REG - Secure Property Dev - Interim Results
29/09/2022 07:00
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RNS Number : 0747B Secure Property Dev & Inv PLC 29 September 2022
Secure Property Development & Invest PLC/ Index: AIM / Epic: SPDI /
Sector: Real Estate
29 September 2022
Secure Property Development & Investment PLC ('SPDI' or 'the Company')
Interim Results
Secure Property Development & Investment PLC, the AIM quoted South Eastern
European focused property company, is pleased to announce its unaudited
interim results for the period ended 30 June 2022.
Corporate Overview
· NAV per share stood at 13p a share as at 30 June 2022 - 126%
higher than the current share price
· Progress of Stage 2 of the indirect merger with Arcona Property
Fund N.V (Arcona) with the closing and transfer of the following Romanian
assets:
o Transfer of Lelar Holdings Limited (Delenco Office Building asset in
Bucharest) to Arcona
o Transfer of N-E Real Estate Park First Phase SRL (EOS Business Park in
Bucharest) to Arcona
· SPDI now has a total holding of 1,072,910 shares in Arcona and
259,627 warrants over shares in Arcona which based on the closing price of
Arcona's shares on 29 September 2022, values the SPDI's stake in Arcona at
c.€7.1 million (excluding the issue of the warrants), while based on the
current net asset value per Arcona share (as at 30 June 2022), values the
stake at €12.48 million (excluding the issue of the warrants)
· Stage 2 is ongoing with the remaining assets in the Kiev region
of Ukraine. Discussions regarding Stage 3 of the transaction are at a
preliminary stage and will be intensified upon successful closing of Stage 2
· Net income from continuing operations decreased to €651,139 due
to a drop in third party management fees as a result of the disposal process
Michael Beys, Board Chairman, said, "The first half of 2022 has been a period
in which we have made substantial progress in line with the Company's strategy
to maximise value for shareholders. We closed two transactions with Arcona as
part of the conditional implementation agreement for the sale of Company's
property portfolio, resulting in us having a 25.3% shareholding in Arcona
currently. 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.
"The war in Ukraine has, obviously, meant a reprioritisation of our efforts to
ensure the safety first and foremost of our team on the ground and the
consequent ongoing delays in the progress of the Ukrainian aspect of the
Arcona transaction.
"Despite facing a number of continuing headwinds, we are pleased with the
progress we have made on our strategy even though it is not reflected in the
trading price of SPDI shares. We will continue to update shareholders as we
move forward implementing that strategy."
* * ENDS * *
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014
For further information please visit www.secure-property.eu
(http://www.secure-property.eu/#_blank) or contact:
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Ritchie Balmer
Jon Belliss Novum Securities Limited Tel: +44 (0) 207 399 9400
Catherine Leftley St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Charlotte Page
Notes to Editors
Secure Property Development and Investment plc is an AIM listed property
development and investment company focused on the South East European
markets. The Company's strategy is focused on generating healthy investment
returns principally derived from: the operation of income generating
commercial properties and capital appreciation through investment in high
yield real estate assets. The Company is focused primarily on commercial and
industrial property in populous locations with blue chip tenants on long term
rental contracts. The Company's senior management consists of a team of
executives that possess extensive experience in managing real estate companies
both in the private and the publicly listed sector, in various European
countries.
Management Report
1.1 Corporate Overview & Financial Performance
SPDI's core property asset portfolio consists of South Eastern European prime
commercial and industrial real estate, the majority of which is let to blue
chip tenants on long leases. During H1 2022, management, in line with the
Company's strategy to maximise value for shareholders, closed two transactions
with Arcona Property Fund N.V (Arcona) as part of 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 total agreement 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.
During March and June 2022 the transactions for the sale of EOS and Delenco
were concluded, in exchange for the issue to the Company of 479.376 new shares
in Arcona and 115.543 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 normalisation 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 managed to
get an official approval yet. The first step in the process whereby the
approval by presiding committee of the municipality, before the final approval
by the City Council, did not take 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.
Net income from operations decreased by 31% during H1 2022, due to an expected
drop in third party management fees as a result of the disposal process.
Overall, the administration expenses, adjusted by the one-off costs associated
with non-recurring tasks, decreased by 8%, but recurring EBITDA decreased to
€0,07m compared to €0,5m in H1 2021, not only due to the decrease in net
operating income but also due to non-existance of share of profits from
associates, resulted from the sale of the Delenco asset. Finance result
remained at the same levels and the operating result after finance and taxes
decreased to losses €0,2m as compared to profits of €0,25m in the
comparative period.
Table 1
2. Regional Economic Developments 1 (#_ftn1)
The main macroeconomic indicators reveal a steady, but at a slower pace,
economic rebound at two years after the contraction of the economy due to the
impact of the COVID-19 pandemic in 2020. After a GDP growth of 5,9% for 2021,
economic performance in 2022 is forecasted considerably lower, with a modest
3% growth. The reason for such performance is mainly the ongoing conflict in
neighbouring Ukraine and the considerably high inflation rate which is
recorded during the year at +10% and is expected to reach 9,7% at the end of
2022. At the same time, the unemployment rate increased marginally from 5,4%
at the end of 2021 to 5,7% at mid H1 2022.
The Government announced recently the launch of a new package of social and
economic measures of the order of €1,1bn, including financial support for
pensioners and low income citizens, as well as the postponement for nine
months of bank debts for corporates and people facing economic difficulties.
At the same time, the Government adopted measures for restraining public
deficit, including among others the reduction of public expenditures by 10%,
excluding salaries, pensions and investments.
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 devastating blow to
Ukraine's economy and it has caused 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.
3. Real Estate Market Developments
2 (#_ftn2)
3.1 Romania
Sales of residential units in Romania are expected to continue to be strong in
2022 with an increase of c.15% as compared to 2021. Residential units in
Bucharest cost on average €1.660 per m(2), while prices of more than
€1.000 per m(2) are also achieved in regional cities such as Timisoara,
Brasov and Constanta. Despite the social and economic impact of the conflict
in Ukraine, the demand for new houses in H1 2022 turned out to be stronger
than expected.
3.2 Ukraine
Real estate market in Ukraine has not functioned normally since the invasion
of the country by Russia in February 2022. Given the ongoing conflict, any
relevant activity during the period is almost impossible, the country is
operating under martial law, there are no available statistics and/or
publications, and therefore no meaningful statements and inferences can be
made for the local real estate market.
4. Property Assets
4.1 EOS Business Park - Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class "A" office building
of 3.386 sqm GLA and 90 parking places. It is located next to the Danone
factory, in the North-Eastern part of Bucharest with access to the Colentina
Road and the Fundeni Road. The Park is very close to Bucharest's ring road and
the DN 2 national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
The Company acquired the office building in November 2014. The complex is
fully let to Danone Romania, the French multinational food company, until
2025. The asset was sold in June 2022 as part of Stage 2 of the Arcona
transaction.
4.2 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of two
underground levels, a ground floor and ten above-ground floors. The building
is strategically located in the very center of Bucharest, close to three main
squares of the city: Unirii, Alba Iulia and Muncii, only 300m from the metro
station.
The Company acquired 24,35% of the property in May 2015. As at the end 2021,
the building 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.
4.3 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.
The terminal is currently is 73% leased. Anchor 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.
4.4 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake, a standalone
building on the ground and first floor is used as a nursery by one of the
Bucharest's leading private schools.
The building is erected on 1.429 m2 plot with a total gross area of 1.198 m2.
The property is 100% leased to the International School for Primary Education
until 2032.
4.5 Residential portfolio
• GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of apartments and
villas, situated on the banks of Grivita Lake, in the northern part of the
Romanian capital - the only residential property in Bucharest with a 200
meters frontage to a lake. The compound also includes facilities such as one
of Bucharest's leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally GreenLake
includes land plots totaling 40.360 sqm. SPDI owns ~43% of this property asset
portfolio.
During H1 2022, 2 apartments and villas were sold while at the end of the
period 9 units remained unsold. The asset is planned to be part of Stage 3 of
the Arcona transaction.
4.5 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 historic Podil.
The asset is part of Stage 2 of the Arcona transaction and the relevant SPA
for its disposal has 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 remaining 45%.
The extension of the lease, originally expected during 2021, was delayed and
currently is on hold due to the invasion of Ukraine by Russia. The asset is
planned to be part of Stage 3 of the Arcona transaction.
· Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be developed as a
residential complex. Following a protracted legal battle, it has been
registered under the Company pursuant to a legal decision in July 2015.
The asset is part of Stage 2 of the Arcona transaction and relevant SPA for
its disposal has already been signed in June 2021 while closing has been
postponed due to the invasion of Ukraine by Russia.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Note 30 June 2022 30 June 2021
Continued Operations € €
Income 10 509.750 657.443
Net Operating Income 509.750 657.443
Administration expenses 12 (859.672) (553.530)
Other operating income/(expenses), net 15 3.641 3.524
Fair value (loss)/gain on financial assts at FV through P&L 25 (446.674) 79.284
Gain/(loss) realized on acquisition of assets/subsidiary 1.041 -
Share of profits/(losses) associates 21 (3.822) -
Operating profit/(Loss) (795.736) 186.721
Finance income 16 187.273 254.819
Finance costs 16 (61.178) (106.503)
Profit/ (Loss) before tax and foreign exchange differences (669.641) 335.037
Foreign exchange (loss), net 17a (11.065) (47.406)
Profit/ (Loss) before tax (680.706) 287.631
Income tax expense 18 2.277 (124)
Profit/ (Loss) for the period from continuing operations (678.429) 287.507
Profit/(Loss) from discontinued operations 9b (6.204.637) 234.770
Profit/(Loss) for the period (6.883.066) 522.277
Other comprehensive income
Total comprehensive income for the period (6.863.918) (43.202)
Profit/ (Loss) for the period from continued operations attributable to:
Owners of the parent (678.429) 287.507
Non-controlling interests - -
(678.429) 287.507
Profit/(Loss) for the period from discontinued operations attributable to:
Owners of the parent (5.982.678) 146.385
Non-controlling interests (221.959) 88.385
(6.204.637) 234.770
Profit/(Loss) for the period attributable to:
Owners of the parent (6.661.107) 433.892
Non-controlling interests (221.959) 88.385
(6.883.066) 522.277
Total comprehensive income attributable to:
Owners of the parent (6.690.897) (189.974)
Non-controlling interests (173.021) 146.772
(6.863.918) (43.202)
Earnings/(losses) per share (Euro per share): 36 b,c
Basic earnings/(losses) for the period attributable to ordinary equity owners (0,005) 0,002
of the parent
Diluted earnings/(losses) for the period attributable to ordinary equity (0,005) 0,002
owners of the parent
Basic earnings/(losses) for the period from discontinued operations
attributable to ordinary equity owners of the parent (0,05) 0,001
Diluted earnings/(losses) for the period from discontinued operations
attributable to ordinary equity owners of the parent (0,05) 0,001
The notes form an integral part of these condensed consolidated interim
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the six months ended 30 June 2022
Note 30 June 2022 31 December 2021
€
ASSETS
Non‑current assets
Tangible and intangible assets 22 1.297 1.628
Financial Assets at FV through P&L 25 12.703.253 7.470.722
Investments in associates 21 5.219 -
Long-term receivables and prepayments 23 823 824
12.710.592 7.473.174
Current assets
Prepayments and other current assets 24 4.150.836 4.510.381
Cash and cash equivalents 26 235.742 2.160.576
4.386.578 6.670.957
Assets classified as held for sale 9d 23.635.136 39.011.516
Total assets 40.732.306 53.155.647
EQUITY AND LIABILITIES
Issued share capital 27 1.291.281 1.291.281
Share premium 72.107.265 72.107.265
Foreign currency translation reserve 28 8.874.608 8.969.787
Exchange difference on I/C loans to foreign holdings 38.3 (211.199) (211.199)
Accumulated losses (65.142.572) (58.903.610)
Equity attributable to equity holders of the parent 16.919.383 23.253.524
Non-controlling interests 29 5.218.355 5.748.132
Total equity 22.137.738 29.001.656
Non‑current liabilities
Borrowings 30 140.181 126.066
Bonds issued 31 1.033.842 1.033.842
Taxation 34 611.225 627.130
1.785.248 1.787.038
Current liabilities
Borrowings 30 535.500 1.577.500
Bonds issued 31 136.266 293.214
Trade and other payables 32 3.998.125 4.396.123
Tax payable and provisions 34 73.193 256.437
4.743.084 6.523.274
Liabilities directly associated with assets classified as held for sale 9d 12.066.236 15.843.679
16.809.320 22.366.953
Total liabilities 18.594.568 24.153.991
Total equity and liabilities 40.732.306 53.155.647
Net Asset Value (NAV) € per share: 36 d
Basic NAV attributable to equity holders of the parent 0,13 0,17
Diluted NAV attributable to equity holders of the parent 0,13 0,17
On 28 September 2022 the Board of Directors of SECURE PROPERTY DEVELOPMENT
& INVESTMENT PLC authorised these financial statements for issue.
Lambros Anagnostopoulos Michael Beys
Theofanis Antoniou
Director & Chief Executive Officer Director & Chairman of the
Board
CFO
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Attributable to owners of the Company
Share capital Share premium, Accumulated losses, net of non-controlling interest(2) Exchange difference on I/C loans to foreign holdings(3) Foreign currency translation reserve(4) Total Non- controlling interest Total
Net(1)
€ € € € € € € €
Balance 1 January 2021 1.291.281 72.107.265 (58.428.800) (211.199) 8.954.426 23.712.973 5.921.153 29.634.126
Loss for the year - - 433.892 - - 433.892 88.385 522.277
Foreign currency translation reserve - - - - (623.866) (623.866) 58.387 (565.479)
Balance 30 June 2021 1.291.281 72.107.265 (57.994.908) (211.199) 8.330.560 23.522.999 6.067.925 29.590.924
Loss for the year - - (908.702) - - (908.702) (310.344) (1.219.046)
Foreign currency translation reserve - - - 639.227 639.227 (9.449) 629.778
Balance 31 December 2021 1.291.281 72.107.265 (58.903.610) (211.199) 8.969.787 23.253.524 5.748.132 29.001.656
Loss for the year - - (6.238.962) - - (6.238.962) (644.104) (6.883.066)
Foreign currency translation reserve - - - (95.179) (95.179) 114.327 19.148
Balance 30 June 2022 1.291.281 72.107.265 (65.142.572) (211.199) 8.874.608 16.919.383 5.218.355 22.137.738
( )
(1) Share premium is not available for distribution.
(2) Companies, which do not distribute 70% of their profits after tax, as
defined by the Special Contribution for the Defence of the Republic Law,
within two years after the end of the relevant tax year, will be deemed to
have distributed this amount as dividend on the 31 of December of the second
year. The amount of the deemed dividend distribution is reduced by any actual
dividend already distributed by 31 December of the second year for the year
the profits relate. The Company pays special defence contribution on behalf of
the shareholders over the amount of the deemed dividend distribution at a rate
of 17% (applicable since 2014) when the entitled shareholders are natural
persons tax residents of Cyprus and have their domicile in Cyprus. In
addition, from 2019 (deemed dividend distribution of year 2017 profits), the
Company pays on behalf of the shareholders General Healthcare System (GHS)
contribution at a rate of 2,65% (31.12.2019: 1,70%), when the entitled
shareholders are natural persons tax residents of Cyprus, regardless of their
domicile.
(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 38.3).
(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.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2022
Note 30 June 2022 30 June 2021
€ €
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling interests-continued operations (680.706) 287.631
Profit/(Loss )before tax and non-controlling interests-discontinued operations 9b (6.171.386) 252.619
Profi/(Loss) before tax and non-controlling interests (6.852.092) 540.250
Adjustments for:
(Gains)/losses on revaluation of investment property 13 1.793.710 (250.201)
Net gain/loss on disposal of investment properties 14 982.792 (294.514)
Accounts payable written off 15 - (5.464)
Depreciation/ Amortization charge 12 852 738
Finance income 16 (191.918) (259.464)
Interest expense 16 421.551 489.012
Share of profit from associates 21 3.822 (194.863)
(Gain)/loss realized in acquisition of asset/subsidiary (1.041) -
(Gain)/loss on disposal of subsidiaries 20.2.2 2.970.951 -
Fair value change on financial investment 25 446.674 (79.284)
Effect of foreign exchange differences 17a 42.041 205.348
Cash flows from/(used in) operations before working capital changes (382.658) 151.558
Change in prepayments and other current assets 24 (461.427) 458.426
Change in trade and other payables 32 105.445 (77.966)
Change in VAT and other taxes receivable 24 (27.016) 8.471
Change in other taxes payables 34 157.299 55.785
Change in provisions 34 - (337)
Change in deposits from tenants 33 (41.229) -
Cash generated from operations (649.586) 595.937
Income tax paid (112.321) (103.989)
Net cash flows provided/(used) in operating activities (761.907) 491.948
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment property 14 774.833 2.126.423
Payment for acquisition of associate 21 (6.296) -
Dividend received from associates 21 121.772 -
Interest received 24 95.649 139.682.89
(Increase)/Decrease in long term receivable 23 (13.809) (149.990)
Net cash flows from / (used in) investing activities 972.149 1.976.433
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of principle amount of borrowings 30 (1.224.086) (2.404.265)
Interest and financial charges paid 30 (267.725) (108.521)
Decrease in financial lease liabilities 35 (142.951) (197.489)
Net cash flows from / (used in) financing activities (1.634.762) (2.710.275)
Net increase/(decrease) in cash at banks (1.424.520) (241.894)
Cash:
At beginning of the period 2.555.246 841.868
At end of the period 26 1.130.726 599.974
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 June 2022
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 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 the reporting date, the companies of the Group employed and/or used the
services of 15 full time equivalent people, (2021 à 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)
.
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
2022. This adoption did not have a material effect on the accounting policies
of the Company.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all years presented in these consolidated financial
statements unless otherwise stated.
Local statutory accounting principles and procedures differ from those
generally accepted under IFRS. Accordingly, the consolidated financial
information, which has been prepared from the local statutory accounting
records for the entities of the Group domiciled in Cyprus, Romania, 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 the
Cypriot subsidiaries.
The consolidated financial statements are presented in Euro, which is the
Group's presentation currency.
As Management records the consolidated financial information of the entities
domiciled in Cyprus, Romania, Ukraine in their functional currencies, in
translating financial information of the entities domiciled in these countries
into Euro for inclusion in the consolidated financial statements, the Group
follows a translation policy in accordance with IAS 21, "The Effects of
Changes in Foreign Exchange Rates", and the following procedures are
performed:
· All assets and liabilities are translated at
closing rate;
· Equity of the Group has been translated using the
historical rates;
· Income and expense items are translated using
exchange rates at the dates of the transactions, or where this is not
practicable the average rate has been
used;
· All resulting exchange differences are recognized
as a separate component of equity;
· When a foreign operation is disposed of through
sale, liquidation, repayment of share capital or abandonment of all, or part
of that entity, the exchange differences deferred in equity are reclassified
to the consolidated statement of comprehensive income as part of the gain or
loss on sale;
· Monetary items receivable from foreign operations
for which settlement is neither planned nor likely to occur in the foreseeable
future and in substance are part of the Group's net investment in those
foreign operations are recongised initially in other comprehensive income and
reclassified from equity to profit or loss on disposal of the foreign
operation.
The relevant exchange rates of the European and local central banks used in
translating the financial information of the entities from the functional
currencies into Euro are as follows:
Average for the period Closing as at
Currency 1 Jan 2022 - 30 June 2022 1 Jan 2021 - 31 Dec 2021 1 Jan 2021 - 30 June 2021 30 June 2022 31 December 2021 30 June 2021
USD 1,0934 1,1827 1,2053 1,0387 1,1326 1,1884
UAH 31,7356 32,3009 33,4936 30,7776 30,9226 32,3018
RON 4,9463 4,9204 4,9000 4,9454 4,9481 4,9267
4.3 Discontinued operations
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
· represents a separate major line of business or geographic area
of operations;
· is part of a single coordinated plan to dispose of a separate
major line of business or geographic area of operations; or
· is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal
or when the operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative
statement of profit or loss and OCI is re-presented as if the operation had
been discontinued from the start of the comparative year.
4.4 Investment Property at fair value
Investment property, comprising freehold and leasehold land, investment
properties held for future development, warehouse and office properties, as
well as the residential property units, is held for long term rental yields
and/or for capital appreciation and is not occupied by the Group. Investment
property and investment property under construction are carried at fair value,
representing open market value as determined annually by external valuers and
reviewed by Management who finally decides on reported values. Changes in fair
values are recorded in the statement of comprehensive income and are included
in other operating income.
A number of the land leases (all in Ukraine) are held for relatively short
terms and place an obligation upon the lessee to complete development by a
prescribed date. It is important to note that the rights to complete a
development may be lost or at least delayed if the lessee fails to complete a
permitted development within the timescale set out by the ground lease.
In addition, in the event that a development has not commenced upon the expiry
of a lease then the City Authorities are entitled to decline the granting of a
new lease on the basis that the land is not used in accordance with the
designation. Furthermore, where all necessary permissions and consents for the
development are not in place, this may provide the City Authorities with
grounds for rescinding or non-renewal of the ground lease. However Management
believes that the possibility of such action is remote and was made only under
limited circumstances in the past.
Management believes that rescinding or non-renewal of the ground lease is
remote if a project is on the final stage of development or on the operating
cycle. In undertaking the valuations reported herein, the valuer of Ukrainian
properties CBRE has made the assumption that no such circumstances will arise
to permit the City Authorities to rescind the land lease or not to grant a
renewal.
Land held under operating lease is classified and accounted for as investment
property when the rest of the definition is met.
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 the
period ending 30 June 2022:
· 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".
In expressing opinions on Market Value, in certain cases the appraisers have
estimated net annual rentals/income from sale. These are assessed on the
assumption that they are the best rent/sale prices at which a new letting/sale
of an interest in property would have been completed at the date of valuation
assuming: a willing landlord/buyer; that prior to the date of valuation there
had been a reasonable period (having regard to the nature of the property and
the state of the market) for the proper marketing of the interest, for the
agreement of the price and terms and for the completion of the letting/sale;
that the state of the market, levels of value and other circumstances were, on
any earlier assumed date of entering into an agreement for lease/sale, the
same as on the valuation date; that no account is taken of any additional bid
by a prospective tenant/buyer with a special interest; that the principal deal
conditions assumed to apply are the same as in the market at the time of
valuation; that both parties to the transaction had acted knowledgeably,
prudently and without compulsion.
A number of properties are held by way of ground leasehold interests granted
by the City Authorities. The ground rental payments of such interests may be
reviewed on an annual basis, in either an upwards or downwards direction, by
reference to an established formula. Within the terms of the lease, there is a
right to extend the term of the lease upon expiry in line with the existing
terms and conditions thereof. In arriving at opinions of Market Value, the
appraisers assumed that the respective ground leases are capable of extension
in accordance with the terms of each lease. In addition, given that such
interests are not assignable, it was assumed that each leasehold interest is
held by way of a special purpose vehicle ("SPV"), and that the shares in the
respective SPVs are transferable.
With regard to each of the properties considered, in those instances where
project documentation has been agreed with the respective local authorities,
opinions of the appraisers of value have been based on such agreements.
In those instances where the properties are held in part ownership, the
valuations assume that these interests are saleable in the open market without
any restriction from the co-owner and that there are no encumbrances within
the share agreements which would impact the sale ability of the properties
concerned.
The valuation is exclusive of VAT and no allowances have been made for any
expenses of realization or for taxation which might arise in the event of a
disposal of any property.
In some instances the appraisers constructed a Discounted Cash Flow (DCF)
model. DCF analysis is a financial modeling technique based on explicit
assumptions regarding the prospective income and expenses of a property or
business. The analysis is a forecast of receipts and disbursements during the
period concerned. The forecast is based on the assessment of market prices for
comparable premises, build rates, cost levels etc. from the point of view of a
probable developer.
To these projected cash flows, an appropriate, market-derived discount rate is
applied to establish an indication of the present value of the income stream
associated with the property. In this case, it is a development property and
thus estimates of capital outlays, development costs, and anticipated sales
income are used to produce net cash flows that are then discounted over the
projected development and marketing periods. The Net Present Value (NPV) of
such cash flows could represent what someone might be willing to pay for the
site and is therefore an indicator of market value. All the payments are
projected in nominal US Dollar/Euro amounts and thus incorporate relevant
inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the appraisers have
taken into account in arriving at Market Value the following:
Pre Development
In those instances where the nature of the 'Project' has been defined, it was
assumed that the subject property will be developed in accordance with this
blueprint. The final outcome of the development of the property is determined
by the Board of Directors decision, which is based on existing market
conditions, profitability of the project, ability to finance the project and
obtaining required construction permits.
Development
In terms of construction costs, the budgeted costs have been taken into
account in considering opinions of value. However, the appraisers have also
had regard to current construction rates prevailing in the market which a
prospective purchaser may deem appropriate to adopt in constructing each
individual scheme. Although in some instances the appraisers have adopted the
budgeted costs provided, in some cases the appraisers' own opinions of costs
were used.
Post Development
Rental values have been assessed as at the date of valuation but having regard
to the existing occupational markets taking into account the likely supply and
demand dynamics during the anticipated development period. The standard
letting fees were assumed within the valuations. In arriving at their
estimates of gross development value ("GDV"), the appraisers have capitalized
their opinion of net operating income, having deducted any anticipated
non-recoverable expenses, such as land payments, and permanent void allowance,
which has then been capitalized into perpetuity.
The capitalization rates adopted in arriving at the opinions of GDV reflect
the appraisers' opinions of the rates at which the properties could be sold as
at the date of valuation.
In terms of residential developments, the sales prices per sq. m. again
reflect current market conditions and represent those levels the appraisers
consider to be achievable at present. It was assumed that there are no
irrecoverable operating expenses and that all costs will be recovered from the
occupiers/owners by way of a service charge.
The valuations take into account the requirement to pay ground rental payments
and these are assumed not to be recoverable from the occupiers. In terms of
ground rent payments, the appraisers have assessed these on the basis of
information available, and if not available they have calculated these
payments based on current legislation defining the basis of these assessments.
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 20
IT hardware 33
Motor vehicles 25
Furniture, fixtures and office equipment 20
Machinery and equipment 15
Software and Licenses 33
No depreciation is charged on land.
Assets held under leases are depreciated over their expected useful lives on
the same basis as owned assets or, where shorter, the term of the relevant
lease.
The assets residual values and useful lives are reviewed, and adjusted, if
appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its estimated
recoverable amount, the asset is written down immediately to its recoverable
amount.
Expenditure for repairs and maintenance of tangible and intangible assets is
charged to the statement of comprehensive income of the year in which it is
incurred. The cost of major renovations and other subsequent expenditure are
included in the carrying amount of the asset when it is probable that future
economic benefits in excess of the originally assessed standard of performance
of the existing asset will flow to the Group. Major renovations are
depreciated over the remaining useful life of the related asset.
An item of tangible and intangible assets is derecognized upon disposal or
when no future economic benefits are expected to arise from the continued use
of the asset. Any gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the difference between
the sales proceeds and the carrying amount of the asset and is recognized in
the statement of comprehensive income.
4.7 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.
Financial assets - Business model assessment:
The Group makes an assessment of the objective of the business model in which
a financial asset is held at a portfolio level because this best reflects the
way the business is managed and information is provided to management. The
information considered includes:
- the stated policies and objectives for the portfolio and
the operation of those policies in practice. These include whether
management's strategy focuses on earning contractual interest income,
maintaining a particular interest rate profile, matching the duration of the
financial assets to the duration of any related liabilities or expected cash
outflows or realising cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and
reported to the Group's management;
- the risks that affect the performance of the business
model (and the financial assets held within that business model) and how those
risks are managed;
- how managers of the business are compensated - e.g.
whether compensation is based on the fair value of the assets managed or the
contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in prior
periods, the reasons for such sales and expectations about future sales
activity.
Transfers of financial assets to third parties in transactions that do not
qualify for derecognition are not considered sales for this purpose,
consistent with the Group's continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose
performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets - Assessment whether contractual cash flows are solely
payments of principal and interest:
For the purposes of this assessment, 'principal' is defined as the fair value
of the financial asset on initial recognition. 'Interest' is defined as
consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and
for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of
principal and interest, the Group considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a
contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition. In making this assessment,
the Group considers:
- contingent events that would change the amount or timing
of cash flows;
- terms that may adjust the contractual coupon rate,
including variable-rate features;
- prepayment and extension features; and
- terms that limit the Group's claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and
interest criterion if the prepayment amount substantially represents unpaid
amounts of principal and interest on the principal amount outstanding, which
may include reasonable additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or requires
prepayment at an amount that substantially represents the contractual par
amount plus accrued (but unpaid) contractual interest (which may also include
reasonable additional compensation for early termination) is treated as
consistent with this criterion if the fair value of the prepayment feature is
insignificant at initial recognition.
Financial assets - Subsequent measurement and gains and losses:
These assets are subsequently measured at fair value. Net gains and losses,
including any interest or dividend income, are recognised in profit or loss.
However for derivatives designated as hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective
interest method. The amortised cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are recognised in
profit or loss. Any gain or loss on derecognition is recognised in profit or
loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income
calculated using the effective interest method, foreign exchange gains and
losses and impairment are recognised in profit or loss. Other net gains and
losses are recognised in OCI. On derecognition, gains and losses accumulated
in OCI are reclassified to profit or loss.
Equity investments at
FVOCI
These assets are subsequently measured at fair value. Dividends are recognised
as income in profit or loss unless the dividend clearly represents a recovery
of part of the cost of the investment. Other net gains and losses are
recognised in OCI and are never reclassified to profit or loss.
4.9.3 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.
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:
the contract involves the use of
an identified asset this may be specified explicitly or implicitly, and should
be physically distinct or represent substantially all of the capacity of a
physically distinct asset. If the supplier has a substantive substitution
right, then the asset is not identified;
the Company has the right to
obtain substantially all of the economic benefits from use of the asset
throughout the period of use; and
the Company has the right to
direct the use of the asset. The Company has this right when it has the
decision making rights that are most relevant to changing how and for what
purpose the asset is used. In rare cases where the decision about how and for
what purpose the asset is used is predetermined, the Company has the right to
direct the use of the asset if either:
the Company has the right to
operate the asset; or
the Company designed the asset in
a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component,
the Company allocates the consideration in the contract to each lease
component on the basis of their relative stand alone prices. However, for the
leases of land and buildings in which it is a lessee, the Company has elected
not to separate non lease components and account for the lease and non lease
components as a single lease component.
The Company as lessor
When the Company acts as a lessor, it determines at lease inception whether
each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the
lease transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is the case, then the lease is a
finance lease; if not, then it is an operating lease. As part of this
assessment, the Company considers certain indicators such as whether the lease
is for the major part of the economic life of the asset.
When the Company is an intermediate lessor, it accounts for its interests in
the head lease and the sub lease separately. It assesses the lease
classification of a sub lease with reference to the right of use asset arising
from the head lease, not with reference to the underlying asset. If a head
lease is a short term lease to which the Company applies the exemption
described above, then it classifies the sub lease as an operating lease.
If an arrangement contains lease and non lease components, the Company applies
IFRS 15 to allocate the consideration in the contract. The Company recognises
lease payments received under operating leases as income om a straight line
basis over the lease term as part of 'other income'.
The accounting policies applicable to the Company as a lessor in the
comparative period were not different from IFRS 16. However, when the Company
was an intermediate lessor the sub leases were classified with reference to
the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease liability at the lease
commencement date. The right of use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right of use asset is subsequently depreciated using the straight line
method from the commencement date to the earlier of the end of the useful life
of the right of use asset or the end of the lease term. The estimated useful
lives of the right of use assets are determined on the same basis as those of
property and equipment. In addition, the right of use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the
following:
fixed payments, including in
substance fixed payments;
variable lease payments that
depend on an index or a rate, initially measured using the index or rate as at
the commencementdate;
amounts expected to be payable
under a residual value guarantee; and
the exercise price under a
purchase option that the Company is reasonably certain to exercise, lease
payments in an optional renewal period if the Company is reasonably certain to
exercise an extension option, and penalties for early termination of a lease
unless the Company is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the
Company's estimate of the amount expected to be payable under a residual value
guarantee, or if the Company changes its assessment of whether it will
exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right of use asset, or is recorded in
profit or loss if the carrying amount of the right of use asset has been
reduced to zero.
The Company presents its right of use assets that do not meet the definition
of investment property in 'Property, plant and equipment' in the statement of
financial position.
The lease liabilities are presented in 'loans and borrowings'in the statement
of financial position.
Short term leases and leases of low value assets
The Company has elected not to recognise the right of use assets and lease
liabilities for short term leases that have a lease term of 12 months or less
and leases of low value assets (i.e. IT equipment, office equipment etc.). The
Company recognises the lease payments associated with these leases as an
expense on a straight line basis over the lease term.
4.11 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.
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.
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:
4.19.1 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.
4.19.2 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).
4.19.3 Interest income
Interest income is recognized on a time-proportion (accrual) basis, using the
effective interest rate method.
4.19.4 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.
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.
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 · Residential segment · Land assets - the Group owns a number of land assets which are
either available for sale or for potential development
· Office segment
· Retail segment
The Group also monitors investment property assets on a Geographical
Segmentation, namely the country where its property is located.
4.27 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
At the date of approval of these financial statements, standards and
interpretations were issued by the International Accounting Standards Board
which were not yet effective. Some of them were adopted by the European Union
and others not yet. The Board of Directors expects that the adoption of these
accounting standards in future periods will not have a material effect on the
financial statements of the Company.
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. For the current period,
the Group has used the same fair values as those determined for 31 December
2021, except for the Ukrainian assets for which updated valuations were
prepared in order to take into account the developments from the ongoing
conflict. Following the updated valuations, the Management has agreed to
further impair the value of those assets at 50% of their end of previous year
value (Note 19.2).
· Income taxes
Significant judgment is required in determining the provision for income
taxes. There are transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group
recognizes liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such
differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.
· Impairment of tangible assets
Assets that are subject to depreciation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognized for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units).
· Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of the investment
property and investment property under development as the Group is able to
control the timing of the reversal of this temporary difference and the
Management has intention not to reverse the temporary difference in the
foreseeable future. The properties are held by subsidiary companies in
Ukraine, Greece and Romania. Management estimates that the assets will be
realized through a share deal rather than through an asset deal. Should any
subsidiary be disposed of, the gains generated from the disposal will be
exempt from any tax.
· Application of IFRS 10
The Group has considered the application of IFRS 10 and concluded that the
Company is not an Investment Entity as defined by IFRS 10 and it should
continue to consolidate all of its investments, as in 2016. The reasons for
such conclusion are among others that the Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development,
allocation of capital expenditure for its properties, marketing etc.) in order
to provide benefits other than capital appreciation and/or investment income,
c) to have investments that are not bound by time in relation to the
exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as well
as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its investments,
this is being done primarily for presentation purposes rather that evaluating
income generating capability and making investment decisions. The latter is
being based on metrics like IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate property holding
and development associated risks, property market price risk, interest rate
risk, credit risk, liquidity risk, currency risk, other market price risk,
operational risk, compliance risk, litigation risk, reputation risk, capital
risk and other risks, arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these risks are
discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and economic
environment of countries in which it operates. Notably:
7.1.1.1 Ukraine
The risk associated with Company's interests in Ukraine has increased
dramatically with the invasion of the country by Russia in February 2022.
Currently, the political and economic risks associated with Company's
activities in the region do not really allow for any relevant assessment for
the future.
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.
Due to the situation, the Management decided to proceed with the re-valuation
of the Ukrainian properties, although this is not the standard course of
action in relation to interim accounts. To that end, the Company received
updated valuation reports for these properties, and finally the Management,
given the associated uncertainty, decided to value those assets even lower
than the current values as provided by the third-party valuers (CBRE Ukraine).
As a result, the Ukrainian assets contribute €1,8 million in Group's assets,
as compared to €3,1 million provided by the valuers and €3,6 million in
2021 accounts.
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.
The Company will revert to inform investors upon having a clearer view on the
developments associated with the conflict and its consequences on real estate
assets.
7.1.1.2 Romania
Romanian economy grew significantly by 5,9% in 2021, following the contraction
of the economy due to the impact of the COVID-19 pandemic in 2020. However,
economic performance for current year is forecasted considerably lower at 3%,
due to the ongoing conflict in neighboring Ukraine, and the associated impact
on inflation rate, which stands and expected to continue to do so at double
digit levels.
Following the impacts of that conflict, local Government forced to announce
social and economic measures for the support of low income citizens,
increasing the risk of higher budget deficits and public debt, which might
further weaken the macroeconomic indicators and therefore the associated risk.
7.1.2 Risks associated with property holding and development associated risks
Several factors may affect the economic performance and value of the Group's
properties, including:
· risks associated with construction activity at the properties,
including delays, the imposition of liens and defects in workmanship;
· the ability to collect rent from tenants on a timely basis or at
all, taking also into account currency rapid devaluation risk;
· the amount of rent and the terms on which lease renewals and new
leases are agreed being less favorable than current leases;
· cyclical fluctuations in the property market generally;
· local conditions such as an oversupply of similar properties or a
reduction in demand for the properties;
· the attractiveness of the property to tenants or residential
purchasers;
· decreases in capital valuations of property;
· changes in availability and costs of financing, which may affect
the sale or refinancing of properties;
· covenants, conditions, restrictions and easements relating to the
properties;
· changes in governmental legislation and regulations, including
but not limited to designated use, allocation, environmental usage, taxation
and insurance;
· the risk of bad or unmarketable title due to failure to register
or perfect our interests or the existence of prior claims, encumbrances or
charges of which we may be unaware at the time of purchase;
· the possibility of occupants in the properties, whether squatters
or those with legitimate claims to take possession;
· the ability to pay for adequate maintenance, insurance and other
operating costs, including taxes, which could increase over time; and
· political uncertainty, acts of terrorism and acts of nature, such
as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group's portfolio
investments will fluctuate as a result of changes in market prices. The
Group's assets are susceptible to market price risk arising from uncertainties
about future prices of the investments. The Group's market price risk is
managed through diversification of the investment portfolio, continuous
elaboration of the market conditions and active asset management. To quantify
the value of its assets and/or indicate the possibility of impairment losses,
the Group commissioned internationally acclaimed valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially independent of
changes in market interest rates as the Group has no significant
interest‑bearing assets apart from its cash balances that are mainly kept
for liquidity purposes.
The Group is exposed to interest rate risk in relation to its borrowings.
Borrowings issued at variable rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk. All of the Group's borrowings are issued at a variable
interest rate. Management monitors the interest rate fluctuations on a
continuous basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets at hand at the end of the reporting period. Cash balances are held with
high credit quality financial institutions and the Group has policies to limit
the amount of credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and recognized assets
and liabilities are denominated in a currency that is not the Group's
functional currency. Excluding the transactions in Ukraine all of the Group's
transactions, including the rental proceeds are denominated or pegged to EUR.
In Ukraine, even though there is no recurring income stream, the fluctuations
of UAH against EUR entails significant FX risk for the Group in terms of its
local assets valuation. Management monitors the exchange rate fluctuations on
a continuous basis and acts accordingly, although there are no available
financial tools for hedging the exposure on UAH. It should be noted though
that the current political uncertainty in Ukraine, and any probable currency
devaluation may affect the Group's financial position.
7.1.7 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 41.1 of the consolidated financial statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines and other
penalties, which arises from non‑compliance with laws and regulations of
each country the Group is present, as well as from the stock exchange where
the Company is listed. Although the Group is trying to limit such risk, the
uncertain environment in which it operates in various countries increases the
complexities handled by Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of the Group's
operations or any other undesirable situation that arises from the possibility
of non‑execution or violation of legal contracts and consequentially of
lawsuits. The risk is restricted through the contracts used by the Group to
execute its operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet its financial
obligations towards a lender as debts become due. Addressing and resolving any
insolvency issues is usually a slow moving process in the Region. Management
is closely involved in discussions with creditors when/if such cases arise in
any subsidiary of the Group aiming to effect alternate repayment plans
including debt repayment so as to minimize the effects of such situations on
the Group's asset base.
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies relating to
the Group's information technology and control systems, as well as the risk of
human error and natural disasters. The Group's systems are evaluated,
maintained and upgraded continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities approximate
their carrying amounts at the end of the reporting period.
8. Investment in subsidiaries
The Company has direct and indirect holdings in other companies, collectively
called the Group, that were included in the consolidated financial statements,
and are detailed below.
Holding %
Name Country Related Asset as at as at as at
30 June 2022 31 Dec 2021 30 June 2021
SC Secure Capital Limited Cyprus 100 100 100
LLC Aisi Ukraine Ukraine Kiyanovskiy Residence 100 100 100
LLC Trade Center Ukraine 100 100 100
LLC Almaz‑Pres‑Ukraine Ukraine Tsymlyanskiy Residence* 55 55 55
LLC Retail Development Balabino Ukraine 100 100 100
LLC Interterminal Ukraine 100 100 100
LLC Aisi Ilvo Ukraine 100 100 100
Myrnes Innovations Park Limited Cyprus Innovations Logistics Park 100 100 100
Best Day Real Estate Srl Romania 100 100 100
Yamano Holdings Limited Cyprus EOS Business Park 100 100 100
N-E Real Estate Park First Phase Srl Romania - 100 100
Victini Holdings Limited Cyprus - - 100
Zirimon Properties Limited Cyprus Delea Nuova (Delenco) 100 100 100
Bluehouse Accession Project IX Limited Cyprus 100 100 100
Bluehouse Accession Project IV Limited** Cyprus 100 100 100
BlueBigBox 3 Srl Romania 100 100 100
SPDI Real Estate Srl Romania Kindergarten 50 50 50
SEC South East Continent Unique Real Estate Investments II Limited Cyprus 100 100 100
SEC South East Continent Unique Real Estate (Secured) Investments Limited Cyprus 100 100 100
Diforio Holdings Limited** Cyprus Residential and Land portfolio 100 100 100
Demetiva Holdings Limited** Cyprus 100 100 100
Ketiza Holdings Limited Cyprus 90 90 90
Frizomo Holdings Limited Cyprus 100 100 100
SecMon Real Estate Sr Romania 100 100 -
Ketiza Real Estate Srl Romania 90 90 90
Edetrio Holdings Limited Cyprus 100 100 100
Emakei Holdings Limited Cyprus 100 100 100
RAM Real Estate Management Limited Cyprus 50 50 50
Iuliu Maniu Limited Cyprus 45 45 45
Moselin Investments Srl Romania 45 45 45
Rimasol Enterprises Limited Cyprus 70,56 70,56 70,56
Rimasol Real Estate Srl Romania 70,56 70,56 70,56
Ashor Ventures Limited Cyprus 44,24 44,24 44,24
Ashor Development Srl Romania 44,24 44,24 44,24
Jenby Ventures Limited** Cyprus 44,30 44,30 44,30
Jenby Investments Srl Romania 44,30 44,30 44,30
Ebenem Limited** Cyprus 44,30 44,30 44,30
Ebenem Investments Srl Romania 44,30 44,30 44,30
Sertland Properties Limited Cyprus 100 100 100
Mofben Investments Limited** Cyprus 100 100 100
SPDI Management Srl Romania 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 2020 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.
As part of Stage 2 of the transaction with Arcona, during the first half of
2022 the Group proceeded with closing the disposal of N-E Real Estate Park
First Phase Srl, the entity which owns the EOS asset, in exchange of 116.688
new ordinary shares in Arcona and 28.125 warrants over shares in Arcona.
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.
Additionally 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%.
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 2021, the subsidiary had managed to sell successfully all its units
stock .
9. Discontinued operations
9.(a) Description
The Company announced on 18 December 2018 that it has entered into a
conditional implementation agreement for the sale of its property portfolio,
excluding its Greek logistics properties ('the Non-Greek Portfolio'), in an
all-share transaction to Arcona Property Fund N.V. The transaction is subject
to, among other things, asset and tax due diligence (including third party
asset valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission to listing
of the new Arcona Property Fund N.V. shares), as well as successful
negotiating and signature of transaction documents. During 2019 and as part of
the Arcona transaction the Company sold the Boyana Residence asset in
Bulgaria, as well as the Bela and Balabino land plots in Ukraine, while in
June 2021 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 in Romania. On the other hand, the invasion of Ukraine
by Russia in February 2022 has put on hold the completion of the transactions
regarding the Ukrainian assets and any development is expected to take place
in the future upon normalization of current conditions in the country.
The companies that are classified under discontinued operations are the
followings:
• Cyprus: Ashor Ventures Limited,
Edetrio Holdings Limited, Rimasol Enterprises Limited, Emakei Holdings
Limited, Iuliu Maniu Limited, Ram Real Estate Management Limited, Frizomo
Holdings Limited, Ketiza Holdings Limited
• Romania: Ashor Development Srl,
Ebenem Investments Srl, Jenby Investments Srl, Rimasol Real Estate Srl,
Moselin Investments Srl, Best Day Real Estate 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
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).
9.(b) Results of discontinued operations
For the period ended 30 June 2022
Note 30 June 2022 30 June 2021
€ €
Income 10 417.610 530.033
Asset operating expenses 11 (276.221) (256.068)
Net Operating Income 141.389 273.965
Administration expenses 12 (70.823) (113.562)
Share of profits from associates 21 - 194.863
Valuation gains/(losses) from Investment Property 13 (1.793.710) 250.201
Gain/(loss) on disposal of subsidiary 20.2.2 (2.970.951) -
Net profit /(loss) on disposal of investment property 14 (982.792) 294.514
Other operating income/(expenses), net 15 (104.116) (107.144)
Operating profit (5.781.003) 792.837
Finance income 16 4.645 4.645
Finance costs 16 (364.052) (386.921)
Profit /(Loss) before tax and foreign exchange differences (6.140.410) 410.561
Foreign exchange (loss), net 17a (30.976) (157.942)
Profit/(Loss) before tax (6.171.386) 252.619
Income tax expense 18 (33.251) (17.849)
Profit/(Loss) for the year (6.204.637) 234.770
Profit/(Loss) attributable to:
Owners of the parent (5.982.678) 146.385
Non-controlling interests (221.959) 88.385
(6.204.637) 234.770
9.(c) Cash flows from(used in) discontinued operation
30 June 2022 30 June 2021
€ €
Net cash flows provided in operating activities (2.014.264) (218.890)
Net cash flows from / (used in) financing activities 5.473.653 (2.392.148)
Net cash flows from / (used in) investing activities (565.587) 2.201.166
Net increase/(decrease) from discontinued operations 2.893.802 (409.872)
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 30 June 2022:
Note 30 June 2022 31 Dec 2021
€ €
Assets classified as held for sale
Investment properties 19.4 18.567.057 31.554.991
Tangible and intangible assets 22 52 11.988
Long-term receivables and prepayments 23 317.084 333.263
Investments in associates 21 1 5.476.576
Prepayments and other current assets 24 3.855.958 1.240.028
Cash and cash equivalents 26 894.984 394.670
Total assets of group held for sale 23.635.136 39.011.516
Liabilities directly related with assets classified as held for sale
Borrowings 30 4.615.242 8.022.899
Finance lease liabilities 35 6.372.896 6.515.847
Trade and other payables 32 802.476 997.392
Taxation 34 252.620 243.310
Deposits from tenants 33 23.002 64.231
Total liabilities of group held for sale 12.066.236 15.843.679
10. Income
Income from continued operations for the period ended 30 June 2022 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 in 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 also be transferred.
b) Asset management income.
Continued operations 30 June 2022 30 June 2021
€ €
Rental income 358.514 339.831
Service charges and utilities income 151.236 116.675
Asset management income - 200.937
Total income 509.750 657.443
Income from discontinued operations for the period ended 30 June 2022
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 in 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.
Discontinued operations (Note 9) 30 June 2022 30 June 2021
€ €
Rental income 408.891 515.772
Service charges and utilities income 8.719 13.798
Property management income - 463
Total income 417.610 530.033
Occupancy rates in the various income producing assets of the Group as at 30
June 2022 were as follows:
Income producing assets
% 30 June 2022 30 June 2021
EOS Business Park Romania 100 100
Innovations Logistics Park Romania 73 89
Kindergarten Romania 100 100
11. Asset operating expenses
The Group incurs expenses related to the proper operation and maintenance of
all properties in Kiev and Bucharest. Part of these expenses is recovered from
the tenants through the service charges and utilities recharged (Note 10).
Under continued operations there are no such expenses related to operation of
the Asset.
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) 30 June 2022 30 June 2021
€ €
Property related taxes (82.212) (55.871)
Repairs and technical maintenance (13.432) (37.883)
Utilities (147.382) (110.518)
Property security (17.565) (22.922)
Property insurance (6.208) (3.804)
Leasing expenses (3.421) (22.908)
Other investment property operating expenses (6.001) (2.162)
Total (276.221) (256.068)
Property related taxes reflect local taxes of land and building properties (in
the form of land taxes, building taxes, garbage fees, etc.).
Repairs and technical maintenance decreased substantially in H1 2022 following
extensive maintenance works that took place in Innovations iLogistics Park and
Green Lake unit stock in Bucharest during H1 2021.
Utilities refer mainly to electricity and fuel costs which increased as a
result of the increased consumption by the tenant in Innovations Logistics
Park (Romania) during the period. Such costs are re-invoiced to the tenant.
Property security refers to expenses related to the security of the assets by
third party service providers.
Leasing expenses reflect expenses related to long term land leasing.
12. Administration Expenses
Continued operations 30 June 2022 30 June 2021
€ €
Salaries and Wages (166.927) (174.753)
Incentives pursuant to RemCo proposal (184.500) -
Advisory and broker fees (85.107) (86.136)
Public group expenses (75.005) (73.538)
Corporate registration and maintenance fees (24.395) (32.285)
Vat Expensed (10.711) (5.253)
Audit and accounting fees (47.468) (60.523)
Legal fees (152.731) (25.390)
Depreciation/Amortization charge (787) (688)
Corporate operating expenses (112.041) (94.964)
Total Administration Expenses (859.672) (553.530)
Discontinued operations (Note 9) 30 June 2022 30 June 2021
€ €
Salaries and Wages (14.592) (16.241)
Advisory fees and broker fees (1.918) (38.003)
Corporate registration and maintenance fees (22.188) (19.998)
Vat Expensed (4.385) (3.871)
Audit and accounting fees (21.368) (19.406)
Legal fees (432) (2.195)
Depreciation/Amortization charge (65) (50)
Corporate operating expenses (5.875) (13.798)
Total Administration Expenses (70.823) (113.562)
Salaries and wages include the remuneration of the CEO (H1 2022: €63.123 ,
H1 2021: €63.123), 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 provided in H1 2022 to personnel for the sussessful implementation
of Group's plan pursuant to relevant Remuneration Committee proposal dated 7
May 2021 as approved by the BoD on 01 June 2021.
Advisory and broker fees mainly relate to advisors, brokers and other
professionals engaged in relevant transactions and capital raising campaigns,
as well as outsourced human resources support on the basis of relevant
contracts. The decrease in relevant fees in discontinued operations resulted
from the lower sales commissions and brokerage fees associated with the sales
of units in GreenLake complex, following estensive sales that took place
during the comparative period.
Accounting and related fees include fees from external accounting services, as
well as fees for transfer pricing and tax consulting services.
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.
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. The decrease during the period in continued
operations resulted from the strike off of Cypriot SPV's which remained idle
after the disposal of relevant assets.
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. During the current period, the Group incurred €146k relevant
legal fees associated with the signing of the SPA's and the partial closing of
Stage 2 of the transaction with Arcona.
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 higher cost for the D&O insurance policy, following the continuous
increase of such premiums in the insurance market.
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 (€) Valuation gains/(losses)
30 June 2022 30 June 2021
€ €
Kiyanovskiy Residence (1.296.510) (101.366)
Tsymlyanskiy Residence * - (37.168)
Rozny Lane (485.608) 30.137
Innovations Logistics Park (5.295) 118.108
EOS Business Park - 78.349
Residential Portfolio - 1.783
GreenLake (5.576) 143.542
Kindergarten (721) 16.816
Total (1.793.710) 250.201
* 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.
In relation to the Ukrainian assets, and in view of the ongoing conflict in
the country, the Company received updated third-party valuation reports
instead of keeping the values as at the end of 2021 which is the standard
practice for interim accounts. Following the new valuations of such
properties, the Management decided to further impair the value of those assets
at 50% of their value as at the end of 2021.
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 Investment properties
During the reporting period the Group proceeded with selling properties
classified under either Investment Property (Romanian residential assets)
designated as non-core assets. The gain/ (losses) from disposal of such
properties are presented below:
During H1 2022 the Group sold nothing in Zizin (H1 2021: 1 apartment, 3
parking spaces ) and 2 villas in Moselin (Greenlake Parcel K) (H1 2021: 5
villas). During the period the Group also sold Green Lake Phase 2 land, and in
particular Parcels B,C,F and part of G and additional adjacent land owned by
Green Lake Development SRL, in a transaction with a local developer. The
results of the part of the transaction which conducted by Green Lake
Development SRL are not included in the table below since the selling entity
is an associate.
Discontinued operations (Note 9) 30 June 2022 30 June 2021
€ €
Income from sale of investment property 3.495.146 2.126.423
Cost of investment property (4.477.938) (1.831.909)
Loss from disposal of investment property (982.792) 294.514
15. Other operating income/(expenses), net
Continued operations 30 June 2022 30 June 2021
€ €
Other income 9.198 -
Accounts payable written off - 5.464
Other income 9.198 5.464
Penalties (5.557) (233)
Other expenses - (1.707)
Other expenses (5.557) (1.940)
Other operating income/(expenses), net 3.641 3.524
Discontinued operations (Note 9) 30 June 2022 30 June 2021
€ €
Accounts payable written off - 2.081
Other income 123 -
Other income 123 2.081
Penalties (215) (240)
Other expenses (104.024) (108.985)
Other expenses (104.239) (109.225)
Other operating income/(expenses), net (104.116) (107.144)
Continued operations
Other income represents income from services to an associate company.
The accounts payable written off in H1 2021 are mainly related to writing off
an old balance.
Discontinued operations
Other expenses in discontinued operations represent mainly VAT adjustments on
the construction of buildings resulted from sales of villas with no VAT to
individuals. Such amounts have been received from the clients through the
selling price.
16. Finance costs and income
Continued operations
Finance income 30 June 2022 30 June 2021
€ €
Interest received from non-bank loans (Note 38.1.1) 187.273 254.819
Total finance income 187.273 254.819
Finance costs 30 June 2022 30 June 2021
€ €
Interest expenses (non-bank) (Note 38.1.2) (24.985) (69.490)
Finance charges and commissions (2.406) (3.226)
Bonds interest (33.787) (33.787)
Total finance costs (61.178) (106.503)
Net finance result 126.095 148.316
Discontinued operations (Note 9)
Finance income 30 June 2022 30 June 2021
€ €
Interest received from non-bank loans (Note 38.1.1) 4.645 4.645
Total finance income 4.645 4.645
Finance costs 30 June 2022 30 June 2021
€ €
Interest expenses (bank) (199.643) (215.867)
Interest expenses (non-bank) (Note 38.1.2) (11.993) (12.702)
Finance leasing interest expenses (151.143) (157.166)
Finance charges and commissions (1.273) (1.186)
Total finance costs (364.052) (386.921)
Net finance result (359.407) (382.276)
Interest income from non-bank loans, reflects income from loans granted by the
Group for financial assistance of associates . This amount includes also
interest on Loan receivables from 3rd parties provided as an advance payment
for acquiring a participation in an investment property portfolio (Olympians
portfolio) in Romania The funds provided initially with a convertibility
option which was not exercised, and is currently treated as a loan.
According to the last addendum of the loan agreement, part of the principal
equal to €2,5 million will be contributed to a joint venture between the
Company and the borrower for the development of logistics assets in Romania
(Note 24). The remaining principal plus the interest is repayable by the end
of 2022. The loan is bearing a fixed interest rate of 10%.
Borrowing interest expense represents interest expense charged on bank and
non-bank borrowings (Note 30).
Finance leasing interest expenses relate to the sale and lease back agreements
of the Group (Note 35).
Finance charges and commissions include regular banking commissions and
various fees imposed by the banks.
Bonds interest represents interest accrued for the bonds issued by the Company
during 2018 (Note 31).
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 30 June 2022 from continued operations
amounted to €11.065 (30 June 2021: loss €47.406).
The exchange loss from discontinued operations for the year ended 30 June 2022
amounted to €30.976 (30 June 2021: loss €157.942) (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 38.3). For these intercompany loans the foreign exchange differences are
recognized initially in other comprehensive income and in a separate component
of equity. During 30 June 2022, the Group recognized a foreign exchange loss
of €0 (30 June 2021: loss of €0).
18. Tax Expense
Continued operations 30 June 2022 30 June 2021
€ €
Income and defence tax expense 2.277 (124)
Taxes 2.277 (124)
Discontinued operations (Note 9) 30 June 2022 30 June 2021
€ €
Income and defence tax expense (33.251) (17.849)
Taxes (33.251) (17.849)
For the period ended 30 June 2022 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%.
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. In June
2022 the Company proceeded to the sale of the Romanian SPV which holds the
asset as part of Stage 2 of the transaction with Arcona.
• 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, completed in 2008 and is separated in four
warehouses, two of which offer cold storage (freezing temperature), the total
area of which is 6.395 sqm. Innovations Logistics Park was acquired by the
Group in May 2014 and was 73% leased at the end of the reporting period.
Residential Assets
At the end of the reporting period the Company does not own any more
residential units, having sold during the period the remaining residential
portfolio held by Moselin Investments Srl in GreenLake Residential complex.
The associate company Green Lake Developments Srl still owns 9 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 refers to land plots in GreenLake
complex adjacent to the already developed assets by the associate Greenlake
Development Srl, consisting the Second Phase of the overall project (Note 21).
The complex is situated in the northern part of Bucharest on the bank of
Grivita Lake. SPDI owns indirectly ~44% of these plots, but has effective
management control. At the beginning of the period the asset consisted by
40.850 sqm of land plots and during H1 2022, the Company sold 15.960 sqm of
plots to a local developer in a combined transaction with the associate
Greenlake Development Srl which sold extra 3.983 sqm of plots. At the end of
the period the remaining land in Second Phase of Green Lake project was 24.890
sqm.
19.2 Investment Property Movement during the reporting period
The table below presents a reconciliation of the Fair Value movements of the
investment property during the reporting period broken down by property and by
local currency vs. reporting currency.
Discontinued Operations
30 June 2022 (€) Fair Value movements Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name Type Carrying amount as at 30/06/2022 Foreign exchange translation difference Fair value gain/(loss) based on local currency valuations Disposals H1 2022 Additions Carrying amount as at 31/12/2021
H1 2022
Kiyanovskiy Residence Land 1.324.386 (27.877) (1.296.510) - - 2.648.773
Tsymlyanskiy Residence Land 1 - - - - 1
Rozny Lane Land 485.608 - (485.609) - - 971.217
Total Ukraine 1.809.995 (27.877) (1.782.119) - - 3.619.991
Innovations Logistics Park Warehouse 9.700.000 5.295 (5.295) - - 9.700.000
EOS Business Park Office - - - (6.700.000) - 6.700.000
Residential portfolio Residential - - - - - -
GreenLake Land & Resi 5.737.062 5.576 (5.576) (4.477.938) - 10.215.000
Kindergarten Retail 1.320.000 721 (721) - - 1.320.000
Total Romania 16.757.062 11.592 (11.592) (11.177.938) - 27.935.000
Total 18.567.057 (16.285) (1.793.711) (11.177.938) - 31.554.991
31 December 2021 (€) Fair Value movements Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name Type Carrying amount as at 31/12/2021 Foreign exchange translation difference Fair value gain/(loss) based on local currency valuations (b) Disposals 2021 Additions Carrying amount as at 31/12/2020
(a) 2021
Kiyanovskiy Residence Land 2.648.773 297.620 (93.835) - - 2.444.988
Tsymlyanskiy Residence Land 1 67.683 (964.178) - - 896.496
Rozny Lane Land 971.217 (1.019) 75.740 - - 896.496
Total Ukraine 3.619.991 364.284 (982.273) - - 4.237.980
Innovations Logistics Park Warehouse 9.700.000 (159.294) (240.706) - - 10.100.000
EOS Business Park Office 6.700.000 (107.164) 107.164 - - 6.700.000
Residential portfolio Residential - (4.438) 4.438 (277.458) 124.958 152.500
GreenLake Land & Resi 10.215.000 (197.765) 452.062 (2.314.297) - 12.275.000
Kindergarten Retail 1.320.000 (22.336) (95.664) - - 1.438.000
Total Romania 27.935.000 (490.997) 227.294 (2.591.755) 124.958 30.665.500
TOTAL 31.554.991 (126.713) (754.979) (2.591.755) 124.958 34.903.480
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
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € €
Kiyanovskiy Residence Podil, Land for residential development LLC Aisi Ukraine 2.648.773
Kiev City Center LLC Trade Center - 1.324.386 -
Tsymlyanskiy Residence Podil, Land for residential LLC Almaz‑Pres‑Ukraine 1
Kiev City Center Development - 1 -
Rozny Lane Brovary district, Kiev Land for residential SC Secure Capital Limited 971.217
Development - 485.608 -
Total Ukraine - 1.809.995 - 3.619.991
Innovations Logistics Park Clinceni, Bucharest Warehouse Myrnes Innovations Park Limited 9.700.000
Best Day Real Estate Srl - 9.700.000 -
EOS Business Park Bucharest Office building Yamano Holdings Limited, 6.700.000
N-E Real Estate Park First Phase Srl - - -
Kindergarten Bucharest Retail SPDI Real Estate Srl - 1.320.000 - 1.320.000
GreenLake Bucharest Residential villas (4 villas) Edetrio Holdings Limited
& Emakei Holdings Limited
Land for Residential Development Iuliu Maniu Limited
Moselin Investments Srl 10.215.000
Rimasol Enterprises Limited
Rimasol Real Estate Srl
Ashor Ventures Limited -
Ashor Development Srl - 5.737.062
Jenby Investments Srl
Ebenem Investments Srl
Total Romania - 16.757.062 - 27.935.000
TOTAL - 18.567.057 - 31.554.991
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property: Innovations
Logistics park, EOS Business Park, Kindergarten of GreenLake and GreenLake
parcel K, as well as all the land assets namely Kiyanovskiy Residence,
Tsymlyanskiy Residence and Rozny Lane in Ukraine, and GreenLake in Romania.
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
At the beginning of the reporting period - 31.554.991 - 34.903.480
Additions - - 124.958
Disposal of investment Property - (11.177.938) - (2.591.755)
Revaluation (loss)/gain on investment property - (1.793.711) - (754.979)
Translation difference - (16.285) - (126.713)
As at the end of the reporting period - 18.567.057 - 31.554.991
Disposals in H1 2022 of Investment Properties represent the sales of villas in
Green Lake Parcel K and sale of land Parcels B,C,F and part of G in Green Lake
project Second Phase.
20. Investment Property Acquisitions, Goodwill Movement and Disposals
20.1 Acquisition of asset
On 31 March 2021 the Group acquired an additional 26,32% stake in Rimasol Ltd,
which through Rimasol Srl owns Plot R in Greenlake complex, part of the Second
Phase land of the overall project. With this purchase the total stake of the
Group in this particular plot increased to 70,56%. The asset is a land plot of
3.777 sqm situated in the perimeter of Greenlake residential development, and
currently there are ongoing discussions for its co-development independently.
The value of the transaction reached €200.000 while the fair value of such
stake according to the valuation report as at 31/12/2020 is €212.402 and as
at 31/12/2021 €212.666.
20.2 Disposals
20.2.1 Disposal pre-contract
During previous periods, the Company honouring certain commitment made in the
past during the restructuring of the holdings of Green Lake project, signed a
pre-agreement for the sale of its 50% stake in Kindergarten asset in
Greenlake, Bucharest. The consideration of the transaction has been set at
€175.000 plus release of available company's cash pledged by the Bank, while
the agreement is conditional on effective payment of the price by the buyer
until 30/09/2022.
20.2.2 Disposal of subsidiaries and associates
20.2.2 (A) Disposal of EOS Bussiness Park
Following relevant SPA signed in June 2021 and as part of Stage 2 of the
transaction with Arcona, during H1 2022 the Company closed the agreement for
the disposal of the Romanian SPV which owns the EOS Business Park asset in
Bucharest. In exchange for the sale the Company received 116.688 new ordinary
shares in Arcona and 28.125 warrants over shares in Arcona.
ASSETS €
Non-current assets
Investment properties 6.700.000
Other non-current assets 41.674
6.741.674
Current assets
Prepayments and other current assets 72.198
Cash and cash equivalents 49.783
121.981
Total Assets 6.863.655
LIABILITIES
Interest bearing borrowings 3.347.799
Other liabilities 44.372
Total Liabilities 3.392.171
NET ASSET 3.471.484
Consideration:
Shares in Arcona 1.386.249
Loss on Disposal 2.085.235
In view of closing the transaction with Arcona for EOS, the Company entered in
December 2021 a new loan facility for re-financing the previous leasing
contract of the asset, securing a net amount of ~€800k which used to
partially re-pay the shareholder loan provided by the Company to the relevant
SPV.
20.2.2 (B) Disposal of Associate Lelar Holdings Limited (Note 21)
During H1 2022 and as part of Stage 2 of the transaction with Arcona, the
Company sold Lelar Holdings Limited, the Cypriot holding company associated
with Delea Nuova asset in Bucharest. In exchange of the transfer, the Company
received 362.688 new ordinary shares in Arcona and 87.418 warrants over shares
in Arcona, while at the same time the parties agreed that the already declared
dividends by Lelar Holding Limited will be allocated and paid to the Company.
The relevant amount of such dividends corresponding to the transferred
ownership stake of 24,35% was €298k which will be collected during 2022.
€
Value of associate at date of Disposal (Note 21) 5.178.669
Consideration:
Shares in Arcona 4.292.953
Loss on Disposal 885.716
Total losses on Disposals (A) & (B) 2.970.951
21. Investments in associates
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Cost of investment in associates at the beginning of the period - - 5.476.576 - 5.071.656
Aqusition of investment in associate 9.041 - - -
Share of profits/(losses) from associates (3.822) - - 344.746
Dividend Income - (297.906) - (198.137)
Disposal of investments - (5.178.669) - -
Foreign exchange difference - - - 258.311
Total 5.219 1 - 5.476.576
During H1 2022 the Company acquired 50% of the share capital of Equardo
Holdings 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. Vic City is a plot of land for development in north
Bucharest on Bucuresti Noi Boulevard near the metro station, where a
commercial mixed use 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 Holdings Limited so as to retain some of the value originally destined
to be part of its asset portfolio.
Dividend Income reflects dividends declared by Lelar Holdings Limited the
holding SPV of Delea Nuova building, where the Group used to hold a 24,35%
participation. The associate was sold during the H1 2022 with the declared
dividends agreed to be paid to the Company (Note 20.2.2).
The share of profit from the associate GreenLake Development Srl was limited
up to the interest of the Group in the associate.
As at 30 June 2022, the Group's interests in its associates and their
summarised financial information, including total assets at fair value, total
liabilities, revenues and profit or loss, were as follows:
Project Name Associates Total assets Total liabilities Profit/ Holding Share of profits from associates Country Asset type
(loss)
€ € € % €
Delea Nuova Project Lelar Holdings Limited and S.C. Delenco Construct Srl - - - - - Romania Office building
Vic City Project Equardo Holdings Limited 273.954 (255.872) (7.643) 50% (3.822) Romania Land
Green Lake Project GreenLake Development Srl 3.783.789 (5.426.760) 1.233.492 40,35% - Romania Residential assets
4.057.743 (5.682.632) 1.225.849 (3.822)
As at 30 June 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 Associates Total assets Total liabilities Profit/ Holding Share of profits from associates Country Asset type
(loss)
€ € € % €
Delea Nuova Project Lelar Holdings Limited and S.C. Delenco Construct Srl 22.598.967 (1.428.496) 800.126 24,35% 194.863 Romania Office building
GreenLake Project - Phase A GreenLake Development Srl 5.765.057 (8.613.170) 375.735 40,35% - Romania Residential assets
Total 28.364.024 (10.041.666) 1.175.861 194.863
22. Tangible and intangible assets
As at 30 June 2022 the intangible assets were composed of the capitalized
expenditure on the Enterprise Resource Planning system (Microsoft
Dynamics-Navision) in the amount of €103.193 (31 Dec 2021: €103.193) which
is under continued operations. Accumulated amortization as at the reporting
date amounts to €103.193 (31 Dec 2021: €103.193) and therefore net value
amounts to €0 (31 Dec 2021: €0).
As at 30 June 2022 the tangible non-current assets under continued operations
were comprised mainly by electronic equipment (mobiles, computers etc.) of a
net value of €1.297 (31 Dec 2021: €1.628).
As at 30 June 2022 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 €39.960
(31 Dec 2021 €79.863). Accumulated depreciation as at the reporting date
amounts to €39.908 (31 Dec 2021: €67.660).
23. Long Term Receivables and prepayments
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Long Term Receivables 823 317.084 824 333.263
Total 823 317.084 824 333.263
Long term receivables mainly include cash pledged in favor of Piraeus Leasing
and in favor of Alpha Leasing, and the guarantee deposit from tenants in
Innovations Logistics Park.
24. Prepayments and other current assets
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Trade and other receivables 476.042 3.245.473 498.869 576.656
VAT and other tax receivables 253.069 88.927 199.808 127.550
Deferred expenses - - - 433
Receivables due from related parties 67.864 516.913 44.084 516.631
Loan receivables from 3(rd) parties 3.413.062 - 3.825.949 -
Loan to associates (Note 38.4) 9.512 315.611 9.351 310.966
Allowance for impairment of prepayments and other current assets (67.680) (292.208)
(68.713) (310.966)
Total 4.150.836 3.855.958 4.510.381 1.240.028
Trade and other receivables mainly include receivables from tenants and
prepayments made for services.
VAT receivable represent VAT which is refundable in Romania, Cyprus and
Ukraine.
Deferred expenses include mainly recognition of property tax expenses.
Receivables due from related parties refer to an amount owed by the associate
Greenlake Development Srl to Moselin Srl as part of the use of latter's cash
for the re-payment of former's loan with Eurobank, as a result of the fact
that there was a cross collateral arrangement securing the loans of the two
companies with Eurobank.
Loan receivables from 3rd parties refer to an advance payment for acquiring a
participation in an investment property portfolio (Olympians portfolio) in
Romania, as well as associated interest less accumulated expected credit loss
of €54.256. The loan provided initially with a convertibility option which
was not exercised. According to the last addendum in force and based on a
relevant SHA signed by the two parties in August 2022 an amount of the loan
equal to €2,5 million will be converted into equity in a joint venture for
the development of logistics properties in Bucharest, Romania, while the
remaining principal plus accrued interest is repayable by end of 2022. The
loan bears a fixed interest rate of 10%.
Loan to associates reflects a loan receivable from GreenLake Development Srl,
holding company of GreenLake Project-Phase A (Notes 21 and 38.4).
25. 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:
30 June 2022 31 Dec 2021
€ €
Arcona shares 7.330.145 6.783.642
FV change in Arcona shares (531.404) 546.503
Acquired Arcona shares 5.679.202 -
Arcona shares at reporting date 12.477.943 7.330.145
Warrants over Arcona shares 140.577 3.602
FV change in warrants 84.730 136.975
Acquired Arcona shares 3 -
Arcona warrants at reporting date 225.310 140.577
Total Financial Assets at FV 12.703.253 7.470.722
FV change in Arcona shares (531.404) 546.503
FV change in warrants 84.730 136.975
Fair Value loss on Financial Assets at FV through P&L (446.674) 683.478
The Company received during 2019 and 2020 593.534 Arcona shares as part of the
completion of Stage 1 of the transaction with Arcona, for the sale of Bella
and Balabino assets in Ukraine, and the Boyana asset in Bulgaria. During the
current period the Company received 479.376 additional shares in Arcona as
part of Stage 2 of the transaction with Arcona, for the sale of EOS and Delea
Nuova assets in Romania.
At the end of the reporting period the shares are revalued at their fair value
based on the NAV per share of Arcona at the same date, and as a result a
relevant fair value loss of €531.404 (2021: gain €546.503) 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
€8,10 or higher.
Moreover, during the current period the Company received 28.125 warrants over
shares in Arcona for the sale of EOS asset, and 87.418 warrants over shares in
Arcona for the sale of Delea Nuova asset for a total consideration of €2.
These warrants are exercisable upon the volume weighted average price of
Arcona shares traded on a regulated market at €7,2 or higher.
At year end, the warrants are re-valued to fair value and as a result a
relevant gain of €84.730 (2021: gain €136.975) is recognized. The terms
and assumptions used for such warrant re-valuation are:
• Current stock price (as retrieved
from Amsterdam Stock Exchange): EUR 6,25 per share
• Strike price of the warrants: EUR
8,10 and EUR 7,20 per share
• Expiration date: 1 November 2024,
25 March 2027, 15 June 2027
• Standard deviation of stock price:
22,10%
• Annualized dividend yield on
shares: 0%
• 5 year Government Bond rate
(weighted average rate of Government Bonds of countries that Arcona is
exposed): 5,021%
26. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Cash with banks in USD 15.811 - 15.778 -
Cash with banks in EUR 191.785 86 2.081.700 7.872
Cash with banks in UAH 97 883 84 1.826
Cash with banks in RON 27.857 894.015 62.841 384.972
Cash with banks in GBP 192 - 173 -
Total 235.742 894.984 2.160.576 394.670
27. Share capital
Number of Shares
€ 30 June 2022 31 Dec 2021
Authorised
Ordinary shares of €0,01 989.869.935 989.869.935
Total ordinary shares 989.869.935 989.869.935
RCP Class A Shares of €0,01 - -
RCP Class B Shares of €0,01 8.618.997 8.618.997
Total redeemable shares 8.618.997 8.618.997
Issued and fully paid
Ordinary shares of €0,01 129.191.442 129.191.442
Total ordinary shares 129.191.442 129.191.442
Total 129.191.442 129.191.442
Nominal value (€)
€ 30 June 2022 31 Dec 2021
Authorised
Ordinary shares of €0,01 9.898.699 9.898.699
Total ordinary shares 9.898.699 9.898.699
RCP Class A Shares of €0,01 - -
RCP Class B Shares of €0,01 86.190 86.190
Total redeemable shares 86.190 86.190
Issued and fully paid
Ordinary shares of €0,01 1.291.281 1.291.281
Total ordinary shares 1.291.281 1.291.281
Total 1.291.281 1.291.281
27.1 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 27.3).
27.2 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 27.3),
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 27.3) 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 39.3). As soon as the case is settled, the Company
will proceed with the cancellation of the Redeemable Preference Class B
Shares.
On 24(th) December 2019 the Company proceeded with the issue of 1.920.961 new
Ordinary Shares as follows:
i. 1.219.000 new Ordinary Shares to
certain advisors, directors and executives of the Company involved in the
closing of the Stage I of the Arcona Transaction by means of settling relevant
Company's liabilities.
ii. 437.676 new Ordinary Shares to
directors of the Company in lieu of H1 2019 and before H2 2016 fees.
iii. 200.000 new Ordinary Shares to certain
advisor in lieu of cash fees for financial advisory services rendered in 2019.
iv. 64.285 new Ordinary Shares to certain
executive of the Company in lieu of cash fees for services rendered in 2018.
Following shares issuance completed within 2019, the issued share capital of
the Company as at the date of issuance of this report is as follows:
a) 129.191.442 Ordinary Shares of €0,01 nominal value each,
b) 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value
each, (Note 27.3).
27.3 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as follows:
Number of (as at) 30 June 2022 (as at) 31 December 2021 (as at) 31 December 2020
Ordinary shares of €0,01 Issued and Listed on AIM 129.191.442 129.191.442 129.191.442
Total number of Shares Non-Dilutive Basis 129.191.442 129.191.442 129.191.442
Total number of Shares Full Dilutive Basis 129.191.442 129.191.442 129.191.442
Options - - - -
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE ACCESSION
PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker Craiova asset
acquisition do not have voting rights but have economic rights at par with
ordinary shares. As at the reporting date all of the Redeemable Preference
Class B Shares have been redeemed but the Company is in legal proceedings with
the vendor in respect of a final settlement (Notes 32, 39.3).
28. Foreign Currency Translation Reserve
Exchange differences related to the translation from the functional currency
to EUR of the Group's subsidiaries are accounted by entries made directly to
the foreign currency translation reserve. The foreign exchange translation
reserve represents unrealized profits or losses related to the appreciation or
depreciation of the local currencies against EUR in the countries where the
Company's subsidiaries' functional currencies are not EUR. The Company had
foreign exchange gain on translation due to presentation currency of €19.148
for H1 2022, in comparison to €565.479 relevant losses for H1 2021.
29. Non-Controlling Interests
Non-controlling interests represent the percentage participations in the
respective entities not owned by the Group:
% Non-controlling interest portion
Group Company 30 June 2022 31 Dec 2021
LLC Almaz-Press-Ukraine 45,00 45,00
Ketiza Holdings Limited 10,00 10,00
Ketiza Real Estate Srl 10,00 10,00
Ram Real Estate Management Limited 50,00 50,00
Iuliu Maniu Limited 55,00 55,00
Moselin Investments Srl 55,00 55,00
Rimasol Enterprises Limited 29,44 29,44
Rimasol Real Estate Srl 29,44 29,44
Ashor Ventures Limited 55,76 55,76
Ashor Development Srl 55,76 55,76
Jenby Ventures Limited 55,70 55,70
Jenby Investments Srl 55,70 55,70
Ebenem Limited 55,70 55,70
Ebenem Investments Srl 55,70 55,70
SPDI Real Estate Srl 50,00 50,00
30. Borrowings
Project 30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Principal of bank Loans
Piraeus Bank SA GreenLake-Phase 2 - 2.525.938 - 2.525.938
Bancpost SA - 478.666 -
Kindergarten - SPDI RE 510.188
Patria bank First Phase - - - 3.500.000
Loans from other 3(rd) parties and related parties (Note 38.5) 545.336 186.374 1.587.128
183.140
Overdrafts - 1.644 - 1.048
Total principal of bank and non-bank Loans 545.336 3.192.622 1.587.128
6.720.314
Interest accrued on bank loans - 1.358.701 -
1.251.191
Interests accrued on non-bank loans 130.345 63.919 116.438
51.394
Total 675.681 4.615.242 1.703.566 8.022.899
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Current portion 535.500 693.410 1.577.500 3.787.614
Non-current portion 140.181 3.921.832 126.066 4.235.285
Total 675.681 4.615.242 1.703.566 8.022.899
Continued Operations
Loans from other 3(rd) 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 2022 The Company is in the process of extending the maturity of
these Loans.(Note 38.5).
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.
This loan was fully repaid within April 2022.
Discontinued Operations
Moselin Investments Srl entered in 2010 into a construction loan agreement
with Bancpost SA covering the construction works of Parcel K Green Lake
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.
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 €1.356.889 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.
SPDI Real Estate Srl (Kindergarten) has a loan agreement with Bancpost SA
Romania. As at 30 June 2022 the balance of the loan was €478.666 and bears
interest of Euribor 3m plus 4,6% per annum. The loan is repayable by 2027.
Loans from other 3(rd) parties and related parties under discontinued
operations includes borrowings from non-controlling interest parties. During
the last nine years and in order to support the Green Lake 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.
31. 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.
32. Trade and other payables
The fair value of trade and other payables due within one year approximate
their carrying amounts as presented below.
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Payables to third parties 3.115.256 455.496 3.256.166 564.810
Payables to related parties (Note 38.2) 705.165 209.666 929.142 218.359
Deferred income from tenants - 7.843 - 7.839
Accruals 54.045 129.471 87.735 206.384
Pre-sale advances (Advances received for sale of properties) 123.080
123.659 - -
Total 3.998.125 802.476 4.396.123 997.392
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Current portion 3.998.125 794.633 4.396.123 989.553
Non-current portion - 7.843 - 7.839
Total 3.998.125 802.476 4.396.123 997.392
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 27.3) which is under legal proceedings for a final
settlement (Note 39.3), 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, accrued management remuneration and other related parties
balances (Note 38.2). Payables to related parties under discontinued
operations represent payables to non-contolling intetest shareholders.
Deferred income from tenants represents advances from tenants which will be
used as future rental income and utilities charges.
Accruals mainly include the accrued, administration fees, accounting fees,
facility management and other fees payable to third parties.
Pre-sale advances reflect the advance received in relation to Kiyanovskiy
Residence pre-sale agreement, which upon non closing of the said sale part of
which had to be returned to the prospective buyer.
33. Deposits from Tenants
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Deposits from tenants non-current - 23.002 - 64.231
Total - 23.002 - 64.231
Deposits from tenants appearing under non-current liabilities include the
amounts received from the tenants of Innovations Logistics Park and EOS
Business Park (only for 2021), as advances/guarantees and are to be reimbursed
to these clients at the expiration of the lease agreements.
34. Provisions and Taxes Payables
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Corporate income tax - non current 197.523 41.047 200.295 52.221
Defence tax - non current 14.252 - 27.385 -
Tax provision - non current 399.450 - 399.450 -
Non-current 611.225 41.047 627.130 52.221
Corporate income tax - current 50.860 29.934 127.528 9.085
Other taxes including VAT payable - current 22.333 181.639 128.909 182.004
Provisions - current - - - -
Current 73.193 211.573 256.437 191.089
Total Provisions and Taxes Payables 684.418 252.620 883.567 243.310
Corporate income tax represents taxes payable in Cyprus and Romania.
Other taxes represent local property taxes and VAT payable in Ukraine,
Romania, and Cyprus.
Current amounts corporate income tax represent the part of the settlement plan
agreed with the Cyprus tax authorities up to 2022. This amount will be fully
repaid by the end of 2022.
35. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist of the
non-current portion of €6.091.808 and the current portion of €281.088 (31
December 2021: €6.234.852 and €280.995, accordingly).
Discontinued operations
30 June 2022 Note Minimum lease payments Interest Principal
€ € €
Less than one year 41.2 & 41.6 576.328 295.245 281.083
Between two and five years 6.861.520 790.645 6.070.875
More than five years 30.671 9.960 20.711
7.468.519 1.095.850 6.372.669
Accrued Interest 227
Total Finance Lease Liabilities 6.372.896
31 Dec 2021 Note Minimum lease payments Interest Principal
€ € €
Less than one year 41.2 & 41.6 582.862 301.868 280.994
Between two and five years 7.144.878 934.758 6.210.120
More than five years 33.844 11.813 22.031
7.761.584 1.248.439 6.513.14
Accrued Interest 2.702
Total Finance Lease Liabilities 6.515.847
35.1 Land Plots Financial Leasing
The Group holds land plots in Ukraine under leasehold agreements which in
terms of the accounts are classified as finance leases. Lease obligations are
denominated in UAH. The fair value of lease obligations approximate to their
carrying amounts as included above. Following the appropriate discounting,
finance lease liabilities are carried at €31.263 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.
35.2 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 €6.372.896 (2021:€6.621.641) 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 bank towards 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. The leasing facility
borne an interest of 3M Euribor plus 5,25% margin. During December 2021 the
SPV re-paid fully the leasing facility and acquired the property, through a
new loan from Patria Bank of the order of €3,5 million, bearing an interest
rate of 3M Euribor plus 3,5% margin.
36. Earnings and net assets per share attributable to equity holders of the
parent
a. Weighted average number of ordinary shares
30 June 2022 31 Dec 2021 30 June 2021
Issued ordinary shares capital 129.191.442 129.191.442 129.191.442
Weighted average number of ordinary shares (Basic) 129.191.442 129.191.442 129.191.442
Diluted weighted average number of ordinary shares 129.191.442 129.191.442 129.191.442
b. Basic diluted and adjusted earnings per share
Earnings per share 30 Jun 2022 30 Jun 2021
€ €
Profit/ (Loss) after tax attributable to owners of the parent (678.429) 287.507
Basic (0,005) 0,002
Diluted (0,005) 0,002
c. Basic diluted and adjusted earnings per share from
discontinued operations
Earnings per share 30 Jun 2022 30 Jun 2021
€ €
Profit/ (Loss) after tax from discontinued operations attributable to owners (6.204.637) 234.770
of the parent
Basic (0,05) 0,001
Diluted (0,05) 0,001
d. Net assets per share
Net assets per share 30 June 2022 31 Dec 2021
€ €
Net assets attributable to equity holders of the parent 16.919.383 23.253.524
Number of ordinary shares 129.191.442 129.191.442
Diluted number of ordinary shares 129.191.442 129.191.442
Basic 0,13 0,17
Diluted 0,13 0,17
37. 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 in Green Lake
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 period ended 30 June 2022
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Rental income (Note 10) - - - - - 358.514 358.514
Service charges and utilities income (Note 10)
- - - - - 151.236 151.236
Profit from discontinued operation (Note 9) (41.186) (569.325) 51.266 (510) (2.819.347)
(2.226.963) (5.606.065)
Gain realized on acquisition of subsidiary - - - - -
1.041 1.041
Gains/(losses) from investments in associates (Note 21) - - - - -
(3.822) (3.822)
Impairment of financial investments (Note 25)
- - - - - (446.674) (446.674)
Segment profit (41.186) (569.325) 51.266 (510) (2.819.347) (2.166.668) (5.545.770)
Administration expenses (859.672)
(Note 12)
- - - - - -
Other (expenses)/income, net (Note 15)
- - - - - - 3.641
Finance income (Note 16) - - - - - - 187.273
Interest expenses (Note 16) - - - - - - (58.772)
Other finance costs (Note 16) - - - - - - (2.406)
Foreign exchange losses, net (Note 17a)
- - - - - - (11.065)
Income tax expense (Note 18) - - - - - - 2.277
Profit from discontinued operations (Note 9)
- - - - - - (598.572)
Exchange difference on translation foreign holdings (Note 28)
- - - - - - 19.148
Total Comprehensive Income (6.863.918)
- - - - - -
* It is noted that part of the rental and service charges/ utilities income
related to Innovations Logistics Park (Romania) is currently invoiced by the
Company as part of a relevant lease agreement with the Innovations SPV and the
lender, however the asset, through the SPV, is planned to be transferred as
part of the transaction with Arcona Property Fund N.V. Upon a final agreement
for such transfer, the Company will negotiate with the lender its release from
the aforementioned lease agreement, and if succeeds, upon completion such
income will be also transferred.
Continued Operations
Profit and Loss for the period ended 30 June 2021
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Rental income (Note 10) - - - - - 339.831 339.831
Service charges and utilities income (Note 10) - - - - -
116.675 116.675
Profit from discontinued operation (Note 9) 183.623 600.369 70.569 15.393 252.626
(109.037) 1.013.543
Impairment of financial investments - - - -
- 79.284 79.284
Property management (Note 10) - - - - - 200.937 200.937
Segment profit 183.623 600.369 70.569 15.393 252.626 627.690 1.750.270
Administration expenses (Note 12) - - - - - - (553.530)
Other (expenses)/income, net (Note 15) - - - - - -
3.524
Finance income (Note 16) - - - - - - 254.819
Interest expenses (Note 16) - - - - - - (103.277)
Other finance costs (Note 16) - - - - - - (3.226)
Foreign exchange losses, net (Note 17a)
- - - - - - (47.406)
Income tax expense (Note 18) - - - - - - (124)
Profit from discontinued operations (Note 9) - - - - - -
(778.773)
Exchange difference on translation foreign holdings (Note 28)
- - - - - - (565.479)
Total Comprehensive Income - - - - - - (43.202)
Discontinued Operations
Profit and Loss for the period ended 30 June 2022
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Property Sales income (Note 14) - - - - 3.495.146 - 3.495.146
Cost of Property sold (Note 14) - - - - (4.477.938) - (4.477.938)
Rental income (Note 10) 16.930 331.363 59.998 600 - - 408.891
Service charges and utilities income (Note 10) 2.393 - - - 6.326 - 8.719
Valuation gains/(losses) from investment property (Note 13) (5.295) - (721) - (1.787.694) - (1.793.710)
Loss on disposal of subsidiary (Note 20.2.2) - (885.614) - - - (2.085.337) (2.970.951)
Asset operating expenses (55.214) (15.072) (8.011) (1.112) (55.186) (141.626) (276.221)
(Note 11)
Segment profit (41.186) (569.323) 51.266 (512) (2.819.346) (2.226.963) (5.606.064)
Administration expenses - - - - - - (70.823)
(Note 12)
Other (expenses)/income, net (Note 15) - - - - - - (104.116)
Finance income (Note 16) - - - - - - 4.645
Interest expenses (Note 16) - - - - - - (362.779)
Other finance costs (Note 16) - - - - - - (1.273)
Foreign exchange losses, net (Note 17a) - - - - - - (30.976)
Income Tax (Note 18) - - - - - - (33.251)
Exchange difference on translation foreign holdings (Note 28) (46.241)
Total Comprehensive Income - - - - - - (6.250.878)
Discontinued Operations
Profit and Loss for the period ended 30 June 2021
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Property Sales income (Note 14) - - - 168.817 1.957.606 - 2.126.423
Cost of Property sold (Note 14) - - - (152.400) (1.679.509) - (1.831.909)
Rental income (Note 10) 114.612 340.436 59.974 750 - - 515.772
Service charges and utilities income (Note 10) 13.798 - - - - - 13.798
Service and Property Management income (Note 10) - - - - 463 - 463
Valuation gains/(losses) from investment property (Note 13) 118.108 78.349 16.816 1.783 35.145 - 250.201
Share of profits/(losses) from associates (Note 21) - 194.863 - - - - 194.863
Asset operating expenses (62.895) (13.279) (6.221) (3.556) (61.080) (109.037) (256.068)
(Note 11)
Segment profit 183.623 600.369 70.569 15.394 252.625 (109.037) 1.013.543
Administration expenses - - - - - - (113.562)
(Note 12)
Other (expenses)/income, net (Note 15) - - - - - - (107.144)
Finance income (Note 16) - - - - - - 4.645
Interest expenses (Note 16) - - - - - - (385.735)
Other finance costs (Note 16) - - - - - - (1.186)
Foreign exchange losses, net (Note 17a) - - - - - - (157.942)
Income Tax (Note 18) - - - - - - (17.849)
Total Comprehensive Income - - - - - - 234.770
Total Operations
Balance Sheet as at 30 June 2022
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € € €
Assets
Long-term receivables and prepayments 823 - - - - - 823
Investment in associates - - - - - 5.219 5.219
Available-for-sale investments - - - - - 12.703.253 12.703.253
Assets held for sale 10.015.000 - 1.322.084 - 7.547.057 4.750.995 23.635.136
Segment assets 10.015.823 - 1.322.084 - 7.547.057 17.459.467 36.344.431
Tangible and intangible assets - - - - - - 1.297
Prepayments and other current assets - - - - - - 4.150.836
Cash and cash equivalents - - - - - - 235.742
Total assets - - - - - - 40.732.306
Borrowings 9.836 - - - - 665.845 675.681
Liabilities associated with assets classified as held for disposal 6.364.676 - 669.567 - 3.976.897 1.055.096 12.066.236
Segment liabilities 6.374.512 - 669.567 - 3.976.897 1.720.941 12.741.917
Trade and other payables - - - - - - 3.998.125
Taxes payable and provisions - - - - - - 684.418
Bonds - - - - - - 1.170.108
Total liabilities - - - - - - 18.594.568
Total Operations
Balance Sheet as at 31 December 2021
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € €
Assets
Long-term receivables and prepayments - - - - - 823 823
Financial Assets at FV through P&L - - - - - 7.470.723 7.470.723
Assets held for sale 10.015.000 12.176.575 1.338.263 - 12.939.514 2.542.163 39.011.515
Segment assets 10.015.000 12.176.575 1.338.263 - 12.939.514 10.013.709 46.483.061
Tangible and intangible assets - - - - - - 1.628
Prepayments and other current assets - - - - - - 4.510.381
Cash and cash equivalents - - - - - - 2.160.577
Total assets - - - - - - 53.155.647
Liabilities associated with assets classified as held for disposal 6.545.868 3.504.083 696.741 - 3.856.285 1.240.702 15.843.679
Borrowings - - - - - 1.703.566 1.703.566
Segment liabilities 6.545.868 3.504.083 696.741 3.856.285 2.944.268 17.547.245
Trade and other payables - - - - - - 4.396.123
Taxation - - - - - - 883.567
Bonds - - - - - - 1.327.056
Total liabilities - - - - - - 24.153.991
Discontinued operations
Assets and Liabilities held for sale 30 June 2022
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € € €
Assets
Investment properties 9.700.000 - 1.320.000 - 7.547.057 - 18.567.057
Long-term receivables and prepayments 315.000 - 2.084 - - - 317.084
Investments in associates - 1 - - - - 1
Segment assets 10.015.000 1 1.322.084 - 7.547.057 - 18.884.142
Tangible and intangible assets - - - - - - 52
Prepayments and other current assets - - - - - - 3.855.958
Cash and cash equivalents - - - - - - 894.984
Total assets - - - - - - 23.635.136
Borrowings 41 - 669.567 - 3.945.634 - 4.615.242
Finance lease liabilities 6.341.633 - - - 31.263 - 6.372.896
Deposits from tenants 23.002 - - - - - 23.002
Segment liabilities 6.364.676 - 669.567 - 3.976.897 - 11.011.140
Trade and other payables - - - - - - 802.476
Taxation - - - - - - 252.620
Total liabilities - - - - - - 12.066.236
Assets and Liabilities held for sale 31 December 2021
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € € €
Assets
Investment properties 9.700.000 6.700.000 1.320.000 - 12.939.514 895.477 31.554.991
Long-term receivables and prepayments 315.000 - 18.263 - - - 333.263
Investments in associates - 5.476.575 - - - - 5.476.575
Segment assets 10.015.000 12.176.575 1.338.263 - 12.939.514 895.477 37.364.829
Tangible and intangible assets - - - - - - 11.988
Prepayments and other current assets - - - - - - 1.240.028
Cash and cash equivalents - - - - - - 394.670
Total assets - - - - - - 39.011.515
Borrowings - 3.504.083 696.741 - 3.822.075 - 8.022.899
Finance lease liabilities 6.481.637 - - - 34.210 - 6.515.847
Deposits from tenants 64.231 - - - - - 64.231
Segment liabilities 6.545.868 3.504.083 696.741 - 3.856.285 - 14.602.977
Trade and other payables - - - - - - 997.392
Taxation - - - - - - 243.310
Total liabilities - - - - - - 15.843.679
Geographical information
30 June 2022 30 June 2021
Income (Note 10) Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Romania - 417.610 1.836 530.033
Cyprus * 509.750 - 655.607 -
Total 509.750 417.610 657.443 530.033
* 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 successful, upon completion such
income will be also transferred.
Gain/(loss) from disposal of investment properties (Note 14) 30 June 2022 30 June 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Romania - (982.792) - 294.515
Total - (982.792) - 294.515
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Carrying amount of assets (investment properties and associates)
Ukraine - 1.809.995 - 4.375.631
Romania - 16.757.063 - 33.989.351
Total - 18.567.058 - 38.364.982
38. Related Party Transactions
The following transactions were carried out with related parties:
38.1 Income/ Expense
38.1.1 Income
30 June 2022 30 June 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Interest Income from loan to associates (Note 16) 161 4.645 161 4.645
Total 161 4.645 161 4.645
Interest income on loan to related parties relates to interest income from
GreenLake Development Srl (associate).
38.1.2 Expenses
30 June 2022 30 June 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Management Remuneration and incentives (Note 12) 298.843 - 114.343 -
Interest expenses on Director and Management Loans (Note 16) 19.100 - 19.967 -
Total 317.943 - 134.310 -
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, while
incentives refer to incentives to the personnel for the implementation of the
plan of the Group, pursuamt to the proposal of the Remuneration Committee
dated 7 May 2021 as approved by the BoD on 1 June 2021.
38.2 Payables to related parties (Note 32)
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Board of Directors & Committees remuneration 297.009 - 373.187 -
Sec South East Continet Unique Real Esate Management Limited - -
65 65
Management Remuneration 363.467 - 508.511 -
Total 660.541 - 881.763 -
38.2.1 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 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.
38.2.2 Management Remuneration
Management Remuneration represents deferred amounts payable to the CEO of the
Company.
38.3 Loans from SC Secure Capital Limited to the Group's subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group provided
capital in the form of loans to the Ukrainian subsidiaries of the Company so
as to support the acquisition of assets, development expenses of the projects,
as well as various operational costs. The following table presents the amounts
of such loans which are eliminated for consolidation purposes, but their
related exchange difference affects the equity of the Consolidated Statement
of Financial Position.
Borrower Limit Principal as at Principal as at
30 June 2022 31 Dec 2021
€ € €
LLC " Trade Center'' - 6.150 5.707
LLC "Aisi Ukraine" 23.062.351 259.448 220.514
LLC "Almaz-Press-Ukraine" 8.236.554 279.212 259.126
LLC "Aisi Ilvo" 150.537 24.435 24.435
Total 31.449.442 569.245 509.782
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 €56.925, estimated on
balances held at 30 June 2022.
38.4 Loans to associates (Note 24)
30 June 2021 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Loans to GreenLake Development Srl 9.512 315.611 9.351 310.966
Total 9.512 315.611 9.351 310.966
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.
38.5 Loans from related parties (Note 30)
30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Loan from Directors and Management 535.500 - 577.500 -
Interest accrued on loans from related parties 130.345 - 114.060 -
Total 665.845 - 691.560 -
Loans from directors of the order of € 375.000 reflect loans provided from
3 directors as bridge financing. The loans bear interest 8% annually repayable
by 31 August 2022. The Company will discuss with the directors relevant
extension of the loans.
Rest amount of the order of € 160.500 reflect payable to one director,
converted to loan for facilitating Company's cash flow (2021: €202.500).
39. Contingent Liabilities
39.1 Tax Litigation
The Group performed during the reporting period part of its operations in the
Ukraine, within the jurisdiction of the Ukrainian tax authorities. The
Ukrainian tax system can be characterized by numerous taxes and frequently
changing legislation, which may be applied retroactively, open to wide and in
some cases, conflicting interpretation. Instances of inconsistent opinions
between local, regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax declarations
are subject to review and investigation by a number of authorities, which are
authorised by law to impose severe fines and penalties and interest charges.
Any tax year remains open for review by the tax authorities during the three
following subsequent calendar years; however, under certain circumstances a
tax year may remain open for longer. Overall following the sale of Terminal
Brovary, the exposure of the Group in Ukraine was significantly reduced.
The Group performed during the reporting period part of its operations also in
Romania, Greece and Bulgaria. In respect of Romanian, taxation system is
subject to varying interpretation and to constant changes, which may be
retroactive. In certain circumstances the tax authorities can be arbitrary in
certain cases.
These facts create tax risks which are substantially more significant than
those typically found in countries with more developed tax systems. Management
believes that it has adequtely provided for tax liabilities, based on its
interpretation of tax legislation, official pronouncements and court
decisions. However, the interpretations of the relevant authorities could
differ and the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations, could be
significant.
39.2 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.
39.3 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 32). 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 on October 8(th), 2022.
39.4 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.
39.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 30 June 2022.
40. Commitments
The Group had no other commitments as at 30 June 2022.
41. Financial Risk Management
41.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will be available
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 30), bonds (Note 31),
trade and other payables (Note 32) deposits from tenants (Note 33), financial
leases (Note 35), taxes payable (Note 34) 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 shareholders' Return on Equity (ROE) while adhering
to the operational requirements of the property assets and exercising prudent
judgment as to the extent of gearing.
41.2 Categories of Financial Instruments
Note 30 June 2022 31 Dec 2021
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Financial Assets
Cash at Bank 26 235.742 894.984 2.160.576 394.670
Long-term Receivables and prepayments 23 823 317.084 824 333.263
Financial Assets at FV through P&L 25 12.703.253 - 7.470.722 -
Prepayments and other receivables 24 4.150.836 3.855.958 4.510.381 1.240.028
Total 17.090.654 5.068.026 14.142.503 1.967.961
Financial Liabilities
Borrowings 30 675.681 4.615.242 1.703.566 8.022.899
Trade and other payables 32 3.998.125 802.476 4.396.123 997.392
Deposits from tenants 33 - 23.002 - 64.231
Finance lease liabilities 35 - 6.372.896 - 6.515.847
Taxes payable and provisions 34 684.417 252.620 883.567 243.310
Bonds 31 1.170.108 - 1.327.056 -
Total 6.528.331 12.066.236 8.310.312 15.843.679
41.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various corporate
entities, coordinates access to local and international financial markets,
monitors and manages the financial risks relating to the operations of the
Group, mainly the investing and development functions. Its primary goal is to
secure the Group's liquidity and to minimize the effect of the financial asset
price variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk, as well as
credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using derivative instruments
whenever appropriate. The use of financial derivatives is governed by the
Group's approved policies which indicate that the use of derivatives is for
hedging purposes only. The Group does not enter into speculative derivative
trading positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not entered
into any derivative contracts.
41.4 Economic Market Risk Management
The Group currently 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
interest-bearing assets. On June 30(th), 2022, cash and cash equivalent
(including continued and discontinued operations) financial assets amounted to
€ 1.130.726 (31 December 2021: € 2.555.246) of which approx. €980 in UAH
and €921.872 in RON (Note 26) while the remaining are mainly denominated in
either GBP, USD or €.
The Group is exposed to interest rate risk in relation to its borrowings
(including continued and discontinued operations) amounting to € 5.290.923
(31 December 2021: €9.726.465) as they are issued at variable rates tied to
the Libor or Euribor. Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's strategy
with the interest rate view and the defined risk appetite. Although no hedging
has been applied for the reporting period, such may take place in the future
if deemed necessary in order to protect the cash flow of a property asset
through different interest rate cycles.
Management monitors the interest rate fluctuations on a continuous basis and
evaluates hedging options to align the Group's strategy with the interest rate
view and the defined risk appetite. Although no hedging has been applied for
the reporting period, such may take place in the future if deemed necessary in
order to protect the cash flow of a property asset through different interest
rate cycles.
As at 30 June 2022 the weighted average interest rate for all the interest
bearing borrowings of the Group stands at 5,17% (31 December 2021: 5,07%).
The sensitivity analysis for EURIBOR changes applying to the interest
calculation on the borrowings principal outstanding as at 30 June 2022 is
presented below:
Actual +100 bps +200 bps
as at 30.06.2022
Weighted average interest rate 5,17% 6,17% 7,17%
Influence on yearly finance costs 37.380 74.759
The sensitivity analysis for EURIBOR changes applying to the interest
calculation on the borrowings principal outstanding as at 31 December 2021 is
presented below:
Actual +100 bps +200 bps
as at 31.12.2021
Weighted average interest rate 5,07% 6,07% 7,07%
Influence on yearly finance costs 83.074 1..466.149
The Group's exposures to financial risk are discussed also in Note 7.
41.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit risk emanating
from the liquid funds is limited because the Group's counterparties are banks
with high credit-ratings assigned by international credit rating agencies. The
Credit risk of receivables is reduced as the majority of the receivables
represent VAT to be offset through VAT income in the future. In respect of
receivables from tenants these are kept to a minimum of 2 months and are
monitored closely.
41.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which applies a framework for the Group's short, medium and long
term funding and liquidity management requirements. The Treasury function of
the Group manages liquidity risk by preparing and monitoring forecasted cash
flow plans and budgets while maintaining adequate reserves. The following
table details the Group's contractual maturity of its financial liabilities.
The tables below have been drawn up based on the undiscounted contractual
maturities including interest that will be accrued.
Continued Operations
30 June 2022 Carrying amount Total Less than From one to More than two years
Contractual one year two years
Cash Flows
€ € € € €
Financial assets
Cash at Bank 235.742 235.742 235.742 - -
Financial Assets at FV through P&L 12.703.253 12.703.253 12.703.253 - -
Prepayments and other receivables 4.150.836 4.150.836 4.150.836 - -
Long-term Receivables and prepayments 823 823 - - 823
Total Financial assets 17.090.654 17.090.654 17.089.831 - 823
Financial liabilities
Borrowings 675.681 730.215 532.612 197.603 -
Trade and other payables 3.998.125 3.998.125 3.998.125 - -
Bonds issued 1.170.108 1.438.907 203.466 67.200 1.168.241
Taxes payable and provisions 684.417 684.418 76.842 607.576 -
Total Financial liabilities 6.528.331 6.851.665 4.811.045 872.379 1.168.241
Total net (liabilities)/ assets 10.562.323 10.238.989 12.278.786 (872.379) (1.167.418)
Discontinued Operations
30 June 2022 Carrying amount Total Less than From one to More than two years
Contractual one year two years
Cash Flows
€ € € € €
Financial assets
Cash at Bank 894.984 894.984 894.984 - -
Prepayments and other receivables 3.855.958 3.855.958 3.855.958 - -
Long-term Receivables and prepayments 317.084 317.084 - - 317.084
Total Financial assets 5.068.026 5.068.026 4.750.942 - 317.084
Financial liabilities
Borrowings 4.615.242 4.771.352 3.978.811 217.424 575.117
Trade and other payables 802.476 802.476 794.633 - 7.843
Deposits from tenants 23.002 23.002 - - 23.002
Finance lease liabilities 6.372.896 7.468.520 576.329 563.260 6.328.931
Taxes payable and provisions 252.620 252.620 213.922 38.698 -
Total Financial liabilities 12.066.236 13.317.970 5.563.695 819.382 6.934.893
Total net liabilities (6.998.210) (8.249.944) (812.753) (819.382) (6.617.809)
Continued Operations
31 December 2021 Carrying amount Total Less than From one to More than two years
Contractual one year two years
Cash Flows
€ € € € €
Financial assets
Cash at Bank 2.160.576 2.160.576 2.160.576 - -
Long-term Receivables and prepayments 824 824 - - 824
Financial Assets at FV through P&L 7.470.722 7.470.722 7.470.722 - -
4.510.381 4.510.381 - -
Prepayments and other receivables 4.510.381
Total Financial assets 14.142.503 14.142.503 14.141.679 - 824
Financial liabilities
Borrowings 1.703.566 1.862.279 570.795 1.291.484 -
Trade and other payables 4.396.123 4.396.123 4.396.123 4.036.9624.396.123 - -
Bonds issued 1.327.056 1.595.855 360.414 67.200 1.168.241
Taxes payable and provisions 883.567 883.567 312.635 570.523 -
Total Financial liabilities 8.310.312 8.737.824 5.693.967 1.929.616 1.168.241
Total net assets/(liabilities) 5.832.191 5.404.679 8.501.712 (1.929.616) (1.167.418)
Discontinued Operations
31 December 2021 Carrying amount Total Less than From one to More than two years
Contractual one year two years
Cash Flows
€ € € € €
Financial assets
Cash at Bank 394.670 394.670 394.670 - -
Long-term receivables 333.263 333.263 - - 333.263
Prepayments and other receivables 1.240.028 1.240.028 1.240.028 - -
Total Financial assets 1.967.961 1.967.961 1.634.698 - 333.263
Financial liabilities
Borrowings 8.022.899 8.537.740 7.534.289 215.460 787.991
Trade and other payables 997.392 997.392 989.553 - 7.839
Deposits from tenants 64.231 64.231 - - 64.231
Finance lease liabilities 6.515.847 7.761.584 582.862 569.794 6.608.928
Taxation 243.310 243.310 213.540 29.770 -
Total Financial liabilities 15.843.679 17.604.257 9.320.244 815.024 7.468.989
Total net assets/(liabilities) (13.875.718) (15.636.296) (7.685.546) (815.024) (7.135.726)
42. Events after the end of the reporting period
a) Shareholders Agreement with Myrian Nes Limited
In August 2022 the Company signed with Myrian Nes Limited a Shareholders
Agreement for a joint venture for developing a logistics properties in
Romania. As part of this agreement the Company will convert €2,5 million of
the loan it has extended in 2017 to Myrian Nes Limited (Olympians Loan) into a
50% equity stake of the joint venture company. The objective of this new
company, which Myrian Nes is contributing €2,5 million in equity funds to,
is to develop a portfolio of logistics properties in Romania with a view of
letting them to third party tenants in a market that has very low vacancy and
has shown substantial strength and resilience in recent years. The remaining
part of the Olympians Loan is being repaid in regular intervals and is
expected to be fully repaid to the Company by the end of 2022.
1 (#_ftnref1) Sources: World Bank Group, Eurostat, EBRD, National Institute
of Statistics- Romania, National Institute of Statistics - Ukraine, IMF,
European Commission.
2 (#_ftnref2) 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, JLL
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