ANNUAL REPORT
2021
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 2022 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
5.2 Delenco office building, Romania
5.3 Innovations Logistics Park, Romania
5.4 Kindergarten, Romania
5.5 Residential portfolio
Monaco Towers, Bucharest, Romania
Blooming House, Bucharest, Romania
GreenLake, Bucharest, Romania
5.6 Land Assets
Kiyanovskiy Residence – Kiev, Ukraine
Tsymlyanskiy Residence – Kiev, Ukraine
Rozny Lane – Kiev Oblast, Kiev, Ukraine
SECTION B- Financial Statements
SECURE PROPERTY DEVELOPMENT AND INVESTMENT PLC
KIRIAKOU MATSI 16, AG. OMOLOGITES,1082, NICOSIA,CYPRUS
4
5
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8
11
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12
13
13
14
15
15
16
16
17
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18
18
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ANNUAL REPORT 2021| 2
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC
Key Figures
31 Dec 2021
31 Dec 2020
Change
Total Assets (€million):
Number of income producing
commercial Properties:
53
4
56
4
-4%
-
Average occupancy rate of
91%
94%
-3%
income producing assets:
Operational Gearing:
31%
33%
-7%
Average borrowing cost:
5,1
4,0%
27%
Operating Income*(€million):
2,6
2,1
25%
EBITDA*(€million):
0,8
-0,2
nm
Net Equity**(€million):
23,2
23,7
-2%
Issued Shares:
129.191.442
129.191.442
NAV per share (€):
0,18
0,18
-
-
* Excluding fair value related impact (Table 1).
** Attributable to the shareholders.
This report may contain forward-looking statements about the Company. Such statements are predictive in nature and depend upon or refer to future
events or conditions and may include such words as ‘‘expects’’, ‘‘plans’’, ‘‘anticipates’’, ‘‘believes’’, ‘‘estimates’’ or other similar expressions. In addition, any
statement regarding future performances, strategies, prospects, actions or plans is also a forward-looking statement. Forward-looking statements are subject
to known and unknown risks and uncertainties and other factors that may cause actual results, events, activities and achievements to differ materially from
those expressed or implied by such statements. Such factors include general economic, political and market conditions, interest and foreign exchange rates,
regulatory or judicial proceedings, technological change and catastrophic events. You should consider these and other factors carefully before making any
investment decisions and before relying on forward-looking statements.
ANNUAL REPORT 2021| 3
1.
Letter to Shareholders
28 June 2022
2021 was the second year straight that our world, our continent and our business experienced the impacts
of COVID-19. Despite the vaccines being available for much of the year, lockdowns were frequent and
fatalities increased. Consequently, our effort to complete the merger with the Amsterdam and Prague listed
Arcona Property Fund N.V. (‘APF’ - with assets in Poland, Czech Republic and Slovakia) took more time
than expected. With the start of the year bringing improvements on the health front, the process picked
up pace and is now progressing meeting SPDI’s strategic objectives to create a regional property platform
of reference in South Eastern Europe by offering exposure to our shareholders to a much larger and broader
East European regional property company.
The Romanian part of Stage 2, which in whole involves the transfer of the remaining Ukraine assets and
the Romanian portfolio to APF, closed within H1 2022. Obviously, completing the Ukraine part of Stage 2
has taken second stage to ensuring the life and wellbeing of our Ukrainian executives and their families,
all of which we are happy to report are safe. We hope the unnecessary military conflict in Ukraine with the
untold catastrophes in the country’s population, society and infrastructure, as well as the substantial
consequences to our continent’s present and future, will end soon. As such the Ukrainian component may
take longer, but APF, in which we now own ~25% and have our chairman as one of the four supervisory
board members, is committed to meeting its obligations. With our directors, consequently broadening their
scope of interest to include the future good management of APF, as per their fiduciary responsibility to our
shareholders, management’s focus has shifted towards monetising the remaining SPDI assets that are not
part of the APF deal and settling any remaining liabilities, while reducing operating expenses to a minimum
(including management and directors fees).
2022 is expected to be the last year of SPDI operations as we know them with its net assets turned into
APF shares and cash, within the year or soon after, and opex being reduced to mostly listing and legal
related costs. When such APF shares and cash are distributed to our shareholders they will be able to either
monetise their investment by selling them or retain them and follow APF’s growth into a dividend issuing
pan-East Europe property company, the preferred way of safeguarding their investment value together
with having the option of further value generation. Management and directors of SPDI are committed to
see a swift conclusion of the transaction, so that they will ensure the transformation of our Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
ANNUAL REPORT 2021| 4
2.
Management Report
2.1 Corporate Overview & Financial Performance
SPDI’s core property asset portfolio consists of South Eastern European prime commercial and
Summary
Corporate
developments
industrial real estate, the majority of which is let to blue chip tenants on long leases. During 2021,
management in line with the 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 originally held high
yielding real estate investments in Czech Republic, Poland and Slovakia, with the transaction valuing
the SPDI NAV at ~ €29m, significantly higher than the current market value of the Company as a
whole.
The combination of two complementary asset portfolios is expected to create a significant European
property company, benefiting both the Company’s and Arcona’s respective shareholders.
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 593.534 Arcona shares and 144.084 warrants over Arcona shares, in June 2021, the two parties
signed SPA agreements for Stage 2 of the Arcona transaction. This stage involves the transfer of the
EOS and Delenco assets in Romania and the Kiyanovskiy and Rozny land plots in Ukraine with a total
net asset value of €8,2 million, in exchange for approximately 560.000 new ordinary shares in Arcona
and approximately 135.000 warrants over shares in Arcona, as well as €1m in cash, subject to, inter
alia, standard form adjustment and finalisation in accordance with the relevant agreements.
However, the rapid development of COVID-19 affected during the second half of 2021, all related
countries and therefore all participants in this process, causing major delays.
Finally, in March and June 2022 the parties signed the closing documents of the transactions regarding
the Delenco and the EOS assets in Romania, and in particular the transfer of a 24,4% stake in Delenco
in exchange for the issue to SPDI of 362.688 new shares in Arcona and 87.418 warrants over shares
in Arcona, as well as a 100% stake in EOS in exchange for the issue to SPDI of 116.688 new shares
in Arcona and 28.125 warrants over shares in Arcona.
The invasion of Ukraine by Russia during February 2022, suspended the transfer process of the
relevant Ukrainian assets included in Stage 2 of the Transaction. Any development of such process is
expected to take place in the future upon normalization of current conditions.
Moreover, the war in Ukraine has also affected our standard local business. In particular, despite
submitting the official request to the City of Kiev to extend the lease of Tsymlyanskiy for another 5
years last November (as we have first extension rights over any other interested party) we have not
ANNUAL REPORT 2021| 5
managed to get an official approval yet. The first step in the process whereby the presiding committee
of the municipality, before the final approval by the City Council, did not place as too many other
cases had accumulated which had time priority over our case. During the period between 15 December
2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of the committee and the City
Council unfortunately were on issues not related to property lease extensions, but rather more
pressing matters for the interests and operational stability of the City of Kiev. From there on, all
decisions have been put on hold due to the Russian invasion of Ukraine. However, management
remains confident that the Company will be awarded the lease extension once the war status permits.
Regarding the economic environment in which the Company operates, the Romanian economy which
constitutes the main operating market of the Company, grew by 5,9% in 2021 following the downturn
in 2020 due to the pandemic. Consumer spending has remained robust, but lost momentum on the
back of lower pent-up demand and price increases. Inflation has surged, far above the central bank
target band, mainly driven by sharp increases in food and energy prices. Labour market conditions
improved, with the number of registered unemployed moving towards to its pre-pandemic level. Real
estate investment volume picked up, with office assets representing 43% of the annual volume, while
industrial projects attracted 30% and retail 21%.
Romanian
economic
developments
Total operating income increased by 25% during 2021 to €2,6m as a result of the increased sales of
residential units throughout the period, leading to an increase of net operating income of 14% to
Financial
performance
€1,9m.
Overall, the administration costs, adjusted by the one-off costs associated with the transaction with
Arcona, the legal costs for the acceptance by Euroclear of the new custodian as a result of Brexit, and
ad-hoc previous periods’ and re-financing costs, decreased by 5%, while at the same time profit
realized from associates and dividends income increased further recurring EBITDA to €0,82m from
losses €0,2m in 2020.
ANNUAL REPORT 2021| 6
Table 1
As a result, operating results after finance and tax for the year reached €0,14m as compared to losses
of €1,0m in 2020.
ANNUAL REPORT 2021| 7
Property
Assets
Commercial
Land &
Residential
Property
Asset
Valuations
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial income producing and residential
properties in Romania, as well as land plots in Ukraine and Romania.
Commercial Property
EOS Business Park
Location
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
65%
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)
Monaco, Blooming,
GreenLake
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 2021:
Available units (end 2021):
6
4
420
40
22
11
*As of November 2021, the Company had submitted an official request to the City of Kiev to
extend the lease of the property for another 5 years (since it has first extension rights over any
other interested party). The first step in the process whereby the presiding committee of the
municipality, before the final approval by the City Council, did not place as too many other cases
had accumulated which had time priority over our case. During the period between 15 December
2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of the committee and the City
Council unfortunately were on issues not related to property lease extensions, but rather more
pressing matters for the interests and operational stability of the City of Kiev. From there on, all
decisions have been put on hold due to the Ukrainian invasion by Russia. Management remains
confident that the Company will be awarded the lease extension once the war status permits.
In 2021, 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
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).
ANNUAL REPORT 2021| 8
Following disposals of previous periods, SPDI’s portfolio has became more concentrated in terms
of geography. At the end of the reporting period, Romania is the prime country of operations
(88%) in terms of Gross Asset Value, while in Ukraine (12%) the Company still has interests in
land plots.
In respect of the Company’s income generation capacity, Romania has become 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
ANNUAL REPORT 2021| 9
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 31/12/2021 (Share price at £0,0725)
Market Cap in EUR as at 16/06/2022 (Share price at £0,0625)
Discount of Market Cap in EUR at 16/06/2022 vs NAV at 31/12/2021
* Reflects the Company’s participation at each asset
**Refer to balance sheet and related notes of the financial statements
GAV*
9,7
6,7
5,1
0,7
0,4
6,6
29,2
2021
€m Debt *
6,5
3,5
0
0,3
0
3,8
14,1
NAV
3,2
3,2
5,1
0,4
0,4
3,1
15,1
+8,1
23,2
11,1
9,4
-60%
The Net Equity attributable to the shareholders as at 31 December 2021 stood at ~€23,2m vs
~€23,7m in 2020. The table below depicts the discount of Market Share Price over NAV since
2012.
to Net Asset
Value
Net Equity
The NAV per share as at 31 December 2021 stood at GBP 0,15 and the discount of the Market
Value vis a vis the Company’s NAV denominated in GBP stands at 52% at year-end.
Net Asset
Value per
share
ANNUAL REPORT 2021| 10
2.3 Financial and Risk Management
The Group’s overall bank debt exposure at the end of the reporting period was
~€14,06m (calculating relative to the Company’s percentage shareholding in each),
Leverage
comprising the following:
a) €3,5m debt financing of EOS Business Park with Patria Bank Romania.
b) €6,5m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
c) €0,26m being the Company’s portion of debt financing of Kindergarten with
Eurobank Ergasias.
d) €3,8m being the Company’s portion of land plot related debt financing in Romania.
Throughout 2021, the Company focused on managing and preserving liquidity through
cash flow optimisation. In this context, Management secured a) collection of scheduled
re-payments of loans provided to third parties, b) continuous sale of residential assets
and c) advancement of discussions related to the transaction with Arcona Property
Liquidity
Management-
Cash Flow Risk
Arcona
transaction
Fund N.V. which partially materialised in 2022.
2.4 2022 and beyond
2022 is expected to be the period in which the Company will change completely, with
all its assets expected to be sold. Consequently its main operations will be minimised,
subject to constraints brought by the pandemic and the current war situation. Despite
such constraints, Management is working, along the guidance of the board for the
closing of the transaction with Arcona Property Fund N.V., which will mark effectively
the maximisation of Company’s value and will give our shareholders the opportunity to
gain direct exposure to an entity of considerably larger size, with a dividend distribution
policy, and active in a more diversified and faster growing region (Central and South
Eastern Europe) of the European property market.
Having already completed during 2022 the transfers of Delenco and EOS assets in
Romania, the Management is currently working towards completion of the remaining
parts of the transaction, monitoring closely any developments in Ukraine, as well as
with all other open issues which if resolved will effectively result in the Company having
as assets only Arcona shares and cash.
ANNUAL REPORT 2021| 11
3.
Regional Economic Developments 1
After a strong recovery in the first half of 2021, economic activity in Romania has been
Romania
cooling as a result of the fourth COVID-19 wave. Supply-chain disruptions have
dampened manufacturing activity while the rapid growth of coronavirus infections has
damaged confidence. Overall the economy grew by 5,9% in 2021 with the agricultural
sector leading with a 13,5% growth, following its steep drop in 2020. The industrial
sector following saw a 5% growth, while the construction sector contracted by 1,7%.
Unemployment rate is estimated lower at 5,6%, while inflation increased as a result
of price increases mainly in foods and energy, at 4,1% with an increasing trend.
Assuming the pandemic remains under control, economic growth in 2022 is projected
to decelerate as a result of the Russia-Ukraine war. The current energy crisis is
expected to lead to further increases in prices, leading in turn to an almost 20-year
high inflation level, affecting household consumption. At the same time and for the
same reasons, private investment activity is expected to drop, however, EU-backed
investments should provide some counterbalance, provided that absorption of EU
funds will remain successful.
Romania
GDP (EUR bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data
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
2020
218,2
19,3
-3,7
2,3
6,1
2021f
231,4
19,2
5,9
4,1
5,6
In 2021, Ukraine’s economy grew by 3,4% due to the easing of COVID-19 restrictions
which supported domestic demand, while at the same time a bigger harvest offset
Ukraine
effectively the drags of higher global energy prices. Inflation rate showed incremental
trends and was estimated at 10% at year end, similarly the unemployment rate which
closed at 10,6%, leading the National Bank of Ukraine to increase interest rates to
9% by the end of the year. Public sector financial needs are expected to grow due to
increases in minimum wages and social transfers, limiting space for public investment,
and fueling further inflationary pressures in a supply-constrained economy.
Following the invasion of Ukraine by Russia in February 2022, Ukraine’s economy is
expected to shrink by an estimated 45% this year, although the magnitude of the
contraction will depend on the duration and intensity of the ongoing war. The Russian
invasion is delivering a massive blow to Ukraine’s economy and it has caused
1 Sources: World Bank Group, Eurostat, EBRD, National Institute of Statistics- Romania, National Institute of Statistics –
Ukraine, IMF, European Commission.
ANNUAL REPORT 2021| 12
enormous damage to country’s infrastructure, so that the country is in need of
immediate financial support in order to keep its economy going and the government
providing aid to the population who face an extreme situation.
Ukraine
GDP (USD bn)
Population (mn)
Real GDP (y-o-y %)
CPI (average, y-o-y %)
Unemployment rate (%)
Macroeconomic data
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
2,4
13,7
9,5
2018
130,9
42,0
3,3
9,8
8,8
2019
154,7
41,9
3,2
4,1
8,2
2020
155,6
41,5
-3,8
5,0
8,9
2021f
160,0
41,4
3,4
10,0
10,6
_____________________________
1 Sources: World Bank Group, Eurostat, EBRD, National Institute of Statistics- Romania, National Institute
of Statistics – Ukraine, IMF, European Commission.
4.
Real Estate Market Developments2
4.1 Romania
Total real esate investment volume in Romania, in 2021 reached Euro 910 million,
General
representing a 10% y-o-y increase. Despite the pandemic, the investment volume
reached in 2021 is one of the highest in the past 10 years, proving the attractivenesss
of Romanian assets. The office segment represented 43% of the annual volume,
followed by logistics/ industrial sector (30%) and retail (21%). Bucharest secured
c.60% of country’s investment volume, driven mainly by office transactions. In
contrast, logistics/ industrial parks accounted for 60-65% of regional cities
transactions.
Compression across all sectors is the trend that describes yields in Romania during
2021. Prime office yields dropped to 6,75%, while industrials reached 7,5%, and retail
7%. Foreign investors represent 91% of total investment volume, with the remaining
9% attributed to local investors from 6% in 2020.
With c.600.000 sq m delivered during 2021, the total modern industrial/ logistics stock
reached c.5,8 million sq m. Almost 66% of the new deliveries were in Bucharest area,
being by far the largest consumer market in the country. The total take-up reached
860.000 sq m, from which c.21% consists of prolongations and renegotiations.
Logistics/ Distribution sector accounted for 34% of annual take-up, followed by
Manufacturing/ Industrial (26%) and Retail (19%). Pipeline consists of c.650.000 sq
m deliverable in 2022 which would elevate the total stock to 6,5 million sq m. Such
Logistics
Market
2 Sources : Eurobank, CBRE Research, Colliers International, Cushman & Wakefield, Crosspoint Real Estate, Knight Frank, Coldwell
Banker Research, National Institute of Statistics- Romania, State Statistics Service-Ukraine, NAI Real Act
ANNUAL REPORT 2021| 13
deliverables are related mostly to regional cities, as only 45% represent projects in
Bucharest, with Timisoara, Oradea, Cluj, Brasov and Arad to account for a total share
of c.44% of the pipeline. The vacancy rates showed a decreasing trend, estimated at
4,9% at the national level and 5,2% at the Bucharest level.
It is estimated that over 270.000 sq m in 13 buildings were completed in 2021, which
Office Market
is the largest office supply delivered in the past 5 years. Modern office stock stands at
c.3,5 million sq m, from which 72% are considered as Class A. The largest supply in
2021 was completed in Central West Bucharest submarket (27%), North Bucharest
(25%) and Central Bucharest (22%). Current pipeline includes office deliverables of
c.150.000 sq m in 2022 and another c.93.000 sq m in 2023, with the majority to be
located in Central and Central-West Bucharest submarkets. On the other hand, annual
total leasing activity in 2021 reached c.297.000 sq m, from which renewals accounted
for 38% of the annual activity and pre-leases for 17%. Leasing activity was 70% driven
by Hi-tech/ Computers, Medical & Pharma and Professional Services sectors.
Residential
Market
In 2021, c.183.000 residential units were sold at a national level, registering an
increase of 50% compared to previous year, and constituting 2021 as the most active
year in terms of residential sales. Approximately 30% of total sales transacted in
Bucharest. At the end of the year, the average selling prices in Bucharest stood at
1.620 Euros per sq m, reflecting a 13,7% year-on-year increase. Part of that increase
came from the newer stock and is directly attributed to the increased construction
costs and material prices. Regarding new supply, it is estimated that during the first 9
months of the year, 14.600 units were completed in Bucharest, a number similar to
the total number completed in 2020 and almost 50% higher than that of 2019. The
introduction of the Consumer Credit Reference Index (IRCC) for consumer loans in
Romania, has not affected demand which is expected to continue to be strong.
4.2 Ukraine
Real estate investment in Ukraine during 2021 continued to be weak on the back of
the COVID-19 pandemic impact, tensions with Russia, and lack of financing. The only
General
exception is the residential market, which during the first nine monts of the year, and
before the climax of the tensions with Russia, showed signs of recovery. During that
period, demand was reported to be stronger, despite slowing construction activity,
ANNUAL REPORT 2021| 14
while property prices, as well as land values and rents, were rising. Existing unit prices
in Kiev rose by +5%, to an average of $1.090 per sq m.
The demand for land plots started increasing in 2016, especially for those suitable for
Land Market
commercial development, a trend which stopped in 2020 mainly due to the effects of
COVID-19 pandemic. During the first half of 2021 land values increased significantly,
a trend that stopped with the increasing tension with Russia. During that period, in
the Kiev region, land values increased by 12,4% compared to previous year, while in
the Odessa region the relevant increase was 13,4%.
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 to Danone
Current status
Romania, the French multinational food company, until 2025. The asset was sold in June 2022
as part of Stage 2 of the Arcona transaction.
ANNUAL REPORT 2021| 15
5.2 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of two underground levels, a
ground floor and ten above-ground floors. The building is strategically located in the very center
of Bucharest, close to three main squares of the city: Unirii, Alba Iulia and Muncii, only 300m
Property
description
from the metro station.
The Company acquired 24,35% of the property in May 2015. As at the end 2021, the building
Current status
is 99% let, with ANCOM (the Romanian Telecommunications Regulator) being the anchor
tenant (81% of GLA). The stake in the asset was sold in March and June 2022 as part of Stage
2 of the Arcona transaction.
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
As at the year end the terminal was 65% leased, while currently is 73,5% leased. Anchor
Current status
tenant with 46% is Favorit Business Srl, a large Romanian logistics operator, which
accommodates in the terminal their new business line which involves as end user Carrefour.
Following recent relevant agreement, Favorit’s leases extended until 2026. In 2019, the
Company also signed short term lease agreements for ambient storage space with Chipita
Romania Srl, one of the fastest growing regional food companies. The asset is planned to be
part of Stage 3 of the Arcona transaction.
ANNUAL REPORT 2021| 16
5.4 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake, a standalone building on
ground and first floor, is used as a nursery by one of the Bucharest’s leading private schools.
Property
description
The building is erected on 1.428.59 sqm plot with
a total gross area of 1.198 sqm.
The property is 100% leased to International School for Primary Education until 2032.
Current status
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)
Property
description
reachable within a short driving distance or easily accessible by subway.
Following extended negotiations for two years with the
Current status
company which acquired Monaco’s loan, the SPV
holding Monaco units, in 2019, entered into insolvency
status in order to protect itself from its creditors. During
2020 the relevant loan has been fully re-paid and in
2021 the SPV exited insolvency status and proceeded to
the sale of all 5 remaining units.
Blooming House, Bucharest, Romania
Blooming House is a residential development project located in Bucharest, Sector 3, a
residential area with the biggest development and property value growth in Bucharest, offering
a number of supporting facilities such as access to Vitan Mall, kindergartens, café, schools and
Property
description
public transportation (both bus and tram).
During 2021 the last unit of the project was sold. Current status
ANNUAL REPORT 2021| 17
GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of apartments and villas, situated
on the banks of Grivita Lake, in the northern part of the Romanian capital – the only residential
property in Bucharest with a 200 meters frontage to a lake. The compound also includes
facilities such as one of Bucharest’s leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally GreenLake includes land
plots totaling 40.360 sqm. SPDI owns ~43% of this property asset portfolio.
Property
description
During 2021, 16 apartments and villas were sold while at the end of the year 11 units remained
Current status
unsold. The asset is planned to be part of Stage 3 of the Arcona transaction.
5.6 Land Assets
Kiyanovskiy Residence – Kiev, Ukraine
The property consists of 0,55 Ha of freehold and leasehold 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 the relevant SPA for its disposal has
Current status
already been signed in June 2021 while closing has been postponed due to the invasion of
Ukraine by Russia.
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 SPV which leases the plot, with a local co-investor owning the
Property
description
remaining 45%.
The extension of the lease, originally expected during 2021, was delayed and currently is on
Current status
hold due to the invasion of Ukraine by Russia. The asset is planned to be part of Stage 3 of
the Arcona transaction.
ANNUAL REPORT 2021| 18
Rozny Lane – Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be developed as a residential complex.
Following a protracted legal battle, it has been registered under the Company pursuant to a
Property
description
legal decision in July 2015.
The asset is part of Stage 2 of the Arcona transaction and relevant SPA for its disposal has
Current status
already been signed in June 2021 while closing has been postponed due to the invasion of
Ukraine by Russia.
ANNUAL REPORT 2021| 19
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2021
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
22
23
24
25-27
28-31
32
33
34
35
36-92
CONSOLIDATED FINANCIAL STATEMENTS 2021| 21
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 2021| 22
Chairman’s Statement
During the year in which the impacts of the global pandemic, which in 2020 affected life, health and businesses alike, was subsiding,
and business was supposed to return to pre-pandemic levels, the military conflict in Ukraine created yet another global crisis. More
specifically for SPDI, the crisis is on its doorsteps. Having said that we are happy that our people, executives and service providers
alike, are safe. This succession of crises delayed even further our efforts to “merge” with Arcona Property Fund (“APF”), the Central
European property fund listed in Amsterdam, yet recently we took the next step closing Stage 2 of the transaction. 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 2021| 23
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 2021, 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 2021:
Theofanis Antoniou
CONSOLIDATED FINANCIAL STATEMENTS 2021| 24
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 2021.
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 has been proceeding since 2019, with 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 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, in 2019 the Company completed Stage 1 of the transaction with Arcona, involving the sale
of Bela and Balabino land plots in Ukraine, and the Boyana asset in Bulgaria, receiving from these sales a total of 593.534 Arcona
shares and 144.084 warrants over shares in Arcona. Moreover in June 2021 the Company signed with Arcona relevant SPAs for the
transfer of assets included in Stage 2 of the transaction which includes two office properties in Bucharest, Romania (Delenco, EOS),
and two land plots in Ukraine. In March and June 2022 the parties signed the closing documents of the transaction regarding the
Delenco and EOS assets in Romania in exchange for the issue to SPDI of 479.376 new shares in Arcona and 115.543 warrants over
shares in Arcona.
Closing of the transactions regarding the Ukrainian assets has been on hold after the Russian invasion of Ukraine. Although the buyer
is committed to meet its relevant obligations, the effective closing of these transactions is expected to take longer. Obviously, the
associated risk has increased dramatically, and inevitably successful completion of Stage 2 is closely dependent on how conflict will
be resolved.
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 the 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.
However, as long as the pandemic continues to create instability, affecting business activity in the countries the Company operates
in, it is possible associated problems will 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 negatively affected real estate investment activity,
and therefore relevant property values.
Moreover the current conflict between Ukraine and Russia, on top of the huge humanitarian and economic problems that it has
brought in Ukraine, has also harmed confidence and economic sentiment in the whole region (including Romania), something which
eventually might lead to destabilization of the associated economies, minimization of foreign investment volumes, and negative
impacts on real estate markets. However, we should note at this point that negative impact from any inflationary trends is minimized
through the indexation clauses included in Group’s lease agreements.
Results and Dividends
The Group's results for the year are set out on page 32. No dividends were declared during the year.
Share Capital
Authorised share capital
The authorized 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 28.3).
CONSOLIDATED FINANCIAL STATEMENTS 2021| 25
MANAGEMENT REPORT
Issued share capital
As at the end of 2021, the issued share capital of the Company was as follows:
a) 129.191.442 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 28.3) 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 40.3). 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 28.3)
Board of Directors
The members of the Company's Board of Directors as at 31 December 2021 and at the date of this report are presented on page 22.
All Directors were members of the Board throughout the year ended 31 December 2021.
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 from H2 2019 onwards will be paid in cash. Annual fees for non-executive members of the Board
have been set at GBP 129k.
The remuneration of the senior management is described in Note 12 and Note 39.1.2.
CONSOLIDATED FINANCIAL STATEMENTS 2021| 26
MANAGEMENT REPORT
Directors and Management Holdings in the Company
The table below presents Directors and Management direct shareholding in the Company as at the date of issuance of this report:
Name
Michael Petros Beys
Ian Domaille *
Antonios Kaffas
Harin Thaker
Lambros Anagnostopoulos
Theofanis Antoniou
George Dopoulos
Position
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Director and CEO
CFO
Commercial Director
Amount of Shares held
479.976
814.988
343.832
297.192
1.001.092
107.333
117.952
*includes a number of 83.196 shares as non-beneficial owner
Events after the end of the reporting period
The significant events that occurred after the end of the reporting period are described in Note 43 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 2022, 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 2021| 27
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
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 32 to 92 and comprise the consolidated
statement of financial position as at 31 December 2021, and the consolidated statements of comprehensive income,
changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including
a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the consolidated financial position of
the Group as at 31 December 2021, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the ''Auditor's Responsibilities for the Audit of the Consolidated Financial Statements''
section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for
Accountants' 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 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
2021 these are carried at a value of €31.554.991. 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 40 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 Moisis Aristidou.
Moisis Aristidou
Certified Public Accountant and Registered Auditor
for and on behalf of
Baker Tilly Klitou
Certified Public Accountants and Registered Auditors
Corner C. Hatzopoulou and 30 Griva Digheni Avenue
1066 Nicosia, Cyprus
Nicosia, 29 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 2021
Note
2021
€
Continued Operations
Income
Net Operating Income
Administration expenses
Gain/(Loss) on disposal of subsidiary
Fair Value gain/(loss) on Financial Assets at FV through P&L
Other operating income/ (expenses), net
Operating profit / (loss)
Finance income
Finance costs
10
12
20
26
15
16
16
1.047.137
1.047.137
(1.798.293)
748
683.478
69.643
2020
€
795.700
795.700
(1.701.180)
-
(824.634)
191.222
2.713
(1.538.892)
489.072
(190.409)
503.527
(274.751)
Profit / (Loss) before tax and foreign exchange differences
301.376
(1.310.116)
Foreign exchange loss, net
Profit/(Loss) before tax
Income tax expense
Profit/(Loss) for the year from continuing operations
Loss from discontinued operations
Profit/ (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
Profit/ (Loss) for the year from continued operations attributable to:
Owners of the parent
Non-controlling interests
Profit/ (Loss) for the year from discontinued operations attributable to:
Owners of the parent
Non-controlling interests
Profit/ (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
37b
37b
37c
37c
The notes on pages 36 to 92 form an integral part of these consolidated financial statements.
17a
(65.147)
(60.142)
18
9b
17b
29
236.229
(1.370.258)
(51.824)
(117.656)
184.405
(1.487.914)
(881.174)
(4.262.592)
(696.769)
(5.750.506)
-
64.299
(632.470)
(61.936)
(1.392.155)
(7.204.597)
184.405
-
184.405
(1.487.914)
-
(1.487.914)
(659.215)
(221.959)
(881.174)
(474.810)
(221.959)
(696.769)
(459.449)
(173.021)
(632.470)
(0,00)
(0,00)
(0,00)
(0,00)
(2.851.952)
(1.410.640)
(4.262.592)
(4.339.866)
(1.410.640)
(5.750.506)
(7.115.161)
(89.436)
(7.204.597)
(0,03)
(0,03)
(0,02)
(0,02)
CONSOLIDATED FINANCIAL STATEMENTS 2021|32
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2021
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
26
25
27
9d
28
29
39.3
30
31
32
35
31
32
33
35
9d
2021
€
2020
€
1.628
824
7.470.722
2.859
836
6.787.244
7.473.174
6.790.939
4.510.381
2.160.576
6.670.957
39.011.516
6.880.076
129.859
7.009.935
41.791.409
53.155.647
55.592.283
1.291.281
72.107.265
8.969.787
(211.199)
(58.903.610)
23.253.524
1.291.281
72.107.265
8.954.426
(211.199)
(58.428.800)
23.712.973
5.748.132
5.921.153
29.001.656
29.634.126
126.066
1.033.842
627.130
1.787.038
1.577.500
293.214
4.396.123
256.437
95.977
1.033.842
663.062
1.792.881
2.054.400
225.081
4.036.962
620.365
6.523.274
6.936.808
15.843.679
22.366.953
24.153.991
17.228.468
24.165.276
25.958.157
53.155.647
55.592.283
Net Asset Value (NAV) € per share:
37d
Basic NAV attributable to equity holders of the parent
Diluted NAV attributable to equity holders of the parent
0,18
0,18
0,18
0,18
On 28 June 2022 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 36 to 92 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2021|33
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
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 2019
Loss for the year
Exchange difference on I/C loans to foreign
holdings (Note 17b)
Foreign currency translation reserve
Balance - 31 December 2020
Loss for the year
Foreign currency translation reserve
Balance - 31 December 2021
1.291.281
-
72.107.265
-
(54.088.934)
(4.339.866)
(149.263) 10.232.119
-
-
29.392.468
(4.339.866)
7.446.255
(1.410.640)
36.838.723
(5.750.506)
-
-
1.291.281
-
-
1.291.281
-
-
72.107.265
-
-
72.107.265
-
-
(58.428.800)
(474.810)
-
(58.903.610)
(61.936)
-
(211.199)
-
-
(211.199)
-
(1.277.693)
8.954.426
-
15.361
8.969.787
(61.936)
(1.277.693)
23.712.973
(474.810)
15.361
23.253.524
-
(114.462)
5.921.153
(221.959)
48.938
5.748.132
(61.936)
(1.392.155)
29.634.126
(696.769)
64.299
29.001.656
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 39.3).
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 36 to 92 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2021|34
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Note
2021
€
2020
€
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(Loss) before tax and non-controlling interests-continued operations
Profit/(Loss) before tax and non-controlling interests-discontinued operations
Profit/(Loss) before tax and non-controlling interests
Adjustments for:
(Gain)/Loss on revaluation of investment property
Net loss on disposal of investment property
Fair Value (gain)/loss on Financial Assets at FV through P&L
(Reversal) /Impairment of prepayments and other current assets
Accounts payable written off
Depreciation/ Amortization charge
Interest income
Interest expense
Share of profit from associates
Gain 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
Increase/(Decrease) in long term receivables
Repayment of principal and 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
26
15
15
12
16
16
21
20
17a
25
33
25
35
35
34
14.1
21
24
25
31
31
36
27
27
236.229
(813.846)
(577.617)
(1.370.258)
(4.218.205)
(5.588.463)
754.979
(653.567)
(683.478)
5.932
(18.536)
2.101
(498.438)
1.044.296
(344.746)
(748)
318.813
3.495.700
(281.886)
824.634
(16.035)
(253.957)
4.883
(512.919)
1.071.822
179.775
-
379.067
(651.009)
(697.379)
(61.750)
(486.081)
(17.181)
28.954
18.580
-
(104.272)
(687.428)
(87.279)
6.080
136.512
(3.038)
(1.168.487)
(1.436.804)
(515.938)
(206.194)
(1.684.425)
(1.642.998)
3.245.322
183.583
(18.251)
2.289.683
5.700.337
2.427.184
242.403
(281)
240.000
2.909.306
3.500.000
(2.538.099)
(117.032)
(3.176.182)
(2.331.313)
1.729.400
(2.083.700)
(386.545)
(392.441)
(1.133.286)
1.684.599
133.022
870.647
737.625
2.555.246
870.647
The notes on pages 36 to 92 form an integral part of these consolidated financial statements.
CONSOLIDATED FINANCIAL STATEMENTS 2021|35
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
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 2021, the companies of the Group employed and/or used the services of 15 full time equivalent people, (2020 15 full
time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial statements have been
prepared under the historical cost as modified by the revaluation of investment property and investment property under construction, of
financial assets at fair value through other comprehensive income and of financial assets at fair value through profit and loss.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires
Management to exercise its judgment in the process of applying the Company's accounting policies. It also requires the use of assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on
Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.
Following certain conditional agreement signed in December 2018 with Arcona Property Fund N.V for the sale of Company’s non-Greek
portfolio of assets, the Company classifies its assets since 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 some 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 significant
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 2021. This adoption did not have a material effect on the
accounting policies of the Company.
CONSOLIDATED FINANCIAL STATEMENTS 2021|36
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,
and Ukraine 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 2021|37
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
2021
1,1827
32,3009
4,9204
4.3 Discontinued operations
Average
31 December
2020
1,1422
30,8013
4,8371
2021
1,1326
30,9226
4,9481
2020
1,2270
34,7396
4,8694
2019
1,1234
26,422
4,7793
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 2021|38
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 2021:
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 2021|39
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 2021|40
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.
4.5 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.
4.6 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.
Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its
recoverable amount.
CONSOLIDATED FINANCIAL STATEMENTS 2021|41
4. Significant accounting policies (continued)
4.6 Property, Plant and equipment and intangible assets (continued)
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.
4.7 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.
4.8 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.
4.9 Financial Instruments
4.9.1 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.
4.9.2 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 2021|42
4. Significant accounting policies (continued)
4.9 Financial Instruments (continued)
4.9.2 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 2021|43
4. Significant accounting policies (continued)
4.9 Financial Instruments (continued)
4.9.3 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.
4.9.4 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.
4.9.5 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 2021|44
4. Significant accounting policies (continued)
4.9 Financial Instruments (continued)
4.9.5 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.
4.10 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:
ly 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;
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:
of use; and
t 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 2021|45
4. Significant accounting policies (continued)
4.10 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:
tdate;
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.
4.11 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 2021|46
4. Significant accounting policies (continued)
4.12 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.
4.13 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.
4.14 Share Capital
Ordinary shares are classified as equity.
4.15 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.
4.16 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.
4.17 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 2021|47
4. Significant accounting policies (continued)
4.18 Non-current liabilities
Non-current liabilities represent amounts that are due in more than twelve months from the reporting date.
4.19 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.
4.20 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized on an accrual basis.
4.21 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.
4.22 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.
4.23 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 2021|48
4. Significant accounting policies (continued)
4.24 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
4.24.1 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.
4.24.2 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.
4.24.3 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.
4.24.4 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.
4.24.5 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.
4.25 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 2021|49
4. Significant accounting policies (continued)
4.26 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.
4.27 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.
4.28 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:
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 2021|50
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 2021
(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 2021|51
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’s economy grew by 3,4% in 2021 driven by increased domestic demand. Inflation picked up to 10% by year end leading National
Bank to increase interest rates to 9% by the end of the same period. Unemplyment showed incremental trends to 10,6% as minimum wages
and social contributions increased during the year.
All these have no real use by the time Russia invaded in Ukraine in February 2022. Currently the political and economic risks associated with
Company’s activities in the country have increased dramatically and any relevant assessment for the future is impossible to be made.
The Company owns land plots in Ukraine, either in Kiev or close to the capital, reported at time of publishing still under Ukrainian control.
The plots do not generate income and therefore the cash flow of the Group is not affected by the invasion.
On the other hand, starting from 2022 interim consolidated accounts, the assets will be revalued affecting the net asset value of the Group.
At the end of the current reporting period Ukrainian assets contribute €3,6 milion in Group’s assets, figure which is going to be significantly
reduced.
Moreover, the war, as well as the preceded tensions during the previous period, affect also the land leaseholds that the Company has in the
country. In particular, as of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease of
Tsymlyanskiy Residence property for another 5 years, since the Group has first extension rights over any other interested party. The first step
in the process whereby the presiding committee of the municipality, before the final approval by the City Council, did not place as many other
cases had accumulated which had time priority over Group’s case. During the period between December 15th 2021 and January 20th of 2022,
the committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the
committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for
the interests and operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence
of Ukraine. The Management remains confident that the Group will be awarded the lease extension once the war status permits. However,
as a result of such development, the asset does not contribute value commencing from current reporting period.
The Management will monitor developments in the country and change policy if necessary.
7.1.1.2 Romania
The Romanian economy grew by 5,9% in 2021 following a year of contraction. The agricultural sector led such growth with 13,5%,
followed by the industrial one with 5%.At the end of the year unemployment rate stood at 5,6% and inflation rate at 4,1% due to increased
prices in foods and energy. Overall, during the first half of the year the economy showed strong signs of recovery from the effects of the
COVID-19 pandemic, although such trend slowed during the second half of the year, mainly due to the hurt in confidence brought by the
fourth pandemic wave and the political tensions in the region.
Future outlook is positive with GDP expected to grow by 4,5% annually in the next two year period, as a result of all monetary and fiscal
measures and reforms adopted by the government, and provided that the health situation will progressively improve. However, the recent
invasion of Russia in neighboring country Ukraine, and the ongoing war that takes place there, has harmed confidence and local economic
sentiment, while at the same time might also harm foreign investment. Therefore, the associated risk has significantly increased, being
closely related to the geopolitical developments in the region.
CONSOLIDATED FINANCIAL STATEMENTS 2021|52
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 war in Ukraine causing economic and political problems, as well as any probable currency devaluation may affect Group’s financial
position.
CONSOLIDATED FINANCIAL STATEMENTS 2021|53
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 42.1 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 2021|54
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
SecMon Real Estate Srl
Ketiza Real Estate Srl
Edetrio Holdings Limited
Emakei Holdings Limited
RAM Real Estate Management Limited
Iuliu Maniu Limited
Moselin Investments Srl
Rimasol Enterprises Limited
Rimasol Real Estate Srl
Ashor Ventures Limited
Ashor Development Srl
Jenby Ventures Limited
Jenby Investments Srl
Ebenem Limited
Ebenem Investments Srl
Sertland Properties Limited
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 2021
100
100
100
55
100
100
100
100
100
100
100
-
100
100
100
100
50
as at
31 Dec 2020
100
100
100
55
100
100
100
100
100
100
100
100
100
100
100
100
50
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Cyprus
Romania
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
100
90
100
100
50
45
45
70,56
70,56
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
* As of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease of Tsymlyanskiy Residence
property for another 5 years, since the Group has first extension rights over any other interested party. The first step in the process whereby
the presiding committee of the municipality, before the final approval by the City Council, did not place as too many other cases had
accumulated which had time priority over Group’s case. During the period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the
committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for
the interests and operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence
of Ukraine. The Management remains confident that the Company will be awarded the lease extension once the war status permits.
During 2021 the Group proceeded with the disposal of Victini Holdings Limited in Cyprus which was idle after the disposal in 2019 of its
subsidiary that used to hold the warehouse asset in Greece. (Note 20).
CONSOLIDATED FINANCIAL STATEMENTS 2021|55
8. Investment in subsidiaries (continued)
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 was not consolidated in
previous periods in Group’s financial statements. However, during 2021 and after the successful re-organization of SecMon Real Estate Srl
through the insolvency process, the company re-paid fully its loan and the Group regained full control of the subsidiary. Following that, by
the end of the current period, the subsidiary had managed to sell successfully all its units stock .
During the period the Company initiated the process of striking off six holding subsidiaries in Cyprus, which became idle following recent
disposals of local asset owning companies and properties. The companies to be struck off are: Bluehouse Accession Project IV Limited,
Demetiva Holdings Limited, Diforio Holdings Limited, Jenby Ventures Limited, Ebenem Limited and Mofben Investments Limited. Relevant
official clearance from local Trade Registry and Tax Authorities is expected in the following period. Currently the Group has initiated strike off
process for two additional Ukrainian entities.
During 2021 the Group acquired an additional 26,32% stake in Rimasol Enterprises Limited, which through Rimasol Real Estate Srl owns Plot
R in GreenLake, part of the Second Phase of the overall GreenLake project. With this acquisition the total stake of the Group in this particular
plot increased to 70,56% .
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 March and June
2022 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. In March and June 2022, the Company sold effectively to Arcona the Delenco and EOS assets. Regarding the
Ukrainian assets, further discussions for closing have been put on hold due to the existing circumstances in the country.
Additionally, the Company also sold during 2019 the Greek logistics property Victini Logistics, which was not part of the Arcona transaction.
Cyprus: Ashor Ventures Limited, Edetrio Holdings Limited, Rimasol Enterprises Limited, Emakei Holdings Limited, Iuliu Maniu
The companies that are classified under discontinued operations are the followings:
•
Limited, Ram Real Estate Management Limited, Frizomo Holdings Limited, Ketiza Holdings Limited and Victini Holdings Limited
•
Srl, Best Day Real Estate Srl, N-E Real Estate Park First Phase Srl, Ketiza Real Estate Srl, SPDI Real Estate Srl and Secmon SRL
Ukraine: LLC Aisi Ukraine, LLC Almaz‑Pres‑Ukraine, LLC Trade Center, LLC Retail Development Balabino
•
Romania: Ashor Development Srl, Ebenem Investments Srl, Jenby Investments Srl, Rimasol Real Estate Srl, Moselin Investments
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 &
4.8).
CONSOLIDATED FINANCIAL STATEMENTS 2021|56
9. Discontinued operations (continued)
9.(b) Results of discontinued operations
For the year ended 31 December 2021
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
Other operating income/(expenses), net
Operating profit / (loss)
Dividends income
Finance income
Finance costs
Profit/(Loss) before tax and foreign exchange differences
Foreign exchange (loss), net
Profit/(Loss) before tax
Income tax expense
Profit/(Loss) for the year
Loss attributable to:
Owners of the parent
Non-controlling interests
9.(c) Cash flows from(used in) discontinued operation
Net cash flows provided in operating activities
Net cash flows from / (used in) financing activities
Net cash flows from / (used in) investing activities
Net increase/(decrease) from discontinued operations
Note
10
11
2021
€
939.720
(763.024)
176.696
2020
€
1.041.346
(470.548)
570.798
12
21
13
14.1
15
20
16
16
17a
18
(289.086)
344.746
(754.979)
653.567
(12.510)
118.434
175.500
9.366
(863.480)
(560.180)
(217.988)
(179.775)
(3.495.700)
281.886
3.058
(3.037.721)
-
9.392
(870.951)
(3.899.280)
(253.666)
(813.846)
(318.925)
(4.218.205)
(67.328)
(44.387)
(881.174)
(4.262.592)
(659.215)
(221.959)
(881.174)
(2.851.952)
(1.410.640)
(4.262.592)
31 Dec 2021
€
(712.598)
3.280.967
(2.275.600)
292.769
31 Dec 2020
€
961.997
(3.880.653)
2.670.120
(248.536)
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 2021:
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
Note
31 Dec 2021
€
31 Dec 2020
€
19.4a
23
24
21
22
25
27
31
36
33
35
34
31.554.991
11.988
333.263
5.476.576
-
1.240.028
394.670
39.011.516
8.022.899
6.515.847
997.392
243.310
64.231
15.843.679
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
CONSOLIDATED FINANCIAL STATEMENTS 2021|57
10. Income
Income from continued operations for the year ended 31 December 2021 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.
b) Service and property managent income is related to one off invoice with a third party.
Continued operations
Rental income
Service charges and utilities income
Service and property management income
Total income
31 Dec 2021
€
633.427
232.870
180.840
1.047.137
31 Dec 2020
€
583.683
192.017
20.000
795.700
Income from discontinued operations for the year ended 31 December 2021 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), Kindergarten (Romania), and EOS Business Park (Romania)
b) rental income and service charges by tenants of the Residential Portfolio, and;
c)
income from third parties and /or partners for consulting and managing real estate properties for 2020
Discontinued operations (Note 9)
Rental income
Service charges and utilities income
Service and property management income
Total income
31 Dec 2021
€
916.498
23.222
-
939.720
31 Dec 2020
€
1.008.294
31.064
1.988
1.041.346
Occupancy rates in the various income producing assets of the Group as at 31 December 2021 were as follows:
Income producing assets
%
EOS Business Park
Innovations Logistics Park
Kindergarten
11. Asset operating expenses
Romania
Romania
Romania
31 Dec 2021
31 Dec 2020
100
65
100
100
77
100
The Group incurs expenses related to the proper operation and maintenance of all properties in Kiev, Bucharest. 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 2021
€
(253.917)
(22.087)
(179.009)
(218.519)
(44.464)
(10.267)
(34.761)
-
(763.024)
31 Dec 2020
€
(99.949)
(9.054)
(101.757)
(179.268)
(33.223)
(6.932)
(40.267)
(98)
(470.548)
Property related taxes reflect local taxes of land and building properties (in the form of land taxes, building taxes, garbage fees, etc.). Relevant
increase in 2021 resulted from the increased sales of residential units during 2021, as well as land book taxes associated with the acquisition
of EOS asset from the leasing company in order the project to be re-financed.
Repairs and technical maintenance increased substantially during the period due to works performed on residential units for facilitating their
successful sale.
CONSOLIDATED FINANCIAL STATEMENTS 2021|58
11. Asset operating expenses (continued)
Utilities increase came from Innovations Logistics Park in Bucharest, and matches with the increased service charges and utilities income
invoiced by the Company and included in continued operations.
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 2021
€
(355.933)
-
(360.578)
(144.330)
(68.135)
(59.990)
(78.668)
(29.180)
(328.331)
(1.481)
(243.823)
(127.844)
(1.798.293)
31 Dec 2021
€
(32.498)
(83.066)
(38.765)
(35.160)
(29.034)
(52.940)
(620)
(17.003)
(289.086)
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)
Salaries and wages include the remuneration of the CEO (2021: €100.997, 2020: €100.997), 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 2020 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 2021, such fees include EUR 36k of services
related to Arcona transaction (EUR 52k in 2020) and increased brokerage fees for the extended residential sales of the Group that took place
during the year in Romania. In discontinued operations, advisory fees include also EUR 30k related to the re-financing of EOS asset that took
place in December 2021.
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 2021 came as a
result of the additional fees incurred by the new custodian (Cyprus Stock Exchange) of the shares of the Company, which came as requirement
following Brexit, as well as extra fees from the corporate registrar for arrangements in relation to the new share custody status of the
Company.
Corporate registration and maintenance fees represent fees charged for the annual maintenance of the Company and its subsidiaries, as well
as fees and expenses related to the normal operation of the companies including charges by the relevant local authorities. Increase in current
period came as a result of the expenses incurred for striking off six (6) idle entities in Cyprus.
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 2021 an amount of EUR 168k was associated with legal advices and support related to the transaction with
Arcona (EUR 29k in 2020), while an amount of EUR 123k was associated with the change of custodian due to Brexit and the need to provide
relevant legal opinion to Euroclear (EUR 0 in 2020). In discontinued operations, an amount of EUR 48k is related to the re-financing of EOS
property, including also the associated notary and relevant fees for acquiring the asset from the leasing company.
CONSOLIDATED FINANCIAL STATEMENTS 2021|59
12. Administration Expenses (continued)
Corporate operating expenses include office expenses, travel expenses, (tele)communication expenses, D&O insurance and all other general
expenses for Cypriot, Romanian and Ukrainian operations. Current increase is a result of the considerably higher cost for the D&O insurance
policy, following the general increase of such premiums in the insurance market.
The annual Directors fees including Chairman and Committee remunerations have been set at GBP 129k. In 2021 the Company posted also
fees from previous periods which were not included previously in Company’s books and presented as “Deferred Amounts” in table below (Note
39.1.2).
Summary of
Directors’
Total
Remuneration
31 Dec 2021
31 Dec 2020
€
€
Base
remuneration
Chairman/
Committee Fees
€
Deferred
Amounts
€
Total
€
Base
remuneration
€
Total
€
Chairman/
Committee
Fees
Michael Beys
Harin Thaker
Ian Domaille
Anthonios Kaffas
Total
(33.323)
(33.323)
(33.323)
(33.323)
(133.291)
(5.950)
(3.570)
(7.141)
(3.570)
(20.232)
(23.100)
(21.700)
(23.800)
(21.700)
(90.300)
(62.373)
(58.593)
(64.263)
(58.593)
(243.823)
(28.000)
(28.000)
(28.000)
(28.000)
(112.000)
(5.000)
(3.000)
(6.000)
(3.000)
(17.000)
(33.000)
(31.000)
(34.000)
(31.000)
(129.000)
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 2021
€
(93.835)
(964.178)
75.740
(240.706)
107.164
4.438
452.063
(95.665)
(754.979)
31 Dec 2020
€
390.469
94.811
(171.690)
(305.894)
(863.251)
(1.950)
(2.664.980)
26.785
(3.495.700)
* As of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease of Tsymlyanskiy Residence
property for another 5 years, since the Group has first extension rights over any other interested party. The first step in the process whereby
the presiding committee of the municipality, before the final approval by the City Council, did not place as many other cases had accumulated
which had time priority over Group’s case. During the period between December 15th 2021 and January 20th of 2022, the committee did not
convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the committee and the City
Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for the interests and
operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence of Ukraine. We
remain confident that we will be awarded the lease extension once the war status permits.
Valuation gains and losses result not only from the differences in the values of the properties as reported by valuers at the different points in
time, but also from the fluctuation of the FX rate between the denominated currency of the valuation report itself and the functional currency
of the company which posts valuation amount in its accounting books. For example, valuations of Ukrainian assets are denominated in USD
and translated to UAH for entering effectively in the accounting books of the local entities. Similarly, valuations of Romanian assets are
denominated in EUR and translated to RON for accounting purposes.
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling properties classified under Investment Property (Romanian residential assets)
designated as non-core assets. The gain/ (losses) from disposal of such properties are presented below:
14.1 Investment property
During 2021 the Group sold 7 villas in Greenlake Parcel K, 5 apartments in Monaco Towers and 1 apartment, 3 parking spaces in Zizin.
In 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.
CONSOLIDATED FINANCIAL STATEMENTS 2021|60
14. Gain/ (Loss) from disposal of properties (continued)
14.1 Investment property (continued)
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
Penalties
Impairment of prepayments and other current assets
Other expenses
Other expenses
31 Dec 2021
€
3.245.322
(2.591.755)
653.567
31 Dec 2020
€
2.427.184
(2.145.298)
281.886
31 Dec 2021
€
18.536
62.978
-
81.514
-
(509)
(5.932)
(5.430)
(11.871)
31 Dec 2020
€
115.039
124.007
16.035
255.081
(55.128)
(2.184)
-
(6.547)
(63.859)
Other operating income/(expenses), net
69.643
191.222
Discontinued operations (Note 9)
Accounts payable written off
Other income
Other income
Penalties
Other expenses
Other expenses
Other operating income/(expenses), net
Continued operations
31 Dec 2021
€
-
1.679
1.679
31 Dec 2020
€
129.950
23
129.973
(240)
(13.949)
(14.189)
(1.201)
(125.714)
(126.915)
(12.510)
3.058
Other income, represents income from services, while in 2020 included also a price adjustment of the sale of Terminal Brovary pursuant to
the relevant sale and purchase agreement.
The accounts payable write off under continued operations are mainly related to writing off an old balance due to a vendor.
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.
In 2020 the other expenses under discontinued operations of a total of EUR 126k relate mostly to VAT imposed to Jenby Srl after relevant
tax investigation by authorities, associated with past VAT activity of the company.
CONSOLIDATED FINANCIAL STATEMENTS 2021|61
16. Finance costs and income
Continued operations
Finance income
Interest received from non-bank loans
Total finance income
Finance costs
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 39.1.1)
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 2021
€
489.072
489.072
31 Dec 2020
€
503.527
503.527
31 Dec 2021
€
31 Dec 2020
€
(116.468)
(5.808)
(68.133)
-
(190.409)
(140.489)
(6.645)
(68.320)
(59.297)
(274.751)
298.663
228.776
31 Dec 2021
€
31 Dec 2020
€
9.366
9.366
9.392
9.392
31 Dec 2021
€
31 Dec 2020
€
(479.939)
(6.547)
(373.209)
(3.785)
-
(863.480)
(378.793)
(7.172)
(477.048)
(2.585)
(5.353)
(870.951)
(854.114)
(861.559)
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 funds provided initially with a convertibility option which was not exercised, and is
currently treated as a loan.
According to the last addendum, the loan had certain one-off payments for a period until 30 June 20202 which has to be re-paid in full. The
loan is bearing a fixed interest rate of 10% and the Company has initiated 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 31).
Finance leasing interest expenses relate to the sale and lease back agreements of the Group. The decrease of finance leasing interest during
2021 is due to the fact that the leasing loan with Alpha Bank Romania SA was repaid and a new bank loan was granted(Note 36).
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 32).
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.
CONSOLIDATED FINANCIAL STATEMENTS 2021|62
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 2021 from continued operations amounted to €65.147 (2020: loss
€60.142).
The exchange loss from discontinued operations for the year ended 31 December 2021 amounted to €253.666 (2020: loss €318.925) (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 39.3). For these intercompany loans the foreign exchange differences are recognized initially in other comprehensive
income and in a separate component of equity. During 2021, the Group has not recognized any foreign exchange loss/ profit (2020: loss
€61.936).
18. Tax Expense
Continued operations
Income and defence tax expense
Taxes
Discontinued operations (Note 9)
Income and defence tax expense
Taxes
31 Dec 2021
€
(51.824)
(51.824)
31 Dec 2020
€
(117.656)
(117.656)
31 Dec 2021
€
(67.328)
(67.328)
31 Dec 2020
€
(44.387)
(44.387)
For the year ended 31 December 2021, 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 2021
€
31 Dec 2020
€
(577.617)
(5.588.463)
1.270.289
319.568
(817.941)
390.502
(1.060.938)
4.339
-
(919)
14.252
119.152
(177.663)
1.132.008
(844.478)
801.574
(874.138)
20.616
636
(1.322)
13.860
90.950
162.043
CONSOLIDATED FINANCIAL STATEMENTS 2021|63
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
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 65% leased at the end of the reporting period.
Residential Assets
The Company owns a residential portfolio, consisting at the end of the reporting period of 2 villas in GreenLake Residential
complex, owned by Moselin Investments Srl. The associate company Green Lake Developments Srl owns 9 more units in the Green
Lake Residential complex, classified under associates (Note 21).
Land Assets
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. As of November 2021, the Group had submitted properly the official request to the City of Kiev to extend
the lease of Tsymlyanskiy Residence property for another 5 years, since the Group has first extension rights over any other
interested party. The first step in the process whereby the presiding committee of the municipality, before the final approval by the
City Council, did not place as many other cases had accumulated which had time priority over Group’s case. During the period
between December 15th 2021 and January 20th of 2022, the committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on
issues not related to property lease extensions, but rather more pressing matters for the interests and operational stability of the
City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence of Ukraine. We remain confident
that we will be awarded the lease extension once the war status permits.
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.
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.
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
31/12/2021
Fair Value movements
Foreign
exchange
translation
difference
(a)
Fair value
gain/(loss)
based on local
currency
valuations (b)
2.648.773
297.620
(93.835)
1
67.683
(964.178)
971.217
(1.019)
75.740
3.619.991
364.284
(982.273)
Land
Land
Land
Discontinued Operations
2021 (€)
Asset Name
Type
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Residential
portfolio
GreenLake
Kindergarten
Total Romania
Warehouse
9.700.000
(159.294)
(240.706)
Office
6.700.000
(107.164)
107.164
Residential
Land & Resi
Retail
-
(4.438)
4.438
(277.458)
10.215.000
1.320.000
27.935.000
(197.765)
(22.336)
(490.997)
452.062
(95.664)
227.294
(2.314.297)
(2.591.755)
TOTAL
31.554.991
(126.713)
(754.979)
(2.591.755)
Disposals 2021
Asset Value at the Beginning of the period or at
Acquisition/Transfer date
Transfer to
Assets held
for sale
Additions
2021
Carrying
amount as at
31/12/2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.444.988
896.496
896.496
4.237.980
10.100.000
6.700.000
124.958
152.500
-
-
124.958
12.275.000
1.438.000
30.665.500
124.958
34.903.480
CONSOLIDATED FINANCIAL STATEMENTS 2021|64
19. Investment Property (continued)
19.2 Investment Property Movement during the reporting period (continued)
Discontinued Operations
2020 (€)
Asset Name
Type
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
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)
Kiyanovskiy
Residence
Tsymlyanskiy
Residence
Rozny Lane
Total Ukraine
Innovations
Logistics Park
EOS Business Park
Residential
portfolio
GreenLake
Kindergarten
Total Romania
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
TOTAL
34.903.480
(1.636.374)
(3.495.700)
(2.145.298)
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 €126.713 (a) (2020: loss €1.636.374) 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 €754.979 (b) (2020: loss €3.495.700), 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 2021|65
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 2021
Continued
operations
€
31 Dec 2021
Discontinued
operations
€
31 Dec 2020 31 Dec 2020
Discontinued
operations
€
Continued
operations
€
-
-
-
-
-
-
-
-
2.648.773
1
971.217
3.619.991
9.700.000
6.700.000
1.320.000
-
-
-
-
-
-
-
-
-
2.444.988
896.496
896.496
4.237.980
10.100.000
6.700.000
1.438.000
152.500
-
10.215.000
-
12.275.000
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
Residential
apartments
GreenLake
Bucharest
Residential
villas (2 villas)
&
Land for
Residential
Development
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
Total Romania
TOTAL
-
-
27.935.000
31.554.991
-
-
30.665.500
34.903.480
CONSOLIDATED FINANCIAL STATEMENTS 2021|66
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
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
Additions
Disposal of Investment Property
Revaluation (loss)/gain on investment property
Translation difference
At 31 December
31 Dec 2021
31 Dec 2021
31 Dec 2020
31 Dec 2020
Continued
operations
€
Discontinued
operations
(Note 9)
€
Continued
operations
€
-
-
-
-
-
-
34.903.480
124.958
(2.591.755)
(754.979)
(126.713)
31.554.991
-
-
-
-
-
-
Discontinued
operations
(Note 9)
€
42.180.852
-
(2.145.298)
(3.495.700)
(1.636.374)
34.903.480
Disposals of Investment Properties represent the sales of apartments and parking spaces in Residential Portfolio and villas in GreenLake parcel
K.
19.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the following table represents an analysis based on the various valuation methods. The
different levels as defined by IFRS have been defined as follows:
-
-
-
Level 1 relates to quoted prices (unadjusted) in active and liquid markets for identical assets or liabilities.
Level 2 relates to inputs other than quoted prices that are observable for the asset or liability indirectly (that is, derived from prices).
Level 2 fair values of investment properties have been derived using the market value approach by comparing the subject asset
with similar assets for which price information is available. Under this approach the first step is to consider the prices for transactions
of similar assets that have occurred recently in the market. The most significant input into this valuation approach is price per sqm.
Level 3 relates to inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). Level
3 valuations have been performed by the external valuer using the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of income and market approach weighted according to the predominant local
market and economic conditions.
Fair value measurements at 31 Dec 2021 (€)
(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
GreenLake – Bucharest
Kindergarten - Bucharest
Totals
1
-
2.648.773
-
971.217
-
-
-
-
-
-
10.215.000
-
-
- 13.834.991
-
-
-
9.700.000
6.700.000
-
1.320.000
17.720.000
1
2.648.773
971.217
9.700.000
6.700.000
10.215.000
1.320.000
31.554.991
CONSOLIDATED FINANCIAL STATEMENTS 2021|67
19. Investment Property (continued)
19.5 Investment Property valuation method presentation (continued)
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
The table below shows yearly adjustments for Level 3 investment property valuations:
Level 3 Fair value
measurements at 31 Dec
2021 (€)
Innovations Logistics
Park
EOS Business Park
Kindergarten
Total
Opening balance
Profit/(loss) on revaluation
Translation difference
Closing balance
10.100.000
6.700.000
1.438.000
18.238.000
(240.706)
(159.294)
9.700.000
107.164
(107.164)
6.700.000
(95.664)
(229.206)
(22.336)
1.320.000
(288.794)
17.720.000
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
Information about Level 3 Fair Values is presented below:
Fair value at
31 Dec 2021
Fair value at
31 Dec 2020
Valuation
technique
Unobservable
inputs
Relationship of unobservable
inputs to fair value
€
€
9.700.000
10.100.000
€
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
6.700.000
6.700.000
Income approach
Kindergarten
1.320.000
1.438.000
Income approach
Total
17.720.000
18.238.000
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
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
CONSOLIDATED FINANCIAL STATEMENTS 2021|68
20. Investment Property Acquisitions, Goodwill Movement and Disposals
On 7 December 2021, the Company proceeded to the sale of Victini Holdings Limited to a 3rd party. Before the sale, Victini Holdings Limited
declared dividends of €175.500 for all previous financial years. The subsidiary company was idle since December 2019 when its own Greek
subsidiary which held the warehouse in Greece was sold.
21. Investments in associates
31 Dec 2021
31 Dec 2021
31 Dec 2020
31 Dec 2020
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
-
-
-
-
-
5.071.656
344.746
(198.137)
258.311
5.476.576
-
-
-
-
-
5.380.021
(179.775)
(242.403)
113.813
5.071.656
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 2021, 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
22.927.561
(440.187)
1.415.561
24,35
344.746 Romania
5.447.484
(7.752.870)
1.503.720
40,35
- Romania
28.375.045
(8.193.057)
2.919.281
344.746
Office
building
Residential
assets
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 2021|69
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 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 until 2020. However, during 2021 the SPV exited insolvency status successfully by repaying back its loan and following
the relevant Court procedures, the Group re-gained full control and as a result SecMon Real Estate Srl is included in current consolidation.
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
€
2020
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 2021 the intangible assets were composed of the capitalized expenditure on the Enterprise Resource Planning system
(Microsoft Dynamics-Navision) in the amount of €103.193 (2020: €103.193) which is under continued operations. Accumulated amortization
as at the reporting date amounts to €103.193 (2020: €103.193) and therefore net value amounts to €0 (2020: €0).
As at 31 December 2021 the tangible non-current assets under continued operations were comprised mainly by electronic equipment (mobiles,
computers etc.) of a net value of €1.628 (2020: €2.859).
As at 31 December 2021 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 amount to €81.144 (2020: €77.978). Accumulated depreciation
as at the reporting date amounts to €69.156 (2020: €65.621).
24. Long Term Receivables and prepayments
Long Term Receivables
Total
31 Dec 2021
Continued
operations
31 Dec 2021
Discontinued
operations
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
€
824
824
€
333.263
333.263
€
836
836
€
315.000
315.000
Long term receivables mainly include the cash collateral existing in favor of Piraeus Leasing in relation to Innovations asset.
CONSOLIDATED FINANCIAL STATEMENTS 2021|70
25. Prepayments and other current assets
Trade and other receivables
VAT and other tax receivables
Deferred expenses
Receivables due from related parties
Loan receivables from 3rd parties
Loan to associates (Note 39.4)
Allowance for impairment of prepayments and other
current assets
Total
31 Dec 2021
Continued
operations
31 Dec 2021
Discontinued
operations
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
€
498.869
199.808
-
44.084
3.825.949
9.351
€
576.656
127.550
433
516.631
-
310.966
€
307.549
239.191
-
45.077
6.365.654
9.026
€
487.185
105.348
1.095
10.783
124.958
301.600
(67.680)
4.510.381
(292.208)
1.240.028
(86.421)
6.880.076
(282.842)
748.127
Trade and other receivables mainly include receivables from tenants and prepayments made for services. The increase during the year is due
to increased receivables from tenants which have been recovered during 2022, as well as increased accrual prepayment entry for the D&O
insurance.
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.
Receivables due from related parties represent all kind of receivables from related parties of the Group. Relevant increase represents the
amount paid by Moselin Investments Srl during 2021 for the re-payment of associate’s GreenLake Srl bank loan, given that the former is a
guarantor to the loan agreement.
Loan receivables from 3rd parties include an amount of €3.825.949 (2020: € 4.580.000) provided as an advance payment for acquiring a
participation in an investment property portfolio (Olympians portfolio) in Romania less accumulated expected credit loss of €54.256. The
accrued interest was fully repaid during the year (2020: unpaid accrued interest of €1.071.271). The loan provided initially with a convertibility
option which was not exercised. According to the last addendum the loan has certain one-off and monthly payments for a period until 30
June 2022. 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.
Loan receivable from 3rd parties under discontinued operations included in 2020 a loan receivable from SecMon Real Estate Srl which since
January 2018 was classified as Financial Asset at Fair value through OCI (Note 22). However, during 2021 the SPV exited insolvency status
successfully by repaying back its loan and following the relevant Court procedures, the Group re-gained full control and as a result SecMon
Real Estate Srl is included in current consolidation.
Loan to associates reflects a loan receivable from GreenLake Development Srl, holding company of GreenLake Project-Phase A (Notes 21 and
39.4).
26. 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 2021
€
6.783.642
-
546.503
7.330.145
31 Dec 2020
€
3.549.453
4.030.234
(796.045)
6.783.642
3.602
-
136.975
140.577
32.190
1
(28.589)
3.602
7.470.722
6.787.244
546.503
136.975
(796.045)
(28.589)
Fair Value loss on Financial Assets at FV through P&L
683.478
(824.634)
CONSOLIDATED FINANCIAL STATEMENTS 2021|71
26. Financial Assets at FV through P&L (continued)
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 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 gain of €546.503
(2020: loss €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 77.021 warrants over Arcona shares for the sale of Boyana 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 gain of €136.975 (2020: loss €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 7,5 per share
Strike price of the warrants: EUR 8,10 per share
Expiration date: 1 November 2024
Standard deviation of stock price: 23,06%
Annualized dividend yield on shares: 0%
5 year Government Bond rate (weighted average rate of Government Bonds of countries that Arcona is exposed): 2,484%
27. 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
28. Share capital
Number of Shares during 2021 and 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
Nominal value (€) for 2021 and 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
31 Dec 2021
31 Dec 2021
31 Dec 2020
31 Dec 2020
Continued
operations
Discontinued
operations
Continued
operations
Discontinued
operations
€
15.778
2.081.700
84
62.841
173
2.160.576
€
-
7.872
1.826
384.972
-
394.670
€
15.755
33.234
6
79.577
1.287
129.859
€
-
216.224
418
524.146
-
740.788
31 December 2020
31 December 2021
989.869.935
989.869.935
-
8.618.997
8.618.997
989.869.935
989.869.935
-
8.618.997
8.618.997
129.191.442
129.191.442
129.191.442
129.191.442
129.191.442
129.191.442
31 December 2020
31 December 2020
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
CONSOLIDATED FINANCIAL STATEMENTS 2021|72
28. Share capital (contined)
28.1 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 28.3).
28.2 Issued Share Capital
As at the end of 2021, the issued share capital of the Company was as follows:
a) 129.191.442 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 28.3),
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 28.3)
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 40.3). 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 28.3).
28.3 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
Redeemable Preference Class B Shares
Issued and Listed on AIM
Non-Dilutive Basis
Full Dilutive Basis
-
(as at) 31 December
2021
129.191.442
129.191.442
129.191.442
-
(as at) 31 December
2020
129.191.442
129.191.442
129.191.442
-
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 33, 40.3).
CONSOLIDATED FINANCIAL STATEMENTS 2021|73
29. 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 €64.299 gain on foreign exchange losses/gains on translation due to presentation currency for
2021, in comparison to €1.392.155 relevant losses in 2020.
30. 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
31. Borrowings
Non-controlling interest
portion
31 Dec 2021
45,00
10,00
10,00
50,00
55,00
55,00
29,44
29,44
55,76
55,76
55,70
55,70
55,70
55,70
50,00
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
Principal of bank Loans
Bancpost SA
Piraeus Bank SA
Bancpost SA
Patria bank
Loans from other 3rd parties
and related parties (Note 39.5)
Overdrafts
Total principal of bank and
non-bank Loans
Interest accrued on bank loans
Interests accrued on non-bank
loans
Total
Current portion
Non-current portion
Total
Project
31 Dec 2021
Continued
operations
€
31 Dec 2021
Discontinued
operations
€
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
GreenLake – Parcel K
GreenLake-Phase 2
Kindergarten – SPDI
RE
First Phase
-
-
-
-
-
2.525.938
510.188
3.500.000
-
-
-
-
1.587.128
-
183.140
1.048
2.061.514
-
1.901.094
2.525.938
670.293
-
235.191
853
1.587.128
-
6.720.314
1.251.191
2.061.514
-
5.333.369
952.321
116.438
1.703.566
51.394
8.022.899
88.863
2.150.377
38.771
6.324.461
31 Dec 2021
Continued
operations
€
1.577.500
126.066
1.703.566
31 Dec 2021
Discontinued
operations
€
3.787.614
4.235.285
8.022.899
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
2.054.400
95.977
2.150.377
3.510.366
2.814.095
6.324.461
CONSOLIDATED FINANCIAL STATEMENTS 2021|74
31. Borrowings (continued)
Continued Operations
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 39.5).
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 was fully repaid April 2022.
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. The loan was fully repaid 2 June 2020. 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. The the loan was fully repaid 29 December 2020. 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.The loan was fully repaid on 25 November 2021 through sale proceeds. The loan borne interest of EURIBOR 3M plus 2,5%,
secured with the property itself and the shares of Moselin Investments Srl.
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. On 29 July 2020 the loan was transferred to Arcona as part of the transaction for the sale of Boyana Residence
ood in Bulgaria.
SEC South East Continent Unique Real Estate (Secured) Investments Limited has a debt facility with Piraeus Bank for the acquisition of the
GreenLake land in Bucharest Romania. As at the end of the reporting period the balance of the loan was €2.525.938 plus accrued interest
€1.220.857 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. During 2020 the balance of the loan was fully repaid. The loan borne interest of EURIBOR 1M+4,5% and was
repayable from the free cash flow resulting from the rental income of company’s property, 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.
N-E Real Estate Park First Phase Srl entered in December 2021 into a loan agreement with Patria Bank for a credit facility of €3.500.000 used
to refinance the Leasing Contract with Alpha Leasing and to repay some of shareholders loans. As at the end of the reporting period the
balance of the loan was €3.500.000 and bears interest of EURIBOR 3M plus 3,5%. The repayment is done in monthly installments of principal
plus interest. A collateral deposit of €265.000 will be made in monthly installments of €5.000, during the period January 2022 – May 2026.
The loan has the maturity date in December 2031 and was secured by a first rank mortgage over EOS building and mortgage over the
company’s bank accounts and receivables.
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 €510.188 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.
32. 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.
CONSOLIDATED FINANCIAL STATEMENTS 2021|75
33. 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 39.2)
Deferred income from tenants
Accruals
Pre-sale advances (Advances received for sale of
properties)
Total
Current portion
Non-current portion
Total
31 Dec 2021
Continued
operations
€
3.256.166
929.142
-
87.735
31 Dec 2021
Discontinued
operations
€
564.810
218.359
7.839
206.384
31 Dec 2020
Continued
operations
€
3.243.465
582.829
-
101.112
31 Dec 2020
Discontinued
operations
€
644.889
196.233
7.965
21.385
123.080
4.396.123
-
997.392
109.556
4.036.962
-
870.472
31 Dec 2021
Continued
operations
€
4.396.123
-
4.396.123
31 Dec 2021
Discontinued
operations
€
989.553
7.839
997.392
31 Dec 2020
Continued
operations
€
4.036.962
-
4.036.962
31 Dec 2020
Discontinued
operations
€
862.507
7.965
870.472
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 28.3) which is under legal proceedings for a final settlement (Note 40.3) , 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
39.2). Relevant increase came mainly by posting in 2021 previous periods’ directors fees. 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.
Relevant increase in discontinued operations represent the allocation made on security and utilities expenses in Green Lake complex between
Moselin Investments Srl and GreenLake Srl (associate).
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.
34. Deposits from Tenants
Deposits from tenants non-current
Total
31 Dec 2021
Continued
operations
€
31 Dec 2021
Discontinued
operations
€
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
-
-
64.231
64.231
-
-
64.231
64.231
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.
CONSOLIDATED FINANCIAL STATEMENTS 2021|76
35. Taxation
Corporate income tax – non current
Defence tax – non current
Tax provision – non current
Non- current
Corporate income tax - current
Other taxes including VAT payable - current
Provisions – current
Current
Total Provisions and Taxes Payables
31 Dec 2021
Continued
operations
€
200.295
27.385
399.450
627.130
127.528
128.909
-
256.437
883.567
31 Dec 2021
Discontinued
operations
€
52.221
-
-
52.221
9.085
182.004
-
191.089
243.310
31 Dec 2020
Continued
operations
€
237.521
26.091
399.450
663.062
449.844
163.972
6.549
620.365
1.283.427
31 Dec 2020
Discontinued
operations
€
30.374
15
-
30.389
58.960
165.521
22.405
246.886
277.275
Corporate income tax represents taxes payable in Cyprus and Romania.
Other taxes represent local property taxes and VAT payable in Romania.
Corporate income tax current amount represents the part of the settlement plan agreed with the Cyprus tax authorities up to 2022.
36. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist of the non-current portion of €6.234.852 and the current portion of €280.995 (31
December 2020: €9.235.266 and €456.763, accordingly).
Discontinued operations
31 Dec 2021
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities (Note 9d)
31 Dec 2020
Less than one year
Between two and five years
More than five years
Accrued Interest
Total Finance Lease Liabilities (Note 9d)
36.1 Land Plots Financial Leasing
Note
42.2
&
42.6
Note
42.2
&
42.6
Minimum lease
payments
€
582.862
7.144.878
33.844
Minimum lease
payments
€
917.759
5.265.225
5.506.778
11.689.762
Interest
Principal
€
301.868
934.758
11.813
€
280.994
6.210.120
22.031
6.513.145
2.702
6.515.847
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
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 €34.210 under current and non-current portion. The Group's obligations
under finance leases are secured by the lessor's title to the leased assets. Regarding Tsymlyanskiy, as of November 2021, the Group had
submitted properly the official request to the City of Kiev to extend the lease property for another 5 years, since the Group has first extension
rights over any other interested party. The first step in the process whereby the presiding committee of the municipality, before the final
approval by the City Council, did not place as too many other cases had accumulated which had time priority over Group’s case. During the
period between December 15th 2021 and January 20th of 2022, the committee did not convene at all as is usual during holiday and vacation
times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on issues not related to
property lease extensions, but rather more pressing matters for the interests and operational stability of the City of Kiev. From there on, all
decisions have been put on hold due to the Russian insurgence of Ukraine. We remain confident that we will be awarded the lease extension
once the war status permits, and we continue calculate relevant future lease obligations.
CONSOLIDATED FINANCIAL STATEMENTS 2021|77
36. Finance Lease Liabilities (continued)
36.2 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 €6.481.637 (2020:
€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 the SPV N-E Real Estate Park First Phase
Srl, through a sale and lease back agreement with Alpha Bank Romania SA. During December 2021 the SPV re-paid fully the leasing facility
(2020 balance: € 2.953.273) and acquired the property, through a new loan from Patria Bank. The facility borne interest at the rate of 3M
Euribor plus 5,25% margin.
37. 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
Profit/(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
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
31 Dec 2021
31 Dec 2020
129.128.442
129.128.442
129.128.442
129.191.442
129.191.442
129.191.442
31 Dec 2021
31 Dec 2020
€
(184.405)
0,00
0,00
€
(1.487.914)
(0,03)
(0,03)
31 Dec 2021
31 Dec 2020
€
(659.215)
(0,00)
(0,00)
€
(2.851.952)
(0,02)
(0,02)
31 Dec 2021
€
31 Dec 2020
€
23.253.524
129.191.442
129.191.442
0,18
0,18
23.712.973
129.191.442
129.191.442
0,18
0,18
CONSOLIDATED FINANCIAL STATEMENTS 2021|78
38. Segment information
All commercial and financial information related to the properties held directly or indirectly by the Group is being provided to members of
executive management who report to the Board of Directors. Such information relates to rentals, valuations, income, costs and capital
expenditures. The individual properties are aggregated into segments based on the economic nature of the property. For the reporting period
the Group has identified the following material reportable segments:
Commercial-Industrial
Warehouse segment –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 2021
Segment profit
Rental income (Note 10)
Service charges and utilities income
(Note 10)
Property Management income (Note
10)
Impairment of financial investments
(Note 26)
Gain on disposal of subsidiaries
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)
Total Comprehensive Income
Warehouse
€
Office
€
Retail Residential Land Plots
€
€
€
Corporate
€
Total
€
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
633.427
633.427
232.870
232.870
180.840
180.840
683.478
683.478
748
748
(214.232)
(214.232)
1.061.290
1.061.290
5.439
5.439
271.406
271.406
(488.324)
(488.324)
(215.549)
1.515.814
420.030
2.151.393
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1.798.293)
69.643
489.072
(184.601)
(5.808)
(1.301.204)
(65.147)
(51.824)
64.299
(632.470)
CONSOLIDATED FINANCIAL STATEMENTS 2021|79
38. Segment information (continued)
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 26)
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 29)
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
* 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 2021|80
38. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2021
Warehouse
Office
Retail
Residential Land Plots
Corporate
Total
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)
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)
Dividends income
Finance income (Note 16)
Interest expenses (Note
16)
Other finance costs (Note
16)
Foreign exchange losses,
net (Note 17a)
Income tax expense (Note
18)
Exchange difference on
translation foreign
holdings (Note 29)
Loss for the year
€
€
€
€
€
€
€
-
-
-
542.297
2.703.025
-
133.253
16.064
-
652.998
-
119.936
(277.457)
4.277
(2.314.297)
6.033
-
-
6.608
550
(240.706)
107.164
(95.664)
4.438
(530.211)
-
344.746
-
-
-
-
-
-
-
-
-
(122.843)
(214.232)
(43.618)
1.061.290
(18.833)
5.439
(8.757)
271.406
(353.424)
(488.324)
(215.549)
(215.549)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.245.322
(2.591.754)
916.497
23.222
(754.979)
344.746
(763.024)
420.030
(289.086)
(12.510)
175.500
9.366
(797.856)
(65.624)
(253.666)
(67.328)
64.299
(816.875)
CONSOLIDATED FINANCIAL STATEMENTS 2021|81
38. Segment information (continued )
Discontinued Operations
Profit and Loss for the year 2020
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)
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
Total Operations
Balance Sheet as at 31 December 2021
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
-
-
-
-
-
823
823
-
10.015.000
-
12.176.575
10.015.000 12.176.575
-
1.338.263
1.338.263
-
-
-
-
-
-
-
-
-
-
-
-
6.545.868
-
6.545.868
-
-
-
-
3.504.083
-
3.504.083
-
-
-
-
696.741
-
696.741
-
-
-
-
-
12.939.514
7.470.723
-
-
39.011.515
- 12.939.514 10.013.709 46.483.061
7.470.723
2.542.163
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.628
-
4.510.381
2.160.577
-
- 53.155.647
3.856.285
-
3.856.285
-
-
-
-
1.240.702
1.703.566
15.843.679
1.703.566
2.944.268 17.547.245
4.396.123
-
883.567
-
-
1.327.056
- 24.153.991
CONSOLIDATED FINANCIAL STATEMENTS 2021|82
38. Segment information (continued)
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
Discontinued operations
-
-
-
-
-
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
Assets and Liabilities held for sale 2021
Warehouse
€
Office
€
Retail
€
Residential
€
Land plots Corporate
€
€
Total
€
Assets
Investment properties
Long-term receivables and
prepayments
Investments in associates
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
9.700.000
6.700.000
1.320.000
-
12.939.514
895.477
31.554.991
315.000
-
-
5.476.575
10.015.000 12.176.575
18.263
-
1.338.263
-
-
-
-
- 12.939.514
-
-
895.477
333.263
5.476.575
37.364.829
-
-
-
-
-
-
-
-
6.481.637
64.231
6.545.868
-
-
-
-
3.504.083
-
-
3.504.083
-
-
-
-
-
-
-
696.741
-
-
696.741
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.822.075
34.210
-
3.856.285
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11.988
1.240.028
394.670
39.011.515
8.022.899
6.515.847
64.231
14.602.977
997.392
243.310
15.843.679
CONSOLIDATED FINANCIAL STATEMENTS 2021|83
38. Segment information (continued)
Discontinued operations
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
Geographical information
Income (Note 10)
Ukraine
Romania
Greece
Bulgaria
Cyprus *
Total
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
-
-
-
-
-
-
-
6.707.475
64.231
6.771.706
-
-
-
-
-
-
270
2.953.373
-
2.953.643
-
-
-
-
-
-
873.108
-
-
873.108
-
-
-
1
-
152.501 15.444.794 1.068.186
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
31 Dec 2021
Continued
operations
€
31 Dec 2021
Discontinued
operations
€
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
-
-
-
-
1.047.137
1.047.137
-
939.720
-
-
-
939.720
-
-
-
-
795.700
795.700
-
1.041.346
-
-
-
1.041.346
* 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 2021
Continued
operations
€
-
-
31 Dec 2021
Discontinued
operations
€
653.567
653.567
31 Dec 2020
Continued
operations
€
-
-
31 Dec 2020
Discontinued
operations
€
281.886
281.886
CONSOLIDATED FINANCIAL STATEMENTS 2021|84
38. Segment information (continued)
Geographical information (continued)
Carrying amount of assets (investment properties, associates
and Financial asset at fair value through OCI)
Ukraine
Romania
Total
39. Related Party Transactions
The following transactions were carried out with related parties:
39.1 Income/ Expense
39.1.1 Income
31 Dec 2021
Continued
operations
€
31 Dec 2021
Discontinued
operations
€
31 Dec 2020
Continued
operations
€
31 Dec 2020
Discontinued
operations
€
-
-
-
3.619.991
33.411.576
37.031.567
-
-
-
4.237.980
35.737.157
39.975.137
Interest Income on loan to related parties
Interest Income from loan to associates
Total
31 Dec 2021
31 Dec 2021
31 Dec 2020
31 Dec 2020
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
-
325
325
-
9.366
9.366
2.294
326
2.620
-
9.392
9.392
Interest income on loan to related parties relates to interest income from Delia Lebada Srl in 2020 and interest income from associates relates
to interest income from GreenLake Development Srl.
39.1.2 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 2021
Continued
operations
€
244.350
243.823
-
40.194
528.367
31 Dec 2021
Discontinued
operations
€
-
-
-
-
-
31 Dec 2020
Continued
operations
€
388.925
129.000
12
36.265
554.202
31 Dec 2020
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.
39.2 Payables to related parties (Note 33)
Board of Directors & Committees remuneration
Secure Management Services LTD
SecMon SRL
Sec South East Continet Unique Real Esate Management
Limited
Management Remuneration
Total
31 Dec 2021
Continued
operations
31 Dec 2021
Discontinued
operations
31 Dec 2020
Continued
operations
31 Dec 2020
Discontinued
operations
€
373.187
-
-
65
508.511
881.763
€
-
-
-
-
-
-
€
129.364
1.146
6.285
7.899
438.135
582.829
€
-
-
-
-
-
-
39.2.1 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 used to 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
CONSOLIDATED FINANCIAL STATEMENTS 2021|85
39. Related Party Transactions (continued)
39.2 Payables to related parties (Note 33) (continued)
39.2.1 Board of Directors & Committees (continued)
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. Since H2
2019 it has been decided that relevant fees will be paid in cash. The increase in the amount during 2021 comes from the posting of previous
periods’ directors fees in order accounts to be in accordance with such decision.
39.2.2 Management Remuneration
Management Remuneration represents deferred amounts payable to the CEO of the Company.
39.3 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 2021
€
5.800
23.062.351
8.236.554
150.537
31.455.242
Principal as
at
31 Dec 2021
€
5.707
220.514
259.126
24.435
509.782
Limit –as at
31 Dec 2020
€
5.800
23.062.351
8.236.554
150.537
31.455.242
Principal as
at
31 Dec 2020
€
5.266
137.966
239.079
21.750
404.061
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 €50.978 (2020: €40.406), estimated on balances held at 31 December 2021.
39.4 Loans to associates (Note 25)
Loans to GreenLake Development Srl
Total
31 Dec 2021
Continued
operations
€
31 Dec 2021
Discontinued
operations
€
31 Dec 2020
Continued
operations
€
9.351
9.351
310.966
310.966
9.026
9.026
31 Dec 2020
Discontinued
operations
€
301.600
301.600
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 2023 for the Edetrio loan
and 4 December 2022 for the SC Capital Limted loan.
39.5 Loans from related parties (Note 31)
Loan from Directors and Management
Interest accrued on loans from related parties
Total
31 Dec 2021
Continued
operations
€
577.500
114.060
691.560
31 Dec 2021
Discontinued
operations
€
-
-
-
31 Dec 2020
Continued
operations
€
604.400
77.394
681.794
31 Dec 2020
Discontinued
operations
€
-
-
-
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 2022. In case needed, the Company will discuss with the directors
relevant extension of the loans.
Rest amount of the order of € 202.500 reflect payables of € 42.000 to 2 executives and of € 160.500 to one director, converted to loans for
facilitating Company’s cash flow.
CONSOLIDATED FINANCIAL STATEMENTS 2021|86
40. Contingent Liabilities
40.1 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 and Greece. In respect of Romanian
and Greek tax systems, many aspects are 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.
40.2 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.
40.3 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 33). On the other hand, 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. The hearing of the combined cases
in front of Cypriot Courts has been set in September 2022.
40.4 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.
40.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December 2021.
41. Commitments
The Group had no other commitments as at 31 December 2021.
42. Financial Risk Management
42.1 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 31), bonds (Note 32), trade and other payables (Note 33)
deposits from tenants (Note 34), financial leases (Note 36), taxes payable (Note 35) 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 2021|87
42. Financial Risk Management (continued)
42.2 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
42.3 Financial Risk Management Objectives
Note
31 Dec 2021
31 Dec 2021
31 Dec 2020
31 Dec 2020
Continued
operations
€
Discontinued
operations
€
Continued
operations
€
Discontinued
operations
€
27
24
26
25
22
31
33
34
36
35
32
2.160.576
824
7.470.722
4.510.381
-
394.670
333.263
-
1.240.028
-
129.859
836
6.787.244
6.880.076
-
740.788
315.000
-
748.127
1
14.142.503
1.967.961
13.798.015
1.803.916
1.703.566
4.396.123
-
-
883.567
1.327.056
8.022.899
997.392
64.231
6.515.847
243.310
-
2.150.377
4.036.962
-
-
1.283.427
1.258.923
6.324.461
870.472
64.231
9.692.029
277.275
-
8.310.312
15.843.679
8.729.689
17.228.468
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.
42.4 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, 2021, cash and cash equivalent (including continued and discontinued operations) financial
assets amounted to €2.555.246 (2020: €870.647) of which approx. €1.910 in UAH and €447.813 in RON (Note 27) while the remaining are
mainly denominated in either USD,GBP or €.
The Group is exposed to interest rate risk in relation to its borrowings (including continued and discontinued operations) amounting to
€9.726.465 (31 December 2020: €8.474.838) 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 2021|88
42. Financial Risk Management (continued)
42.4 Economic Market Risk Management (continued)
Interest Rate Risk (continued)
As at 31 December 2021 the weighted average interest rate for all the interest bearing borrowing and financial leases of the Group stands at
5,07% (31 December 2020: 4%).
The sensitivity analysis for LIBOR and EURIBOR changes applying to the interest calculation on the borrowings principal outstanding as at
31 December 2021 is presented below:
Weighted average interest rate
%Influence on yearly finance costs
Actual
as at 31.12.2021
5,07%
+100 bps
6,07%
83.074
+200 bps
7,07%
1466.149
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 Group’s exposures to financial risk are discussed also in Note 7.
42.5 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.
42.6 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 2021|89
42. Financial Risk Management (continued)
42.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2021
Carrying amount
€
Total
Contractual
Cash Flows
€
Less than
one year
From one to
two years
More than two
years
€
2.160.576
2.160.576
2.160.576
4.510.381
4.510.381
4.510.381
7.470.722
7.470.722
7.470.722
824
14.142.503
824
14.142.503
-
14.141.679
€
-
-
-
-
-
€
-
-
-
824
824
-
-
1.703.566
1.862.279
570.795
1.291.484
4.396.123
4.396.123
4.396.123
-
1.327.056
1.595.855
360.414
67.200
1.168.241
883.567
883.567
312.635
570.932
-
Total net assets/(liabilities)
8.310.312
5.832.191
8.737.824
5.404.679
5.639.967
8.501.712
1.929.616
(1.929.616)
1.168.241
(1.167.418)
Discontinued Operations
31 December 2021
Carrying amount
Less than
one year
From one to
two years
More than two
years
Total
Contractual
Cash Flows
€
394.670
333.263
€
394.670
333.263
€
394.670
-
1.240.028
1.967.961
1.240.028
1.967.961
1.240.028
1.634.698
€
-
-
-
-
€
-
333.263
-
333.263
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
Financial assets
Cash at Bank
Long-term receivables
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)
8.022.899
997.392
64.231
6.515.847
243.310
15.843.679
(13.875.718)
8.537.740
997.392
64.231
7.761.584
243.310
17.604.257
(15.636.296)
7.534.289
989.553
-
582.862
213.540
9.320.244
(7.685.546)
215.460
-
-
569.794
29.770
815.024
(815.024)
787.991
7.839
64.231
6.608.928
-
7.468.989
(7.135.726)
CONSOLIDATED FINANCIAL STATEMENTS 2021|90
42. Financial Risk Management (continued)
42.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2020
Carrying amount
€
Total
Contractual
Cash Flows
€
€
Financial assets
Cash at Bank
Prepayments and other
receivables
Financial Assets at FV through
P&L
Long-term Receivables and
prepayments
129.859
129.859
129.859
836
836
-
6.787.244
6.787.244
6.787.244
6.880.076
6.880.076
6.880.076
Total Financial assets
13.798.015
13.798.015
13.797.179
Less than
one year
From one to
two years
More than two
years
€
-
-
-
-
-
€
-
836
-
-
836
-
-
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
1.283.426
712.903
570.523
-
Total net assets/(liabilities)
8.729.688
5.068.327
9.271.838
4.526.177
5.609.084
8.188.095
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
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
€
-
-
-
-
-
€
-
315.000
-
-
315.000
Financial liabilities
Borrowings
Trade and other payables
Bonds issued
Taxes payable and provisions
Total Financial 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 2021|91
43. Events after the end of the reporting period
a) War in Ukraine
In light of Russian military activity in Ukraine started in February 2022, the Company temporarily closed its Ukrainian office in Kiev and is
housing some family members of its Ukrainian staff in Romania. The office re-opened in May and since then business is running according to
the conditions imposed by the ongoing war.
Group’s assets in Ukraine consist of non-generating income land plots and as such the financial impact of the invasion is expected to be
minimal, although the economic instability brought by the war is expected to affect private investment activity and the overall local real
estate market. Starting from 2022 interim consolidated accounts, local assets will be realued affecting the net asset value of the Group. In
current period the contributed value of Ukrainian assets is €3,6 milion.
b) Arcona Property Fund N.V. transaction
Following the conditional Implementation Agreement signed between the Company and Arcona Property Fund N.V. in December 2018 for the
sale of Company’s 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 upon closing of such agreements is expected to reach c.€8,2 million, payable in Arcona shares and
warrants valued at NAV plus ~€1 million in cash. Final figures are subject to, inter alia, standard form adjustment and finalization in accordance
with the agreements.
Following SPA signing as per above, during March and June 2022 the transfers of Delenco and EOS assets in Romania to Arcona Property
Fund N.V. were concluded, in exchange for the issue to SPDI of 479.376 new shares in Arcona and 115.543 warrants over shares in Arcona.
c)
Re-payment of corporate loan
During 2022 SPDI re-paid fully the corporate loan granted by Safe Growth Investments on November 11th, 2020 for an amount of EUR 1mil.
In particular, the loan was re-paid in two tranches, one of € 600.000 on January 6th, 2022 and one of € 400.000 on April 1st, 2022.
d) Final acquisition of 50% of Vic City shareholder SPV
Based on the relevant agreement in 2021, the Company, in February 2022, acquired 50% of the share capital of Equardo Limited, an SPV
holding stake in Victoria City (Vic City) project in Bucharest. The participation took place through a share capital increase of the order of €
8.000, where the remaining shareholders waived their right to participate. Vic City is a development land in north Bucharest on Bucuresti Noi
Boulevard near a metro station, where a commercial mixed used center was to be developed. The project was to be contributed to SPDI by
its promoters at the time, but neither its development nor its contribution progressed due to other priorities. SPDI participated in Equardo
Limited so as to retain some of the value originally destined to be part of its asset portfolio.
CONSOLIDATED FINANCIAL STATEMENTS 2021|92