ANNUAL REPORT
2019
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 2020 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
4
5
5
7
10
10
11
14
14
15
15
16
17
17
18
5.3 Delenco office building, Romania
18
5.4 Innovations Logistics Park, Romania 18
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
19
19
19
20
20
20
21
21
21
22
22
22
22
ANNUAL REPORT 2019| 2
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC
Key Figures
31 Dec 2019
31 Dec 2018
Change
Total Assets (€million):
65
86
-32%
Sold income producing
commercial Properties:
Number of income producing
commercial Properties:
1
4
1
5
-
-20%
Average occupancy rate of
93%
87%
10%
income producing assets:
Operational Gearing:
30%
39%
-23%
Average borrowing cost:
4,07%
3,83%
6%
Operating Income*(€million):
2,3
3,1
-26%
EBITDA*(€million):
-0,06
0,8
-92%
Net Equity**(€million):
29,4
35,6
-17%
Issued Shares:
129.191.442
127.270.481
+2%
NAV per share (€):
0,23
0,28
-18%
* 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 2019| 3
1.
Letter to Shareholders
29 September 2020
Dear Shareholders,
2019 was the year when the merger with the Amsterdam and Prague listed Arcona Property Fund N.V.
(APF - with assets in Poland, Czech Republic and Slovakia) would have been finalised confirming SPDI’s
strategy to establish itself as the regional property company of reference in South Eastern Europe and
offering to our shareholders exposure to a much larger and broader East European regional property
company, as per our original plan. As the European and more specifically the regional economies and
related property markets where SPDI is present continued their respective growth trends, SPDI commenced
2019 with the plan of having executed the transaction already in the first half of the year. Unfortunately
the complication of joining forces in six different jurisdictions with corporate entities in two additional
jurisdictions, proved an obstacle difficult to overcome and the end of the year found SPDI and APF having
barely closed one sixth of the transaction, with yet one more sixth being almost concluded in the first half
of 2020. As the APF transaction extended itself throughout 2020, with legal advisors from nine different
jurisdictions being involved, it was further affected by the COVID-19 related city wide lockdowns, as well
as certain APF specific issues.
In 2019, Romania continued being the fastest growing economy of the European Union and saw property
prices continue rising across all sectors, facilitating our residential sales at rising prices confirming our
choice not to have gone all out on selling such assets in prior years. At the same the Greek economy started
growing following years of recession and driven by a new pro-business government. Consequently we
disposed of our Athens logistics terminal, as this property was not included in the APF deal.
During 2019 our leaner, more agile Board of Directors, went the extra mile (with almost bi-weekly meetings)
in guiding the company to effect the APF transaction and shape SPDI’s strategy towards concluding such.
Management is confident that, with such commitment, support and involvement from all its non-executive
directors, as well as members of its Advisory Board, who have taken the lead in negotiating with APF
management and pushing the transaction forward, the successful end for SPDI and its shareholders is near
ensuring thus the transformation of our Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
ANNUAL REPORT 2019| 4
2.
Management Report
2.1 Corporate Overview & Financial Performance
SPDI’s core property asset portfolio consists of South Eastern European prime commercial
Summary
and industrial real estate, the majority of which is let to blue chip tenants on long leases.
During 2019, management, in line with Company’s strategy to maximize value for
shareholders, commenced the implementation agreement for the sale of its property
portfolio, excluding its Greek logistics property, in an all-share transaction to Arcona
Property Fund N.V. (Arcona), an Amsterdam and Prague listed company that invests in
commercial property in Central Europe. Arcona currently holds high yielding real estate
investments in Czech Republic, Poland and Slovakia. The transaction values the SPDI
assets NAV at ~ €29m, or 215% higher than the current market value of the Company as
a whole. If one takes into consideration and assumes the warrants that will be issued
together with the ARCONA shares, the transaction values the SPDI assets at their Net
Asset Value.
Based on such strategy, during the period the Company sold the Victini Logistics asset in
Results
Greece, as the asset was excluded from the beginning from the transaction with Arcona.
The Company generated ~ €2,0m in cash from the sale.
Most importantly, in 2019 the Company completed Stage 1 of the transaction with Arcona,
exchanging effectively two land plots in Ukraine, Bella and Balabino plots, and the Boyana
asset in Bulgaria together with its existing debt, for a total of 593.534 Arcona shares and
144.264 warrants over Arcona shares.
The combination of the two complementary asset portfolios is expected to create a
significant European Property company, benefiting both the Company’s and the buyer’s
respective shareholders.
Regarding the economic environment in which the Company operates, the Romanian
economy which constitutes the main operating market of the Company, continued in 2019
to grow strongly with a 4,1% GDP increase, whilst maintaining record low unemployment.
Investment and development activity in Bucharest was strong throughout 2019, mainly
in Logistics and Office sectors, both from international and local investors. However, the
trend was disrupted in Q1 2020 due to COVID-19 pandemic crisis that negatively affected
economic activity, with as yet undetermined effects for the whole of the year.
Romanian
economic
developments
ANNUAL REPORT 2019| 5
Following the successful sales of Victini Logistics in Athens in 2019 and the sale of
BlueBigBox asset in Craiova in 2018, rental and related income reduced by 26% during
Financial
performance
2019, while net operating income from investments reduced by 27%.
Overall corporate and administration costs, adjusted by the one-off costs associated with
the transaction with Arcona, decreased by 2%, and recurring EBITDA decreased to -
€0,06m compared to €0,8m in 2018. Moreover, finance costs dropped to ~€1,08m from
€1,2m in 2018.while.
Table 1
The operating results after finance and tax for the year were negative with the loss being
€1,1m.
ANNUAL REPORT 2019| 6
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial income producing and
Property
residential properties in Romania, as well as land plots in Ukraine and Romania.
Assets
Commercial Property
EOS Business Park
Location
Key Features
Bucharest, Romania
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
3.386 sqm
Danone Romania
100%
Delenco (SPDI has a 24,35% interest)
Bucharest, Romania
Innovations Logistics Park
Bucharest, Romania
Kindergarten
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
10.280 sqm
ANCOM (Romanian telecoms regulator)
100%
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate 2019:
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%
Commercial
Land & Residential Assets
Kiyanovskiy Residence
Tsymlyanskiy Residence
Rozny Lane
GreenLake Land
(SPDI has a ~44% interest)
Romfelt, Monaco, Blooming,
GreenLake
Romfelt, Monaco, Blooming,
GreenLake
Location
Kiev, Ukraine
Kiev, Ukraine
Kiev, Ukraine
Key Features
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Plot of land (~ th. sqm):
Bucharest, Romania
Plot of land (~ th. sqm):
Romania
Romania
Sold units during 2019:
Available units (end 2019):
6
4
420
40
16
68
Land &
Residential
In 2019, the Company’s accredited valuers, namely CBRE Ukraine for the Ukrainian
Assets, and NAI RealAct for the Romanian Assets, remained appointed. The valuations
have been carried out by the appraisers on the basis of Market Value in accordance with
Property
Asset
Valuations
the current Practice Statements contained within the Royal Institution of Chartered
Surveyors (“RICS”) Valuation – Global Standards (2017) (the “Red Book”) and are also
compliant with the International Valuation Standards (IVS).
In recent years, following the implementation of the Company’s strategy, SPDI’s portfolio
became even more diversified in terms of geography, as well as asset class. At the end
of the reporting period, considering the asset sales that took place during the recent
years, Romania is the prime country of operations (87%) in terms of Gross Asset Value,
while in Ukraine (13%) the Company still has interests in land plots.
ANNUAL REPORT 2019| 7
In respect of the Company’s income generation capacity, Romania is the prime source
with 64%, with the remaining income deriving from Greece (36%). Note that the Greek
property was sold during 2019 and therefore Romania has now become the single
operating income source of the Company.
** 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.
Asset
Contribution
to Net Asset
Value
ANNUAL REPORT 2019| 8
Table 2
2019
€m
Debt (principal)*
6,9
3,5
0,3
0,4
1,8
3,2
16,0
Country
Rom
Rom
Rom
Rom
Rom
Rom & Ukr
Property
Innovations Logistics Park
Eos Business Park
Delenco (associate)
Kindergarten
Residential units
Land banking
Total Value
Other balance sheet items, net **
Net Asset Value total
Market Cap 31/12/2019 (Share price at £0,085)
Market Cap 24/09/2020 (Share price at £0,065)
Discount of Market Cap (at 24/9/2020) vs NAV (at 31/12/2019)
* Reflects the Company’s participation at each asset
**Refer to balance sheet and related notes of the financial statements
GAV*
10,6
7,7
5,6
0,7
2,8
10,4
37,9
NAV
3,7
4,2
5,3
0,4
1,0
7,2
21,9
+7,4
29,3
13,0
9,2
-69%
Net Equity
The Net Equity attributable to the shareholders as at 31 December 2019 stood at ~€29,3m
vs ~€35,6m in 2018. The table below depicts the discount of Market Cap over NAV during
the years.
The NAV per share as at 31 December 2019 stood at GBP 0,20 and the discount of the
Market Value vis a vis the Company’s NAV stands at 56% at year-end.
Net Asset
Value per
share
ANNUAL REPORT 2019| 9
2.3 Financial and Risk Management
The Group’s overall bank principal debt exposure at the end of the reporting period
Leverage
was ~€16,0m (calculating relative to the Company’s percentage shareholding in each),
comprising of the following:
a) €3,2m finance lease of EOS Business Park with Alpha Leasing Romania and €0,3m
debt facility received by First Phase from Alpha Bank Romania.
b) €6,9m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
c) €0,4m being the Company’s portion on debt financing of the Kindergarten with
Eurobank Ergasias.
d) €1,8m being the Company’s portion on the residential portfolio debt financing.
e) €3,2m being the Company’s portion on land plot related debt financing in Romania.
f) €0,3m being the Company’s portion on debt financing of Delenco asset.
Throughout 2019, the Company focused on managing and preserving liquidity through
cash flow optimization. In this context, the Victini Logistics asset in Athens, Greece,
was sold, and the Company is focused on completing the aforementioned transaction
Liquidity
Management-
Cash Flow Risk
Arcona
transaction
with Arcona Property Fund N.V.
2.4 2020 and beyond
During 2020 the Company expects to complete Stage 2 of the transaction with Arcona,
following the conditional implementation agreement signed in December 2018 by the
two parties. During the first half of the year, and due to the COVID-19 pandemic crisis
with lockdowns in all relevant jurisdictions, the process progressed slowly. The parties
have resumed discussions in agreeing binding terms for the second step of the
transaction which involves three land plots in Ukraine (Rhozny, Kiyanovskiy,
Tsymlyanskiy) and two office building properties in Bucharest (EOS, Delenco). Overall
completion of the transaction is planned in three steps with the last to be expected to
commence and close in 2021.
The 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 2019| 10
3.
Regional Economic Developments 1
Romania’s GDP growth was strong in 2019 at 4,1 percent, driven by private
Romania
consumption and an investment rebound. The labour market tightened, and
unemployment reached historic lows at 3.1%. Private consumption, up 5,9%, was the
main driver of growth, supported by wage and pension increases. Investment rose
strongly, growing at 17,8% year-on-year (y-o-y), owing to a strong performance in
construction. Exports grew by 3,5%, reflecting weaker demand in major export
markets, while imports remained buoyant (up 7,2%). Construction (up 16,8%) and
information and communications technology (ICT) (up 8,1%) were the main drivers
of production.
The situation abruptly shifted in early 2020 due to the impact of the COVID-19
pandemic on the health sector, businesses, the labour market, and households.The
risk of a recession in 2020 is substantial and growing as COVID-19 brings to a halt
large segments of the European economy and causes disruptions to global supply
chains and trade patterns. The negative impact of the COVID-19 pandemic is
anticipated to be substantial. The economy is expected to contract in 2020, but the
severity of the recession will depend on the length of the lockdown, the impact of the
national economic stimulus, and the spill overs from the stimulus at the EU level.The
fiscal stimulus is expected to focus on targeted spending to contain the disease;
deferred tax payments; liquidity support for companies, small and medium enterprises,
and firms in severely affected sectors, such as transport and tourism; and support for
self-employed workers and others affected by the crisis. To address the consequences
of COVID-19, the fiscal deficit is expected to widen to at least 5,5% of GDP in 2020,
up from a planned deficit of 3,6%. Once the impacts of COVID-19 dissipate, the deficit
is expected to follow a downward adjustment of at least 0,5% of GDP per year.
Romania
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2016
170,4
19,8
4,8
-1,5
5,9
2013
143,8
20,0
3,5
4,0
7,1
2015
160,3
19,9
3,9
-0,6
6,8
2014
150,5
20,0
3,4
1,1
6,8
2017
187,5
19,6
7,0
1,3
4.3
2018
202,9
19,5
4,1
4,6
3,6
2019
223,4
19,5
4,1
3,3
3,1
Bulgaria has undergone a significant transformation over the past three decades. It
has changed from a highly centralized, planned economy to an open, market-based,
Bulgaria
upper-middle-income country securely anchored in the European Union (EU). In its
initial transition, Bulgaria went through a decade of slow economic restructuring and
growth, high indebtedness, and a loss of savings.
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 2019| 11
However, the advancement of structural reforms starting in the late 1990s, the
introduction of the currency board, and expectations of EU accession unleashed a
decade of exceptionally high economic growth and improved living standards.
Yet, a number of legacies from that early period, the global economic crisis of 2008,
and a period of political instability in 2013-14 undid some of those gains. In the current
period, the ongoing pandemic is most likely to drag the economy into a recession in
2020. After better-than-expected GDP growth in 2019, the economy is set to plunge
into a recession in 2020 due to the toll of the COVID-19 pandemic on exports and
domestic activity. GDP is expected to decline by 3,7 % in 2020.
Bulgaria
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2016
48,1
7,1
3,9
-0,8
7,6
2013
41,9
7,2
0,5
0,9
13,0
2015
45,3
7,2
3,5
-0,1
9,2
2014
42,8
7,2
1,8
-1,4
11,4
2017
51,7
7,1
3,8
2,1
6,3
2018
55,2
7,0
3,2
2,8
5,2
2019
61,0
7,0
3,4
2,4
4,7
Greece’s economy entered 2020 on a relatively strong footing. GDP growth in 2019
reached 1,5%, only slightly below expectations. Growth was mainly driven by domestic
Greece
demand and to a lesser extent net exports. The labour market was improving and
employment grew by 2%, leading to a further decrease in the unemployment rate to
17,2% for the year overall. But this came to a sudden stop with the spread of the
virus. While the main effects of the lockdown are expected to be concentrated in the
second quarter of this year, Greece’s large tourism sector is likely to be affected in the
third quarter as well, as restrictions on travel are expected to remain in place and
foreign demand for overseas travel may remain subdued. Since more than 70% of
tourism receipts are concentrated in the main summer months, impediments during
this period would have a large impact on overall exports of services in 2020. The
budget balance will deteriorate significantly in 2020 due to the operation of automatic
stabilisers and the cost of measures to address the crisis. The size of the fiscal
measures amounts to 6,9% of GDP.
Last but not least, there is considerable uncertainty as to the final cost of the
emergency fiscal measures adopted by the authorities. The general government deficit
is forecast to reach 6,25% of GDP in 2020 and to decrease to about 2% in 2021 based
on a no-policy-change assumption. Public debt is expected to increase to around 196%
of GDP in 2020 before declining to around 183% in 2021, supported by the economic
recovery.
ANNUAL REPORT 2019| 12
Greece
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data and forecasts
2016
176,5
10,8
-0,2
-0,8
23,6
2013
180,7
11,0
-3,2
-0,9
27,5
2015
177,3
10,9
-0,4
-1,7
25,0
2014
178,7
10,9
0,7
-1,3
26,6
2017
180,2
10,8
1,5
1,1
21,4
2018
184,7
10,7
2,1
0,6
19,3
2019
187,5
10,7
1,5
1,1
17,2
Economic growth was solid at 1,9% in 2019, led by a good agricultural harvest and
sectors dependent on domestic consumption. Household consumption grew by 11,9%
Ukraine
in 2019, supported by sizable remittance inflows and a resumption of consumer
lending, while domestic trade and agriculture grew by 3,4 and 1,3 %, respectively.
However, manufacturing and investment growth remained weak. Manufacturing
contracted by 0,3% in the first three quarters of 2019 (compared to 0,6% growth in
2018), while fixed investment growth slowed to 12,8% (compared to 14,3 percent in
2018). The economy lost momentum in the fourth quarter of the year, with estimated
growth of 1,5% year-on-year (y-o-y), and the decline in steel prices contributed to a
5,1% (y-o-y) contraction in industrial production. Fixed investment, at 18% of GDP,
has been too low for sustained economic growth. Fiscal restraint helped contain the
fiscal deficit at 2,1% of GDP in 2019 (the fourth year in a row). This, together with
currency appreciation, helped lower public debt to 50% of GDP in 2019 from 81% in
2018.
The COVID-19 crisis is expected to impact economic activity in Ukraine through
several channels in 2020. First, disposable income and consumption will suffer from
the sudden necessary restrictions, including the closure of restaurants, cafes, and
shopping/entertainment centres and the halt to air, rail, and bus passenger transport.
Second, lower remittances due to weaker economic activity in Poland and other
European Union countries will also adversely affect household consumption. Third,
lower commodity prices will have a negative effect on Ukraine’s exports. The overall
impact on economic activity in 2020 will depend on the duration of the public health
crisis, as a more protracted crisis would lead to second-order effects through more
widespread layoffs, business closures, and weaker liquidity and asset quality in banks.
Under a scenario in which the crisis is contained by the second half of the year and
key reforms move forward, the economy is projected to contract by 3,5% in 2020.
ANNUAL REPORT 2019| 13
4.
Real Estate Market Developments2
4.1 Romania
Year 2019 found Romania with an investment volume of 608,85 million Euros, slightly
General
decreased from 2018 levels. Market volumes were dominated by the office segment
(62%), with retail following up with 26% and industrial at 9%, with 3% accounting
for the hotel industry.
Although facing a small decline in 2019, prime yields continue to be amongst the
highest in Europe. Prime office and retail yields range between 7,25%-6,75%, while
prime industrial yields are at 8%. The CEE region had the strongest yield compression
this year but yields in Romania are still around 7% or higher in all market sectors.
For the year 2019, Romania’s industrial stock stands at around 4,6 million sqm,
500.000 sqm of which were delivered in 2019. This accounts for an impressive 13%
increase comparing to the previous year. Bucharest continues to be the largest market
accounting for a little over 2 mil sqm (50%) of the market share, with the West and
Northwest areas accounting for 40% of the market share. Leasing activity dropped by
9% within 2019 to 457.230 sqm, mainly due to the fact that a significant number of
businesses are moving into self-built facilities. In the following years we are expecting
to see new areas being developed like Costanta and Craiova, along with record
deliveries of modern spacies.
Logistics
Market
The total take up of the office market for the year 2019 amounted to almost 377.000
Office Market
sqm, increasing by 5% from 2018. Most of the demand was concentrated in the
West/Central-West areas. The dominant industry for 2019 was the IT&C sector,
weighing a 45% in the total take-up. The office vacancy rate in Bucharest has
increased to 9%, and the areas where the vacancy rates remain the lowest are
Floreasca/Barbu Vacarescu with under 2% and CBD with around 3%. The record
deliveries of new products announced for 2020 and 2021 will likely cause a further
increase in vacancy rates.
In Romania, for year 2019, we have witnessed a series of macroeconomic changes: a
3,8% increase in inflation as well as an average exchange rate of 4,74 RON/EURand
the introduction of the Consumer Credit Referece Index (IRCC), replacing ROBOR for
consumer loans in RON. In spite of the ‘First Home’ initiative by the government,
lending conditions have remained unchanged. Increasing prices in new residential
dwellings are due to the increased material costs which have increased by 30% in
2019, as well as the lack of qualified workforce. Nevertheless, over 15.000 new units
Residential
Market
2 Sources : Eurobank, CBRE Research, Colliers International, Cushman & Wakefield, Crosspoint Real Estate, Knight Frank, Coldwell
Banker Research, National Institute of Statistics- Romania, State Statistics Service-Ukraine, Arbitrage Real Estate Advisors
ANNUAL REPORT 2019| 14
were delivered in 2019 in Bucharest alone, and prices are expected to increase by a
further 15% in 2020 due to changes in local legislations.
4.2 Bulgaria
After five years of strong house prices increases, the housing market in Bulgaria
General
remains strong, mainly due to low interest rates and a stable economy. The total value
for 2019 was 270 million Euro, with the majority of the acquisitions being land,
followed up by offices, hotels and retail. Yield levels were preserved in three major
real estate market segments, 8% for offices, 7,25% for retail and 9,5% for the industry
sector. Nevertheless, due to to COVID-19 pandemic, investment volumes are unlikely
to reach the record levels of 2017 and 2018.
Growth in the economy, low interest rates and an increase in the availability of credit
play a key role in the residential market and is estimated to continue to do so. The
Residential
Market
nationwide price index rose by 7,29% (3,56% inflation adjusted). Prices of new
dwellings rose by 11,9% during the year to Q1 2019, strongly up from previous years
2,3% y-o-y rise. Prices of existing dwellings rose by 5%. The almost zero interest
rates have really pushed investment in real estate, although this is expected to come
to a short halt due to the COVID-19 pandemic, temporarily. Despite strong demand,
construction remains low as new dwelling construction fell by a 1,5% for 2019, to
2.250 units. Sofia remains the most sought-after location in the country, particularly
Sofia’s Southern districts, from both local and foreign buyers. Lozenets and the City
Center remain highly sought after even though they are by far the most expensive
locations, at 1.500-2.000 Euro per sqm, with Strelbishte and Gotse Delchev following
at 1.100-1.400 Euros per sqm.
On an additional note rental yields in Sofia are at 6%. However, the COVID-19
pandemic will also take its toll on the Bulgarian real estate market, bringing it to an at
least temporary slowdown compared to previous years, as we are still not aware of
the final repercussions it will have on the economy. To a certain degree, the decrease
in commercial leases and postponement of construction is going to affect the Bulgarian
real estate market.
4.3 Greece
After nine years of falling real estate prices, the Greek housing market is now growing
General
strongly alongside improving economic conditions and market expansionary measures.
Overall, before the pandemic, demand was rising on all prime real estate segments.
Post pandemic the situation does not look negative though, as demand will remain for
logistics in strategic locations , as well as quality residential properties and large hotels.
ANNUAL REPORT 2019| 15
Demand for prime assets will continue to increase, and the retail segment is expected
to be mostly affected by the pandemic.
Residential
For 2019, residential prices increased by 9,32%, far higher than 2018’s 2,35%, with
Athens and Thessaloniki leading the price increase with 11,91% and 8,52%
respectively. Construction permits drastically increased by 24,5% for 11.744 new units
although the total remains well below the 70.000 to 80.000 issued annually during the
period 2004-2007.
As of May 2020, the industrial/logistics market segment counted for 9% of the total
Greek real estate market. Prime yields were within the range of 8,5% - 10,0%
Logistics
Market
depending on the specific area, but with upward predictions for 2020.
As far sales activity is concerned, in the Attica region it came mainly from Greek REIC’s
and other domestic real estate funds and investors. In Thessaloniki, interest came
mainly from expanding industrial occupiers and local companies active in imports and
wholesale trading. Regarding leasing, recent activity came mainly from medical
services, consumer healthcare and household goods distributors. On an additional
note, 25% of companies using logistics assets operate in the consumer products
sector, followed by transport and third-party logistics providers (24%), and retailers
(11%). Shipping and port operation counted for 5% of the space, with businesses in
the power sector (mostly oil and gas) occupying 4% of the total market space. As of
2019, the Greek logistics market features several strengths. Firstly, the country’s
geographical location within the Eastern Mediterranean corridor, followed by
privatizations and upgrades in the ports and airports. The presence of COSCO in the
port of Piraeus and its development as an international transit container hub, as well
as a rapid strengthening of the e-commerce market, make the Greek logistics sector
a strong developing market.
4.4 Ukraine
After a massive decrease by 72% from their peak in 2008, during 2019 real estate
prices in Ukraine and especially Kiev were stable or mildy rising. Tensions with Russia
General
are de-escalating, corruption is dropping and the economy is slowly recovering, with
the real estate market also affected in a positive way. However, due to the COVID-19
outbreak, the imminent increase in the Ukrainian real estate market is expected to be
put to a halt.
With regards to the Ukrainian land market, due to lack of finance, many potential
Land Market
investors are placing unfinished projects in the market. However, particularly in Kiev,
there is scarcity of undeveloped land plots near the city centre with access to public
transportation and especially to metro stations. On the supply side, the sellers pool
ANNUAL REPORT 2019| 16
consists of development companies, unable to develop due to the lack of finance,
companies or individuals having speculatively acquired land plots prior to the crisis
with the intention to sell on and banks possessing mortgaged land upon default of
previous owners. The demand for land plots has started increasing since 2016,
especially for ones suitable for commercial development, with large land plots sales in
2017, reflecting the existing positive investment trend.
The number of apartments in Ukraine increased by 1,6% in 2019, as per the State
Statistics Service. This accounts for almost 280.000 apartments, the biggest increase
Residential
since 1995. Similarly, the total area of housing stock increased by 1,8% y-o-y to 1,01
billion sqm over the same period. Securing construction permits has been drastically
easier during the past years in Ukraine, mainly due to a reduction in the mandatory
licenses and permits , particularly in the construction sector.
5. Property Assets
5.1 Victini Logistics (ex GED), Athens Greece
The 17.756 sqm complex that consists of industrial and office space is situated on a 44.268
sqm land plot in the West Attica Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki
Odos (the Athens ring road) and is 20 minutes from the port of Piraeus (where Cosco runs a
container port handling more than 5,5 million containers a year) and the National Road
connecting Athens to the north of the country. The roof of the warehouse buildings houses a
photovoltaic park of 1.000 KWp.
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.
ANNUAL REPORT 2019| 17
The asset was not part of the Arcona transaction and sold independently on 8
August 2019.
5.2 EOS Business Park – Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class “A” office building of 3.386 sqm GLA
and 90 parking places. It is located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road. The Park is very close to
Bucharest’s ring road and the DN 2 national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
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.
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 2019, 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)
Property
description
ANNUAL REPORT 2019| 18
highway. Its construction was completed in 2008 and was tenant specific. It comprises four
separate warehouses, two of which offer cold storage.
In April 2017, the Company signed a lease agreement with Aquila Srl, a large Romanian logistics
Current status
operator, for 5.740 sqm of ambient space in the warehouse which expired during April 2018
without being extended. During Q1 2019 the Company signed with Favorit Business Srl a lease
agreement for 3,000 sqm of cold storage space, 506 sqm of ambient storage space, and 440
sqm of office space. In Q2 2019 the Company agreed with Favorit Business Srl a lease of an
extra 3.000 sqm of cold storage space, and an extra 210 sqm of office space to accommodate
their new business line which involves as end user Carrefour. Moreover, during 2019 and H1
2020 the Company signed short term lease agreements for 2.000 sqm of ambient storage
space with Chipita Romania Srl, one of the fastest growing regional food companies. As at the
year end, the terminal was 70% leased, while currently is ~83% leased. 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
ANNUAL REPORT 2019| 19
During 2019, 3 units were sold and, at the
Current status
end of 2019, one apartment was available
for sale. 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.
Following extended negotiations for the last two years
Current status
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 of assets
held by the debtor and upon agreement of all parties
and the judicial administrator’s approval, 5 units were sold. At the end of 2019, 17 apartments
were available, four of which were rented.
Blooming House, Bucharest, Romania
Blooming House is a residential development project located in Bucharest, Sector 3, a
residential area with the biggest development and property value growth in Bucharest, offering
a number of supporting facilities such as access to Vitan Mall, kindergartens, café, schools and
Property
description
public transportation (both bus and tram).
At the end of 2019, 4 apartments and 1
Current status
commercial space were available, while 1 unit
and 1 commercial space were rented. During
2019, 4 units were sold. The asset was planned
to be part of the Arcona transaction, but it is
expected that all units will have been sold before
completion.
GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of apartments and villas, situated
on the banks of Grivita Lake, in the northern part of the Romanian capital – the only residential
property in Bucharest with a 200 meters frontage to a lake. The compound also includes
Property
description
ANNUAL REPORT 2019| 20
facilities such as one of Bucharest’s leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally GreenLake includes land
plots totaling 40.360 sqm. SPDI owns ~43% of this property asset portfolio.
During 2019, four apartments and villas were sold while at the end of the year, of the 46 units
Current status
that were unsold, 8 were let. The asset is planned to be part of the Arcona transaction.
Boyana Residence, Sofia, Bulgaria
A residential compound, which consisted at acquisition date in May 2015 of 67 apartments plus
83 underground parking slots developed on a land surface of 5.700 sqm, situated in the Boyana
high end suburb of Sofia, at the foot of Vitosha mountain with Gross Buildable Area (“GBA”)
totaling 11.400 sqm. The complex includes adjacent land plots available for sale or
development of ~22.000 sqm of gross buildable area.
Property
description
34 units remain unsold at the end of 2019.
Current status
The asset was sold as part of the Arcona transaction on 06 December 2019.
5.7 Land Assets
Aisi Bela – Bela Logistic Park, Odessa, Ukraine
The site consists of a 22,4 Ha plot of land with zoning allowance to construct up to 103.000
sqm GBA industrial properties and is situated on the main Kiev – Odessa highway, 20 km from
Odessa port, in an area of high demand for logistics and distribution warehousing.
Development has been put on hold.
The asset was sold as part of the Arcona transaction during November 2019.
Property
description
Current status
ANNUAL REPORT 2019| 21
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.
Current status
The asset was sold as part of the Arcona transaction during November 2019.
Rozny Lane – Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be developed as a residential complex.
Following a protracted legal battle, it has been registered under the Company pursuant to a
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 2019| 22
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2019
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2019
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
25
26
27
28-31
32-35
36
37
38
39
40-100
CONSOLIDATED FINANCIAL STATEMENTS 2019| 24
Corporate Information
Board of Directors
Lambros Anagnostopoulos
Ian Domaille
Antonios Kaffas
Harin Thaker
Michael Petros Beys
Registered Address
16, Kyriakou Matsi Avenue,
Eagle House, 10th floor, PC 1082,
Agioi Omologites, Nicosia, Cyprus
Principal Places of Business
6, Nikiforou Foka Street,
1016 Nicosia,
Cyprus
10A Zizin Street, Interphone 21,
Ap. no 21, 6th floor, District 3,
Bucharest, PC 031263
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
Banca Transilvania
SOS Bucuresti – Ploiesti Nr.43, Sector 1
Bucuresti, Romania
Alpha Bank Romania
Neocity 2 Building, 237B, Calea Dorobantilor Street,
District 1, Bucharest, Romania
Piraeus Leasing Romania
B-dul Nicolae Titulescu, No. 29 - 31, etaj 5
Sector 1, Bucuresti, 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 2019| 25
Chairman’s Statement
During 2019, the favorable fundamentals of our target markets continued to prevail, with Romania continuing its leading growth
within the EU, and with Greece electing a new government and continuing on a path to recovery and economic growth. The property
markets in our region continued to experience growth and yield compression, underpinning our effort to merge with Arcona Property
Fund (“APF”), the Central European property fund listed in Amsterdam. To effect the Stage 1 of the APF transaction, SPDI accepted
a discount to the NAV of the transferred assets, which, even though it is to be compensated by the APF warrants received when they
are exchanged with shares, caused much of SPDI’s financial losses for 2019, yet when the global COVID-19 pandemic hit global
economies in early 2020, we found ourselves well protected, as our tenants in the food and telecom industries were mostly untouched
during the crisis. Throughout this period, SPDI has continued to pursue the APF transaction, although at a slower pace not only
because of the pandemic but also due to increased difficulties faced by APF. In any case, the Company's management and board are
committed to generating value for our shareholders in markets that are strong and growing and, no matter the temporary difficulties,
will attempt to do whatever is necessary to realize that end.
Michael Beys
Chairman of the Board
CONSOLIDATED FINANCIAL STATEMENTS 2019| 26
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 2019, 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 2019:
Theofanis Antoniou
CONSOLIDATED FINANCIAL STATEMENTS 2019| 27
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 2019.
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
Following relevant decision in 2018, management proceeded during 2019 to the implementation of the agreement with Arcona
Property Fund N.V. (Arcona), a fund listed on Amsterdam and Prague Stock Exchanges. This agreement involves the effective
exchange of Company’s non-Greek portfolio for new Arcona shares, effectively combining the two entities’ complimentary portfolios,
creating at the same time 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.
As part of the aforementioned agreement, the Company completed during 2019 Stage 1 of the transaction with Arcona, involving the
sale of Bela and Balabino land plots in Ukraine, and Boyana asset in Bulgaria, and receiving from these sales a total of 593.534 Arcona
shares and 144.264 warrants over shares in Arcona.
Moreover, the Company continued during 2019 the disposal of the assets not included in the transaction with Arcona, with the sale
of Victini Logistics, the Athens based warehouse asset, generating c.EUR 2m in cash, following the disposal during 2018 of the
BlueBigBox3 asset in Craiova, Romania, which generated approximately EUR 2,5m in cash.
Currently management is negotiating with Arcona the relevant agreements for the transfer of the assets included in Stage 2 which
includes the office properties in Bucharest, Romania, expected to close by the end of 2020 subject to COVID-19 effects. Discussions
regarding Stage 3 of the transaction are at a preliminary stage.
In relation to COVID-19, as a result of Company’s property operations being focused on the food and the telco sectors, all of the
large/anchor tenants in the Company’s properties in Bucharest, including Favorit, a 3PL logistics operator servicing Carrefour; Danone,
the international food company; ANCOM, the Romanian Telecoms Regulatory Authority; and the supermarket chain Mega Image,
have experienced little or no disruption from either the pandemic crisis or the lockdown in Romania.
However, as long as the pandemic creates economic and instability affecting business activity in the countries the Company operates,
it is likely that relevant problems will be faced in the future, while at the same time an ongoing pandemic crisis might affect negatively
real estate investment activity, and therefore relevant property values.
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).
Issued share capital
As at the end of 2018, the issued share capital of the Company was as follows:
a) 127.270.481 Ordinary Shares of €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.
CONSOLIDATED FINANCIAL STATEMENTS 2019| 28
MANAGEMENT REPORT
In respect of the Redeemable Preference Class B Shares, issued in connection to the acquisition of Craiova Praktiker, following the
holders of such shares notifying the Company of their intent to redeem within 2016, the Company:
- for the Redeemable Preference Class B Shares, in lieu of redemption the Company gave its 20% holding in Autounion
(Note 29.6) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L.
and final settlement for any resulting difference is expected to be provided by Cypriot Courts (Note 42.4). As soon as the
case is settled, the Company will proceed with the cancellation of the Redeemable Preference Class B Shares.
On 24th December 2019 the Company proceeded with the issue of 1.920.961 new Ordinary Shares as follows:
i.
ii.
iii.
iv.
1.219.000 new Ordinary Shares to certain advisors, directors and executives of the Company involved in the closing
of the Stage I of the Arcona Transaction by means of settling relevant Company’s liabilities.
437.676 new Ordinary Shares to directors of the Company in lieu of H1 2019 and before H2 2016 fees.
200.000 new Ordinary Shares to certain advisor in lieu of cash fees for financial advisory services rendered in 2019.
64.285 new Ordinary Shares to certain executive of the Company in lieu of cash fees for services rendered in 2018.
Following shares issuance completed within 2019, the issued share capital of the Company as at the date of issuance of this report is
as follows:
a) 129.191.442 Ordinary Shares of €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 2019 and at the date of this report are presented on page 25.
All Directors were members of the Board throughout the year ended 31 December 2019.
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 2019, 261.100 ordinary shares were issued to the Board members for their H1 2019 remuneration, 176.576 ordinary shares
were issued to existing and previous Board members for their before H2 2016 fees, and 718.000 ordinary shares were issued to two
members of the Board by means of settling existing Company’s liabilities for services and incentives related to the closing of the Stage
1 of the transaction with Arcona Property Fund N.V.
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 for the period 1/7/2016 – 31/12/2018.
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. 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 2019| 29
MANAGEMENT REPORT
Directors and Management Holdings in the Company
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
Theofanis Antoniou
George Dopoulos
Position
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director and CEO
CFO
Commercial Director
Amount of Shares held
479.976
814.988
343.832
297.192
1.001.092
107.333
117.952
*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,
(Note 26) issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a warrant.
Pursuant to issuing the instrument, the Company issued 17.066.560 Class A warrants which were exercised during 2017 at an exercise
price of £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.
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 29th December 2017, the Company proceeded with the following actions in H1 2018 (
finalized during June):
-
-
-
-
That the balance of the share premium account of the Company reduced by €53.569.295 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 reduced by €698.650 and the said amount 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 was 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 set off against any outstanding balances
between the Company, Myrian Nes Ltd and Theandrion Estates Ltd.
That the articles of association of the Company 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).”
CONSOLIDATED FINANCIAL STATEMENTS 2019| 30
MANAGEMENT REPORT
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 expired on 31
December 2019. Under this authority and following relevant Board resolution on 11/12/2019, the Company issued 1.920.961
ordinary shares of euro 0,01 each.
issue up to 15.000.000 Class A Warrants, being convertible to up to 15.000.000 ordinary share of euro 0,01 each in the
Company upon exercise of the Warrants, with such terms and conditions and at an issue price as the Board may in its sole
unfettered discretion from time to time determine (and such price may be at a discount to the net asset value per share in
the Company which is in issue immediately prior to the issue of the Warrants)and for such purpose any rights of pre-
emption and other rights the Company's shareholders have or may have by operation of law and/or pursuant to the articles
of association of the Company and/or otherwise in connection with the authority conferred on the Board for the issue and
allotment of shares or Warrants in the Company as contemplated in this resolution or the issue and allotment of shares or
Warrants in the Company pursuant to such authority be and are hereby irrevocably and unconditionally waived. The
authority conferred by this resolution expired on 31 December 2019. The Company did not issue any Class A Warrants
under this authority.
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 2020, authorizing the CEO and
the CFO 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
CFO
CONSOLIDATED FINANCIAL STATEMENTS 2019| 31
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@bakertilly.com.cy
www.bakertilly.com.cy
T: +357 22 458500
Independent Auditor's Report
To the Members of Secure Property Development & Investment Plc
F: +357 22 751648
Report on the Audit of the Consolidated Financial Statements
Opinion
info@bakertilly.com.cy
www.bakertilly.com.cy
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 36 to 100 and comprise the consolidated
statement of financial position as at 31 December 2019, 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 2019, 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 Note 2 to the consolidated financial statements which refers to Management’s assessment of
going concern and the transactions that the Group plans to complete in the foreseeable future. The Group’s financial
position and cash flows will be significantly affected in a manner which cannot be determined with certainty at this
stage. These conditions indicate the existence of a material uncertainty which casts significant doubt as to the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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 presented within assets classified as held for sale
Refer to Note 4 - Significant accounting policies, Note 9 –
Discontinued operations and Note 19 - 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 might have imposed scope limitations
upon their work.
The Group holds investment properties which are
presented within assets classified as held for sale. As at
31 December 2019 these are carried at a value of
€42.180.852. 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 the unique nature, location and
expected future prospects of each property. The
methodology applied in determining the fair values is set
out in Note 19 of the consolidated financial statements.
Valuations, as disclosed in Note 4, are carried out by third-
party 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 obtained and read the 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.
We draw attention to Note 42.3 to the consolidated financial statements, which describes the Contingent Liabilities of
the Group arising from the lawsuit for the Bluehouse accession case. The ultimate outcome of the matter cannot be
reliably determined at present. The Group has recognized a liability of €2.521.211 in these consolidated financial
statements. Our opinion is not modified in respect of this matter.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Annual Report, the Chairman’s Statement and the Management Report, but does not include the
consolidated financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European Union and the
requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Board of Directors.
Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
In our opinion, the Management Report has been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap 113, and the information given is consistent with the consolidated financial statements.
In our opinion, and in the light of the knowledge and understanding of the Group and its environment obtained
in the course of the audit, we have not identified material misstatements in the Management Report.
Other 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, 29 September 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
Continued Operations
Income
Asset operating expenses
Net Operating Income
Administration expenses
Fair Value loss on Financial Assets at FV through P&L
Net loss on disposal of investment property
Other operating expenses, net
Operating profit / (loss)
Finance income
Finance costs
Note
10
11
12
27
14b
15
16
16
2019
€
457.450
-
457.450
(2.442.171)
(153.913)
-
(442.629)
2018
€
769.463
(118.319)
651.144
(1.768.847)
-
(845.181)
(31.716)
(2.581.263)
(1.994.600)
474.584
(137.250)
686.183
(353.741)
Profit / (loss) before tax and foreign exchange differences
(2.243.929)
(1.662.158)
Foreign exchange (loss), net
17a
(74.779)
(71.390)
18
9b
17b
30
Loss before tax
Income tax expense
Loss for the year from continuing operations
Loss from discontinued operations
Loss for the year
Other comprehensive income
Exchange difference on I/C loans to foreign holdings
Exchange difference on translation of foreign operations
Total comprehensive income for the year
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):
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
Basic earnings/(losses) for the year from discontinued operations attributable to
ordinary equity owners of the parent
Diluted earnings/(losses) for the year from discontinued operations attributable to
ordinary equity owners of the parent
39b,c
39b
39b
39c
39c
The notes on pages 40 to 100 form an integral part of these consolidated financial statements.
(2.318.708)
(1.733.548)
(36.380)
(613.034)
(2.355.088)
(2.346.582)
(4.801.843)
(1.405.899)
(7.156.931)
(3.752.481)
66.557
223.135
(6.867.239)
1.850
421.086
(3.329.545)
(2.355.088)
-
(2.355.088)
(2.346.582)
-
(2.346.582)
(4.846.634)
44.791
(4.801.843)
(699.271)
(706.628)
(1.405.899)
(7.201.722)
44.791
(7.156.931)
(6.777.803)
(89.436)
(6.867.241)
(3.045.853)
(706.628)
(3.752.481)
(2.463.822)
(865.723)
(3.329.545)
(0,06)
(0,06)
(0,04)
(0,04)
(0,03)
(0,03)
(0,01)
(0,01)
CONSOLIDATED FINANCIAL STATEMENTS 2019|36
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2019
ASSETS
Non-current assets
Tangible and intangible assets
Long-term receivables and prepayments
Financial Assets at FV through P&L
Current assets
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
Bonds issued
Taxation
Current liabilities
Borrowings
Bonds issued
Trade and other payables
Taxation
Liabilities directly associated with assets classified as held for sale
Total liabilities
Total equity and liabilities
Note
23
24
27
26
28
9d
29
30
41.3
31
32
33
36
32
33
34
36
9d
2019
€
566
852
3.581.643
3.583.061
10.833.913
207.251
11.041.164
49.891.627
2018
€
3.674
850
-
4.524
5.585.408
282.713
5.868.121
79.678.738
64.515.852
85.551.383
1.291.911
71.924.045
10.232.119
(149.263)
(53.906.344)
29.392.468
1.272.702
71.381.259
9.874.757
(215.820)
(46.704.622)
35.608.276
7.446.255
7.535.691
36.838.723
43.143.967
7.249
1.033.842
595.541
1.636.632
420.751
156.761
4.579.595
550.162
380.256
1.033.842
761.460
2.175.558
22.034
88.628
4.174.936
652.367
5.707.269
4.937.965
20.333.228
26.040.497
27.677.129
35.293.893
40.231.858
42.407.416
64.515.852
85.551.383
Net Asset Value (NAV) € per share:
39d
Basic NAV attributable to equity holders of the parent
Diluted NAV attributable to equity holders of the parent
0,23
0,23
0,28
0,28
On 29 September 2020 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
CFO
The notes on pages 40 to 100 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2019|37
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
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 1 January 2018
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 17b)
Share premium set off with accumulated losses
(Note 29.6)
Expenses for capital raising
Exercised warrants (Note 29.4)
Foreign currency translation reserve
Balance - 31 December 2018
Loss for the year
Issue of share capital (Note 29)
Exchange difference on I/C loans to foreign
holdings (Note 17b)
Foreign currency translation reserve
Balance - 31 December 2019
66.044
810.522
-
-
-
-
-
-
170.765
-
1.272.702
-
19.209
(53.569.295)
53.569.295
(735.623)
1.749.327
71.381.259
-
542.786
-
-
-
(46.704.622)
(7.201.722)
-
-
1.850
-
-
-
-
-
-
-
-
(215.820)
-
-
-
580.181
9.874.757
-
-
876.566
1.850
-
(735.623)
1.920.092
580.181
35.608.276
(7.201.722)
561.995
-
-
-
-
(159.095)
7.535.691
44.791
-
-
-
1.291.911
-
-
71.924.045
-
-
(53.906.344)
66.557
-
-
357.362
(149.263) 10.232.119
66.557
357.362
29.392.468
-
(134.227)
7.446.255
876.566
1.850
-
(735.623)
1.920.092
421.086
43.143.967
(7.156.931)
561.995
66.557
223.135
36.838.723
1 Share premium is not available for distribution.
2 Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution
for defense at 20% will be payable on such deemed dividends to the extent that the shareholders (companies and individuals) are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of
the relevant year at any time. This special contribution for defense is payable on account of the shareholders.
3 Exchange differences on intercompany loans to foreign holdings arose as a result of devaluation of the Ukrainian Hryvnia during previous years. The Group treats the mentioned loans as a part of the net investment in foreign operations (Note 41.3).
4 Exchange differences related to the translation from the functional currency of the Group’s subsidiaries are accounted for directly to the foreign currency translation reserve. The foreign currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local currencies against the euro in the countries where the Group’s subsidiaries own property assets.
The notes on pages 40 to 100 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2019|38
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
Note
2019
€
2018
€
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:
(Gain)/Loss on revaluation of investment property
Net loss on disposal of investment property
Other non-cash movements
Fair Value loss on Financial Assets at FV through P&L
Impairment of prepayments and other current assets
Impairment on Receivable from Arcona
Accounts payable written off
Depreciation/ Amortization charge
Interest income
Interest expense
Share of profit from associates
Loss on disposal of subsidiaries
Effect of foreign exchange differences
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
Change 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/(Decrease) in long term receivables
Cash inflow on disposal of subsidiaries
Repayment of interest of loan receivable
Loan granted for property acquisition
Net cash flows from / (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
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
27
15
15
15
12
16
16
21
20
17a
25
26
34
26
36
36
35
14b
21
24
20
26
26
32
32
37
28
28
(2.318.706)
(4.749.528)
(7.068.234)
(1.733.548)
(1.309.332)
(3.042.880)
(417.852)
7.404
35
153.913
380.127
211.310
(462.198)
5.896
(484.606)
1.525.526
(297.985)
4.992.763
511.659
(942.242)
-
(456.878)
1.170.302
(39.954)
(665)
145.045
(75)
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
(124.467)
1.068.053
(391.616)
(368.156)
(516.083)
699.897
608.073
121.772
657
(44.994)
2.030.624
229.576
-
2.945.708
8.016.573
143.263
405
45.667
-
-
(350.000)
7.855.908
503.871
(1.795.665)
(1.002.202)
(385.542)
(2.679.538)
1.044.408
(7.558.655)
(1.528.913)
(356.231)
(8.399.391)
(249.913)
156.414
987.538
831.124
737.625
987.538
The notes on pages 40 to 100 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2019|39
Notes to the Consolidated Financial Statements
For the year ended 31 December 2019
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the ''Company'') was incorporated in Cyprus on 23 June 2005 and is a public
limited liability company, listed on the London Stock Exchange (AIM): ISIN CY0102102213. Its registered office is at Kyriakou Matsi 16,
Eagle House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its principal place of business is in Cyprus at 6 Nikiforou Foka
Street, 1060 Nicosia, Cyprus.
Principal activities
The principal activities of the Group are to invest directly or indirectly in and/or manage real estate properties, as well as real estate
development projects in South East Europe (the "Region"). These include the acquisition, development, commercializing, operating and
selling of property assets in the Region.
The Group maintains offices in Nicosia, Cyprus, Bucharest, Romania and Kiev, Ukraine.
As at 31 December 2019, the companies of the Group employed and/or used the services of 14 full time equivalent people, (2018 15
full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified by the revaluation of investment property and investment property
under construction, of financial assets at fair value through other comprehensive income and of financial assets at fair value through
profit and loss.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Company's accounting policies. It also requires the use of
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates
are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
Following certain conditional agreement signed in December 2018 with Arcona Property Fund N.V for the sale of Company’s non-
Greek portfolio of assets, as well as plans and discussions regarding the Greek asset, the Company has classified its assets in 2018
as discontinued operations (Note 4.3) .
Going concern basis
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for the foreseeable future.
In particular, the Company is in a process of disposing of its portfolio of assets in an all share transaction with Arcona Property Fund
N.V., meaning that as soon as this transaction consummates the Company will be left with its corporate receivables and liabilities.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern within the next twelve months
from the date these financial statements are available to be issued. The ability to continue as a going concern is dependent upon
positive future cash flows.
Management believes that the Company will be able to finance its needs given the fact that the additional corporate receivables, as well
as the consideration received in the form of Arcona shares is estimated that it can effectively discharge all corporate liabilities. At the
same time, the transaction with Arcona Property Fund N.V., which is a cash flow generating entity, will result in the Company being a
~45% shareholder, entitled to dividends according to the dividend policy of Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods beginning on 1 January 2019. This adoption did not have a material
effect on the accounting policies of the Company.
CONSOLIDATED FINANCIAL STATEMENTS 2019|40
4. Significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all years presented in these consolidated financial statements unless otherwise stated.
Local statutory accounting principles and procedures differ from those generally accepted under IFRS. Accordingly, the consolidated
financial information, which has been prepared from the local statutory accounting records for the entities of the Group domiciled in
Cyprus, Romania, Ukraine, Greece and Bulgaria, reflects adjustments necessary for such consolidated financial information to be
presented in accordance with IFRS.
4.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose
entities) controlled by the Company (its subsidiaries).
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts
of acquiree’s identifiable net assets.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in
the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized
in profit or loss.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to
the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39, either
in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured
and its subsequent settlement is accounted for within equity.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about
facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.
Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses
are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting
policies.
Changes in ownership interests in subsidiaries without change of control and Disposal of Subsidiaries
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of non-controlling
interests are also recorded in equity.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is
lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously
recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
4.2 Functional and presentation currency
Items included in the Group's financial statements are measured applying the currency of the primary economic environment in which
the entities operate (''the functional currency''). The national currency of Ukraine, the Ukrainian Hryvnia, is the functional currency for
all the Group’s entities located in Ukraine, the Romanian leu is the functional currency for all Group’s entities located in Romania, the
Bulgarian lev is the functional currency for all Group’s entities in Bulgaria and the Euro is the functional currency for all the Greek and
Cypriot subsidiaries.
CONSOLIDATED FINANCIAL STATEMENTS 2019|41
4. Significant accounting policies (continued)
4.2 Functional and presentation currency (continued)
The consolidated financial statements are presented in Euro, which is the Group’s presentation currency.
As Management records the consolidated financial information of the entities domiciled in Cyprus, Romania, Ukraine, Greece and
Bulgaria in their functional currencies, in translating financial information of the entities domiciled in these countries into Euro for
inclusion in the consolidated financial statements, the Group follows a translation policy in accordance with IAS 21, “The Effects of
Changes in Foreign Exchange Rates”, and the following procedures are performed:
All assets and liabilities are translated at closing rate;
Equity of the Group has been translated using the historical rates;
Income and expense items are translated using exchange rates at the dates of the transactions, or where this is not practicable
the average rate has been used;
All resulting exchange differences are recognized as a separate component of equity;
When a foreign operation is disposed of through sale, liquidation, repayment of share capital or abandonment of all, or part
of that entity, the exchange differences deferred in equity are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
Monetary items receivable from foreign operations for which settlement is neither planned nor likely to occur in the foreseeable
future and in substance are part of the Group’s net investment in those foreign operations are recongised initially in other
comprehensive income and reclassified from equity to profit or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central banks used in translating the financial information of the entities from
the functional currencies into Euro are as follows:
Currency
USD
UAH
RON
BGN
2019
1,1195
28,9406
4,7453
1,9558
4.3 Discontinued operations
Average
31 December
2018
1,1810
32,1341
4,6535
1,9558
2019
1,1234
26,422
4,7793
1,9558
2018
1,1450
31,7141
4,6639
1,9558
2017
1,1993
33,4954
4,6597
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.
CONSOLIDATED FINANCIAL STATEMENTS 2019|42
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Management believes that rescinding or non-renewal of the ground lease is remote if a project is on the final stage of development or
on the operating cycle. In undertaking the valuations reported herein, the valuer of Ukrainian properties CBRE has made the assumption
that no such circumstances will arise to permit the City Authorities to rescind the land lease or not to grant a renewal.
Land held under operating lease is classified and accounted for as investment property when the rest of the definition is met.
Investment property under development or construction initially is measured at cost, including related transaction costs.
The property is classified in accordance with the intention of the management for its future use. Intention to use is determined by the
Board of Directors after reviewing market conditions, profitability of the projects, ability to finance the project and obtaining required
construction permits.
The time point, when the intention of the management is finalized is the date of start of construction. At the moment of start of
construction, freehold land, leasehold land and investment properties held for a future redevelopment are reclassified into investment
property under development or inventory in accordance to the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including related transaction costs. Investment properties are derecognized when
either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit
is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the
consolidated statement of comprehensive income in the period of retirement or disposal.
Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation,
or the commencement of an operating lease to third party. Transfers are made from investment property when, and only when, there
is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale.
If an investment property becomes owner occupied, it is reclassified as property, plant and equipment, and its fair value at the date of
reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment
property is classified as investment property under construction until construction or development is complete. At that time, it is
reclassified and subsequently accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair value of
investment property are included in the statement of comprehensive income in the period in which they arise.
If a valuation obtained for an investment property held under a lease is net of all payments expected to be made, any related
liabilities/assets recognized separately in the statement of financial position are added back/reduced to arrive at the carrying value of
the investment property for accounting purposes.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are
charged to the statement of comprehensive income during the financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial position date. These valuations are prepared annually by chartered surveyors
(hereafter “appraisers”). The Group appointed valuers in 2014, which remain the same in 2019:
CBRE Ukraine, for all its Ukrainian properties,
Real Act for all its Romanian, Greek and Bulgarian properties.
The valuations have been carried out by the appraisers on the basis of Market Value in accordance with the appropriate sections of the
current Practice Statements contained within the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards (2018)
(the “Red Book”) and is also compliant with the International Valuation Standards (IVS).
“Market Value” is defined as: “The estimated amount for which a property should be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion”.
CONSOLIDATED FINANCIAL STATEMENTS 2019|43
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
In expressing opinions on Market Value, in certain cases the appraisers have estimated net annual rentals/income from sale. These are
assessed on the assumption that they are the best rent/sale prices at which a new letting/sale of an interest in property would have
been completed at the date of valuation assuming: a willing landlord/buyer; that prior to the date of valuation there had been a
reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest,
for the agreement of the price and terms and for the completion of the letting/sale; that the state of the market, levels of value and
other circumstances were, on any earlier assumed date of entering into an agreement for lease/sale, the same as on the valuation date;
that no account is taken of any additional bid by a prospective tenant/buyer with a special interest; that the principal deal conditions
assumed to apply are the same as in the market at the time of valuation; that both parties to the transaction had acted knowledgeably,
prudently and without compulsion.
A number of properties are held by way of ground leasehold interests granted by the City Authorities. The ground rental payments of
such interests may be reviewed on an annual basis, in either an upwards or downwards direction, by reference to an established
formula. Within the terms of the lease, there is a right to extend the term of the lease upon expiry in line with the existing terms and
conditions thereof. In arriving at opinions of Market Value, the appraisers assumed that the respective ground leases are capable of
extension in accordance with the terms of each lease. In addition, given that such interests are not assignable, it was assumed that
each leasehold interest is held by way of a special purpose vehicle (“SPV”), and that the shares in the respective SPVs are transferable.
With regard to each of the properties considered, in those instances where project documentation has been agreed with the respective
local authorities, opinions of the appraisers of value have been based on such agreements.
In those instances where the properties are held in part ownership, the valuations assume that these interests are saleable in the open
market without any restriction from the co-owner and that there are no encumbrances within the share agreements which would impact
the sale ability of the properties concerned.
The valuation is exclusive of VAT and no allowances have been made for any expenses of realization or for taxation which might arise
in the event of a disposal of any property.
In some instances the appraisers constructed a Discounted Cash Flow (DCF) model. DCF analysis is a financial modeling technique
based on explicit assumptions regarding the prospective income and expenses of a property or business. The analysis is a forecast of
receipts and disbursements during the period concerned. The forecast is based on the assessment of market prices for comparable
premises, build rates, cost levels etc. from the point of view of a probable developer.
To these projected cash flows, an appropriate, market-derived discount rate is applied to establish an indication of the present value of
the income stream associated with the property. In this case, it is a development property and thus estimates of capital outlays,
development costs, and anticipated sales income are used to produce net cash flows that are then discounted over the projected
development and marketing periods. The Net Present Value (NPV) of such cash flows could represent what someone might be willing
to pay for the site and is therefore an indicator of market value. All the payments are projected in nominal US Dollar/Euro amounts and
thus incorporate relevant inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the appraisers have taken into account in arriving at Market Value the following:
Pre Development
In those instances where the nature of the ‘Project’ has been defined, it was assumed that the subject property will be developed in
accordance with this blueprint. The final outcome of the development of the property is determined by the Board of Directors decision,
which is based on existing market conditions, profitability of the project, ability to finance the project and obtaining required construction
permits.
Development
In terms of construction costs, the budgeted costs have been taken into account in considering opinions of value. However, the
appraisers have also had regard to current construction rates prevailing in the market which a prospective purchaser may deem
appropriate to adopt in constructing each individual scheme. Although in some instances the appraisers have adopted the budgeted
costs provided, in some cases the appraisers’ own opinions of costs were used.
Post Development
Rental values have been assessed as at the date of valuation but having regard to the existing occupational markets taking into account
the likely supply and demand dynamics during the anticipated development period. The standard letting fees were assumed within the
valuations. In arriving at their estimates of gross development value (“GDV”), the appraisers have capitalized their opinion of net
operating income, having deducted any anticipated non-recoverable expenses, such as land payments, and permanent void allowance,
which has then been capitalized into perpetuity.
CONSOLIDATED FINANCIAL STATEMENTS 2019|44
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
The capitalization rates adopted in arriving at the opinions of GDV reflect the appraisers’ opinions of the rates at which the properties
could be sold as at the date of valuation.
In terms of residential developments, the sales prices per sq. m. again reflect current market conditions and represent those levels the
appraisers consider to be achievable at present. It was assumed that there are no irrecoverable operating expenses and that all costs
will be recovered from the occupiers/owners by way of a service charge.
The valuations take into account the requirement to pay ground rental payments and these are assumed not to be recoverable from
the occupiers. In terms of ground rent payments, the appraisers have assessed these on the basis of information available, and if not
available they have calculated these payments based on current legislation defining the basis of these assessments. Property tax is not
presently payable in Ukraine.
4.5 Investment Property under development
Property that is currently being constructed or developed, for future use as investment property is classified as investment property
under development carried at cost until construction or development is complete, or its fair value can be reliably determined. This
applies even if the works have temporarily being stopped.
4.6 Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated
impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or Groups of cash-generating
units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the
unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or
loss in the consolidated statement of comprehensive income. An impairment loss recognized for goodwill is not reversed in subsequent
periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or
loss on disposal.
4.7 Property, Plant and equipment and intangible assets
Property, plant and equipment and intangible non-current assets are stated at historical cost less accumulated depreciation and
amortization and any accumulated impairment losses.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined and
intangibles not inputted into exploitation, are carried at cost, less any recognized impairment loss. Cost includes professional fees and,
for qualifying assets, borrowing costs capitalized in accordance with the Group's accounting policy. Depreciation of these assets, on the
same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation and amortization are calculated on the straight-line basis so as to write off the cost of each asset to its residual value over
its estimated useful life. The annual depreciation rates are as follows:
Type
Leasehold
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 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.
CONSOLIDATED FINANCIAL STATEMENTS 2019|45
4. Significant accounting policies (continued)
4.7 Property, Plant and equipment and intangible assets (continued)
Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its
recoverable amount.
Expenditure for repairs and maintenance of tangible and intangible assets is charged to the statement of comprehensive income of the
year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the
asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing
asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.
An item of tangible and intangible assets is derecognized upon disposal or when no future economic benefits are expected to arise from
the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the statement of
comprehensive income.
4.8 Inventory
Inventory principally comprises of residential property. Inventory is recognized initially at cost, including transaction costs, which
represent its fair value at the time of acquisition. Costs related to the development of land are capitalised and recognized as inventory.
Inventory is carried at the lower of cost and net realizable value.
4.9 Cash and Cash equivalents
Cash and cash equivalents include cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of
cash flows.
4.10 Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they
will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any
impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis,
except that no loss is allocated to inventories, financial assets or investment property, which continue to be measured in accordance
with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-for-distribution and
subsequent gains and losses on remeasurement are recognised in profit or loss.
4.11 Financial Instruments
4.11.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial
liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at
fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable
without a significant financing component is initially measured at the transaction price.
4.11.2 Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment;
or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing
financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the
change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
-
-
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
CONSOLIDATED FINANCIAL STATEMENTS 2019|46
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.2 Classification and subsequent measurement (continued)
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
-
-
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes
in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
Financial assets – Business model assessment:
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because
this best reflects the way the business is managed and information is provided to management. The information considered includes:
-
-
-
-
the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether
management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile,
matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising
cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Group’s management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and
how those risks are managed;
how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets
managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations
about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose,
consistent with the Group’s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at
FVTPL.
Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest:
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined
as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms
of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
-
-
-
-
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable-rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially
represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional
compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual
par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus
accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated
as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets – Subsequent measurement and gains and losses:
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised
in profit or loss. However for derivatives designated as hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange
gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition,
gains and losses accumulated in OCI are reclassified to profit or loss.
CONSOLIDATED FINANCIAL STATEMENTS 2019|47
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.2 Classification and subsequent measurement (continued)
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified
to profit or loss.
4.11.3 Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also
derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in
which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including
any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
4.11.4 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or
to realise the asset and settle the liability simultaneously.
4.11.5 Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting –
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives
are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are
met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable
forecast transactions arising from changes in foreign exchange rates and interest rates and certain derivatives and non-derivative
financial liabilities as hedges of foreign exchange risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking
the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative
is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is
recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from
inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in
cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (‘forward points’) is
separately accounted for as a cost of hedging and recognised in a costs of hedging reserve within equity.
CONSOLIDATED FINANCIAL STATEMENTS 2019|48
4. Significant accounting policies (continued)
4.11 Financial Instruments (continued)
4.11.5 Derivative financial instruments and hedge accounting (continued)
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount
accumulated in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item
when it is recognised.
For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified
to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised,
then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that
has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non-
financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to
profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment
in a foreign operation, the effective portion of, for a derivative, changes in the fair value of the hedging instrument or, for a non-
derivative, foreign exchange gains and losses is recognised in OCI and presented in the translation reserve within equity. Any ineffective
portion of the changes in the fair value of the derivative or foreign exchange gains and losses on the non-derivative is recognised
immediately in profit or loss. The amount recognised in OCI is reclassified to profit or loss as a reclassification adjustment on disposal
of the foreign operation.
4.12 Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether
a contract conveys the right to control the use of an identified asset, the Company assesses whether:
the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right,
then the asset is not identified;
the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of
use; and
the Company has the right to direct the use of the asset. The Company has this right when it has the decision making rights
that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for
what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
the Company has the right to operate the asset; or
the Company designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract
to each lease component on the basis of their relative stand alone prices. However, for the leases of land and buildings in which it is a
lessee, the Company has elected not to separate non lease components and account for the lease and non lease components as a
single lease component.
The Company as lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating
lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the
economic life of the asset.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub lease separately. It assesses
the lease classification of a sub lease with reference to the right of use asset arising from the head lease, not with reference to the
underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies
the sub lease as an operating lease.
CONSOLIDATED FINANCIAL STATEMENTS 2019|49
4. Significant accounting policies (continued)
4.12 Leases (continued)
If an arrangement contains lease and non lease components, the Company applies IFRS 15 to allocate the consideration in the contract.
The Company recognises lease payments received under operating leases as income on a straight line basis over the lease term as part
of 'other income'.
The accounting policies applicable to the Company as a lessor in the comparative period were not different from IFRS 16. However,
when the Company was an intermediate lessor the sub leases were classified with reference to the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentives received.
The right of use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the
end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of the right of use assets are
determined on the same basis as those of property and equipment. In addition, the right of use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing
rate.
Lease payments included in the measurement of the lease liability comprise the following:
fixed payments, including in substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencementdate;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional
renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease
unless the Company is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future
lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount expected to be
payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension
or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use asset,
or is recorded in profit or loss if the carrying amount of the right of use asset has been reduced to zero.
The Company presents its right of use assets that do not meet the definition of investment property in 'Property, plant and equipment'
in the statement of financial position.
The lease liabilities are presented in 'loans and borrowings'in the statement of financial position.
Short term leases and leases of low value assets
The Company has elected not to recognise the right of use assets and lease liabilities for short term leases that have a lease term of
12 months or less and leases of low value assets (i.e. IT equipment, office equipment etc.). The Company recognises the lease payments
associated with these leases as an expense on a straight line basis over the lease term.
4.13 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period
of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production
of a qualifying asset, in which case they are capitalized as part of the cost of that asset.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extend there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment and amortised
over the period of the facility to which it relates.
CONSOLIDATED FINANCIAL STATEMENTS 2019|50
4. Significant accounting policies (continued)
4.13 Borrowings (continued)
Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on
borrowings, amortization of discounts or premium relating to borrowings, amortization of ancillary costs incurred in connection with the
arrangement of borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of that asset,
when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at
least twelve months after the reporting date.
4.14 Tenant security deposits
Tenant security deposits represent financial advances made by lessees as guarantees during the lease and are repayable by the Group
upon termination of the contracts. Tenant security deposits are recognized at nominal value.
4.15 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment loss annually, and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of
the impairment loss is treated as a revaluation increase.
4.16 Share Capital
Ordinary shares are classified as equity.
4.17 Share premium
The difference between the fair value of the consideration received by the shareholders and the nominal value of the share capital
being issued is taken to the share premium account.
4.18 Share-based compensation
The Group had in the past and intends in the future to operate a number of equity-settled, share-based compensation plans, under
which the Group receives services from Directors and/or employees as consideration for equity instruments (options) of the Group. The
fair value of the Director and employee cost related to services received in exchange for the grant of the options is recognized as an
expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of
any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which
is the period over which all of the specified vesting conditions are to be satisfied. At each financial position date, the Group revises its
estimates on the number of options that are expected to vest based on the non-marketing vesting conditions. It recognizes the impact
of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The
proceeds received net of any directly attributable transaction costs are credited to share capital and share premium when the options
are exercised.
CONSOLIDATED FINANCIAL STATEMENTS 2019|51
4. Significant accounting policies (continued)
4.19 Provisions
Provisions are recognized when the Group has a present obligation (legal, tax or constructive) as a result of a past event, it is probable
that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. As at the
reporting date the Group has settled all its construction liabilities.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect
of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable
is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
4.20 Non-current liabilities
Non-current liabilities represent amounts that are due in more than twelve months from the reporting date.
4.21 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns,
rebates and other similar allowances. It is recognized to the extent that it is probable that the economic benefits associated with the
transaction will flow to the Group and the revenue can be measured reliably. Revenue earned by the Group is recognized on the
following bases:
4.21.1 Income from investing activities
Income from investing activities includes profit received from disposal of investments in the Company’s subsidiaries and associates and
income accrued on advances for investments outstanding as at the year end.
4.21.2 Dividend income
Dividend income from investments is recognized when the shareholders’ right to receive payment has been established (provided that
it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).
4.21.3 Interest income
Interest income is recognized on a time-proportion (accrual) basis, using the effective interest rate method.
4.21.4 Rental income
Rental income arising from operating leases on investment property is recognized on an accrual basis in accordance with the substance
of the relevant agreements.
4.22 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized on an accrual basis.
4.23 Other property expenses
Irrecoverable running costs directly attributable to specific properties within the Group's portfolio are charged to the statement of
comprehensive income. Costs incurred in the improvement of the assets which, in the opinion of the directors, are not of a capital
nature are written off to the statement of comprehensive income as incurred.
4.24 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in the statement of comprehensive income in the period in which they are incurred as interest
costs which are calculated using the effective interest rate method, net result from transactions with securities, foreign exchange gains
and losses, and bank charges and commission.
CONSOLIDATED FINANCIAL STATEMENTS 2019|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 and Romania, while the Parent and some holding companies are
incorporated in Cyprus. The Group’s management and control is exercised in Cyprus.
The Group’s Management does not intend to dispose of any asset, unless a significant opportunity arises. In the event that a decision
is taken in the future to dispose of any asset it is the Group’s intention to dispose of shares in subsidiaries rather than assets. The
corporate income tax exposure on disposal of subsidiaries is mitigated by the fact that the sale would represent a disposal of the
securities by a non-resident shareholder and therefore would be exempt from tax. The Group is therefore in a position to control the
reversal of any temporary differences and as such, no deferred tax liability has been provided for in the financial statements.
4.26.4 Withholding Tax
The Group follows the applicable legislation as defined in all double taxation treaties (DTA) between Cyprus and any of the countries of
Operations (Romania, Ukraine,). In the case of Romania, as the latter is part of the European Union, through the relevant directives
the withholding tax is reduced to NIL subject to various conditions.
4.26.5 Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which
the dividends are approved by the Company’s shareholders.
4.27 Value added tax
VAT levied at various jurisdictions were the Group is active, was at the following rates, as at the end of the reporting period:
20% on Ukrainian domestic sales and imports of goods, works and services and 0% on export of goods and provision of
works or services to be used outside Ukraine.
19% on Cyprus domestic sales and imports of goods, works and services and 0% on export of goods and provision of works
or services to be used outside Cyprus.
19% on Romanian domestic sales and imports of goods, works and services (decreased from 20% from 1 January 2017) and
0% on export of goods and provision of works or services to be used outside Romania.
CONSOLIDATED FINANCIAL STATEMENTS 2019|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
Amendments
IFRS Interpretations Committee
Amendments to IAS 1 and IAS 8: Definition of Material (issued on 31 October 2018) (effective for annual periods beginning
•
on or after 1 January 2020).
The amendments clarify the definition of material and how it should be applied by including in the definition guidance that until now
has featured elsewhere in IFRS. In addition, the explanations accompanying the definition have been improved. Finally, the amendments
ensure that the definition of material is consistent across all IFRS Standards. Information is material if omitting, misstating or obscuring
it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the
basis of those financial statements, which provide financial information about a specific reporting entity.
•
after 1 January 2020)
Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or
CONSOLIDATED FINANCIAL STATEMENTS 2019|54
5. New accounting pronouncement (continued)
In March 2018 the IASB issued a comprehensive set of concepts for financial reporting, the revised ''Conceptual Framework for Financial
Reporting'' (Conceptual Framework), replacing the previous version issued in 2010. The main changes to the framework's principles
have implications for how and when assets and liabilities are recognised and derecognised in the financial statements, while some of
the concepts in the revised Framework are entirely new (such as the ''practical ability'' approach to liabilities''. To assist companies with
the transition, the IASB issued a separate accompanying document ''Amendments to References to the Conceptual Framework in IFRS
Standards''. This document updates some references to previous versions of the Conceptual Framework in IFRS Standards, their
accompanying documents and IFRS Practice Statements.
(ii)
Issued by the IASB but not yet adopted by the European Union
IFRS 17 ''Insurance Contracts'' (effective for annual periods beginning on or after 1 January 2021).
New standards
•
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts that was
issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e. life, non life, direct insurance and re insurance), regardless of
the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features.
A few scope exceptions will apply.
Amendments
•
23 January 2020) (effective for annual periods beginning on or after 1 January 2020).
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non current (issued on
Amendment to IFRS 3 Business Combinations (issued on 22 October 2018) (effective for annual periods beginning on or after
•
1 January 2020)
The amendments revise definition of a business. A business must have inputs and a substantive process that together significantly
contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process
are present, including for early stage companies that have not generated outputs. An organised workforce should be present as a
condition for classification as a business if are no outputs. The definition of the term 'outputs' is narrowed to focus on goods and services
provided to customers, generating investment income and other income, and it excludes returns in the form of lower costs and other
economic benefits. It is also no longer necessary to assess whether market participants are capable of replacing missing elements or
integrating the acquired activities and assets. An entity can apply a 'concentration test'. The assets acquired would not represent a
business if substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets).
•
Joint Venture(effective date postponed indefinitely).
The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with
the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is
that a full gain or loss is recognised when a transaction involves a business (as defined in IFRS 3). A partial gain or loss is recognised
when a transaction involves assets that do not constitute a business. In December 2015, the IASB postponed the effective date of this
amendment indefinitely pending the outcome of its research project on the equity method of accounting.
The above are expected to have no significant impact on the Company's financial statements when they become effective.
IFRS 10 (Amendments) and IAS 28 (Amendments) ''Sale or Contribution of Assets between an Investor and its Associate or
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on
Management's best knowledge of current events and actions and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Actual results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the future, the resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below:
Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the state's ability to pay its dues (VAT receivable). If indications of non-
recoverability exist, the recoverable amount is estimated and a respective provision for impairment of receivables is made. The amount
of the provision is charged through profit or loss. The review of credit risk is continuous and the methodology and assumptions used
for estimating the provision are reviewed regularly and adjusted accordingly. As at the reporting date Management did not consider
necessary to make a provision for impairment of receivables.
Fair value of financial assets
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company
uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each
reporting date. The fair value of the financial assets at fair value through other comprehensive income has been estimated based on
the fair value of these individual assets.
CONSOLIDATED FINANCIAL STATEMENTS 2019|55
6. Critical accounting estimates and judgments (continued)
Fair value of investment property
The fair value of investment property is determined by using various valuation techniques. The Group selects accredited professional
valuers with local presence to perform such valuations. Such valuers use their judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at each financial reporting date. The fair value has been estimated as
at 31 December 2019 (Note 19.2).
Income taxes
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
Impairment of tangible assets
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units).
Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of the investment property and investment property under development as
the Group is able to control the timing of the reversal of this temporary difference and the Management has intention not to reverse
the temporary difference in the foreseeable future. The properties are held by subsidiary companies in Ukraine, Greece and Romania.
Management estimates that the assets will be realized through a share deal rather than through an asset deal. Should any subsidiary
be disposed of, the gains generated from the disposal will be exempt from any tax.
Application of IFRS 10
The Group has considered the application of IFRS 10 and concluded that the Company is not an Investment Entity as defined by IFRS
10 and it should continue to consolidate all of its investments, as in 2016. The reasons for such conclusion are among others that the
Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development, allocation of capital expenditure for its properties, marketing etc.)
in order to provide benefits other than capital appreciation and/or investment income,
c) to have investments that are not bound by time in relation to the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making investment decisions. The latter is being based on metrics like
IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate property holding and development associated risks, property market price
risk, interest rate risk, credit risk, liquidity risk, currency risk, other market price risk, operational risk, compliance risk, litigation risk,
reputation risk, capital risk and other risks arising from the financial instruments it holds. The risk management policies employed by
the Group to manage these risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and economic environment of countries in which it operates. Notably:
7.1.1.1 Ukraine
After a significant deterioration in 2014 and 2015, the current political and economic situation in Ukraine remains volatile. In 2019, the
Ukrainian government continues to implement a comprehensive structural reform program aimed at eliminating existing imbalances in
the economy, public finances and governance, fighting corruption, and reforming the legal environment to provide conditions for
economic recovery in the country.
The stabilization of Ukraine's economy in the near future depends on the success of the government's actions and the provision of
continuous financial support to Ukraine by international donors and international financial institutions.
CONSOLIDATED FINANCIAL STATEMENTS 2019|56
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.1 Operating Country Risks (continued)
7.1.1.1 Ukraine(continued)
The National Bank of Ukraine continues to adhere to the policy of floating exchange rate of hryvnia. During 2019, the official exchange
rate of hryvnia to the US dollar of the National Bank of Ukraine decreased by 13% from 27.6883 hryvnia for the US dollar on January
1, 2019 to 23.6862 hryvnia for the US dollar on December 31, 2019. During 2019, the National Bank of Ukraine reduced the discount
rate from 18.0% to 13.5%.
Regarding currency regulation, the National Bank of Ukraine continued the policy of reducing currency restrictions, and starting from
March 2019, reduced the mandatory share of exchange of foreign currency earnings from 50% to 30%, and completely abolished this
restriction starting from June 20, 2019.
In 2019, consumer inflation slowed to 4.1% (from 9.8% in 2018), and real GDP growth amounted to 3.2%. The slowdown in inflation
was facilitated by moderate dynamics of food prices, as well as the strengthening of the hryvnia exchange rate due to the foreign
exchange surplus in the market, which was maintained during most of 2019.
International rating agencies Fitch and Standard & Poor's have upgraded Ukraine's sovereign rating to B. The agencies noted a significant
improvement in the macroeconomic situation, responsible fiscal and budgetary policies, and the emergence of a "window of opportunity"
for economic reform. At the end of 2019, the international rating agency Moody's Investors Service reaffirmed Ukraine's sovereign credit
rating in national and foreign currencies at Caa1 and changed the stable outlook to positive.
7.1.1.2 Romania
The Romanian economy continued to grow within 2019, featuring GDP growth of 4.1%, according to Eurostat. The strong growth has
been mainly fueled from a large domestic market, a diversified and competitive industry mainly due to cheap labor, as well as a limited
energy dependence thanks to coal, oil, and gas.
Inflation for 2019 was at 3.9%, following a 2018 4.6% increase. Private consumption for the year will ease, although its solid level and
substantial share in the economy (63% of GDP) will keep it as the main growth driver. The ongoing improvement on the labour market,
with the unemployment rate dropping to 3.8% in mid-2019, and further growth of wages and pensions, will continue to support
household spending. Labor cost continues to be amonst the lowest in Europe, giving a constant boost to foreign investment and
services sector.
On the other hand, exports’ growth will be limited due to the global trade downturn and deteriorated prospects of main export
destinations. Therefore, the contribution of next exports to GDP growth is likely to remain negative but less so. Moreover, increased
public spending has raised questions in relation to the future level of budget deficit and the overall sustainability of current economic
growth.
7.1.2 Risks associated with property holding and development associated risks
Several factors may affect the economic performance and value of the Group's properties, including:
risks associated with construction activity at the properties, including delays, the imposition of liens and defects in
workmanship;
the ability to collect rent from tenants, on a timely basis or at all, taking also into account currency rapid devaluation risk;
the amount of rent and the terms on which lease renewals and new leases are agreed being less favorable than current
leases;
cyclical fluctuations in the property market generally;
local conditions such as an oversupply of similar properties or a reduction in demand for the properties;
the attractiveness of the property to tenants or residential purchasers;
decreases in capital valuations of property;
changes in availability and costs of financing, which may affect the sale or refinancing of properties;
covenants, conditions, restrictions and easements relating to the properties;
changes in governmental legislation and regulations, including but not limited to designated use, allocation, environmental
usage, taxation and insurance;
the risk of bad or unmarketable title due to failure to register or perfect our interests or the existence of prior claims,
encumbrances or charges of which we may be unaware at the time of purchase;
the possibility of occupants in the properties, whether squatters or those with legitimate claims to take possession;
the ability to pay for adequate maintenance, insurance and other operating costs, including taxes, which could increase over
time; and
political uncertainty, acts of terrorism and acts of nature, such as earthquakes and floods that may damage the properties.
CONSOLIDATED FINANCIAL STATEMENTS 2019|57
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group’s portfolio investments will fluctuate as a result of changes in market prices. The
Group's assets are susceptible to market price risk arising from uncertainties about future prices of the investments. The Group's market
price risk is managed through diversification of the investment portfolio, continuous elaboration of the market conditions and active
asset management. To quantify the value of its assets and/or indicate the possibility of impairment losses, the Group commissioned
internationally acclaimed valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no
significant interest-bearing assets apart from its cash balances that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. All of the Group's borrowings
are issued at a variable interest rate. Management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from
financial assets at hand at the end of the reporting period. Cash balances are held with high credit quality financial institutions and the
Group has policies to limit the amount of credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not
the Group's functional currency. Excluding the transactions in Ukraine all of the Group’s transactions, including the rental proceeds are
denominated or pegged to EUR. In Ukraine, even though there is no steady income stream, the fluctuations of UAH against EUR entails
significant FX risk for the Group in terms of its local assets valuation. Management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly. It should be noted that the current political uncertainty in Ukraine, and any currency devaluation
may affect the Group’s financial position.
Management is monitoring foreign exchange fluctuations closely and acts accordingly.
7.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders
through the optimization of the debt and equity balance. The Group’s core strategy is described in Note 44.1 of the consolidated financial
statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non-compliance with laws and
regulations of each country the Group is present, as well as from the stock exchange where the Company is listed. Although the Group
is trying to limit such risk, the uncertain environment in which it operates in various countries increases the complexities handled by
Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of the Group's operations or any other undesirable situation that arises from the
possibility of non-execution or violation of legal contracts and consequentially of lawsuits. The risk is restricted through the contracts
used by the Group to execute its operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet its financial obligations towards a lender as debts become due.
Addressing and resolving any insolvency issues is usually a slow moving process in the Region. Management is closely involved in
discussions with creditors when/if such cases arise in any subsidiary of the Group aiming to effect alternate repayment plans including
debt repayment so as to minimize the effects of such situations on the Group’s asset base.
CONSOLIDATED FINANCIAL STATEMENTS 2019|58
7. Risk Management (continued)
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies relating to the Group's information technology and control systems, as well
as the risk of human error and natural disasters. The Group’s systems are evaluated, maintained and upgraded continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the end of the reporting period.
8. Investment in subsidiaries
The Company has direct and indirect holdings in other companies, collectively called the Group, that were included in the consolidated
financial statements, and are detailed below.
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
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
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 2019
100
100
100
55
-
as at
31 Dec 2018
100
100
100
55
100
Ukraine
Ukraine
Ukraine
Cyprus
Romania
Cyprus
Romania
Cyprus
Greece
Cyprus
Cyprus
Cyprus
Romania
Romania
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
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
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
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
CONSOLIDATED FINANCIAL STATEMENTS 2019|59
8. Investment in subsidiaries (continued)
During the reporting period the Group proceeded with the disposal of Aisi Bela in Ukraine as well as with the disposal of the Boyana
Residence in Bulgaria, as part of the Arcona’s transaction. In addition the Group also disposed of Victini Logistics Park AE in Greece on
top of the aforementioned transactions with Arcona.
The Group has resolved to streamline its structure in Cyprus and Romania for cost cutting and tax optimization purposes. Towards this
goal, during 2018 the following mergers have been finalized:
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.
Following extended but unsuccessful negotiations for more than 2 years with Tonescu Finance Srl, the company which has acquired
Monaco Towers property’s loan, SecMon Real Estate Srl entered voluntarily in January 2018 into insolvency process, in order to protect
its interests against its creditor, given that the value of the assets is higher than the value of the relevant loan. The entering of SecMon
Real Estate Srl in the insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl is not
consolidated in the present consolidated financial statements.
9. Discontinued operations
9.(a) Description
The Company announced at 18 December 2018 that it has entered into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties (‘the Non-Greek Portfolio’), in an all-share transaction to Arcona Property
Fund N.V. The transaction is subject to, among other things, asset and tax due diligence (including third party asset valuations) and
regulatory approvals (including the approval of a prospectus required in connection with the issuance and admission to listing of the
new Arcona Property Fund N.V. shares), as well as successful negotiating and signature of transaction documents. During 2019 and as
part of the Arcona transaction the Company sold the Boyana Residence asset in Bulgaria, as well as the Bela and Balabino land plots in
Ukraine, while currently it is negotiating with Arcona the sale of the assets included in Stage 2 of the transaction, EOS and Delenco
assets in Romania, as well as the Tsymlyanskiy and Kiyanovskiy assets in Ukraine. Stage 2 of the transaction is expected to close by
the end of 2020 subject to COVID-19 effects.
Additionally, the Company also sold the Greek logistics property Victini Logistics, which was not part of the Arcona transaction.
The companies that are classified under discontinued operations are the followings:
Bulgaria: Boyana Residence ood (sold during 2019)
•
•
Cyprus: Ashor Ventures Limited, Ebenem Limited, Jenby Ventures Limited, Edetrio Holdings Limited, Rimasol Enterprises
Limited, Emakei Holdings Limited, Iuliu Maniu Limited, Ram Real Estate Management Limited, Frizomo Holdings Limited, Ketiza Holdings
Limited
•
•
Investments Srl, Best Day Real Estate Srl, N-E Real Estate Park First Phase Srl, Ketiza Real Estate Srl, SPDI Real Estate Srl
•
Development Balabino
Greece: Victini Logistics Park S.A. (sold during 2019)
Romania: Ashor Development Srl, Ebenem Investments Srl, Jenby Investments Srl, Rimasol Real Estate Srl, Moselin
Ukraine: LLC Aisi Bela (sold during 2019), LLC Aisi Ukraine, LLC Almaz‑Pres‑Ukraine, LLC Trade Center, LLC Retail
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 2019|60
9. Discontinued operations (continued)
9.(b) Results of discontinued operations
For the year ended 31 December 2019
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/(loss) on disposal of subsidiaries
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
Note
10
11
12
21
13
14a
14b
20
15
16
16
17a
18
2019
€
1.891.708
(591.811)
1.299.897
(220.509)
297.985
417.852
-
(7.404)
(4.992.763)
312.801
(2.892.141)
10.022
(1.430.529)
(4.312.648)
2018
€
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)
(436.880)
(4.749.528)
(10.233)
(1.309.332)
(52.315)
(96.567)
(4.801.843)
(1.405.899)
(4.846.634)
44.791
(4.801.843)
(699.271)
(706.628)
(1.405.899)
31 Dec 2019
€
1.897.780
31 Dec 2018
€
2.930.026
(2.770.679)
2.677.920
1.805.021
(3.910.958)
1.287.742
306.810
9.(d) Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in relation to the discontinued operation as at 31 December 2019:
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 FV 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
Taxation
Deposits from tenants
Total liabilities of group held for sale
Note
31 Dec 2019
€
31 Dec 2018
€
19.4a
19.4b
23
24
21
22
25
26
28
32
37
34
36
35
42.180.852
-
14.342
315.265
5.380.021
1
-
1.470.772
530.374
49.891.627
8.949.660
10.084.470
1.015.266
216.563
67.269
20.333.228
63.345.537
4.716.157
42.534
270.271
5.313.235
1
4.604.044
682.134
704.825
79.678.738
22.605.474
10.470.012
1.500.603
498.530
219.274
35.293.893
CONSOLIDATED FINANCIAL STATEMENTS 2019|61
10. Income
Income from continued operations for the year ended 31 December 2019 represents:
a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded
with tenants of Innovations Logistics Park (Romania) and Praktiker Craiova (Romania). It is noted that part of the rental and service
charges/ utilities income related to Innovations Logistics Park (Romania) is currently invoiced by the Company as part of a relevant
lease agreement with the Innovations SPV and the lender, however the asset, through the SPV, is planned to be transferred as part
of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer, the Company will negotiate with the
lender its release from the aforementioned lease agreement, and if succeeds, upon completion such income will be also transferred.
Continued operations
Rental income
Service charges and utilities income
Service and property management income
Total income
31 Dec 2019
€
364.034
93.416
-
457.450
31 Dec 2018
€
631.636
9.534
128.293
769.463
Income from discontinued operations for the year ended 31 December 2019 represents:
a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded
with tenants of Innovations Logistics Park (Romania), EOS Business Park (Romania), and Victini Logistics (Greece) until the date of
disposal,
income from the sale of electricity by Victini Logistics to the Greek grid until the same of disposal,
b)
b) rental income and service charges by tenants of the Residential Portfolio, and;
c)
income from third parties and /or partners for consulting and managing real estate properties
Discontinued operations (Note 9)
Rental income
Sale of electricity
Service charges and utilities income
Service and property management income
Total income
31 Dec 2019
€
1.726.978
128.623
33.982
2.125
1.891.708
31 Dec 2018
€
1.963.724
294.773
118.211
2.167
2.378.875
Occupancy rates in the various income producing assets of the Group as at 31 December 2019 were as follows:
Income producing assets
%
EOS Business Park
Innovations Logistics Park
Victini Logistics
Kindergarten
11. Asset operating expenses
Romania
Romania
Greece
Romania
31 Dec 2019
31 Dec 2018
100
70
-
100
100
37
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 in 2018.
Continued operations
Property related taxes
Repairs and technical maintenance
Property insurance
Total
31 Dec 2019
€
-
-
-
-
31 Dec 2018
€
(77.723)
(4.150)
(36.446)
(118.319)
CONSOLIDATED FINANCIAL STATEMENTS 2019|62
11. Asset operating expenses (continued)
Under discontinued operations are all the expenses related to Innovations Logistics Park (Romania), EOS Business Park (Romania),
Residential Portfolio (Romania), GreenLake (Romania), and all Ukrainian properties.
Discontinued operations (Note 9)
Property related taxes
Property management fees
Repairs and technical maintenance
Utilities
Property security
Property insurance
Leasing expenses
Other operating expenses
Total
31 Dec 2019
€
(199.725)
-
(195.428)
(95.688)
(35.191)
(17.184)
(48.329)
(266)
(591.811)
31 Dec 2018
€
(227.819)
(120.630)
(69.377)
(73.715)
(37.301)
(32.638)
(44.258)
(331)
(606.069)
Property related taxes reflect local taxes of land and building properties (in the form of land taxes, building taxes, garbage fees, etc.).
Property Management fees in 2018 relate to Property Management Agreements for Victini Logistics Park with third party managers
outsourcing the related services. The Park was sold during 2019 and no such services were rendered during the period.
Repairs and technical maintenance increased substantially during the period due to relevant works performed in Innovations Logistics
Park in Bucharest, essential for hosting successfully new tenant in the cold spaces of the property.
Leasing expenses reflect expenses related to long term land leasing.
12. Administration Expenses
Continued operations
Salaries and Wages
Incentives to Management
Advisory fees
Public group expenses
VAT expensed
Corporate registration and maintenance fees
Audit fees
Accounting fees
Legal fees
Depreciation/Amortization charge
Directors Renumeration
Corporate operating expenses
Total Administration Expenses
Discontinued operations (Note 9)
Salaries and Wages
Advisory fees
Corporate registration and maintenance fees
Audit and accounting fees
Accounting fees
Legal fees
Depreciation/Amortization charge
Corporate operating expenses
Total Administration Expenses
31 Dec 2019
€
(459.789)
(280.000)
(614.315)
(100.084)
(112.815)
(60.905)
(86.031)
(23.879)
(442.051)
(3.399)
(73.108)
(185.795)
(2.442.171)
31 Dec 2019
€
(44.753)
(29.496)
(38.721)
(54.560)
(12.141)
(11.406)
(2.497)
(26.935)
(220.509)
31 Dec 2018
€
(556.580)
-
(438.423)
(210.097)
-
(65.234)
(85.300)
(14.841)
(193.644)
(5.502)
-
(199.226)
(1.768.847)
31 Dec 2018
€
(43.073)
(26.666)
(54.903)
(64.848)
(841)
(20.650)
(21.882)
(27.850)
(260.714)
Salaries and wages include the remuneration of the CEO, the CFO, the Group Commercial Director and the Country Managers of Ukraine
and Romania, as well as the salary cost of personnel employed in the various Company’s offices in the region.
Incentives to Management provided during 2019 for the successful disposal of Victini Logistics Park, and the completion of Stage 1 of
the transaction with Arcona which was fully paid in shares of the Company.
CONSOLIDATED FINANCIAL STATEMENTS 2019|63
12. Administration Expenses (continued)
Advisory fees are mainly related to advisors, brokers and other professionals engaged in relevant transactions and capital raising
campaigns, as well as outsourced human resources support on the basis of relevant contracts. In 2019 the advisory fees includes EUR
145k paid in Company’s shares to advisors engaged with the successful completion of Stage 1 of the transaction with Arcona, as well
as EUR 28k for due diligence expenses related to the Arcona transaction. In 2018 the advisory fees includes one-off elements related
to the disposal of Praktiker asset (EUR 180k) and due diligence expenses (EUR 90k) for non consummated transactions, in relation to
the acquisitions of logistic asset portfolios in Greece and Romania.
Audit and accounting expenses include the audit fees and accounting fees for the Company and all the subsidiaries.
Public group expenses include among others fees paid to the AIM:LSE stock exchange and the Nominated Adviser of the Company, as
well as other expenses related to the listing of the Company.
Corporate registration and maintenance fees represent fees charged for the annual maintenance of the Company and its subsidiaries,
as well as fees and expenses related to the normal operation of the companies including charges by the relevant local authorities.
Legal fees represent legal expenses incurred by the Group in relation to asset operations (rentals, sales, etc.), ongoing legal cases in
Ukraine, Cyprus and Romania, compliance with AIM listing, as well as one-off fees associated with legal services and advise in relation
to due diligence processes, and transactions. The increase in 2019 came as a result of an over EUR 350k relevant costs for legal advices
and support related to the transaction with Arcona.
Directors fees for the period H1 2019 were paid fully in Company’s shares.
Corporate operating expenses include office expenses, travel expenses, (tele)communication expenses, D&O insurance and all other
general expenses for Cypriot, Romanian, Ukrainian, Bulgarian and Greek operations.
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the reporting period, excluding foreign exchange translation differences which
are incorporated in the table of Note 19.2, are presented in the tables below.
Discontinued operations (Note 9)
Property Name (€)
Bela Logistic Park
Kiyanovskiy Residence
Tsymlyanskiy Residence
Balabino Project
Rozny Lane
Innovations Logistics Park
EOS Business Park
Residential Portfolio
GreenLake
Kindergarten
Victini Logistics
Total
Valuation gains/(losses)
31 Dec 2019
€
-
(543.263)
(77.541)
-
20.152
257.785
285.545
27.366
381.385
66.423
-
417.852
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)
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling properties classified under either Investment Property (Romanian
residential assets) or Inventory (Bulgarian residential assets), both designated as non-core assets. The gain/ (losses) from disposal of
such properties are presented below:
14a Inventory
During 2019 the Group completely disposed of the Boyana Residence, which was classified as inventory (Notes 20 & 26).
Discontinued operations (Note 9)
Income from sale of inventory
Cost of inventory
Loss from disposal of inventory
31 Dec 2019
€
-
-
-
31 Dec 2018
€
194.953
(208.504)
(13.553)
CONSOLIDATED FINANCIAL STATEMENTS 2019|64
14. Gain/ (Loss) from disposal of properties (continued)
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 2019
€
-
-
-
31 Dec 2018
€
6.517.181
(7.362.362)
(845.181)
During 2019 the Group sold 3 apartments in Romfelt Plaza (Doamna Ghica) and 4 apartments and 2 parking spaces in Zizin while during
2018 the Group sold 10 apartments in Romfelt Plaza and 5 apartments and 2 parking spaces in Zizin. Additionally a villa in SPDI Real
Estate Srl was sold during 2018.
Discontinued operations (Note 9)
Income from sale of investment property
Cost of investment property
Loss from disposal of investment property
15. Other operating income/(expenses), net
Continued operations
Other income
Other income
Assets Written off
Impairment on Receivable from Arcona (Note 26)
Provisions and Impairment of prepayments and other current assets
Penalties
Other expenses
Other expenses
31 Dec 2019
€
608.073
(615.477)
(7.404)
31 Dec 2018
€
1.499.392
(1.547.617)
(48.225)
31 Dec 2019
€
114.166
114.166
(2.007)
(211.310)
(222.363)
(7.213)
(113.902)
(556.795)
31 Dec 2018
€
-
-
-
-
(26.389)
(4.959)
(368)
(31.716)
Other operating income/(expenses), net
(442.629)
(31.716)
Discontinued operations (Note 9)
Accounts payable written off
Other income
Other income
Provisions and Impairment of prepayments and other current assets
Penalties
Other expenses
Other expenses
31 Dec 2019
€
462.198
9.910
472.108
(157.764)
(1.458)
(85)
(159.307)
31 Dec 2018
€
85
30.010
30.095
(388.900)
(4.334)
(296)
(393.530)
Other operating income/(expenses), net
312.801
(363.435)
Provision and impairment of prepayments and other current assets , include expected credit loss per IFRS9
Impairment on receivables from Arcona is related to the fair value adjustment of the receivable Arcona shares held in escrow from the
disposal of the Boyana asset in Bulgaria. In particular, the 315.591 consideration Arcona shares valued at year end according to the
NAV per share at that date and a loss of €211.310 was realized.
The accounts payable write off in 2019 of a total of €462.198 is related to Aisi Bela and Boyana payables for construction. The settlement
for the former was reached in late 2011 on the basis of maintaining the construction contract in an inactive state (to be reactivated at
the option of the Group), while upon reactivation of the contract or termination of it (due to a sale of the asset) the Group would have
to pay an additional UAH 5.400.000 (~USD 160.000) payable upon such event occurring. Due to the uncertainness of the payment
period the latter amount used to be discounted at current discount rates in Ukraine presented as a non-current liability. This amount
was written off during 2019 as a result of the forthcoming disposal of the asset during the year. Payables for construction write off
related to Boyana asset, refer to an amount of ~€245.000 payable to the constructor of the project as part of the withholding of a Good
Performance Guarantee. The amount has been written off during 2019 as a result of statute of limitations.
CONSOLIDATED FINANCIAL STATEMENTS 2019|65
16. 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
Total finance costs
Net finance result
Discontinued operations (Note 9)
Finance income
Interest received from non-bank loans (Note 41.1.1)
Interest income from bank deposits
Total finance income
Finance costs
Interest expenses (bank)
Interest expenses (non-bank) (Note 41.1.2)
Finance leasing interest expenses
Finance charges and commissions
Total finance costs
Net finance result
31 Dec 2019
€
474.583
1
474.584
31 Dec 2018
€
685.778
405
686.183
31 Dec 2019
€
31 Dec 2018
€
(699)
(50.693)
(17.725)
(68.133)
(137.250)
(140.903)
(120.376)
(24.329)
(68.133)
(353.741)
337.334
332.442
31 Dec 2019
€
31 Dec 2018
€
9.366
656
10.022
31 Dec 2019
€
(901.896)
(7.155)
(496.950)
(24.528)
(1.430.529)
9.366
613
9.979
31 Dec 2018
€
(986.466)
(7.251)
(513.461)
(35.402)
(1.542.580)
(1.420.507)
(1.532.601)
Interest income from non-bank loans, reflects income from loans granted by the Group for financial assistance of associates. This
amount includes also interest on Loan receivables from 3rd parties provided as an advance payment for acquiring a participation in an
investment property portfolio (Olympians portfolio) in Romania. The loan provided initially with a convertibility option which was not
exercised. According to the last addendum, the loan had certain one-off and monthly payments for a period until 30 June 2020. The
two parties are currently engaged in discussions for agreeing and signing a new addendum with a new re-payment schedule. The loan
is bearing a fixed interest rate of 10% and secured by relevant corporate guarantees, while the Company is in the process of getting
agreed security in the form of pledge of shares following the relevant process provided in the initial Loan Agreement.
Borrowing interest expense represents interest expense charged on bank and non-bank borrowings (Note 32).
Finance leasing interest expenses relate to the sale and lease back agreements of the Group (Note 37).
Finance charges and commissions include regular banking commissions and various fees paid to the banks.
Bonds interest represent interest calculated for the bonds issued by the Company during 2018 (Note 33).
Other finance expenses for 2019 includes interest on tax for prior years related to Cyprus companies.
17. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December 2019 from continued operations amounted to €74.779 (2018:
loss €71.390).
The exchange loss from discontinued operations for the year ended 31 December 2019 amounted to €436.880 (2018: loss €10.233)
(Note 9).
CONSOLIDATED FINANCIAL STATEMENTS 2019|66
17. Foreign exchange profit / (losses) (continued)
b. Exchange difference on intercompany loans to foreign holdings
The Company has loans receivable from foreign group subsidiaries which are considered as part of the Group’s net investments in those
foreign operations (Note 41.3). For these intercompany loans the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During 2019, the Group recognized a foreign exchange profit of €66.557
(2018:profit €1.850).
18. Tax Expense
Continued operations
Income and defence tax expense
Taxes
Discontinued operations (Note 9)
Income and defence tax expense
Taxes
31 Dec 2019
€
(36.380)
(36.380)
31 Dec 2018
€
(613.034)
(613.034)
31 Dec 2019
€
(52.315)
(52.315)
31 Dec 2018
€
(96.567)
(96.567)
For the year ended 31 December 2019, the corporate income tax rate for the Group’s subsidiaries are as follows: in Ukraine 18%, and
in Romania 16%. The corporate tax that is applied to the qualifying income of the Company and its Cypriot subsidiaries is 12,5%. For
2018 the amount of tax recorded mainly related to an amount of €506.728 which was derived from the sale of asset in Craiova, Romania.
The tax on the Group's results differs from the theoretical amount that would arise using the applicable tax rates as follows:
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
Overseas tax in excess of credit claim used during the year
Tax effect of Group tax relief
Total Tax
31 Dec 2019
€
31 Dec 2018
€
(10.975.189)
(6.759.507)
(1.644.485)
1.879.661
(413.424)
289.577
(25.108)
4.074
20
(1.620)
88.695
(990.634)
1.357.212
(303.862)
653.310
(16.981)
10.514
42
-
709.601
CONSOLIDATED FINANCIAL STATEMENTS 2019|67
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
Victini Logistics (ex GED) is a logistics park comprising 17.756 gross leasable sqm. It is fully let to the German multinational
transportation and logistics company, Kuehne & Nagel and to a Greek commercial company trading electrical appliances GE
Dimitriou SA. On the roof of the warehouse there is a 1MW photovoltaic park installed with the electricity generated being
sold to Greek Electric Grid on a long term contract. The asset was sold within 2019.
EOS Business Park consists of 3.386 sqm gross leasable area and includes a Class A office Building in Bucharest, which is
currently fully let to Danone Romania until 2025.
Innovations Logistics Park is a 16.570 sqm gross leasable area logistics park located in Clinceni in Bucharest, which
benefits from being on the Bucharest ring road. Its construction was tenant specific, was completed in 2008 and is separated
in four warehouses, two of which offer cold storage (freezing temperature), the total area of which is 6.395 sqm. Innovations
Logistics Park was acquired by the Group in May 2014 and was 70% leased at the end of the reporting period while currently
is 83%.
During 2017 the Company proceeded with an internal reorganization and the Kindergarten asset of GreenLake which was
under the ownership of the associate GreenLake Development Srl was acquired by a separate entity (SPDI Real Estate). The
Kindergarten is fully let to one of Bucharest’s leading private schools and produces an annual rent inflow of ~€115.000.
Residential Assets
The Company owns a residential portfolio, consisting at the end of the reporting period of 19 apartments and villas across
four separate complexes located in different residential areas of Bucharest (Residential portfolio: Romfelt Plaza, Blooming
House, GreenLake Residential: GreenLake Parcel K). During 2017 Tonescu Finance (the company which acquired the Monaco
Towers related loan) commenced against SecMon Real Estate Srl legal proceedings and in order for SecMon Real Estate Srl
to protect itself it entered voluntarily into insolvency process in January 2018. The entering of SecMon Real Estate Srl in the
insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl is not consolidated
in the present financial statements. (Note 8)
Land Assets
Bela Logistic Park is a 22,4 Ha plot in Odessa situated on the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000 sqm GBA logistic center commenced. Construction was
put on hold in 2009. The asset was sold within 2019.
Kiyanovskiy Residence consists of four adjacent plots of land, totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael’s Spires and historic Podil neighborhood.
Tsymlyanskiy Residence is a 0,36 Ha plot of land located in the historic Podil District of Kiev and is destined for the
development of a residential complex.
Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in 2015.
Balabino Project is a 26,38 Ha plot of land situated on the south entrance of Zaporizhia, a city in the south of Ukraine with
a population of 800.000 people. Balabino Project is zoned for retail and entertainment development.
GreenLake land is a 40.360 sqm plot and is adjacent to the GreenLake part of the Company’s residential portfolio, which is
classified under Investments in Associates (Note 21). It is situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI owns ~44% of these plots, but has effective management control.
Boyana Land: The complex of Boyana Residence ood includes adjacent land plots available for sale or development of
~22.000 sqm of gross buildable area. The asset was sold within 2019.
CONSOLIDATED FINANCIAL STATEMENTS 2019|68
19. Investment Property (continued)
19.2 Investment Property Movement during the reporting period
The table below presents a reconciliation of the Fair Value movements of the investment property during the reporting period broken
down by property and by local currency vs. reporting currency.
Continued Operations
In 2019 , the Company did not have any Investment Property assets classified within continued operations.
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
2019 (€)
Asset Name
Type
Carrying
amount as at
31/12/2018
Fair Value movements
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on local
currency
valuations (b)
Disposals 2018
Asset Value at the Beginning of the period or at
Acquisition/Transfer date
Transfer to
Assets held for
sale
Additions
2018
Carrying
amount as at
31/12/2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(7.500.000)
(7.500.000)
-
-
-
-
(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
Carrying
amount as at
31/12/2019
Fair Value movements
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on local
currency
valuations (b)
Disposals 2019
Asset Value at the Beginning of the period or at
Acquisition/Transfer date
Transfer to
Assets held for
sale
Additions
2019
Carrying
amount as at
31/12/2018
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
Land
Land
Land
Land
Land
-
-
-
(4.716.157)
2.759.480
507.983
(543.263)
1.068.186
185.028
(77.541)
-
-
-
-
-
(1.310.044)
1.068.186
20.152
-
4.895.852
693.011
(600.652)
(6.026.201)
Warehouse
10.600.000
(257.785)
Office
7.700.000
(185.545)
Residential
733.000
(32.889)
Land
Retail
Land
Warehouse
16.814.000
1.438.000
37.285.000
(409.385)
(34.423)
(920.027)
-
-
-
-
-
-
-
-
257.785
285.545
27.366
381.385
66.423
1.018.504
-
-
-
-
-
-
(615.477)
-
-
(615.477)
(4.230.000)
(4.230.000)
(15.200.000)
(15.200.000)
42.180.852
(227.016)
417.852
(26.071.678)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.716.157
2.794.760
960.699
1.310.044
1.048.034
10.829.694
10.600.000
7.600.000
1.354.000
16.842.000
1.406.000
37.802.000
4.230.000
4.230.000
15.200.000
15.200.000
68.061.694
CONSOLIDATED FINANCIAL STATEMENTS 2019|69
19. Investment Property (continued)
19.2 Investment Property Movement during the reporting period (continued)
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)
Transfer to FA
at fair value
through OCI
(Note 22)
Disposals 2018
Asset Value at the Beginning of the
period or at Acquisition/Transfer
date
Transfer from
Continued
Operations
Carrying
amount as at
31/12/2017
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
Land
Land
Land
Land
Land
Warehouse
Office
Residential
Land
Retail
Land
Warehouse
4.716.157
255.916
(125.768)
2.794.760
149.561
51.411
73.639
-
530.527
(10.366)
(7.392)
(2.322)
(13.707)
(1.642)
(35.429)
960.699
1.310.044
1.048.034
10.829.694
10.600.000
7.600.000
1.354.000
16.842.000
1.406.000
37.802.000
4.230.000
4.230.000
15.200.000
15.200.000
(23.024)
(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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The two components comprising the fair value movements are presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation loss due to the devaluation of local currencies of €227.016 (a) (2018: profit €495.098) is
presented as part of the exchange difference on translation of foreign operations in other comprehensive income
in the statement of comprehensive income and then carried forward in the Foreign currency translation reserve;
and,
b. The fair value gain in terms of the local functional currencies amounting to €417.852 (b) (2018: loss €1.218.299),
is presented as Valuation gains/(losses) from investment properties in the statement of comprehensive income and
is carried forward in Accumulated losses.
CONSOLIDATED FINANCIAL STATEMENTS 2019|70
19. Investment Property (continued)
19.3 Investment Property Carrying Amount per asset as at the reporting date
The table below presents the values of the individual assets as appraised by the appointed valuer as at the reporting date.
Asset Name
Location
Principal
Operation
Related
Companies
Carrying amount as at
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
€
31 Dec 2018 31 Dec 2018
Discontinued
operations
€
Continued
operations
€
Bela Logistic
Park
Odesa
Land and
Development
Works for
Warehouse
Land for residential
Development
Land for residential
Development
LLC Aisi Bela
LLC Aisi Ukraine
LLC Trade Center
LLC Almaz‑Pres‑Ukraine
Land for retail
development
LLC Aisi Bela
Podil,
Kiev City
Center
Podil,
Kiev City
Center
Zaporizhia
Brovary
district, Kiev
Land for residential
Development
SC Secure Capital Limited
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Balabino
Project
Rozny Lane
Total
Ukraine
Innovations
Logistics Park
EOS Business
Park
Praktiker
Craiova
Clinceni,
Bucharest
Warehouse
Bucharest
Office building
Craiova
Big Box retail
Kindergarten
Residential
Portfolio
Bucharest
Bucharest
GreenLake
Bucharest
Retail
Residential
apartments
(5 in total in 2
complexes)
Residential villas
(14 villas)
&
land for Residential
Development
Myrnes Innovations Park
Limited
Best Day Real Estate Srl
Yamano Ltd
SPDI SRL
First Phase srl
Bluehouse Accession
Project IX Limited
Bluehouse Accession
Project IV Limited
BlueBigBox 3 Srl
SPDI Real Estate Srl
Secure II, Demetiva Ltd
Diforio Ltd, Frizomo Ltd,
Ketiza Ltd, Sec Rom Ltd
Sec Vista Srl, Sec Mon Ltd,
Ketiza Srl
Edetrio Holdings Limited
Emakei Holdings Limited
Iuliu Maniu Limited
Moselin Investments srl
Rimasol Limited
Rimasol Real Estate Srl
Ashor Ventures Limited
Ashor Develpoment Srl
Jenby Ventures Limited
Jenby Investments Srl
Ebenem Limited
Ebenem Investments Srl
SPDI Real Estate
Total
Romania
Boyana
Total
Bulgaria
Victini
Logistics
Total Greece
TOTAL
Sofia
Land
Boyana Residence ood,
Sertland Properties Limited
Athens
Warehouse
Victini Holdings Limited,
Victini Logistics Park S.A.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.759.480
1.068.186
-
1.068.186
4.895.852
10.600.000
7.700.000
-
1.438.000
733.000
16.814.000
37.285.000
-
-
-
-
42.180.852
4.716.157
2.794.760
960.699
1.310.044
1.048.034
10.829.694
10.600.000
7.600.000
-
1.406.000
1.354.000
16.842.000
37.802.000
4.230.000
4.230.000
15.200.000
15.200.000
68.061.694
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CONSOLIDATED FINANCIAL STATEMENTS 2019|71
19. Investment Property (continued)
19.4 Investment Property analysis
a.
Investment Properties
The following assets are presented under Investment Property: Innovations Logistics park, EOS Business Park, Kindergarten of
GreenLake, the Residential Portfolio (consisting of apartments in 2 complexes) and GreenLake parcel K, as well as all the land assets
namely Kiyanovskiy Residence, Tsymlyanskiy Residenceand Rozny Lane in Ukraine, and GreenLake in Romania
At 1 January
Disposal of investment Property
Revaluation (loss)/gain on investment property
Translation difference
Transferred to Assets held for sale
At 31 December
31 Dec 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Continued
operations
€
Discontinued
operations
(Note 9)
€
Continued
operations
€
Discontinued
operations
(Note 9)
€
-
-
-
-
-
-
63.345.537
74.732.502
-
(21.355.521)
(7.500.000)
(3.033.617)
417.852
(227.016)
-
-
(1.092.530)
-
(67.232.502)
239.182
67.232.502
42.180.852
-
63.345.537
Disposals of Investment Properties represent the sales of Balabino land plot in Ukraine, the Boyana Residence in Bulgaria and the Victini
Logistics asset in Greece. All these assets were sold during 2019.
b.
Investment Properties Under Development
As at 31 December 2019 investment property under development represents the carrying value of Bela Logistic Park property, which
has reached the +10% construction in late 2008 but it is stopped since then. This property sold during December 2019.
At 1 January
Revaluation on investment property
Disposal of IP
Translation difference
Transferred to Assets held for sale
At 31 December
31 Dec 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Continued
operations
€
Discontinued
operations
(Note 9)
€
Continued
operations
€
Discontinued
operations
(Note 9)
€
-
-
-
-
-
-
4.716.157
4.586.009
-
(4.716.157)
-
-
-
-
-
-
(4.586.009)
-
-
(125.768)
-
255.916
4.586.009
4.716.157
19.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the following table represents an analysis based on the various valuation methods.
The different levels as defined by IFRS have been defined as follows:
-
-
-
Level 1 relates to quoted prices (unadjusted) in active and liquid markets for identical assets or liabilities.
Level 2 relates to inputs other than quoted prices that are observable for the asset or liability indirectly (that is, derived from
prices). Level 2 fair values of investment properties have been derived using the market value approach by comparing the
subject asset with similar assets for which price information is available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred recently in the market. The most significant input into this valuation
approach is price per sqm.
Level 3 relates to inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using the income approach (discounted cash flow) due to the
lack of similar sales in the local market (unobservable inputs).
CONSOLIDATED FINANCIAL STATEMENTS 2019|72
19. Investment Property (continued)
19.5 Investment Property valuation method presentation (continued)
To derive Fair Values the Group has adopted a combination of income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements at 31 Dec 2019 (€)
-
Recurring fair value measurements
Tsymlyanskiy Residence – Podil, Kiev City Center
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
Kindergarten - Bucharest
Totals
(Level 1)
-
(Level 2)
(Level 3)
Total
-
-
-
-
-
-
1.068.186
-
2.759.480
-
1.068.186
-
-
-
-
-
733.000
-
16.814.000
-
-
- 22.442.852
-
-
-
-
10.600.000
7.700.000
-
-
1.438.000
19.738.000
-
1.068.186
2.759.480
1.068.186
10.600.000
7.700.000
733.000
16.814.000
1.438.000
42.180.852
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
Kindergarten - Bucharest
Victini Logistics – Athens
Boyana- Land, Bulgaria
Totals
-
2.794.760
1.048.034
-
--
1.310.044
960.699
-
-
-
-
--
-
-
-
-
-
-
-
-
-
4.230.000
28.539.537
1.354.000
16.842.000
-
-
-
-
4.716.157
-
-
10.600.000
7.600.000
-
-
1.406.000
15.200.000
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
The table below shows yearly adjustments for Level 3 investment property valuations:
Level 3 Fair
value
measurements
at 31 Dec 2019
(€)
Opening balance
Profit/(loss) on
revaluation
Translation
difference
Closing balance
Bela
Logistics
Park
Innovations
Logistics
Park
EOS
Business
Park
Victini
Logistics
Kindergarten
Total
4.716.157
10.600.000
7.600.000
15.200.000
1.406.000
39.522.157
-
257.785
285.545
-
66.423
609.753
(4.716.157)
-
(257.785)
10.600.000
(185.545)
7.700.000
(15.200.000)
-
(34.423)
1.438.000
(20.393.910)
19.738.000
CONSOLIDATED FINANCIAL STATEMENTS 2019|73
19. Investment Property (continued)
19.5 Investment Property valuation method presentation (continued)
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
Information about Level 3 Fair Values is presented below:
Fair value at
31 Dec 2019
Fair value at
31 Dec 2018
Valuation technique
Unobservable inputs
Bela Logistic Park –
Odessa
€
-
€
4.716.157
€
Combined market and
cost approach(2018)
Innovations Logistics
Park – Bucharest
10.600.000
10.600.000
Income approach
EOS Business Park –
Bucharest, City Center
7.700.000
7.600.000
Income approach
€
Percentage of
development works
completion,
deterioration
rate(2018)
Future rental income
and costs for 10 years,
discount rate
Future rental income
and costs for 10 years,
discount rate
Praktiker Craiova
Victini Logistics
-
-
-
Income
approach(2018)
Future rental income
and costs for 10 years,
discount rate(2018)
15.200.000
Income
approach(2018)
Future rental income
and costs for 10 years,
discount rate for real
estate property and for
Photovoltaic(PV) 13 +
4 years (2018)
Future rental income
and costs of discount
rate, vacancy rate
Kindergarten
1.438.000
1.406.000
Income approach
Total
19.738.000
39.522.157
Relationship of
unobservable inputs
to fair value
€
The higher the
percentage of
completion the higher
the fair value. The
higher the deterioration
rate, the lower fair
value(2018)
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
income the higher the
fair value. The higher
the discount rate, the
lower fair value(2018)
The higher the
rental/PV income the
higher the fair value.
The higher the discount
rate, the lower fair
value(2018)
The higher the rental
income the higher the
fair value. The higher
the discount rate and
the vacancy rate, the
lower fair value
CONSOLIDATED FINANCIAL STATEMENTS 2019|74
20. Investment Property Acquisitions, Goodwill Movement and Disposals
Disposal of subsidiaies
ASSETS
Non-current assets
Investment property
Investment property under
construction
Tangibles and intangibles assets
Current assets
Inventories
Prepayments and other current assets
Cash and cash equivalents
Total assets
Non-current liabilities
Borrowings
Deposits from tenants
Current liabilities
Borrowings
Trade and other payables
Tax Payable
Provisions
Total liabilities
Net assets disposed
Financed by
Cash consideration received
Retained receivables from tenants
Financial assets received
Bank Loan pending transfer (Notes 26
& 45c)
Net deferred consideration in the form
of a loan receivable
Total result from disposal (Note
9)
Victini Logistics
Park AE
Aisi Bela
Boyana
Total
€
€
€
€
15.200.000
-
16.994
15.216.994
-
475.143
35.994
511.137
15.728.131
10.082.370
151.930
10.234.300
-
586.870
180.883
42.512
810.265
11.044.565
4.683.566
2.030.624
337.600
-
-
1.318.104
4.745.167
-
6.063.271
-
938
27
965
6.064.236
4.230.000
-
-
4.230.000
4.604.044
1.255
2.187
4.607.486
8.837.486
-
-
-
2.257.980
-
2.257.980
-
78.068
-
-
78.068
78.068
5.986.168
-
-
3.735.555
-
336.329
24.046
136.138
-
496.513
2.754.493
6.082.993
-
-
4.241.544
775.641
20.748.104
4.745.167
16.994
25.510.265
4.604.044
477.336
38.208
5.119.588
30.629.853
12.340.350
151.930
12.492.280
336.329
688.984
317.021
42.512
1.384.846
13.877.126
16.752.727
2.030.624
337.600
7.977.099
775.641
-
-
639.000
639.000
(2.315.342)
(2.250.613)
(426.808)
(4.992.763)
On 8 August 2019 Victini Logistcs Park AE the owner of Victini Logistics property in Athens, Greece, was sold at a Gross Asset Value of
EUR 12,5m payable in cash, excluding the receivables from the tenant of the property G. Dimitriou S.A. of a total of EUR 337.600 plus
all future rent invoicing until 31/12/2020. The transaction resulted in a cash inflow of EUR 2,03m, plus the amount to be recovered in
the future from G.Dimitriou S.A.
On 1 November 2019 the Company announced the disposal of Aisi Bella, the owner company of Bella and Balabino assets in Ukraine,
to Arcona in exchange for the issue to the Company of 277.943 new shares in Arcona and 67.063 warrants over shares in Arcona.
Based on the NAV per Arcona share the consideration corresponds to EUR 3,7m (excluding the issue of warrants), while the price paid
for the warrants was EUR1. The warrants give the Company the right to receive ordinary shares in Arcona of EUR 5 each nominal
value, exercisable before 1 November 2024 and when the shares have traded at a volume weighted average price of EUR 8,10.
On 5 December 2019 the Company announced the disposal of Boyana Residence, the owner company of Boyana assets in Sofia,
Bulgaria, to Arcona in exchange of 315.591 new shares in Arcona and 77.201 warrants over shares in Arcona. Based on the NAV per
Arcona share the consideration corresponds to EUR 4,2m (excluding the issue of warrants), while the price paid for the warrants was
EUR1. The Company also maintained as part of the transaction, a Sellers Loan with Boyana Residence equal to EUR 750k, as adjusted
finally by a reverse liability of EUR 111k to a net amount of EUR 639k, receivable by the end of 2020. Moreover, as part of the transaction
it was agreed that an associated to Boyana loan from Alpha Bank at Sertland level of EUR 0,77m will be transferred to Arcona. The
transfer completed successfully in August 2020. The warrants give the Company the right to receive ordinary shares in Arcona of EUR
5 each nominal value, exercisable before 1 November 2024 and when the shares have traded at a volume weighted average price of
EUR 8,10. The shares and the warrants issued to the Company in relation to this transaction held in escrow, to be released upon
agreement on the terms of the extension of the loan associated with the asset. As at the reporting period, the shares and warrants
were still in escrow, released successfully in February 2020.
CONSOLIDATED FINANCIAL STATEMENTS 2019|75
21. Investments in associates
Cost of investment in associates at the beginning of the period
Share of profits /(losses) from associates (Note 9)
Dividend Income
Foreign exchange difference
Transfer to assets classified as held for sale
Total
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
€
-
-
-
-
-
-
5.313.235
297.985
(121.772)
(109.427)
-
5.380.021
31 Dec
2018
Continued
operations
€
5.115.587
-
-
-
(5.115.587)
-
31 Dec 2018
Discontinued
operations
€
-
364.920
(143.263)
(24.009)
5.115.587
5.313.235
Dividend Income reflects dividends received from Delenco Srl, owner of the Delea Nuova building, where the Group maintains a 24,35%
participation.
The share of profit from the associate GreenLake Development Srl was limited up to the interest of the Group in the associate.
As at 31 December 2019, the Group’s interests in its associates and their summarised financial information, including total assets at fair
value, total liabilities, revenues and profit or loss, were as follows:
Project
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
24.263.233
(2.172.318)
1.223.558
24,35
297.985 Romania
8.403.831
(11.474.393)
(954.837)
40,35
- Romania
32.667.064 (13.646.711)
268.721
297.985
Office
building
Residential
assets
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
CONSOLIDATED FINANCIAL STATEMENTS 2019|76
22. Financial Assets at FV through OCI
The Group proceeded with an impairment of €297.200 for Monaco Towers (company SecMon Real Estate Srl) in 2018 for which following
the court decision for entering into insolvency in January 2018, the Company lost the control over the asset (Note 8) and as such it was
reclassified as Financial assets at fair value through OCI as per table below (where the fair value of the property was adjusted at 80%
of its value): In 2019, the Management believes that the fair value of the Financial asset at fair value through OCI should remain the
same as last year.
Discontinued operations (Note 9)
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
23. Tangible and intangible assets
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
As at 31 December 2019 the intangible assets were composed of the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of €103.193 (2018: €103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to €103.193 (2018: €100.800) and therefore net value amounts to €0 (2018: €2.393).
As at 31 December 2019 the tangible non-current assets under continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of €566 (2018: €1.281).
As at 31 December 2019 the tangible non-current assets under discontinued operations mainly consisted of the machinery and
equipment used for servicing the Group's investment properties in Ukraine, Romania, Greece and Bulgaria, amount to €60.741
(2018:€129.516). Accumulated depreciation as at the reporting date amounts to €46.399 (2018: €86.982).
24. Long Term Receivables and prepayments
Long Term Receivables
Total
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
31 Dec 2018
Continued
operations
31 Dec 2018
Discontinued
operations
€
852
852
€
315.265
315.265
€
850
850
€
270.271
270.271
Long term receivables mainly include the cash collateral existing in favor of Piraeus Leasing and the guarantee deposit from a tenant in
Innovations Logistics Park.
CONSOLIDATED FINANCIAL STATEMENTS 2019|77
25. Inventory
At 1 January
Sale of Inventories (Note 14a)
Disposal of the asset (Note 19)
Transfer to assets classified as held for sale
At 31 December
31 Dec 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
-
-
-
-
-
4.604.044
4.812.550
-
(4.604.044)
-
-
-
(208.506)
-
-
-
(4.812.550)
4.812.550
-
4.604.044
The residential portfolio in Boyana, Sofia, Bulgaria is classified as Inventory.
Boyana residential portfolio was sold within 2019.
26. Prepayments and other current assets
Trade and other receivables
Bank Loan pending transfer (Note 20)
Receivable from Arcona (Note 20)
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 2019
Continued
operations
31 Dec 2019
Discontinued
operations
31 Dec 2018
Continued
operations
31 Dec 2018
Discontinued
operations
€
1.062.508
-
4.030.233
145.910
14.533
71.147
5.575.555
-
€
437.183
775.641
-
111.350
15.245
6.927
124.958
292.208
€
102.243
-
-
123.975
72.630
54.689
5.312.919
8.374
€
569.210
-
-
93.331
1.254
1.010
124.958
282.842
(65.974)
10.833.913
(292.740)
1.470.772
(89.422)
5.585.408
(390.471)
682.134
Trade and other receivables mainly include receivables from tenants and prepayments made for services.
Bank Loan pending transfer refers to the agreement, as part of the transaction for the sale of Boyana to Arcona, of the transfer of the
relevant loan at Sertland level to Arcona upon signing relevant documentation with Alpha Bank. The transfer completed effectively in
August 2020 (Note 20 & Note 45c).
Receivables from Arcona refer to the consideration shares and warrants in relation to the disposal of Boyana asset, which at year end
were in escrow account, agreed then to be released to the Company upon agreement of the extension terms of the associated loans.
The consideration shares and warrants were released effectively in February 2020. The initial amount of the Receivable is €4.241.544
and the impairment charge at the year end is €211.310, resulting in a net amount €4.030.233 (Note 20 & Note 45c).
VAT receivable represent VAT which is refundable in Romania, Cyprus and Ukraine.
Deferred expenses include legal, advisory, consulting and marketing expenses related to ongoing share capital increase and due
diligence expenses related to the possible acquisition of investment properties.
Loan receivables from 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 €845.638 (2018 €610.853). The loan
provided initially with a convertibility option which was not exercised. According to the last addendum the loan had certain one-off and
monthly payments for a period until 30 June 2020. The two parties are currently engaged in discussions for agreeing and signing a new
addendum with a new re-payment schedule.The loan is bearing a fixed interest rate of 10% and secured by relevant corporate
guarantees, while the Company is in the process of getting agreed security in the form of pledge of shares following the relevant process
provided in the initial Loan Agreement.
Moreover, Loans receivables from 3rd parties include an amount of €750.000 which represents effectively part of the consideration for
the disposal of Boyana asset to Arcona deferred until 31/12/2020 in the form of a loan. The loan has a scaling structure of interest
rates: 6% until 31/3/2020, 8% until 30/6/2020 and 10% until 31/12/2020. Final agreement involved also a reverse payable of the
Company of €111k which is classified appropriately.
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.
CONSOLIDATED FINANCIAL STATEMENTS 2019|78
26. Prepayments and other current assets (continued)
Loan receivable from 3rd parties under discontinued operations include a loan receivable from SecMon Real Estate Srl which since
January 2018 is classified as Financial Asset at Fair value through OCI (Note 22).
Loan to associates reflects a loan receivable from GreenLake Development Srl, holding company of GreenLake Project-Phase A (Notes
21 and 41.4).
27. Financial Assets at FV through P&L
The table below presents the analysis of the balance of Financial Assets at FV through P&L in relation to the continued operations of
the Company:
31 Dec 2019
€
31 Dec 2018
€
Arcona shares
FV change in Arcona shares
Arcona shares at reporting date
Cost of Warrants over Arcona shares
FV change in warrants
Arcona warrants at reporting date
Total Financial Assets at FV
FV change in Arcona shares
FV change in warrants
Fair Value loss on Financial Assets at
FV through P&L
3.735.555
(186.102)
3.549.453
1
32.189
32.190
3.581.643
(186.102)
32.189
(153.913)
-
-
-
-
-
-
-
---
-
-
The Company received during the year 277.943 Arcona shares as part of the disposal of Aisi Bella LLC, the owner company of Bella and
Balabino assets in Ukraine, to Arcona Property Fund N.V. At the time of the transaction the shares represented a total value of EUR
3.735.555 based on the NAV per share of Arcona at that time. At the end of the period the shares are re-valued to fair value based on
the NAV per share of Arcona at that date, and as a result a relevant fair value loss of EUR 186.102 is recognized.
On top of the aforementioned shares, the Company received for the sale of Bella and Balabino assets, 67.063 warrants over shares in
Arcona for a consideration of EUR 1. The warrants are exercisable upon the volume weighted average price of the Arcona shares traded
on a regulated market at EUR 8,10 or higher. At year end, the warrants are re-valued to fair value and as a result a relevant gain of
EUR 32.189 is recognized. The terms and assumptions used for such warrant re-valuation are:
•
•
•
•
•
•
Current stock price (as retrieved from Amsterdam Stock Exchange): EUR 6 per share
Strike price of the warrants: EUR 8,10 per share
Expiration date: 1 November 2024
Standard deviation of stock price: 20,78%
Annualized dividend yield on shares: 0,10%
5 year Government Bond rate (weighted average rate of Government Bonds of countries that Arcona is exposed): 0,521%
28. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
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 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Continued
operations
Discontinued
operations
Continued
operations
Discontinued
operations
€
€
€
€
15.700
151.349
59
40.143
-
207.251
-
51.539
95
478.740
-
530.374
45.134
205.679
71
31.829
-
282.713
2.621
233.184
1.498
465.062
2.460
704.825
CONSOLIDATED FINANCIAL STATEMENTS 2019|79
29. Share capital
Number of Shares during 2019 and 2018
31 December
2017
26 January 2018
Exercise of warrants &
options
26 January
2018
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
103.589.550
103.589.550
-
-
-
103.589.550
-
-
-
-
-
-
-
-
-
-
-
-
(785.000)
-
(785.000)
17.076.560
17.076.560
-
-
-
17.076.560
6.604.371
6.604.371
-
-
-
6.604.371
-
-
-
-
-
-
5 June 2018
31 December
2018
24 December
2019
31 December 2019
Increase of
share capital
-
-
-
-
-
1.920.961
1.920.961
-
-
-
1.920.961
989.869.935
989.869.935
-
8.618.997
8.618.997
127.270.481
127.270.481
-
-
-
127.270.481
989.869.935
989.869.935
-
8.618.997
8.618.997
129.191.442
129.191.442
-
-
-
129.191.442
Nominal value (€) for 2019 and 2018
€
31 December
2017
26 January 2018
26 January
2018
5 June 2018
31 December
2018
24 December
2019
31 December 2019
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
Exercise of warrants &
options
Increase of
share capital
Increase of
share capital
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
-
-
-
-
-
19.209
19.209
-
-
-
19.209
9.898.699
9.898.699
-
86.190
86.190
1.291.911
1.291.911
-
-
-
1.291.911
CONSOLIDATED FINANCIAL STATEMENTS 2019|80
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 2018, the issued share capital of the Company was as follows:
a) 127.270.481 Ordinary Shares of €0,01 nominal value each,
c) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each.
In respect of the Redeemable Preference Class B Shares, issued in connection to the acquisition of Craiova Praktiker, following the
holders of such shares notifying the Company of their intent to redeem within 2016, the Company:
- for the Redeemable Preference Class B Shares, in lieu of redemption the Company gave its 20% holding in Autounion
(Note 29.6) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L.
and final settlement for any resulting difference is expected to be provided by Cypriot Courts (Note 42.4). As soon as the
case is settled, the Company will proceed with the cancellation of the Redeemable Preference Class B Shares.
On 24th December 2019 the Company proceeded with the issue of 1.920.961 new Ordinary Shares as follows:
v.
vi.
vii.
viii.
1.219.000 new Ordinary Shares to certain advisors, directors and executives of the Company involved in the closing
of the Stage I of the Arcona Transaction by means of settling relevant Company’s liabilities.
437.676 new Ordinary Shares to directors of the Company in lieu of H1 2019 and before H2 2016 fees.
200.000 new Ordinary Shares to certain advisor in lieu of cash fees for financial advisory services rendered in 2019.
64.285 new Ordinary Shares to certain executive of the Company in lieu of cash fees for services rendered in 2018.
Following shares issuance completed within 2019, the issued share capital of the Company as at the date of issuance of this report is
as follows:
a) 129.191.442 Ordinary Shares of €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 Class A Warrants issued
The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio,
(Note 26) issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a warrant.
Pursuant to issuing the instrument, the Company issued 17.066.560 Class A warrants which were exercised during 2017 at an exercise
price of £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.
29.4 Class B Warrants issued
On 8 August 2011 the Company issued an amount of Class B Warrants for an aggregate corresponding to 12,5% of the issued share
capital of the Company after the exercise date. Further to the resolution approved at the AGM of 30 December 2016 the exercise
period of the Class B Warrants was extended until 30 June 2017, at an exercise price of the nominal value per Ordinary Share as at
the date of exercise. The Class B Warrant Instruments have anti-dilution protection so that, in the event of further share issuances
by the Company, the number of Ordinary Shares to which the holder of a Class B Warrant is entitled will be adjusted so that he
receives the same percentage of the issued share capital of the Company (as nearly as practicable), as would have been the case
had the issuances not occurred. This anti-dilution protection will freeze on the earlier of (i) the expiration of the Class B Warrants;
and (ii) capital increase(s) undertaken by the Company generating cumulative gross proceeds in excess of USD 100.000.000.
As at 30 June 2017 there were 12.948.694 warrants in circulation corresponding to an equal amount of ordinary shares (1:1) and the
Company received valid notices from holders of Class B warrants for the full exercise of their warrants and proceeded with the issue
of 12.948.694 new ordinary shares.
There are no Class B warrants in circulation.
29. Share capital (continued)
29.5 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as follows:
Number of
Ordinary shares of €0,01
Total number of Shares
Total number of Shares
Options
Shares issued in 2018 for exercise of
warrants and options in 2017
Redeemable Preference Class A Shares
Issued and Listed on
AIM
Non-Dilutive Basis
Full Dilutive Basis
-
-
(as at) 31 December
2019
(as at) 31 December
2018
129.191.442
129.191.442
129.191.442
-
-
127.270.481
127.270.481
127.270.481
-
-
The Redeemable Preference Class A Shares which do not have voting or dividend rights where issued as part of the Innovations
Logistics Park acquisition consideration. As at the reporting date all of the Redeemable Preference Class A Shares have been redeemed
and the Company, following the approval received by the AGM on 29 December 2017, proceeded in their cancellation within 2018.
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the
Praktiker Craiova asset acquisition do not have voting rights but have economic rights at par with ordinary shares. As at the reporting
date all of the Redeemable Preference Class B Shares have been redeemed but the Company is in legal proceedings with the vendor
in respect of a final settlement (Notes 34, 42.4).
29.6 Other share capital related matters
Pursuant to decisions taken by the AGM of 29th December 2017, the Company proceeded with the following actions in H1 2018
(finalized during June):
-
-
-
-
That the balance of the share premium account of the Company will be reduced by €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 expired on 31
December 2019. Under this authority and following relevant Board resolution on 11/12/2019, the Company issued 1.920.961
ordinary shares of euro 0,01 each.
issue up to 15.000.000 Class A Warrants, being convertible to up to 15.000.000 ordinary share of euro 0,01 each in the
Company upon exercise of the Warrants, with such terms and conditions and at an issue price as the Board may in its sole
unfettered discretion from time to time determine (and such price may be at a discount to the net asset value per share in
the Company which is in issue immediately prior to the issue of the Warrants)and for such purpose any rights of pre-
emption and other rights the Company's shareholders have or may have by operation of law and/or pursuant to the articles
of association of the Company and/or otherwise in connection with the authority conferred on the Board for the issue and
allotment of shares or Warrants in the Company as contemplated in this resolution or the issue and allotment of shares or
Warrants in the Company pursuant to such authority be and are hereby irrevocably and unconditionally waived. The
authority conferred by this resolution shall expire on 31 December 2019. The Company did not issue any Class A Warrants
under this authority.
CONSOLIDATED FINANCIAL STATEMENTS 2019|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. The Company had foreign exchange gains on translation due to presentation currency
of €223.135 for 2019, in comparison to €421.086 relevant gains for 2018.
31. Non-Controlling Interests
Non-controlling interests represent the percentage participations in the respective entities not owned by the Group:
%
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
Non-controlling interest
portion
31 Dec 2019
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 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
Principal of bank Loans
Bancpost SA
Alpha Bank Romania
Alpha Bank Romania
Bancpost SA
Alpha Bank Bulgaria
Alpha Bank Bulgaria
Eurobank Ergasias SA
Piraeus Bank SA
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
Project
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
Blooming House
Romfelt Plaza
EOS Business Park
GreenLake – Parcel K
Boyana Residence
Boyana Residence
(Sertland Loan)
Victini Logistics
GreenLake-Phase 2
Kindergarten – SPDI
RE
-
-
-
-
-
-
-
-
382.455
459
382.914
-
45.086
428.000
277.802
51.594
293.466
3.249.926
-
666.468
-
2.525.938
732.107
177.686
2.546
7.977.533
922.073
50.054
8.949.660
-
-
-
-
-
-
-
-
-
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
177.473
1.420
21.603.342
960.075
42.057
22.605.474
31 Dec 2019
Continued
operations
€
420.751
7.249
428.000
31 Dec 2019
Discontinued
operations
€
3.451.833
5.497.827
8.949.660
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
CONSOLIDATED FINANCIAL STATEMENTS 2019|83
32. Borrowings (continued)
Ketiza Real Estate Srl entered in 2012 into a loan agreement with Bancpost SA for a credit facility for financing the acquisition of the
Blooming House and 100% of the remaining (without VAT) construction works of Blooming House project. As at the end of the
reporting period the balance of the loan was €277.802. The loan bears interest of EURIBOR 3M plus 3,5% and secured by all assets
of Ketiza Real Estate Srl, as well as its shares and is being repaid through sales proceeds. The loan has been repaid in full during
2020.
SecRom Real Estate Srl entered (2009) into a loan agreement with Alpha Bank Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. During 2018, SecRom Real Estate Srl was merged with N-E Real Estate Park
First Phase Srl as a result the loan was transferred to N-E Real Estate Park First Phase Srl. As at the end of the reporting period, the
balance of the loan was €51.594, bears interest of EURIBOR 1M+4.25% and is repayable on the basis of investment property sales.
The loan is secured by all assets of SecRom Real Estate Srl, currently held by N-E Real Estate Park First Phase Srl, as well as its shares
and is being repaid through sales proceeds with a maturity in 2021.
Moselin Investments Srl entered in 2010 into a construction loan agreement with Bancpost SA covering the construction works of
Parcel K GreenLake project. As at the end of the reporting period the balance of the loan was €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 in 2011 into a loan agreement with Alpha Bank Bulgaria for a construction loan related to the
construction of the Boyana Residence project which finished in 2014. The loan bears interest of EURIBOR 3M plus 5,75%, secured
through a mortgage over the property and a pledge over the company‘s shares, as well as those of Sertland Properties Limited.
Boyana Residence ood was sold during 2019 (Note 20).
Sertland Properties Limited entered in 2008 into a loan agreement with Alpha Bank Bulgaria for an acquisition loan related to the
acquisition of 70% of Boyana Residence ood. As at the end of the reporting period the balance of the loan was €666.468 and bears
interest of EURIBOR 3M plus 5,75%. The loan has been agreed to be transferred to Arcona as part of the transaction of the sale of
Boyana Residence ood in Bulgaria on 5 December 2019. The relevant agreement between Sertland, Arcona and Alpha Bank was
signed in August 2020 when the transfer of the loan from Sertland to Arcona effectively enforced (Note20).
Victini Logistics Park S.A. entered in April 2015 into a loan agreement with EUROBANK SA to refinance the existing debt facility
related to Victini Logistics asset. The loan bear interest of EURIBOR 6M plus 3,2%+30% of an asset swap which if negative total
spread is accounted for 4,9%. The loan is repayable by 2022, has a balloon payment of €8.660.000 and is secured by all assets of
Victini Logistics Park S.A., as well as its shares. Victini Logistics Park S.A. was sold during 2019(Note 20).
SEC South East Continent Unique Real Estate (Secured) Investments Limited has a debt facility with Piraeus Bank for the acquisition
of the GreenLake land in Bucharest Romania. As at the end of the reporting period the balance of the loan was €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. During September
2019, the company received a termination notice from Piraeus Bank in relation to this loan, and currently relevant discussions with
the Bank are taking place for a mutual agreed solution.
N-E Real Estate Park First Phase Srl entered in 2016 into a loan agreement with Alpha Bank Romania for a credit facility of €1.000.000
for working capital purposes. As at the end of the reporting period, the balance of the loan was €293.466, bears interest of EURIBOR
1M+4,5% and is repayable from the free cash flow resulting from the rental income of company’s property. The loan matures in April
2024 and is secured by a second rank mortgage over assets of SecRom Real Estate Srl, which has been absorbed by First Phase, as
well as its shares.
SPDI Real Estate Srl (Kindergarten) has a loan agreement with Bancpost SA Romania. As at the end of the reporting period the
balance of the loan was €732.107 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 under continued operations includes also loans from related parties provided as bridge
financing for future property acquisitions (Note 41.5).
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 2020. The Company discusses with the Directors 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. The Loan had interest initially at a rate of 8,5% until the end of Q1 2018, when increased to 11% until its full
repayment on 8 October 2018.
Loans from other 3rd parties and related parties under discontinued operations includes borrowings from non-controlling interest.
During the last nine years and in order to support the GreenLake project the non-controlling shareholders of Moselin Investments Srl
and SPDI Real Estate SRL (other than the Group) have contributed their share of capital injections by means of shareholder loans.
The loans bear interest 4% annually.
33. Bonds
The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio,
(Notes 26 and 29.4) issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a
warrant. The convertible loan element of the instrument which was in the value of €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.
CONSOLIDATED FINANCIAL STATEMENTS 2019|84
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 (Advances received for sale of
properties)
Total
Current portion
Non-current portion
Total
31 Dec 2019
Continued
operations
€
3.729.592
606.214
-
99.744
-
31 Dec 2019
Discontinued
operations
€
854.974
177
8.216
151.899
-
31 Dec 2018
Continued
operations
€
3.213.848
743.139
-
94.905
-
31 Dec 2018
Discontinued
operations
€
924.137
-
8.316
150.324
417.826
144.045
4.579.595
-
1.015.266
123.044
4.174.936
-
1.500.603
31 Dec 2019
Continued
operations
€
4.579.595
-
4.579.595
31 Dec 2019
Discontinued
operations
€
1.007.050
8.216
1.015.266
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
4.174.936
-
4.174.936
1.074.460
426.143
1.500.603
Payables to third parties represents: a) payables due to Bluehouse Capital (under continued operations) as a result of the Redeemable
Convertible Class B share redemption (Note 29.6) which is under legal proceedings for a final settlement (Note 42.4) , b) amounts
payable to various service providers including auditors, legal advisors, consultants and third party accountants related to the current
operations of the Group, and c) guarantee amounts collected from tenants.
Payables to related parties under continued operations represent amounts due to directors and accrued management remuneration
(Note 41.2). Payables to related parties under discontinued operations represent payables to non-contolling intetest shareholders.
Deferred income from tenants represents advances from tenants which will be used as future rental income and utilities charges.
Accruals mainly include the accrued, administration fees, accounting fees, facility management and other fees payable to third parties.
Payables for construction represent amounts payable to the contractor of Bela Logistic Park in Odessa and Boyana asset in Sofia. The
settlement for the former was reached in late 2011 on the basis of maintaining the construction contract in an inactive state (to be
reactivated at the option of the Group), while upon reactivation of the contract or termination of it (due to a sale of the asset) the
Group would have to pay an additional UAH 5.400.000 (~USD 160.000) payable upon such event occurring. Due to the uncertainness
of the payment period the latter amount had been discounted at current discount rates in Ukraine and used to be presented as a
non-current liability. This amount was written off during 2019 as a result of the forthcoming disposal of the asset. Payables for
construction related to Boyana asset, refers to an amount of ~€245.000 payable to the constructor of the project as part of the
withholding of a Good Performance Guarantee. The amount has been written off during 2019 as a result of statute of limitations.
Pre-sale advances reflect the advance received in relation to Kiyanovskiy Residence pre-sale agreement, which upon non closing of
the said sale part of which will be returned to the prospective buyer.
35. Deposits from Tenants
Deposits from tenants non-current
Total
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
31 Dec 2018
Continued
operations
€
-
-
€
67.269
67.269
€
-
-
31 Dec 2018
Discontinu
ed
operations
€
219.274
219.274
Deposits from tenants appearing under non-current liabilities include the amounts received from the tenants of Innovations Logistics
Park, EOS Business Park, Victini Logistics (in 2018 only) and companies representing residential segment as advances/guarantees
and are to be reimbursed to these clients at the expiration of the lease agreements.
CONSOLIDATED FINANCIAL STATEMENTS 2019|85
36. Taxation
Corporate income tax – non current
Defence tax – 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 2019
Continued
operations
€
167.961
28.130
399.450
450.450
99.669
43
1.145.703
31 Dec 2019
Discontinued
operations
€
43.535
15
-
56.865
93.322
22.826
216.563
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
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 €9.699.050 and the current portion of
€385.420 (31 December 2018: €10.076.579 and €393.433, accordingly).
Discontinued operations
31 Dec 2019
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities (Note 9d)
31 Dec 2018
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities (Note 9d)
37.1 Land Plots Financial Leasing
Note
44.2
& 44.6
Minimum lease
payments
€
861.304
5.637.702
6.053.782
12.552.788
Note
44.2 &
44.6
Minimum lease
payments
€
886.771
3.666.346
8.861.576
13.414.693
Interest
Principal
€
475.884
1.611.343
381.375
2.468.602
€
385.420
4.026.359
5.672.407
10.084.186
284
10.084.470
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
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 €54.195 under current and non-current portion.
The Group's obligations under finance leases are secured by the lessor's title to the leased assets.
37.2 Sale and Lease Back Agreements
A.
Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations Logistics Park in Bucharest, owned by Best Day Real Estate Srl,
through a sale and lease back agreement with Piraeus Leasing Romania SA. As at the end of the reporting period the balance is
€6.857.475, 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 and upon payment of the balloon Best Day Real Estate Srl will become
owner of the asset.
CONSOLIDATED FINANCIAL STATEMENTS 2019|86
37. Finance Lease Liabilities (continued)
37.2 Sale and Lease Back Agreements (continued)
Under the current finance lease agreement the collaterals for the facility are as follows:
1. Best Day Real Estate Srl pledged its future receivables from its tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved accounts opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash collateral in the amount of €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
€3.172.800 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 and upon payment of the balloon N-E Real Estate Park First Phase
Srl will become owner of the asset.
Under the current finance lease agreement the collaterals for the facility are as follows:
1. N-E Real Estate Park First Phase Srl pledged its future receivables from its tenants.
2. N-E Real Estate Park First Phase Srl pledged Bank Guarantee receivables from its tenants.
3. N-E Real Estate Park First Phase Srl pledged its shares.
4. N-E Real Estate Park First Phase Srl pledged all current and reserved accounts opened in Alpha Bank Romania SA.
5. N-E Real Estate Park First Phase Srl is obliged to provide cash collateral in the amount of €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
c. Basic diluted and adjusted earnings per share from discontinued operations
Earnings per share
Loss after tax from discontinued operations attributable to owners of the parent
Basic
Diluted
31 Dec 2019
129.191.442
127.275.743
127.275.743
31 Dec 2018
127.270.481
125.644.043
125.644.043
31 Dec 2019
€
31 Dec 2018
€
(7.201.720)
(0,06)
(0,06)
(3.045.853)
(0,03)
(0,03)
31 Dec 2019
€
31 Dec 2018
€
(4.846.634)
(0,04)
(0,04)
(699.271)
(0,01)
(0,01)
CONSOLIDATED FINANCIAL STATEMENTS 2019|87
39. Earnings and net assets per share attributable to equity holders of the parent (continued)
d. 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 2019
€
31 Dec 2018
€
29.392.468
129.191.442
129.191.442
0,23
0,23
35.608.276
127.270.481
125.644.043
0,28
0,28
All commercial and financial information related to the properties held directly or indirectly by the Group is being provided to members
of executive management who report to the Board of Directors. Such information relates to rentals, valuations, income, costs and
capital expenditures. The individual properties are aggregated into segments based on the economic nature of the property. For the
reporting period the Group has identified the following material reportable segments:
Commercial-Industrial
Warehouse segment – Victini Logistics (sold within 2019), Innovations Logistics Park
Office segment - Eos Business Park – Delea Nuova (Associate)
Retail segment - Craiova Praktiker (sold within 2018) and Kindergarten of GreenLake
Residential
Residential segment
Land Assets
Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent investment property (including investment properties under
development and prepayments made for the investment properties). Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
Continued Operations
Profit and Loss for the year 2019
Segment profit
Rental income (Note 10)
Service charges and utilities
income (Note 10)
Impairment of financial
investments (Note 27)
Impairment of inventory and
provisions (Note 15)
Profit from discontinued
operation (Note 9b)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income, net
(Note 15)
Finance income (Note 16)
Interest expenses (Note 16)
Other finance costs (Note 16)
Profit from discontinued
operations (Note 9b)
Foreign exchange losses, net
(Note 17a)
Income tax expense (Note 18)
Exchange difference on I/C loan
to foreign holdings (Note 17b)
Exchange difference on
translation foreign holdings
(Note 30)
Total Comprehensive
Income
Warehouse
€
Office
€
Retail
€
Residential
€
Land Plots Corporate
€
€
Total
€
-
-
-
-
-
-
-
-
-
-
-
-
-
-
364.034
364.034
93.416
93.416
(153.913)
(153.913)
-
-
-
(1.233.371)
(1.233.371)
1.307.445
1.307.445
171.395
171.395
(88.634)
(88.634)
(3.049.171)
(3.203.084)
(92.097)
365.353
(2.984.433)
(2.680.896)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2.442.171)
(442.629)
474.584
(119.525)
(17.725)
(1.817.410)
(74.779)
(36.380)
66.557
223.135
(6.867.239)
CONSOLIDATED FINANCIAL STATEMENTS 2019|88
40. Segment information (continued)
Continued 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 (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 15)
Finance income (Note 16)
Interest expenses (Note 16)
Other finance costs (Note
16)
Foreign exchange losses, net
(Note 17a)
Income tax expense (Note
18)
Profit from discontinued
operations (Note 9)
Exchange difference on I/C
loan to foreign holdings
(Note 17b)
Exchange difference on
translation foreign holdings
(Note 30)
Total Comprehensive
Income
-
-
-
-
-
-
-
6.517.181
-
(7.362.362)
-
-
-
494.347
-
-
-
(116.770)
-
-
-
-
-
-
-
-
-
-
-
-
6.517.181
(7.362.362)
137.289*
9.534*
631.636
9.534
-
128.293
128.293
934.156
1.377.516
68.206
(317.594)
(1.501.833)
(1.549)
-
-
(118.319)
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)
* 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.
CONSOLIDATED FINANCIAL STATEMENTS 2019|89
40. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2019
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 20)
Loss on disposal of
subsidiary (Note 20)
Share of profits/(losses)
from associates
(Note 21)
Asset operating expenses
(Note 11)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income,
net (Note 15)
Finance income (Note 16)
Interest expenses (Note 16)
Other finance costs (Note
16)
Foreign exchange losses, net
(Note 17a)
Income tax expense (Note
18)
Loss for the year
Warehouse
€
Office
€
Retail
€
Residential Land Plots
€
€
Corporate
€
Total
€
-
244.212
-
363.861
-
952.902
(135.242)
640.651
-
114.320
(480.235)
18.688
28.574
128.623
4.698
-
-
-
-
-
-
710
-
2.125
-
-
417
-
-
-
257.785
293.711
66.423
19.200
(219.267)
-
-
-
-
-
-
-
-
-
-
-
-
-
608.073
(615.477)
1.726.978
33.982
128.623
2.125
417.852
-
(2.315.343)
(2.677.420)
(4.992.763)
297.985
297.985
(285.912)
(38.570)
(1.233.371) 1.307.445
(9.348)
171.395
(12.983)
(88.634)
(152.901)
(3.049.171)
(92.097)
(92.097)
(591.811)
(2.984.433)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(220.509)
312.801
10.022
(1.406.001)
(24.528)
(436.880)
(52.315)
(4.801.843)
CONSOLIDATED FINANCIAL STATEMENTS 2019|90
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 21)
Asset operating expenses (Note
11)
Other (expenses)/income, net
(Note 15)
Segment profit
Administration expenses
(Note 12)
Other (expenses)/income, net
(Note 15)
Finance income (Note 16)
Interest expenses (Note 16)
Other finance costs (Note 16)
Foreign exchange losses, net
(Note 17a)
Income Tax (Note 18)
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)
Total Operations
Balance Sheet as at 31 December 2019
Warehouse
€
Office
€
Retail
€
Residential
€
Land plots Corporate
€
Total
€
Assets
Long-term receivables and
prepayments
Financial Assets at FV
through P&L
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
Taxation
Bonds
Total liabilities
852
-
-
-
-
-
852
-
10.915.000
-
13.146.286
-
1.438.000
10.915.852 13.146.286 1.438.000
-
667.001
3.581.643
-
2.015.488
21.709.852
667.001 21.709.852 5.597.131
3.581.643
49.891.627
53.474.122
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
566
10.833.913
207.251
64.515.852
6.921.741
7.248
6.928.989
-
-
-
-
3.518.711
-
3.518.711
-
-
-
-
930.730
-
930.730
-
-
-
-
281.399
-
281.399
-
-
-
-
7.448.818
459
1.231.829
420.293
7.449.277 1.652.122
-
-
-
-
-
-
-
-
20.333.228
428.000
20.761.228
4.579.595
1.145.703
1.190.603
27.677.129
CONSOLIDATED FINANCIAL STATEMENTS 2019|91
40. Segment information (continued)
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.674
-
5.585.408
282.713
-
- 85.551.383
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
-
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
Discontinued operations
Assets and Liabilities held for sale 2019
Warehouse
€
Office
€
Retail
€
Residential
€
Land plots Corporate
€
€
Total
€
Assets
Investment properties
Long-term receivables and
prepayments
Investments in associates
Financial Asset at FV
through OCI
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
Taxation
Total liabilities
10.600.000
7.766.000
1.438.000
667.000
21.709.852
315.000
-
265
5.380.021
-
-
-
-
-
10.915.000 13.146.286 1.438.000
-
-
-
-
1
-
667.001 21.709.852
-
-
-
-
-
-
-
-
36
6.857.475
64.230
6.921.741
-
-
-
-
-
-
345.911
3.172.800
3.518.711
-
-
-
-
-
-
930.730
-
-
930.730
-
-
-
-
-
-
278.360
-
3.039
281.399
-
-
-
-
-
-
7.394.623
54.195
-
7.448.818
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
42.180.852
315.265
5.380.021
1
47.876.139
14.342
1.470.772
530.374
49.891.627
8.949.660
10.084.470
67.269
19.101.399
1.015.266
216.563
20.333.228
CONSOLIDATED FINANCIAL STATEMENTS 2019|92
40. Segment information (continued)
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
Geographical information
Income (Note 10)
Ukraine
Romania
Greece
Bulgaria
Cyprus *
Total
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
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
-
-
-
-
457.450
457.450
-
1.038.158
853.133
417
-
1.891.708
-
594.566
-
-
174.897
769.463
-
1.098.059
1.280.119
697
-
2.378.875
* It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with the Innovations SPV and the lender, however the asset, through
the SPV, is planned to be transferred as part of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer,
the Company will negotiate with the lender its release from the aforementioned lease agreement, and if succeeds, upon completion such
income will be also transferred.
Loss from disposal of inventory (Note 14a)
Bulgaria
Total
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
31 Dec 2018
Continued
operations
€
-
-
-
-
-
-
31 Dec 2018
Discontinued
operations
€
(13.553)
(13.553)
Gain/(loss) from disposal of investment properties (Note
14b)
31 Dec 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Romania
Total
Continued
operations
€
-
-
Discontinued
operations
€
(7.404)
(7.404)
Continued
operations
€
(845.181)
(845.181)
Discontinued
operations
€
(285.098)
(285.098)
CONSOLIDATED FINANCIAL STATEMENTS 2019|93
40. Segment information (continued)
Geographical information (continued)
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
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
-
-
-
-
-
4.895.852
42.665.022
-
-
47.560.874
-
-
-
-
-
10.829.694
42.917.588
15.200.000
8.834.044
77.781.326
Interest Income on loan to related parties
Interest Income from loan to associates
Total
31 Dec 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Continued
operations
€
4.600
2.372
6.972
Discontinued
operations
Continued
operations
€
Discontinued
operations
-
9.366
9.366
4.600
325
4.925
-
9.366
9.366
Interest income on loan to related parties relates to interest income from Delia Lebada Srl and interest income from associates relates
to interest income from GreenLake Development Srl.
41.1.2 Expenses
Management Remuneration and incentives (Note 12)
Interest expenses on Narrowpeak loan (Note 16)
Interest expenses on Director Loans
Total
31 Dec 2019
Continued
operations
€
646.309
232
30.417
676.958
31 Dec 2019
Discontinued
operations
€
-
-
-
-
31 Dec 2018
Continued
operations
€
391.359
637
38.444
430.440
31 Dec 2018
Discontinued
operations
€
-
-
-
-
Management remuneration includes the remuneration of the CEO, the CFO, the Group Commercial Director, and that of the Country
Managers of Ukraine and Romania pursuant to the decisions of the remuneration committee.
41.2 Payables to related parties (Note 34)
Board of Directors & Committees remuneration
Grafton Properties
Secure Management Services Ltd
Management Remuneration
Total
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
31 Dec 2018
Continued
operations
31 Dec 2018
Discontinued
operations
€
€
364
-
177
605.850
606.391
-
-
-
-
-
€
80.776
123.549
19.319
519.495
743.139
€
-
-
-
-
41.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to Non-Executive Directors until the end of the reporting period. The members
of the Board of Directors pursuant to a recommendation by the remuneration committee and in order to facilitate the Company’s cash
flow receive their payment in shares of the Company. During 2018 the directors received 344.371 ordinary shares in lieu of their 2016
H1 remuneration amounting to GBP 120.530. During 2019, Non-Executive Directors received 261.000 ordinary shares amounting to
EUR 73.108 in lieu of their H1 2019 fees, and 176.576 ordinary shares amounting to EUR 74.162,04 in lieu of their before H2 2016
fees.
CONSOLIDATED FINANCIAL STATEMENTS 2019|94
41. Related Party Transactions (continued)
41.2 Payables to related parties (Note 34) (continued)
41.2.2 Loan payable to Grafton Properties
During the Company restructuring in 2011 and under the Settlement Agreement of July 2011, the Company undertook the obligation
to pay to certain lenders who had contributed funds for the operating needs of the Company between 2009-2011, by lending to AISI
Realty Capital LLC as was the SC Secure Capital Limited name then, a total fee of USD 450.000. Part of this liability towards Grafton
Properties (the representative of the Lenders), equal to USD 150.000, remained unpaid and eventually wtitten off during 2019,
because it was contingent on the Group raising USD 50m of capital in the markets, something that never took place.
41.2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to the CEO of the Company.
41.3 Loans from SC Secure Capital Limited to the Group’s subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group provided capital in the form of loans to the Ukrainian subsidiaries of
the Company so as to support the acquisition of assets, development expenses of the projects, as well as various operational costs.
The following table presents the amounts of such loans which are eliminated for consolidation purposes, but their related exchange
difference affects the equity of the Consolidated Statement of Financial Position.
Borrower
LLC “Aisi Ukraine”
LLC “Almaz-Press-Ukraine”
LLC “Aisi Ilvo”
Total
Limit –as at
31 Dec 2019
€
23.062.351
8.236.554
150.537
31.449.442
Principal as
at
31 Dec 2019
€
57.865
263.330
28.597
349.792
Limit –as at
31 Dec 2018
€
23.062.351
8.236.554
150.537
31.449.442
Principal as
at
31 Dec 2018
€
21.711
189.938
78.890
290.539
A potential Ukrainian Hryvnia weakening/strengthening by 10% against the US dollar with all other variables held constant, would
result in an exchange difference on I/C loans to foreign holdings of €35.559, estimated on balances held at 31 December 2019.
41.4 Loans to associates (Note 27)
Loans to GreenLake Development Srl
Total
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
31 Dec 2018
Continued
operations
€
8.700
8.700
292.208
292.208
8.374
8.374
31 Dec 2018
Discontinued
operations
€
282.842
282.842
The loan was given to GreenLake Development Srl from Edetrio Holdings Limited. The agreement with Edetrio Holdings Limited was
signed on 17 February 2012 and bears interest 5%. The maturity date is 30 April 2020.
41.5 Loans from related parties (Note 32)
Loan from Narrowpeak Consultants
Loan from Directors
Interest accrued on loans from related parties
Total
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
31 Dec 2018
Continued
operations
€
31 Dec 2018
Discontinued
operations
€
206
375.000
45.086
420.292
-
-
-
-
5.256
375.000
14.107
394.363
-
-
-
-
Loans from Directors reflects loans provided from 3 Directors as bridge financing for future property acquisitions. The loans bear
interest 8% annually and are repayable on 31 March 2020. The Company and the Directors are discussing the extension of the loans
until year end and relevant documentation process is currently in place.
CONSOLIDATED FINANCIAL STATEMENTS 2019|95
42. Contingent Liabilities
42.1 Tax Litigation
The Group performed during the reporting period part of its operations in the Ukraine, within the jurisdiction of the Ukrainian tax
authorities. The Ukrainian tax system can be characterized by numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of authorities, which are authorised by law to impose severe fines
and penalties and interest charges. Any tax year remains open for review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may remain open for longer. Overall following the sale of Terminal
Brovary, the exposure of the Group in Ukraine was significantly reduced.
The Group performed during the reporting period part of its operations also in Romania, Greece and Bulgaria. In respect of Romanian,
Bulgarian and Greek taxation systems all are subject to varying interpretation and to constant changes, which may be retroactive. In
certain circumstances the tax authorities can be arbitrary in certain cases.
These facts create tax risks which are substantially more significant than those typically found in countries with more developed tax
systems. Management believes that it has adequtely provided for tax liabilities, based on its interpretation of tax legislation, official
pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these
consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant.
42.2 Construction related litigation
There are no material claims from contractors due to the postponement of projects or delayed delivery other than those disclosed in
the financial statements.
42.3 Bluehouse accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. (Bluehouse) filed in Cypriot courts in December 2018 lawsuit against the
Company for the total amount of €5.042.421,87, in relation to the Praktiker Craiova acquisition in 2015, and the redemption of the
Redeemable Preference Class A shares which were issued as part of the transaction to the vendor, plus special compensations of
€2.500.000 associated with the related pledge agreement. The redemption of such shares was requested in 2016, and in lieu of such
redemption the Company transferred to the vendor the 20% holding in Autounion asset which was used as a guarantee to the
transaction for the effective redemption of the Redeemable Preference Class A shares. At the same time the Company has posted in
its accounts a relevant payable provision for Bluehouse in the amount of €2.521.211 (Note 34). In addition, the Company during
2019, as part of the judicial process, has filed a claim against Bluehouse for concealing certain key information during the Praktiker
Craiova transaction, which if revealed would have resulted in a significant reduction of the final acquisition price. Management believes
the Company has good grounds of defence and valid arguments and the amount already provided is adequate to cover an eventual
final settlement between the parties.
42.4 Other Litigation
The Group has a number of other minor legal cases pending. Management does not believe that the result of these will have a
substantial overall effect on the Group’s financial position. Consequently no such provision is included in the current financial
statements.
42.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December 2019.
43. Commitments
The Group had no other commitments as at 31 December 2019.
44. Financial Risk Management
44.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will be able to implement its stated growth strategy in order to maximize
the return to stakeholders through the optimization of the debt-equity structure and value enhancing actions in respect of its portfolio
of investments. The capital structure of the Group consists of borrowings (Note 32), bonds (Note 33), trade and other payables (Note
34) deposits from tenants (Note 35), financial leases (Note 37), taxes payable (Note 36) and equity attributable to ordinary or
preferred shareholders.
Management reviews the capital structure on an on-going basis. As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of equity (issuance of shares to the Group’s shareholders) or in the form of
debt. Management balances the capital structure of the Group with a view of maximizing the shareholder’s Return on Equity (ROE)
while adhering to the operational requirements of the property assets and exercising prudent judgment as to the extent of gearing.
CONSOLIDATED FINANCIAL STATEMENTS 2019|96
44. Financial Risk Management (continued)
44.2 Categories of Financial Instruments
Financial Assets
Cash at Bank
Long-term Receivables and prepayments
Financial Assets at FV through P&L
Prepayments and other receivables
Financial Asset at FV through OCI
Total
Financial Liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liabilities
Taxation
Bonds
Total
Note
31 Dec 2019
31 Dec 2019
31 Dec 2018
31 Dec 2018
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
28
24
27
26
22
32
34
35
37
36
33
207.251
852
3.581.643
10.833.913
-
530.374
315.265
-
282.713
850
704.825
270.271
1.470.772
5.585.408
682.134
1
-
1
14.623.659
2.316.412
5.868.971
1.657.231
428.000
4.579.595
-
-
1.145.703
1.190.603
8.949.660
1.015.266
67.269
10.084.470
216.563
-
402.290
22.605.474
4.174.936
-
-
1.413.827
1.122.470
1.500.603
219.274
10.470.012
498.530
-
7.343.901
20.333.228
7.113.523
35.293.893
44.3 Financial Risk Management Objectives
The Group’s Treasury function provides services to its various corporate entities, coordinates access to local and international financial
markets, monitors and manages the financial risks relating to the operations of the Group, mainly the investing and development
functions. Its primary goal is to secure the Group’s liquidity and to minimize the effect of the financial asset price variability on the
cash flow of the Group. These risks cover market risks including foreign exchange risks and interest rate risk, as well as credit risk
and liquidity risk.
The above mentioned risk exposures may be hedged using derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group’s approved policies which indicate that the use of derivatives is for hedging purposes only. The
Group does not enter into speculative derivative trading positions. The same policies provide for the investment of excess liquidity.
As at the end of the reporting period, the Group had not entered into any derivative contracts.
44.4 Economic Market Risk Management
The Group operates in Romania, Bulgaria, Greece and Ukraine. The Group’s activities expose it primarily to financial risks of changes
in currency exchange rates and interest rates. The exposures and the management of the associated risks are described below. There
has been no change in the way the Group measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized financial assets and liabilities are denominated in a currency that
is not the Group's functional currency. Most of the Group’s financial assets are denominated in the functional currency. Management
is monitoring the net exposures and adopts policies to encounter them so that the net effect of devaluation is minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no
significant floating interest-bearing assets. On December 31st, 2019, cash and cash equivalent (including continued and discontinued
operations) financial assets amounted to €737.624,57 (2018: €987.537) of which approx. €153,9 in UAH and €518.883 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 €9.378.060 (31 December 2018: €23.007.764) as they are issued at variable rates tied to the Libor or Euribor. Management
monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group’s strategy with the
interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may take place
in the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.
Management monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group’s strategy
with the interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may
take place in the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.
CONSOLIDATED FINANCIAL STATEMENTS 2019|97
44. Financial Risk Management (continued)
44.4 Economic Market Risk Management (continued)
Interest Rate Risk (continued)
As at 31 December 2019 the weighted average interest rate for all the interest bearing borrowing and financial leases of the Group
stands at 4,07% (31 December 2018: 3,83%).
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding
as at 31 December 2019 is presented below:
Weighted average interest rate
Influence on yearly finance costs
Actual
as at 31.12.2019
4,07%
+100 bps
+200 bps
5,07%
180.076
6,07%
360.152
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding
as at 31 December 2018 is presented below:
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 Group’s exposures to financial risk are discussed also in Note 7.
44.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit risk emanating from the liquid funds is limited because the Group’s
counterparties are banks with high credit-ratings assigned by international credit rating agencies. In respect of receivables from
tenants these are kept to a minimum of 2 months and are monitored closely.
44.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which applies a framework for the Group’s
short, medium and long term funding and liquidity management requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and budgets while maintaining adequate reserves. The following table
details the Group’s contractual maturity of its financial liabilities. The tables below have been drawn up based on the undiscounted
contractual maturities including interest that will be accrued.
Continued Operations
31 December 2019
Financial assets
Cash at Bank
Prepayments and other receivables
Financial Assets at FV through P&L
Long-term Receivables and
prepayments
Total Financial assets
Financial liabilities
Borrowings
Trade and other payables
Bonds issued
Taxes payable and provisions
Total Financial liabilities
Total net assets/(liabilities)
Carrying
amount
€
Total
Contractual
Cash Flows
€
€
Less than
one year
From one to
two years
More than two
years
207.251
10.833.913
3.581.643
207.251
10.833.913
3.581.643
207.251
10.833.913
3.581.643
852
14.623.659
852
14.623.659
-
14.622.807
€
-
-
-
-
-
€
-
-
-
852
852
428.000
4.579.595
1.190.603
1.145.703
7.343.901
7.279.758
484.060
4.579.595
1.661.001
1.145.703
7.870.359
6.753.300
64.668
4.579.595
223.961
550.163
5.418.387
9.204.420
419.392
67.200
595.541
1.082.133
(1.082.133)
-
-
1.369.841
-
1.369.841
(1.368.989)
CONSOLIDATED FINANCIAL STATEMENTS 2019|98
44. Financial Risk Management (continued)
44.6 Liquidity Risk Management (continued)
Discontinued Operations
31 December 2019
Financial assets
Cash at Bank
Prepayments and other receivables
Financial Asset at FV through OCI
Long-term Receivables and
prepayments
Total Financial assets
Financial liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liabilities
Bonds issued
Taxation
Total Financial liabilities
Total net assets/(liabilities)
Continued Operations
31 December 2018
Financial assets
Cash at Bank
Prepayments and other receivables
Long-term Receivables and
prepayments
Total Financial assets
Financial liabilities
Borrowings
Trade and other payables
Bonds issued
Taxation
Total Financial liabilities
Total net assets/(liabilities)
Discontinued Operations
31 December 2018
Financial assets
Cash at Bank
Prepayments and other receivables
Financial Asset at FV 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 assets/(liabilities)
Less than
one year
From one to
two years
More than two
years
Carrying
amount
€
Total
Contractual
Cash Flows
€
530.374
1.470.772
1
530.374
1.470.772
1
€
530.374
1.470.772
1
315.265
2.316.412
315.265
2.316.412
-
2.001.147
€
-
-
-
-
-
€
-
-
-
315.265
315.265
8.949.660
1.015.266
67.269
10.084.470
-
216.563
20.333.228
(18.016.816)
6.918.573
1.015.266
67.269
12.552.787
-
216.563
20.770.458
(18.454.046)
2.113.369
1.007.050
-
861.304
-
173.012
4.154.735
(2.153.588)
3.513.894
-
-
912.841
-
43.551
4.470.286
(4.470.286)
1.291.310
8.216
67.269
10.778.642
-
-
12.145.437
(11.830.172)
Carrying
amount
€
Total
Contractual
Cash Flows
€
€
Less than
one year
From one to
two years
More than two
years
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
€
-
-
-
-
€
-
-
850
850
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
€
704.825
682.134
1
Total
Contractual
Cash Flows
€
704.825
682.134
1
€
704.825
682.134
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 2019|99
45. Events after the end of the reporting period
a) COVID-19 effects
As a result of Group’s property operations being focused on the food and the telco sectors, the Group did not suffer any material
adverse effects from the COVID-19 pandemic crisis which started during Q1 2020 and continues until the date of this report. All of
the large/anchor tenants in Group’s properties in Bucharest, including Favorit, a 3PL logistics operator servicing Carrefour; Danone,
the international food company; ANCOM, the Romanian Telecoms Regulatory Authority; and the supermarket chain Mega Image,
have experienced little or no disruption from either the COVID-19 crisis or the lockdown in Romania.
However, like other companies all over the world, during the pandemic, SPDI has experienced both delayed payment receipts as well
as general delays when interacting with associates who were/ are home bound, while carrying out its business activities. Moreover,
the overall investment apetite for real estate has been affected by the ongoing crisis, and this will be reflected in Group’s investment
activities and future valuation exercises of its properties.
b) Arcona Property Fund N.V. transaction
Following the conditional Implementation Agreement signed between the Company and Arcona Property Fund N.V. in December 2018
for the sale of Company’s non-Greek portfolio of assets in an all share transaction, and the completion of Stage 1 of the transaction
in February 2020 with the sale of Boyana in Bulgaria, which followed the Ukrainian Bella and Balabino asset disposals in Q4 2019, the
two parties have been engaged in extensive discussions for formulating and agreeing the specific terms of Stage 2 of the transaction
which involves EOS and Delenco assets in Romania, and Kiyanovskiy and Tsymlyanskiy land plots in Ukraine.
Despite the problems and the slow progression of the discussions during the pandemic which affected all related participants in all
jurisdictions of the two parties (Holland, Czech Republic, Ukraine, Romania, Cyprus, UK), provided that final agreements are reached,
signing and closing of Stage 2 is expected close to year end subject to COVID-19 effects.
c) Closing of Boyana transaction with Arcona
As part of the closing of the sale of Boyana to Arcona in 2019, the 315.591 Arcona shares and the 77.201 warrants over Arcona
shares that served as consideration of the transaction, held initially in escrow, agreed to be released upon agreement of the extension
terms of the associated loans. The consideration shares and warrants were in such escrow as at the end of the period and released
effectively in February 2020 when the transaction closed successfully. Moreover, as part of the transaction, the parties agreed the
transfer of an Alpha Bank loan of EUR 0,77m at the level of Sertland to Arcona. The loan was transferred successfully during August
2020.
d) Loan from a third party
During Q2 2020 the Company received a short term loan from an unrelated third party, of an amount of € 500.000 at 10% interest,
with the purpose of funding operating needs. The loan is payable within 2020, following the re-payment of the Sellers Loan that the
Company has granted as part of the sale of Boyana Residences to Arcona.
e) Blooming House loan re-payment
Following cash proceeds from apartment sales during H1 2020, Ketiza Real Estate Srl re-paid fully the loan with Eurobank, used to
finance the acquisition and construction of Blooming House asset, therefore being able to utilize freely the proceeds from the remaining
three units.
CONSOLIDATED FINANCIAL STATEMENTS 2019|100