REG - Secure Property Dev - 2023 Annual Results
28/06/2024 10:15
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RNS Number : 3539U Secure Property Dev & Inv PLC 28 June 2024
Secure Property Development & Invest PLC/ Index: AIM / Epic: SPDI /
Sector: Real Estate
28 June 2024
Secure Property Development & Investment PLC ('SPDI' or 'the Company')
2023 Annual Results
Secure Property Development & Investment PLC, the AIM quoted South Eastern
European focused property company, is pleased to announce its full year
audited financial results for the year ended 31 December 2023.
Highlights
· Advanced strategy to maximise shareholder value by working towards
the contribution of Ukrainian assets to Arcona Property Fund N.V. as part of
the larger transaction, with finalisation expected in Q3 2024.
· The Company externalised HR and office costs, through an agreement
with a Cyprus-based advisory company, expected to further reduce annual costs
by 35% to 50% compared to 2021 and 2020 levels.
· The Company settled the longstanding claim vis a vis Bluehouse
Capital, removing the relevant provision, thus generating a one-off profit of
~€2 million.
· Consequently, NAV per share increased by 40% to €0.14 from €0.10.
· The Romanian economy saw strong growth of 2.1%, a decrease in
inflation to 9.7%, and a marginal reduction in unemployment to
5.5%.
Copies of the Annual report and Accounts are being posted to Shareholders
today and are available on the Company's website at www.secure-property.eu
(http://www.secure-property.eu/) .
* * 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
Susie Geliher St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
1. Letter to Shareholders
2023 experienced further market disruption with one war continuing and another
one commencing in our South East Europe / East Mediterranean Region. On the
other hand global (and European) inflation seems to have been tamed and
interest rate reduction is expected to hit the markets within 2024. In this
difficult environment, SPDI succeeded in lightening its balance sheet
eliminating both a number of liabilities, including settling the Bluehouse
legal dispute, which in itself allowed the Company to get rid of the relative
provision from its books, as well as a number of subsidiary SPVs.
In parallel, SPDI's Management increased its effort to monetize the remaining
assets that had not yet been sold to Arcona Property Fund N.V. (Arcona)
("APF") while it commenced discussions about the future of the Company, after
it reduces its capital and distributes the APF shares it owns to its
shareholders.
We expect 2024 will be a pivotal year for SPDI as its shareholders will
receive the APF shares concluding the effective merger of the two entities,
and any new strategy for the future of the Company is put forward. Management
and directors of SPDI are confident that the effective merger with Arcona
which generates a pan-East European property company listed in Amsterdam will
help our shareholders generate further value from their investment while also
facilitating monetization for those that would like to do so. In any case, we
believe we have followed through our promise to deliver on both options and
are happy to see our long standing efforts nearing realization.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
2. Management Report
2.1 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 2023, in line with the Company's strategy
to maximise value for shareholders, management worked towards closing the sale
of the Ukrainian assets included in Stage 2 of the transaction 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, 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 the 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
involved 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
€1 million 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.
Although, 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, during 2023 the Management has worked intensively to resolve
all relevant issues for the sale to be concluded, and as at today the
transactions are expected to finally close during Q3 2024.
Furthermore, during 2023, as part of the cost optimization process adopted by
the Board, the Company has started the implementation of the externalization
of all existing HR and office costs in all jurisdictions that it currently
operates, except Ukraine. As previously announced, the cost optimization plan
involves an agreement with a Cyprus based advisory company wholly owned by the
Company's CEO Lambros Anagnostopoulos, which has assumed all direct individual
personnel contracts, all service contracts with local real estate service
providers and all HR and office costs in Romania, for a fixed monthly fee of
€ 24.000 plus VAT. All relevant agreements related to this plan were signed
during the period, and currently the Company has externalized all HR costs. It
has been estimated that the plan will result in an annual reduction of 35% and
50% compared to similar costs incurred by the group in 2021 and 2020
respectively. The agreed monthly fee has been set to effectively reflect the
reduced personnel time/cost and office expenses of the Company during the
current phase of the transformation.
Moreover, during 2023, as part of the joint venture agreement with Myrian Nes
Limited for converting €2,5 million of a loan into equity for developing
logistics properties in Romania, the parties have identified and appraised
relevant potential deals, and currently concentrate into one transaction
involving the development of two different properties for the same tenant in
two regional Romanian cities. The main terms have been in principle agreed and
due diligence on relevant properties has been finalized, while the legal teams
are currently engaging with drafting the required documentation.
Finally, during the period the Company sold its interests in all the corporate
vehicles associated with Phase I of the GreenLake project in Bucharest,
Romania, which remained idle following the sale of all Phase I units.
Regarding the economic environment in which the Company operates, the Romanian
economy which constitutes the main operating market of the Company, grew by
2,1% in 2023. The economy decelerated during the year due to higher inflation
and weaker external demand. Growth was driven by strong consumer spending,
which increased significantly year-on-year on the back of the increased wages.
The inflation rate dropped to 9,7% in 2023, while unemployment showed a
marginal decrease to 5,5%, keeping the labor market relatively tight and wage
increases high. Real estate investment volume reached in 2023 €0,5 billion,
60% lower than the volume registered in the previous year, with retail assets
representing 57% of the annual volume, while office assets attracted 17% and
industrial/logistics 14%.
Income from operations increased by 92% during 2023 as a result of new tenant
agreements and increased energy costs re-charged to tenants, and similarly net
operating income from operations increased by 90%.
Table 1
EUR 2023 2022
Continued Operations Discontinued Operations Total Continued Operations Discontinued Operations Total
Rental, Utilities, Management & Sale of electricity Income 1,430,588 1,586,604 1,143,752 1,649,537
156,016 505,785
- (825,392) (825,392)
Net gain/(loss) on disposal of investment property - - -
1,430,588 1,586,604 1,143,752 (319,607) 824,145
Income from Operations 156,016
(867,484) (867,484) (446,380) (446,380)
Asset operating expenses - -
1,430,588 (711,468) 719,120 1,143,752 (765,987) 377,765
Net Operating Income
- (245,316) (245,316) (7,999) 335,533 327,534
Share of profit/(loss) and gains from associates
Dividends income 160,937 - 160,937 - - -
1,591,525 (956,784) 634,741 1,135,753 (430,454) 705,299
Net Operating Income from investments
(1,208,698) (201,344) (1,410,042) (1,097,873) (242,157) (1,340,030)
Administration expenses
241,966 (604,360) (362,394) 162,704 (652,987) (490,283)
Finance result, net
(2,434) (7,389) 17,940 (74,340) (56,400)
Income tax expense (4,955)
Other income / (expenses), net 2,034,104 2,039,896 (3,390) (2,721,353) (2,724,743)
5,792
(49,850) (49,850) (182,253) (182,253)
One off costs associated with Arcona transaction - -
Personnel incentives (151,370) (184,500)
- -
One off costs associated with new tax ruling (70,000) (70,000) -
- - -
One off costs associated with Bluehouse legal motions (152,364) (152,364) -
- - -
Fair value adjustments from Investment Properties (223,730) (223,730) (1,245,230) (1,245,230)
- -
Result on disposal of subsidiaries 7,629,679 (946,792) 6,682,887 (4,871,809) (4,871,809)
-
Fair Value adjustment on financial investments (392,210) (392,210) (1,071,119) (1,071,119)
- -
Foreign exchange differences, net (26,824) (55,699) (82,523) (17,647) (165,165) (182,812)
Result for the year 9,443,524 (2,987,872) 6,455,652 (1,240,385) (10,403,495) (11,643,880)
Exchange difference on translation due to presentation currency (931,988) (931,988) (692,906) (692,906)
- -
Total Comprehensive Income for the year 9,443,524 (3,919,860) 5,523,664 (1,240,385) (11,096,401) (12,336,786)
2.2 property Holdings
The Company's portfolio at the year-end, and as at the date of this report,
consists of commercial income producing property in Romania, as well as land
plots in Ukraine.
Innovations Logistics Park
Bucharest, Romania Gross Leaseable Area: 16.570 sqm
Anchor Tenant: Favorit Business Srl
Occupancy Rate: 82%
Land & Residential Assets Location Key Features
Kiyanovskiy Residence Kiev, Ukraine Plot of land (~ th. sqm): 6
Tsymlyanskiy Residence* Kiev, Ukraine Plot of land (~ th. sqm): 4
Rozny Lane Kiev, Ukraine Plot of land (~ th. sqm): 420
Land & Residential Assets Location Key Features
Kiyanovskiy Residence Kiev, Ukraine Plot of land (~ th. sqm): 6
Tsymlyanskiy Residence* Kiev, Ukraine Plot of land (~ th. sqm): 4
Rozny Lane Kiev, Ukraine Plot of land (~ th. sqm): 420
*As of November 2021, the Company submitted an official request to the City of
Kiev to extend the lease of the property for another 5 years, since it has
first extension rights over any other interested party. The first step in the
process whereby the presiding committee of the municipality, before the final
approval by the City Council, did not place as 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
then on, all decisions have been put on hold due to the Russian insurgence of
Ukraine. Management remains confident that the Company will be awarded the
lease extension when the war status permits.
In 2023, the Company's accredited valuers, namely CBRE Ukraine for the
Ukrainian Assets, and NAI RealAct for the Romanian Asset, remained appointed.
The valuations have been carried out by the appraisers on the basis of Market
Value in accordance with the current Practice Statements contained within the
Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards
(2017) (the "Red Book") and are also compliant with the International
Valuation Standards (IVS).
Following disposals of previous periods, SPDI's portfolio, excluding the
Arcona shares, has become more concentrated in terms of geography. At the end
of the reporting period, Romania remains the prime country of operations (86%)
in terms of Gross Asset Value, excluding the Arcona shares, while in Ukraine
(14%) the Company still has interests in land plots intended to be sold as
part of the Arcona transaction.
In respect of the Company's income generation capacity, Romania has become
gradually the single operating income source.
The table below summarizes the main financial position of each of the
Company's assets (representing the Company's participation in each asset) at
the end of the reporting period.
Table 2
Innovations Logistics Park Rom 9,7 5,9 3,8
Land banking Ukr 1,5 0 1,5
Total Value 11,2 5,9 5,3
Other balance sheet items, net ** +13,4
Market Cap in EUR as at 31/12/2023 (Share price at £0,04) 5,94
Market Cap in EUR as at 19/06/2024 (Share price at £0,04) 6,09
Discount of Market Cap in EUR at 19/06/2024 vs NAV at 31/12/2023 -68%
* Reflects the Company's participation at each asset
**Among other items including Arcona shares. Refer to balance sheet and
related notes of the financial statements.
The Net Equity attributable to the shareholders as at 31 December 2023 stood
at ~€18,7 million. The table below depicts the discount of Market Share
Price over NAV since 2012.
The NAV per share as at 31 December 2023 stood at GBP 0,125 and the discount
of the Market Value vis a vis the Company's NAV denominated in GBP stands at
68% at year-end.
2.3 Financial and Rick Management
The Group's overall bank debt exposure at the end of the reporting period was
~€5,9 million being the balance of the financial lease of Innovations
Logistics park.
Throughout 2023, the Company focused on managing and preserving liquidity
through cash flow optimization. In this context, Management secured a)
collection of scheduled re-payments of loans provided to third parties, b)
complete sale of residential assets and c) advancement of discussions related
to transaction with Arcona Property Fund N.V
2.4 2024 and beyond
During 2024 the Company intends to complete the repositioning of its remaining
property assets as well as the distribution of its Arcona shares to its
shareholders, with main operations already being minimized, including the
externalization of all HR and relevant costs. Management is working along the
guidelines of the board for the closing of the transaction with Arcona
Property Fund N.V., which will mark effectively the maximization of Company's
value and will give our shareholders the opportunity to gain direct exposure
to an entity of considerably larger size, with a strong dividend distribution
policy, and active in a more diversified and faster growing region (Central
and South Eastern Europe) of the European property market.
At the same time, the Company along with the JV partner for the logistics
platform in Romania, are evaluating different opportunities throughout the
country, expecting the venture to materialize during 2024.
3. Regional Economic Developments 1
The Romanian economy experienced in 2023 a growth of ~2,1% marking a slower
y-o-y pace compared to previous years. Growth resulted from strong private
consumption, despite the ongoing conflict in neighboring Ukraine and the high
inflation rate from the increased energy prices.
The rate of unemployment is estimated marginally lower but still in low levels
at 5,5% from 5,6% in 2022, keeping the labor market relatively tight and wage
increases high. Inflation closed at ~9,7% at year end, marking a significant
decline when compared to 2022 peak rate at 13,8%.
Macroeconomic data
Romania 2017 2018 2019 2020 2021 2022 2023f
GDP (EUR bn) 188 203 223 218 241 280 285
Population (mn) 19,6 19,5 19,5 19,3 19,3 19,6 19,5
Real GDP (y-o-y %) 7,0 4,1 4,1 -3,7 5,9 4,6 2,1
CPI (average, y-o-y %) 1,3 4,6 3,3 2,3 4,1 13,8 9,7
Unemployment rate (%) 4.3 3,6 3,1 6,1 5,4 5,6 5,5
Ukraine's economy grew by 5,3% in 2023 after contracting by almost a third in
the first year of Russia's full-scale invasion. The economy is dependent on
the financial aid received from Western countries and the World Bank, which
reached during 2023 a total of $37,5 billion. Ukraine's trade deficit
increased by c.30% during the year due to a ban on exporting agricultural
products into Eastern Europe, despite the resumption of the maritime corridor
for sea exports.
During 2023, the consumer price index (CPI) experienced a significant decline
to ~14% from ~25% in 2022. The reduction was greater than the anticipated one
By NBU, and came as a result of the successfully applied measures for the
stabilization of the foreign exchange market, which limited the growth of
prices for imported goods.
According to predictions of international financial institutions and agencies,
the expected GDP will fluctuate in the range of 3-5% in 2024, and the pre-war
GDP level is expected to be reached no sooner than 2030 provided average
growth of 4% in 2025-2029.
4. Real Estate Market Developments 2
4.1 Romania
Total real estate investment volume in Romania reached in 2023 €0,5 billion,
representing a 60% y-o-y decrease, but reflecting cautious optimism in the
face of all underlying issues, such as neighboring conflict, high energy
prices and broader European economic considerations. Investment in 2023 spread
beyond the capital Bucharest, with main drivers the tourist destinations of
Brasov, Cluj, and Constanta. For the first time, Bucharest accounted for 25%
of total volume, with 75% attributed to regional cities. After many years,
retail emerged as the most attractive asset class, reaching 57% of total
investment volume. Office and industrial/logistics segments represented 17%
and 14% respectively of the annual volume, while hotel segment secured 8% of
the market.
Prime yields registered a moderate adjustment in 2024, with office and retail
yields settling at 7,75% from 7,5%, while industrial yields remained steady at
~7,75%. Local investors represent 23% of total investment volume, while
foreign investment was driven by UK (44%) and Czech investors (12%).
With c.1.000.000 sq m delivered during 2023, the total modern industrial/
logistics stock reached c.7,6 million sq m. Almost 50% of the new deliveries
were in Bucharest area, being by far the largest consumer market in the
country. The following most important industrial/logistics hub in the country
are Timisoara (11%), Brasov (7%), Ploiesti (5%) and Cluj (5%). At the end of
2023 the vacancy rate in Romania's industrial modern stock stood at ~4,8%,
while the vacancy rate for Bucharest was ~5,5%. Headline rent in logistic
parks is on an ascending trend and stands at €4,5/sqm/month mainly as a
result of the robust demand.
4.2 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.
5. Property Assets
5.1 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.
As at the year end the terminal was 82% 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 last relevant agreement, Favorit's leases extended until 2026.
During 2023, the Company signed a new lease agreement with Baustoff + Metall
for 3.000 sq m ambient storage space plus office space.
5.2 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.
During 2023 all the units of the complex have been sold.
5.3 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. Leasehold
has been recently extended for a 10-year period.
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 Russia in Ukraine, with the parties trying to
conclude the transaction in 2024
Tsymlyanskit 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 Russia in Ukraine. 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 Russia in Ukraine, with the parties trying to
conclude the transaction during 2024.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2023
Continued Operations
Income 10 1.430.588 1.143.752
Net Operating Income 1.430.588 1.143.752
Administration expenses 12 (1.632.282) (1.464.626)
Gain on disposal of Investment 20.2.3 5.604.752 -
Gain on disposal of subsidiary/associate 20.2.2 2.024.927 -
Fair Value loss on Financial Assets at FV through P&L 25 (392.210) (1.071.119)
Gain realized on acquisition on associate - 1.041
Share of loss of associates 21 - (9.040)
Other operating income/ (expenses), net 15 2.034.104 (3.390)
Dividend income 25 160.937 -
Finance income 16 308.466 361.035
Finance costs 16 (66.500) (198.331)
Foreign exchange loss, net 17 (26.824) (17.647)
Income tax expense 18 (2.434) 17.940
Profit/(Loss) for the year from continuing operations 9.443.524 (1.240.385)
Loss from discontinued operations 9b (2.987.872) (10.403.495)
Profit/ (Loss) for the year 6.455.652 (11.643.880)
Other comprehensive income
Exchange difference on translation of foreign operations 28 (931.988) (692.906)
Profit/ (Loss) for the year from continued operations attributable to:
Owners of the parent 9.443.524 (1.240.385)
Non-controlling interests - -
9.443.524 (1.240.385)
Profit/ (Loss) for the year from discontinued operations attributable to:
Owners of the parent (2.966.646) (8.416.599)
Non-controlling interests (21.226) (1.986.896)
(2.987.872) (10.403.495)
Profit/ (Loss) for the year attributable to:
Owners of the parent 6.476.878 (9.656.984)
Non-controlling interests (21.226) (1.986.896)
6.455.652 (11.643.880)
Total comprehensive income attributable to:
Owners of the parent 5.546.471 (10.142.264)
Non-controlling interests (22.807) (2.194.522)
5.523.664 (12.336.786)
Earnings/(Losses) per share (Euro per share):
Basic earnings/(losses) for the year attributable to ordinary equity owners of 36b 0,07 (0,01)
the parent
Diluted earnings/(losses) for the year attributable to ordinary equity owners 36b 0,07 (0,01)
of the parent
Basic earnings/(losses) for the year from discontinued operations 36c (0,02) (0,06)
attributable to ordinary equity owners of the parent
Diluted earnings/(losses) for the year from discontinued operations 36c (0,02) (0,06)
attributable to ordinary equity owners of the parent
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2023
Note 2023 2022
€ €
ASSETS
Non‑current assets
Tangible and intangible assets 22 164 816
Long-term receivables and prepayments 23 818 824
Investment in associate 21 - 1
Financial Assets at FV through P&L 25 11.686.598 12.078.808
11.687.580 12.080.449
Current assets
Prepayments and other current assets 24 4.034.537 4.153.162
Cash and cash equivalents 26 152.241 66.570
4.186.778 4.219.732
Assets classified as held for sale 9d 12.327.462 13.835.091
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 7.554.101 8.484.507
Exchange difference on I/C loans to foreign holdings 38.3 (211.199) (211.199)
Accumulated losses (62.083.716) (68.560.594)
Non-controlling interests 29 113.668 369.399
Total equity 18.771.400 13.480.659
Non‑current liabilities
Borrowings 30 - 597.357
Bonds issued 31 - 723.690
Tax payable and provisions 34 17.173 579.519
17.173 1.900.566
Current liabilities
Borrowings 30 114.794 -
Bonds issued 31 870.373 99.046
Trade and other payables 32 1.795.884 3.731.769
Tax payable and provisions 34 21.438 37.574
2.802.489 3.868.389
Liabilities directly associated with assets classified as held for sale 9d 6.610.758 10.885.658
9.413.247 14.754.047
Total liabilities 9.430.420 16.654.613
Net Asset Value (NAV) € per share: 36d
Basic NAV attributable to equity holders of the parent 0,14 0,10
Diluted NAV attributable to equity holders of the parent 0,14 0,10
Lambros Anagnostopoulos Michael Beys Antonios Kaffas
Director & Chief Executive Officer Director & Chairman of the Board Director
CONSOLIDATED STATEMENT OF CHNAGES IN EQUITY
For the year ended 31 December 2023
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)
€ € € € € € € €
Loss for the year - - (9.656.984) - - (9.656.984) (1.986.896) (11.643.880)
Foreign currency translation reserve - - - - (485.280) (485.280) (207.626) (692.906)
Disposals of subsidiaries - - - - - - (3.184.211) (3.184.211)
Profit for the year - - 6.476.878 - - 6.476.878 (21.226) 6.455.652
Foreign currency translation reserve - - - - (930.406) (930.406) (1.582) (931.988)
Disposals of subsidiaries - - - - - - (232.923) (232.923)
( )
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after tax, as
defined by the relevant tax law, within two years after the end of the
relevant tax year, will be deemed to have distributed as dividends 70% of
these profits. Special contribution for defence at 17% and GHS contribution at
1,7%-2,65% for deemed distributions after 1 March 2019 will be payable on such
deemed dividends to the extent that the ultimate shareholders are both Cyprus
tax resident and Cyprus domiciled. The amount of deemed distribution is
reduced by any actual dividends paid out of the profits of the relevant year
at any time. This special contribution for defence is payable by the Company
for the account of the shareholders.
(3) Exchange differences on intercompany loans to foreign holdings arose as a
result of devaluation of the Ukrainian Hryvnia during previous years. The
Group treats the mentioned loans as a part of the net investment in foreign
operations (Note 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.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023
Note 2023 2022
€ €
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(Loss) before tax and non-controlling interests-continued operations 9.445.958 (1.258.325)
Profit/(Loss) before tax and non-controlling interests-discontinued operations 9b (2.982.917) (10.329.155)
Profit/(Loss) before tax and non-controlling interests 6.463.041 (11.587.480)
Adjustments for:
(Gain)/Loss on revaluation of investment property 13 223.730 1.245.230
Net loss on disposal of investment property 14 - 825.392
Fair Value (gain)/loss on Financial Assets at FV through P&L 25 392.210 1.071.119
(Reversal) /Impairment of prepayments and other current assets 15 - 2.721.151
Accounts payable written off 15 (2.045.485) (4.401)
Depreciation/ Amortization charge 12 792 7.292
Interest income 16 (308.938) (369.017)
Interest expense 16 666.324 850.400
Share of profit from associates 21 245.316 (326.493)
Gain on disposal of Investments 20 (6.682.887) 4.870.768
Effect of foreign exchange differences 17 82.523 182.812
Cash flows from/(used in) operations before working capital changes (963.374) (513.227)
Change in prepayments and other current assets 24 215.871 (531.409)
Change in trade and other payables 32 1.363.311 (1.230.439)
Change in VAT and other taxes receivable 24 (89.362) 141.751
Change in provisions 34 (399.500) -
Change in other taxes payables 34 14.084 (173.788)
Change in deposits from tenants 33 - (41.229)
Cash generated from operations 141.030 (2.348.341)
Income tax paid (228.860) (117.762)
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment property 14 - 1.164.133
Cash inflow from sale of subsidiaries 20 - 382.750
Dividend received 21 255.889 219.190
Payment on acquisition of associate - (8.000)
Increase/(Decrease) in long term receivables 23 6 (18.263)
Repayment of principal and interest of loan receivable 24 850.053 821.891
1.105.948 2.561.701
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bank and non-bank loans 30 (392.500) (1.618.403)
Interest and financial charges paid (107.667) (391.126)
Repayment of financial lease principal and interest 35 (371.960) (289.917)
Net increase/(decrease) in cash at banks 145.991 (2.203.848)
Cash:
At beginning of the year 26 351.398 2.555.246
At end of the year 26 497.389 351.398
Notes to the Consolidated Financial Statements
For the ended 31 December 2023
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the ''Company'') was
incorporated in Cyprus on 23 June 2005 and is a public limited liability
company, listed on the London Stock Exchange (AIM): ISIN CY0102102213. Its
registered office is at Kyriakou Matsi 16, Eagle House, 10th floor, Agioi
Omologites, 1082 Nicosia, Cyprus while its principal place of business is in
Cyprus at 6 Nikiforou Foka Street, 1060 Nicosia, Cyprus.
1. Principal activities
The principal activities of the Group are to invest directly or indirectly in
and/or manage real estate properties, as well as real estate development
projects in South East Europe (the "Region"). These include the acquisition,
development, commercializing, operating and selling of property assets in the
Region.
The Group maintains offices in Nicosia, Cyprus, Bucharest, Romania and Kiev,
Ukraine.
As at 31 December 2023, the companies of the Group employed and/or used the
services of 2 full time equivalent people, (2022, 10 full time equivalent
people).
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The
consolidated financial statements have been prepared under the historical cost
as modified by the revaluation of investment property and investment property
under construction, of financial assets at fair value through other
comprehensive income and of financial assets at fair value through profit and
loss.
The preparation of financial statements in conformity with IFRSs requires the
use of certain critical accounting estimates and requires Management to
exercise its judgment in the process of applying the Company's accounting
policies. It also requires the use of assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Although these estimates
are based on Management's best knowledge of current events and actions, actual
results may ultimately differ from those estimates.
Following certain conditional agreement signed in December 2018 with Arcona
Property Fund N.V for the sale of Company's non-Greek portfolio of assets, the
Company classifies its assets since 2018 as discontinued operations (Note 4.3)
.
Going concern basis
The financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future.
In particular, the Company is in a process of disposing of its portfolio of
assets in an all share transaction with Arcona Property Fund N.V., meaning
that as soon as this transaction consummates the Company will be left with its
corporate receivables and liabilities.
These conditions raise some doubt about the Company's ability to continue as a
going concern within the next twelve months from the date these financial
statements are available to be issued. The ability to continue as a going
concern is dependent upon positive future cash flows.
Management believes that the Company will be able to finance its needs given
the fact that the additional corporate receivables, as well as the
consideration received in the form of Arcona shares is estimated that it can
effectively discharge all corporate liabilities. At the same time, the
transaction with Arcona Property Fund N.V., which is a cash flow generating
entity, will result in the Company being a significant shareholder, entitled
to dividends according to the dividend policy of Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year the Company adopted all the new and revised
International Financial Reporting Standards (IFRS) that are relevant to its
operations and are effective for accounting periods beginning on 1 January
2023. 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 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 31 December
Currency 2023 2022 2023 2022 2021
USD 1,0813 1,0530 1,1050 1,0666 1,1326
UAH 39,5582 33,9820 42,2079 38,9510 30,9226
RON 4,9465 4,9315 4,9746 4,9474 4,9481
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 determined annually by external valuers.
Changes in fair values are recorded in the statement of comprehensive income
and are included in other operating income.
A number of the land leases (all in Ukraine) are held for relatively short
terms and place an obligation upon the lessee to complete development by a
predetermined 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.
Land held under operating lease is classified and accounted for as investment
property when the rest of the definition is met.
Investment property under development or construction initially is measured at
cost, including related transaction costs.
The property is classified in accordance with the intention of the management
for its future use. Intention to use is determined by the Board of Directors
after reviewing market conditions, profitability of the projects, ability to
finance the project and obtaining required construction permits.
The time point, when the intention of the management is finalized is the date
of start of construction. At the moment of start of construction, freehold
land, leasehold land and investment properties held for a future redevelopment
are reclassified into investment property under development or inventory in
accordance to the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including related
transaction costs. Investment properties are derecognized when either they
have been disposed of or when the investment property is permanently withdrawn
from use and no future economic benefit is expected from its disposal. Any
gains or losses on the retirement or disposal of an investment property are
recognized in the consolidated statement of comprehensive income in the period
of retirement or disposal.
Transfers are made to investment property when, and only when, there is a
change in use, evidenced by the end of owner occupation, or the commencement
of an operating lease to third party. Transfers are made from investment
property when, and only when, there is a change in use, evidenced by
commencement of owner occupation or commencement of development with a view to
sale.
If an investment property becomes owner occupied, it is reclassified as
property, plant and equipment, and its fair value at the date of
reclassification becomes its cost for accounting purposes. Property that is
being constructed or developed for future use as investment property is
classified as investment property under construction until construction or
development is complete. At that time, it is reclassified and subsequently
accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated at fair
value. Gains or losses arising from changes in the fair value of investment
property are included in the statement of comprehensive income in the period
in which they arise.
If a valuation obtained for an investment property held under a lease is net
of all payments expected to be made, any related liabilities/assets recognized
separately in the statement of financial position are added back/reduced to
arrive at the carrying value of the investment property for accounting
purposes.
Subsequent expenditure is charged to the asset's carrying amount only when it
is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. All other
repairs and maintenance costs are charged to the statement of comprehensive
income during the financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial position date.
These valuations are prepared annually by chartered surveyors (hereafter
"appraisers"). The Group appointed valuers in 2014, which remain the same in
2023:
· 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 actions,
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 on a straight line basis over the lease term as part of 'other income'.
The accounting policies applicable to the Company as a lessor in the
comparative period were not different from IFRS 16. However, when the Company
was an intermediate lessor the sub leases were classified with reference to
the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease liability at the lease
commencement date. The right of use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right of use asset is subsequently depreciated using the straight line
method from the commencement date to the earlier of the end of the useful life
of the right of use asset or the end of the lease term. The estimated useful
lives of the right of use assets are determined on the same basis as those of
property and equipment. In addition, the right of use asset is periodically
reduced by impairment losses, if any, and adjusted for certain remeasurements
of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company's incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the
following:
· fixed payments, including in substance fixed payments;
· variable lease payments that depend on an index or a rate, initially
measured using the index or rate as at the commencement date;
· 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:
4.20.1 Income from investing activities
Income from investing activities includes profit received from disposal of
investments in the Company's subsidiaries and associates and income accrued on
advances for investments outstanding as at the year end.
4.20.2 Dividend income
Dividend income from investments is recognized when the shareholders' right to
receive payment has been established (provided that it is probable that the
economic benefits will flow to the Group and the amount of income can be
measured reliably).
4.20.3 Interest income
Interest income is recognized on a time-proportion (accrual) basis, using the
effective interest rate method.
4.20.4 Rental income
Rental income arising from operating leases on investment property is
recognized on an accrual basis in accordance with the substance of the
relevant agreements.
4.20 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized on an accrual
basis.
4.21 Other property expenses
Irrecoverable running costs directly attributable to specific properties
within the Group's portfolio are charged to the statement of comprehensive
income. Costs incurred in the improvement of the assets which, in the opinion
of the directors, are not of a capital nature are written off to the statement
of comprehensive income as incurred.
4.22 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalization.
All other borrowing costs are recognized in the statement of comprehensive
income in the period in which they are incurred as interest costs which are
calculated using the effective interest rate method, net result from
transactions with securities, foreign exchange gains and losses, and bank
charges and commission.
4.23 Asset Acquisition Related Transaction Expenses
Expenses incurred by the Group for acquiring a subsidiary or associate company
as part of an Investment Property and are directly attributable to such
acquisition are recognized within the cost of the Investment Property and are
subsequently accounted as per the Group's accounting Policy for Investment
Property subsequent measurement.
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 Land Assets
· Warehouse segment · Land assets - the Group owns a number of land assets which are either
available for sale or for potential development
The Group also monitors investment property assets on a Geographical
Segmentation, namely the country where its property is located.
4.27 Earnings and Net Assets value per share
The Group presents basic and diluted earnings per share (EPS) and net asset
value per share (NAV) for its ordinary shares.
Basic EPS amounts are calculated by dividing net profit/loss for the year,
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year. Basic NAV amounts are
calculated by dividing net asset value as at year end, attributable to
ordinary equity holders of the Company by the number of ordinary shares
outstanding at the end of the year.
Diluted EPS is calculated by dividing net profit/loss for the year,
attributable to ordinary equity holders of the parent, by the weighted average
number of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on conversion of all
the potentially dilutive ordinary shares into ordinary shares.
Diluted NAV is calculated by dividing net asset value as at year end,
attributable to ordinary equity holders of the parent with the number of
ordinary shares outstanding at year end plus the number of ordinary shares
that would be issued on conversion of all the potentially dilutive ordinary
shares into ordinary shares.
4.28 Comparative Period
Where necessary, comparative figures have been adjusted to conform to changes
in presentation in the current year.
5. New accounting pronouncement
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. The fair value has been
estimated as at 31 December 2023 (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
In 2023, growth in Ukraine had been supported by a record harvest, reaching
5,3%. However, recent war damage to the country's electricity infrastructure
is among factors seen likely to constrain even higher growth in 2024.
The economy was boosted not only by bumper crops but also increased defense
spending, which supported domestic demand, while net exports continued to
decline as a result of the ongoing conflict.
Other supportive factors of 2023 economic performance, included the Ukrainian
authorities' success in restoring electrical supply after the previous
winter's Russian attacks on civilian infrastructure, and the resilience and
adaptability of Ukrainian business. Moreover, timely external financing in
2023 was a further stabilizing factor, helping to reduce inflation to target
levels. These lifted official foreign reserves to record levels as public debt
surged to close to 90% of GDP.
However, in 2024, the prospect of a prolonged war of attrition and renewed
doubts about external financing for this year, which persisted for several
months before being resolved, have raised new challenges. Limited domestic
demand, labour shortages and insufficient investments are also among factors
that will likely constrain further growth prospects.
On the positive side, a new Ukrainian Black Sea export corridor along the
coastline has been opened, removing some of the wartime uncertainty about the
safety of using the Black Sea to export Ukraine's vast offerings of
agricultural produce and other bulk good such as metals and ores.
After a slow start, this corridor's usage has been picking up, boosting not
only agriculture but also the metal industry and mining, which have been among
the hardest hit industries over the last two years. A recovery in exports and
higher domestic military production will likely generate economic growth of
+3% in 2024, accelerating to 6 per cent in 2025. However, risks remain high,
in particular related to the damages in port and electricity infrastructure.
7.1.1.2 Romania
Romanian economy grew by 2,1% in 2023 despite the slow start made during the
first two quarters, marking however a significant slower y-o-y pace compared
to the previous periods.
Growth succeeded mainly due to strong private consumption, and despite the
ongoing war in neighboring Ukraine and the high, although significantly lower
than 2022, inflation rates.
Fiscal and current account deficits remain elevated as a result of the social
politics adopted by the Government for the support of low income citizens,
while unemployment rate is estimated marginally lower to 5,5%. Taking into
account the European economic considerations and the international political
circumstances, the macroeconomic indicators of local economy have become
weaker, and therefore the associated risk has been increased.
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;
7.1.2 Risks associated with property holding and development associated risks
(continued)
· the risk of bad or unmarketable title due to failure to register
or perfect our interests or the existence of prior claims, encumbrances or
charges of which we may be unaware at the time of purchase;
· the possibility of occupants in the properties, whether squatters
or those with legitimate claims to take possession;
· the ability to pay for adequate maintenance, insurance and other
operating costs, including taxes, which could increase over time; and
· political uncertainty, acts of terrorism and acts of nature, such
as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group's portfolio
investments will fluctuate as a result of changes in market prices. The
Group's assets are susceptible to market price risk arising from uncertainties
about future prices of the investments. The Group's market price risk is
managed through diversification of the investment portfolio, continuous
elaboration of the market conditions and active asset management. To quantify
the value of its assets and/or indicate the possibility of impairment losses,
the Group commissioned internationally acclaimed valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially independent of
changes in market interest rates as the Group has no significant
interest‑bearing assets apart from its cash balances that are mainly kept
for liquidity purposes.
The Group is exposed to interest rate risk in relation to its borrowings.
Borrowings issued at variable rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk. All of the Group's borrowings are issued at a variable
interest rate. Management monitors the interest rate fluctuations on a
continuous basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets at hand at the end of the reporting period. Cash balances are held with
high credit quality financial institutions and the Group has policies to limit
the amount of credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and recognized assets
and liabilities are denominated in a currency that is not the Group's
functional currency. Excluding the transactions in Ukraine, all of the Group's
transactions, including the rental proceeds are denominated or pegged to EUR.
In Ukraine, even though there is no recurring income stream, the fluctuations
of UAH against EUR entails significant FX risk for the Group in terms of its
local assets valuation. Management monitors the exchange rate fluctuations on
a continuous basis and acts accordingly, although there are no available
financial tools for hedging the exposure on UAH. It should be noted though
that the current war in Ukraine causing economic and political problems, as
well as any probable currency devaluation may affect Group's financial
position.
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 of incorporation Related Asset as at as at
31 Dec 2023 31 Dec 2022
SC Secure Capital Limited Cyprus 100 100
LLC Aisi Ukraine Ukraine Kiyanovskiy Residence 100 100
LLC Trade Center Ukraine 100 100
LLC Almaz‑Pres‑Ukraine Ukraine Tsymlyanskiy Residence* 55 55
LLC Retail Development Balabino** Ukraine 100 100
LLC Interterminal** Ukraine 100 100
LLC Aisi Ilvo Ukraine 100 100
Myrnes Innovations Park Limited Cyprus Innovations Logistics Park 100 100
Best Day Real Estate Srl Romania 100 100
Yamano Holdings Limited Cyprus EOS Business Park 100 100
Zirimon Properties Limited Cyprus Delea Nuova (Delenco) - 100
Bluehouse Accession Project IX Limited Cyprus 100 100
BlueBigBox 3 Srl *** Romania - -
SEC South East Continent Unique Real Estate Investments II Limited Cyprus 100 100
SEC South East Continent Unique Real Estate (Secured) Investments Limited Cyprus - 100
Ketiza Holdings Limited Cyprus 90 90
Frizomo Holdings Limited Cyprus 100 100
SecMon Real Estate Srl Romania 100 100
Ketiza Real Estate Srl Romania 90 90
Edetrio Holdings Limited Cyprus - 100
Emakei Holdings Limited Cyprus - 100
RAM Real Estate Management Limited Cyprus - 50
Iuliu Maniu Limited Cyprus - 45
Moselin Investments Srl Romania - 45
Jenby Ventures Limited** Cyprus 44,30 44,30
Ebenem Limited** Cyprus 44,30 44,30
Sertland Properties Limited Cyprus - 100
SPDI Management Srl Romania 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 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 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. Bluehouse Accession Project IV Limited,
Demetiva Holdings Limited, Diforio Holdings Limited and Mofben Investments
Limited were already deleted from registrar of Companies. Jenby Ventures
Limited and Ebenem Limited are still expected relevant official clearance from
local Trade Registry and Tax Authorities in the following period. During 2022
the Group has also initiated strike off process for two additional Ukrainian
entities, LLC Retail Development Balabino and LLC Interterminal.
*** During 2023 BlueBigBox 3 Srl, the SPV which used to hold Praktiker Craiova
property that was sold back in 2018, was entered into an insolvency process
initiated by a vendor. The case is associated with the Bluehouse litigation
case (Note 39.3). Following the settlement made with BLUEHOUSE ACCESSION
PROPERTY HOLDING III S.A.R.L. pursuant to a consensual order issued by the
District Court of Nicosia in action no. 3362/2018, relevant legal motions
against Bluebigbox3 Srl have been withdrawn. In relation to the insolvency
procedure of the company, next hearing has been set on 17 September 2024, when
the judicial administrator will file the request to close the bankruptcy
procedure before the court. Following this, SPDI will re-gain control and will
start the process of an ordinary liquidation, since the entity does no longer
hold any assets.
9. Discontinued operations
9.(a) Description
The Company announced on 18 December 2018 that it has entered into a
conditional implementation agreement for the sale of its property portfolio,
excluding its Greek logistics properties ('the Non-Greek Portfolio'), in an
all-share transaction to Arcona Property Fund N.V. The transaction is subject
to, among other things, asset and tax due diligence (including third party
asset valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission to listing
of the new Arcona Property Fund N.V. shares), as well as successful
negotiating and signature of transaction documents. During 2019 and as part of
the Arcona transaction the Company sold the Boyana Residence asset in
Bulgaria, as well as the Bela and Balabino land plots in Ukraine, while in
March and June 2021 has signed SPAs related to Stage 2 of the transaction,
namely for the EOS and Delenco assets in Romania, as well as the Kiyanovskiy
and Rozny assets in Ukraine. In March and June 2022, the Company sold
effectively to Arcona the Delenco and EOS assets. Regarding the Ukrainian
assets included in Stage 2 of the transaction, discussions for closing had
been put on hold after the invasion of Russia in the country, however
currently negotiations have re-emerged, a commercial agreement has been
reached, and relevant closing documentation is drafted for execution.
During 2023, the Company sold through a third-party transaction, SEC South
East Continent Unique Real Estate (Secured) Investments Limited along with its
subsidiaries, which no longer possessed any asset.
The companies that are classified under discontinued operations are the
followings:
• Cyprus: Frizomo Holdings Limited and Ketiza
Holdings Limited
• Romania: Best Day Real Estate Srl, Ketiza 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 year ended 31 December 2023
Note 2023 2022
€ €
Income 10 156.016 505.785
Asset operating expenses 11 (867.484) (446.380)
Net Operating Income (711.468) 59.405
Administration expenses 12 (201.344) (242.157)
Share of profits/(losses) from associates 21 (245.316) 335.533
Valuation gains/(losses) from Investment Property 13 (223.730) (1.245.230)
Net gain/(loss) on disposal of investment property 14 - (825.392)
Loss on Disposal of subsidiaries 20.2.4 (946.792) (4.871.809)
Other operating income/(expenses), net 15 5.792 (2.721.353)
Operating profit / (loss) (2.322.858) (9.511.003)
Finance income 16 472 7.982
Finance costs 16 (604.832) (660.969)
Profit/(Loss) before tax and foreign exchange differences (2.927.218) (10.163.990)
Foreign exchange (loss), net 17 (55.699) (165.165)
Profit/(Loss) before tax (2.982.917) (10.329.155)
Income tax expense 18 (4.955) (74.340)
Profit/(Loss) for the year (2.987.872) (10.403.495)
Loss attributable to:
Owners of the parent (2.966.646) (8.416.599)
Non-controlling interests (21.226) (1.986.896)
(2.987.872) (10.403.495)
9.(c) Cash flows from(used in) discontinued operation
31 Dec 2023 31 Dec 2022
€ €
Net cash flows provided in operating activities (635.218) 5.569.628
Net cash flows from / (used in) financing activities 472 (939.540)
Net cash flows from / (used in) investing activities (886.067) 1.754.358
Net increase/(decrease) from discontinued operations (1.520.813) 6.384.446
9.(d) Assets and liabilities of disposal group classified as held for sale
The following assets and liabilities were reclassified as held for sale in
relation to the discontinued operation as at 31 December 2023:
Note 31 Dec 2023 31 Dec 2022
€ €
Assets classified as held for sale
Investment properties 19.4a 11.257.513 11.631.996
Tangible and intangible assets 22 25 20
Long-term receivables and prepayments 23 315.000 315.000
Investments in associates 21 - 335.534
Prepayments and other current assets 24 409.776 1.267.713
Cash and cash equivalents 26 345.148 284.828
Total assets of group held for sale 12.327.462 13.835.091
Liabilities directly related with assets classified as held for sale
Borrowings 30 71 4.021.192
Finance lease liabilities 35 5.943.201 6.225.930
Trade and other payables 32 488.612 431.307
Taxation 34 155.872 184.227
Deposits from tenants 33 23.002 23.002
Total liabilities of group held for sale 6.610.758 10.885.658
10. Income
Income from continued operations for the year ended 31 December 2023
represents:
a) rental income, as well as service charges and utilities income collected
from tenants as a result of the rental agreements concluded with tenants of
Innovations Logistics Park (Romania). It is noted that part of the rental and
service charges/ utilities income related to Innovations Logistics Park
(Romania) is currently invoiced by the Company as part of a relevant lease
agreement with the Innovations SPV and the lender, however the asset, through
the SPV, is planned to be transferred as part of the transaction with Arcona
Property Fund N.V. Upon a final agreement for such transfer, the Company will
negotiate with the lender its release from the aforementioned lease agreement,
and if succeeds, upon completion such income will be also transferred.
The increase in the service charge and utility income in 2023 is due to the
increased energy costs of the park re-invoiced to tenants.
Continued operations 31 Dec 2023 31 Dec 2022
€ €
Rental income 761.683 763.242
Service charges and utilities income 668.905 276.996
Asset & property management income - 103.514
Total income 1.430.588 1.143.752
Income from discontinued operations represents:
a) rental income, as well as service charges and utilities income collected
from tenants as a result of the rental agreements concluded with tenants of
Innovations Logistics Park (Romania) for the year ended 31 December 2023,
while for 2022 there was relevant income from Kindergarten (Romania) and EOS
Business Park (Romania) which were sold during this year.
b) rental income and service charges by tenants of the Residential
Portfolio;
Discontinued operations (Note 9) 31 Dec 2023 31 Dec 2022
€ €
Rental income 130.678 489.653
Service charges and utilities income 25.338 16.132
Total income 156.016 505.785
Occupancy rates as at 31 December 2023 were as follows:
Income producing assets
% 31 Dec 2023 31 Dec 2022
Innovations Logistics Park Romania 82 80
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 recharge process (Note
10).
Under continued operations, there are no such expenses related to the
operation of the assets.
Under discontinued operations all such expenses related to Innovations
Logistics Park (Romania), EOS Business Park (Romania) in 2022, Residential
Portfolio (Romania) in 2022, GreenLake (Romania), and all Ukrainian
properties.
Discontinued operations (Note 9) 31 Dec 2023 31 Dec 2022
€ €
Property related taxes (49.800) (112.420)
Property management fees - (3.758)
Repairs and technical maintenance (77.505) (30.595)
Utilities (688.775) (251.507)
Property security (43.388) (35.527)
Property insurance (3.971) (7.695)
Leasing expenses (4.045) (4.878)
Total (867.484) (446.380)
Property related taxes reflect local taxes of land and building properties (in
the form of land taxes, building taxes, garbage fees, etc.). Relevant decrease
in 2023 resulted from the assets sold during 2022.
Repairs and technical maintenance increased in 2023 due to required works
conducted in Innovations Logistics Park, bringing the property in line with
newly adopted Fire and Environmental legislation.
Utilities' increase resulted from Innovations Logistics Park in Bucharest, and
matches with the increased service charges and utilities income invoiced back
by the Company and included in continued operations.
Leasing expenses reflect expenses related to long term land leasing.
12. Administration Expenses
Continued operations 31 Dec 2023 31 Dec 2022
€ €
Salaries and Wages (84.464) (263.477)
Incentives pursuant to RemCo proposal (151.370) (184.500)
Advisory and broker fees (415.049) (270.457)
Public group expenses (164.085) (138.908)
VAT expensed (3.989) (89.315)
Corporate registration and maintenance fees (32.085) (32.458)
Audit fees (67.275) (67.332)
Tax advisory services (70.000) -
Accounting and related fees (16.383) (15.529)
Legal fees (170.657) (233.098)
Depreciation/Amortization charge (651) (2.784)
Directors Renumeration (75.020) -
Provision for Director fees (250.000) -
Corporate operating expenses (131.254) (166.768)
Total Administration Expenses (1.632.282) (1.464.626)
Discontinued operations (Note 9) 31 Dec 2023 31 Dec 2022
€ €
Salaries and Wages (18.763) (30.221)
Advisory and broker fees (111.311) (99.323)
Corporate registration and maintenance fees (21.155) (33.142)
Audit fees (15.554) (26.230)
Accounting and related fees (13.350) (20.973)
Legal fees (3.009) (4.488)
Depreciation/Amortization charge (141) (4.508)
Corporate operating expenses (18.061) (23.272)
Total Administration Expenses (201.344) (242.157)
Salaries and wages include the remuneration of the CEO (2023: €1, 2022:
€63.123), the CFO, the Group Commercial Director and the Country Managers in
Ukraine and Romania, as well as the salary cost of personnel employed in the
various Company's offices. Relevant decrease came as a result of the
externalization of all HR costs after April 2023, except those in Ukraine, as
part of the cost reduction plan adopted by the board.
Incentives provided to personnel refer for the successful implementation of
Group's plan pursuant to relevant Remuneration Committee proposal dated 7 May
2021 as approved by the board on 01 June 2021.
Advisory fees are mainly related to advisors, brokers, valuers and other
professionals engaged in relevant transactions, as well as outsourced human
resources support on the basis of relevant contracts. The increase during the
current period resulted from the externalization of HR and related costs, as
well as from the increased fees to consultants in Ukraine in relation to the
extension of Company's leaseholds in the country.
Accounting and related fees include fees from external accounting services.
Tax advisory fees are related to ad-hoc fees paid to advisors for applying and
succeeding a new tax ruling for the Company, which based on current structure
of operations, is expected to produce significantly lower imposed taxes, while
its application has produced beneficial retrospective results.
Public group expenses include among others fees paid to the AIM:LSE stock
exchange, Cyprus Stock Exchange as custodian, and the Nominated Adviser of the
Company, as well as other expenses related to the listing of the Company, such
as public relations and registry expenses. Relevant increase in current period
resulted from ad hoc advise in respect of listing rule transaction opinion of
the order of ~€25k.
Corporate registration and maintenance fees represent fees charged for the
annual maintenance of the Company and its subsidiaries, as well as fees and
expenses related to the normal operation of the companies including charges by
the relevant local authorities.
Legal fees represent legal expenses incurred by the Group in relation to asset
operations (rentals, sales, etc.), ongoing legal cases in Ukraine, Cyprus and
Romania, compliance with AIM listing, as well as one-off fees associated with
legal services and advise in relation to due diligence processes and
transactions. During the current period, the Group incurred ~€152k relevant
legal fees associated with the Bluehouse litigation and its eventual
settlement.
Following relevant confirmation by the board, the Company registered in 2023
the remuneration of the board associated with H1 2022 (€75k) which remained
pending from previous year, as well as a provision of a remuneration to cover
the period including H2 2022 and 2023 (€250k).
Corporate operating expenses include D&O insurance, travel expenses,
(tele)communication and conference expenses, software fees and other general
expenses in Cyprus, Romania and Ukraine.
Summary of Directors' 31 Dec 2023 31 Dec 2022
Total Remuneration
€ € € € € € € €
Base remuneration Chairman/ Committee Fees Deferred Amounts Total Base remuneration Chairman/ Committee Fees Deferred Amounts Total
Michael Beys 19.191 - 19.191 19.191 - - - -
Harin Thaker 18.028 - 18.028 18.028 - - - -
Ian Domaille 19.773 - 19.773 19.773 - - - -
Anthonios Kaffas 18.028 - 18.028 18.028 - - - -
Total 75.020 - 75.020 75.020 - - - -
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)
31 Dec 2023 31 Dec 2022
€ €
Kiyanovskiy Residence (177.757) (798.325)
Rozny Lane (99.367) (455.560)
Innovations Logistics Park 53.394 8.655
Total (223.730) (1.245.230)
* 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 between15 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 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 excluding Tsymlyanskiy, and in view of the
ongoing conflict in the country, the Management, although received updated
third-party valuation reports to monitor effectively the underlying values,
decided in H1 2022 accounts to impair the value of those assets at 50% of
their value as at the end of 2021 and continues the same in every period since
then.
Valuation gains and losses result not only from the differences in the values
of the properties as reported by valuers at the different points in time, but
also from the fluctuation of the FX rate between the denominated currency of
the valuation report itself and the functional currency of the company which
posts valuation amount in its accounting books. For example, valuations of
Ukrainian assets are denominated in USD and translated to UAH for entering
effectively in the accounting books of the local entities. Similarly,
valuations of Romanian assets are denominated in EUR and translated to RON for
accounting purposes.
14. Gain/ (Loss) from disposal of properties
During 2022 the Group sold in Moselin (Greenlake Parcel K) 2 villas, Green
Lake Phase 2 land (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 was an associate.
Discontinued operations (Note 9) 31 Dec 2023 31 Dec 2022
€ €
Income from sale of investment property - 3.897.608
Cost of investment property - (4.723.000)
Profit/(Loss) from disposal of investment property - (825.392)
15. Other operating income/(expenses), net
Continued operations 31 Dec 2023 31 Dec 2022
€ €
Other income 10.657 18.834
Accounts payable written off 2.027.275 3.022
Other income 2.037.932 21.856
Penalties (302) (348)
Impairment of prepayments and other current assets - (19.648)
Other expenses (3.526) (5.250)
Other expenses (3.828) (25.246)
Other operating income/(expenses), net 2.034.104 (3.390)
Discontinued operations (Note 9) 31 Dec 2023 31 Dec 2022
€ €
Accounts payable written off 18.210 1.379
Other income 4.290 4.571
Other income 22.500 5.950
Penalties - (215)
Impairments - (2.701.503)
Other expenses (16.708) (25.585)
Other expenses (16.708) (2.727.303)
Other operating income/(expenses), net 5.792 (2.721.353)
Continued operations
Other income represents income from services to an associate company.
Account payable written off under continued operations, represents the
reversal of the provision made in the past for the Bluehouse litigation
case, as a result of the Redeemable Class B share redemption (Note 32).
Pursuant to a concensual order issued by the District Court of Nicosia in
action no.3362/2018, the Company paid €494.000, and as a result the surplus
provision was reversed since it is no longer necessary.
Discontinued operations
Account payable written off in 2023 refer to old payable balances of Secmon
for which local legislation allows for their effective elimination.
Other expenses in discontinued operations represent mainly property tax
penalties incurred by a Romanian company from Local Tax Authorities.
16. Finance costs and income
Continued operations
Finance income 31 Dec 2023 31 Dec 2022
€ €
Interest received from non-bank loans 308.466 361.035
Total finance income 308.466 361.035
Finance costs 31 Dec 2023 31 Dec 2022
€ €
Interest expenses (non-bank) (15.348) (127.748)
Finance charges and commissions (3.515) (5.883)
Bonds interest (47.637) (64.700)
Total finance costs (66.500) (198.331)
Net finance result 241.966 162.704
Discontinued operations (Note 9)
Finance income 31 Dec 2023 31 Dec 2022
€ €
Interest received from-bank loans 48 10
Interest received from non-bank loans (Note 38.1.1) 424 7.972
Total finance income 472 7.982
Finance costs 31 Dec 2023 31 Dec 2022
€ €
Interest expenses (bank) (317.586) (353.428)
Interest expenses (non-bank) - (4.892)
Finance leasing interest expenses (285.753) (299.632)
Finance charges and commissions (1.493) (3.017)
Total finance costs (604.832) (660.969)
Net finance result (604.360) (652.987)
Continued operations
Interest income from non-bank loans, reflects 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 repaid in installments, expected to be fully repaid by the end of
2024. The loan is bearing a fixed interest rate of 10%.
Interest expenses represent interest 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 calculated for the bonds issued by the
Company during 2018 (Note 31).
Discontinued operations
Interest income from non-bank loans, reflects income from loans granted by the
Group for financial assistance of associates.
Interest expenses represent interest 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.
17. Foreign exchange profit / (losses)
Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans and/or
payables/receivables denominated in non EUR currencies when translated in EUR.
The exchange loss for the year ended 31 December 2023 from continued
operations is €26.824 (2022: loss €17.647).
The exchange loss from discontinued operations for the year ended 31 December
2023 is €55.699 (2022: loss €165.165) (Note 9).
18. Tax Expense
Continued operations 31 Dec 2023 31 Dec 2022
€ €
Reversal of tax/(Income and defence tax expense) (2.434) 17.940
Taxes (2.434) 17.940
Discontinued operations (Note 9) 31 Dec 2023 31 Dec 2022
€ €
Income and defence tax expense (4.955) (74.340)
Taxes (4.955) (74.340)
For the year ended 31 December 2023, the corporate income tax rate for the
Group's subsidiaries is 18% in Ukraine, and 16% in Romania. The corporate tax
that is applied to the qualifying income of the Company and its Cypriot
subsidiaries is 12,5%.
The tax on the Group's results differs from the theoretical amount that would
arise using the applicable tax rates as follows:
31 Dec 2023 31 Dec 2022
€ €
Profit / (loss) before tax 6.463.041 (11.587.480)
Tax calculated on applicable rates (154.218) (318.782)
Expenses not recognized for tax purposes 521.478 592.568
Tax effect of allowances and income not subject to tax (452.550) (221.122)
Tax effect on tax losses for the year 742 2.644.670
Tax effect on tax losses brought forward 91.113 (2.617.009)
10% additional tax 596 8.057
Tax effect of Group tax relief - -
Defence contribution current year 228 17.173
Prior year tax - (161.955)
Total Tax (7.389) (56.400)
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, was completed
in 2008 and is separated in four warehouses, two of which offer cold storage
(freezing temperature), the total area of which is 6.395 sqm. Innovations
Logistics Park was acquired by the Group in May 2014 and at the end of the
reporting period is 82% leased.
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.
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. The
Company recently secured for the leashold part of the property a 10-year
extension.
· 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 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 insurgence of Ukraine. We remain
confident that we will be awarded the lease extension once the war status
permits.
· Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for
the development of a residential complex. It has been registered under the
Group pursuant to a legal decision in 2015.
· GreenLake land is a 40.360 sqm plot in GreenLake which was sold
during 2022.
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
2023 (€) Fair Value movements Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name Type Carrying amount as at 31/12/2023 Foreign exchange translation difference Fair value gain/(loss) based on local currency valuations (b) Disposals 2023 Transfer to Assets held for sale Additions Carrying amount as at 31/12/2022
(a) 2023
Kiyanovskiy Residence Land 1.131.222 (97.359) (177.757) - - - 1.406.338
Tsymlyanskiy Residence Land 1 - - - - - 1
Rozny Lane Land 416.290 - (99.367) - - - 515.657
Total Ukraine 1.547.513 (97.359) (277.124) - - - 1.921.996
Innovations Logistics Park Warehouse 9.710.000 (53.394) 53.394 - - 9.710.000
Total Romania 9.710.000 (53.394) 53.394 - - - 9.710.000
TOTAL 11.257.513 (150.753) (223.730) - - - 11.631.996
2022 (€) Fair Value movements Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name Type Carrying amount as at 31/12/2022 Foreign exchange translation difference Fair value gain/(loss) based on local currency valuations (b) Disposals 2022 Transfer to Assets held for sale Additions Carrying amount as at 31/12/2021
(a) 2022
Kiyanovskiy Residence Land 1.406.338 (444.110) (798.325) - - - 2.648.773
Tsymlyanskiy Residence Land 1 - - - - - 1
Rozny Lane Land 515.657 - (455.560) - - - 971.217
Total Ukraine 1.921.996 (444.110) (1.253.885) - - - 3.619.991
Innovations Logistics Park Warehouse 9.710.000 1.345 8.655 - - 9.700.000
EOS Business Park Office - - - (6.700.000) - - 6.700.000
Residential portfolio Residential - - - - - - -
GreenLake Land & Resi - - - (10.215.000) - - 10.215.000
Kindergarten Retail - - - (1.320.000) - - 1.320.000
Total Romania 9.710.000 1.345 8.655 (18.235.000) - - 27.935.000
TOTAL 11.631.996 (442.765) (1.245.230) (18.235.000) - - 31.554.991
Discontinued Operations
Due to the situation in Ukraine and the associated uncertainty, the Management
has decided in H1 2022 to proceed with valueing those assets 50% lower than
the values provided by the third-party valuers (CBRE Ukraine), and in turn
decided to keep the same decision in all subsequent periods, including the
current one. As a result, the Ukrainian assets contribute €1,5 million in
Group's assets, as compared to €3,1 million provided by the valuers and
€3,1 million in 2022 accounts.
The two components comprising the fair value movements are presented in
accordance with the requirements of IFRS in the consolidated statement of
comprehensive income as follows:
a. The translation loss due to the devaluation of local currencies of
€150.753 (a) (2022: loss €442.765) is presented as part of the exchange
difference on translation of foreign operations in other comprehensive income
in the statement of comprehensive income and then carried forward in the
Foreign currency translation reserve; and,
b. The fair value loss in terms of the local functional currencies
amounting to €223.730 (b) (2022: loss €1.245.230), is presented as
Valuation gains/(losses) from investment properties in the statement of
comprehensive income and is carried forward in Accumulated losses.
19.3 Investment Property Carrying Amount per asset as at the reporting date
The table below presents the values of the individual assets as appraised by
the appointed valuer as at the reporting date.
Asset Name Location Principal Operation Related Companies Carrying amount as at
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Kiyanovskiy Residence Podil, Land for residential Development LLC Aisi Ukraine 1.131.222 1.406.338
Kiev City Center LLC Trade Center - -
Tsymlyanskiy Residence Podil, Land for residential LLC Almaz‑Pres‑Ukraine 1 1
Kiev City Center Development - -
Rozny Lane Brovary district, Kiev Land for residential SC Secure Capital Limited 416.290 515.657
Development - -
Total Ukraine - 1.547.513 - 1.921.996
Innovations Logistics Park Clinceni, Bucharest Warehouse Myrnes Innovations Park Limited 9.710.000 9.710.000
Best Day Real Estate Srl - -
Total Romania - 9.710.000 - 9.710.000
TOTAL - 11.257.513 - 11.631.996
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property: Innovations
Logistics park and all the land assets namely Kiyanovskiy Residence,
Tsymlyanskiy Residenceand Rozny Lane in Ukraine.
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
(Note 9) (Note 9)
€ € € €
At 1 January - 11.631.996 - 31.554.991
Additions - - - -
Disposal of Investment Property - - - (18.235.000)
Revaluation (loss)/gain on investment property - (223.730) - (1.245.230)
Translation difference - (150.753) - (442.765)
At 31 December - 11.257.513 - 11.631.996
Disposals of Investment Properties in 2022 represent the sale of EOS,
Kindergarten and GreenLake Phase 2 land.
19.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the following table
represents an analysis based on the various valuation methods. The different
levels as defined by IFRS have been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and liquid
markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived from
prices). Level 2 fair values of investment properties have been derived using
the market value approach by comparing the subject asset with similar assets
for which price information is available. Under this approach the first step
is to consider the prices for transactions of similar assets that have
occurred recently in the market. The most significant input into this
valuation approach is price per sqm.
- Level 3 relates to inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs). Level 3
valuations have been performed by the external valuer using the income
approach (discounted cash flow) due to the lack of similar sales in the local
market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of income and market
approach weighted according to the predominant local market and economic
conditions.
Fair value measurements at 31 Dec 2023(€) (Level 1) (Level 2) (Level 3) Total
Recurring fair value measurements
Tsymlyanskiy Residence - Podil, Kiev City Center* - 1 - 1
Kiyanovskiy Residence - Podil, Kiev City Center* - 1.131.222 - 1.131.222
Rozny Lane - Brovary district, Kiev * - 416.290 - 416.290
Innovations Logistics Park - Bucharest - - 9.710.000 9.710.000
Totals - 1.547.513 9.710.000 11.257.513
Fair value measurements at 31 Dec 2022 (€) (Level 1) (Level 2) (Level 3) Total
Recurring fair value measurements
Tsymlyanskiy Residence - Podil, Kiev City Center* - 1 - 1
Kiyanovskiy Residence - Podil, Kiev City Center* - 1.406.338 - 1.406.338
Rozny Lane - Brovary district, Kiev * - 515.657 - 515.657
Innovations Logistics Park - Bucharest - - 9.710.000 9.710.000
Totals - 1.921.996 9.710.000 11.631.996
The table below shows yearly adjustments for Level 3 investment property
valuations:
Level 3 Fair value measurements at 31 Dec 2023 (€) Innovations Logistics Park Total
Opening balance 9.710.000 9.710.000
Profit/(loss) on revaluation 53.394 53.394
- -
Disposal
Translation difference (53.394) (53.394)
Closing balance 9.710.000 9.710.000
Level 3 Fair value measurements at 31 Dec 2022 (€) Innovations Logistics Park EOS Business Park Kindergarten Total
Opening balance 9.700.000 6.700.000 1.320.000 17.720.000
Profit/(loss) on revaluation 8.655 - - 8.655
- (6.700.000) (1.320.000) (8.020.000)
Disposal
Translation difference 1.345 - - 1.345
Closing balance 9.710.000 - - 9.710.000
Information about Level 3 Fair Values is presented below:
Fair value at Fair value at Valuation technique Unobservable inputs Relationship of unobservable inputs to fair value
31 Dec 2023 31 Dec 2022
€ € € € €
Innovations Logistics Park - Bucharest 9.710.000 9.710.000 Income approach Future rental income and costs for 10 years, discount rate The higher the rental income the higher the fair value. The higher the
discount rate, the lower fair value
Total 9.710.000 9.710.000
20. Investment Property Acquisitions, Goodwill Movement and Disposals
20.1 Acquisition of asset
In 2022, the Company acquired 50% of the share capital of Equardo Limited, an
SPV holding stake in Victoria City (Vic City) project in Bucharest. The
participation took place through a share capital increase of the order of
€8.000, where the remaining shareholders waived their right to participate.
Vic City is a land plot in north Bucharest on Bucuresti Noi Boulevard near a
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 Limited so as to retain some of the
value originally destined to be part of its asset portfolio. During 2023, the
Company acquired the remaining 50% of Equardo Limited for a consideration of
€90.000.
20.2 Disposals of subsidiaries and associates
20.2.1 (A) Disposal of EOS Business Park
In June 2022 the Company closed the agreement for the sale 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 into a new loan facility for re-financing the previous leasing
contract of the asset, securing a net amount of ~€800k which was used to
partially re-pay the shareholder loan provided by the Company to the relevant
SPV before the closing of the transaction with Arcona.
20.2.1 (B) Disposal of Associate Lelar Holdings Limited (Note 21)
During 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 has already been collected by the
Company.
€
Value of associate at date of Disposal (Note 21) 5.178.669
Consideration:
Shares in Arcona 4.292.953
Loss on Disposal (885.716)
20.2.1 (C) Disposal of Kindergarden
ASSETS €
Non-current assets
Investment properties 1.320.000
Current assets
Prepayments and other current assets 16.369
Cash and cash equivalents 2.308
Total Assets 1.338.677
LIABILITIES
Interest bearing borrowings 628.063
Other liabilities 14.214
Total Liabilities 642.277
NET ASSET 696.400
Net share of the group 50% 348.200
Consideration:
Cash 130.750
Net off debt between the parties 44.250
Total Consideration 175.000
Loss on Disposal (173.200)
During 2022, the Company honouring certain commitment made in the past during
the restructuring of the holdings of Green Lake project, proceeded to the sale
of its 50% stake in Kindergarten asset in Greenlake, Bucharest. The
consideration of the transaction was set at €175.000 plus release of
available company's cash pledged by the Bank.
20.2.1 (D) Disposal of GreenLake Phase II land
Rimasol SRL Rimasol LTD Ashor SRL Ashor LTD Ebenem SRL Jenby SRL Total
ASSETS € € € € € € €
Non-current assets
Investment properties 808.000 - 1.510.000 - 612.000 2.562.000 5.492.000
Current assets
Prepayments and other current assets 5.789 - 118.695 - 3.406 8.644 136.534
Cash and cash equivalents 62 - 18.982 - 44 40 19.128
Total Assets 813.851 - 1.647.677 - 615.450 2.570.684 647.662
LIABILITIES
Interest bearing borrowings 623 - 1.555 - 12.239 19.757 34.174
Other liabilities 31.622 94.736 26.259 4.626 16.801 25.773 199.817
Total Liabilities 32.245 94.736 27.814 4.626 29.040 45.530 233.991
NET ASSET 781.606 (94.736) 1.619.863 (4.626) 586.410 2.525.154 5.416.671
Group % Holding 70,56% 70,56% 44,24% 44,24% 44,30% 44,30%
Net share of the group 551.501 (66.846) 716.627 (2.047) 259.780 1.118.643 2.577.658
Consideration:
Cash 400.000
Variable Compensation 450.000
Total Consideration 850.000
Loss on Disposal (1.727.658)
During 2022, in an effort to accelerate monetization of assets that were to be
part of Stage 3 of the transaction with Arcona, and since the discussions with
Arcona took much longer than expected and negotiations on their valuation did
not conclude, the Company proceeded with monetization of the remaining
GreenLake land plots. The remaining land portfolio was not zoned for
development and its disposal resulted also to the settlement, after prolonged
negotiations with neighbouring land owners, of an ongoing overlapping dispute
over the GreenLake land at a cost of ~€500k gross.
Total losses on Disposal (A) & (B) & (C) & (D) (4.871.809)
20.2.2 Acquisition and disposal of associate Equardo Holding Limited.
The Company in 2023 acquired the remaining 50% of the share capital of Equardo
Holdings Limited (Note 21) for the consideration price of €90.000 increasing
its participation in the company to 100% having a NAV of €180.218. Equardo
has an indirect investment in a large land plot in Bucharest with a
substantially higher value, yet the monetization of such investment is of
increased risk and is expected to take substantial time. As such the Company
sold this investment to the subsidiary Sertland Properties Limited in exchange
of intra group payables of € 2.205.145, i.e. generating a book profit on
disposal of €2.024.927.
20.2.3 Acquisition and disposal of Nottin Holdings Limited
The Company in 2023 acquired the 33,3% of Nottin Holding Limited and a
receivable from the company amounted to €93.300 for a consideration of €1.
Nottin Holdings Limited has an indirect investment in a large property and
land plot in Belgrade with a substantially higher value, yet the monetization
of such invesment is of increased risk and is expected to take substantial
time. As such the Company sold this investment to the subsidiary Zirimon
Properties Limited in exchange of intra group payables of € 5.604.753, i.e.
generating a book profit on disposdal of €5.604.752.
20.2.4 Disposal of SEC I.
The Company in 2023 proceeded to the sale of SEC I group to a 3(rd) party.
SEC I LTD Sertland LTD Zirimon LTD Ram LTD Emakei LTD Edetrio LTD Iuliu Maniu LTD Moselin Investments srl Total
ASSETS € € € € € € €
Non-current assets
Investment in shares - 1.543.602 3.923.327 - - 90.218 - - 5.557.147
Current assets
Prepayments and other current assets 2.384 - 93.300 - - - - 527.248 622.932
Cash and cash equivalents - - - - - - - 18.814 18.814
Total Assets 2.384 1.543.602 4.016.627 - - 90.218 - 546.062 6.198.893
LIABILITIES
Interest bearing borrowings 4.381.964 - - - - - 1.183 4.383.147
Other liabilities 9.025 10.764 8.098 3.987 3.169 13.193 3.180 114.578 165.994
Total Liabilities 4.390.989 10.764 8.098 3.987 3.169 13.193 3.180 115.761 4.549.141
NET ASSET (4.388.605) 1.532.838 4.008.529 (3.987) (3.169) 77.025 (3.180) 430.301 1.649.752
Group % Holding 100% 100% 100% 50% 100% 100% 45% 45%
Net share of the group (4.388.605) 1.532.838 4.008.529 (1.994) (3.169) 77.025 (1.431) 193.635 1.416.828
Consideration:
Payable write off 470.036
Total Consideration 470.036
Loss on Disposal (946.792)
21. Investments in associates
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Cost of investment in associates at the beginning of the period 335.534 5.476.576
1 -
Acquisition of Investment in associates - 90.000 9.041 -
Share of profits /(losses) from associates (Note 9) - (245.316) (9.040) 335.533
Dividend Income - - - (297.906)
Disposal of Investment (Note 20.2.1 B) (1) (180.218) - (5.178.669)
Foreign exchange difference - - - -
Total - - 1 335.534
During 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.
During 2023 and as part of the sale of SEC I group, the Company sold GreenLake
Development Srl which at that time had no remaining asset for sale in its
portfolio, as well as Equardo Holdings Limited (Note 20.2.4).
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 2022 with the already declared
dividends agreed to be paid to the Company (Note 20.2.1 B).
The share of profit from the associate GreenLake Development Srl and Equardo
Holdings Limited were limited up to the interest of the Group in the
associate.
As at 31 December 2023, 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)
€ € € % €
GreenLake Project - Phase A GreenLake Development Srl - - (607.969) 40,35 (245.316) Romania Residential assets
Vic City Project Equardo Holdings Limited - - (11.288) 50 - Romania Land
Total - - (619.257) (245.316)
As at 31 December 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
GreenLake Project - Phase A GreenLake Development Srl 3.296.244 (2.960.711) 3.436.512 40,35 335.533 Romania Residential assets
Vic City Project Equardo Holdings Limited 267.600 (259.831) (18.082) 50 (9.040) Romania Land
Total 3.563.844 (3.220.542) 3.418.430 326.493
22. Tangible and intangible assets
As at 31 December 2023 the tangible non-current assets under continued
operations were comprised mainly by electronic equipment (mobiles, computers
etc.) of a net value of €164 (2022: €816).
As at 31 December 2023 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 €29.997
(2022: €32.244). Accumulated depreciation as at the reporting date amounts
to €29.972 (2022: €32.224).
23. Long Term Receivables and prepayments
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Long Term Receivables 818 315.000 824 315.000
Total 818 315.000 824 315.000
Long term receivables under discontiniued operations mainly include the cash
collateral existing in favor of Piraeus Leasing in relation to Innovations
asset.
24. Prepayments and other current assets
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Trade and other receivables 691.296 396.245 603.257 1.019.634
VAT and other tax receivables 219.790 55.179 132.771 52.836
Deferred expenses 40 1.605 - 128
Receivables due from related parties 30.168 6.679 75.095 195.115
Loan receivables from 3(rd) parties 3.152.450 - 3.463.985 -
Loan to associates (Note 39.4) - - - 229.629
Allowance for impairment of prepayments and other current assets (59.207) (121.946)
(49.932) (229.629)
Total 4.034.537 409.776 4.153.162 1.267.713
Continued operations
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 legal, advisory, consulting and marketing expenses.
Receivables due from related parties represent all kind of receivables from
related parties of the Group.
Loan receivables from 3(rd) parties include an amount of €2.909.115 (2022:
€3.404.467) provided as an advance payment for acquiring a participation in
an investment property portfolio (Olympians portfolio) in Romania. The accrued
interest was €243.335 (2022: €59.517). The loan provided initially with a
convertibility option which was not exercised. The loan is bearing a fixed
interest rate of 10%. In August 2022 the Company signed with the borrower a
Shareholders Agreement for a joint venture for developing logistics properties
in Romania. As part of this agreement the Company will convert €2,5 million
of the loan into a 50% equity stake of the joint venture company. The
objective of this new company, in which borrower is contributing €2,5
million in equity funds too, 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 conversion will take place upon identifying and agreeing on
the specific project to be undertaken by the JV. The parties have evaluated
many opportunities and currently are in the final negotiations stage with a
tenant for developing two different properties in two different regional
cities in Romania. 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 2024.
Discontinued operations
Trade and other receivables decrease due to the sale of associate company
during the year.
VAT receivable represent VAT which is refundable in Romania, Cyprus and
Ukraine.
Deferred expenses include legal, advisory, consulting and marketing expenses.
Receivables due from related parties represent all kind of receivables from
related parties of the Group.
Loan to associates reflects a loan receivable from GreenLake Development Srl,
which was sold during the year as part of the sale of SEC I group (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:
31 Dec 2023 31 Dec 2022
€ €
Arcona shares at the beginning of the period 11.920.030 7.330.145
Acquired Arcona shares during the period - 5.679.202
FV change in Arcona shares (259.781) (1.089.317)
Arcona shares at reporting date 11.660.249 11.920.030
Warrants over Arcona shares at the beginning of the period 158.778 140.577
Acquired Arcona Warrants during the period - 3
FV change in warrants (132.429) 18.198
Arcona warrants at reporting date 26.349 158.778
Total Financial Assets at FV 11.686.598 12.078.808
FV change in Arcona shares (259.781) (1.089.317)
FV change in warrants (132.429) 18.198
Fair Value (loss)/ gain on Financial Assets at FV through P&L (392.210) (1.071.119)
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 2022
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 €259.781 (2022: loss €1.089.317) 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 2022, 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 €3. 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 loss of €132.429 (2022: gain €18.198) is recognized. The terms
and assumptions used for such warrant re-valuation are:
Current stock price (as retrieved from Amsterdam Stock Exchange): EUR 4,99 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: 20,88%
• Annualized dividend yield on shares: 3,01%
• 5 year Government Bond rate (weighted average
rate of Government Bonds of countries that Arcona is exposed): 5,05%
During 2023, the Company realized dividend income from the shareholding in
Arcona of the order of €160.937, as part of the dividend distribution policy
of Arcona.
26. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Cash with banks in USD 399 - 1.472 7.734
Cash with banks in EUR 144.760 89 38.704 80.151
Cash with banks in UAH 46 455 395 813
Cash with banks in RON 7.008 344.604 25.710 196.130
Cash with banks in GBP 28 - 289 -
Total 152.241 345.148 66.570 284.828
27. Share capital
Number of Shares during 2023 and 2022
31 December 2023 31 December 2022
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 (€) for 2023 and 2022
€ 31 December 2023 31 December 2022
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 2023, the issued share capital of the Company was 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.
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:
- in lieu of redemption transferred 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., while final settlement has also been reached pursuant
to a consensual order issued by the District Court of Nicosia in action
no.3362/2018 (Note 39.3). As a result the Company has planned to cancel these
shares and has included relevant resolution in the forthcoming Extraordinary
General Meeting to be held on 10 July 2024.
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) 31 December 2023 (as at) 31 December 2022
Ordinary shares of €0,01 Issued and Listed on AIM 129.191.442 129.191.442
Total number of Shares Non-Dilutive Basis 129.191.442 129.191.442
Total number of Shares Full Dilutive Basis 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 and the Company plans to cancel them.
28. Foreign Currency Translation Reserve
Exchange differences relate to the translation from the functional currency to
EUR of Group's subsidiaries' accounts and are recognized by entries made
directly to the foreign currency translation reserve. The foreign exchange
translation reserve represents unrealized profits or losses related to the
appreciation or depreciation of the local currencies against EUR in the
countries where Company's subsidiaries' functional currencies are not EUR. The
Company had €931.988 loss on foreign exchange losses/gains on translation
due to presentation currency for 2023, in comparison to €692.906 relevant
loss in 2022.
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 31 Dec 2023 31 Dec 2022
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
Iuliu Maniu Limited - 55,00
Moselin Investments Srl - 55,00
Jenby Ventures Limited - 55,70
Jenby Investments Srl - -
Ebenem Limited - 55,70
30. Borrowings
Project 31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Principal of bank Loans
Piraeus Bank SA Land banking - - - 2.525.938
Loans from other 3(rd) parties and related parties (Note 38.5) 106.682 502.130
- 2.314
Overdrafts - 71 - 17
Total principal of bank and non-bank Loans 106.682 502.130
71 2.528.269
Interest accrued on bank loans - - - 1.492.923
Interests accrued on non-bank loans (Note 38.5) 8.112 95.227
- -
Total 114.794 71 597.357 4.021.192
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Current portion 114.794 71 - 4.021.192
Non-current portion - - 597.357 -
Total 114.794 71 597.357 4.021.192
Continued Operations
Loans from other 3(rd) parties and related parties under continued operations
include among others:
Α) Loan from one Director of €100k provided as bridge financing for future
property acquisitions. The loan bears annual interest of 8% (Note 38.5).
Discontinued Operations
SEC South East Continent Unique Real Estate (Secured) Investments Limited has
a debt facility with Piraeus Bank. As at the end of the previous period the
balance of the loan was €2.525.938 plus accrued interest €1.492.923
bearing 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.
During 2023, the Company sold SEC South East Continent Unique Real Estate
(Secured) Investments Limited.
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
has been redeemed by 30% and at the end of the reporting period the balance
stands at €723.690 (2022: €723.690). The instrument bears a 6,5% coupon,
has a 7 year term, maturing in July 2024, and is convertible into ordinary
shares of the Company at the option of the holder at 25p. starting from 1
January 2018. The Company plans to extend the maturity of the bond and for
that purpose the consent of most of the bondholders has already been received.
As at 31 December 2023, the balance of the bonds with interest amounts to
€870.373.
32. Trade and other payables
The fair value of trade and other payables due within one year approximate
their carrying amounts as presented below.
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Payables to third parties 1.095.564 484.786 3.070.074 389.462
Payables to related parties 536.867 - 495.157 13.883
Deferred income from tenants - - - 7.840
Accruals 73.281 3.826 68.827 20.122
Pre-sale advances (Advances received for sale of properties) 90.172 97.711
- -
Total 1.795.884 488.612 3.731.769 431.307
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Current portion 1.795.884 - 3.731.769 7.840
Non-current portion - 488.612 - 423.467
Total 1.795.884 488.612 3.731.769 431.307
Continued Operations
Payables to third parties represents: a) payable provision due to Bluehouse
Capital as a result of the Redeemable Class B share redemption (Note 27.3)
which was under legal proceedings and resolved during the current period (Note
39.3). As a result the remaining payable provision was written off through the
profit and loss account; b) amounts payable to various service providers
including auditors, legal advisors, consultants and third party accountants
related to the current operations of the Group, and c) guarantee amounts
collected from tenants.
Payables to related parties under continued operations represent amounts due
to directors and accrued management remuneration (Note 38.2).
Accruals mainly include the accrued, administration fees, accounting fees,
facility management and other fees payable to third parties.
Pre-sale advances reflect the advance received in relation to Kiyanovskiy
Residence pre-sale agreement, which upon non closing of the said sale, part of
which will be returned to the prospective buyer.
Discontinued Operations
Payables to related parties under discontinued operations represent payables
to non-controlling interest shareholders.
Accruals mainly include the accrued, administration fees, accounting fees,
facility management and other fees payable to third parties.
33. Deposits from Tenants
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Deposits from tenants non-current - 23.002 - 23.002
Total - 23.002 - 23.002
Deposits from tenants appearing under non-current liabilities include the
amounts received from tenants in Innovations Logistics Park.
34. Taxation
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Corporate income tax - non current - - 165.817 41.981
Defence tax - non current 17.173 - 14.252 -
Tax provision - non current - - 399.450 -
Non- current 17.173 - 579.519 41.981
Corporate income tax - current 21.146 4.955 30.631 12.064
Other taxes including VAT payable - current 292 150.917 6.943 130.182
Current 21.438 155.872 37.574 142.246
Total Provisions and Taxes Payables 38.611 155.872 617.093 184.227
Corporate income tax represents taxes payable in Cyprus and Romania.
Other taxes represent local property taxes and VAT payable in Romania.
During 2023, the prior year taxes due were re-assessed downwards by the tax
authorities following relevant motion by the Company.
35. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist of the
non-current portion of €5.885.895 and the current portion of €57.306 (31
December 2022: €6.168.403 and €57.527, accordingly).
Discontinued operations
31 Dec 2023 Note Minimum lease payments Interest Principal
€ € €
Less than one year 41.2 555.030 274.004 281.026
& 41.6
Between two and five years 6.022.565 372.190 5.650.375
More than five years 15.496 3.773 11.723
6.593.091 649.967 5.943.124
Accrued Interest 77
Total Finance Lease Liabilities (Note 9d) 5.943.201
31 Dec 2022 Note Minimum lease payments Interest Principal
€ € €
Less than one year 41.2 568.486 287.549 280.937
& 41.6
Between two and five years 6.574.889 645.268 5.929.621
More than five years 21.831 6.529 15.302
7.165.206 939.346 6.225.860
Accrued Interest 70
Total Finance Lease Liabilities (Note 9d) 6.225.930
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 €21.580 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 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 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 €5.921.621 (2022: €6.201.629), being repayable in
monthly tranches until 2026 with a balloon payment of €5.244.926. At the
maturity of the lease agreement and upon payment of the balloon Best Day Real
Estate Srl will become owner of the asset.
Under the current finance lease agreement the collaterals for the facility are
as follows:
1. Best Day Real Estate Srl pledged its future receivables from its
tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved accounts
opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash collateral in
the amount of €250.000 in Piraeus Leasing Romania, which had been deposited
as follows, half in May 2014 and half in May 2015.
SPDI provided a corporate guarantee in favor of the Leasing company related to
the liabilities of Best Day Real Estate Srl arising from the sale and lease
back agreement.
36. Earnings and net assets per share attributable to equity holders of the
parent
a. Weighted average number of ordinary shares
31 Dec 2023 31 Dec 2022
Issued ordinary shares capital 129.191.442 129.191.442
Weighted average number of ordinary shares (Basic) 129.191.442 129.191.442
Diluted weighted average number of ordinary shares 129.191.442 129.191.442
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2023 31 Dec 2022
€ €
Profit/(Loss) after tax attributable to owners of the parent 9.443.524 (1.240.385)
Basic 0,07 (0,01)
Diluted 0,07 (0,01)
c. Basic diluted and adjusted earnings per share from discontinued
operations
Earnings per share 31 Dec 2023 31 Dec 2022
€ €
Loss after tax from discontinued operations attributable to owners of the (2.966.646) (8.416.599)
parent
Basic (0,02) (0,06)
Diluted (0,02) (0,06)
d. Net assets per share
Net assets per share 31 Dec 2023 31 Dec 2022
€ €
Net assets attributable to equity holders of the parent 18.657.732 13.111.260
Number of ordinary shares 129.191.442 129.191.442
Diluted number of ordinary shares 129.191.442 129.191.442
Basic 0,14 0,10
Diluted 0,14 0,10
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) -
2022 only
· Retail segment - Kindergarten of GreenLake - 2022 only
Residential
· Residential segment
Land Assets
· Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent investment
property (including investment properties under development and prepayments
made for the investment properties). Segment liabilities represent interest
bearing borrowings, finance lease liabilities and deposits from tenants.
Continued Operations
Profit and Loss for the year 2023
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Rental income (Note 10) - - - - - 761.683 761.683
Service charges and utilities income (Note 10) - - - - - 668.905 668.905
Impairment of financial investments (Note 25) - - - - - (392.210) (392.210)
Result from disposal of Investment - - - - - 5.604.752 5.604.752
Result from disposal of associate(Note21) - - - - - 2.024.927 2.024.927
Profit from discontinued operation (Note 9b) 33.736 - 5.773 (535.101) (1.631.714) (2.127.306)
Segment profit 33.736 - - 5.773 (535.101) (7.036.343) 6.540.751
Administration expenses - - - - - - (1.632.282)
(Note 12)
Other (expenses)/income, net (Note 15) - - - - - - 2.034.104
Dividend Income (Note 25) - - - - - - 160.937
Finance income (Note 16) - - - - - - 308.466
Interest expenses (Note 16) - - - - - - (62.985)
Other finance costs (Note 16) - - - - - - (3.515)
Profit from discontinued operations (Note 9b) - - - - - - (860.566)
Foreign exchange losses, net (Note 17) - - - - - - (26.824)
Income tax expense (Note 18) - - - - - - (2.434)
Exchange difference on I/C loan to foreign holdings (Note 28) - - - - - - (931.988)
Total Comprehensive Income - - - - - - 5.523.664
Profit and Loss for the year 2022
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Rental income (Note 10) - - - - - 763.242 763.242
Service charges and utilities income (Note 10) - - - - - 276.996 276.996
Property Management income (Note 10) 103.514 - - - - - 103.514
Impairment of financial investments (Note 25) - - - - - (1.071.119) (1.071.119)
Gain on disposal of subsidiaries - - - - - 1.041 1.041
Share of profit/loss of associate (Note21) - - - - - (9.040) (9.040)
Profit from discontinued operation (Note 9b) (31.359) (2.285.712) (120.588) (64.466) (3.458.376) (586.990) (6.547.491)
Segment profit 72.155 (2.285.712) (120.588) (64.466) (3.458.376) (625.870) (6.482.857)
Administration expenses - - - - - - (1.464.626)
(Note 12)
Other (expenses)/income, net (Note 15) - - - - - - (3.390)
Finance income (Note 16) - - - - - - 361.035
Interest expenses (Note 16) - - - - - - (192.448)
Other finance costs (Note 16) - - - - - - (5.883)
Profit from discontinued operations (Note 9b) - - - - - - (3.856.004)
Foreign exchange losses, net (Note 17) - - - - - - (17.647)
Income tax expense (Note 18) - - - - - - 17.940
Exchange difference on I/C loan to foreign holdings (Note 28) - - - - - - (692.906)
Total Comprehensive Income - - - - - - (12.336.786)
* It is noted that part of the rental and service charges/ utilities income
related to Innovations Logistics Park in Romania is currently invoiced by the
Company as part of a relevant lease agreement with the Innovations SPV and the
lender. However the asset, which is held 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.
Discontinued Operations
Profit and Loss for the year 2023
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Rental income (Note 10) 128.878 - - 1.800 - - 130.678
Service charges and utilities income (Note 10) 17.497 - - 7.841 - - 25.338
Valuation gains/(losses) from investment property (Note 13) 53.394 - - - (277.124) - (223.730)
Share of profits/(losses) from associates - - - - (245.316) - (245.316)
(Note 21)
Loss on disposal of subsidiaries (Note 20.2.4) - - - - - (946.792) (946.792)
Asset operating expenses (166.032) - - (3.868) (12.661) (684.923) (867.484)
(Note 11)
Segment profit 33.737 - - 5.773 (535.101) (1.631.715) (2.127.306)
Administration expenses - - - - - - (201.344)
(Note 12)
Other (expenses)/income, net (Note 15) - - - - - - 5.792
- - - - - - 472
Finance income (Note 16)
Interest expenses (Note 16) - - - - - - (603.339)
Other finance costs (Note 16) - - - - - - (1.493)
Foreign exchange losses, net (Note 17) - - - - - - (55.699)
Income tax expense (Note 18) - - - - - - (4.955)
Loss for the year - - - - - - (2.987.872)
Profit and Loss for the year 2022
Warehouse Office Retail Residential Land Plots Corporate Total
€ € € € € € €
Segment profit
Property Sales income (Note 14) - - - - 3.897.608 - 3.897.608
Cost of Property sold (Note 14) - - - - (4.723.000) - (4.723.000)
Rental income (Note 10) 63.940 332.356 90.054 3.303 - - 489.653
Service charges and utilities income (Note 10) 9.152 - - - 6.980 - 16.132
Valuation gains/(losses) from investment property (Note 13) 8.655 - - - (1.253.885) - (1.245.230)
Share of profits/(losses) from associates - - - - 335.533 - 335.533
(Note 21)
Loss on disposal of subsidiaries (Note 20) - (2.602.950) (199.229) (65.746) (1.661.910) (341.974) (4.871.809)
Asset operating expenses (113.107) (15.118) (11.413) (2.022) (59.704) (245.016) (446.380)
(Note 11)
Segment profit (31.360) (2.285.712) (120.588) (64.465) (3.458.377) (586.990) (6.547.493)
Administration expenses - - - - - - (242.157)
(Note 12)
Other (expenses)/income, net (Note 15) - - - - - - (2.721.353)
- - - - - - 7.982
Finance income (Note 16)
Interest expenses (Note 16) - - - - - - (657.952)
Other finance costs (Note 16) - - - - - - (3.017)
Foreign exchange losses, net (Note 17) - - - - - - (165.165)
Income tax expense (Note 18) - - - - - - (74.340)
Loss for the year - - - - - - (10.403.495)
Total Operations
Balance Sheet as at 31 December 2023
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € €
Assets
Long-term receivables and prepayments 818 - - - - - 818
Investment in associate - - - - - - -
Financial Assets at FV through P&L - - - - - 11.686.598 11.686.598
Assets held for sale 10.025.000 - - - 1.547.513 754.949 12.327.462
Segment assets 10.025.818 - - - 1.547.513 12.441.547 24.014.878
Tangible and intangible assets - - - - - - 164
Prepayments and other current assets - - - - - - 4.034.537
Cash and cash equivalents - - - - - - 152.241
Total assets - - - - - - 28.201.820
Liabilities associated with assets classified as held for disposal 5.944.693 - - - 21.581 644.484 6.610.758
Borrowings 6.682 - - - - 108.112 114.794
Segment liabilities 5.951.375 - - - 21.581 752.596 6.725.552
Trade and other payables - - - - - - 1.795.884
Taxation - - - - - - 38.611
Bonds - - - - - - 870.373
Total liabilities - - - - - - 9.430.420
Balance Sheet as at 31 December 2022
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € €
Assets
Long-term receivables and prepayments - - - - - 824 824
Investment in associate - - - - - 1 1
Financial Assets at FV through P&L - - - - - 12.078.808 12.078.808
Assets held for sale 10.025.000 1 - - 1.286.313 2.523.777 13.835.091
Segment assets 10.025.000 1 - - 1.286.313 14.603.410 25.914.724
Tangible and intangible assets - - - - - - 816
Prepayments and other current assets - - - - - - 4.153.162
Cash and cash equivalents - - - - - - 66.570
Total assets - - - - - - 30.135.272
Liabilities associated with assets classified as held for disposal 6.224.647 - - - 4.045.477 615.534 10.885.658
Borrowings 9.630 - - - - 587.727 597.357
Segment liabilities 6.234.277 - - - 4.045.477 1.203.261 11.483.015
Trade and other payables - - - - - - 3.731.769
Taxation - - - - - - 617.093
Bonds - - - - - - 822.736
Total liabilities - - - - - - 16.654.613
Discontinued operations
Assets and Liabilities held for sale 2023
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € € €
Assets
Investment properties 9.710.000 - - - 1.547.513 - 11.257.513
Long-term receivables and prepayments 315.000 - - - - - 315.000
Investments in associates - - - - - - -
Segment assets 10.025.000 - - - 1.547.513 - 11.572.513
Tangible and intangible assets - - - - - - 25
Prepayments and other current assets - - - - - - 409.776
Cash and cash equivalents - - - - - - 345.148
Total assets - - - - - - 12.327.462
Borrowings 71 - - - - - 71
Finance lease liabilities 5.921.621 - - - 21.580 - 5.943.201
Deposits from tenants 23.002 - - - - - 23.002
Segment liabilities 5.944.694 - - - 21.580 - 5.966.274
Trade and other payables - - - - - - 488.612
Taxation - - - - - - 155.872
Total liabilities - - - - - - 6.610.758
Assets and Liabilities held for sale 2022
Warehouse Office Retail Residential Land plots Corporate Total
€ € € € € € €
Assets
Investment properties 9.710.000 - - - 950.779 971.217 11.631.996
Long-term receivables and prepayments 315.000 - - - - - 315.000
Investments in associates - 1 - - 335.533 - 335.534
Segment assets 10.025.000 1 - - 1.286.313 971.217 12.282.530
Tangible and intangible assets - - - - - - 20
Prepayments and other current assets - - - - - - 1.267.713
Cash and cash equivalents - - - - - - 284.828
Total assets - - - - - - 13.835.091
Borrowings 16 - - - 4.021.176 - 4.021.192
Finance lease liabilities 6.201.629 - - - 24.301 - 6.225.930
Deposits from tenants 23.002 - - - - - 23.002
Segment liabilities 6.224.647 - - - 4.045.477 - 10.270.124
Trade and other payables - - - - - - 431.307
Taxation - - - - - - 184.227
Total liabilities - - - - - - 10.885.658
Geographical information
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Income (Note 10) Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Ukraine - - - -
Romania - 156.016 103.514 505.785
Greece - - - -
Bulgaria - - - -
Cyprus * 1.430.588 - 1.040.238 -
Total 1430.588 156.016 1.143.752 505.785
* It is noted that part of the rental and service charges/ utilities income
related to Innovations Logistics Park in 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. or in the broader
market. Upon a final agreement for such transfer, the Company will negotiate
with the lender its release from the aforementioned lease agreement, and if
succeeds, upon completion such income will be also transferred.
Gain/(loss) from disposal of investment properties (Note 14) 31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Romania - - - (825.392)
Total - - - (825.392)
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Carrying amount of assets (investment properties and investment in associates)
Ukraine - 1.547.513 - 1.921.996
Romania - 9.710.000 - 10.045.534
Cyprus - - 1 -
Total - 11.257.513 1 11.967.530
38. Related Party Transactions
The following transactions were carried out with related parties:
38.1 Income/ Expense
38.1.1 Income
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Interest Income from loan to associates - 424 230 7.972
Total - 424 230 7.972
Interest income from associates relates to interest income from GreenLake
Development Srl.
38.1.2 Expenses
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Management Remuneration (Note 12) 10.657 - 155.959 -
Incentives pursuant to RemCo proposal (Note 12) 151.370 - 184.500 -
Directors fees (Note 12) 75.020 - - -
Provision for Director fees (Note 12) 250.000 - - -
Interest expenses on Director and Management Loans (Note 16) 15.348 - 37.513 -
Total 502.395 - 377.972 -
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. During 2023
the Company externalized most of the related HR cost as part of the cost
minimization plan adopted by the board.
Incentives provided to personnel for the successful implementation of Group's
plan pursuant to relevant Remuneration Committee proposal dated 7 May 2021 as
approved by the BoD on 1st June 2021.
The annual Directors fees including Chairman and Committee remunerations have
been set at GBP 129k. Following relevant confirmation by the board, the
Company registered in 2023 the remuneration of the board associated with H1
2022 (€75k) which remained pending from previous year, as well as a
provision of a remuneration to cover the period including H2 2022 and 2023
(€250k).
38.2 Payables to related parties (Note 32)
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Board of Directors & Committees remuneration 148.879 - 218.171 -
Provision for director fees 250.000
Sec South East Continent Unique Real Estate Management Limited - - 65 -
Management Remuneration 137.988 - 276.921 -
Total 536.867 - 495.157 -
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.
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 -as at Principal as at Limit -as at Principal as at
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
€ € € €
LLC " Trade Center'' 5.800 5.822 5.800 6.074
LLC "Aisi Ukraine" 23.062.351 315.524 23.062.351 295.549
LLC "Almaz-Press-Ukraine" 8.236.554 264.338 8.236.554 275.778
LLC "Aisi Ilvo" 150.537 19.398 150.537 19.398
Total 31.455.242 605.082 31.455.242 596.799
38.3 Loans from SC Secure Capital Limited to the Group's subsidiaries
(continued)
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 €60.508 (2022: €59.680),
estimated on balances held at 31 December 2023.
38.4 Loans to associates (Note 24)
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Loans to GreenLake Development Srl - - - 229.629
Total - - - 229.629
The loan was provided to GreenLake Development Srl from Edetrio Holdings
Limited (discontinued operations) and from Sc Capital (continued operations).
The agreement with Edetrio Holdings Limited was signed on 14 June 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 loan with Sc Capital was
fully repaid during 2022.
38.5 Loans from related parties (Note 30)
31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Loans from Directors and Management 100.000 - 492.500 -
Interest accrued on loans from related parties 8.112 - 95.227 -
Total 108.112 - 587.727 -
Loans from directors of the order of €375.000 reflect loans provided from
three directors as bridge financing for future property acquisitions. The
loans bear interest 8% annually. The loans have been partially repaid during
2023 and current balance is €100.000.
The rest of the amount of the order of €117.500 reflect payables to one
director, converted to loan for facilitating Company's cash flow.
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 sales of Terminal
Brovary, Balabino and Bela, the exposure of the Group in Ukraine has been
significantly reduced.
The Group performed during the reporting and comparative periods part of its
operations in Romania. In respect of Romanian tax system, many aspects are
subject to varying interpretations and frequent changes, which in many cases
have retroactive effects. In certain circumstances it is also possible that
tax authorities may act arbitrary.
These facts create tax risks which are substantially more significant than
those typically found in countries with more advanced tax systems. Management
believes that it has adequtely provided for tax liabilities, based on its
interpretation of tax legislation, official pronouncements and court
decisions. However, the interpretations of the relevant authorities could
differ and the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations, could be
significant.
39.2 Construction related litigation
There are no 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 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, 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. Following relevant negotiations and taking into account the
timeline and the costs associated with these legal motions, the Company
proceeded to a settlement against a payment of €494.000 pursuant to
consensual order issued by the District Court of Nicosia in action no.
3362/2018.
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 31 December 2023.
40. Commitments
The Group had no other commitments as at 31 December 2023.
41. Financial Risk Management
41.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity for implementing
its strategy 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 shareholder's Return on Equity (ROE) while adhering
to the operational requirements of the property assets and exercising prudent
judgment as to the extent of gearing.
41.2 Categories of Financial Instruments
Note 31 Dec 2023 31 Dec 2023 31 Dec 2022 31 Dec 2022
Continued operations Discontinued operations Continued operations Discontinued operations
€ € € €
Financial Assets
Cash at Bank 26 152.241 345.148 66.570 284.828
Long-term Receivables and prepayments 23 818 315.000 824 315.000
Financial Assets at FV through P&L 25 11.686.598 - 12.078.808 -
Prepayments and other receivables 24 4.034.537 409.776 4.153.162 1.267.713
Total 15.874.194 1.069.924 16.299.364 1.867.541
Financial Liabilities
Borrowings 30 114.794 71 597.357 4.021.192
Trade and other payables 32 1.795.884 488.612 3.731.769 431.307
Deposits from tenants 33 - 23.002 - 23.002
Finance lease liabilities 35 - 5.943.201 - 6.225.930
Taxation 34 38.611 155.872 617.093 184.227
Bonds 31 870.373 - 822.736 -
Total 2.819.662 6.610.758 5.768.955 10.885.658
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 floating
interest-bearing assets. On December 31(st), 2023, cash and cash equivalent
(including continued and discontinued operations) financial assets amounted to
€497.389 (2022: €351.398) of which approx. €501 in UAH and €351.612 in
RON (Note 26) while the remaining are mainly denominated in either USD,GBP or
€.
The Group is exposed to interest rate risk in relation to its borrowings
(including continued and discontinued operations) amounting to €114.865 (31
December 2022: €4.618.549) as they are issued at variable rates tied to the
Libor or Euribor. Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's strategy
with the interest rate view and the defined risk appetite. Although no hedging
has been applied for the reporting period, such may take place in the future
if deemed necessary in order to protect the cash flow of a property asset
through different interest rate cycles.
Management monitors the interest rate fluctuations on a continuous basis and
evaluates hedging options to align the Group's strategy with the interest rate
view and the defined risk appetite. Although no hedging has been applied for
the reporting period, such may take place in the future if deemed necessary in
order to protect the cash flow of a property asset through different interest
rate cycles.
As at 31 December 2023, the weighted average interest rate for all the
interest bearing borrowing and financial leases of the Group stands at 4,7%
(31 December 2022: 5,36%).
The sensitivity analysis changes applying to the interest calculation on the
borrowings principal outstanding as at 31 December 2023 is presented below:
Actual +100 bps +200 bps
as at 31.12.2023
Weighted average interest rate 4,7% 5,7% 6,7%
%Influence on yearly finance costs 60.284 120.567
The sensitivity analysis changes applying to the interest calculation on the
borrowings principal outstanding as at 31 December 2022 is presented below:
Actual +100 bps +200 bps
as at 31.12.2022
Weighted average interest rate 5,36% 6,36% 7,36%
%Influence on yearly finance costs 30.304 60.608
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
31 December 2023 Carrying amount Total Less than From one to More than two years
Contractual one year two years
Cash Flows
€ € € € €
Financial assets
Cash at Bank 152.241 152.241 152.241 - -
Prepayments and other receivables 4.034.537 4.034.537 4.034.537 - -
Financial Assets at FV through P&L 11.686.598 11.686.598 11.686.598 - -
Long-term Receivables and prepayments 818 818 - - 818
Total Financial assets 15.874.194 15.874.194 15.873.376 - 818
Financial liabilities
Borrowings 114.794 125.461 13.445 112.016 -
Trade and other payables 1.795.884 1.795.884 1.795.884 - -
870.373 870.373 870.373 - -
Bonds issued
Taxes payable and provisions 38.611 38.611 21.438 17.173 -
Total Financial liabilities 2.819.662 2.830.329 2.701.140 129.189 -
Total net assets/(liabilities) 13.054.532 13.043.865 13.172.236 (129.189) 818
Discontinued Operations
31 December 2023 Carrying amount Total Less than From one to More than two years
Contractual one year two years
Cash Flows
€ € € € €
Financial assets
Cash at Bank 345.148 345.148 345.148 - -
Long-term receivables 315.000 315.000 - - 315.000
Prepayments and other receivables 409.776 409.776 409.776 - -
Total Financial assets 1.069.924 1.069.924 754.924 - 315.000
Financial liabilities
Borrowings 71 11.831 71 11.760 -
Trade and other payables 488.612 488.612 488.612 - -
Deposits from tenants 23.002 23.002 - - 23.002
Finance lease liabilities 5.943.201 6.593.092 555.030 541.962 5.496.100
Taxation 155.872 155.872 155.872 - -
Total Financial liabilities 6.610.758 7.272.409 1.199.585 553.722 5.519.102
Total net assets/(liabilities) (5.540.834) (6.202.485) (444.661) (553.722) (5.204.102)
Continued Operations
31 December 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 66.570 66.570 66.570 - -
Prepayments and other receivables 4.153.162 4.153.162 4.153.162 - -
Financial Assets at FV through P&L 12.078.808 12.078.808 12.078.808 - -
Long-term Receivables and prepayments 824 824 - - 824
Total Financial assets 16.299.364 16.299.364 16.298.540 - 824
Financial liabilities
Borrowings 597.357 647.571 120.334 527.237 -
Trade and other payables 3.731.769 3.731.769 3.731.769 - -
Bonds issued 822.736 1.010.896 146.086 47.040 817.770
Taxes payable and provisions 617.093 617.093 37.574 579.519 -
Total Financial liabilities 5.768.955 6.007.329 4.035.763 1.153.796 817.770
Total net assets/(liabilities) 10.530.409 10.292.035 12.262.778 (1.153.796) (816.946)
Discontinued Operations
31 December 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 284.828 284.828 284.828 - -
Long-term receivables 315.000 315.000 - - 315.000
Prepayments and other receivables 1.267.713 1.267.713 1.267.713 - -
Total Financial assets 1.867.541 1.867.541 1.552.541 - 315.000
Financial liabilities
Borrowings 4.021.192 4.033.067 4.018.994 14.073 -
Trade and other payables 431.307 431.307 423.467 - 7.840
Deposits from tenants 23.002 23.002 - - 23.002
Finance lease liabilities 6.225.930 7.165.206 568.486 555.418 6.041.302
Taxation 184.227 184.227 142.246 41.981 -
Total Financial liabilities 10.885.658 11.836.809 5.153.193 611.472 6.072.144
Total net assets/(liabilities) (9.018.117) (9.969.269) (3.600.652) (611.472) (5.757.144)
42. Events after the end of the reporting period
a) Stage 2 of Arcona transaction
During 2024, the Company has worked extensively towards the closing of Stage 2
of the transaction with Arcona, which involves the sale of Rozhny and
Kyianivskyi assets in Ukraine. To that end, the commercial terms of the
transactions have been finally agreed, and the relevant valuations, for use as
reference of the price, have been ordered and issued by the third-party local
valuer. At this point, the two legal teams are finalizing the required
documentation for execution, and it is estimated that, albeit the constraints
in force, the transactions will materialize during the third quarter of the
year.
b) Bluebigbox3 Srl insolvency procedure
Following the settlement made with BLUEHOUSE ACCESSION PROPERTY HOLDING III
S.A.R.L. pursuant to a consensual order issued by the District Court of
Nicosia in action no. 3362/2018, relevant legal motions against Bluebigbox3
Srl have been withdrawn. In relation to the insolvency procedure of the
company, next hearing has been set on 17 September 2024, when the judicial
administrator will file the request to close the bankruptcy procedure before
the court, considering that this proposal was already confirmed by creditors
in accordance with the Creditors Assembly held on 15 March 2024.
c) Liquidation of Romanian entities
During the first quarter of 2024, the Company initiated the process for
liquidating two Romanian entities of the Group, without the appointment of a
liquidator, according to the provisions of art.236 of Company law 31/1990. The
entities are SPDI Management Srl and Secmon Srl, and their liquidation has
been emerged from the fact that they are currently idle, the former following
the externalization of all local HR and office costs, and the latter following
the sale of its entire portfolio of assets.
d) Bond maturity extension
Regarding the Bond instrument issued by the Company on 19 December 2017 and
for which 30% of the original amount has already been redeemed, the Company
has at the date of this report secured the agreement of most of the
bondholders to the extension of the maturity date of the instrument for one
year, namely to 19 July 2025.
e) Extraordinary General Meeting of the Shareholders
On 17 June 2024, the Company announced the release of a Notice of
Extraordinary General Meeting (EGM) to be held at the registered address of
the Company on 10 July 2024. The purpose of the EGM is to make the necessary
changes to the Company's share capital structure in order to proceed with the
distribution to holders of SPDI ordinary shares their pro rata allocation of
shares of Arcona Property Fund N.V. held by the Company, or by a bank transfer
of readily available funds, or both as the board of directors in their
absolute discretion may decide. To do this, the Company's redeemable
preference Class B shares need to be cancelled (Resolution 1) and the
Company's share premium account needs to be reduced (Resolution 2 and 3).
Shareholders are encouraged to read the Notice of EGM in full for further
detail. Both resolutions are to be proposed as special resolutions, and
therefore require 75% of those present to vote in favour to pass.
1 Sources: World Bank Group, Eurostat, EBRD, National Institute of
Statistics- Romania, National Institute of Statistics - Ukraine, IMF, European
Commission, CBRE.
2 Sources : CBRE, Colliers International, Cushman & Wakefield,
Crosspoint Real Estate, Knight Frank, Coldwell Banker Research, National
Institute of Statistics- Romania, State Statistics Service-Ukraine, NAI Real
Act
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