.993
2.673.808
-
-
-
-
41.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to Non-Executive Directors until the end of the reporting period. The members of
the Board of Directors pursuant to a recommendation by the remuneration committee and in order to facilitate the Company’s cash flow,
will receive part of their payment in shares of the Company. During 2018 the directors received 344.371 ordinary shares in lieu of their
2016 H1 remuneration amounting to GBP 120.530.
41.2.2 Loan payable to Grafton Properties
During the Company restructuring in 2011 and under the Settlement Agreement of July 2011, the Company undertook the obligation to
repay to certain lenders who had contributed funds for the operating needs of the Company between 2009-2011, by lending to AISI Realty
Capital LLC as was the SC Secure Capital Limited name then, the total amount of USD 450.000. As at the reporting date the liability towards
Grafton Properties, representing the Lenders, was USD 150.000, which is contingent on the Group raising USD 50m of capital in the markets.
41.2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to the CEO of the Company.
41.2.4 Advances for warrants and options exercise
During 2017 (Note 29.4) the Company issued a warrant instrument and received by investors the amount of €1.916.392 for which it issued
17.066.560 ordinary shares during 2018. The Company issued also 10.000 shares to an ex-employee for exercise of his option for the
amount of €1.601.
41.3 Loans from SC Secure Capital Limited to the Group’s subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group provided capital in the form of loans to the Ukrainian subsidiaries of the
Company so as to support the acquisition of assets, development expenses of the projects, as well as various operational costs. The following
table presents the amounts of such loans which are eliminated for consolidation purposes, but their related exchange difference affects the
equity of the Consolidated Statement of Financial Position.
Borrower
LLC “Aisi Ukraine”
LLC “Almaz-Press-Ukraine”
LLC “Aisi Ilvo”
Total
Limit –as at
31 Dec 2018
€
23.062.351
8.236.554
150.537
31.449.442
Principal as
at
31 Dec 2018
€
Principal as
at
31 Dec 2017
€
21.711
189.938
78.890
290.539
12.488
58.656
66.897
138.041
A potential Ukrainian Hryvnia weakening/strengthening by 10% against the US dollar with all other variables held constant, would result in
an exchange difference on I/C loans to foreign holdings of (€23.950)/ €13.804 respectively, estimated on balances held at 31 December
2018.
CONSOLIDATED FINANCIAL STATEMENTS 2018|94
41. Related Party Transactions (continued)
41.4 Loans to associates (Note 27)
Loans to GreenLake Development Srl
Total
31 Dec 2018
31 Dec 2018
31 Dec 2017
Continued
operations
€
Discontinued
operations
€
8.374
8.374
282.842
282.842
€
273.476
273.476
The loan was given to GreenLake Development Srl from Edetrio Holdings Limited. The agreement with Edetrio Holdings Limited was signed
on 17 February 2012 and bears interest 5%. The maturity date is 30 April 2020.
41.5 Loans from related parties (Note 32)
Loan from Narrowpeak Consultants
Loan from Directors
Interest accrued on loans from related parties
Total
31 Dec 2018
Continued
operations
€
5.256
375.000
14.107
394.363
31 Dec 2018 31 Dec 2017
Discontinued
operations
€
-
-
-
-
€
55.032
500.000
27.298
582.330
Loans from Directors reflects loans provided from 3 Directors as bridge financing for future property acquisitions. The loans bear interest
8% annually and are repayable on 31 March 2019. The Directors have accepted the extension of the loans until year end and relevant
documentation process is currently in place.
42. Contingent Liabilities
42.1 Tax Litigation
The Group performed during the reporting period part of its operations in the Ukraine, within the jurisdiction of the Ukrainian tax authorities.
The Ukrainian tax system can be characterized by numerous taxes and frequently changing legislation, which may be applied retroactively,
open to wide and in some cases, conflicting interpretation. Instances of inconsistent opinions between local, regional, and national tax
authorities and between the National Bank of Ukraine and the Ministry of Finance are not unusual. Tax declarations are subject to review
and investigation by a number of authorities, which are authorised by law to impose severe fines and penalties and interest charges. Any
tax year remains open for review by the tax authorities during the three following subsequent calendar years; however, under certain
circumstances a tax year may remain open for longer. Overall following the sale of Terminal Brovary the exposure of the Group in Ukraine
was significantly reduced.
The Group performed during the reporting period part of its operations also in Romania, Greece and Bulgaria. In respect of Romanian,
Bulgarian and Greek taxation systems all are subject to varying interpretation and to constant changes, which may be retroactive. In certain
circumstances the tax authorities can be arbitrary in certain cases.
These facts create tax risks which are substantially more significant than those typically found in countries with more developed tax systems.
Management believes that it has adequately provided for tax liabilities, based on its interpretation of tax legislation, official pronouncements
and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial
statements, if the authorities were successful in enforcing their interpretations, could be significant.
42.2 Construction related litigation
There are no material claims from contractors due to the postponement of projects or delayed delivery other than those disclosed in the
financial statements.
42.3 Delia Lebada Srl debt towards Bank of Cyprus
Sec South East Continent Unique Real Estate (SECURED) Investment Limited has provided in 2007 a corporate guarantee to Bank of Cyprus
in respect to the loan provided by the latter to its subsidiary Delia Lebada Srl, the owner of the Pantelimon Lake plot (Note 20.2). As the
loan was in default, the bank had initiated an insolvency procedure. In July 2017 the Company concluded its discussions with the bank and
settled all debts and guarantees following successful disposal of Delia Lebada plot (Note 21b). Provision was taken by management in 2015
for €700.000 while finally the Company as part of the sale of the asset and cancellation of the corporate guarantee paid €550.000 in final
settlement and as such the difference of €150.000 was reversed in 2017 (Note 15).
CONSOLIDATED FINANCIAL STATEMENTS 2018|95
42. Contingent Liabilities (continued)
42.4 Bluehouse accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. filed in Cypriot courts in December 2018 lawsuit against the Company for the
total amount of €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. The redemption of such shares was requested in 2016, and in
lieu of such redemption the Company transferred to the vendor the 20% holding in Autounion asset which was used as a guarantee to the
transaction for the effective redemption of the Redeemable Preference Class A shares. At the same time the Company has posted in its
accounts a relevant payable provision for BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. in the amount of €2.521.211 (Note
34). Management believes the Company has good grounds of defence and the amount already provided is adequate to cover an eventual
final settlement.
42.5 Other Litigation
The Group has a number of other minor legal cases pending. Management does not believe that the result of these will have a substantial
overall effect on the Group’s financial position. Consequently no such provision is included in the current financial statements.
42.6 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December 2018.
43. Commitments
The Group had no other commitments as at 31 December 2018.
44. Financial Risk Management
44.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will be able to implement its stated growth strategy in order to maximize the
return to stakeholders through the optimization of the debt-equity structure and value enhancing actions in respect of its portfolio of
investments. The capital structure of the Group consists of borrowings (Note 32), bonds (Note 33), trade and other payables (Note 34)
deposits from tenants (Note 35), financial leases (Note 37), taxes payable (Note 36) and equity attributable to ordinary or preferred
shareholders.
Management reviews the capital structure on an on-going basis. As part of the review Management considers the differential capital costs
in the debt and equity markets, the timing at which each investment project requires funding and the operating requirements so as to
proactively provide for capital either in the form of equity (issuance of shares to the Group’s shareholders) or in the form of debt.
Management balances the capital structure of the Group with a view of maximizing the shareholder’s Return on Equity (ROE) while adhering
to the operational requirements of the property assets and exercising prudent judgment as to the extent of gearing.
44.2 Categories of Financial Instruments
Financial Assets
Cash at Bank
Long-term Receivables and prepayments
Prepayments and other receivables
Financial Asset at fair value through OCI
Total
Financial Liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liabilities
Taxes payable and provisions
Bonds
Total
Note
31 Dec 2018
31 Dec 2018
31 Dec 2017
Continued
operations
€
Discontinued
operations
€
282.713
850
5.585.408
-
704.825
270.271
682.134
1
€
831.124
316.788
5.846.584
-
5.868.971
1.657.231
6.994.496
402.290
22.605.474
30.486.465
4.174.936
1.500.603
7.338.099
-
-
219.274
187.976
10.470.012
10.826.243
1.413.827
1.122.470
498.530
-
1.666.556
1.054.337
7.113.523
35.293.893
51.559.676
28
25
27
23
32
34
35
37
36
33
CONSOLIDATED FINANCIAL STATEMENTS 2018|96
44. Financial Risk Management (continued)
44.3 Financial Risk Management Objectives
The Group’s Treasury function provides services to its various corporate entities, coordinates access to local and international financial
markets, monitors and manages the financial risks relating to the operations of the Group, mainly the investing and development functions.
Its primary goal is to secure the Group’s liquidity and to minimize the effect of the financial asset price variability on the cash flow of the
Group. These risks cover market risks including foreign exchange risks and interest rate risk, as well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using derivative instruments whenever appropriate. The use of financial derivatives is
governed by the Group’s approved policies which indicate that the use of derivatives is for hedging purposes only. The Group does not
enter into speculative derivative trading positions. The same policies provide for the investment of excess liquidity. As at the end of the
reporting period, the Group had not entered into any derivative contracts.
44.4 Economic Market Risk Management
The Group operates in Romania, Bulgaria, Greece and Ukraine. The Group’s activities expose it primarily to financial risks of changes in
currency exchange rates and interest rates. The exposures and the management of the associated risks are described below. There has
been no change in the way the Group measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized financial assets and liabilities are denominated in a currency that is not
the Group's functional currency. Most of the Group’s financial assets are denominated in the functional currency. Management is monitoring
the net exposures and adopts policies to encounter them so that the net effect of devaluation is minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no
significant interest-bearing assets. On December 31st, 2018, cash and cash equivalent (including continued and discontinued operations)
financial assets amounted to €987.537 (2017: €831.124) of which approx. €1.569 in UAH and €496.891 in RON (Note 28) while the
remaining are mainly denominated in either USD or €.
The Group is exposed to interest rate risk in relation to its borrowings (including continued and discontinued operations) amounting to
€23.007.764 (31 December 2017: €30.486.465) as they are issued at variable rates tied to the Libor or Euribor. Management monitors the
interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group’s strategy with the interest rate view and
the defined risk appetite. Although no hedging has been applied for the reporting period, such may take place in the future if deemed
necessary in order to protect the cash flow of a property asset through different interest rate cycles.
Management monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group’s strategy with
the interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may take place in
the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.
As at 31 December 2018 the weighted average interest rate for all the interest bearing borrowing and financial leases of the Group stands
at 3,83% (31 December 2017: 4,67%).
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding as at
31 December 2018 is presented below:
Weighted average interest rate
Influence on yearly finance costs
Actual
as at 31.12.2018
3,83%
+100 bps
+200 bps
4,83%
(324.007)
5,83%
(648.014)
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding as at
31 December 2017 is presented below:
Weighted average interest rate
Influence on yearly finance costs
Actual
as at 31.12.2017
4,67%
+100 bps
+200 bps
5,67%
(403.580)
6,67%
(807.159)
The Group’s exposures to financial risk are discussed also in Note 7.
44.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit risk emanating from the liquid funds is limited because the Group’s
counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Credit risk of receivables is reduced
as the majority of the receivables represent VAT to be offset through VAT income in the future. In respect of receivables from tenants these
are kept to a minimum of 2 months and are monitored closely.
CONSOLIDATED FINANCIAL STATEMENTS 2018|97
44. Financial Risk Management (continued)
44.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which applies a framework for the Group’s short,
medium and long term funding and liquidity management requirements. The Treasury function of the Group manages liquidity risk by
preparing and monitoring forecasted cash flow plans and budgets while maintaining adequate reserves. The following table details the
Group’s contractual maturity of its financial liabilities. The tables below have been drawn up based on the undiscounted contractual
maturities including interest that will be accrued.
Continued Operations
31 December 2018
Carrying
amount
€
Total
Contractual
Cash Flows
€
€
Financial assets
Cash at Bank
Prepayments and other receivables
Long-term Receivables and
prepayments
Total Financial assets
282.713
5.585.408
282.713
5.585.408
282.713
5.585.408
850
5.868.971
850
5.868.971
-
5.868.121
Less than
one year
From one to
two years
More than two
years
€
-
-
-
-
€
-
-
850
850
Financial liabilities
Borrowings
Trade and other payables
Bonds issued
Taxes payable and provisions
Total Financial liabilities
Total net liabilities
Discontinued Operations
31 December 2018
Financial assets
Cash at Bank
Prepayments and other receivables
Financial asset at fair value through
OCI
Long-term Receivables and
prepayments
Total Financial assets
Financial liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liabilities
Taxes payable and provisions
Total Financial liabilities
Total net liabilities
420.290
4.174.936
1.122.470
1.413.827
7.131.523
1.262.552
439.631
4.174.936
1.592.868
1.413.827
7.621.262
1.752.291
33.991
4.174.936
155.828
652.367
5.017.122
(850.999)
405.640
-
67.200
761.460
1.234.300
1.234.300
1.369.840
-
1.369.840
1.368.990
Less than
one year
From one to
two years
More than two
years
Carrying
amount
€
Total
Contractual
Cash Flows
€
704.825
682.134
704.825
682.134
€
704.825
682.134
1
1
1
270.271
1.657.231
270.271
1.657.231
-
1.386.960
€
-
-
-
-
-
€
-
-
-
270.271
270.271
22.605.474
1.500.603
219.274
10.470.012
498.530
35.293.893
33.636.662
22.387.725
1.500.603
219.274
13.414.693
498.530
38.020.825
36.363.594
4.817.752
1.074.460
-
886.771
452.665
7.231.648
5.844.688
2.784.025
-
-
856.269
45.865
3.686.159
3.686.159
14.785.948
426.143
219.274
11.671.653
-
27.103.018
26.832.747
CONSOLIDATED FINANCIAL STATEMENTS 2018|98
44. Financial Risk Management (continued)
44.6 Liquidity Risk Management
31 December 2017
Carrying
amount
€
Total
Contractual
Cash Flows
€
Financial assets
Cash at Bank
Prepayments and other receivables
Long-term Receivables and
prepayments
Total Financial assets
Financial liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liabilities
Bonds issued
Taxes payable and provisions
Total Financial liabilities
Total net liabilities
Less than
one year
From one to
two years
More than two
years
€
€
-
-
-
-
€
-
-
316.788
316.788
831.124
5.846.584
831.124
5.846.584
831.124
5.846.584
316.788
6.994.496
316.788
6.994.496
-
6.677.708
30.486.465
7.338.099
187.976
10.826.243
1.054.337
1.666.556
51.559.676
44.565.180
30.486.465
7.338.099
187.976
14.231.045
1.054.337
1.666.556
54.964.478
47.969.982
5.162.087
6.920.308
-
899.834
20.495
664.906
13.667.630
6.989.922
4.072.514
-
-
880.913
-
1.001.650
5.955.077
5.955.077
21.251.864
417.791
187.976
12.450.298
1.033.842
-
35.341.771
35.024.983
45. Events after the end of the reporting period
a) Arcona Property Fund N.V. transaction
Following the conditional Implementation Agreement signed between the Company and Arcona Property Fund N.V. in December 2018, for
the sale of Company’s non-Greek portfolio of assets in an all share transaction, the two parties have been engaged in extensive discussions
for formulating the transaction which has been decided to be consummated in three steps.
During H1 2019, the parties conducted mutual due diligence, engaged in extensive discussions with the lending institutions from which
relevant waivers and approvals have been requested, and performed third party property valuations. Currently the parties negotiate terms
for the Framework Agreement, which will superintend the total process, and the transaction terms of the first step of the transaction which
includes assets in Ukraine and Bulgaria. The first step of the transaction is expected to close within July 2019 and the overall transaction to
be finalized within the current year.
b) Loans from shareholders
During Q1 2019 the Company received two short terms loans from two of its shareholders, with the purpose of financing working capital
needs and expenses related to the transaction with Arcona Property Fund N.V. In particular the Company borrowed from Badoli Investments
Limited the amount of €200.000 at 8% interest rate payable by 30 June 2019, and from Mount Nelson S.A. the amount of €300.000 at 8%
interest rate payable by 30 June 2019. For both loans there is an agreement for an extension of a short term period.
c) Sale of Victini Logistics Park S.A.
Following receipt of a number of expressions of interest, the Company is in the final stages of negotiations with one particular party with
regards to signing an agreement, subject to a number of conditions precedent, including all necessary approvals being granted, to sell
Victini Logistics Park S.A. – finalization of the agreement expected to occur during July 2019, which will then be followed by negotiations
on definitive documentation.
CONSOLIDATED FINANCIAL STATEMENTS 2018|99