REG - Secure Property Dev - Half-Year Report <Origin Href="QuoteRef">SPDI.L</Origin> - Part 2

Secure Property Development & InvestmentAnnouncement

28/09/2017 15:08

- Part 2: For the preceding part double click  ID:nRSb1384Sa 

                                          
 Net cash flows from / (used in) investing activities                    1.834.424     1.990.897     
 CASH FLOWS FROM FINANCING ACTIVITIES                                                                
 Proceeds from issue of share capital/shareholders advances        25    354.814       -             
 Repayment of principle amount of borrowings                       28    (1.106.933)   (2.653.108)   
 Proceeds from bank and nonbank loans                                    1.414.530     -             
 Interest and financial charges paid                                     (1.078.815)   (1.357.034)   
 Decrease in financial lease liabilities                           32    (138.349)     162.896       
                                                                                                     
 Net cash flows from / (used in) financing activities                    (554.753)     (3.847.246)   
                                                                                                     
 Net increase/(decrease) in cash at banks                                157.867       (41.029)      
 Cash:                                                                                               
 At beginning of the period                                              1.701.007     895.422       
                                                                                                     
 Effect of foreign exchange rates on cash and cash equivalents           (6.328)       16.064        
                                                                                                     
 At end of the period                                              24    1.852.546     870.457       
 
 
Notes to the Condensed Consolidated Interim Financial Statements 
 
For the six months ended 30 June 2017 
 
1. General Information 
 
Country of incorporation 
 
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the ''Company'') was incorporated in Cyprus on 23 June 2005 and is a public
limited liability company, listed on the London Stock Exchange (AIM): ISIN CY0102102213. Its registered office is at
Kyriakou Matsi 16, Eagle House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its principal place of business is
at Cyprus is 11 Bouboulinas Street. 
 
Principal activities 
 
The principal activities of the Company, which are unchanged from last year, 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, in Kiev, Ukraine, in Bucharest, Romania and in Athens, Greece. 
 
As at the reporting date, the companies of the Group employed and/or used the services of 17 Full Time Equivalent, (2016 à
26 people). 
 
2. Adoption of new and revised Standards and Interpretations 
 
The accounting policies adopted for the preparation of these condensed consolidated interim financial statements for the
six months ended 30 June 2017 are consistent with those followed for the preparation of the annual financial statements for
the year ended 31 December 2016. 
 
3. Significant accounting policies 
 
3.1 Statement of compliance 
 
The condensed consolidated interim 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 condensed consolidated interim financial statements have been prepared under the historical cost convention as modified
by the revaluation of investment property, investment property under construction and available for sale financial assets
to fair value. 
 
3.2 Basis of preparation 
 
The condensed consolidated interim financial statements for the six months ended 30 June 2017 have been prepared in
accordance with International Accounting Standard 34 "Interim Financial Reporting". 
 
Certain information and footnote disclosures normally included in the condensed consolidated interim financial statements
prepared in accordance with the International Financial Reporting Standards ("IFRS") have been condensed or omitted.
However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion
of the Group's Management, necessary to fairly state the results of interim periods. 
 
Interim results are not necessarily indicative of the results to be expected for the full year. 
 
The 31 December 2016 statement of financial position was derived from the audited consolidated financial statements. 
 
3.3 Basis of consolidation 
 
The condensed consolidated interim 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 Company 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 and 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 to 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. 
 
3.4 Functional and presentation currency 
 
Items included in the Group's financial statements are measured applying the currency of the primary economic environment
in which the entities operate (''the functional currency''). The national currency of Ukraine, the Ukrainian Hryvnia, is
the functional currency for all the Group's entities located in Ukraine, the Romanian leu is the functional currency for
all Group's entities located in Romania, the Bulgarian lev is the functional currency for all Group's entities in Bulgaria
and the Euro for all Greek and Cypriot subsidiaries. 
 
The condensed consolidated interim financial statements are presented in Euro, which is the Group's presentation currency. 
 
As Management records the condensed consolidated interim financial information of the entities domiciled in Cyprus,
Romania, Ukraine, Greece and Bulgaria in their functional currencies, in translating financial information of the entities
domiciled in these countries into Euro for inclusion in the condensed consolidated interim financial statements, the Group
follows a translation policy in accordance with International Accounting Standard No. 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 condensed consolidated interim
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 recognized
initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the foreign
operation. 
 
The relevant exchange rates of the European and local central banks used in translating the financial information of the
entities from the functional currencies into Euro are as follows: 
 
           Average for the period     Closing as at                  
 Currency  1 Jan 2017 - 30 June 2017  1 Jan 2016 - 31 December 2016  1 Jan 2016 - 30 June 2016  30 June 2017  31 December 2016  30 June 2016  
 USD       1,0830                     1,1069                         1,1159                     1,1412        1,0541            1,1102        
 UAH       28,9372                    28,2854                        28,4201                    29,7868       28,4226           27,5635       
 RON       4,5362                     4,4908                         4,5218                     4,5539        4,5411            4,5210        
 BGN       1,9558                     1,9558                         1,9558                     1,9558        1,9558            1,9558        
 
 
3.5 Investment Property at fair value 
 
Investment property, comprising freehold and leasehold land, investment properties held for future development, warehouse
and office properties as well as the residential property units, is held for long term rental yields and/or for capital
appreciation and is not occupied by the Group. Investment property and investment property under construction are carried
at fair value, representing open market value determined annually by external valuers. Changes in fair values are recorded
in the statement of comprehensive income and are included in other operating income. 
 
A number of the land leases (all in Ukraine) are held for relatively short terms and place an obligation upon the lessee to
complete development by a prescribed date. It is important to note that the rights to complete a development may be lost or
at least delayed if the lessee fails to complete a permitted development within the timescale set out by the ground lease. 
 
In addition, in the event that a development has not commenced upon the expiry of a lease then the City Authorities are
entitled to decline the granting of a new lease on the basis that the land is not used in accordance with the designation.
Furthermore, where all necessary permissions and consents for the development are not in place, this may provide the City
Authorities with grounds for rescinding or non-renewal of the ground lease. However Management believes that the
possibility of such action is remote and was made only under limited circumstances in the past. 
 
Management believes that rescinding or non-renewal of the ground lease is remote if a project is on the final stage of
development or on the operating cycle. In undertaking the valuations reported herein, the valuer of Ukrainian properties
CBRE have made the assumption that no such circumstances will arise to permit the City Authorities to rescind the land
lease or not to grant a renewal. 
 
Land held under operating lease is classified and accounted for as investment property when the rest of the definition is
met. The operating lease is accounted for as if it were a finance lease. 
 
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 off 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 condensed consolidated interim 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 as of year-end
2016: 
 
·      CBRE Ukraine, for all its Ukrainian properties, 
 
·      Real Act for all its Romanian, Greek and Bulgarian properties. 
 
The valuations have been carried out by the appraisers on the basis of Market Value in accordance with the appropriate
sections of the current Practice Statements contained within the Royal Institution of Chartered Surveyors ("RICS")
Valuation - Professional Standards (2014) (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 exchange on the date of valuation between
a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion". 
 
In expressing opinions on Market Value, in certain cases the appraisers have estimated net annual rentals/income from sale.
 These are assessed on the assumption that they are the best rent/sale prices at which a new letting/sale of an interest in
property would have been completed at the date of valuation assuming: a willing landlord/buyer; that prior to the date of
valuation there had been a reasonable period (having regard to the nature of the property and the state of the market) for
the proper marketing of the interest, for the agreement of the price and terms and for the completion of the letting/sale;
that the state of the market, levels of value and other circumstances were, on any earlier assumed date of entering into an
agreement for lease/sale, the same as on the valuation date; that no account is taken of any additional bid by a
prospective tenant/buyer with a special interest; that the principal deal conditions assumed to apply are the same as in
the market at the time of valuation; that both parties to the transaction had acted knowledgeably, prudently and without
compulsion. 
 
A number of properties are held by way of ground leasehold interests granted by the City Authorities. The ground rental
payments of such interests may be reviewed on an annual basis, in either an upwards or downwards direction, by reference to
an established formula. Within the terms of the lease, there is a right to extend the term of the lease upon expiry in line
with the existing terms and conditions thereof. In arriving at opinions of Market Value, the appraisers assumed that the
respective ground leases are capable of extension in accordance with the terms of each lease. In addition, given that such
interests are not assignable, it was assumed that each leasehold interest is held by way of a special purpose vehicle
("SPV"), and that the shares in the respective SPVs are transferable. 
 
With regard to each of the properties considered, in those instances where project documentation has been agreed with the
respective local authorities, opinions of the appraisers of value have been based on such agreements. 
 
In those instances where the properties are held in part ownership, the valuations assume that these interests are saleable
in the open market without any restriction from the co-owner and that there are no encumbrances within the share agreements
which would impact the sale ability of the properties concerned. 
 
The valuation is exclusive of VAT and no allowances have been made for any expenses of realization or for taxation which
might arise in the event of a disposal of any property. 
 
In some instances the appraisers constructed a Discounted Cash Flow (DCF) model. DCF analysis is a financial modeling
technique based on explicit assumptions regarding the prospective income and expenses of a property or business. The
analysis is a forecast of receipts and disbursements during the period concerned. The forecast is based on the assessment
of market prices for comparable premises, build rates, cost levels etc. from the point of view of a probable developer. 
 
To these projected cash flows, an appropriate, market-derived discount rate is applied to establish an indication of the
present value of the income stream associated with the property. In this case, it is a development property and thus
estimates of capital outlays, development costs, and anticipated sales income are used to produce net cash flows that are
then discounted over the projected development and marketing periods. The Net Present Value (NPV) of such cash flows could
represent what someone might be willing to pay for the site and is therefore an indicator of market value. All the payments
are projected in nominal US Dollar/Euro amounts and thus incorporate relevant inflation measures. 
 
Valuation Approach 
 
In addition to the above general valuation methodology, the appraisers have taken into account in arriving at Market Value
the following: 
 
Pre Development 
 
In those instances where the nature of the 'Project' has been defined, it was assumed that the subject property will be
developed in accordance with this blueprint. The final outcome of the development of the property is determined by the
Board of Directors decision, which is based on existing market conditions, profitability of the project, ability to finance
the project and obtaining required construction permits. 
 
Development 
 
In terms of construction costs, the budgeted costs have been taken into account in considering opinions of value. However,
the appraisers have also had regard to current construction rates prevailing in the market which a prospective purchaser
may deem appropriate to adopt in constructing each individual scheme.  Although in some instances the appraisers have
adopted the budgeted costs provided, in some cases the appraisers' own opinions of costs were used. 
 
Post Development 
 
Rental values have been assessed as at the date of valuation but having regard to the existing occupational markets taking
into account the likely supply and demand dynamics during the anticipated development period. The standard letting fees
were assumed within the valuations. In arriving at their estimates of gross development value ("GDV"), the appraisers have
capitalized their opinion of net operating income, having deducted any anticipated non-recoverable expenses, such as land
payments, and permanent void allowance, which has then been capitalized into perpetuity. 
 
The capitalization rates adopted in arriving at the opinions of GDV reflect the appraisers' opinions of the rates at which
the properties could be sold as at the date of valuation. 
 
In terms of residential developments, the sales prices per sq. m. again reflect current market conditions and represent
those levels the appraisers consider to be achievable at present.  It was assumed that there are no irrecoverable operating
expenses and that all costs will be recovered from the occupiers/owners by way of a service charge. 
 
The valuations take into account the requirement to pay ground rental payments and these are assumed not to be recoverable
from the occupiers. In terms of ground rent payments, the appraisers have assessed these on the basis of information
available, and if not available they have calculated these payments based on current legislation defining the basis of
these assessments. Property tax is not presently payable in Ukraine. 
 
3.6 Investment Property under development 
 
Property that is currently being constructed or developed, for future use as investment property is classified as
investment property under development carried at cost until construction or development is complete, or its fair value can
be reliably determined. This applies even if the works have temporarily being stopped. 
 
3.7 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 condensed 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. 
 
3.8 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 finance 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 period/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 continuing 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. 
 
3.9 Available for sale financial assets 
 
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in
any of the other categories. They are included in non-current assets, unless Management intends to dispose of the
investment within twelve months of the reporting date. 
 
Shares of a property holding corporate entity that are owned by the Company in lieu of owning a percentage of the asset
itself, are considered under this classification even if the shares are not intended to be sold immediately but are
intended to offer to the Company the said percentage of the revenue streams generated by the property asset itself. 
 
Regular way purchases and sales of available-for-sale financial assets are recognized on trade-date which is the date on
which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction
costs. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale
financial assets are subsequently carried at fair value. 
 
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognized in
other comprehensive income are included in profit or loss as gains and losses on available-for-sale financial assets. 
 
Interest on available-for-sale securities calculated using the effective interest method is recognized in the profit or
loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group's right to receive
payments is established. 
 
The Group assesses at each reporting date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged
decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If
any such evidence exists for available-for-sale financial assets the cumulative loss which is measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognized in profit or loss, is removed from equity and recognized in profit or loss. 
 
In respect of available for sale equity securities, impairment losses previously recognized in profit or loss are not
reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other
comprehensive income and accumulated under the heading of investments fair value reserve. In respect of available for sale
debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the
investment can be objectively related to an event occurring after the recognition of the impairment loss. 
 
3.10 Inventory 
 
Inventory principally comprises land purchased for development and property under construction. Inventory is recognized
initially at cost, including transaction costs, which represent its fair value at the time of acquisition. Costs related to
the development of land are capitalized and recognized as inventory. Inventory is carried at the lower of cost and net
realizable value. 
 
3.11 Borrowings 
 
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortized 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 amortized 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 capitalized 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. 
 
3.12 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. 
 
3.13 Financial liabilities and equity instruments 
 
3.13.1 Classification as debt or equity 
 
Debt and equity instruments issued by a Group entity are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity
instrument. 
 
3.13.2 Equity instruments 
 
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue
costs. 
 
Ordinary shares are classified as equity. The difference between the fair value of the consideration received by the
Company and the nominal value of the share capital being issued is taken to the share premium account. 
 
Share premium account can only be resorted to for limited purposes, which don't include the distribution of dividends, and
is otherwise subject to the provisions of the Cyprus Companies Law on reduction of share capital. 
 
Repurchase of the Company's own equity instruments is recognized and deducted directly in equity. No gain or loss is
recognized in the statement of comprehensive income on the purchase, sale, issue or cancellation of the Company's own
equity instruments. 
 
3.13.3 Financial liabilities 
 
Financial liabilities are classified as either financial liabilities "at Fair Value Through Profit or Loss" or "other
financial liabilities". 
 
3.13.3.1 Financial liabilities at FVTPL 
 
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is
designated as at FVTPL. 
 
A financial liability is classified as held for trading if: 
 
·      it has been acquired principally for the purpose of repurchasing it in the near term; or 
 
·      on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or 
 
·      it is a derivative that is not designated and effective as a hedging instrument. 
 
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial
recognition if: 
 
·      such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise; or 
 
·      the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed
and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or
investment strategy, and information about the grouping is provided internally on that basis; or 
 
·      it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments:
Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL. 
 
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in
profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability
and is included in the "other gains and losses" line item in the condensed consolidated statement of comprehensive income. 
 
3.13.3.2 Other financial liabilities 
 
Other financial liabilities (including borrowings) are subsequently measured at amortized cost using the effective interest
method. 
 
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition. 
 
Preference shares, which may be redeemable on a specific date, are classified as liabilities. The dividends, if any, on
these preference shares are recognized in the income statement as interest expense. 
 
3.13.3.3 De-recognition of financial liabilities 
 
The Group derecognizes financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they
are expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid
and payable is recognized in profit or loss. 
 
3.14 Offsetting financial instruments 
 
Financial assets and financial liabilities are offset and the net amount reported in the condensed consolidated statement
of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and
there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is
not generally the case with master netting agreements and the related assets and liabilities are presented gross in the
condensed consolidated statement of financial position. 
 
3.15 Impairment of tangible and intangible assets other than goodwill 
 
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the
smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. 
 
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
loss annually, and whenever there is an indication that the asset may be impaired. 
 
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. 
 
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss
is treated as a revaluation decrease. 
 
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 
 
3.16 Cash and Cash equivalents 
 
Cash and cash equivalents include cash balances, call deposits and short-term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdraft
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. 
 
3.17 Share Capital 
 
Ordinary shares are classified as equity. 
 
3.18 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. 
 
3.19 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 Company 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. 
 
3.20 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. 
 
3.21 Leased assets 
 
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases. 
 
Assets held under finance leases are recognized as assets of the Group at their fair value at the inception of the lease
or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in
the condensed consolidated statement of financial position as a finance lease obligation. Lease payments are apportioned
between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to
qualifying assets, in which case they are capitalized in accordance with the Group's general policy on borrowing costs (see
above). 
 
Lease payments are analyzed between capital and interest components so that the interest element of the payment is charged
to the statement of comprehensive income over the period of the lease and represents a constant proportion of the balance
of capital repayments outstanding. The capital part reduces the amount payable to the lessor. 
 
3.22 Non-current liabilities 
 
Non-current liabilities represent amounts that are due in more than twelve months from the reporting date. 
 
3.23 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: 
 
3.23.1 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 period/year end. 
 
3.23.2 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). 
 
3.23.3 Interest income 
 
Interest income is recognized on a time-proportion (accrual) basis, using the effective interest rate method. 
 
3.23.4 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. 
 
3.24 Service charges and expenses recoverable from tenants 
 
Income arising from expenses recharged to tenants is recognized on an accrual basis. 
 
3.25 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. 
 
3.26 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. 
 
3.27 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. 
 
3.28 Taxation 
 
Income tax expense represents the sum of the tax currently payable and deferred tax. 
 
3.28.1 Current tax 
 
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
condensed 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. 
 
3.28.2 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. 
 
3.28.3 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, Greece 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. 
 
3.28.4 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, Greece, Bulgaria). 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. 
 
3.28.5 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. 
 
3.29 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 (reduced to 20% in 2016) and 0% on export of
goods and provision of works or services to be used outside Romania. 
 
·      20% on Bulgarian domestic sales and imports of goods, works and services and 0% on export of goods and provision of
services to taxable persons outside Bulgaria. 
 
·      24% on Greek 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 Greece. 
 
3.30 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 condensed consolidated interim 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 
 
·      Warehouse segment 
 
·      Office segment 
 
·      Retail segment 
 
Residential 
 
·      Residential segment 
 
Land Assets 
 
·      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 were its property is
located. 
 
3.31 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 period/year, attributable to ordinary equity holders
of the Company by the weighted average number of ordinary shares outstanding during the period/year. Basic NAV amounts are
calculated by dividing net asset value as at period/year end, attributable to ordinary equity holders of the Company by the
number of ordinary shares outstanding at the end of the period/year. 
 
Diluted EPS is calculated by dividing net profit/loss for the period/year, attributable to ordinary equity holders of the
parent, by the weighted average number of ordinary shares outstanding during the period/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 period/year end, attributable to ordinary equity holders of the
parent with the number of ordinary shares outstanding at period/year end plus the number of ordinary shares that would be
issued on conversion of all the potentially dilutive ordinary shares into ordinary shares. 
 
3.32 Comparative Period 
 
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period/year. 
 
4. Critical accounting estimates and judgments 
 
The preparation of financial statements in conformity with IFRS 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 investment property 
 
The fair value of 

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