REG - Secure Property Dev - Half-Year Report <Origin Href="QuoteRef">SPDI.L</Origin> - Part 3
28/09/2017 15:08
- Part 3: For the preceding part double click ID:nRSb1384Sb
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 2016 (Note 16).
· 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. The reasons for such conclusion are among others
that the Company:
a) is not an Investment Management Service provider to Investors,
b) 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) has investments that are not bound by time in relation to the exit strategy nor to the way that are being
exploited,
d) provides 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.
5. Risk Management
5.1 Financial risk factors
The Group is exposed to operating country risk, real estate holding and development associated risks, 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 management 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.
5.1.1 Operating Country Risks
The Group is exposed to country risk, stemming from the political and economic environment of countries in which it
operates. Notably:
5.1.1.1 Ukraine
In the recent years, Ukraine has been in a political and economic turmoil. Crimea, an autonomous republic of Ukraine, was
effectively annexed by the Russian Federation. In 2017, an armed conflict with separatists continued in certain parts of
Luhansk and Donetsk regions. These events resulted in higher inflation, devaluation of the national currency against major
foreign currencies, illiquidity and volatility of financial markets during 2014-2015 years.
For the six-month period ended 30 June 2017 average inflation amounted to 7,9% comparing to 4,9% for the six-month period
ended 30 June 2016. For the whole 2016 year the inflation rate in Ukraine was 12% (as compared to 43% in 2015).
The economic situation continues its stabilization in 2017, which resulted in GDP growth around 2,5% for the six-month
period ended 30 June 2017 (GDP returned to nominal growth of 1% in 2016 after 9% decline in 2015) and stabilization of
Ukrainian Hryvnia. This allowed the National Bank of Ukraine to ease some foreign exchange restrictions imposed during
2014-2015, including decrease of the required share of foreign currency proceeds sale to 50% and permission of dividends
remittance. However, certain other restrictions were prolonged. Significant external financing is required to support the
economy. As at 4 April 2017, Ukraine received the fourth tranche of extended fund facilities (EFF) agreed with the IMF.
Further stabilization of the economic and political situation depends, to a large extent, upon success of the Ukrainian
government's efforts.
5.1.1.2 Greece
During the reporting period the Greek government finalized discussions with the creditor institutions (EU/ECB/IMF/ESM) and
is now entering into the 3rd evaluation of the current program. If such evaluation finalizes as planned, political and
economic instability for the country will decrease significantly. In any event, the uncertainty although decreased during
the last months, it is still apparent especially as far as the implementation of the rescue program and the reforms
included therein are concerned. The implementation of the program and its effects on the economy are beyond the Group's
control. The country continues to operate under capital controls and restrictions as imposed by the government on 27 June
2015.
Various risks emerge should the program is not implemented as planned, including restrictions on use of local bank
deposits, liquidity of the financial sector and businesses, recoverability of receivables, impairment of assets,
sufficiency of financing by the lending banks, serving of existing financing arrangements and/or compliance with existing
terms and financial covenants of such arrangements. These and any possible further negative developments in Greece could
impact the results and financial position of the Group's Greek operations to some extent, in a manner not currently
determinable.
The Group has been closely assessing developments in Greece and preparing for a number of eventualities around the Greek
crisis, in line with its established risk management policy in order to ensure that timely actions and response are
undertaken so as to minimize any impact on the Group's business and operations.
5.1.2 Risks associated with property holding
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 the UAH rapid
devaluation;
· the amount of rent and the terms on which lease renewals and new leases are agreed being less favorable than current
leases;
· cyclical fluctuations in the property market generally;
· local conditions such as an oversupply of similar properties or a reduction in demand for the properties;
· the attractiveness of the property to tenants or residential purchasers;
· decreases in capital valuations of property;
· changes in availability and costs of financing, which may affect the sale or refinancing of properties;
· covenants, conditions, restrictions and easements relating to the properties;
· changes in governmental legislation and regulations, including but not limited to designated use, allocation,
environmental usage, taxation and insurance;
· the risk of bad or unmarketable title due to failure to register or perfect our interests or the existence of prior
claims, encumbrances or charges of which we may be unaware at the time of purchase;
· the possibility of occupants in the properties, whether squatters or those with legitimate claims to take
possession;
· the ability to pay for adequate maintenance, insurance and other operating costs, including taxes, which could
increase over time; and
· political uncertainty, acts of terrorism and acts of nature, such as earthquakes and floods that may damage the
properties.
5.1.3 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.
Valuations reported as at 31 December 2016 take into account the continuation of political instability in Ukraine. Given
the nature of the Group's assets the most immediate effect would be the prolongation of the period needed to market and
effectively sell an asset under such duress conditions.
The BoD is monitoring the situation to ensure that assets' value is preserved while at the same time through
diversification according to the strategic plan of the Group, Ukrainian operations are gradually becoming a smaller part of
a larger portfolio of assets. Following the disposal of the Terminal Brovary Logistics beginning of the year the Group's
presence in Ukraine in terms of Gross Asset Value has been reduced to 11% and as a result the group's exposure to Ukrainian
risks has been minimized.
5.1.4 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.
5.1.5 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.
Management has been in continuous discussions with banking institutions monitoring their ability to extend financing as per
the Group's needs. The sovereign debt crisis has affected the pan-European banking system during 2011 and 2012 imposing
financing uncertainties for new development projects. The financial crisis in the European Union periphery has strained
any remaining liquidity and the financial institutions in the region (including those that have Italian, Greek or Austrian
parent) have entered into deleveraging programs.
5.1.6 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 E. In Ukraine even though some of the rental
proceeds are denominated in USD, Management has been monitoring the rental market decoupling from the USD and switching to
the UAH, which entails significant FX risks for the Group in the future. Management monitors the exchange rate fluctuations
on a continuous basis and acts accordingly, by limiting net exposures to a few days to 2 months. It should be noted that
the current political uncertainty in Ukraine, and the currency devaluation may affect the Group's income streams indirectly
also through affecting the financial condition of the tenants of the Group's properties their solvency and their income
generating capacity.
Management is monitoring foreign exchange fluctuations closely and acts accordingly. Following the disposal of the Terminal
Brovary Logistics beginning of the year the Group's presence in Ukraine in terms of Gross Asset Value has been reduced to
11% and as a result the group's exposure to Ukrainian risks has been minimized.
5.1.7 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 39.1
of the condensed consolidated interim financial statements.
5.1.8 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.
5.1.9 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 .
5.1.10 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 Company aiming to effect alternate
repayment plans including debt repayment so as to minimize the effects of such situations on the Group's asset base.
5.2. 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.
5.3. Fair value estimation
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at 31 December 2016.
6. Investment in subsidiaries
The Company has direct and indirect holdings in other companies, collectively called the Group, that were included in the
condensed consolidated interim financial statements, and are detailed below:
Holding %
Name Country Related Asset as at 30 June 2017 as at 31 Dec 2016 as at 30 June 2016
SC SECURE Capital Ltd Cyprus 100 100 100
SL SECURE Logistics Ltd Cyprus Terminal Brovary Logistics Park 0 100 100
LLC Aisi Brovary Ukraine 0 100 100
LLC Terminal Brovary Ukraine 0 100 100
LLC Aisi Ukraine Ukraine Kiyanovskiy Residence 100 100 100
LLC Retail Development Balabino Ukraine 100 100 100
LLC Trade Center Ukraine 100 100 100
LLC Almaz-press-Ukrayina Ukraine Tsymlianskiy Residence 55 55 55
LLC Aisi Bela Ukraine Bela Logistic Center 100 100 100
LLC Interterminal Ukraine Zaporizhia Retail Center 100 100 100
LLC Aisi Ilvo Ukraine 100 100 100
Myrnes Innovations Park Ltd Cyprus Innovations Logistics Park 100 100 100
Best Day Real Estate SRL Romania 100 100 100
Yamano Holdings Ltd Cyprus EOS Business Park 100 100 100
Secure Property Development and Investment Srl Romania 100 100 100
N-E Real Estate Park First Phase Srl Romania 100 100 100
Victini Holdings Ltd Cyprus GED Logistics 100 100 100
SPDI Logistics S.A. Greece 100 100 100
Zirimon Properties Ltd Cyprus Delea Nuova 100 100 100
Bluehouse Accession Project IX Ltd Cyprus Praktiker Craiova 100 100 100
Bluehouse Accession Project IV Ltd Cyprus 100 100 100
Bluebigbox 3 Srl Romania 100 100 100
SPDI Real Estate SRL Romania Kindergarten 50 - -
SEC South East Continent Unique Real Estate Investments II Ltd Cyprus 100 100 100
SEC South East Continent Unique Real Estate (Secured) Investments Ltd Cyprus 100 100 100
Diforio Holdings Ltd Cyprus Residential and Land portfolio 100 100 100
Demetiva Holdings Ltd Cyprus 100 100 100
Ketiza Holdings Ltd Cyprus 90 90 90
Frizomo Holdings Ltd Cyprus 100 100 100
SecMon Real Estate SRL Romania 100 100 100
SecVista Real Estate SRL Romania 100 100 100
SecRom Real Estate SRL Romania 100 100 100
Ketiza Real Estate SRL Romania 90 90 90
Edetrio Holdings Ltd Cyprus 100 100 100
Emakei Holdings Ltd Cyprus 100 100 100
RAM Real Estate Management Ltd Cyprus 50 50 50
Iuliu Maniu Ltd Cyprus 45 45 45
Moselin Investments srl Romania 45 45 45
Rimasol Enterprises Ltd Cyprus 44,24 44,24 44,24
Rimasol Real Estate Srl Romania 44,24 44,24 44,24
Ashor Ventures Ltd Cyprus 44,24 44,24 44,24
Ashor Development Srl Romania 44,24 44,24 44,24
Jenby Ventures Ltd Cyprus 44,30 44,30 44,30
Jenby Investments Srl Romania 44,30 44,30 44,30
Ebenem Ltd Cyprus 44,30 44,30 44,30
Ebenem Investments Srl Romania 44,30 44,30 44,30
Sertland Properties Ltd Cyprus 100 100 100
Boyana Residence ood Bulgaria 100 100 100
Mofben Investments Ltd Cyprus 100 100 100
Delia Lebada Invest srl Romania 65 65 65
SPDI Management SRL Romania 100 100 100
7. Income
Income for the period ended 30 June 2017 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 the Innovations Logistics Park (Romania), EOS Business Park (Romania), Praktiker
Craiova (Romania), and GED Logistics (Greece),
b) income from the sale of electricity by GED Logistics to the Greek grid,
c) rental income and service charges by tenants of the Residential Portfolio, and;
d) income from third parties and /or partners for managing real estate properties.
30 June 2017 30 June 2016
E E
Rental income 1.609.640 2.345.038
Sale of electricity 162.806 164.607
Service charges and utilities income 93.335 152.911
Service and property management income 1.047.728 -
Total income 2.913.509 2.662.556
55% of the rental income reduction on a comparable basis results from the sale of Terminal Brovary in Ukraine while the
rest is due to the income lost from Nestle pursuant to the agreement for early termination of rental contract at Innovation
Logistics Park.
Occupancy rates in the various income producing assets of the Group as at 30 June 2017 were as follows:
Income producing assets
% 30 June 2017 30 June 2016
EOS Business Park Romania 100% 100%
Innovations Logistics Park Romania 60% 87%
GED Logistics Greece 100% 100%
Terminal Brovary Logistics Park Ukraine sold 100%
Praktiker Craiova Romania 100% 100%
8. Asset operating expenses
The Group incurs expenses related to the proper operation and maintenance of all the income generating properties in Kiev,
Bucharest, Athens, Sofia and Craiova. A part of these expenses is recovered from the tenants through the rental agreements
(Note 7).
30 June 2017 30 June 2016
E E
Property related taxes (139.949) (121.707)
Utilities (59.892) (97.170)
Property management fees (59.951) (72.376)
Repairs and technical maintenance (47.042) (26.581)
Property security (24.863) (21.194)
Property insurance (23.612) (25.965)
Land Leasing expenses (6.299) (25.189)
Total (361.608) (390.182)
Property related taxes reflect local taxes related to land and building properties (in the form of land taxes, building
taxes, garbage fees, etc).
Property Management fees relate to Property Management Agreements for Innovation Logistics Park and Praktiker Craiova with
third party managers outsourcing the related services.
9. Administration Expenses
30 June 2017 30 June 2016
E E
Salaries and Wages (438.066) (480.484)
Legal fees (69.498) (44.123)
Advisory fees (133.875) (169.548)
Corporate registration and maintenance fees (105.006) (89.765)
Travelling and other office expenses (71.586) (78.148)
Audit and accounting fees (66.781) (74.758)
Public entity expenses (84.549) (67.166)
Depreciation/Amortization charge (27.012) (24.162)
Sundry expenses (95.310) (150.019)
Total Administration Expenses (1.091.683) (1.178.173)
Salaries and wages include the remuneration of the CEO, the CFO, the Group Commercial Director, the Group Investment
Director and the Country Managers of Ukraine and Romania, as well as the salary cost of personnel employed in the region.
Legal fees represent legal expenses incurred by the Group in relation to asset operations (rentals, sales etc), ongoing
legal cases in Ukraine, debt restructurings as well as its compliance with AIM listing.
Advisory fees are mainly related to outsourced man power on the basis of advisory contracts, capital raising advisory
expenses and marketing expenses incurred by the Group.
Audit and accounting expenses includes the audit fees and accounting fees for the Company and all the subsidiaries.
Public entity expenses include fees paid to the London Stock Exchange (LSE) and the Nominated Advisor of the Company as
well as other expenses related to the listing of the Company.
Sundry expenses include rent expenses for offices, marketing expenses and security expenses for offices and all other
general expenses for Cypriot, Romanian, Ukrainian, Bulgarian and Greek operations.
During 2016 the BoD decided not to receive any remuneration starting from 2017.
10. Valuation gains /(losses) from investment properties
Following the Group's accounting policy which prescribes the yearly valuation of the investment properties the Group did
not perform valuation its assets as of 30 June 2017. At the same time, the Group adopted the decision to keep the value of
its investment property at the same level as it was defined as of 31 December 2016 in the currencies in which the valuation
was performed (EUR for Romanian subsidiaries and USD for Ukrainian ones). Since during the 1H 2017 the functional
currencies of the Romanian and Ukrainian subsidiaries changed their value against EUR and USD, respectively, the resulting
effect was recognized as the valuation gain/loss in the consolidated financial statements.
Valuation gains /(losses) from investment property for the six month reporting period, excluding foreign exchange
translation differences which are incorporated in the table of Note 16, are presented in the table below.
Property Name Valuation gains/(losses)
30 June 2017 30 June 2016
E E
Terminal Brovary Logistics Park - 349.332
Bela Logistic Center (157.983) 145.991
Kiyanovskiy Lane (104.328) 91.243
Tsymlianskiy Lane (32.789) 28.677
Balabino Lane (47.693) 44.318
Rozny Lane (86.887) (23.125)
Innovations Logistics Park 31.039 -
EOS Business Park 19.357 -
Residential Portfolio 12.345 -
Green Lake 50.563 -
Pantelimon Lake 13.714 -
Praktiker Craiova 21.163 -
GED Logistics (100.000) -
Total (381.499) 636.436
11. Gain/(Loss) from disposal of properties
During the reporting period the Group progressed with selling properties classified under either Investment Property
(Romanian residential assets) or Inventory (Bulgarian residential assets), designated as non-core assets. The proceeds from
sale of apartments and parking spaces minus the cost of assets sold, representing the fair value of the previous year of
the apartments and parking spaces sold during the period is presented below.
11.a Inventory
30 June 2017 30 June 2016
E E
Income from sale of inventory 171.834 610.780
Cost of inventory (Note 21) (215.708) (902.636)
Gain/(Loss) from disposal of inventory (43.874) (291.856)
In H1-2017, the Group sold 3 apartments in Bulgaria while in H1-2016 sold 11 apartments (and 4 parking spaces).
11.b Investment property
A large part of sold properties during H1 2016 represent the bulk sale of all the apartments held by the Group at the Linda
Residence project. This sale resulted in E660.000 of income vs the carrying value of E1.014.000 reflecting the 2015 stated
fair value. During the sale process the financing bank agreed to provide a discount of E324.695 against the one off
repayment of the associated debt (Note 13). The net cash proceeds from the sale were ~E450k. In H1-2017, the Group sold 2
apartments in Romania while in H1-2016 29 apartments (and 20 parking spaces).
30 June 2017 30 June 2016
E E
Income from sale of investment property 135.393 1.627.761
Cost of investment property (Note 16.2) (130.762) (2.083.859)
Gain/(Loss) from disposal of investment property 4.631 (456.098)
12. Other operating income/ (expenses), net
30 June 2017 30 June 2016
E E
Accounts payable write off 1.250 -
Provision for impairment of prepayments and other current assets 4.390 -
Other income 5.640 -
Impairment - (772)
Penalties (1.584) (8.814)
Other expenses (4.721) (8.240)
Other expenses (6.305) (17.826)
Total (665) (17.826)
13. Finance costs and income
30 June 2017 30 June 2016
E E
Finance income
Interest income from non-bank loans (Note 36.1) 4.645 38.041
Bank Loan written off (Note 28) - 324.695
Bank interest income 1.754 400
Other finance income 3.442 -
Total finance income 9.841 363.136
Finance costs
Borrowing interest expenses (715.065) (1.320.634)
Finance leasing interest expenses (268.126) (269.398)
Finance charges and commissions (41.510) (72.070)
Other finance expenses - (97.048)
Total finance costs (1.024.701) (1.759.150)
Net finance result (1.014.860) (1.396.014)
Interest income from non-bank loans represents interest receivable from loans to associate (in 2016 was included also
interest income from Autounion, Available for sale investment, which was disposed in H2 2016).
Bank Loan written off represents a debt amount written off following completion of the bulk sale of the of Linda Residence
properties (Note 28).
Borrowing interest expense represents interest expense charged on bank and non-bank borrowings (Note 28). The reduction
reflects the disposal of Terminal Brovary asset together with the associated EBRD loan.
Finance leasing interest expenses relate to the sale and lease back agreements of the Group (Note 32).
Finance charges and commissions include regular banking commissions, and various fees paid to the banks.
Other finance expenses mainly represent the penalties that Piraeus Leasing charged to Best Day SRL for overdue installments
during the period when the Company and Nestle were trying to get Piraeus Leasing agreeing on the early termination.
14. Foreign exchange profit / (losses)
a. Foreign exchange loss - non realised
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 from continuing operations for the period ended 30 June 2017 amounted
to E1.733.039 (30 June 2016: loss E98.818).
b. Exchange difference on intercompany loans to foreign holdings
The intercompany loans provided by SC Secure Capital Limited to Ukrainian subsidiaries (Note 36.3) incurred an aggregate
non-realized exchange loss of E37.567.055, due to the UAH devaluation which took place from the date of acquisitions (in
2006). Under the IAS 21 paragraph 48, when a foreign operation is disposed of, the cumulative amount of the exchange
differences recognized in other comprehensive income and accumulated in the separate component of equity relating to that
foreign operation shall be recognized in profit or loss upon disposal.
15. Income Tax Expense
30 June 2017 30 June 2016
E E
Current income and defense tax expense (21.085) (45.507)
Taxes (21.085) (45.507)
For period ended 30 June 2017, the corporate income tax rate for the Company's subsidiaries are as follows: in Ukraine 19%,
in Romania 16%, in Greece 29% and in Bulgaria 10%. The corporate tax that is applied to the qualifying income of the
Company and its Cypriot subsidiaries is 12,5%.
16. Investment Property
16.1 Investment Property Holdings
Investment Property consists of the following assets:
Income Producing Assets
· GED Logistics is a logistics park comprising 17.756 gross leasable sqm. It is fully let to the German multinational
transportation and logistics company, Kuehne + Nagel (70%) and to a Greek commercial company trading electrical appliances
GE Dimitriou SA (30%). On the roof of the warehouse there is a 1MW photovoltaic park installed with the electricity
generated being sold to Greek Electric Grid on a long term contract.
· EOS Business Park is a 3.386 sqm gross leasable area and a Class A office Building in Bucharest, which is currently
fully let to Danone Romania. EOS Business Park was acquired by the Group in October 2014.
· Praktiker Craiova, a DIY retail property was acquired by the Group in July 2015. It is situated in a prime location
in Craiova, Romania and it is fully let to Praktiker, a regional DIY retailer. The property has a gross leasble area of
9.385 sqm and is 100% rented until 2025.
· Innovations Logistic 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 was acquired by the Group in May 2014 and was ~60% leased at the end of the reporting period.
· Terminal Brovary Logistics Park consists of a 49.180 sqm gross leasable Class A warehouse and associated office
space, situated on the junction of the main Kiev - Moscow highway and the Borispil road. The Company sold the asset at the
end of January 2017, generating a net cash inflow of over US$3m.
· During the period the Company proceeded with an internal reorganization and the Kindergarten of GreenLake which was
under the ownership of its associate Green Lake Development Srl was acquired by a separate entity (SPDI Real Estate). The
Kindergaden is fully let to one of Bucharest's leading private schools and produces an annual rent inflow of ~E115.000.
Residential Assets
· The Company owns a residential portfolio, consisting at the end of the reporting period of partly let and income
producing 67 apartments and villas across four separate complexes located in different residential areas of Bucharest
(Residential portfolio: Romfelt, Monaco, Blooming House, Green Lake Residential: Green Lake Parcel K). The Group acquired
the portfolio partly in August 2014 and partly in May 2015 (Note 18) and in May 2016 proceeded in full divestment from
Linda Residences. The aggregate residential portfolio is ~35% let at the end of the reporting period.
Land Assets
· Bela Logistic Center is a 22,4 Ha plot in Odessa situated on the main highway to Kiev. Following the issuance of
permits in 2008, below ground construction for the development of a 103.000 sqm GBA logistic center commenced. Construction
was put on hold in 2009.
· Kiyanovskiy Lane 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. Beginning of July 2017 the
Company announced the conditional sale of its Kiyanovski land asset to Riverside Developments ('Riverside'), a large
Ukrainian developer, for a price to be finally determined at closing but will be in excess of US$3 million (which reflects
approximately the valuation at the year-end accounts) (Note 40.2).
· Tsymlianskiy Lane is a 0,36 Ha plot of land located in the historic Podil District of Kiev and is destined for the
development of a residential complex.
· Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for the development of a residential complex. It
has been registered under the Group pursuant to a legal decision in 2015.
· Balabino project is a 26,38 Ha plot of land situated on the south entrance of Zaporizhia, a city in the south of
Ukraine with a population of 800.000 people. Balabino is zoned for retail and entertainment development.
· Green Lake land is a 40.360 sqm plot and is adjacent to the Green Lake part of the Company's residential portfolio,
which is classified under Investments in Associates (Note 18). It is situated in the northern part of Bucharest on the bank
of Grivita Lake in Bucharest. SPDI owns ~44% of these plots, but has effective management control.
· Pantelimon Lake consists of a ~40.000 sqm plot of land in east Bucharest situated on the shore of Pantelimon Lake,
opposite to a famous Romanian hotel, the Lebada Hotel. The construction permit, which allows for ~54.000 sqm residential
space to be built, has been renewed. Beginning of July 2017 the plot was disposed and the associated debt was settled and
following completion of the disposal the Company will retain a 5% interest in the Special-Purpose Vehicle ("SPV") which
will hold the land asset post disposal debt free (Note 40.1).
· Boyana Land: The complex of Boyana Residence includes adjacent land plots with building permits to develop gross
buildable area of 21,851 sqm .
16.2 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.
30 June 2017 (E) Fair Value movements Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name Type Carrying amount 30/06/2017 Foreign exchange translation difference(a) Fair value gain/(loss) based on local currency valuations (b) Disposals30/06/2017 Transfer from prepayments made for investments Additions 30/06/2017 Carrying amount as at 31/12/2016
Terminal Brovary Logistics Park Warehouse - - - (14.900.000) - - 14.900.000
Bela Logistic Center Land 4.644.234 (225.769) (157.983) - - - 5.027.986
Kiyanovskiy Lane Land 3.066.946 (149.094) (104.328) - - - 3.320.368
Tsymlianskiy Lane Land 963.898 (46.857) (32.789) - - - 1.043.544
Balabino Land 1.402.033 (68.157) (47.693) - - - 1.517.883
Rozny Lane Land 1.051.525 - (86.887) - - - 1.138.412
Total Ukraine 11.128.636 (489.877) (429.680) (14.900.000) - - 26.948.193
Innovations Logistics Park Warehouse 11.000.000 (31.039) 31.039 - - - 11.000.000
EOS Business Park Office 6.860.000 (19.357) 19.357 - - - 6.860.000
Residential portfolio Residential 4.244.238 (12.345) 12.345 (130.762) - - 4.375.000
Green Lake Land 17.919.000 (50.563) 50.563 - - - 17.919.000
Pantelimon Lake Land 4.860.000 (13.714) 13.714 - - - 4.860.000
Praktiker Craiova Retail 7.500.000 (21.163) 21.163 - - - 7.500.000
GreenLake -kindergarten Commercial 1.265.000 - - - - 1.265.000 -
Total Romania 53.648.238 (148.181) 148.181 (130.762) - 1.265.000 52.514.000
Boyana Land 4.720.000 - - - - - 4.720.000
Total Bulgaria 4.720.000 - - - - - 4.720.000
GED Logistics Warehouse 16.500.000 - (100.000) - - 100.000 16.500.000
Total Greece 16.500.000 - (100.000) - - 100.000 16.500.000
Total 85.996.874 (638.058) (381.499) (15.030.762) - 1.365.000 100.682.193
30 June 2016 (E) Fair Value movements Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name Type Carrying amount 30/06/2016 Foreign exchange translation difference(a) Fair value gain/(loss) based on local currency valuations (b) Disposals Transfer from prepayments made for investments Additions 2015 Carrying amount as at 31/12/2015
Terminal Brovary Logistics Park Warehouse 12.069.897 (543.759) 349.332 - - - 12.264.324
Bela Logistic Center Land 5.044.136 (227.244) 145.991 - - - 5.125.389
Kiyanovskiy Lane Land 3.152.586 (142.025) 91.243 - - - 3.203.368
Tsymlianskiy Lane Land 990.812 (44.637) 28.677 - - - 1.006.772
Balabino Land 1.531.256 (68.984) 44.318 - - - 1.555.922
Rozny Lane Land 1.170.960 - (23.125) 1.194.085
Total Ukraine 23.959.647 (1.026.649) 636.436 - - - 24.349.860
Overall change in Ukraine (390.213) - - -
Innovations Logistics Park Warehouse 14.400.000 - - - - - 14.400.000
EOS Business Park Office 6.550.000 - - - - - 6.550.000
Residential portfolio Residential 4.638.141 - - (2.083.859) - - 6.722.000
Green Lake Land 17.932.000 - - - - - 17.932.000
Pantelimon Lake Land 5.812.000 - - - - - 5.812.000
Praktiker Craiova Retail 7.200.000 - - - - - 7.200.000
Total Romania 56.532.141 - - (2.083.859) - - 58.616.000
GED Logistics Warehouse 16.500.000 - - - - - 16.500.000
Total Greece 16.500.000 - - - - - 16.500.000
Total 96.991.788 (1.026.649) 636.436 (2.083.859) - - 99.465.860
16.3 Investment Property Valuations per asset
The table below presents the values of the individual assets as appraised by the 2016 appointed valuer.
Asset Name Description/ Location Principal Operation Related Companies Carrying amount as at (E)
30 June 2017 31 Dec 2016
Terminal Brovary Logistics Park Brovary,Kiev oblast Warehouse LLC TERMINAL BROVARY LLC AISI BROVARY SL LOGISTICS LIMITED - 14.900.000
Bela Logistic Center Odesa Land and Development Works for Warehouse LLC AISI BELA 4.644.234 5.027.986
Kiyanovskiy Lane Podil,Kiev City Center Land for residential development LLC AISI UKRAINE 3.066.946 3.320.368
Tsymlianskiy Lane Podil,Kiev City Center Land for residentialDevelopment LLC ALMAZ PRES UKRAINE 963.898 1.043.544
- More to follow, for following part double click ID:nRSb1384SdRecent news on Secure Property Development & Investment
See all newsREG - Secure Property Dev - Result of EGM
AnnouncementREG - Secure Property Dev - Notice of EGM
AnnouncementREG - Secure Property Dev - Transfer of Ukrainian property asset to Arcona
AnnouncementREG - Secure Property Dev - Result of AGM
AnnouncementREG - Secure Property Dev - Notice of AGM
Announcement