ANNUAL REPORT
2020
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 Ukraine
5. Property Assets
5.1 EOS Business Park – Danone headquarters, Romania
3
4
4
6
9
9
10
12
12
13
14
15
5.2 Delenco office building, Romania
14
5.3 Innovations Logistics Park, Romania 16
5.4 Kindergarten, Romania
5.5 Residential portfolio
Monaco Towers, Bucharest, Romania
Blooming House, Bucharest, Romania
GreenLake, Bucharest, Romania
Romfelt Plaza (Doamna Ghica), Bucharest, Romania
5.6 Land Assets
Kiyanovskiy Residence – Kiev, Ukraine
Tsymlyanskiy Residence – Kiev, Ukraine
Rozny Lane – Kiev Oblast, Kiev, Ukraine
SECTION B- Financial Statements
15
16
16
16
16
17
17
17
17
17
SECURE PROPERTY DEVELOPMENT AND INVESTMENT PLC
KIRIAKOU MATSI 16, AG. OMOLOGITES,1082, NICOSIA,CYPRUS
ANNUAL REPORT 2020|1
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC
Key Figures
31 Dec 2020
31 Dec 2019
Change
Total Assets (€million):
Number of income producing
commercial Properties:
56
4
65
4
-14%
-
Average occupancy rate of
94%
93%
1%
income producing assets:
Operational Gearing:
33%
30%
10%
Average borrowing cost:
4,0%
4,07%
-2%
Operating Income*(€million):
2,1
2,3
-9,5%
EBITDA*(€million):
-0,2
0,06
-419%
Net Equity**(€million):
23,7
29,4
-19%
Issued Shares:
129.191.442
129.191.442
-
NAV per share (€):
0,18
0,23
-19%
* 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 2020|2
1.
Letter to Shareholders
28 June 2021
Dear Shareholders,
AS already presented to you last July, 2020 was to be the year when the merger with the Amsterdam and
Prague listed Arcona Property Fund N.V. (APF - with assets in Poland, Czech Republic and Slovakia) would
have been finalised, confirming SPDI’s strategy to establish itself as the regional property company of
reference in South Eastern Europe and offering to our shareholders exposure to a much larger and broader
East European regional property company, as per our original plan and additional liquidity in the shares.
While the complication of joining forces in six different jurisdictions, with corporate entities in two additional
ones, proved an obstacle difficult to overcome (meaning that by the end of 2019, SPDI and APF had only
closed one sixth of the transaction), the pandemic then developed and 2020 proved even slower and
inactive than we could have imagined.
In 2020 with health and loss of life becoming the major concern of humanity, with mask, social distancing
and Zoom becoming the world’s new buzzwords and with major lockdowns affecting business across
Europe, we were able to a) ensure that almost all our income producing properties remained fully let,
experience only minor COVID-19 related disruptions, and extended any leases that were coming up for
renewal, while at the same time b) increase the sales pace of our residential property portfolio which
followed a growing market in Romania. Having therefore rebuffed any issues caused by the pandemic, we
were just waiting for the markets to come back to normalcy and for APF to be ready to proceed with Stage
2 of our transaction, which we managed to sign in mid-June 2021.
As 2021 brought with it vaccines that are expected to alleviate the human pain as well as restart the global
economies, we are fully prepared and ready to push forward for a swift closing of the APF Transaction, the
preferred way of safeguarding value for our shareholder and offering them the option of further value
generation, if they so choose. Management directors, and advisors of SPDI are committed to see a swift
conclusion of the transaction that will ensure the transformation of our Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
ANNUAL REPORT 2020|3
2.
Management Report
2.1 Corporate Overview & Financial Performance
SPDI’s core property asset portfolio consists of South Eastern European prime commercial and
Summary
industrial real estate, the majority of which is let to blue chip tenants on long leases. During 2020,
management in line with Company’s strategy to maximise value for shareholders, continued the
discussions with Arcona Property Fund N.V (Arcona) in relation to the conditional implementation
agreement for the sale of Company’s property portfolio, excluding its Greek logistics property (which
has now also separately been sold), in an all-share transaction to Arcona, an Amsterdam and Prague
listed company that invests in commercial property in Central Europe. Arcona currently holds high
yielding real estate investments in Czech Republic, Poland and Slovakia, with the transaction valueing
the SPDI assets NAV at ~ €29m, significantly higher than the current market value of the Company
as a whole.
Following the completion of Stage 1 of the transaction in 2019, which involved the sale of two land
plots in Ukraine and residential and land assets in Bulgaria and resulted in Company receiving a total
of 595.534 Arcona shares and 144.264 warrants over Arcona shares, during 2020 the two parties
engaged in negotiating and planning Stage 2 of the transaction. This Stage is centred on the sale of
two commercial income producing assets in Romania and land plots in Ukraine. The combination of
the two complimentary asset portfolios is expected to create a significant European Property
company, benefiting both the Company’s and the buyer’s respective shareholders.
However, the rapid development of COVID-19 outbreak and its effects on all related countries and
therefore on all participants in this process, have caused major delays. Lockdowns, travel restrictions,
remote working and other similar measures, have affected the effective completion of all relevant
actions and therefore brought barriers to the successful completion of the negotiations.
Finally, in June 2021 the two parties signed relevant SPAs for Stage 2, which involves transfer of EOS
and Delenco assets in Romania and the Kiyanovskiy and Rozny land plots in Ukraine in exchange of
approximately 605.000 new ordinary shares in Arcona and approximately 145.000 warrants over
shares in Arcona, as well as €1m in cash, subject to, inter alia, standard form adjustment and
finalization in accordance with the relevant agreements. Stage 2 is likely to be dependent on
shareholder approval, and is expected to close within 2021 at which point the Company will be issued
the relevant shares in Arcona and the warrants .
Corporate
developments
Regarding the economic environment in which the Company operates, the Romanian economy which
constitutes the main operating market of the Company, contracted by 3,9% in 2020 as a result of
the COVID-19 pandemic and its impact on economic activity. Investment volume dropped to almost
half the one registered in 2019 and returned back to 2015 levels, with Office properties being the
most in demand type of properties and logistics being the second due to limited supply of product
Romanian
economic
developments
despite strong demand.
ANNUAL REPORT 2020|4
Following the successful sales of Victini Logistics in Athens in 2019, rental and related income reduced
by 9,5% during 2020, while net income from operations reduced by 6%.
Financial
performance
Overall, the administration costs adjusted by the one-off costs associated with the transaction with
Arcona and by previous periods’ transaction costs decreased by 16%, however the loss incurred from
associate as a result of reduced valuation of the asset at the end of the period, resulted in reduced
recurring EBITDA at -€0,2m compared to €0,06m in 2019. Finance costs dropped to ~€0,6m from
€1,1m in 2019 following the disposal of Victini and Boyana assets in 2019.
Table 1
As a result, operating results after finance and tax for the year closed at - €1m as compared to -
€1,1m in 2019.
ANNUAL REPORT 2020|5
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial income producing and residential
Property
properties in Romania, as well as land plots in Ukraine and Romania.
Assets
Commercial
Commercial Property
Location
EOS Business Park
Bucharest, Romania
Delenco (SPDI has a 24,35% interest)
Bucharest, Romania
Innovations Logistics Park
Bucharest, Romania
Kindergarten
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
Key Features
3.386 sqm
Danone Romania
100%
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
10.280 sqm
ANCOM (Romanian telecoms regulator)
99%
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
16.570 sqm
Favorit Business Srl
77%
Bucharest, Romania
Gross Leaseable Area:
Anchor Tenant:
Occupancy Rate:
1.400 sqm
International School for Primary Education
100%
Land & Residential Assets
Kiyanovskiy Residence
Tsymlyanskiy Residence
Rozny Lane
GreenLake Land
(SPDI has a ~44% interest)
Romfelt, Monaco, Blooming,
GreenLake
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
35
33
Land &
Residential
In 2020, 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 the current Practice Statements
Property
Asset
Valuations
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).
Following the implementation of Company’s strategy, with the disposal of Bulgarian and Greek
asset, SPDI’s portfolio became more concentrated in terms of geography. At the end of the
reporting period, 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 2020|6
In respect of the Company’s income generation capacity, Romania has became the single
operating income source.
** 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 2020|7
Table 2
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 in EUR as at 31/12/2020 (Share price at £0,065)
Market Cap in EUR as at 21/06/2021 (Share price at £0,0635)
Discount of Market Cap in EUR at 21/06/2021 vs NAV at 31/12/2020
* Reflects the Company’s participation at each asset
**Refer to balance sheet and related notes of the financial statements
GAV*
10,1
6,7
5,06
0,7
1,4
8,0
32,0
2020
€m Debt *
6,7
2,95
0,2
0,34
0,86
3,5
14,6
NAV
3,4
3,7
4,9
0,4
0,5
4,5
17,4
+6,3
23,7
9,3
9,5
-60%
The Net Equity attributable to the shareholders as at 31 December 2020 stood at ~€23,7m vs
~€29,3m in 2019. The table below depicts the discount of Market Share Price over NAV since
Net Equity
2012.
The NAV per share as at 31 December 2020 stood at GBP 0,17 and the discount of the Market
Value vis a vis the Company’s NAV denominated in GBP stands at 61% at year-end.
Net Asset
Value per
share
ANNUAL REPORT 2020|8
2.3 Financial and Risk Management
The Group’s overall bank debt exposure at the end of the reporting period was
Leverage
~€14,5m (calculating relative to the Company’s percentage shareholding in each),
comprising the following:
a) €2,95m finance lease of EOS Business Park with Alpha Leasing Romania and €0,3m
debt facility received by First Phase from Alpha Bank Romania.
b) €6,7m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
c) €0,34m being the Company’s portion on debt financing of the Kindergarten with
Eurobank Ergasias.
d) €0,86m being the Company’s portion on the residential portfolio debt financing.
e) €3,5m being the Company’s portion on land plot related debt financing in Romania.
f) €0,2m being the Company’s portion on debt financing of Delenco asset.
Throughout 2020, the Company focused on managing and preserving liquidity through
cash flow optimization. In this context, Management secured a) bridge financing for
working capital purposes, b) continuous sale of residential assets and c) advancement
Liquidity
Management-
Cash Flow Risk
of discussions related to transaction with Arcona Property Fund N.V.
Arcona
transaction
2.4 2021 and beyond
During 2021 the Company is concentrated in closing Stage 2 of the transaction with
Arcona. Following slow progress of the process during the first half of the year due to
the COVID-19 effects, the signing of relevant SPA’s in June 2021 took place, involving
the transfer of two assets in Romania and two land plots in Ukraine. In particular,
Stage 2 involves the two office buildings in Bucharest, EOS and Delenco, as well as
Rozny and Kiyanovskiy land plots in Kiev. Currently, main target of the Company is the
successful closing of the Stage 2 transactions within H2 2021, which will likely be
dependent on SPDI shareholder approval.
The finalization of the transaction with Arcona Property Fund N.V. marks effectively
the maximization of the Company’s value from the current asset portfolio, providing
Company’s shareholders the opportunity to gain direct exposure to a listed property
fund of significantly larger size, having a strong dividend distribution policy, and active
in a faster-growing over the long-term area (Central and South Eastern Europe) of the
European property market.
ANNUAL REPORT 2020|9
3.
Regional Economic Developments 1
The Romanian economy contracted by 3,9% in 2020 due to the impact of the COVID-
Romania
19 pandemic. Trade and services decreased by 4,7%, while certain sectors, such as
tourism and hospitality, remained heavily affected. Industry contracted by 9,3%,
reflecting weakened external demand and supply chain disruptions. The biggest
contraction was seen in agriculture, linked to persistent droughts affecting crops. The
unemployment rate reached 5,5% during 2020 before edging down to 5,2% in
December.
The Government provided a fiscal stimulus of 4,4% of GDP in 2020 in response to the
COVID-19 crisis. In the first COVID wave, poor and vulnerable households were less
supported by the fiscal response measures, which extended more directly to those in
formal employment structures; subsequent programs for daily wage and seasonal
workers extended protections to typically more vulnerable segments.
The economy is projected to grow at around 4,3% in 2021. The strength of the
recovery will depend on the success of the COVID-19 vaccine rollout and the policy
response to the health crisis, as well as on developments in the EU. In view of the
limited fiscal space, the impact of the EU-level stimulus will play a crucial role in the
economic recovery. Romania is expected to receive €79,9 billion from the EU by 2027
under the Multiannual Financial Framework 2021–2027 (€49,5 billion) and the
economic recovery plan (€30,4 billion).
Romania
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data
2014
150,5
20,0
3,4
1,1
6,8
2015
160,3
19,9
3,9
-0,6
6,8
2016
170,4
19,8
4,8
-1,5
5,9
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
2020f
217,8
19,3
-3,9
2,1
5,2
With an estimated contraction of 4,5%, the economic impact of COVID-19 has been
Ukraine
smaller than in most other countries, nevertheless the pandemic has caused a heavy
toll on households and weakened the commitment by the government to undertake
critical reforms. The COVID-19 outbreak redirected government policy from structural
reforms towards ad-hoc reactive measures, and as a result, macro fiscal risks have
increased. Public sector financial needs are expected to grow due to increases in
minimum wages and social transfers, limiting space for public investment, and fueling
inflationary presuures
in a supply-constrained economy. Additionally,
large
1 Sources: World Bank Group, Eurostat, EBRD, National Institute of Statistics- Romania, National Institute of Statistics –
Ukraine, IMF, European Commission.
ANNUAL REPORT 2020|10
government domestic borrowings are crowding out much needed private investment.
Holdings of government securities already represent close to 30% of total assets of
the state-owned banks while corporate lending continues to stagnate. Stronger fiscal
discipline is needed to reduce risks for medium-term growth prospects.
On the supply side, retail and wholesale trade grew 7,9% yoy in 2020 and made a
significant positive contribution to GDP. At the same time agriculture output fell almost
12%.
Ukraine’s economic recovery in 2021 is expected to be mild given high uncertainty
associated with the vaccine rollout and the direction of economic policies to address
problems in investment and safeguard macroeconomic sustainability. GDP is projected
to grow by 3,8% in 2021.
Macroeconomic data
Ukraine
GDP (USD bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
2014
98,4
42,8
-6,6
12,1
9,3
2015
87,5
42,6
-9,8
43,3
9,1
2016
92,3
42,4
2,4
12,4
9,3
2017
113,0
42,2
3,5
13,7
9,5
2018
130,9
42,0
3,3
9,8
8,8
2019
154,7
41,9
1,9
4,1
8,2
2020f
142,2
41,5
-4,5
5,0
8,9
_____________________________
1 Sources: World Bank Group, Eurostat, EBRD, National Institute of Statistics- Romania, National Institute
of Statistics – Ukraine, IMF, European Commission.
ANNUAL REPORT 2020|11
4.
Real Estate Market Developments2
4.1 Romania
Total investment volume in Romania reached in 2020 826,5 million Euros, increased
General
by 20% as compared to previous period. Although throughout the first six months of
2020 investor’s activity was disrupted by the COVID-19 outbreak, the second half of
the year their level of confidence widened and led to investment activity totalling 625
milion Euros. Investment volume was dominated by the office segment (86%), with
logistics/ industrial being the next most in demand type of properties (9%) mainly due
to limited supply of product. Retail followed with 4%.
In 2020 there were no major variations regarding the evolution of prime yields which
continued to be amongst the highest in Europe. Prime office properties achieve yields
of around 7,25%, while for the prime industrial properties, the yield stands at 7,75%
and is expected to compress as investors’ appetite for logisti products is strong. Prime
retail yields have slightly decompressed as compared to 2019 at 7%.
Logistics
Market
With c.630.000 sqm delivered in 2020, the prime industrial/ logistics stock in Romania
exceeded 5,2 milion sqm which accounts for an impressive evolution of more than
double during the last five years. Bucharest attracted 66% of total deliveries in 2020
and reached a total prime industrial stock of 2,4 milion sqm. For 2021, developers
have planned the delivery of over 700.000 sqm of prime industrial/ logistics spaces,
more than 50% in Bucharest. Other cities attracting new developments are Timisoara
and Craiova. Total leasing activity volume in 2020 reached a record high figure of
876.000 sqm, comprised by renewal of existing contracts and new demand. It is
expected that industrial/ logistics leasing activity and prime stock evolution will
continue strong in the next 5-year period when country’s stock is projected to reach 8
milion sqm.
During 2020 new office spaces were delivered to the market with a total gross leasable
Office Market
area of 155.000 considerably lower than previous years. Major office location is
Bucharest, where at the end of 2020, modern office stock reached 2,9 milion sqm,
63% respectively being class A. Such new delivery forced the increase in vacancy rate,
since aside from the pandemic and relevant economic factors, new supply was leased
at 70% on average due to decreased relevant demand as a result of the COVID-19
pandemic impact. 243.000 sqm were transacted in Bucharest, out of which 58% take
ups and the rest renewals/ renegotiations. IT and Consumer Services & Leisure sectors
2 Sources : Eurobank, CBRE Research, Colliers International, Cushman & Wakefield, Crosspoint Real Estate, Knight Frank, Coldwell
Banker Research, National Institute of Statistics- Romania, State Statistics Service-Ukraine, NAI Real Act
ANNUAL REPORT 2020|12
maintained their leading position as demand drivers, representing 37% and 23% of
the total space transacted, while Central-West sub-market attracted the largest share
of leasing activity.
Sales of residential units in Romania during 2020 increased by 8,2% yoy, meaning that
approximately 123.000 units sold during the period. Almost a third were in Bucharest
(37.000 units sold) and the rest in regional cities. Average price asked per sqm
remained unchanged, c.1.350 Euros per sqm for older units and c.1450 Euros per sqm
for new ones. Despite the devaluation of Ron in terms of Euro and the introduction of
the Consumer Credit Referece Index (IRCC), replacing ROBOR for consumer loans in
Romania, demand was witnessed robust and expected to continue to be so.
Residential
Market
4.2 Ukraine
Real estate investment in Ukraine during 2020 is reported weak. The COVID-19
General
pandemic impact, tensions with Russia, and lack of financing are considered the main
factors for lack of significant investment activity. However, a new law on the increase
of support to large investors, passed in December 2020, backed by a most probable
retreat of the pandemic, can sharpen investors’ appetite for Ukrainian real estate
during 2021. The new law exempts large investors from income tax, value-added tax,
import duty on new equipment and its components, and provides financial support in
the construction of infrastructure relevant to investment projects.
With regards to the Ukrainian land market, due to lack of finance, many potential
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
consists of development companies, unable to develop due to the lack of finance,
companies or individuals having speculatively acquired land plots prior to the crisis
with the intention to sell on and banks possessing mortgaged land upon default of
previous owners. The demand for land plots has started increasing since 2016,
especially for ones suitable for commercial development, a trend which stopped in
2020 mainly due to the effects of COVID-19 pandemic. Under condition of economic
recovery in 2021, gradual rebound in demand is anticipated by the end of the year.
ANNUAL REPORT 2020|13
5. Property Assets
5.1 EOS Business Park – Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class “A” office building of 3.386
sqm GLA and 90 parking places. It is located next to the Danone factory, in the North-
Eastern part of Bucharest with access to the Colentina Road and the Fundeni Road.
The Park is very close to Bucharest’s ring road and the DN 2 national road (E60 and
E85) and is also served by public transportation. The park is highly energy efficient.
Property
description
The Company acquired the office building in November 2014. The complex is fully let
Current status
to Danone Romania, the French multinational food company, until 2025. The asset is
part of Stage 2 of the Arcona transaction and relevant SPA for its disposal has already
been signed in June 2021 with closing to be expected within H2 2021.
5.2 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of two underground levels,
a ground floor and ten above-ground floors. The building is strategically located in the
very center of Bucharest, close to three main squares of the city: Unirii, Alba Iulia and
Property
description
Muncii, only 300m from the metro station.
The Company acquired 24,35% of the property in May 2015. As at the year end 2019,
Current status
the building is 99% let, with ANCOM (the Romanian Telecommunications Regulator)
being the anchor tenant (81% of GLA). The asset is part of Stage 2 of the Arcona
transaction and relevant SPA for its disposal has already been signed in June 2021 with
closing to be expected within H2 2021.
ANNUAL REPORT 2020|14
5.3
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, 200m from the city’s ring road and 6km from
Bucharest-Pitesti (A1) highway. Its construction was completed in 2008 and was tenant
specific. It comprises four separate warehouses, two of which offer cold storage.
Property
description
In April 2017, the Company signed a lease agreement with Aquila Srl, a large Romanian
Current status
logistics operator, for 5.740 sqm of ambient space in the warehouse which expired
during April 2018 without being extended. During Q1 2019 the Company signed with
Favorit Business Srl a lease agreement for 3,000 sqm of cold storage space, 506 sqm
of ambient storage space, and 440 sqm of office space. In Q2 2019 the Company
agreed with Favorit Business Srl a lease of an extra 3.000 sqm of cold storage space,
and an extra 210 sqm of office space to accommodate their new business line which
involves as end user Carrefour. Moreover, during 2019 and H1 2020 the Company
signed short term lease agreements for 2.000 sqm of ambient storage space with
Chipita Romania Srl, one of the fastest growing regional food companies. As at the
year end, the terminal was 77% leased. The asset is planned to be part of Stage 3 of
the Arcona transaction.
5.4 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake, a standalone
building on ground and first floor, is used as a nursery by one of the Bucharest’s leading
Property
description
private schools.
The building is erected on 1.428.59 sqm
plot with a total gross area of 1.198 sqm.
The property is 100% leased to International School for Primary Education until 2032. Current status
ANNUAL REPORT 2020|15
5.5 Residential portfolio
Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in South Bucharest, Sector 4, enjoying
good car access due to the large boulevards, public transportation, and a shopping
mall (Sun Plaza) reachable within a short driving distance or easily accessible by
Property
description
subway.
Following extended negotiations for two years
Current status
with the company which acquired Monaco’s
loan, the SPV holding Monaco units entered in
2019 into insolvency status in order to protect
itself from its creditors. During 2019, based on
regulatory procedures for disposing of assets
held by the debtor and upon agreement of all parties and the judicial administrator’s
approval, 5 units were sold. During 2020 another 12 units were sold and as a result
the relevant loan has been fully re-paid. Currently, the SPV has exited insolvency status
and the Company is in the process of re-gaining full control. At the end of 2020, 5
apartments were available, 2 of which were rented.
Blooming House, Bucharest, Romania
Blooming House is a residential development project located in Bucharest, Sector 3, a
residential area with the biggest development and property value growth in Bucharest,
offering a number of supporting facilities such as access to Vitan Mall, kindergartens,
café, schools and public transportation (both bus and tram).
Property
description
At the end of 2020, 1 apartment was available.
Current status
During 2020, 3 units and I commercial space
were sold.
GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of apartments and villas,
situated on the banks of Grivita Lake, in the northern part of the Romanian capital –
the only residential property in Bucharest with a 200 meters frontage to a lake. The
compound also includes facilities such as one of Bucharest’s leading private schools
(International School for Primary Education), outdoor sports courts and a mini-market.
Additionally GreenLake includes land plots totaling 40.360 sqm. SPDI owns ~43% of
this property asset portfolio.
Property
description
ANNUAL REPORT 2020|16
During 2020, 19 apartments and villas were sold while at the end of the year 27 units
Current status
remained unsold. The asset is planned to be part of Stage 3 of the Arcona transaction.
Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Romfelt Plaza is a residential complex located in Bucharest, Sector 2, relatively close to the city
center, easily accessible by public transport and nearby supporting facilities and green areas.
During 2020, the last unit of the complex was effectively sold.
Current status
Property
description
5.6 Land Assets
Kiyanovskiy Residence – Kiev, Ukraine
The property consists of 0,55 Ha of land located at Kiyanovskiy Lane, near Kiev city
center. It is destined for the development of businesses and luxury residences with
beautiful protected views overlooking the scenic Dnipro River, St. Michaels’ Spires and
Property
description
historic Podil.
The asset is part of Stage 2 of the Arcona transaction and relevant SPA for its disposal
Current status
has already been signed in June 2021 with closing to be expected within H2 2021.
Tsymlyanskiy Residence – Kiev, Ukraine
The 0,36 Ha plot is located in the historic and rapidly developing Podil District in Kiev.
The Company owns 55% of the plot, with a local co-investor owning the remaining
Property
description
45%.
Discussions are ongoing with interested parties with a view to partnering in the
Current status
development or sale of this property. The asset is planned to be part of Stage 3 of the
Arcona transaction.
Rozny Lane – Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be developed as a residential
complex. Following a protracted legal battle, it has been registered under the Company
Property
description
pursuant to a legal decision in July 2015.
The asset is part of Stage 2 of the Arcona transaction and relevant SPA for its disposal
Current status
has already been signed in June 2021 with closing to be expected within H2 2021.
ANNUAL REPORT 2020|17
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2020
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2020
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
20
21
22
23-25
26-29
30
31
32
33
34-91
CONSOLIDATED FINANCIAL STATEMENTS 2020|19
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
Vista Bank (Romania) S.A.
90-92 Emanoil Porumbaru Str.,
1st District, Bucharest, Romania
Solicitors
WTS Tax Legal Consulting LLC
5, Pankivska Street, 5th floor
Kiev, Ukraine, 01033
Drakopoulos Law Firm
332, Kifissias Avenue, 152 33 Halandri,
Athens, Greece
Drakopoulos Law Firm
7 David Praporgescu, District 2, 020965
Bucharest, Romania
Auditors
Baker Tilly Klitou and Partners Limited
Corner C Hatzopoulou & 30 Griva Digheni Avenue
1066 Nicosia, Cyprus
Reed Smith LLP
The Broadgate Tower 20 Primrose Street,
London EC2A 2RS, United Kingdom
Georgiades & Pelides LLC
Kyriakou Matsi Avenue,
Eagle House, 10th floor, PC 1082, Nicosia, Cyprus
CONSOLIDATED FINANCIAL STATEMENTS 2020|20
Chairman’s Statement
The global pandemic that came upon the world early in 2020 affected life, health and businesses alike, and caused substantial delays
in our efforts to merge with Arcona Property Fund (“APF”), the Central European property fund listed in Amsterdam. While SPDI’s
assets were largely unaffected by the pandemic, both due to their “covid-resistant” tenancy selection in the food and telco sectors,
and due to the immediate and steady response of our directors and management, Arcona Property Fund experienced a higher degree
of covid-related impact. Nevertheless, as the pandemic seems to be subsiding, we expect the favorable fundamentals of our target
markets to help lead a pan-European economic resurgence. As we managed to sign the Stage 2 documents just before this annual
report was issued, we are confident the APF transaction, still the preferred option for generating value for our shareholders, will now
move forward at a speedier pace. The Company's management and board are committed to generating value for our shareholders
in markets that are strong and growing and, no matter the temporary difficulties, will attempt to do whatever is necessary to realize
that end.
Michael Beys
Chairman of the Board
CONSOLIDATED FINANCIAL STATEMENTS 2020|21
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 2020, 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 2020:
Theofanis Antoniou
CONSOLIDATED FINANCIAL STATEMENTS 2020|22
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 2020.
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 portfolio 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.
In June 2021 the Company signed with Arcona relevant SPAs for the transfer of assets included in Stage 2 of the transaction which
includes the office properties in Bucharest, Romania, and two land plots in Ukraine. Relevant closing of the transactions is expected
by the end of 2021 subject to COVID-19 effects and likely SPDI shareholder approval. Discussions regarding Stage 3 of the transaction
are at a preliminary stage and will be intensified upon successful closing of Stage 2.
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 limited disruption from either the pandemic crisis or the lockdowns in Romania.
As long as the pandemic continuous to create instability, affecting business activity in the countries the Company operates, it is
possible relevant problems to be faced in the future, although current vaccination programs in the countries of interest mitigate
considerably such risks. On the other hand, the pandemic outbreak has affected 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 30. No dividends were declared during the year.
Share Capital
Authorised share capital
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 29.3).
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,
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 29.3) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L.
and final settlement for any resulting difference is expected to be provided by Cypriot Courts (Note 41.3). As soon as the
case is settled, the Company will proceed with the cancellation of the Redeemable Preference Class B Shares.
CONSOLIDATED FINANCIAL STATEMENTS 2020|23
MANAGEMENT REPORT
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 29.3)
Board of Directors
The members of the Company's Board of Directors as at 31 December 2020 and at the date of this report are presented on page 20.
All Directors were members of the Board throughout the year ended 31 December 2020.
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 relevant 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. It has
also been decided that any fees for H2 2019 and those of 2020 will be paid in cash.
The remuneration of the senior management is described in Note 12 and Note 40.1.2.
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
CONSOLIDATED FINANCIAL STATEMENTS 2020|24
MANAGEMENT REPORT
Other share capital related matters
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 44 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 2021, 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 2020|25
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
F: +357 22 751648
Independent Auditor's Report
To the Members of Secure Property Development & Investment Plc
Report on the Audit of the Consolidated Financial Statements
Qualified 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 30 to 91 and comprise the consolidated
statement of financial position as at 31 December 2020, and the consolidated statements of comprehensive income,
changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including
a summary of significant accounting policies.
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our
report, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position
of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for Qualified Opinion
As at 31 December 2020, the Group had a loan receivable from a third party which appears on the Consolidated
Statement of Financial Position within Prepayments and other current assets at the value of €5.597.015. We were not
provided with appropriate and reliable audit evidence to determine the recoverable amount of the loan receivable. As
a result, we were unable to determine whether any adjustment would be required on the value of the loan receivable
from the third party.
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the ''Auditor's Responsibilities for the Audit of the Consolidated Financial Statements''
section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants' International Code of Ethics for Professional Accountants (including International Independence
Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our qualified opinion.
Material Uncertainty Related to Going Concern
We draw attention to Notes 2 and 9 to the consolidated financial statements which refer to Management’s assessment
of going concern and the transactions that the Group plans to complete in the foreseeable future. The Group’s financial
position and cash flows will be significantly affected in a manner which cannot be determined with certainty at this
stage. These conditions indicate the existence of a material uncertainty which casts significant doubt as to the Group’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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
The Group holds investment properties which are presented
within assets classified as held for sale. As at 31 December
2020 these are carried at a value of €34.903.480. We
focused in this area as significant judgment and assumptions
are made to result in the fair value of each property.
The valuation of the Group’s properties is inherently
subjective due to unique nature, location and expected
future prospects of each property. The methodology applied
in determining the fair values is set out in Note 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
Institution of Chartered Surveyors (“RICS”) Valuation –
Professional Standards and is also compliant with the
International Valuation Standards (IVS), taking into account
property specific information.
Our audit procedures included assessment of the
valuers’ qualifications and expertise and considered
their engagement with the Group to determine
whether there were any matters that might have
affected their objectivity or may have imposed scope
limitations upon their work.
We obtained and read the valuation reports for every
property, to confirm that the valuation approach for
each property was appropriate and suitable for use
in determining the fair value used in the consolidated
financial statements.
We have also evaluated the mathematical precision
of the methodologies used and the relevance of the
key assumptions used, comparing that with general
economic expectations to assess whether the
assumptions used were reasonable.
We have engaged independent valuators where we
considered this necessary to assess the fair values of
specific properties.
Emphasis of matter
We draw attention to Note 42.3 to the consolidated financial statements, which describe the Contingent liabilities of the
Group arising from the lawsuits for the Bluehouse accession case. The ultimate outcome of the matter cannot be reliably
determined at present. The Group has recognized a liability of €2.521.211 in these consolidation financial statements.
Our opinion is not modified in respect of this matter.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Annual Report, the Chairman’s Statement and the Management Report, but does not include the
consolidated financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
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.
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.
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.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
In our opinion, the Management Report has been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap 113, and the information given is consistent with the consolidated financial statements.
In our opinion, and in the light of the knowledge and understanding of the Group and its environment obtained
in the course of the audit, we have not identified material misstatements in the Management Report.
Other Matters
This report, including the opinion, has been prepared for and only for the Group's members as a body in accordance
with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or
assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor’s report is Andreas Pittakas.
Andreas Pittakas
Certified Public Accountant and Registered Auditor
for and on behalf of
Baker Tilly Klitou
Certified Public Accountants and Registered Auditors
Corner C. Hatzopoulou and 30 Griva Digheni Avenue
1066 Nicosia, Cyprus
Nicosia, 28 June 2021
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.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
Continued Operations
Income
Net Operating Income
Administration expenses
Fair Value loss on Financial Assets at FV through P&L
Other operating income/ (expenses), net
Operating profit / (loss)
Finance income
Finance costs
Note
10
12
27
15
16
16
2020
€
795.700
795.700
(1.701.180)
(824.634)
191.222
2019
€
457.450
457.450
(2.442.171)
(153.913)
(442.629)
(1.538.892)
(2.581.263)
503.527
(274.751)
474.584
(137.250)
Profit / (loss) before tax and foreign exchange differences
(1.310.116)
(2.243.929)
17a
(60.142)
(74.779)
Foreign exchange loss, net
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
38b
38b
38c
38c
The notes on pages 34 to 91 form an integral part of these consolidated financial statements.
18
9b
17b
30
(1.370.258)
(2.318.708)
(117.656)
(36.380)
(1.487.914)
(2.355.088)
(4.262.592)
(4.801.843)
(5.750.506)
(7.156.931)
(61.936)
(1.392.155)
(7.204.597)
66.557
223.135
(6.867.239)
(1.487.914)
-
(1.487.914)
(2.355.088)
-
(2.355.088)
(2.851.952)
(1.410.640)
(4.262.592)
(4.846.634)
44.791
(4.801.843)
(4.339.866)
(1.410.640)
(5.750.506)
(7.115.161)
(89.436)
(7.204.597)
(7.201.722)
44.791
(7.156.931)
(6.777.803)
(89.436)
(6.867.239)
(0,03)
(0,03)
(0,02)
(0,02)
(0,06)
(0,06)
(0,04)
(0,04)
CONSOLIDATED FINANCIAL STATEMENTS 2020|30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2020
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
Tax payable and provisions
Current liabilities
Borrowings
Bonds issued
Trade and other payables
Tax payable and provisions
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
40.3
31
32
33
36
32
33
34
36
9d
2020
€
2019
€
2.859
836
6.787.244
6.790.939
6.880.076
129.859
7.009.935
41.791.409
566
852
3.581.643
3.583.061
10.833.913
207.251
11.041.164
49.891.627
55.592.283
64.515.852
1.291.281
72.107.265
8.954.426
(211.199)
(58.428.800)
23.712.973
1.291.281
72.107.265
10.232.119
(149.263)
(54.088.934)
29.392.468
5.921.153
7.446.255
29.634.126
36.838.723
95.977
1.033.842
663.062
1.792.881
2.054.400
225.081
4.036.962
620.365
7.249
1.033.842
595.541
1.636.632
420.751
156.761
4.579.595
550.162
6.936.808
5.707.269
17.228.468
24.165.276
25.958.157
20.333.228
26.040.497
27.677.129
55.592.283
64.515.852
Net Asset Value (NAV) € per share:
38d
Basic NAV attributable to equity holders of the parent
Diluted NAV attributable to equity holders of the parent
0,18
0,18
0,23
0,23
On 28 June 2021 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 34 to 91 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2020|31
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Attributable to owners of the Company
Share capital
Share
premium,
Net1
€
€
Accumulated
losses, net of
non-controlling
interest2
€
Exchange
difference on I/C
loans to foreign
holdings3
€
Foreign
currency
translation
reserve4
€
Total
Non-
controlling
interest
Total
€
€
€
Balance - 31 December 2018
Loss for the year
1.272.072
-
71.564.479
-
(46.887.212)
(7.201.722)
(215.820)
-
9.874.757
-
35.608.276
(7.201.722)
7.535.691
44.791
43.143.967
(7.156.931)
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
Loss for the year
Exchange difference on I/C loans to foreign
holdings (Note 17b)
Foreign currency translation reserve
Balance - 31 December 2020
19.209
542.786
-
-
-
-
-
66.557
-
-
561.995
66.557
-
-
561.995
66.557
-
1.291.281
-
-
72.107.265
-
-
(54.088.934)
(4.339.866)
-
357.362
(149.263) 10.232.119
-
-
357.362
29.392.468
(4.339.866)
(134.227)
7.446.255
(1.410.640)
223.135
36.838.723
(5.750.506)
-
-
1.291.281
-
-
72.107.265
-
-
(58.428.800)
(61.936)
-
(211.199)
-
(1.277.693)
8.954.426
(61.936)
(1.277.693)
23.712.973
-
(114.462)
5.921.153
(61.936)
(1.392.155)
29.634.126
1 Share premium is not available for distribution.
2 Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution
for defence at 17% and GHS contribution at 1,7%-2,65% for deemed distributions after 1 March 2019 will be payable on such deemed dividends to the extent that the ultimate shareholders are both Cyprus tax resident and Cyprus domiciled. The
amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable by the Company for the account of the shareholders.
3 Exchange differences on intercompany loans to foreign holdings arose as a result of devaluation of the Ukrainian Hryvnia during previous years. The Group treats the mentioned loans as a part of the net investment in foreign operations (Note 40.3).
4 Exchange differences related to the translation from the functional currency of the Group’s subsidiaries are accounted for directly to the foreign currency translation reserve. The foreign currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local currencies against the euro in the countries where the Group’s subsidiaries own property assets.
The notes on pages 34 to 91 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2020|32
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
Note
2020
€
2019
€
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
(Reversal) /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 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
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
14.1
27
15
15
15
12
16
16
21
20
17a
26
34
26
36
36
35
14.1
21
24
20
26
32
32
37
28
28
(1.370.258)
(4.218.205)
(5.588.463)
(2.318.706)
(4.749.528)
(7.068.234)
3.495.700
(281.886)
-
824.634
(16.035)
-
(253.957)
4.883
(512.919)
1.071.822
179.775
-
379.067
(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
(697.379)
(942.242)
(104.272)
(687.428)
(87.279)
6.080
136.512
(3.038)
(456.878)
1.170.302
(39.954)
(665)
145.045
(75)
(1.436.804)
(124.467)
(206.194)
(391.616)
(1.642.998)
(516.083)
2.427.184
242.403
-
(281)
-
240.000
2.909.306
608.073
121.772
657
(44.994)
2.030.624
229.576
2.945.708
1.729.400
(2.083.700)
(386.545)
(392.441)
(1.133.286)
503.871
(1.795.665)
(1.002.202)
(385.542)
(2.679.538)
133.022
(249.913)
737.625
987.538
870.647
737.625
The notes on pages 34 to 91 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2020|33
Notes to the Consolidated Financial Statements
For the year ended 31 December 2020
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the ''Company'') was incorporated in Cyprus on 23 June 2005 and is a public
limited liability company, listed on the London Stock Exchange (AIM): ISIN CY0102102213. Its registered office is at Kyriakou Matsi 16,
Eagle House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its principal place of business is in Cyprus at 6 Nikiforou Foka
Street, 1060 Nicosia, Cyprus.
Principal activities
The principal activities of the Group are to invest directly or indirectly in and/or manage real estate properties, as well as real estate
development projects in South East Europe (the "Region"). These include the acquisition, development, commercializing, operating and
selling of property assets in the Region.
The Group maintains offices in Nicosia, Cyprus, Bucharest, Romania and Kiev, Ukraine.
As at 31 December 2020, the companies of the Group employed and/or used the services of 15 full time equivalent people, (2019 14
full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified by the revaluation of investment property and investment property
under construction, of financial assets at fair value through other comprehensive income and of financial assets at fair value through
profit and loss.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Company's accounting policies. It also requires the use of
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates
are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
Following certain conditional agreement signed in December 2018 with Arcona Property Fund N.V for the sale of Company’s non-
Greek portfolio of assets, the Company has classified its assets in 2018 as discontinued operations (Note 4.3) .
Going concern basis
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for the foreseeable future.
In particular, the Company is in a process of disposing of its portfolio of assets in an all share transaction with Arcona Property Fund
N.V., meaning that as soon as this transaction consummates the Company will be left with its corporate receivables and liabilities.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern within the next twelve months
from the date these financial statements are available to be issued. The ability to continue as a going concern is dependent upon
positive future cash flows.
Management believes that the Company will be able to finance its needs given the fact that the additional corporate receivables, as
well as the consideration received in the form of Arcona shares is estimated that it can effectively discharge all corporate liabilities. At
the same time, the transaction with Arcona Property Fund N.V., which is a cash flow generating entity, will result in the Company being
a ~45% shareholder, entitled to dividends according to the dividend policy of Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods beginning on 1 January 2020. This adoption did not have a material
effect on the accounting policies of the Company.
CONSOLIDATED FINANCIAL STATEMENTS 2020|34
4. Significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all years presented in these consolidated financial statements unless otherwise stated.
Local statutory accounting principles and procedures differ from those generally accepted under IFRS. Accordingly, the consolidated
financial information, which has been prepared from the local statutory accounting records for the entities of the Group domiciled in
Cyprus, Romania, Ukraine, Greece and Bulgaria, reflects adjustments necessary for such consolidated financial information to be
presented in accordance with IFRS.
4.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose
entities) controlled by the Company (its subsidiaries).
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts
of acquiree’s identifiable net assets.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in
the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized
in profit or loss.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to
the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39, either
in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured
and its subsequent settlement is accounted for within equity.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about
facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.
Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses
are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting
policies.
Changes in ownership interests in subsidiaries without change of control and Disposal of Subsidiaries
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of non-controlling
interests are also recorded in equity.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is
lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously
recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
4.2 Functional and presentation currency
Items included in the Group's financial statements are measured applying the currency of the primary economic environment in which
the entities operate (''the functional currency''). The national currency of Ukraine, the Ukrainian Hryvnia, is the functional currency for
all the Group’s entities located in Ukraine, the Romanian leu is the functional currency for all Group’s entities located in Romania, and
the Euro is the functional currency for all Cypriot subsidiaries.
CONSOLIDATED FINANCIAL STATEMENTS 2020|35
4. Significant accounting policies (continued)
4.2 Functional and presentation currency (continued)
The consolidated financial statements are presented in Euro, which is the Group’s presentation currency.
As Management records the consolidated financial information of the entities domiciled in Cyprus, Romania, Ukraine in their functional
currencies, in translating financial information of the entities domiciled in these countries into Euro for inclusion in the consolidated
financial statements, the Group follows a translation policy in accordance with IAS 21, “The Effects of Changes in Foreign Exchange
Rates”, and the following procedures are performed:
All assets and liabilities are translated at closing rate;
Equity of the Group has been translated using the historical rates;
Income and expense items are translated using exchange rates at the dates of the transactions, or where this is not practicable
the average rate has been used;
All resulting exchange differences are recognized as a separate component of equity;
When a foreign operation is disposed of through sale, liquidation, repayment of share capital or abandonment of all, or part
of that entity, the exchange differences deferred in equity are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
Monetary items receivable from foreign operations for which settlement is neither planned nor likely to occur in the foreseeable
future and in substance are part of the Group’s net investment in those foreign operations are recongised initially in other
comprehensive income and reclassified from equity to profit or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central banks used in translating the financial information of the entities from
the functional currencies into Euro are as follows:
Currency
USD
UAH
RON
BGN
2020
1,1422
30,8013
4,8371
1,9558
4.3 Discontinued operations
Average
31 December
2019
1,1195
28,9406
4,7453
1,9558
2020
1,2270
34,7396
4,8694
1,9558
2019
1,1234
26,422
4,7793
1,9558
2018
1,1450
31,7141
4,6639
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 2020|36
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Management believes that rescinding or non-renewal of the ground lease is remote if a project is on the final stage of development or
on the operating cycle. In undertaking the valuations reported herein, the valuer of Ukrainian properties CBRE has made the assumption
that no such circumstances will arise to permit the City Authorities to rescind the land lease or not to grant a renewal.
Land held under operating lease is classified and accounted for as investment property when the rest of the definition is met.
Investment property under development or construction initially is measured at cost, including related transaction costs.
The property is classified in accordance with the intention of the management for its future use. Intention to use is determined by the
Board of Directors after reviewing market conditions, profitability of the projects, ability to finance the project and obtaining required
construction permits.
The time point, when the intention of the management is finalized is the date of start of construction. At the moment of start of
construction, freehold land, leasehold land and investment properties held for a future redevelopment are reclassified into investment
property under development or inventory in accordance to the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including related transaction costs. Investment properties are derecognized when
either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit
is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the
consolidated statement of comprehensive income in the period of retirement or disposal.
Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation,
or the commencement of an operating lease to third party. Transfers are made from investment property when, and only when, there
is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale.
If an investment property becomes owner occupied, it is reclassified as property, plant and equipment, and its fair value at the date of
reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment
property is classified as investment property under construction until construction or development is complete. At that time, it is
reclassified and subsequently accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair value of
investment property are included in the statement of comprehensive income in the period in which they arise.
If a valuation obtained for an investment property held under a lease is net of all payments expected to be made, any related
liabilities/assets recognized separately in the statement of financial position are added back/reduced to arrive at the carrying value of
the investment property for accounting purposes.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are
charged to the statement of comprehensive income during the financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial position date. These valuations are prepared annually by chartered surveyors
(hereafter “appraisers”). The Group appointed valuers in 2014, which remain the same in 2020:
CBRE Ukraine, for all its Ukrainian properties,
NAI Real Act for all its Romanian properties.
The valuations have been carried out by the appraisers on the basis of Market Value in accordance with the appropriate sections of the
current Practice Statements contained within the Royal Institution of Chartered Surveyors (“RICS”) Valuation – Global Standards (2018)
(the “Red Book”) and is also compliant with the International Valuation Standards (IVS).
“Market Value” is defined as: “The estimated amount for which a property should be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion”.
CONSOLIDATED FINANCIAL STATEMENTS 2020|37
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Basis of valuation (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 2020|38
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Valuation Approach (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 2020|39
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 Cash and Cash equivalents
Cash and cash equivalents include cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of
cash flows.
4.9 Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they
will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any
impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis,
except that no loss is allocated to inventories, financial assets or investment property, which continue to be measured in accordance
with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-for-distribution and
subsequent gains and losses on remeasurement are recognised in profit or loss.
4.10 Financial Instruments
4.10.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial
liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at
fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable
without a significant financing component is initially measured at the transaction price.
4.10.2 Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment; FVOCI – equity investment;
or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing
financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the
change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
-
-
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
-
-
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes
in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
CONSOLIDATED FINANCIAL STATEMENTS 2020|40
4. Significant accounting policies (continued)
4.10 Financial Instruments (continued)
4.10.2 Classification and subsequent measurement (continued)
Financial assets – Business model assessment:
The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because
this best reflects the way the business is managed and information is provided to management. The information considered includes:
-
-
-
-
the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether
management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile,
matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising
cash flows through the sale of the assets;
how the performance of the portfolio is evaluated and reported to the Group’s management;
the risks that affect the performance of the business model (and the financial assets held within that business model) and
how those risks are managed;
how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets
managed or the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations
about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose,
consistent with the Group’s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at
FVTPL.
Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest:
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined
as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular
period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms
of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
-
-
-
-
contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable-rate features;
prepayment and extension features; and
terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially
represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional
compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual
par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus
accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated
as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets – Subsequent measurement and gains and losses:
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised
in profit or loss. However for derivatives designated as hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange
gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition,
gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified
to profit or loss.
CONSOLIDATED FINANCIAL STATEMENTS 2020|41
4. Significant accounting policies (continued)
4.10 Financial Instruments (continued)
4.10.3 Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the
financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also
derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in
which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including
any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
4.10.4 Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only
when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or
to realise the asset and settle the liability simultaneously.
4.10.5 Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives
are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are
met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes
therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable
forecast transactions arising from changes in foreign exchange rates and interest rates and certain derivatives and non-derivative
financial liabilities as hedges of foreign exchange risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking
the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative
is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is
recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from
inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.
The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in
cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts (‘forward points’) is
separately accounted for as a cost of hedging and recognised in a costs of hedging reserve within equity.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount
accumulated in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item
when it is recognised.
For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified
to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised,
then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that
has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non-
financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to
profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.
CONSOLIDATED FINANCIAL STATEMENTS 2020|42
4. Significant accounting policies (continued)
4.10 Financial Instruments (continued)
4.10.5 Derivative financial instruments and hedge accounting (continued)
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment
in a foreign operation, the effective portion of, for a derivative, changes in the fair value of the hedging instrument or, for a non-
derivative, foreign exchange gains and losses is recognised in OCI and presented in the translation reserve within equity. Any ineffective
portion of the changes in the fair value of the derivative or foreign exchange gains and losses on the non-derivative is recognised
immediately in profit or loss. The amount recognised in OCI is reclassified to profit or loss as a reclassification adjustment on disposal
of the foreign operation.
4.11 Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether
a contract conveys the right to control the use of an identified asset, the Company assesses whether:
the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset
is not identified;
the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use;
and
the Company has the right to direct the use of the asset. The Company has this right when it has the decision making rights that are
most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:
the Company has the right to operate the asset; or
the Company designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract
to each lease component on the basis of their relative stand alone prices. However, for the leases of land and buildings in which it is a
lessee, the Company has elected not to separate non lease components and account for the lease and non lease components as a
single lease component.
The Company as lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating
lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the
economic life of the asset.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub lease separately. It assesses
the lease classification of a sub lease with reference to the right of use asset arising from the head lease, not with reference to the
underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies
the sub lease as an operating lease.
If an arrangement contains lease and non lease components, the Company applies IFRS 15 to allocate the consideration in the contract.
The Company recognises lease payments received under operating leases as income on a straight line basis over the lease term as part
of 'other income'.
The accounting policies applicable to the Company as a lessor in the comparative period were not different from IFRS 16. However,
when the Company was an intermediate lessor the sub leases were classified with reference to the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is located, less any lease incentives received.
CONSOLIDATED FINANCIAL STATEMENTS 2020|43
4. Significant accounting policies (continued)
4.11 Leases (continued)
The Company as lessee (continued)
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.
4.12 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period
of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production
of a qualifying asset, in which case they are capitalized as part of the cost of that asset.
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extend there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment and amortised
over the period of the facility to which it relates.
Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on
borrowings, amortization of discounts or premium relating to borrowings, amortization of ancillary costs incurred in connection with the
arrangement of borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of that asset,
when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at
least twelve months after the reporting date.
CONSOLIDATED FINANCIAL STATEMENTS 2020|44
4. Significant accounting policies (continued)
4.13 Tenant security deposits
Tenant security deposits represent financial advances made by lessees as guarantees during the lease and are repayable by the Group
upon termination of the contracts. Tenant security deposits are recognized at nominal value.
4.14 Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment loss annually, and
whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of
the impairment loss is treated as a revaluation increase.
4.15 Share Capital
Ordinary shares are classified as equity.
4.16 Share premium
The difference between the fair value of the consideration received by the shareholders and the nominal value of the share capital
being issued is taken to the share premium account.
4.17 Share-based compensation
The Group had in the past and intends in the future to operate a number of equity-settled, share-based compensation plans, under
which the Group receives services from Directors and/or employees as consideration for equity instruments (options) of the Group. The
fair value of the Director and employee cost related to services received in exchange for the grant of the options is recognized as an
expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of
any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which
is the period over which all of the specified vesting conditions are to be satisfied. At each financial position date, the Group revises its
estimates on the number of options that are expected to vest based on the non-marketing vesting conditions. It recognizes the impact
of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The
proceeds received net of any directly attributable transaction costs are credited to share capital and share premium when the options
are exercised.
4.18 Provisions
Provisions are recognized when the Group has a present obligation (legal, tax or constructive) as a result of a past event, it is probable
that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. As at the
reporting date the Group has settled all its construction liabilities.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect
of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable
is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
CONSOLIDATED FINANCIAL STATEMENTS 2020|45
4. Significant accounting policies (continued)
4.19 Non-current liabilities
Non-current liabilities represent amounts that are due in more than twelve months from the reporting date.
4.20 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns,
rebates and other similar allowances. It is recognized to the extent that it is probable that the economic benefits associated with the
transaction will flow to the Group and the revenue can be measured reliably. Revenue earned by the Group is recognized on the
following bases:
4.20.1 Income from investing activities
Income from investing activities includes profit received from disposal of investments in the Company’s subsidiaries and associates and
income accrued on advances for investments outstanding as at the year end.
4.20.2 Dividend income
Dividend income from investments is recognized when the shareholders’ right to receive payment has been established (provided that
it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).
4.20.3 Interest income
Interest income is recognized on a time-proportion (accrual) basis, using the effective interest rate method.
4.20.4 Rental income
Rental income arising from operating leases on investment property is recognized on an accrual basis in accordance with the substance
of the relevant agreements.
4.21 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized on an accrual basis.
4.22 Other property expenses
Irrecoverable running costs directly attributable to specific properties within the Group's portfolio are charged to the statement of
comprehensive income. Costs incurred in the improvement of the assets which, in the opinion of the directors, are not of a capital
nature are written off to the statement of comprehensive income as incurred.
4.23 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as
the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in the statement of comprehensive income in the period in which they are incurred as interest
costs which are calculated using the effective interest rate method, net result from transactions with securities, foreign exchange gains
and losses, and bank charges and commission.
4.24 Asset Acquisition Related Transaction Expenses
Expenses incurred by the Group for acquiring a subsidiary or associate company as part of an Investment Property and are directly
attributable to such acquisition are recognized within the cost of the Investment Property and are subsequently accounted as per the
Group’s accounting Policy for Investment Property subsequent measurement.
CONSOLIDATED FINANCIAL STATEMENTS 2020|46
4. Significant accounting policies (continued)
4.25 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
4.25.1 Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated
statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that
are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
4.25.2 Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when the deferred taxes relate to the same fiscal authority.
4.25.3 Current and deferred tax for the year
Current and deferred tax are recognized in the statement of comprehensive income, except when they relate to items that are recognized
in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the business combination.
The operational subsidiaries of the Group are incorporated in Ukraine and Romania, while the Parent and some holding companies are
incorporated in Cyprus. The Group’s management and control is exercised in Cyprus.
The Group’s Management does not intend to dispose of any asset, unless a significant opportunity arises. In the event that a decision
is taken in the future to dispose of any asset it is the Group’s intention to dispose of shares in subsidiaries rather than assets. The
corporate income tax exposure on disposal of subsidiaries is mitigated by the fact that the sale would represent a disposal of the
securities by a non-resident shareholder and therefore would be exempt from tax. The Group is therefore in a position to control the
reversal of any temporary differences and as such, no deferred tax liability has been provided for in the financial statements.
4.25.4 Withholding Tax
The Group follows the applicable legislation as defined in all double taxation treaties (DTA) between Cyprus and any of the countries of
Operations (Romania, Ukraine,). In the case of Romania, as the latter is part of the European Union, through the relevant directives
the withholding tax is reduced to NIL subject to various conditions.
4.25.5 Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s financial statements in the period in which
the dividends are approved by the Company’s shareholders.
4.26 Value added tax
VAT levied at various jurisdictions were the Group is active, was at the following rates, as at the end of the reporting period:
20% on Ukrainian domestic sales and imports of goods, works and services and 0% on export of goods and provision of
works or services to be used outside Ukraine.
19% on Cyprus domestic sales and imports of goods, works and services and 0% on export of goods and provision of works
or services to be used outside Cyprus.
19% on Romanian domestic sales and imports of goods, works and services (decreased from 20% from 1 January 2017) and
0% on export of goods and provision of works or services to be used outside Romania.
CONSOLIDATED FINANCIAL STATEMENTS 2020|47
4. Significant accounting policies (continued)
4.27 Operating segments analysis
Segment reporting is presented on the basis of Management’s perspective and relates to the parts of the Group that are defined as
operating segments. Operating segments are identified on the basis of their economic nature and through internal reports provided to
the Group’s Management who oversee operations and make decisions on allocating resources serve. These internal reports are prepared
to a great extent on the same basis as these consolidated financial statements.
For the reporting period the Group has identified the following material reportable segments, where the Group is active in acquiring,
holding, managing and disposing:
Commercial-Industrial
Residential
Land Assets
Warehouse segment
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.
4.28 Earnings and Net Assets value per share
The Group presents basic and diluted earnings per share (EPS) and net asset value per share (NAV) for its ordinary shares.
Basic EPS amounts are calculated by dividing net profit/loss for the year, attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year. Basic NAV amounts are calculated by dividing net asset value
as at year end, attributable to ordinary equity holders of the Company by the number of ordinary shares outstanding at the end of the
year.
Diluted EPS is calculated by dividing net profit/loss for the year, attributable to ordinary equity holders of the parent, by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be
issued on conversion of all the potentially dilutive ordinary shares into ordinary shares.
Diluted NAV is calculated by dividing net asset value as at year end, attributable to ordinary equity holders of the parent with the
number of ordinary shares outstanding at year end plus the number of ordinary shares that would be issued on conversion of all the
potentially dilutive ordinary shares into ordinary shares.
4.29 Comparative Period
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.
5. New accounting pronouncement
Standards issued but not yet effective
Up to the date of approval of the financial statements, certain new standards, interpretations and amendments to existing standards
have been published that are not yet effective for the current reporting period and which the Company has not early adopted, as
follows:
(i) Issued by the IASB and adopted by the European Union
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - Phase 2 (issued on 27
August 2020) (effective for annual periods beginning on or after 1 January 2021).
Amendments to IFRS 16 Leases - Covid 19-Related Rent Concessions (issued on 28 May 2020) (effective for annual
periods beginning on or after 1 June 2020).
(ii) Issued by the IASB but not yet adopted by the European Union
New standards
IFRS 17 ''Insurance Contracts'' (effective for annual periods beginning on or after 1 January 2023).
Amendments
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (issued
on 23 January 2020 and 15 July 2020 respectively) (effective for annual periods beginning on or after 1 January 2023).
Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent
Liabilities and Contingent Assets; Annual Improvements 2018-2020 (All issued 14 May 2020) (effective for annual periods
beginning on or after 1 January 2022).
The above are expected to have no significant impact on the Company's financial statements when they become
effective.
CONSOLIDATED FINANCIAL STATEMENTS 2020|48
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on
Management's best knowledge of current events and actions and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Actual results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the future, the resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below:
Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the state's ability to pay its dues (VAT receivable). If indications of non-
recoverability exist, the recoverable amount is estimated and a respective provision for impairment of receivables is made. The amount
of the provision is charged through profit or loss. The review of credit risk is continuous and the methodology and assumptions used
for estimating the provision are reviewed regularly and adjusted accordingly. As at the reporting date Management did not consider
necessary to make a provision for impairment of receivables.
Fair value of financial assets
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company
uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each
reporting date. The fair value of the financial assets at fair value through other comprehensive income has been estimated based on
the fair value of these individual assets.
Fair value of investment property
The fair value of investment property is determined by using various valuation techniques. The Group selects accredited professional
valuers with local presence to perform such valuations. Such valuers use their judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at each financial reporting date. The fair value has been estimated as
at 31 December 2020 (Note 19.2).
Income taxes
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
Impairment of tangible assets
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units).
Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of the investment property and investment property under development as
the Group is able to control the timing of the reversal of this temporary difference and the Management has intention not to reverse
the temporary difference in the foreseeable future. The properties are held by subsidiary companies in Ukraine, Greece and Romania.
Management estimates that the assets will be realized through a share deal rather than through an asset deal. Should any subsidiary
be disposed of, the gains generated from the disposal will be exempt from any tax.
Application of IFRS 10
The Group has considered the application of IFRS 10 and concluded that the Company is not an Investment Entity as defined by IFRS
10 and it should continue to consolidate all of its investments, as in 2016. The reasons for such conclusion are among others that the
Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development, allocation of capital expenditure for its properties, marketing etc.)
in order to provide benefits other than capital appreciation and/or investment income,
c) to have investments that are not bound by time in relation to the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making investment decisions. The latter is being based on metrics like
IRR, ROE and others.
CONSOLIDATED FINANCIAL STATEMENTS 2020|49
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate property holding and development associated risks, property market price
risk, interest rate risk, credit risk, liquidity risk, currency risk, other market price risk, operational risk, compliance risk, litigation risk,
reputation risk, capital risk and other risks, arising from the financial instruments it holds. The risk management policies employed by
the Group to manage these risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and economic environment of countries in which it operates. Notably:
7.1.1.1 Ukraine
Ukraine has continued to limit its economic ties with Russia, taking into account the annexation of Crimea, the autonomous republic of
Ukraine, and armed conflict in certain parts of Luhansk and Donetsk regions. Amid these events, the Ukrainian economy has
demonstrated further refocusing on the European Union ("EU") market, realizing the potential of established Deep and Comprehensive
Free Trade Area ("DCFTA") with EU, thus effectively responding to mutual trade restrictions between Ukraine and Russia.
Starting from April 2019, the National Bank of Ukraine ("NBU") began to liberalize its monetary policy and for the first time in recent
years significantly reduced its discount rate (from 18% on 15.03.2019 to 6% on 12.06.2020 and at the end of 2020), which is supported
by stable inflation forecast.
On 12 June 2020, the international rating agency Moody's Investors Service upgraded Ukraine's long-term sovereign credit rating in
national and foreign currencies to B3 level from Caa1 level and changed the positive forecast to the stable forecast. On 11 September
2020, the international agency Standard & Poor's confirmed the long-term and short-term sovereign credit rating of Ukraine in foreign
and national currencies at the "B/B" level with a stable forecast. Also, Standard & Poor's reaffirmed Ukraine's national scale rating at
the level "uaA".
At the same time, in the second half of 2019, in the Ukrainian economy, there were emerging trends that continued in 2020, namely:
a slight decline in industrial output, certain reforms and new legislative initiatives due to changes in political power in Ukraine. All these
factors affect business activity, and create certain risks unusual for markets with a stable economy, cause an unfavourable investment
climate and lead to an economic slowdown. The inflation rate in Ukraine in 2020 was 5% (2019: 4.1%), and the national
currency has significantly weakened (hryvnia exchange rate against US dollar as of 31 December 2019 – UAH/USD 23.6862; as
of 31 December 2020 – UAH/USD 28.2746).
Significant public debt payments were planned for 2020 in Ukraine, which required the mobilization of significant financial resources
both inside and outside the country, in an environment where the challenges for developing economies are -growing. In June 2020, the
International Monetary Fund (IMF) approved an 18-month (stand-by) program equivalent to $5 billion to ensure a balance of payments
and budget support to help the Ukrainian government address the challenges posed by the COVID-19 pandemic. The approval of the
agreement allowed the immediate payment of the equivalent of $2.1 billion.
At the end of 2019, news about the COVID-19 coronavirus arrived from China for the first time. In early 2020, the coronavirus spread
around the world and its negative impact gained momentum. The global spread of COVID-19 has caused significant instability,
uncertainty, and economic downturn in Ukraine and the world throughout 2020. The coronavirus has spread to more than 200 countries
and continues to have a negative impact on the economic situation and the healthcare sector. There is considerable uncertainty about
the extent to which COVID-19 will continue to spread, as well as the extent and duration of governmental measures to slow the spread
of the coronavirus, such as quarantine, remote work, suspension of business operations, and other restrictions.
7.1.1.2 Romania
The Romanian economy contracted by 3,9% in 2020 due to the impact of the COVID-19 pandemic. Trade and services decreased by
4,7%, while certain sectors, such as tourism and hospitality, remained heavily affected. Industry contracted by 9,3%, reflecting
weakened external demand and supply chain disruptions. The biggest contraction was seen in agriculture, linked to persistent droughts
affecting crops. The unemployment rate reached 5,5% during 2020 before edging down to 5,2% in December. National Bank of Romania
cut the monetary policy rate to 1,50% in order to address the economic rebound and to maintain in the medium term the inflation rate
in line with target. CPI estimated at 2,1%.
The Government provided a fiscal stimulus of 4,4% of GDP in 2020 in response to the COVID-19 crisis. In the first COVID wave, poor
and vulnerable households were less supported by the fiscal response measures, which extended more directly to those in formal
employment structures; subsequent programs for daily wage and seasonal workers extended protections to typically more vulnerable
segments. As a result budget deficit widened from 4,5% in 2019 to an estimated 10,4% in 2020 making the impact of the agreed EU-
stimulus of c.80 milion Euro, crucial for economic recovery.
CONSOLIDATED FINANCIAL STATEMENTS 2020|50
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.2 Risks associated with property holding and development associated risks
Several factors may affect the economic performance and value of the Group's properties, including:
risks associated with construction activity at the properties, including delays, the imposition of liens and defects in
workmanship;
the ability to collect rent from tenants on a timely basis or at all, taking also into account currency rapid devaluation risk;
the amount of rent and the terms on which lease renewals and new leases are agreed being less favorable than current
leases;
cyclical fluctuations in the property market generally;
local conditions such as an oversupply of similar properties or a reduction in demand for the properties;
the attractiveness of the property to tenants or residential purchasers;
decreases in capital valuations of property;
changes in availability and costs of financing, which may affect the sale or refinancing of properties;
covenants, conditions, restrictions and easements relating to the properties;
changes in governmental legislation and regulations, including but not limited to designated use, allocation, environmental
usage, taxation and insurance;
the risk of bad or unmarketable title due to failure to register or perfect our interests or the existence of prior claims,
encumbrances or charges of which we may be unaware at the time of purchase;
the possibility of occupants in the properties, whether squatters or those with legitimate claims to take possession;
the ability to pay for adequate maintenance, insurance and other operating costs, including taxes, which could increase over
time; and
political uncertainty, acts of terrorism and acts of nature, such as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group’s portfolio investments will fluctuate as a result of changes in market prices. The
Group's assets are susceptible to market price risk arising from uncertainties about future prices of the investments. The Group's market
price risk is managed through diversification of the investment portfolio, continuous elaboration of the market conditions and active
asset management. To quantify the value of its assets and/or indicate the possibility of impairment losses, the Group commissioned
internationally acclaimed valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no
significant interest-bearing assets apart from its cash balances that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. All of the Group's borrowings
are issued at a variable interest rate. Management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from
financial assets at hand at the end of the reporting period. Cash balances are held with high credit quality financial institutions and the
Group has policies to limit the amount of credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not
the Group's functional currency. Excluding the transactions in Ukraine all of the Group’s transactions, including the rental proceeds are
denominated or pegged to EUR. In Ukraine, even though there is no recurring income stream, the fluctuations of UAH against EUR
entails significant FX risk for the Group in terms of its local assets valuation. Management monitors the exchange rate fluctuations on a
continuous basis and acts accordingly, although there are no available financial tools for hedging the exposure on UAH. It should be
noted though that the current political uncertainty in Ukraine, and any probable currency devaluation may affect the Group’s financial
position.
CONSOLIDATED FINANCIAL STATEMENTS 2020|51
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders
through the optimization of the debt and equity balance. The Group’s core strategy is described in Note 43.1 of the consolidated financial
statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non-compliance with laws and
regulations of each country the Group is present, as well as from the stock exchange where the Company is listed. Although the Group
is trying to limit such risk, the uncertain environment in which it operates in various countries increases the complexities handled by
Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of the Group's operations or any other undesirable situation that arises from the
possibility of non-execution or violation of legal contracts and consequentially of lawsuits. The risk is restricted through the contracts
used by the Group to execute its operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet its financial obligations towards a lender as debts become due.
Addressing and resolving any insolvency issues is usually a slow moving process in the Region. Management is closely involved in
discussions with creditors when/if such cases arise in any subsidiary of the Group aiming to effect alternate repayment plans including
debt repayment so as to minimize the effects of such situations on the Group’s asset base.
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies relating to the Group's information technology and control systems, as well
as the risk of human error and natural disasters. The Group’s systems are evaluated, maintained and upgraded continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the end of the reporting period.
CONSOLIDATED FINANCIAL STATEMENTS 2020|52
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 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
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
Mofben Investments Limited
SPDI Management Srl
Country of
incorporation
Cyprus
Ukraine
Ukraine
Ukraine
Ukraine
Ukraine
Ukraine
Cyprus
Romania
Cyprus
Romania
Cyprus
Cyprus
Cyprus
Cyprus
Romania
Romania
Related Asset
Kiyanovskiy Residence
Tsymlyanskiy Residence
Innovations Logistics Park
EOS Business Park
Delea Nuova (Delenco)
Kindergarten
Holding %
as at
31 Dec 2020
100
100
100
55
100
100
100
100
100
100
100
100
100
100
100
100
50
as at
31 Dec 2019
100
100
100
55
100
100
100
100
100
100
100
100
100
100
100
100
50
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Romania
Cyprus
Cyprus
Cyprus
Cyprus
Romania
Cyprus
Romania
Cyprus
Romania
Cyprus
Romania
Cyprus
Romania
Cyprus
Cyprus
Romania
Residential and Land
portfolio
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
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
During 2019 the Group proceeded with the disposal of Aisi Bela in Ukraine as well as with the disposal of the Boyana Residence in
Bulgaria, as part of the Arcona’s transaction. In addition the Group also disposed of Victini Logistics Park AE in Greece (Note 20).
Following extended but unsuccessful negotiations for more than 2 years with Tonescu Finance Srl, the company which had acquired
Monaco Towers property’s loan, SecMon Real Estate Srl entered voluntarily in January 2018 into insolvency process, in order to protect
its interests against its creditor, given that the value of the assets was higher than the value of the relevant loan. The entering of
SecMon Real Estate Srl in the insolvency process meant loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl
is not consolidated in the present consolidated financial statements. However, currently SecMon Real Estate Srl has re-paid the relevant
property loan and exited effectively the insolvency process. The Company is participating in the required procedures to re-gain full
control of the subsidiary (Note 44.b).
CONSOLIDATED FINANCIAL STATEMENTS 2020|53
9. Discontinued operations
9.(a) Description
The Company announced on 18 December 2018 that it has entered into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties (‘the Non-Greek Portfolio’), in an all-share transaction to Arcona Property
Fund N.V. The transaction is subject to, among other things, asset and tax due diligence (including third party asset valuations) and
regulatory approvals (including the approval of a prospectus required in connection with the issuance and admission to listing of the
new Arcona Property Fund N.V. shares), as well as successful negotiating and signature of transaction documents. During 2019 and as
part of the Arcona transaction the Company sold the Boyana Residence asset in Bulgaria, as well as the Bela and Balabino land plots in
Ukraine, while in June 2021 has signed SPAs related to Stage 2 of the transaction, namely for the EOS and Delenco assets in Romania,
as well as the Kiyanovskiy and Rozny assets in Ukraine, which are expected to close in Q4 2021.
Additionally, the Company also sold during 2019 the Greek logistics property Victini Logistics, which was not part of the Arcona
transaction.
The companies that are classified under discontinued operations are the followings:
Bulgaria: Boyana Residence ood (sold during 2019)
•
•
Cyprus: Ashor Ventures Limited, Ebenem Limited, Jenby Ventures Limited, Edetrio Holdings Limited, Rimasol Enterprises
Limited, Emakei Holdings Limited, Iuliu Maniu Limited, Ram Real Estate Management Limited, Frizomo Holdings Limited, Ketiza Holdings
Limited
•
•
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 & 4.9).
9.(b) Results of discontinued operations
For the year ended 31 December 2020
Income
Asset operating expenses
Net Operating Income
Administration expenses
Share of profits/(losses) from associates
Valuation gains/(losses) from Investment Property
Net gain/(loss) on disposal of investment property
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
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)
Note
10
11
2020
€
1.041.346
(470.548)
570.798
(217.988)
(179.775)
(3.495.700)
281.886
-
3.058
(3.037.721)
9.392
(870.951)
(3.899.280)
12
21
13
14.1
20
15
16
16
17a
18
(318.925)
(4.218.205)
(436.880)
(4.749.528)
(44.387)
(52.315)
(4.262.592)
(4.801.843)
(2.851.952)
(1.410.640)
(4.262.592)
(4.846.634)
44.791
(4.801.843)
31 Dec 2020
€
961.997
(3.880.653)
2.670.120
(248.536)
31 Dec 2019
€
1.897.780
(2.770.679)
2.677.920
1.805.021
CONSOLIDATED FINANCIAL STATEMENTS 2020|54
9. Discontinued operations (continued)
9.(d) Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in relation to the discontinued operation as at 31 December 2020:
Assets classified as held for sale
Investment properties
Tangible and intangible assets
Long-term receivables and prepayments
Investments in associates
Financial Asset at FV through OCI
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
10. Income
Note
31 Dec 2020
€
31 Dec 2019
€
19.4a
23
24
21
22
26
28
32
37
34
36
35
34.903.480
12.357
315.000
5.071.656
1
748.127
740.788
41.791.409
6.324.461
9.692.029
870.472
277.275
64.231
17.228.468
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
Income from continued operations for the year ended 31 December 2020 represents:
a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded
with tenants of Innovations Logistics Park (Romania). It is noted that part of the rental and service charges/ utilities income related
to Innovations Logistics Park (Romania) is currently invoiced by the Company as part of a relevant lease agreement with the
Innovations SPV and the lender, however the asset, through the SPV, is planned to be transferred as part of the transaction with
Arcona Property Fund N.V. Upon a final agreement for such transfer, the Company will negotiate with the lender its release from
the aforementioned lease agreement, and if succeeds, upon completion such income will be also transferred.
Continued operations
Rental income
Service charges and utilities income
Service and property management income
Total income
31 Dec 2020
€
583.683
192.017
20.000
795.700
31 Dec 2019
€
364.034
93.416
-
457.450
Income from discontinued operations for the year ended 31 December 2020 represents:
a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded
with tenants of Innovations Logistics Park (Romania), EOS Business Park (Romania), and Victini Logistics (Greece) until the date of
its disposal during 2019,
income from the sale of electricity by Victini Logistics to the Greek grid until the date of disposal during 2019,
b)
c) rental income and service charges by tenants of the Residential Portfolio, and;
d)
income from third parties and /or partners for consulting and managing real estate properties
Discontinued operations (Note 9)
Rental income
Sale of electricity
Service charges and utilities income
Service and property management income
Total income
31 Dec 2020
€
1.008.294
-
31.064
1.988
1.041.346
31 Dec 2019
€
1.726.978
128.623
33.982
2.125
1.891.708
Occupancy rates in the various income producing assets of the Group as at 31 December 2020 were as follows:
Income producing assets
%
EOS Business Park
Innovations Logistics Park
Kindergarten
Romania
Romania
Romania
31 Dec 2020
31 Dec 2019
100
77
100
100
70
100
CONSOLIDATED FINANCIAL STATEMENTS 2020|55
11. Asset operating expenses
The Group incurs expenses related to the proper operation and maintenance of all properties in Kiev, Bucharest, Athens (2019), and
Sofia (2019). Part of these expenses is recovered from the tenants through the service charges and utilities recharge (Note 10).
Under continued operations ,there are no such expenses related to operation of the Assets.
Under discontinued operations are all the expenses related to Innovations Logistics Park (Romania), EOS Business Park (Romania),
Residential Portfolio (Romania), GreenLake (Romania), and all Ukrainian properties.
Discontinued operations (Note 9)
Property related taxes
Property management fees
Repairs and technical maintenance
Utilities
Property security
Property insurance
Leasing expenses
Other operating expenses
Total
31 Dec 2020
€
(99.949)
(9.054)
(101.757)
(179.268)
(33.223)
(6.932)
(40.267)
(98)
(470.548)
31 Dec 2019
€
(199.725)
-
(195.428)
(95.688)
(35.191)
(17.184)
(48.329)
(266)
(591.811)
Property related taxes reflect local taxes of land and building properties (in the form of land taxes, building taxes, garbage fees, etc.).
Relevant decrease in 2020 resulted from the sale of properties during 2019.
Repairs and technical maintenance decreased substantially during the period since in 2019 extensive works in Innovations Logistics
Park in Bucharest took place, essential for hosting successfully the new tenant in the cold spaces of the property.
Utilities increased as a result of the use of the premises by the new tenant in Innovations Logistics Park in Bucharest, with the relevant
income at Company’s level increasing respectively through service charges.
Leasing expenses reflect expenses related to long term land leasing.
12. Administration Expenses
Continued operations
Salaries and Wages
Incentives to Management
Advisory fees
Public group expenses
VAT expensed
Corporate registration and maintenance fees
Audit fees
Accounting and related 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 fees
Accounting and related fees
Legal fees
Depreciation/Amortization charge
Corporate operating expenses
Total Administration Expenses
31 Dec 2020
€
(368.684)
(120.000)
(609.191)
(134.153)
(7.514)
(30.697)
(86.000)
(40.311)
(77.688)
(2.200)
(129.000)
(95.742)
(1.701.180)
31 Dec 2020
€
(46.177)
(35.897)
(31.978)
(40.800)
(31.823)
(6.821)
(2.683)
(21.809)
(217.988)
31 Dec 2019
€
(459.789)
(280.000)
(614.315)
(100.084)
(123.855)
(49.865)
(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)
(15.505)
(11.406)
(2.497)
(23.571)
(220.509)
CONSOLIDATED FINANCIAL STATEMENTS 2020|56
12. Administration Expenses (continued)
Salaries and wages include the remuneration of the CEO, the CFO, the Group Commercial Director and the Country Managers of Ukraine
and Romania, as well as the salary cost of personnel employed in the various Company’s offices in the region.
Incentives to Management provided in 2019 for the successful completion of Stage 1 of the transaction with Arcona, fully paid in
Company’s shares, while in 2020 provided for the sussessful disposal of Victini Logistics Park.
Advisory fees are mainly related to advisors, brokers, valuers and other professionals engaged in relevant transactions and capital
raising campaigns, as well as outsourced human resources support on the basis of relevant contracts. In 2019, advisory fees include
EUR 145k paid in Company’s shares to advisors engaged with the successful completion of Stage 1 of the transaction with Arcona, as
well as EUR 28k for due diligence expenses related to the Arcona transaction. In 2020, such fees include EUR 52k of services related
to Arcona transaction and EUR 170k brokerage fees for past successful disposals.
Accounting and related fees include fees from external accounting services, as well as fees for transfer pricing and tax consulting
services. In particular, certain Group entities proceeded during 2020 in preparation of Transfer Pricing file, essential in such cases under
recent local tax legislation.
Public group expenses include among others fees paid to the AIM:LSE stock exchange and the Nominated Adviser of the Company, as
well as other expenses related to the listing of the Company, such as public relations and registry expenses. Relevant increase in 2020
came as a result of the extra fees associated with the process of changing the custodian of the shares of the Company, which came as
requirement following Brexit.
Corporate registration and maintenance fees represent fees charged for the annual maintenance of the Company and its subsidiaries,
as well as fees and expenses related to the normal operation of the companies including charges by the relevant local authorities.
Legal fees represent legal expenses incurred by the Group in relation to asset operations (rentals, sales, etc.), ongoing legal cases in
Ukraine, Cyprus and Romania, compliance with AIM listing, as well as one-off fees associated with legal services and advise in relation
to due diligence processes, and transactions. In 2019 an amount of EUR 350k was included, associated with legal advices and support
related to the transaction with Arcona. In 2020 the amount related to Arcona transaction reached EUR 29k.
Directors fees for H12019 paid in Company’s shares, while for H2 2019 and 2020 are payable in cash (Note 40.1.2).
Corporate operating expenses include office expenses, travel expenses, (tele)communication expenses, D&O insurance and all other
general expenses for Cypriot, Romanian and Ukrainian operations, as well as Bulgarian and Greek ones for 2019.
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the reporting period, excluding foreign exchange translation differences which
are incorporated in the table of Note 19.2, are presented in the tables below.
Discontinued operations (Note 9)
Property Name (€)
Kiyanovskiy Residence
Tsymlyanskiy Residence
Rozny Lane
Innovations Logistics Park
EOS Business Park
Residential Portfolio
GreenLake
Kindergarten
Total
Valuation gains/(losses)
31 Dec 2020
€
390.469
94.811
(171.690)
(305.894)
(863.251)
(1.950)
(2.664.980)
26.785
(3.495.700)
31 Dec 2019
€
(543.263)
(77.541)
20.152
257.785
285.545
27.366
381.385
66.423
417.852
Such gains and losses result not only from the differences in the values of the properties as reported by valuers at the different points
in time, but also from the fluctuation of the FX rate between the denominated currency of the valuation report itself and the functional
currency of the company which posts valuation amount in its accounting books. For example, valuations of Ukrainian assets are
denominated in USD and translated to UAH for entering effectively in the accounting books of the local entities. Similarly, valuations of
Romanian assets are denominated in EUR and translated to RON for accounting purposes.
CONSOLIDATED FINANCIAL STATEMENTS 2020|57
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling properties classified under Investment Property (Romanian residential
assets) designated as non-core assets. The gain/ (losses) from disposal of such properties are presented below:
14.1 Investment property
During 2020 the Group sold 5 villas in Greenlake Parcel K, 1 apartment and 3 parking spaces in Romfelt Plaza (Doamna Ghica) and 3
apartments, 3 parking spaces and 1 commercial space in Zizin. In 2019 the Group sold 3 apartments in Romfelt Plaza (Doamna Ghica)
and 4 apartments and 2 parking spaces in Zizin.
Discontinued operations (Note 9)
Income from sale of investment property
Cost of investment property
Profit/(Loss) from disposal of investment property
15. Other operating income/(expenses), net
Continued operations
Other income
Accounts payable written off
Reversal of provisions and Impairment of prepayments and other current assets
Other income
Assets Written off
Impairment on Receivables from Arcona (Note 26)
Provisions and Impairment of prepayments and other current assets
Penalties
Other expenses
Other expenses
31 Dec 2020
€
2.427.184
(2.145.298)
281.886
31 Dec 2019
€
608.073
(615.477)
(7.404)
31 Dec 2020
€
115.039
124.007
16.035
255.081
31 Dec 2019
€
114.166
-
-
114.166
(55.128)
-
-
(2.184)
(6.547)
(63.859)
(2.007)
(211.310)
(222.363)
(7.213)
(113.902)
(556.795)
Other operating income/(expenses), net
191.222
(442.629)
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
Other operating income/(expenses), net
Continued operations
31 Dec 2020
€
129.950
23
129.973
31 Dec 2019
€
462.198
9.910
472.108
-
(1.201)
(125.714)
(126.915)
(157.764)
(1.458)
(85)
(159.307)
3.058
312.801
Other income, represents income from services and sale price adjustment of the sale of Terminal Brovary pursuant to the relevant sale
and purchase agreement.
The accounts payable write off in 2020 under continued operations are mainly related to writing off an old balance due to a vendor.
Impairment on receivables from Arcona in 2019 is related to the fair value adjustment of the receivable Arcona shares held in escrow
from the disposal of the Boyana asset in Bulgaria. In particular, the 315.591 consideration Arcona shares valued at 2019 year end
according to the NAV per share at that date and a loss of €211.310 was realized.
CONSOLIDATED FINANCIAL STATEMENTS 2020|58
15. Other operating income/(expenses), net (continued)
Discontinued operations
The accounts payable write off in 2020 under discontinued operations are mainly related to revesal of accrued expenses which after a
long period of time were never realized.
The accounts payable write off in 2019 under discontinued operations of a total of €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.
Other expenses under discontinued operations of a total of €125.915 relate mostly to VAT imposed to Jenby Srl after relevant tax
investigation by authorities, associated with past VAT activity of the company.
Provision and impairment of prepayments and other current assets (both continued and discontinued), include expected credit loss as
per IFRS9.
16. Finance costs and income
Continued operations
Finance income
Interest received from non-bank loans
Interest income associated with banking accounts
Total finance income
Finance costs
Interest expenses (bank)
Interest expenses (non-bank)
Finance charges and commissions
Bonds interest
Interest on taxes
Total finance costs
Net finance result
Discontinued operations (Note 9)
Finance income
Interest received from non-bank loans (Note 40.1.1)
Interest income from bank deposits
Total finance income
Finance costs
Interest expenses (bank)
Interest expenses (non-bank)
Finance leasing interest expenses
Finance charges and commissions
Interest on taxes
Total finance costs
Net finance result
31 Dec 2020
€
503.527
-
503.527
31 Dec 2019
€
474.583
1
474.584
31 Dec 2020
€
31 Dec 2019
€
-
(140.489)
(6.645)
(68.320)
(59.297)
(274.751)
(699)
(50.693)
(17.725)
(68.133)
-
(137.250)
228.776
337.334
31 Dec 2020
€
31 Dec 2019
€
9.392
-
9.392
9.366
656
10.022
31 Dec 2020
€
31 Dec 2019
€
(378.793)
(7.172)
(477.048)
(2.585)
(5.353)
(870.951)
(901.896)
(7.155)
(496.950)
(24.528)
-
(1.430.529)
(861.559)
(1.420.507)
Interest income from non-bank loans reflects income from loans granted by the Group for financial assistance to associates. This amount
includes also interest on Loan receivables from 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.
CONSOLIDATED FINANCIAL STATEMENTS 2020|59
16. Finance costs and income (continued)
According to the last addendum, the loan had certain one-off and monthly payments for a period until 30 June 2020 and is re-payable
by 30 June 2021.The two parties are currently engaged in discussions for agreeing and signing a new addendum with a new re-payment
schedule. The loan is bearing a fixed interest rate of 10% and the Company is in the process of getting agreed security in the form of
pledge of shares following relevant provisions in the initial Loan Agreement.
Borrowing interest expense represents interest expense charged on Bank and non-Bank borrowings (Note 32).
Finance leasing interest expenses relate to the sale and lease back agreements of the Group (Note 37).
Finance charges and commissions include regular banking commissions and various fees paid to Banks.
Bonds interest represent interest calculated for the bonds issued by the Company during 2018 (Note 33).
Interest on taxes posted in 2020 is related to interest charges on taxes associated with the tax audit of all Cypriot entities of the Group
for all periods up to 2015, which follow a certain repayment schedule via the local Ariadne repayment program.
17. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December 2020 from continued operations amounted to €60.142 (2019:
loss €74.779).
The exchange loss from discontinued operations for the year ended 31 December 2020 amounted to €318.925 (2019: loss €436.880)
(Note 9).
b. Exchange difference on intercompany loans to foreign holdings
The Company has loans receivable from foreign group subsidiaries which are considered as part of the Group’s net investments in those
foreign operations (Note 40.3). For these intercompany loans the foreign exchange differences are recognized initially in other
comprehensive income and in a separate component of equity. During 2020, the Group recognized a foreign exchange loss of €61.936
(2019: profit €66.557).
18. Tax Expense
Continued operations
Income and defence tax expense
Taxes
Discontinued operations (Note 9)
Income and defence tax expense
Taxes
31 Dec 2020
€
(117.656)
(117.656)
31 Dec 2019
€
(36.380)
(36.380)
31 Dec 2020
€
(44.387)
(44.387)
31 Dec 2019
€
(52.315)
(52.315)
For the year ended 31 December 2020, the corporate income tax rate for the Group’s subsidiaries are as follows: in Ukraine 18%, and
in Romania 16%. The corporate tax that is applied to the qualifying income of the Company and its Cypriot subsidiaries is 12,5%.
The tax on the Group's results differs from the theoretical amount that would arise using the applicable tax rates as follows:
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
Defence contribution current year
Prior year tax
Total Tax
31 Dec 2020
€
31 Dec 2019
€
(5.588.463)
(7.068.236)
(177.663)
1.132.008
(844.478)
801.574
(874.138)
20.616
636
(1.322)
13.860
90.950
162.043
(1.644.485)
1.879.661
(413.424)
289.577
(25.108)
4.074
20
(1.620)
-
-
88.695
CONSOLIDATED FINANCIAL STATEMENTS 2020|60
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
Victini Logistics (ex GED) is a logistics park comprising 17.756 gross leasable sqm. It is fully let to the German multinational
transportation and logistics company, Kuehne & Nagel and to a Greek commercial company trading electrical appliances GE
Dimitriou SA. On the roof of the warehouse there is a 1MW photovoltaic park installed with the electricity generated being
sold to Greek Electric Grid on a long term contract. The asset was sold within 2019.
EOS Business Park consists of 3.386 sqm gross leasable area and includes a Class A office Building in Bucharest, which is
currently fully let to Danone Romania until 2025.
Innovations Logistics Park is a 16.570 sqm gross leasable area logistics park located in Clinceni in Bucharest, which
benefits from being on the Bucharest ring road. Its construction was tenant specific, was completed in 2008 and is separated
in four warehouses, two of which offer cold storage (freezing temperature), the total area of which is 6.395 sqm. Innovations
Logistics Park was acquired by the Group in May 2014 and is 77% leased at the end of the reporting period
During 2017 the Company proceeded with an internal reorganization and the Kindergarten asset of GreenLake which was
under the ownership of the associate GreenLake Development Srl was acquired by a separate entity (SPDI Real Estate). The
Kindergarten is fully let to one of Bucharest’s leading private schools and produces an annual rent inflow of ~€115.000.
Residential Assets
The Company owns a residential portfolio, consisting at the end of the reporting period of 10 apartments and villas across
two separate complexes located in different residential areas of Bucharest (Residential portfolio: Blooming House, GreenLake
Residential: GreenLake Parcel K, Green Lake Developments Srl owns 18 more units in the Green Lake Residential complex,
classified under associates Note 21). Regarding Monaco Towers complex, during 2017 Tonescu Finance (the company which
acquired the Monaco Towers related loan) commenced against SecMon Real Estate Srl legal proceedings and in order for
SecMon Real Estate Srl to protect itself it entered voluntarily into insolvency process in January 2018. The entering of SecMon
Real Estate Srl in the insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate
Srl is not consolidated in the present financial statements. Currently, the SPV has re-paid the loan and exited effectively
insolvency status and the Company is in the procees of re-gaining full control. At the end of 2020, 5 apartments were available
in Monaco Towers (Note 8).
Land Assets
Bela Logistic Park is a 22,4 Ha plot in Odessa situated on the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000 sqm GBA logistic center commenced. Construction was
put on hold in 2009. The asset was sold within 2019.
Kiyanovskiy Residence consists of four adjacent plots of land, totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael’s Spires and historic Podil neighborhood.
Tsymlyanskiy Residence is a 0,36 Ha plot of land located in the historic Podil District of Kiev and is destined for the
development of a residential complex.
Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in 2015.
Balabino Project is a 26,38 Ha plot of land situated on the south entrance of Zaporizhia, a city in the south of Ukraine with
a population of 800.000 people. Balabino Project is zoned for retail and entertainment development. The asset was sold
within 2019.
GreenLake land is a 40.360 sqm plot and is adjacent to the GreenLake part of the Company’s residential portfolio, which is
classified under Investments in Associates (Note 21). It is situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI owns ~44% of these plots, but has effective management control.
Boyana Land: The complex of Boyana Residence ood includes adjacent land plots available for sale or development of
~22.000 sqm of gross buildable area. The asset was sold within 2019.
CONSOLIDATED FINANCIAL STATEMENTS 2020|61
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.
Carrying
amount as at
31/12/2020
Fair Value movements
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on local
currency
valuations (b)
2.444.988
(704.961)
390.469
896.496
(266.501)
94.811
896.496
-
4.237.980
(971.462)
(171.690)
313.590
Land
Land
Land
Discontinued Operations
2020 (€)
Asset Name
Type
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Residential
portfolio
GreenLake
Kindergarten
Total Romania
Warehouse
10.100.000
(194.106)
(305.894)
Office
6.700.000
(136.749)
(863.251)
Residential
152.500
(13.835)
(1.950)
(564.715)
Land & Resi
Retail
12.275.000
1.438.000
30.665.500
(293.437)
(26.785)
(664.912)
(2.664.980)
(1.580.583)
26.785
(3.809.290)
-
(2.145.298)
TOTAL
34.903.480
(1.636.374)
(3.495.700)
(2.145.298)
Disposals 2020
Asset Value at the Beginning of the period or at
Acquisition/Transfer date
Transfer to
Assets held
for sale
Additions
2020
Carrying
amount as at
31/12/2019
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.759.480
1.068.186
1.068.186
4.895.852
10.600.000
7.700.000
733.000
16.814.000
1.438.000
37.285.000
42.180.852
Discontinued Operations
2019 (€)
Asset Name
Type
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)
257.785
-
Office
Residential
Land & Resi
Retail
Land
Warehouse
7.700.000
733.000
16.814.000
1.438.000
37.285.000
-
-
-
-
(185.545)
(32.889)
(409.385)
(34.423)
(920.027)
-
-
-
-
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
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 €1.636.374 (a) (2019: loss €227.016) is
presented as part of the exchange difference on translation of foreign operations in other comprehensive income
in the statement of comprehensive income and then carried forward in the Foreign currency translation reserve;
and,
b. The fair value loss in terms of the local functional currencies amounting to €3.495.700 (b) (2019: gain €417.852),
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 2020|62
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 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
31 Dec 2019 31 Dec 2019
Discontinued
operations
€
Continued
operations
€
Podil,
Kiev City
Center
Land for
residential
Development
LLC Aisi Ukraine
LLC Trade Center
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business
Park
Kindergarten
Podil,
Kiev City
Center
Brovary
district, Kiev
Clinceni,
Bucharest
Land for
residential
Development
Land for
residential
Development
Warehouse
Bucharest
Office building
Bucharest
Retail
Residential
Portfolio
Bucharest
GreenLake
Bucharest
Residential
apartments
(1 aprtment)
Residential
villas (9 villas)
&
Land for
Residential
Development
Total Romania
TOTAL
LLC
Almaz‑Pres‑Ukraine
SC Secure Capital
Limited
Myrnes Innovations
Park Limited
Best Day Real
Estate Srl
Yamano Ltd
First Phase srl
Yamano Ltd
SPDI Real Estate
Srl
Secure II
Ketiza 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 Investments
Srl
Ebenem
Investments Srl
-
-
-
-
-
-
-
-
-
-
-
2.444.988
896.496
896.496
4.237.980
10.100.000
6.700.000
1.438.000
152.500
-
-
-
-
-
-
-
-
2.759.480
1.068.186
1.068.186
4.895.852
10.600.000
7.700.000
1.438.000
733.000
-
12.275.000
16.814.000
30.665.500
34.903.480
-
-
37.285.000
42.180.852
CONSOLIDATED FINANCIAL STATEMENTS 2020|63
19. Investment Property (continued)
19.4 Investment Property analysis
a.
Investment Properties
The following assets are presented under Investment Property: Innovations Logistics park, EOS Business Park, Kindergarten in
GreenLake, the Residential Portfolio (apartment in 1 complex - Blooming house) and GreenLake parcel K, as well as all the land assets
namely Kiyanovskiy Residence, Tsymlyanskiy Residenceand Rozny Lane in Ukraine, and GreenLake in Romania
At 1 January
Disposal of Investment Property
Revaluation (loss)/gain on investment property
Translation difference
At 31 December
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
(Note 9)
€
Continued
operations
€
-
-
-
-
-
42.180.852
(2.145.298)
(3.495.700)
(1.636.374)
34.903.480
-
-
-
-
-
Discontinued
operations
(Note 9)
€
63.345.537
(21.355.521)
417.852
(227.016)
42.180.852
Disposals of Investment Properties represent the sales of apartments and parking spaces in Residential Portfolio and villas in GreenLake
parcel K.
b.
Investment Properties Under Development
The investment property under development represents the carrying value of Bela Logistic Park property, which has reached the +10%
construction in late 2008 but it is stopped since then. This property sold during December 2019.
At 1 January
Disposal of IP
At 31 December
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
(Note 9)
€
Continued
operations
€
-
-
-
-
-
-
Discontinued
operations
(Note 9)
€
4.716.157
(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 2020|64
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 2020 (€)
(Level 1)
-
(Level 2)
(Level 3)
Total
-
-
-
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
-
896.496
-
2.444.988
-
896.496
-
-
-
-
-
152.500
-
12.275.000
-
-
- 16.665.480
-
-
-
10.100.000
6.700.000
-
-
1.438.000
18.238.000
896.496
2.444.988
896.496
10.100.000
6.700.000
152.500
12.275.000
1.438.000
34.903.480
Fair value measurements at 31 Dec 2019 (€)
(Level 1)
(Level 2)
(Level 3)
Total
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
-
-
-
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
The table below shows yearly adjustments for Level 3 investment property valuations:
Level 3 Fair value
measurements at 31 Dec
2020 (€)
Innovations Logistics
Park
EOS Business Park
Kindergarten
Total
Opening balance
Profit/(loss) on revaluation
Translation difference
Closing balance
10.600.000
7.700.000
1.438.000
19.738.000
(305.894)
(194.106)
10.100.000
(863.251)
(136.749)
6.700.000
26.785
(1.142.360)
(26.785)
1.438.000
(357.640)
18.238.000
Level 3 Fair value
measurements at 31 Dec
2019 (€)
Bela
Logistics
Park
Innovations
Logistics
Park
EOS
Business
Park
Victini
Logistics
Kindergarten
Total
Opening balance
Profit/(loss) on revaluation
Translation difference
Disposal of Investment
property
Closing balance
4.716.157
10.600.000
7.600.000
15.200.000
1.406.000
39.522.157
-
-
257.785
285.545
(257.785)
(185.545)
-
-
66.423
609.753
(34.423)
(477.753)
(4.716.157)
-
-
(15.200.000)
-
(19.916.157)
-
10.600.000
7.700.000
-
1.438.000
19.738.000
CONSOLIDATED FINANCIAL STATEMENTS 2020|65
19. Investment Property (continued)
19.5 Investment Property valuation method presentation (continued)
Information about Level 3 Fair Values is presented below:
Fair value at
31 Dec 2020
Fair value at
31 Dec 2019
Valuation
technique
Unobservable
inputs
Relationship of unobservable
inputs to fair value
€
10.100.000
€
10.600.000
€
Income approach
€
Future rental income
and costs for 10
years, discount rate
€
The higher the rental income the
higher the fair value. The higher the
discount rate, the lower fair value
6.700.000
7.700.000
Income approach
Future rental income
and costs for 10
years, discount rate
The higher the rental income the
higher the fair value. The higher the
discount rate, the lower fair value
Innovations
Logistics Park –
Bucharest
EOS Business Park –
Bucharest, City
Center
Kindergarten
1.438.000
1.438.000
Income approach
Future rental income
and costs of discount
rate, vacancy rate
The higher the rental income the
higher the fair value. The higher the
discount rate and the vacancy rate,
the lower fair value
Total
18.238.000
19.738.000
20. Investment Property Acquisitions, Goodwill Movement and Disposals
Disposal of subsidiaries in 2019
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 transfer (Notes 26)
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
20.748.104
4.745.167
16.994
25.510.265
4.604.044
477.336
38.208
5.119.588
30.629.853
-
-
-
2.257.980
-
2.257.980
12.340.350
151.930
12.492.280
-
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
639.000
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
(2.315.342)
(2.250.613)
(426.808)
(4.992.763)
CONSOLIDATED FINANCIAL STATEMENTS 2020|66
20. Investment Property Acquisitions, Goodwill Movement and Disposals
On 8 August 2019 Victini Logistcs Park AE the owner of Victini Logistics property in Athens, Greece, was sold at a Gross Asset Value of
EUR 12,5m payable in cash, excluding the receivables from the tenant of the property G. Dimitriou S.A. of a total of EUR 337.600 plus
all future rent invoicing until 31/12/2020. The transaction resulted in a cash inflow of EUR 2,03m, plus the amount to be recovered in
the future from G.Dimitriou S.A.
On 1 November 2019 the Company announced the disposal of Aisi Bella, the owner company of Bella and Balabino assets in Ukraine,
to Arcona in exchange for the issue to the Company of 277.943 new shares in Arcona and 67.063 warrants over shares in Arcona.
Based on the NAV per Arcona share the consideration corresponds to EUR 3,7m (excluding the issue of warrants), while the price paid
for the warrants was EUR1. The warrants give the Company the right to receive ordinary shares in Arcona of EUR 5 each nominal
value, exercisable before 1 November 2024 and when the shares have traded at a volume weighted average price of EUR 8,10.
On 5 December 2019 the Company announced the disposal of Boyana Residence, the owner company of Boyana assets in Sofia,
Bulgaria, to Arcona in exchange of 315.591 new shares in Arcona and 77.201 warrants over shares in Arcona. Based on the NAV per
Arcona share the consideration corresponds to EUR 4,2m (excluding the issue of warrants), while the price paid for the warrants was
EUR1. The Company also maintained as part of the transaction, a Sellers Loan with Boyana Residence equal to EUR 750k, as adjusted
finally by a reverse liability of EUR 111k to a net amount of EUR 639k, receivable by the end of 2020. Moreover, as part of the transaction
it was agreed that an associated to Boyana loan from Alpha Bank at Sertland level of EUR 0,77m will be transferred to Arcona. The
transfer completed successfully in August 2020. The warrants give the Company the right to receive ordinary shares in Arcona of EUR
5 each nominal value, exercisable before 1 November 2024 and when the shares have traded at a volume weighted average price of
EUR 8,10. The shares and the warrants issued to the Company in relation to this transaction held in escrow, to be released upon
agreement on the terms of the extension of the loan associated with the asset. The shares and warrants released successfully in
February 2020.
21. Investments in associates
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
Cost of investment in associates at the beginning of the
period
Share of profits /(losses) from associates (Note 9)
Dividend Income
Foreign exchange difference
Total
-
-
-
-
-
5.380.021
(179.775)
(242.403)
113.813
5.071.656
-
-
-
-
-
5.313.235
297.985
(121.772)
(109.427)
5.380.021
Dividend Income reflects dividends received from Delenco Srl, owner of the Delea Nuova building, where the Group maintains a 24,35%
participation.
The share of profit from the associate GreenLake Development Srl was limited up to the interest of the Group in the associate.
As at 31 December 2020, the Group’s interests in its associates and their summarised financial information, including total assets at fair
value, total liabilities, revenues and profit or loss, were as follows:
Project
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
21.926.174
(1.101.439)
(738.176)
24,35
(179.775) Romania
5.420.444
(9.455.683)
(2.344.699)
40,35
- Romania
27.346.618
(10.557.122) (3.082.875)
(179.775)
Office
building
Residential
assets
CONSOLIDATED FINANCIAL STATEMENTS 2020|67
21. Investments in associates (continued)
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
Associates Total assets
Total
liabilities
Profit/
(loss)
Holding
Share of
profits from
associates
Country Asset type
€
€
€
%
€
Delea
Nuova
Project
GreenLake
Project –
Phase A
Total
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
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) and maintained as such in 2019. Although, during 2021 the SPV has exited insolvency status and the Group is in process
of re-gaining full control, for 2020, the Management maintained the fair value of the Financial asset at fair value through OCI the same
as last year.
Discontinued operations (Note 9)
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 2020 the intangible assets were composed of the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of €103.193 (2019: €103.193) which is under continued operations. Accumulated
amortization as at the reporting date amounts to €103.193 (2018: €103.193) and therefore net value amounts to €0 (2019: €0).
As at 31 December 2020 the tangible non-current assets under continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of €2.859 (2019: €566).
As at 31 December 2020 the tangible non-current assets under discontinued operations mainly consisted of the machinery and
equipment used for servicing the Group's investment properties in Ukraine and Romania (Greece and Bulgaria only for 2019), amount
to €77.978 (2019:€60.741). Accumulated depreciation as at the reporting date amounts to €65.621 (2019: €46.399).
CONSOLIDATED FINANCIAL STATEMENTS 2020|68
24. Long Term Receivables and prepayments
Long Term Receivables
Total
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
€
836
836
€
315.000
315.000
€
852
852
€
315.265
315.265
Long term receivables mainly include the cash collateral existing in favor of Piraeus Leasing.
25. Inventory
At 1 January
Disposal of the asset (Note 20)
At 31 December
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
-
-
-
-
-
-
-
-
-
4.604.044
(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 40.4)
Allowance for impairment of prepayments and other
current assets
Total
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
€
307.549
-
-
239.191
-
45.077
6.365.654
9.026
€
487.185
-
-
105.348
1.095
10.783
124.958
301.600
€
1.053.809
-
4.030.233
145.910
14.533
71.147
5.575.555
8.700
€
437.183
775.641
-
111.350
15.245
6.927
124.958
292.208
(86.421)
6.880.076
(282.842)
748.127
(65.974)
10.833.913
(292.740)
1.470.772
Trade and other receivables mainly include receivables from tenants and prepayments made for services.
Bank Loan pending transfer refers to the agreement, as part of the transaction for the sale of Boyana to Arcona, of the transfer of the
relevant loan at Sertland level to Arcona upon signing relevant documentation with Alpha Bank. The transfer completed effectively in
August 2020 (Note 20).
Receivables from Arcona refer to the consideration shares and warrants in relation to the disposal of Boyana asset, which in 2019 at
year end were in escrow account, agreed then to be released to the Company upon agreement of the extension terms of the associated
loans. The consideration shares and warrants were released effectively in February 2020. The initial amount of the Receivable is
€4.241.544 and the impairment charge at the year end was €211.310, resulting in a net amount €4.030.233 (Note 20). Within 2020
this receivable is converted into shares.
VAT receivable represent VAT which is refundable in Romania, Cyprus and Ukraine.
Deferred expenses include legal, advisory, consulting and marketing expenses related to ongoing share capital increase and due
diligence expenses related to the possible acquisition of investment properties.
CONSOLIDATED FINANCIAL STATEMENTS 2020|69
26. Prepayments and other current assets (continued)
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 plus associated interest of €1.071.271 (2019 €845.638) less accumulated
expected credit loss of €54.256. The loan provided initially with a convertibility option which was not exercised. According to the last
addendum the loan had certain one-off and monthly payments for a period until 30 June 2020 and is fully payable 12 months afterwards.
The two parties are currently engaged in discussions for agreeing and signing a new addendum with a new re-payment schedule.The
loan is bearing a fixed interest rate of 10% and the Company is in the process of getting agreed security in the form of pledge of shares
following the relevant process provided in the initial Loan Agreement.
Moreover, Loans receivables from 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 15/6/2021 in the form of a loan. The loan that currently has been re-paid, had a
scaling structure of interest rates: 6% until 31/3/2020, 8% until 30/6/2020, 10% until 31/12/2020 and 11% until maturity. Final
agreement provides also a reverse payable of the Company of €111k which is classified appropriately.
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 40.4).
27. Financial Assets at FV through P&L
The table below presents the analysis of the balance of Financial Assets at FV through P&L in relation to the continued operations of
the Company:
Arcona shares
Transfer from receivables
FV change in Arcona shares
Arcona shares at reporting date
Warrants over Arcona shares
Transfer from receivables
FV change in warrants
Arcona warrants at reporting date
Total Financial Assets at FV
FV change in Arcona shares
FV change in warrants
31 Dec 2020
€
31 Dec 2019
€
3.549.453
4.030.234
(796.045)
6.783.642
3.735.555
-
(186.102)
3.549.453
32.190
1
(28.589)
3.602
1
-
32.189
32.190
6.787.244
3.581.643
(796.045)
(28.589)
(186.102)
32.189
Fair Value loss on Financial Assets at FV through P&L
(824.634)
(153.913)
The Company received during 2019, 277.943 Arcona shares as part of the disposal of Aisi Bella LLC, the owner company of Bella and
Balabino assets in Ukraine, to Arcona Property Fund N.V. Moreover, the Company received during 2020, 315.591 Arcona shares held
previously in escrow, as part of the disposal of Boyana in Sofia, and therefore a relevant transfer from receivables account took place.
At the end of the reporting period the shares revalued at their fair value based on the NAV per share of Arcona at the same date, and
as a result a relevant fair value loss of EUR 796.045 is recognized.
On top of the aforementioned shares, the Company received for the sale of Bella and Balabino assets, 67.063 warrants over shares in
Arcona for a consideration of EUR 1, and 77.201 warrants over Arcona shares for the sale of Boyana, held previously in escrow, for a
consideration of EUR 1. The warrants are exercisable upon the volume weighted average price of Arcona shares traded on a regulated
market at EUR 8,10 or higher. At year end, the warrants are re-valued to fair value and as a result a relevant loss of EUR 28.589 is
recognized. The terms and assumptions used for such warrant re-valuation are:
•
•
•
•
•
•
Current stock price (as retrieved from Amsterdam Stock Exchange): EUR 3,93 per share
Strike price of the warrants: EUR 8,10 per share
Expiration date: 1 November 2024
Standard deviation of stock price: 19,69%
Annualized dividend yield on shares: 0%
5 year Government Bond rate (weighted average rate of Government Bonds of countries that Arcona is exposed): 1,104%
CONSOLIDATED FINANCIAL STATEMENTS 2020|70
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 GBP
Total
29. Share capital
Number of Shares during 2020 and 2019
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
Discontinued
operations
Continued
operations
Discontinued
operations
€
15.755
33.234
6
79.577
1.287
129.859
€
-
216.224
418
524.146
-
740.788
€
15.700
151.349
59
40.143
-
207.251
€
-
51.539
95
478.740
-
530.374
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
Total
31 December 2018
24 December 2019
31 December 2019
31 December 2020
Increase of share capital
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
989.869.935
989.869.935
-
8.618.997
8.618.997
1.920.961
1.920.961
1.920.961
129.191.442
129.191.442
129.191.442
129.191.442
129.191.442
129.191.442
Nominal value (€) for 2020 and 2019
€
31 December 2018
24 December 2019
31 December 2019
31 December 2020
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
Total
Increase of share capital
9.898.699
9.898.699
-
86.190
86.190
1.272.072
1.272.072
1.272.072
-
-
-
-
-
19.209
19.209
19.209
9.898.699
9.898.699
-
86.190
86.190
1.291.281
1.291.281
1.291.281
9.898.699
9.898.699
-
86.190
86.190
1.291.281
1.291.281
1.291.281
The comparative figures in these financial statements have been restated to correct an identified error, which necessitated restatement
of values between the Company’s equity captions. More specifically, as at 31 December 2019 and as at 1 January 2019, the share
capital has been decreased by €630, the share premium has been increased by €183.220 and the retained earnings have been decreased
by €182.590. Total equity has remained unaffected.
29.1 Authorised share capital
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 29.3).
CONSOLIDATED FINANCIAL STATEMENTS 2020|71
29. Share capital (continued)
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,
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 29.3),
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
29.3) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. and final
settlement for any resulting difference is expected to be provided by Cypriot Courts (Note 41.3). As soon as the case is
settled, the Company will proceed with the cancellation of the Redeemable Preference Class B Shares.
On 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 29.3).
29.3 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as follows:
Number of
Ordinary shares of €0,01
Total number of Shares
Total number of Shares
Options
Issued and Listed on AIM
Non-Dilutive Basis
Full Dilutive Basis
-
(as at) 31 December
2020
129.191.442
129.191.442
129.191.442
(as at) 31 December
2019
129.191.442
129.191.442
129.191.442
-
-
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the
Praktiker Craiova asset acquisition do not have voting rights but have economic rights at par with ordinary shares. As at the reporting
date all of the Redeemable Preference Class B Shares have been redeemed but the Company is in legal proceedings with the vendor in
respect of a final settlement (Notes 34, 41.3).
29.4 Other share capital related matters
Pursuant to decisions taken by the AGM of 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.
CONSOLIDATED FINANCIAL STATEMENTS 2020|72
29. Share capital (continued)
29.4 Other share capital related matters (continued)
-
issue up to 15.000.000 Class A Warrants, being convertible to up to 15.000.000 ordinary share of euro 0,01 each in the
Company upon exercise of the Warrants, with such terms and conditions and at an issue price as the Board may in its sole
unfettered discretion from time to time determine (and such price may be at a discount to the net asset value per share in
the Company which is in issue immediately prior to the issue of the Warrants)and for such purpose any rights of pre-emption
and other rights the Company's shareholders have or may have by operation of law and/or pursuant to the articles of
association of the Company and/or otherwise in connection with the authority conferred on the Board for the issue and
allotment of shares or Warrants in the Company as contemplated in this resolution or the issue and allotment of shares or
Warrants in the Company pursuant to such authority be and are hereby irrevocably and unconditionally waived. The authority
conferred by this resolution shall expire on 31 December 2019. The Company did not issue any Class A Warrants under this
authority.
30. Foreign Currency Translation Reserve
Exchange differences relate to the translation from the functional currency to EUR of Group’s subsidiaries’ accounts and are recognized
by entries made directly to the foreign currency translation reserve. The foreign exchange translation reserve represents unrealized
profits or losses related to the appreciation or depreciation of the local currencies against EUR in the countries where Company’s
subsidiaries’ functional currencies are not EUR. The Company had foreign exchange losses on translation due to presentation currency
of €1.392.155 for 2020, in comparison to €223.135 relevant gains in 2019. Current period’s loss resulted from the devaluation of UAH
against EUR by 31% and RON against EUR by ~2%.
31. Non-Controlling Interests
Non-controlling interests represent the percentage participations in the respective entities not owned by the Group:
%
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
Non-controlling interest
portion
31 Dec 2020
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 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
CONSOLIDATED FINANCIAL STATEMENTS 2020|73
32. Borrowings
Principal of bank Loans
Bancpost SA
Alpha Bank Romania
Alpha Bank Romania
Bancpost SA
Alpha Bank Bulgaria
Piraeus Bank SA
Bancpost SA
Loans from other 3rd parties
and related parties (Note 40.5)
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
Continued Operations
Project
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
Blooming House
Romfelt Plaza
EOS Business Park
GreenLake – Parcel K
Boyana Residence
(Sertland Loan)
GreenLake-Phase 2
Kindergarten – SPDI
RE
-
-
-
-
-
-
-
2.061.514
-
-
-
-
1.901.094
-
2.525.938
670.293
235.191
853
-
-
-
-
-
-
-
382.455
459
277.802
51.594
293.466
3.249.926
666.468
2.525.938
732.107
177.686
2.546
2.061.514
-
5.333.369
952.321
382.914
-
7.977.533
922.073
88.863
2.150.377
38.771
6.324.461
45.086
428.000
50.054
8.949.660
31 Dec 2020
Continued
operations
€
2.054.400
95.977
2.150.377
31 Dec 2020
Discontinued
operations
€
3.510.366
2.814.095
6.324.461
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
Loans from other 3rd parties and related parties under continued operations include among others:
Α) Loans from 3 Directors of €375k provided as bridge financing for future property acquisitions. The loans bear interest 8% annually
and are repayable on 31 August 2021 (Note 40.5).
B) Safe Growth Investments, a third party company, provided a loan of €1m to the Company in November 2020 to be used for general
working capital purposes. The loan bears interest of 5,35% per annum and is payable by end 2021.
Discontinued Operations
Ketiza Real Estate Srl entered in 2012 into a loan agreement with Bancpost SA for a credit facility for financing the acquisition of the
Blooming House and 100% of the remaining (without VAT) construction works of Blooming House project. As at the end of the
reporting period the loan was fully repaid. The loan had borne interest of EURIBOR 3M plus 3,5% and had secured by all assets of
Ketiza Real Estate Srl, as well as its shares and is being repaid through sales proceeds
SecRom Real Estate Srl entered (2009) into a loan agreement with Alpha Bank Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. During 2018, SecRom Real Estate Srl was merged with N-E Real Estate Park
First Phase Srl as a result the loan was transferred to N-E Real Estate Park First Phase Srl. As at the end of the reporting period, the
the loan was fully repaid. The loan had borne interest of EURIBOR 1M+4.25% and was repayable on the basis of investment property
sales.
Moselin Investments Srl entered in 2010 into a construction loan agreement with Bancpost SA covering the construction works of
Parcel K GreenLake project. As at the end of the reporting period the balance of the loan was €1.901.094 and bears interest of
EURIBOR 3M plus 2,5%. Following restructuring implemented during 2017 the loan maturity was extended to 2022. The loan is
secured with the property itself and the shares of Moselin Investments Srl and is being repaid through sales proceeds.
Sertland Properties Limited entered in 2008 into a loan agreement with Alpha Bank Bulgaria for an acquisition loan related to the
acquisition of Boyana Residence ood. As at the end of 2019, the balance of the loan was €666.468 bearing interest of EURIBOR 3M
plus 5,75%. On 29 July 2020 the loan was transferred to Arcona as part of the transaction for the sale of Boyana Residence ood in
Bulgaria.
CONSOLIDATED FINANCIAL STATEMENTS 2020|74
32. Borrowings (continued)
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 €948.700 and bears interest of EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution. During September
2019, the company received a termination notice from Piraeus Bank and a payment order from court in relation to this loan, and
currently relevant discussions with the Bank are taking place for a mutual agreed solution.
N-E Real Estate Park First Phase Srl entered in 2016 into a loan agreement with Alpha Bank Romania for a credit facility of €1.000.000
for working capital purposes. As at the end of the reporting period, the balance of the loan was fully repaid. The loan had borne
interest of EURIBOR 1M+4,5% and was repayable from the free cash flow resulting from the rental income of company’s property.
The loan has a maturity in April 2024 and was secured by a second rank mortgage over assets of SecRom Real Estate Srl, which has
been absorbed by First Phase, as well as its shares.
SPDI Real Estate Srl (Kindergarten) has a loan agreement with Bancpost SA Romania. As at the end of the reporting period the
balance of the loan was €670.293 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 discontinued operations includes borrowings from non-controlling interest
parties. During the last nine years and in order to support the GreenLake project the non-controlling shareholders of Moselin
Investments Srl and SPDI Real Estate SRL (other than the Group) have contributed their share of capital injections by means of
shareholder loans. The loans bear interest 4% annually.
33. Bonds
The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio,
issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a warrant. The convertible
loan element of the instrument which was in the value of €1.033.842 bears a 6,5% coupon, has a 7 year term and is convertible into
ordinary shares of the Company at the option of the holder at 25p. starting from 1 January 2018.
34. Trade and other payables
The fair value of trade and other payables due within one year approximate their carrying amounts as presented below.
Payables to third parties
Payables to related parties (Note 40.2)
Deferred income from tenants
Accruals
Pre-sale advances (Advances received for sale of
properties)
Total
Current portion
Non-current portion
Total
31 Dec 2020
Continued
operations
€
3.243.465
582.829
-
101.112
31 Dec 2020
Discontinued
operations
€
841.122
-
7.965
21.385
31 Dec 2019
Continued
operations
€
3.729.592
606.214
-
99.744
31 Dec 2019
Discontinued
operations
€
854.974
177
8.216
151.899
109.556
4.036.962
-
870.472
144.045
4.579.595
-
1.015.266
31 Dec 2020
Continued
operations
€
4.036.962
-
4.036.962
31 Dec 2020
Discontinued
operations
€
862.507
7.965
870.472
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
4.579.595
-
4.579.595
1.007.050
8.216
1.015.266
Payables to third parties represents: a) payables due to Bluehouse Capital (under continued operations) as a result of the Redeemable
Convertible Class B share redemption (Note 29.3) which is under legal proceedings for a final settlement (Note 41.3) , b) amounts
payable to various service providers including auditors, legal advisors, consultants and third party accountants related to the current
operations of the Group, and c) guarantee amounts collected from tenants.
Payables to related parties under continued operations represent amounts due to directors and accrued management remuneration
(Note 40.2). Payables to related parties under discontinued operations represent payables to non-contolling intetest shareholders.
Deferred income from tenants represents advances from tenants which will be used as future rental income and utilities charges.
Accruals mainly include the accrued, administration fees, accounting fees, facility management and other fees payable to third parties.
Pre-sale advances reflect the advance received in relation to Kiyanovskiy Residence pre-sale agreement, which upon non closing of
the said sale, part of which will be returned to the prospective buyer.
CONSOLIDATED FINANCIAL STATEMENTS 2020|75
35. Deposits from Tenants
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
31 Dec 2019
Continued
operations
Deposits from tenants non-current
Total
€
-
-
€
64.231
64.231
€
31 Dec 2019
Discontinu
ed
operations
€
-
-
67.269
67.269
Deposits from tenants appearing under non-current liabilities include the amounts received from the tenants of Innovations Logistics
Park, EOS Business Park and companies representing residential segment as advances/guarantees and are to be reimbursed to these
clients at the expiration of the lease agreements.
36. Taxation
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 2020
Continued
operations
€
237.521
26.091
399.450
449.844
163.972
6.549
1.283.427
31 Dec 2020
Discontinued
operations
€
30.374
15
-
58.960
165.521
22.405
227.275
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
Corporate income tax represents taxes payable in Cyprus and Romania.
Other taxes represent local property taxes and VAT payable in Romania.
Non current amounts represent the part of the settlement plan agreed with the Cyprus tax authorities up to 2022.
37. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist of the non-current portion of €9.235.266 and the current portion of
€456.763 (31 December 2019: €9.699.050 and 385.420, accordingly).
Discontinued operations
31 Dec 2020
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities (Note 9d)
31 Dec 2019
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
43.2
&
43.6
Not
e
43.2
&
43.6
Minimum lease
payments
€
917.759
5.265.225
5.506.778
11.689.762
Minimum lease
payments
€
861.304
5.637.702
6.053.782
12.552.788
Interest
Principal
€
455.241
1.414.550
209.027
2.078.818
€
462.518
3.850.675
5.297.751
9.610.944
81.085
9.692.029
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
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 €31.180 under current and non-current portion.
The Group's obligations under finance leases are secured by the lessor's title to the leased assets.
CONSOLIDATED FINANCIAL STATEMENTS 2020|76
37. Finance Lease Liabilities (continued)
37.2 Sale and Lease Back Agreements
A.
Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations Logistics Park in Bucharest, owned by Best Day Real Estate Srl,
through a sale and lease back agreement with Piraeus Leasing Romania SA. As at the end of the reporting period the balance is
€6.707.475, 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.
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 Leasing company related to the liabilities of Best Day Real Estate Srl
arising from the sale and lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS Business Park in Bucharest, owned by N-E Real Estate Park First Phase
Srl, through a sale and lease back agreement with Alpha Bank Romania SA. As at the end of the reporting period the balance is
€2.953.273 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 related to the liabilities of N-E Real Estate Park First Phase Srl
arising from the sales and lease back agreement.
38. Earnings and net assets per share attributable to equity holders of the parent
a. Weighted average number of ordinary shares
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 2020
129.191.442
129.191.442
129.191.442
31 Dec 2019
129.191.442
127.275.743
127.275.743
31 Dec 2020
€
31 Dec 2019
€
(4.339.866)
(0,03)
(0,03)
(7.201.720)
(0,06)
(0,06)
31 Dec 2020
€
31 Dec 2019
€
(2.851.952)
(0,02)
(0,02)
(4.846.634)
(0,04)
(0,04)
CONSOLIDATED FINANCIAL STATEMENTS 2020|77
38. 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
39. Segment information
31 Dec 2020
€
31 Dec 2019
€
23.712.973
129.191.442
129.191.442
0,18
0,18
29.392.468
129.191.442
129.191.442
0,23
0,23
All commercial and financial information related to the properties held directly or indirectly by the Group is being provided to members
of executive management who report to the Board of Directors. Such information relates to rentals, valuations, income, costs and
capital expenditures. The individual properties are aggregated into segments based on the economic nature of the property. For the
reporting period the Group has identified the following material reportable segments:
Commercial-Industrial
Warehouse segment – Victini Logistics (sold within 2019), Innovations Logistics Park
Office segment - Eos Business Park – Delea Nuova (Associate)
Retail segment - Kindergarten of GreenLake
Residential
Residential segment
Land Assets
Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent investment property (including investment properties under
development and prepayments made for the investment properties). Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
Continued Operations
Profit and Loss for the year 2020
Segment profit
Rental income (Note 10)
Service charges and utilities
income (Note 10)
Property Management income
(Note 10)
Impairment of financial
investments (Note 27)
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
€
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
583.683
583.683
192.017
192.017
20.000
20.000
(796.045)
(28.589)
(824.634)
(158.082)
(158.082)
(419.148)
(419.148)
145.586
145.586
30.200
30.200
(2.243.899)
(3.039.944)
(177.448)
589.663
(2.822.791)
(2.851.725)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1.701.180)
191.222
503.527
(208.809)
(65.942)
(1.439.801)
(60.142)
(117.656)
(61.936)
(1.392.155)
7.204.597
CONSOLIDATED FINANCIAL STATEMENTS 2020|78
39. Segment information (continued)
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)
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)
* 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 2020|79
39. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2020
Segment profit
Property Sales income
(Note 14.1)
Cost of Property sold
(Note 14.1)
Rental income (Note 10)
Service charges and
utilities income (Note 10)
Service and Property
Management income
(Note 10)
Valuation gains/(losses)
from investment property
(Note 13)
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
€
€
€
€
€
€
€
-
-
-
594.991
1.832.193
-
228.820
-
648.499
-
122.928
(564.715)
8.047
(1.580.583)
-
27.812
942
-
2.310
-
-
1.988
-
-
-
(305.894)
(862.021)
26.785
(3.179)
(2.351.391)
-
(179.775)
-
-
-
-
-
-
-
-
-
-
2.427.184
(2.145.298)
1.008.294
31.064
1.988
(3.495.700)
(179.775)
(108.820)
(158.082)
(26.793)
(419.148)
(4.127)
147.574
(9.242)
28.212
(144.118)
(2.243.899)
(177.448)
(177.448)
(470.548)
(2.822.791)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(217.988)
3.058
9.392
(863.013)
(7.938)
(318.925)
(44.387)
(4.262.592)
CONSOLIDATED FINANCIAL STATEMENTS 2020|80
39. Segment information (continued )
Discontinued Operations
Profit and Loss for the year 2019
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)
(2.315.343)
-
-
297.985
-
-
-
(2.677.420)
-
-
-
-
-
-
-
-
-
-
-
608.073
(615.477)
1.726.978
33.982
128.623
2.125
417.852
(4.992.763)
297.985
(285.912)
(1.233.371)
(38.570)
1.307.445
(9.348)
171.395
(12.983)
(152.901)
(88.634) (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)
Segment profit
Property Sales income (Note
14.1)
Cost of Property sold (Note
14.1)
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)
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 (Note 18)
Loss for the year
Total Operations
Balance Sheet as at 31 December 2020
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
-
-
-
-
-
836
836
-
10.415.000
-
11.771.656
10.415.000 11.771.656
-
1.438.000
1.438.000
-
152.501
6.787.244
-
2.569.458
15.444.794
152.501 15.444.794 9.357.538
6.787.244
41.791.409
48.579.489
-
6.771.706
6.771.706
-
2.953.643
2.953.643
-
873.108
873.108
-
-
-
-
5.482.264
2.150.377
1.147.747
5.482.264 3.298.124
2.859
6.880.076
129.859
55.592.283
2.150.377
17.228.468
19.378.845
4.036.962
1.283.427
1.258.923
25.958.157
CONSOLIDATED FINANCIAL STATEMENTS 2020|81
39. Segment information (continued)
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
Taxes payable and provisions
Bonds
Total liabilities
Discontinued operations
852
-
-
-
-
-
852
-
10.915.000
-
13.146.286
10.915.852 13.146.286
-
1.438.000
1.438.000
-
667.001
-
21.709.852
667.001 21.709.852
3.581.643
2.015.488
3.581.643
49.891.627
5.597.131 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
7.449.277
-
-
-
-
1.231.829
420.293
20.333.228
428.000
1.652.122 20.761.228
4.579.595
-
1.145.703
-
-
1.190.603
- 27.677.129
Assets and Liabilities held for sale 2020
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
10.100.000
6.700.000
1.438.000
152.500
15.444.794
1.068.186
34.903.480
315.000
-
-
5.071.656
-
-
-
-
-
-
-
-
315.000
5.071.656
-
10.415.000 11.771.656
-
-
1.438.000
1
-
152.501 15.444.794 1.068.186
-
-
6.707.475
64.231
6.771.706
270
2.953.373
-
2.953.643
873.108
-
-
873.108
-
-
-
-
5.451.083
31.181
-
5.482.264
-
-
-
-
1
40.290.137
12.357
748.127
740.788
41.791.409
6.324.461
9.692.029
64.231
16.080.721
870.472
277.275
17.228.468
CONSOLIDATED FINANCIAL STATEMENTS 2020|82
39. Segment information (continued)
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
Taxes payable and provisions
Total liabilities
Geographical information
Income (Note 10)
Ukraine
Romania
Greece
Bulgaria
Cyprus *
Total
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
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
-
-
-
-
795.700
795.700
-
1.041.346
-
-
-
1.041.346
-
-
-
-
457.450
457.450
-
1.038.158
853.133
417
-
1.891.708
* It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park (Romania) is
currently invoiced by the Company as part of a relevant lease agreement with the Innovations SPV and the lender, however the
asset, through the SPV, is planned to be transferred as part of the transaction with Arcona Property Fund N.V. Upon a final
agreement for such transfer, the Company will negotiate with the lender its release from the aforementioned lease agreement,
and if succeeds, upon completion such income will be also transferred.
Gain/(loss) from disposal of investment
properties (Note 14.1)
Romania
Total
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
€
281.886
281.886
-
-
Continued
operations
€
Discontinued
operations
€
-
-
(7.404)
(7.404)
CONSOLIDATED FINANCIAL STATEMENTS 2020|83
39. Segment information (continued)
Geographical information (continued)
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
Carrying amount of assets (investment properties,
associates and Financial asset at fair value through
OCI)
Ukraine
Romania
Total
40. Related Party Transactions
The following transactions were carried out with related parties:
40.1 Income/ Expense
40.1.1 Income
-
-
-
4.237.980
35.737.157
39.975.137
-
-
-
4.895.852
42.665.022
47.560.874
Interest Income on loan to related parties
Interest Income from loan to associates
Total
31 Dec 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
2.294
326
2.620
-
9.392
9.392
4.600
2.372
6.972
-
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.
40.1.2 Expenses
Management Remuneration and incentives (Note 12)
Directors fees (Note 12)
Interest expenses on Narrowpeak loan (Note 16)
Interest expenses on Director and Management Loans
(Note 16)
Total
31 Dec 2020
Continued
operations
€
388.925
129.000
12
36.265
554.202
31 Dec 2020
Discontinued
operations
€
-
-
-
-
-
31 Dec 2019
Continued
operations
€
646.309
73.108
232
30.417
750.066
31 Dec 2019
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.
40.2 Payables to related parties (Note 34)
Board of Directors & Committees remuneration
Secure Management SRL
Secure Management Services LTD
SecMon SRL
Sec South East Continet Unique Real Esate
Management Limited
Management Remuneration
Total
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
31 Dec 2019
Continued
operations
31 Dec 2019
Discontinued
operations
€
129.364
-
1.146
6.285
7.899
438.135
582.829
€
€
€
-
-
-
-
-
364
-
-
-
-
605.850
606.214
-
177
-
-
-
177
CONSOLIDATED FINANCIAL STATEMENTS 2020|84
40. Related Party Transactions (continued)
40.2 Payables to related parties (Note 34) (continued)
40.2.1 Board of Directors & Committees
The amount payable represents remuneration and expenses payable to Non-Executive Directors until the end of the reporting period.
The members of the Board of Directors pursuant to a recommendation by the remuneration committee and in order to facilitate the
Company’s cash flow receive their payment in shares of the Company. During 2018 the directors received 344.371 ordinary shares in
lieu of their 2016 H1 remuneration amounting to GBP 120.530. During 2019, Non-Executive Directors received 261.000 ordinary
shares amounting to EUR 73.108 in lieu of their H1 2019 fees, and 176.576 ordinary shares amounting to EUR 74.162,04 in lieu of
their before H2 2016 fees. Any H2 2019 fees and 2020 fees has been decided that will be paid in cash.
40.2.2 Management Remuneration
Management Remuneration represents deferred amounts payable to the CEO of the Company.
40.3 Loans from SC Secure Capital Limited to the Group’s subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group provided capital in the form of loans to the Ukrainian subsidiaries of
the Company so as to support the acquisition of assets, development expenses of the projects, as well as various operational costs.
The following table presents the amounts of such loans which are eliminated for consolidation purposes, but their related exchange
difference affects the equity of the Consolidated Statement of Financial Position.
Borrower
LLC “ Trade Center’’
LLC “Aisi Ukraine”
LLC “Almaz-Press-Ukraine”
LLC “Aisi Ilvo”
Total
Limit –as at
31 Dec 2020
€
Principal as at
31 Dec 2020
€
Limit –as at
31 Dec 2019
€
Principal as at
31 Dec 2019
€
5.800
23.062.351
8.236.554
150.537
31.455.242
5.266
137.966
239.079
21.750
404.061
5.800
23.062.351
8.236.554
150.537
31.455.242
5.649
57.865
263.330
28.597
355.441
A potential Ukrainian Hryvnia weakening/strengthening by 10% against the US dollar with all other variables held constant, would
result in an exchange difference on I/C loans to foreign holdings of €40.406, estimated on balances held at 31 December 2020.
40.4 Loans to associates (Note 26)
Loans to GreenLake Development Srl
Total
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
31 Dec 2019
Continued
operations
€
€
€
9.026
9.026
301.600
301.600
8.700
8.700
31 Dec 2019
Discontinued
operations
€
292.208
292.208
The loan was provided to GreenLake Development Srl from Edetrio Holdings Limited (continued operations) and Sc Capital
(discontinued operations). The agreement with Edetrio Holdings Limited was signed on 17 February 2012 and bears interest 5% and
the agreement with Sc Capital Limited was signed on 4 December 2017 and bears interest 4% per annum. The maturity date is 30
April 2022 for the Edetrio loan and 4 December 2021 for the SC Capital Limted loan.
40.5 Loans from related parties (Note 32)
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
31 Dec 2019
Continued
operations
€
31 Dec 2019
Discontinued
operations
€
Loan from Narrowpeak Consultants
Loan from Directors and Management
Interest accrued on loans from related parties
Total
-
604.400
77.394
681.794
-
-
-
-
206
375.000
45.086
420.292
-
-
-
-
Loans from directors of the order of € 375.000 reflect loans provided from 3 directors as bridge financing for future property
acquisitions. The loans bear interest 8% annually and are repayable by 31 August 2021. In case needed, the Company will discuss
with the directors relevant extension of the loans.
Rest amount of the order of € 229.400 reflect payables of € 68.900 to 2 executives and of € 160.500 to one director, converted to
loans for facilitating Company’s cash flow.
CONSOLIDATED FINANCIAL STATEMENTS 2020|85
41. Contingent Liabilities
41.1 Tax Litigation
The Group performed during the reporting period part of its operations in the Ukraine, within the jurisdiction of the Ukrainian tax
authorities. The Ukrainian tax system can be characterized by numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of authorities, which are authorised by law to impose severe fines
and penalties and interest charges. Any tax year remains open for review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may remain open for longer. Overall following the sales of Terminal
Brovary, Balabino and Bela, the exposure of the Group in Ukraine has been significantly reduced.
The Group performed during the reporting and comparative periods part of its operations in Romania, Greece and Bulgaria. In respect
of Romanian, Bulgarian and Greek tax systems, everything is subject to varying interpretations and frequent changes, which in many
cases have retroactive effects. In certain circumstances it is also possible that tax authorities may act arbitrary.
These facts create tax risks which are substantially more significant than those typically found in countries with more advanced tax
systems. Management believes that it has adequtely provided for tax liabilities, based on its interpretation of tax legislation, official
pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these
consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant.
Nevertheless, with the sale of the Bulgarian and Greek assets, such risk has been effectively minimized.
41.2 Construction related litigation
There are no material claims from contractors due to the postponement of projects or delayed delivery other than those disclosed in
the financial statements.
41.3 Bluehouse accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. (Bluehouse) filed in Cypriot courts in December 2018 lawsuit against the
Company for the total amount of €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. Hearing for both cases has been set from Cypriot courts in September 2021.
41.4 Other Litigation
The Group has a number of other minor legal cases pending. Management does not believe that the result of these will have a
substantial overall effect on the Group’s financial position. Consequently no such provision is included in the current financial
statements.
41.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December 2020.
42. Commitments
The Group had no other commitments as at 31 December 2020.
43. Financial Risk Management
43.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will be able to implement its stated growth strategy in order to maximize
the return to stakeholders through the optimization of the debt-equity structure and value enhancing actions in respect of its portfolio
of investments. The capital structure of the Group consists of borrowings (Note 32), bonds (Note 33), trade and other payables (Note
34) deposits from tenants (Note 35), financial leases (Note 37), taxes payable (Note 36) and equity attributable to ordinary or
preferred shareholders.
Management reviews the capital structure on an on-going basis. As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of equity (issuance of shares to the Group’s shareholders) or in the form of
debt. Management balances the capital structure of the Group with a view of maximizing the shareholder’s Return on Equity (ROE)
while adhering to the operational requirements of the property assets and exercising prudent judgment as to the extent of gearing.
CONSOLIDATED FINANCIAL STATEMENTS 2020|86
43. Financial Risk Management (continued)
43.2 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 2020
31 Dec 2020
31 Dec 2019
31 Dec 2019
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
28
24
27
26
22
32
34
35
37
36
33
129.859
836
6.787.244
6.880.076
-
740.788
315.000
207.251
852
-
3.581.643
530.374
315.265
-
748.127
10.833.913
1.470.772
1
-
1
13.798.015
1.803.916
14.623.659
2.316.412
2.150.377
4.036.962
-
-
1.283.427
1.258.923
6.324.461
870.472
64.231
9.692.029
277.275
-
428.000
4.579.595
-
-
1.145.703
1.190.603
8.949.660
1.015.266
67.269
10.084.470
216.563
-
8.729.689
17.228.468
7.343.901
20.333.228
43.3 Financial Risk Management Objectives
The Group’s Treasury function provides services to its various corporate entities, coordinates access to local and international financial
markets, monitors and manages the financial risks relating to the operations of the Group, mainly the investing and development
functions. Its primary goal is to secure the Group’s liquidity and to minimize the effect of the financial asset price variability on the
cash flow of the Group. These risks cover market risks including foreign exchange risks and interest rate risk, as well as credit risk
and liquidity risk.
The above mentioned risk exposures may be hedged using derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group’s approved policies which indicate that the use of derivatives is for hedging purposes only. The
Group does not enter into speculative derivative trading positions. The same policies provide for the investment of excess liquidity.
As at the end of the reporting period, the Group had not entered into any derivative contracts.
43.4 Economic Market Risk Management
The Group operates in Romania and Ukraine. The Group’s activities expose it primarily to financial risks of changes in currency
exchange rates and interest rates. The exposures and the management of the associated risks are described below. There has been
no change in the way the Group measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized financial assets and liabilities are denominated in a currency that
is not the Group's functional currency. Most of the Group’s financial assets are denominated in the functional currency. Management
is monitoring the net exposures and adopts policies to encounter them so that the net effect of devaluation is minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no
significant floating interest-bearing assets. On December 31st, 2020, cash and cash equivalent (including continued and discontinued
operations) financial assets amounted to €870.647 (2019: €737.625) of which approx. €424 in UAH and €603.723 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 €8.475.729 (31 December 2019: €€9.377.660) as they are issued at variable rates tied to the Libor or Euribor. Management
monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group’s strategy with the
interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may take place
in the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.
Management monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group’s strategy
with the interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may
take place in the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.
CONSOLIDATED FINANCIAL STATEMENTS 2020|87
43. Financial Risk Management (continued)
43.4 Economic Market Risk Management (continued)
Interest Rate Risk (continued)
As at 31 December 2020 the weighted average interest rate for all the interest bearing borrowing and financial leases of the Group
stands at 4% (31 December 2019: 4,07%).
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding
as at 31 December 2020 is presented below:
Weighted average interest rate
%Influence on yearly finance costs
Actual
as at 31.12.2020
4%
+100 bps
+200 bps
5%
73.949
6%
147.898
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding
as at 31 December 2019 is presented below:
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 Group’s exposures to financial risk are discussed also in Note 7.
43.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit risk emanating from the liquid funds is limited because the Group’s
counterparties are banks with high credit-ratings assigned by international credit rating agencies. In respect of receivables from
tenants these are kept to a minimum of 2 months and are monitored closely.
43.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which applies a framework for the Group’s
short, medium and long term funding and liquidity management requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and budgets while maintaining adequate reserves. The following table
details the Group’s contractual maturity of its financial liabilities. The tables below have been drawn up based on the undiscounted
contractual maturities including interest that will be accrued.
CONSOLIDATED FINANCIAL STATEMENTS 2020|88
43. Financial Risk Management (continued)
43.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2020
Carrying amount
€
Total
Contractual
Cash Flows
€
Less than
one year
From one to
two years
More than two
years
€
2.150.377
2.356.528
566.938
1.789.590
4.036.962
4.036.962
4.036.962
-
1.258.923
1.594.922
292.281
67.200
1.235.441
1.283.426
8.729.688
5.068.327
1.283.426
9.271.838
4.526.177
712.903
5.609.084
8.188.095
570.523
2.427.313
(2.427.313)
-
1.235.441
(1.234.605)
Discontinued Operations
31 December 2020
Carrying amount
Less than
one year
From one to
two years
More than two
years
129.859
129.859
129.859
836
836
-
6.787.244
6.787.244
6.787.244
6.880.076
13.798.015
6.880.076
13.798.015
6.880.076
13.797.179
Total
Contractual
Cash Flows
€
740.788
315.000
€
740.788
-
€
740.788
315.000
1
1
1
748.127
1.803.916
748.127
748.127
1.803.916
1.488.916
€
-
-
-
-
-
€
-
836
-
-
836
-
-
€
-
-
-
-
-
€
-
315.000
-
-
315.000
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)
Financial assets
Cash at Bank
Long-term receivables
Financial Asset at FV through
OCI
Prepayments and other
receivables
Total Financial assets
Financial liabilities
Borrowings
Trade and other payables
Deposits from tenants
Finance lease liabilities
Taxation
Total Financial liabilities
Total net assets/(liabilities)
6.324.461
870.472
64.231
9.692.029
277.275
17.228.468
(15.424.552)
4.019.940
870.472
64.231
11.689.763
277.275
16.921.681
(15.117.764)
2.933.480
862.507
-
917.759
246.885
4.960.631
(3.471.715)
272.757
-
-
953.700
30.390
1.256.847
(1.256.847)
813.702
7.965
64.231
9.818.303
-
10.704.201
(10.389.201)
CONSOLIDATED FINANCIAL STATEMENTS 2020|89
43. Financial Risk Management (continued)
43.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2019
Carrying amount
€
Total
Contractual
Cash Flows
€
Discontinued Operations
31 December 2019
Carrying amount
€
Total
Contractual
Cash Flows
€
Less than
one year
From one to
two years
More than two
years
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)
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)
Less than
one year
From one to
two years
More than two
years
207.251
207.251
207.251
10.833.913
10.833.913
10.833.913
3.581.643
3.581.643
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)
€
€
530.374
530.374
530.374
1.470.772
1.470.772
1.470.772
1
1
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)
CONSOLIDATED FINANCIAL STATEMENTS 2020|90
44. Events after the end of the reporting period
a) Arcona Property Fund N.V. transaction
Following the conditional Implementation Agreement signed between the Company and Arcona Property Fund N.V. in December 2018
for the sale of Company’s non-Greek portfolio of assets in an all share transaction, and the completion of Stage 1 of the transaction
in February 2020 with the sale of Boyana in Bulgaria, which followed the Ukrainian Bella and Balabino asset disposals in Q4 2019, the
two parties signed in June 2021 SPAs related to Stage 2 of the transaction which involves EOS and Delenco assets in Romania, and
Kiyanovskiy and Rozny land plots in Ukraine. The total value of the transaction is expected to reach c.€8,2 million, payable in Arcona
shares and warrants valued at NAV plus ~€1 million in cash.
Despite the problems and the slow progression of the discussions during the pandemic which affects all related participants in all
jurisdictions of the two parties (Holland, Czech Republic, Ukraine, Romania, Cyprus, UK), closing of Stage 2 is expected in Q4 2021
subject to COVID-19 effects, when SPDI will receive approximately 605.000 new ordinary shares in Arcona and approximately 145.000
warrants over ordinary shares in Arcona plus ~€1 million in cash, while closing will likely be dependent on SPDI shareholder approval.
Final figures are subject to, inter alia, standard form adjustment and finalization in accordance with the agreements.
b) Monaco Towers SPV exits insolvency status
During 2021 following full re-payment of its loan, SecMon Real Estate srl, the entity that owns Monaco Towers asset and was into
insolvency status since 2019, has initiated the process of exiting insolvency and re-gaining full control over the remaining five
apartment units of the asset. The exiting process is expected to be completed in the following period and upon completion the
remaining units can be effectively sold by the Group.
c)
Strike off process for Cypriot entities of the Group
Following recent disposals, the Group initiated in 2021 a strike off process for six holdings companies in Cyprus which have been left
without any direct participation or other asset. The process is expected to be finalised during Q3 2021 and will lead to substantial
reduction of Group’s administration costs. At the same time Group’s business plan provides for four additional entities to follow shortly
when certain conditions related to their activities are met.
d)
Pre-agreement for the sale of Kindergarten asset
On 31 March 2021, SPDI, honoring certain commitment made in the past with one of its partners in GreenLake project, proceeded to
signing a pre-agreement for the sale of its 50% stake in SPDI Real Estate srl, the company which owns the Kindergarten asset in
GreenLake, Bucharest. The consideration of the transaction has been set at €175.000 and the agreement is conditional on effective
payment of the price by the buyer until 31/12/2021.
e) Purchase of additional stake in Plt R, Greenlake
During Q1 2021 the Group proceeded to the purchase of an additional 26,32% stake in Rimasol Ltd, which through Rimasol srl owns
Plot R in GreenLake, part of Second Phase of the overall project. With this purchase the total stake of the Group in this particular plot
increased to 70,56%. The asset is a plot of 3 777 sq m situated in the perimeter of GreenLake residential development, and currently
there are ongoing discussions with an interesting party for its co-development. The value of the transaction reached €200.000 and
settled through the elimination of equal dues of the seller to the Group.
CONSOLIDATED FINANCIAL STATEMENTS 2020|91