TIDMSPDI
RNS Number : 4508E
Secure Property Dev & Inv PLC
30 June 2023
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
30 June 2023
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
2022 Annual Results
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property company, is pleased to
announce its full year audited financial results for the year ended
31 December 2022.
Corporate Overview
The Company maintains its strategy to maximise value for
shareholders through the contribution of SDPI's property portfolio
to Arcona Property Fund (APF)
Significant asset backing behind the Company:
-- NAV per share stood at 9p a share as at 31 December 2022 -
37% higher than share price at year end and 38% higher than the
current share price
-- Having completed Stage 2 with APF, SPDI now has a total
holding of 1,072,910 shares in Arcona and 259,627 warrants over
shares in Arcona which based on the closing price of Arcona's
shares on 31 December 2022, values the SPDI's stake in Arcona at
c.EUR6.3 million (excluding the issue of the warrants), while based
on the current net asset value per Arcona share (as at 31 March
2022), values the stake at EUR12.75 million (excluding the issue of
the warrants)
Financial Overview
-- Rental and related income decreased during 2022 to
EUR1,649,537 (2021: EUR1,986,857) due to the disposal of assets
during the period
-- EBITDA from total operations of - EUR634,731 (2021: EUR819,431)
-- Operating losses after finance and tax for the year reached EUR1,181,414 (2021: EUR144,828)
Michael Beys, Chairman of the Board, said , "In 2022 we
concluded Stage 2 of the Arcona transaction, making SPDI one of the
largest APF shareholders, and installed our financial advisor in
APF's management team to ensure further value retention and
generation to our shareholders. We are therefore on the path of
transforming SPDI into a broader Central and Eastern Europe
property company, as per our shareholders' mandate."
Copies of the Annual report and Accounts are being posted to
Shareholders today and are available on the Company's website at
www.secure-property.eu .
* *S * *
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Ritchie Balmer
Jon Belliss Novum Securities Limited Tel: +44 (0) 207 399 9400
Catherine Leftley St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
1. Letter to Shareholders
28 June 2023
2022 experienced contrasting property market forces. On one hand
the global energy crisis and the ensuing inflation which dragged
along the debt interest rates to levels not seen for a couple of
decades raised the property related costs and risk concerns. On the
other hand, the markets that SPDI is present in continued their
post pandemic recovery, with the exception of Ukraine for obvious
reasons. In this environment, and as we presented to our
shareholders last year, SPDI managed to conclude Stage 2 of its
indirect merger with the Amsterdam and Prague listed Arcona
Property Fund N.V. (APF - with assets in Poland, Czech Republic and
Slovakia) that involved the transfer of the remaining Romanian
portfolio to APF. APF is also committed to acquire the remaining
Ukrainian assets, with the transaction being delayed due to the
ongoing war, expected to take place in the future upon
normalization of current conditions .
In parallel, SPDI's Management increased their effort to
monetize any remaining assets that had not yet been sold to APF and
that were to be part of Stage 3, but as the discussions with APF
took much longer than expected and negotiations on their valuation
did not conclude, we opted to monetize them in the broader market.
As such we managed to sell the Kindergarten and the remaining Green
Lake land in Romania at values much higher than those APF was
offering. At the same time almost half of the loan SPDI had
extended to Olympians has by now been repaid (with a small amount
due to be repaid later this year) with the remaining half planned
to be transformed into a 50% equity stake in a Romanian logistics
platform that is to be monetized together with the Innovations
Terminal later this year.
At the moment SPDI owns 26% of APF, plus a number of warrants,
and has our Chairman as one of the three APF supervisory board
members, to facilitate the transition and ensure value retention
and generation for our shareholders. On the liability side, SDPI is
expecting the hearing of its court case in Cyprus against the
seller of its Praktiker Craiova asset so as to settle a liability
that we have provided for, but our legal advisers and our board are
confident will end up to our benefit anyway. During the year we
have reduced even further the Company's operating expenses to a
minimum with most of the executives being paid for part time
employment; a process that was further advanced earlier in 2023
with all executives moving out of the Company and offering their
(part time) services through a third-party services contract. As
SPDI did not reach the minimum size needed, these operating
expenses, despite being at the bottom end of the peer bracket,
weighted substantially on a limited size property company that SPDI
ended being, and became the management's priority to address,
always taking into consideration our fiduciary responsibility to
ensure smooth running and value retention for our Company.
We expect 2023 will be the last year of SPDI operations as we
know them with its net assets turned into APF shares and cash, and
opex being reduced to minimum. When such APF shares and cash are
distributed to our shareholders, subject to, inter alia, all
necessary shareholder/regulatory approvals being obtained and tax
advice, they will be able to either monetise their investment by
selling them or retain them and follow APF's growth into a dividend
issuing pan-East Europe property company, the preferred way of
safeguarding their investment value together with having the option
of further value generation. Management and directors of SPDI are
committed to see the conclusion of this transaction so that they
will ensure the transformation of our Company.
Best regards,
Lambros G. Anagnostopoulos, Chief Executive Officer
2. Management Report
SPDI's core property asset portfolio consists of South Eastern
European prime commercial and industrial real estate, the majority
of which is let to blue chip tenants on long leases. During 2022,
management, in line with the Company's strategy to maximise value
for shareholders, closed two transactions with Arcona Property Fund
N.V (Arcona) as part of the conditional implementation agreement
for the sale of Company's property portfolio, excluding its Greek
logistics property (which has now also separately been sold), in an
all-share transaction to Arcona, an Amsterdam and Prague listed
company that invests in commercial property in Central Europe.
Arcona originally held high yielding real estate investments in
Czech Republic, Poland and Slovakia, with the total agreement
valuing the SPDI NAV at EUR29m, significantly higher than the
current market value of the Company as a whole.
The combination of two complementary asset portfolios is
expected to create a significant European property company,
benefiting both the Company's and Arcona's respective
shareholders.
Following the completion of Stage 1 of the transaction in 2019,
which involved the sale of two land plots in Ukraine and
residential and land assets in Bulgaria and resulted in Company
receiving a total of 593.534 Arcona shares and 144.084 warrants
over Arcona shares, in June 2021, the two parties signed SPA
agreements for Stage 2 of the Arcona transaction. This stage
involves the transfer of the EOS and Delenco assets in Romania and
the Kiyanovskiy and Rozny land plots in Ukraine with a total net
asset value of EUR8,2 million, in exchange for approximately
560.000 new ordinary shares in Arcona and approximately 135.000
warrants over shares in Arcona, as well as EUR1m in cash, subject
to, inter alia, standard form adjustment and finalisation in
accordance with the relevant agreements.
During March and June 2022 the transactions for the sale of EOS
and Delenco were concluded, in exchange for the issue to the
Company of 479.376 new shares in Arcona and 115.543 warrants over
shares in Arcona.
The invasion of Ukraine by Russia during February 2022 suspended
the transfer process of the relevant Ukrainian assets included in
Stage 2 of the transaction. Any development of such process is
expected to take place in the future upon normalization of current
conditions.
Moreover, the war in Ukraine has also affected our standard
local business. In particular, despite submitting the official
request to the City of Kiev to extend the lease of Tsymlyanskiy for
another 5 years in November 2021 (as we have first extension rights
over any other interested party) we have not managed to get an
official approval yet. The first step in the process whereby the
presiding committee of the municipality, before the final approval
by the City Council, did not take place as too many other cases had
accumulated which had time priority over our case. During the
period between 15 December 2021 and 20 January 2022, the committee
did not convene at all as is usual during holiday and vacation
times. Once the holiday season was over, the main focus of the
committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian invasion of Ukraine. However, management remains confident
that the Company will be
awarded the lease extension once the war status permits.
In August 2022 the Company signed with Myrian Nes Limited a
Shareholders Agreement for a joint venture for developing logistics
properties in Romania. As part of this agreement the Company will
convert EUR2,5 million of the loan it has extended in 2017 to
Myrian Nes Limited (Olympians Loan) into a 50% equity stake of the
joint venture company. The objective of this new company, which
Myrian Nes is contributing EUR2,5 million in equity funds to, is to
develop a portfolio of logistics properties in Romania with a view
of letting them to third party tenants in a market that has very
low vacancy and has shown substantial strength and resilience in
recent years. The remaining part of the Olympians Loan is being
repaid in regular intervals and is expected to be fully repaid to
the Company during the current period. As part of this joint
venture, the parties have proceeded to the establishment of the
required entities in Cyprus and Romania, while currently are
finalizing discussions with a counterparty for the purchase,
development and lease back of a particular asset.
Moreover, during the period the Company sold its total interest
in the 40.850 sqm land portfolio of the GreenLake project in
Bucharest, Romania, which is not zoned for development, as well as
its interest in the Kindergarten asset in GreenLake. These assets
was planned to be part of Stage 3 of the transaction with Arcona,
but negotiations on price did not concluded, and therefore
Management got higher prices in the market. The sale of the land
portfolio resulted in the full repayment of GreenLake's First Phase
bank loan, leading in turn to the successful monetization of the
remaining developed First Phase units of the associate Green Lake
Development Srl, as well as the settlement, after prolonged
negotiations, of an ongoing overlapping dispute over the GreenLake
land.
Regarding the economic environment in which the Company
operates, the Romanian economy which constitutes the main operating
market of the Company, grew by 4,7% in 2022, better than expected
given the persistent inflation during the year. Growth was driven
by strong consumer spending, which increased 5,5% year-on-year on
the back of the removal of pandemic restrictions and the higher
wages. Inflation rate reached 12% in 2022 while unemployment showed
a marginal increase to 5,6%, keeping the labor market relatively
tight and wage increases high. Real estate investment volume
reached in 2022 the historical milestone of 1,25 bln euros, 36%
higher than the volume registered the previous year, with office
assets representing 62% of the annual volume, while retail assets
attracted 24% and industrial 7%.
Total operating income decreased by 38% during 2022 as a result
of the disposal of assets during the period, leading to a decrease
in net income from operations by 69%.
Table 1
EUR 2022 2021
------------------------------------------------------------------------- ---------------------------------------------------------------------------
Continued Discontinued Total Continued Discontinued Total
Operations Operations Operations Operations
---------------- --------------------- ----------------------- ------------------------- ------------------------ ----------------------- ------------------------
Rental,
Utilities,
Management
& Sale of
electricity
Income 1,143,752 505,785 1,649,537 1,047,137 939,720 1,986,857
Net gain/(loss)
on disposal
of investment
property - (825,392) (825,392) - 653,567 653,567
Income from
Operations 1,143,752 (319,607) 824,145 1,047,137 1,593,287 2,640,424
Asset operating
expenses - (446,380) (446,380) - (763,024) (763,024)
Net Operating
Income 1,143,752 (765,987) 377,765 1,047,137 830,263 1,877,400
Share of
profit/(loss)
and gains from
associates (7,999) 335,533 327,534 - 344,746 344,746
Dividends
income - - - - 175,500 175,500
Net Operating
Income
from
investments 1,135,753 (430,454) 705,299 1,047,137 1,350,509 2,397,646
Administration
expenses (1,097,873) (242,157) (1,340,030) (1,367,129) (211,086) (1,578,215)
Operating
Result
(EBITDA) 37,880 (672,611) (634,731) (319,992) 1,139,423 819,431
Finance Cost,
net 162,704 (652,987) (490,283) 298,663 (854,114) (555,451)
Income tax
expense 17,940 (74,340) (56,400) (51,824) (67,328) (119,152)
Operating
Result after
Finance and
Tax Expenses 218,524 (1,399,938) (1,181,414) (73,153) 217,981 144,828
Other income /
(expenses),
net (3,390) (2,721,353) (2,724,743) 69,643 (12,510) 57,133
One off costs
associated
to Arcona
transaction (182,253) (182,253) (204,101) - (204,101)
Personnel (184,500) - - -
incentives
One off costs
associated
with previous
periods
and
re-financing
activities - - - (90,313) (78,000) (168,313)
One off costs
associated
with new
custodian due
to Brexit - - - (136,750) - (136,750)
Fair value
adjustments
from
Investment
Properties - (1,245,230) (1,245,230) - (754,979) (754,979)
Net gain/(loss)
on disposal
of
subsidiaries - (4,871,809) (4,871,809) 748 - 748
Fair Value
adjustment
on financial
investments (1,071,119) (1,071,119) 683,478 - 683,478
Foreign
exchange
differences,
net (17,647) (165,165) (182,812) (65,147) (253,666) (318,813)
Result for the
year (1,240,385) (10,403,495) (11,643,880) 184,405 (881,174) (696,769)
Exchange
difference on
translation
due to
presentation
currency - (692,906) (692,906) - 64,299 64,299
Total
Comprehensive
Income for the
year (1,240,385) (11,096,401) (12,336,786) 184,405 (816,875) (632,470)
---------------- --------------------- ----------------------- ------------------------- ------------------------ ----------------------- ------------------------
The administration costs, adjusted by the one-off costs,
decreased by 15%, and the recurring EBITDA finally decreased to
-EUR0,63m from EUR0,82m in 2021.
Overall, operating results after finance and tax for the year
decreased to -EUR1,18m as compared to EUR0,14m in 2021.
2.2 Property Holdings
The Company's portfolio at year-end consists of commercial
income producing and residential properties in Romania, as well as
land plots in Ukraine and Romania.
Commercial Property Location Key Features
Innovations Logistics Park
Bucharest, Romania Gross Leaseable Area: 16.570 sqm
-------------------- ----------------------- ---------------------
Anchor Tenant: Favorit Business Srl
-------------------- ----------------------- ---------------------
Occupancy Rate: 80%
------------------------------------------------------------------ ---------------------
Land & Residential Assets Location Key Features
Kiyanovskiy Residence Kiev, Ukraine Plot of land ( th. sqm): 6
Tsymlyanskiy Residence* Kiev, Ukraine Plot of land ( th. sqm): 4
Rozny Lane Kiev, Ukraine Plot of land ( th. sqm): 420
GreenLake (Associate) Romania Sold units during 2022: 4
GreenLake (Associate) Romania Available units (end 2022): 7
* As of November 2021, the Company had already submitted
official request to the City of Kiev to extend the lease of the
property for another 5 years, since it has first extension rights
over any other interested party. The first step in the process
whereby the presiding committee of the municipality, before the
final approval by the City Council, did not place as many other
cases had accumulated which had time priority over our case. During
the period between December 15(th) 2021 and January 20(th) of 2022,
the committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. Management remains confident that
the Company will be awarded the lease extension once the war status
permits.
In 2021, the Company's accredited valuers, namely CBRE Ukraine
for the Ukrainian Assets, and NAI RealAct for the Romanian Assets,
remained appointed. The valuations have been carried out by the
appraisers on the basis of Market Value in accordance with the
current Practice Statements contained within the Royal Institution
of Chartered Surveyors ("RICS") Valuation - Global Standards (2017)
(the "Red Book") and are also compliant with the International
Valuation Standards (IVS).
Following disposals of previous periods, SPDI's portfolio has
became more concentrated in terms of geography. At the end of the
reporting period, Romania remains the prime country of operations
(83%) in terms of Gross Asset Value, while in Ukraine (17%) the
Company still has interests in land plots intended to be sold as
part of the Arcona transaction.
In respect of the Company's income generation capacity, Romania
has become gradually the single operating income source.
** Net Operating Income includes NOI from Innovations Logistics
Park, Victini Logistics, EOS Business Park, Praktiker retail
center, Kindergarten, Residential units, GreenLake, as well as
Delenco office building (dividends).
The table below summarizes the main financial position of each
of the Company's assets (representing the Company's participation
in each asset) at the end of the reporting period.
Table 2
2022
------------------------------------------------- -----------------------------
Property Country GAV* EURm Debt * NAV
----------- ------ ------------- ------
Innovations Logistics Park Rom 9,7 6,2 3,5
----------- ------ ------------- ------
Land banking Ukr - Rom 1,9 4,0 -2,1
----------- ------ ------------- ------
Total Value 11,6 10,2 1,4
------ ------------- ------
Other balance sheet items, net ** +11,7
------ ------------- ------
Net Asset Value total 13,1
Market Cap in EUR as at 31/12/2022 (Share price at GBP0,0575) 8,3
Market Cap in EUR as at 23/06/2023 (Share price at GBP0,05625) 8 ,4
Discount of Market Cap in EUR at 23/06/2023 vs NAV at 31/12/2022 -36%
* Reflects the Company's participation at each asset
**Refer to balance sheet and related notes of the financial statements
The Net Equity attributable to the shareholders as at 31
December 2022 stood at EUR13,1m vs EUR23,5m in 2021. The table
below depicts the discount of Market Share Price over NAV since
2012.
The NAV per share as at 31 December 2022 stood at GBP 0,09 and
the discount of the Market Value vis a vis the Company's NAV
denominated in GBP stands at 37% at year-end.
2.3 Financial and Risk Management
The Group's overall bank debt exposure at the end of the
reporting period was EUR10,2m (calculating relative to the
Company's percentage shareholding in each), comprising the
following:
a) EUR6,2m finance lease of Innovations Logistics Park with Piraeus Leasing Romania.
b) EUR4,0m being the Company's portion on land plot related debt financing.
Throughout 2022, the Company focused on managing and preserving
liquidity through cash flow optimization. In this context,
Management secured a) collection of scheduled re-payments of loans
provided to third parties, b) continuous sale of residential assets
and c) advancement of discussions related to transaction with
Arcona Property Fund N.V. which in most part materialized in
2022.
2.4 2022 and beyond
During 2023 the Company intends to sell all its assets, and
consequently its main operations are expected to be minimized,
provided that constraints brought by the the current war situation
in Ukraine will successfully be surpassed. Despite such
constraints, Management is working along the guidelines of the
board for the closing of the transaction with Arcona Property Fund
N.V., which will mark effectively the maximization of Company's
value and will give our shareholders the opportunity to gain direct
exposure to an entity of considerably larger size, with a strong
dividend distribution policy, and active in a more diversified and
faster growing region (Central and South Eastern Europe) of the
European property market.
Having already completed during 2022 the transfers of Delenco
and EOS assets in Romania, the Management is currently working
towards completion of the remaining parts of the transaction,
monitoring closely any developments in Ukraine, as well as with all
other open issues which if resolved will effectively turn the
Company having as assets only Arcona shares (including warrants
over shares) and cash.
To that end, as part of the cost reduction process, the Company
has agreed to externalize all HR and office costs in all operating
jurisdictions except Ukraine, resulting in that way in a 35% and
50% reduction vis a vis same costs in 2022 and 2021
respectively.
3. Regional Economic Developments (1)
The Romanian economy experienced in 2022 the second consecutive
year of strong growth following the global reset experienced in
2020 due to the pandemic. Growth reached 4,7% driven by strong
private consumption and robust investment. Private consumption
increased by 5,5% year on year backed by the release of the
restrictions as a result of the pandemic and the high wages.
Moreover, the local investment market reached the historical
milestone of EUR 1,25 bln, 36% higher than the investment volume
registered
the previous year.
Unemployment rate is estimated marginally higher but still in
low levels at 5,6%, keeping the labor market relatively tight and
wage increases high. Inflation peaked during the year at high
levels and closed at 12% at year end, on the back of the high
energy prices and the constantly increasing trend in foods and
services.
Macroeconomic data
Romania 2016 2017 2018 2019 2020 2021 2022f
---- ---- ---- ---- ---- ---- -----
GDP (EUR bn) 170 188 203 223 218 241 286
---- ---- ---- ---- ---- ---- -----
Population (mn) 19,8 19,6 19,5 19,5 19,3 19,3 19,6
---- ---- ---- ---- ---- ---- -----
Real GDP (y-o-y %) 4,8 7,0 4,1 4,1 -3,7 5,9 4,7
---- ---- ---- ---- ---- ---- -----
CPI (average, y-o-y
%) -1,5 1,3 4,6 3,3 2,3 4,1 12
---- ---- ---- ---- ---- ---- -----
Unemployment rate
(%) 5,9 4.3 3,6 3,1 6,1 5,4 5,6
---- ---- ---- ---- ---- ---- -----
Following the invasion of Russia in Ukraine in February 2022,
Ukraine's GDP fell by 29,1% in 2022 as a result of the damages the
war brought in the heavy industry, the power grid and the
agricultural sector, as well as the restricted access to Black Sea
ports that are vital for the export activities of the country.
With Ukraine's grain crop falling to 53 mil tonnes in 2022 from
86 mil tonnes in 2021, and steel production reduced by almost 71%,
export activity declined by 35% in 2022 compared to the previous
year.
The Ukrainian currency, Hryvnia, depreciated significantly
against major currencies. As at the end of 2022, Hryvnia had
depreciated 34% against US dollar and 26% against Euro, compared to
2021 year end. The invasion also affected the assessment of
country's solvency by international rating agencies. Currently
credit ratings have rebound partially with S&P's rating at CCC+
with stable outlook, Moody's one at Caa3 with stable outlook, and
Fitch's at CC.
[1] Sources: World Bank Group, Eurostat, EBRD, National
Institute of Statistics- Romania, National Institute of Statistics
- Ukraine, IMF, European Commission.
4. Real Estate Market Developments (2)
4.1 Romania
Total real estate investment volume in Romania reached in 2022
1,25 bln Euros, representing a 36% y-o-y increase. Bucharest proved
again to be the most liquid real estate market generating almost
three quarters from total annual investment volume driven mainly by
office transactions. Office segment represented 62% of the annual
volume, followed by retail sector (24%) and the industrial/
logistics one (7%).
Compression and stability is the trend that describes yields in
Romania during 2022. Prime office yields remained at 6,75%, while
industrial ones compressed to 7,15% from 7,5%, and retail stood at
6,75% from 7%. Local investors represent 50% of total investment
volume, while foreign investment was driven by South Africans (15%)
and Austrians (10%).
With c.900.000 sq m delivered during 2022, the total modern
industrial/ logistics stock reached c.6,6 million sq m. Almost 50%
of the new deliveries were in Bucharest area, being by far the
largest consumer market in the country. At the end of 2022 the
vacancy rate in Romania's industrial modern stock stood at 4,5%,
while the vacancy rate for Bucharest was 5,8%. Headline rent in
logistic parks registered a 5% increase at 4,1 EUR/sqm/month as a
result of the robust demand and the increase in construction
costs.
4.2 Ukraine
During 2022 even though the land market was seriously affected
by the Russian military invasion, asking prices demonstrated
certain stability and have not decreased significantly. Despite the
extremely low demand observed on the market, the majority of owners
were not willing to sell at reduced prices and preferred even to
withdraw the asset from the market.
[1] Sources : Eurobank, CBRE Research , Colliers International ,
Cushman & Wakefield , Crosspoint Real Estate, Knight Frank,
Coldwell Banker Research, National Institute of Statistics- Romania
, State Statistics Service-Ukraine, NAI Real Act
5. Property Assets
5.1 EOS Business Park - Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class "A"
office building of 3.386 sqm GLA and 90 parking places. It is
located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road.
The ark is very close to Bucharest's ring road and the DN 2
national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
The Company acquired the office building in November 2014. The
complex is fully let to Danone Romania, the French multinational
food company, until 2025. The asset was sold in June 2022 as part
of Stage 2 of the Arcona transaction.
5.2 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of
two underground levels, a ground floor and ten above-ground floors.
The building is strategically located in the very center of
Bucharest, close to three main squares of the city: Unirii, Alba
Iulia and Muncii, only 300m from the metro station.
The Company acquired 24,35% of the property in May 2015. As at
the end 2021, the building is 99% let, with ANCOM (the Romanian
Telecommunications Regulator) being the anchor tenant (81% of GLA).
The stake in the asset was sold in March and June 2022 as part of
Stage 2 of the Arcona transaction.
5.3 Innovations Logistics Park, Romania
The park incorporates approximately 8.470 sqm of multipurpose
warehousing space, 6.395 sqm of cold storage and 1.705 sqm of
office space. It is located in the area of Clinceni, south west of
Bucharest center, 200m from the city's ring road and 6km from
Bucharest-Pitesti (A1) highway. Its construction was completed in
2008 and was tenant specific. It comprises four separate
warehouses, two of which offer cold storage.
As at the year end the terminal was 80% leased. Anchor tenant
with 46% is Favorit Business Srl, a large Romanian logistics
operator, which accommodates in the terminal their new business
line which involves as end user Carrefour. Following recent
relevant agreement, Favorit's leases extended until 2026. Since
2019 the Company signs also short term lease agreements for ambient
storage space with Mondelez Srl, one of the fastest growing
regional food companies.
5.4 Kindergarten, Romania
Situated on the GreenLake compound on the banks of Grivita Lake,
a standalone building on ground and first floor, is used as a
nursery by one of the Bucharest's leading private schools. The
building is erected on 1.428.59 sqm plot with a total gross area of
1.198 sqm.
The property is 100% leased to International School for Primary
Education. The asset was sold in September 2022.
5.5 Residential Portfolio
-- GreenLake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which consists of
apartments and villas, situated on the banks of Grivita Lake, in
the northern part of the Romanian capital - the only residential
property in Bucharest with a 200 meters frontage to a lake. The
compound also includes facilities such as one of Bucharest's
leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market.
During 2022, 4 apartments and villas were sold while at the end
of the year 7 units remained unsold but they are all precontracted
and sold during 2023.
5.6 Land Assets
-- -Kiyanovskiy Residence - Kiev, Ukraine
The property consists of 0,55 Ha of freehold and leasehold land
located at Kiyanovskiy Lane, near Kiev city center. It is destined
for the development of businesses and luxury residences with
beautiful protected views overlooking the scenic Dnipro River, St.
Michaels' Spires and historic Podil.
The asset is part of Stage 2 of the Arcona transaction and the
relevant SPA for its disposal has already been signed in June 2021
while closing has been postponed due to the invasion of Ukraine by
Russia.
-- -Tsymlyanskiy Residence - Kiev, Ukraine
The 0,36 Ha plot is located in the historic and rapidly
developing Podil District in Kiev. The Company owns 55% of the SPV
which leases the plot, with a local co-investor owning the
remaining 45%.
The extension of the lease, originally expected during 2021, was
delayed and currently is on hold due to the invasion of Ukraine by
Russia. The asset is planned to be part of Stage 3 of the Arcona
transaction.
-- -Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be
developed as a residential complex. Following a protracted legal
battle, it has been registered under the Company pursuant to a
legal decision in July 2015.
The asset is part of Stage 2 of the Arcona transaction and
relevant SPA for its disposal has already been signed in June 2021
while closing has been postponed due to the invasion of Ukraine by
Russia.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
Note 2022 2021
EUR EUR
Continued Operations
Income 10 1.143.752 1.047.137
Net Operating Income 1.143.752 1.047.137
Administration expenses 12 (1.464.626) (1. 798.293
)
Gain/(Loss) on disposal of subsidiary 20 - 748
Fair Value gain/(loss) on Financial
Assets at FV through P&L 26 (1.071.119) 683.478
Gain realized on acquisition on associate 1.041 -
Share of loss of associates 21 (9.040) -
Other operating income/ (expenses),
net 15 (3.390) 69 .643
Operating profit / (loss) (1.403.382) 2. 713
Finance income 16 361.035 489.072
Finance costs 16 (198.331) (190.409)
Profit / (Loss) before tax and foreign
exchange differences (1.240.678) 301.376
Foreign exchange loss, net 17a (17.647) (65.147)
Profit/(Loss) before tax (1.258.325) 236.229
Income tax expense 18 17.940 (51.824)
Profit/(Loss) for the year from continuing
operations (1.240.385) 184.405
Loss from discontinued operations 9b (10.403.495) (881.174)
Profit/ (Loss) for the year (11.643.880) (696.769)
Other comprehensive income
Exchange difference on translation
of foreign operations 29 (692.906) 64.299
Total comprehensive income for the
year (12.336.786) (632.470)
Profit/ (Loss) for the year from continued
operations attributable to:
Owners of the parent (1.240.385) 184.405
Non-controlling interests - -
(1.240.385) 184.405
Profit/ (Loss) for the year from discontinued
operations attributable to:
Owners of the parent (8.416.599) (659.215)
Non-controlling interests (1.986.896) (221.959)
(10.403.495) (881.174)
Profit/ (Loss) for the year attributable
to:
Owners of the parent (9.656.984) (474.810)
Non-controlling interests (1.986.896) (221.959)
( 11.643.880) (696.769)
Total comprehensive income attributable
to:
Owners of the parent (10.142.264) (459.449)
Non-controlling interests (2.194.522) (173.021)
(12.336.786) (632.470)
Earnings/(Losses) per share (Euro
per share):
Basic earnings/(losses) for the year
attributable to ordinary equity owners
of the parent 37b (0,01) (0,00)
Diluted earnings/(losses) for the
year attributable to ordinary equity
owners of the parent 37b (0,01) (0,00)
Basic earnings/(losses) for the year
from discontinued operations attributable
to ordinary equity owners of the parent 37c (0,06) (0,00)
Diluted earnings/(losses) for the
year from discontinued operations
attributable to ordinary equity owners
of the parent 37c (0,06) (0,00)
The notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2022
Note 2022 2021
EUR EUR
ASSETS
Non--current assets
Tangible and intangible assets 23 816 1.628
Long-term receivables and prepayments 24 824 824
Investment in associate 21 1 -
Financial Assets at FV through 26 12.078.808 7.470.722
P&L
12.080.449 7.473.174
Current assets
Prepayments and other current 25 4.153.162 4. 510.381
assets
Cash and cash equivalents 27 66.570 2.160.576
------------- -------------
4.219.732 6.670.
957
Assets classified as held for 9d 13.835.091 39.011.516
sale
Total assets 30.135.272 53.155.
647
EQUITY AND LIABILITIES
Issued share capital 28 1.291.281 1.291.281
Share premium 72.107.265 72.107.265
Foreign currency translation reserve 29 8.484.507 8.969.787
Exchange difference on I/C loans
to foreign holdings 39.3 (211.199) (211.199)
Accumulated losses (68.560.594) ( 58.903.610
)
Equity attributable to equity 13.111.260 23.253.524
holders of the parent
Non-controlling interests 30 369.399 5.748.132
Total equity 13.480.659 29.001.656
Non--current liabilities
Borrowings 31 597.357 126.066
Bonds issued 32 723.690 1.033.842
Tax payable and provisions 35 579.519 627.130
------------- -------------
1.900.566 1.787.038
Current liabilities
Borrowings 31 - 1.577.500
Bonds issued 32 99.046 293.214
Trade and other payables 33 3.731.769 4.396.123
Tax payable and provisions 35 37.574 256.437
3.868.389 6 . 523.274
Liabilities directly associated
with assets classified as held
for sale 9d 10.885.658 15.843.679
14.754.047 22.366.953
Total liabilities 16.654.613 24.153.991
Total equity and liabilities 30.135.272 53.155.
647
Net Asset Value (NAV) EUR per
share: 37d
Basic NAV attributable to equity
holders of the parent 0,10 0,18
Diluted NAV attributable to equity
holders of the parent 0,10 0,18
On 28 June 2022 the Board of Directors of SECURE PROPERTY
DEVELOPMENT & INVESTMENT PLC authorised these financial
statements for issue.
Lambros Anagnostopoulos Michael Beys Theofanis Antoniou
Director & Chief Executive Director & Chairman CFO
Officer of the Board
The notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Attributable to owners of the Company
----------------------------------------------------------------------------------------------- ------- ---------------
Share Share Accumulated Exchange Foreign Total Non- controlling Total
capital premium, losses, difference currency interest
Net(1) net of on I/C translation
non-controlling loans reserve
interest(2) to foreign (4)
holdings
(3)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31 December
2020 1.291.281 72.107.265 (58.428.800) (211.199) 8.954.426 23.712.973 5.921.153 29.634.126
( 474.810 ( 474.810 ( 696.769
Loss for the year - - ) - - ) (221.959) )
Foreign currency
translation
reserve - - - - 15.361 15.361 48.938 64.299
Balance - 31 December
2021 1.291.281 72.107.265 (58.903.610) (211.199) 8.969.787 23.253.524 5.748.132 29.001.656
( 9.656.984 ( 9.656.984 ( 11.643.880
Loss for the year - - ) - - ) (1.986.896) )
Foreign currency
translation
reserve - - - - (485.280) (485.280) (207.626) (692.906)
Disposals of - (3.184.211)
subisdiaries - - - - - (3.184.211)
Balance - 31 December
2022 1.291.281 72.107.265 (68.560.594) (211.199) 8.484.507 13.111.260 369.399 13.480.659
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defence at
17% and GHS contribution at 1,7%-2,65% for deemed distributions
after 1 March 2019 will be payable on such deemed dividends to the
extent that the ultimate shareholders are both Cyprus tax resident
and Cyprus domiciled. The amount of deemed distribution is reduced
by any actual dividends paid out of the profits of the relevant
year at any time. This special contribution for defence is payable
by the Company for the account of the shareholders.
(3) Exchange differences on intercompany loans to foreign
holdings arose as a result of devaluation of the Ukrainian Hryvnia
during previous years. The Group treats the mentioned loans as a
part of the net investment in foreign operations (Note 39.3).
(4) Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted for
directly to the foreign currency translation reserve. The foreign
currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local
currencies against the euro in the countries where the Group's
subsidiaries own property assets.
The notes form an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Note 2022 2021
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(Loss) before tax and non-controlling
interests-continued operations (1.258.325) 236.229
Profit/(Loss) before tax and non-controlling
interests-discontinued operations 9b (10.329.155) (813.846)
------------ -----------
Profit/(Loss) before tax and non-controlling
interests (11.587.480) (577.617)
Adjustments for:
(Gain)/Loss on revaluation of investment
property 13 1.245.230 754.979
Net loss on disposal of investment property 14.1 825.392 (653.567)
Fair Value (gain)/ loss on Financial Assets
at FV through P&L 26 1.071.119 (683.478)
(Reversal) /Impairment of prepayments and
other current assets 15 2.721.151 5.932
Accounts payable written off 15 (4.401) (62.978)
Depreciation/ Amortization charge 12 7.292 2.101
Interest income 16 (369.017) (498.438)
Interest expense 16 850.400 1.044.296
Share of profit from associates 21 (326.493) (344.746)
Gain on disposal of subsidiaries 20 4.870.768 (748)
Effect of foreign exchange differences 17a 182.812 318.813
Cash flows from/(used in) operations before
working capital changes (513.227) (695.451)
Change in prepayments and other current
assets 25 (531409) (61.750)
Change in trade and other payables 33 (1.230.439) (441.639)
Change in VAT and other taxes receivable 25 141.751 (17. 181)
Change in provisions 35 - 28.954
Change in other taxes payables 35 (173.788) 18.580
Change in deposits from tenants 34 (41.229) -
( 2.348.341 (1. 168.487
Cash generated from operations ) )
( 117.762
Income tax paid ) (515.938)
( 2.466.103 (1. 684.425
Net cash flows provided in operating activities ) )
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of investment
property 14.1 1.164.133 3.245.322
Cash inflow from sale of subsidiaries 20 382.750 -
Dividend received from associates 21 219.190 183.583
Payment on acquisition of associate (8.000) -
Increase/(Decrease) in long term receivables 24 (18.263) (18.251)
Repayment of principal and interest of
loan receivable 25 821.891 2.289.683
Net cash flows from / (used in) investing
activities 2.561.701 5.700.337
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank and non-bank loans 31 - 3.500.000
Repayment of bank and non-bank loans 31 (1.618.403) (2.538.099)
( 391.126 (117 .
Interest and financial charges paid ) 032)
Decrease in financial lease liabilities 36 (289.917) (3.176.182)
Net cash flows from / (used in) financing ( 2.299.446
activities ) (2.331.313)
Net increase/(decrease) in cash at banks (2.203.848) 1.684.599
Cash:
At beginning of the year 27 2.555.246 870.647
At end of the year 27 351.398 2.555.246
------------ -----------
The notes form an integral part of these consolidated financial
statements.
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the "Company")
was incorporated in Cyprus on 23 June 2005 and is a public limited
liability company, listed on the London Stock Exchange (AIM): ISIN
CY0102102213. Its registered office is at Kyriakou Matsi 16, Eagle
House, 10th floor, Agioi Omologites, 1082 Nicosia, Cyprus while its
principal place of business is in Cyprus at 6 Nikiforou Foka
Street, 1060 Nicosia, Cyprus.
Principal activities
The principal activities of the Group are to invest directly or
indirectly in and/or manage real estate properties, as well as real
estate development projects in South East Europe (the "Region").
These include the acquisition, development, commercializing,
operating and selling of property assets in the Region.
The Group maintains offices in Nicosia, Cyprus, Bucharest,
Romania and Kiev, Ukraine.
As at 31 December 2022, the companies of the Group employed
and/or used the services of 10 full time equivalent people, (2021 à
15 full time equivalent people).
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union (EU) and the requirements of the
Cyprus Companies Law, Cap.113. The consolidated financial
statements have been prepared under the historical cost as modified
by the revaluation of investment property and investment property
under construction, of financial assets at fair value through other
comprehensive income and of financial assets at fair value through
profit and loss.
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Company's accounting policies. It also requires the
use of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on Management's best knowledge of current
events and actions, actual results may ultimately differ from those
estimates.
Following certain conditional agreement signed in December 2018
with Arcona Property Fund N.V for the sale of Company's non-Greek
portfolio of assets, the Company classifies its assets since 2018
as discontinued operations (Note 4.3) .
Going concern basis
The financial statements have been prepared on a going concern
basis which assumes the Company will be able to realize its assets
and discharge its liabilities in the normal course of business for
the foreseeable future.
In particular, the Company is in a process of disposing of its
portfolio of assets in an all share transaction with Arcona
Property Fund N.V., meaning that as soon as this transaction
consummates the Company will be left with its corporate receivables
and liabilities.
These conditions raise some doubt about the Company's ability to
continue as a going concern within the next twelve months from the
date these financial statements are available to be issued. The
ability to continue as a going concern is dependent upon positive
future cash flows.
Management believes that the Company will be able to finance its
needs given the fact that the additional corporate receivables, as
well as the consideration received in the form of Arcona shares is
estimated that it can effectively discharge all corporate
liabilities. At the same time, the transaction with Arcona Property
Fund N.V., which is a cash flow generating entity, will result in
the Company being a significant shareholder, entitled to dividends
according to the dividend policy of Arcona Property Fund N.V.
3. Adoption of new and revised Standards and Interpretations
During the current year the Company adopted all the new and
revised International Financial Reporting Standards (IFRS) that are
relevant to its operations and are effective for accounting periods
beginning on 1 January 2022. This adoption did not have a material
effect on the accounting policies of the Company.
4. Significant accounting policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented in
these consolidated financial statements unless otherwise
stated.
Local statutory accounting principles and procedures differ from
those generally accepted under IFRS. Accordingly, the consolidated
financial information, which has been prepared from the local
statutory accounting records for the entities of the Group
domiciled in Cyprus, Romania, and Ukraine reflects adjustments
necessary for such consolidated financial information to be
presented in accordance with IFRS.
4.1 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities (including special purpose
entities) controlled by the Company (its subsidiaries).
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity.
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognizes any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognized amounts of acquiree's identifiable net
assets.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such
re-measurement are recognized in profit or loss.
Any contingent consideration to be transferred by the Group is
recognized at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognized in accordance with
IAS 39, either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured and its subsequent settlement is
accounted for within equity.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognized, to reflect new
information obtained about facts and circumstances that existed at
the acquisition date that, if known, would have affected the
amounts recognized at that date.
Business combinations that took place prior to 1 January 2010
were accounted for in accordance with the previous version of IFRS
3.
Inter-company transactions, balances and unrealized gains on
transactions between group companies are eliminated. Unrealized
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the Group's
accounting policies.
Changes in ownership interests in subsidiaries without change of
control and Disposal of Subsidiaries
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals of
non-controlling interests are also recorded in equity.
When the Group ceases to have control, any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognized in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognized in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognized in other comprehensive
income are reclassified to profit or loss.
4. Significant accounting policies (continued)
4.2 Functional and presentation currency
Items included in the Group's financial statements are measured
applying the currency of the primary economic environment in which
the entities operate ("the functional currency"). The national
currency of Ukraine, the Ukrainian Hryvnia, is the functional
currency for all the Group's entities located in Ukraine, the
Romanian leu is the functional currency for all Group's entities
located in Romania, and the Euro is the functional currency for all
Cypriot subsidiaries.
The consolidated financial statements are presented in Euro,
which is the Group's presentation currency.
As Management records the consolidated financial information of
the entities domiciled in Cyprus, Romania, Ukraine in their
functional currencies, in translating financial information of the
entities domiciled in these countries into Euro for inclusion in
the consolidated financial statements, the Group follows a
translation policy in accordance with IAS 21, "The Effects of
Changes in Foreign Exchange Rates", and the following procedures
are performed:
-- All assets and liabilities are translated at closing rate;
-- Equity of the Group has been translated using the historical rates;
-- Income and expense items are translated using exchange rates
at the dates of the transactions, or where this is not practicable
the average rate has been used;
-- All resulting exchange differences are recognized as a separate component of equity;
-- When a foreign operation is disposed of through sale,
liquidation, repayment of share capital or abandonment of all, or
part of that entity, the exchange differences deferred in equity
are reclassified to the consolidated statement of comprehensive
income as part of the gain or loss on sale;
-- Monetary items receivable from foreign operations for which
settlement is neither planned nor likely to occur in the
foreseeable future and in substance are part of the Group's net
investment in those foreign operations are recongised initially in
other comprehensive income and reclassified from equity to profit
or loss on disposal of the foreign operation.
The relevant exchange rates of the European and local central
banks used in translating the financial information of the entities
from the functional currencies into Euro are as follows:
Average 31 December
Currency 2022 2021 2022 2021 2020
-------- -------- -------- -------- --------
USD 1,0530 1,1827 1,0666 1,1326 1,2270
-------- -------- -------- -------- --------
UAH 33,9820 32,3009 38,9510 30,9226 34,7396
-------- -------- -------- -------- --------
RON 4,9315 4,9204 4,9474 4,9481 4,8694
-------- -------- -------- -------- --------
4.3 Discontinued operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single coordinated plan to dispose of a separate
major line of business or geographic area of operations; or
-- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
4.4 Investment Property at fair value
Investment property, comprising freehold and leasehold land,
investment properties held for future development, warehouse and
office properties, as well as the residential property units , is
held for long term rental yields and/or for capital appreciation
and is not occupied by the Group. Investment property and
investment property under construction are carried at fair value,
representing open market value determined annually by external
valuers. Changes in fair values are recorded in the statement of
comprehensive income and are included in other operating
income.
A number of the land leases (all in Ukraine) are held for
relatively short terms and place an obligation upon the lessee to
complete development by a predetermined date. It is important to
note that the rights to complete a development may be lost or at
least delayed if the lessee fails to complete a permitted
development within the timescale set out by the ground lease.
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
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 has noticed that rescinding or non-renewal of the
ground lease is remote if a project is on the final stage of
development or on the operating cycle. In undertaking the
valuations reported herein, the valuer of Ukrainian properties,
CBRE, has made the assumption that no such circumstances will arise
to permit the City Authorities to rescind the land lease or not to
grant a renewal.
Land held under operating lease is classified and accounted for
as investment property when the rest of the definition is met.
Investment property under development or construction initially
is measured at cost, including related transaction costs.
The property is classified in accordance with the intention of
the management for its future use. Intention to use is determined
by the Board of Directors after reviewing market conditions,
profitability of the projects, ability to finance the project and
obtaining required construction permits.
The time point, when the intention of the management is
finalized is the date of start of construction. At the moment of
start of construction, freehold land, leasehold land and investment
properties held for a future redevelopment are reclassified into
investment property under development or inventory in accordance to
the final decision of management.
Initial measurement and recognition
Investment property is measured initially at cost, including
related transaction costs. Investment properties are derecognized
when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic
benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognized in
the consolidated statement of comprehensive income in the period of
retirement or disposal.
Transfers are made to investment property when, and only when,
there is a change in use, evidenced by the end of owner occupation,
or the commencement of an operating lease to third party. Transfers
are made from investment property when, and only when, there is a
change in use, evidenced by commencement of owner occupation or
commencement of development with a view to sale.
If an investment property becomes owner occupied, it is
reclassified as property, plant and equipment, and its fair value
at the date of reclassification becomes its cost for accounting
purposes. Property that is being constructed or developed for
future use as investment property is classified as investment
property under construction until construction or development is
complete. At that time, it is reclassified and subsequently
accounted for as investment property.
Subsequent measurement
Subsequent to initial recognition, investment property is stated
at fair value. Gains or losses arising from changes in the fair
value of investment property are included in the statement of
comprehensive income in the period in which they arise.
If a valuation obtained for an investment property held under a
lease is net of all payments expected to be made, any related
liabilities/assets recognized separately in the statement of
financial position are added back/reduced to arrive at the carrying
value of the investment property for accounting purposes.
Subsequent expenditure is charged to the asset's carrying amount
only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance costs are
charged to the statement of comprehensive income during the
financial period in which they are incurred.
Basis of valuation
The fair values reflect market conditions at the financial
position date. These valuations are prepared annually by chartered
surveyors (hereafter "appraisers"). The Group appointed valuers in
2014, which remain the same in 2022:
-- CBRE Ukraine, for all its Ukrainian properties,
-- NAI Real Act for all its Romanian properties.
The valuations have been carried out by the appraisers on the
basis of Market Value in accordance with the appropriate sections
of the current Practice Statements contained within the Royal
Institution of Chartered Surveyors ("RICS") Valuation - Global
Standards (2018) (the "Red Book") and is also compliant with the
International Valuation Standards (IVS).
"Market Value" is defined as: "The estimated amount for which a
property should be exchanged on the date of valuation between a
willing buyer and a willing seller in an arm's-length transaction
after proper marketing actions, wherein the parties had each acted
knowledgeably, prudently and without compulsion".
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Basis of valuation (continued)
In expressing opinions on Market Value, in certain cases the
appraisers have estimated net annual rentals/income from sale.
These are assessed on the assumption that they are the best
rent/sale prices at which a new letting/sale of an interest in
property would have been completed at the date of valuation
assuming: a willing landlord/buyer; that prior to the date of
valuation there had been a reasonable period (having regard to the
nature of the property and the state of the market) for the proper
marketing of the interest, for the agreement of the price and terms
and for the completion of the letting/sale; that the state of the
market, levels of value and other circumstances were, on any
earlier assumed date of entering into an agreement for lease/sale,
the same as on the valuation date; that no account is taken of any
additional bid by a prospective tenant/buyer with a special
interest; that the principal deal conditions assumed to apply are
the same as in the market at the time of valuation; that both
parties to the transaction had acted knowledgeably, prudently and
without compulsion.
A number of properties are held by way of ground leasehold
interests granted by the City Authorities. The ground rental
payments of such interests may be reviewed on an annual basis, in
either an upwards or downwards direction, by reference to an
established formula. Within the terms of the lease, there is a
right to extend the term of the lease upon expiry in line with the
existing terms and conditions thereof. In arriving at opinions of
Market Value, the appraisers assumed that the respective ground
leases are capable of extension in accordance with the terms of
each lease. In addition, given that such interests are not
assignable, it was assumed that each leasehold interest is held by
way of a special purpose vehicle ("SPV"), and that the shares in
the respective SPVs are transferable.
With regard to each of the properties considered, in those
instances where project documentation has been agreed with the
respective local authorities, opinions of the appraisers of value
have been based on such agreements.
In those instances where the properties are held in part
ownership, the valuations assume that these interests are saleable
in the open market without any restriction from the co-owner and
that there are no encumbrances within the share agreements which
would impact the sale ability of the properties concerned.
The valuation is exclusive of VAT and no allowances have been
made for any expenses of realization or for taxation which might
arise in the event of a disposal of any property.
In some instances the appraisers constructed a Discounted Cash
Flow (DCF) model. DCF analysis is a financial modeling technique
based on explicit assumptions regarding the prospective income and
expenses of a property or business. The analysis is a forecast of
receipts and disbursements during the period concerned. The
forecast is based on the assessment of market prices for comparable
premises, build rates, cost levels etc. from the point of view of a
probable developer.
To these projected cash flows, an appropriate, market-derived
discount rate is applied to establish an indication of the present
value of the income stream associated with the property. In this
case, it is a development property and thus estimates of capital
outlays, development costs, and anticipated sales income are used
to produce net cash flows that are then discounted over the
projected development and marketing periods. The Net Present Value
(NPV) of such cash flows could represent what someone might be
willing to pay for the site and is therefore an indicator of market
value. All the payments are projected in nominal US Dollar/Euro
amounts and thus incorporate relevant inflation measures.
Valuation Approach
In addition to the above general valuation methodology, the
appraisers have taken into account in arriving at Market Value the
following:
Pre Development
In those instances where the nature of the 'Project' has been
defined, it was assumed that the subject property will be developed
in accordance with this blueprint. The final outcome of the
development of the property is determined by the Board of Directors
decision, which is based on existing market conditions,
profitability of the project, ability to finance the project and
obtaining required construction permits.
Development
In terms of construction costs, the budgeted costs have been
taken into account in considering opinions of value. However, the
appraisers have also had regard to current construction rates
prevailing in the market which a prospective purchaser may deem
appropriate to adopt in constructing each individual scheme.
Although in some instances the appraisers have adopted the budgeted
costs provided, in some cases the appraisers' own opinions of costs
were used.
Post Development
Rental values have been assessed as at the date of valuation but
having regard to the existing occupational markets taking into
account the likely supply and demand dynamics during the
anticipated development period. The standard letting fees were
assumed within the valuations. In arriving at their estimates of
gross development value ("GDV"), the appraisers have capitalized
their opinion of net operating income, having deducted any
anticipated non-recoverable expenses, such as land payments, and
permanent void allowance, which has then been capitalized into
perpetuity.
4. Significant accounting policies (continued)
4.4 Investment Property at fair value (continued)
Valuation Approach (continued)
The capitalization rates adopted in arriving at the opinions of
GDV reflect the appraisers' opinions of the rates at which the
properties could be sold as at the date of valuation.
In terms of residential developments, the sales prices per sq.
m. again reflect current market conditions and represent those
levels the appraisers consider to be achievable at present. It was
assumed that there are no irrecoverable operating expenses and that
all costs will be recovered from the occupiers/owners by way of a
service charge.
The valuations take into account the requirement to pay ground
rental payments and these are assumed not to be recoverable from
the occupiers. In terms of ground rent payments, the appraisers
have assessed these on the basis of information available, and if
not available they have calculated these payments based on current
legislation defining the basis of these assessments.
4.5 Goodwill
Goodwill arising on an acquisition of a business is carried at
cost as established at the date of acquisition of the business less
accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to
each of the Group's cash-generating units (or Groups of
cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is
tested for impairment annually, or more frequently when there is
indication that the unit may be impaired. If the recoverable amount
of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of
the unit pro rata based on the carrying amount of each asset in the
unit. Any impairment loss for goodwill is recognized directly in
profit or loss in the consolidated statement of comprehensive
income. An impairment loss recognized for goodwill is not reversed
in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of
the profit or loss on disposal.
4.6 Property, Plant and equipment and intangible assets
Property, plant and equipment and intangible non-current assets
are stated at historical cost less accumulated depreciation and
amortization and any accumulated impairment losses.
Properties in the course of construction for production, rental
or administrative purposes, or for purposes not yet determined and
intangibles not inputted into exploitation, are carried at cost,
less any recognized impairment loss. Cost includes professional
fees and, for qualifying assets, borrowing costs capitalized in
accordance with the Group's accounting policy. Depreciation of
these assets, on the same basis as other property assets, commences
when the assets are ready for their intended use.
Depreciation and amortization are calculated on the
straight--line basis so as to write off the cost of each asset to
its residual value over its estimated useful life. The annual
depreciation rates are as follows:
Type %
Leasehold 20
IT hardware 33
Motor vehicles 25
Furniture, fixtures and office equipment 20
Machinery and equipment 15
Software and Licenses 33
No depreciation is charged on land.
Assets held under leases are depreciated over their expected
useful lives on the same basis as owned assets or, where shorter,
the term of the relevant lease.
The assets residual values and useful lives are reviewed, and
adjusted, if appropriate, at each reporting date.
Where the carrying amount of an asset is greater than its
estimated recoverable amount, the asset is written down immediately
to its recoverable amount.
4. Significant accounting policies (continued)
4.6 Property, Plant and equipment and intangible assets
(continued)
Expenditure for repairs and maintenance of tangible and
intangible assets is charged to the statement of comprehensive
income of the year in which it is incurred. The cost of major
renovations and other subsequent expenditure are included in the
carrying amount of the asset when it is probable that future
economic benefits in excess of the originally assessed standard of
performance of the existing asset will flow to the Group. Major
renovations are depreciated over the remaining useful life of the
related asset.
An item of tangible and intangible assets is derecognized upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognized in
the statement of comprehensive income.
4.7 Cash and Cash equivalents
Cash and cash equivalents include cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the
statement of cash flows.
4.8 Assets held for sale
Non-current assets, or disposal groups comprising assets and
liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather
than through continuing use.
Such assets, or disposal groups, are generally measured at the
lower of their carrying amount and fair value less costs to sell.
Any impairment loss on a disposal group is allocated first to
goodwill, and then to the remaining assets and liabilities on a pro
rata basis, except that no loss is allocated to inventories,
financial assets or investment property, which continue to be
measured in accordance with the Group's other accounting policies.
Impairment losses on initial classification as held-for-sale or
held-for-distribution and subsequent gains and losses on
remeasurement are recognised in profit or loss.
4.9 Financial Instruments
4.9.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially
recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Group
becomes a party to the contractual provisions of the
instrument.
A financial asset (unless it is a trade receivable without a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
4.9.2 Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as
measured at: amortised cost; FVOCI - debt investment; FVOCI -
equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding .
A debt investment is measured at FVOCI if it meets both of the
following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
4. Significant accounting policies (continued)
4.9 Financial Instruments (continued)
4.9.2 Classification and subsequent measurement (continued)
Financial assets - Business model assessment:
The Group makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level
because this best reflects the way the business is managed and
information is provided to management. The information considered
includes:
- the stated policies and objectives for the portfolio and the
operation of those policies in practice. These include whether
management's strategy focuses on earning contractual interest
income, maintaining a particular interest rate profile, matching
the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows
through the sale of the assets;
- how the performance of the portfolio is evaluated and reported
to the Group's management;
- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
- how managers of the business are compensated - e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected; and
the frequency, volume and timing of sales of financial assets in
prior periods, the reasons for such sales and expectations about
future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the Group's continuing recognition of
the assets.
Financial assets that are held for trading or are managed and
whose performance is evaluated on a fair value basis are measured
at FVTPL.
Financial assets - Assessment whether contractual cash flows are
solely payments of principal and interest:
For the purposes of this assessment, 'principal' is defined as
the fair value of the financial asset on initial recognition.
'Interest' is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative
costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely
payments of principal and interest, the Group considers the
contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group
considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable-rate features;
- prepayment and extension features; and
- terms that limit the Group's claim to cash flows from
specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of
principal and interest criterion if the prepayment amount
substantially represents unpaid amounts of principal and interest
on the principal amount outstanding, which may include reasonable
additional compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or
requires prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional compensation
for early termination) is treated as consistent with this criterion
if the fair value of the prepayment feature is insignificant at
initial recognition.
Financial assets - Subsequent measurement and gains and
losses:
These assets are subsequently measured at fair value. Net gains
and losses, including any interest or dividend income, are
recognised in profit or loss. However for derivatives designated as
hedging instruments.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using
the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognised in profit or loss. Any gain or
loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest
income calculated using the effective interest method, foreign
exchange gains and losses and impairment are recognised in profit
or loss. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified
to profit or loss.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends
are recognised as income in profit or loss unless the dividend
clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in OCI and
are never reclassified to profit or loss.
4. Significant accounting policies (continued)
4.9 Financial Instruments (continued)
4.9.3 Derecognition
Financial assets
The Group derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it
transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the
financial asset.
The Group enters into transactions whereby it transfers assets
recognised in its statement of financial position, but retains
either all or substantially all of the risks and rewards of the
transferred assets. In these cases, the transferred assets are not
derecognised.
Financial liabilities
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire. The
Group also derecognises a financial liability when its terms are
modified and the cash flows of the modified liability are
substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed)
is recognised in profit or loss.
4 .9.4 Offsetting
Financial assets and financial liabilities are offset and the
net amount presented in the statement of financial position when,
and only when, the Group currently has a legally enforceable right
to set off the amounts and it intends either to settle them on a
net basis or to realise the asset and settle the liability
simultaneously.
4 .9.5 Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its
foreign currency and interest rate risk exposures. Embedded
derivatives are separated from the host contract and accounted for
separately if the host contract is not a financial asset and
certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to
initial recognition, derivatives are measured at fair value, and
changes therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments
to hedge the variability in cash flows associated with highly
probable forecast transactions arising from changes in foreign
exchange rates and interest rates and certain derivatives and
non-derivative financial liabilities as hedges of foreign exchange
risk on a net investment in a foreign operation.
At inception of designated hedging relationships, the Group
documents the risk management objective and strategy for
undertaking the hedge. The Group also documents the economic
relationship between the hedged item and the hedging instrument,
including whether the changes in cash flows of the hedged item and
hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of
the derivative is recognised in OCI and accumulated in the hedging
reserve. The effective portion of changes in the fair value of the
derivative that is recognised in OCI is limited to the cumulative
change in fair value of the hedged item, determined on a present
value basis, from inception of the hedge. Any ineffective portion
of changes in the fair value of the derivative is recognised
immediately in profit or loss.
The Group designates only the change in fair value of the spot
element of forward exchange contracts as the hedging instrument in
cash flow hedging relationships. The change in fair value of the
forward element of forward exchange contracts ('forward points') is
separately accounted for as a cost of hedging and recognised in a
costs of hedging reserve within equity.
When the hedged forecast transaction subsequently results in the
recognition of a non-financial item such as inventory, the amount
accumulated in the hedging reserve and the cost of hedging reserve
is included directly in the initial cost of the non-financial item
when it is recognised.
For all other hedged forecast transactions, the amount
accumulated in the hedging reserve and the cost of hedging reserve
is reclassified to profit or loss in the same period or periods
during which the hedged expected future cash flows affect profit or
loss.
If the hedge no longer meets the criteria for hedge accounting
or the hedging instrument is sold, expires, is terminated or is
exercised, then hedge accounting is discontinued prospectively.
When hedge accounting for cash flow hedges is discontinued, the
amount that has been accumulated in the hedging reserve remains in
equity until, for a hedge of a transaction resulting in the
recognition of a non-financial item, it is included in the
non-financial item's cost on its initial recognition or, for other
cash flow hedges, it is reclassified to profit or loss in the same
period or periods as the hedged expected future cash flows affect
profit or loss.
4. Significant accounting policies (continued)
4.9 Financial Instruments (continued)
4 .9.5 Derivative financial instruments and hedge accounting
(continued)
If the hedged future cash flows are no longer expected to occur,
then the amounts that have been accumulated in the hedging reserve
and the cost of hedging reserve are immediately reclassified to
profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial
liability is designated as the hedging instrument in a hedge of a
net investment in a foreign operation, the effective portion of,
for a derivative, changes in the fair value of the hedging
instrument or, for a non-derivative, foreign exchange gains and
losses is recognised in OCI and presented in the translation
reserve within equity. Any ineffective portion of the changes in
the fair value of the derivative or foreign exchange gains and
losses on the non-derivative is recognised immediately in profit or
loss. The amount recognised in OCI is reclassified to profit or
loss as a reclassification adjustment on disposal of the foreign
operation.
4.10 Leases
At inception of a contract, the Company assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Company assesses
whether:
the contract involves the use of an identified asset this may be
specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a
physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
the Company has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of
use; and
the Company has the right to direct the use of the asset. The
Company has this right when it has the decision making rights that
are most relevant to changing how and for what purpose the asset is
used. In rare cases where the decision about how and for what
purpose the asset is used is predetermined, the Company has the
right to direct the use of the asset if either:
the Company has the right to operate the asset; or
the Company designed the asset in a way that predetermines how
and for what purpose it will be used.
At inception or on reassessment of a contract that contains a
lease component, the Company allocates the consideration in the
contract to each lease component on the basis of their relative
stand alone prices. However, for the leases of land and buildings
in which it is a lessee, the Company has elected not to separate
non lease components and account for the lease and non lease
components as a single lease component.
The Company as lessor
When the Company acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an operating
lease.
To classify each lease, the Company makes an overall assessment
of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If this is
the case, then the lease is a finance lease; if not, then it is an
operating lease. As part of this assessment, the Company considers
certain indicators such as whether the lease is for the major part
of the economic life of the asset.
When the Company is an intermediate lessor, it accounts for its
interests in the head lease and the sub lease separately. It
assesses the lease classification of a sub lease with reference to
the right of use asset arising from the head lease, not with
reference to the underlying asset. If a head lease is a short term
lease to which the Company applies the exemption described above,
then it classifies the sub lease as an operating lease.
If an arrangement contains lease and non lease components, the
Company applies IFRS 15 to allocate the consideration in the
contract.
The Company recognises lease payments received under operating
leases as income on a straight line basis over the lease term as
part of 'other income'.
The accounting policies applicable to the Company as a lessor in
the comparative period were not different from IFRS 16. However,
when the Company was an intermediate lessor the sub leases were
classified with reference to the underlying asset.
The Company as lessee
The Company recognises a right of use asset and a lease
liability at the lease commencement date. The right of use asset is
initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
4. Significant accounting policies (continued)
4.10 Leases (continued)
The Company as lessee (continued)
The right of use asset is subsequently depreciated using the
straight line method from the commencement date to the earlier of
the end of the useful life of the right of use asset or the end of
the lease term. The estimated useful lives of the right of use
assets are determined on the same basis as those of property and
equipment. In addition, the right of use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Company's incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability comprise the following:
fixed payments, including in substance fixed payments;
variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the
commencementdate;
amounts expected to be payable under a residual value guarantee;
and
the exercise price under a purchase option that the Company is
reasonably certain to exercise, lease payments in an optional
renewal period if the Company is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Company is reasonably certain not to terminate
early.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Company's estimate of the amount
expected to be payable under a residual value guarantee, or if the
Company changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right of use asset, or is recorded in profit or loss if the
carrying amount of the right of use asset has been reduced to
zero.
The Company presents its right of use assets that do not meet
the definition of investment property in 'Property, plant and
equipment' in the statement of financial position.
The lease liabilities are presented in 'loans and borrowings'in
the statement of financial position.
Short term leases and leases of low value assets
The Company has elected not to recognise the right of use assets
and lease liabilities for short term leases that have a lease term
of 12 months or less and leases of low value assets (i.e. IT
equipment, office equipment etc.). The Company recognises the lease
payments associated with these leases as an expense on a straight
line basis over the lease term.
4.11 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost. Any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in profit
or loss over the period of the borrowings, using the effective
interest method, unless they are directly attributable to the
acquisition, construction or production of a qualifying asset, in
which case they are capitalized as part of the cost of that
asset.
Fees paid on the establishment of loan facilities are recognized
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extend there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is capitalized as a prepayment and
amortised over the period of the facility to which it relates.
Borrowing costs are interest and other costs that the Group
incurs in connection with the borrowing of funds, including
interest on borrowings, amortization of discounts or premium
relating to borrowings, amortization of ancillary costs incurred in
connection with the arrangement of borrowings, finance lease
charges and exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to
interest costs.
Borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset,
being an asset that necessarily takes a substantial period of time
to get ready for its intended use or sale, are capitalised as part
of the cost of that asset, when it is probable that they will
result in future economic benefits to the Group and the costs can
be measured reliably.
Borrowings are classified as current liabilities, unless the
Group has an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date.
4. Significant accounting policies (continued)
4.12 Tenant security deposits
Tenant security deposits represent financial advances made by
lessees as guarantees during the lease and are repayable by the
Group upon termination of the contracts. Tenant security deposits
are recognized at nominal value.
4.13 Impairment of tangible and intangible assets other than
goodwill
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. Where a reasonable and consistent basis of
allocation can be identified, corporate assets are also allocated
to individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units for which
a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment loss
annually, and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre--tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or cash--generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash--generating unit) is reduced to its
recoverable amount. An impairment loss is recognized immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (cash--generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognized
for the asset (cash--generating unit) in prior years. A reversal of
an impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
4.14 Share Capital
Ordinary shares are classified as equity.
4.15 Share premium
The difference between the fair value of the consideration
received by the shareholders and the nominal value of the share
capital being issued is taken to the share premium account.
4.16 Share-based compensation
The Group had in the past and intends in the future to operate a
number of equity-settled, share-based compensation plans, under
which the Group receives services from Directors and/or employees
as consideration for equity instruments (options) of the Group. The
fair value of the Director and employee cost related to services
received in exchange for the grant of the options is recognized as
an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market service and performance vesting
conditions. The total amount expensed is recognized over the
vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At each financial position
date, the Group revises its estimates on the number of options that
are expected to vest based on the non-marketing vesting conditions.
It recognizes the impact of the revision to original estimates, if
any, in the statement of comprehensive income, with a corresponding
adjustment to equity. The proceeds received net of any directly
attributable transaction costs are credited to share capital and
share premium when the options are exercised.
4.17 Provisions
Provisions are recognized when the Group has a present
obligation (legal, tax or constructive) as a result of a past
event, it is probable that the Group will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. As at the reporting date the Group has settled all its
construction liabilities.
The amount recognized as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognized as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
4. Significant accounting policies (continued)
4.18 Non--current liabilities
Non--current liabilities represent amounts that are due in more
than twelve months from the reporting date.
4.19 Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances. It is recognized to
the extent that it is probable that the economic benefits
associated with the transaction will flow to the Group and the
revenue can be measured reliably. Revenue earned by the Group is
recognized on the following bases:
4.20.1 Income from investing activities
Income from investing activities includes profit received from
disposal of investments in the Company's subsidiaries and
associates and income accrued on advances for investments
outstanding as at the year end.
4.20.2 Dividend income
Dividend income from investments is recognized when the
shareholders' right to receive payment has been established
(provided that it is probable that the economic benefits will flow
to the Group and the amount of income can be measured
reliably).
4.20.3 Interest income
Interest income is recognized on a time-proportion (accrual)
basis, using the effective interest rate method.
4.20.4 Rental income
Rental income arising from operating leases on investment
property is recognized on an accrual basis in accordance with the
substance of the relevant agreements.
4.20 Service charges and expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognized
on an accrual basis.
4.21 Other property expenses
Irrecoverable running costs directly attributable to specific
properties within the Group's portfolio are charged to the
statement of comprehensive income. Costs incurred in the
improvement of the assets which, in the opinion of the directors,
are not of a capital nature are written off to the statement of
comprehensive income as incurred.
4.22 Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in the statement of
comprehensive income in the period in which they are incurred as
interest costs which are calculated using the effective interest
rate method, net result from transactions with securities, foreign
exchange gains and losses, and bank charges and commission.
4.23 Asset Acquisition Related Transaction Expenses
Expenses incurred by the Group for acquiring a subsidiary or
associate company as part of an Investment Property and are
directly attributable to such acquisition are recognized within the
cost of the Investment Property and are subsequently accounted as
per the Group's accounting Policy for Investment Property
subsequent measurement.
4. Significant accounting policies (continued)
4.24 Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
4.24.1 Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items of
income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The Group's liability
for current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the reporting
period.
4. 24.2 Deferred tax
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Currently enacted tax rates are used in the determination of
deferred tax.
Deferred tax assets are recognized to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilized.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the
same fiscal authority.
4.24.3 Current and deferred tax for the year
Current and deferred tax are recognized in the statement of
comprehensive income, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in
which case, the current and deferred tax are also recognized in
other comprehensive income or directly in equity respectively.
Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included
in the accounting for the business combination.
The operational subsidiaries of the Group are incorporated in
Ukraine and Romania, while the Parent and some holding companies
are incorporated in Cyprus. The Group's management and control is
exercised in Cyprus.
The Group's Management does not intend to dispose of any asset,
unless a significant opportunity arises. In the event that a
decision is taken in the future to dispose of any asset it is the
Group's intention to dispose of shares in subsidiaries rather than
assets. The corporate income tax exposure on disposal of
subsidiaries is mitigated by the fact that the sale would represent
a disposal of the securities by a non--resident shareholder and
therefore would be exempt from tax. The Group is therefore in a
position to control the reversal of any temporary differences and
as such, no deferred tax liability has been provided for in the
financial statements.
4.24.4 Withholding Tax
The Group follows the applicable legislation as defined in all
double taxation treaties (DTA) between Cyprus and any of the
countries of Operations (Romania, Ukraine,). In the case of
Romania, as the latter is part of the European Union, through the
relevant directives the withholding tax is reduced to NIL subject
to various conditions.
4.24.5 Dividend distribution
Dividend distribution to the Company's shareholders is
recognized as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders.
4.25 Value added tax
VAT levied at various jurisdictions were the Group is active,
was at the following rates, as at the end of the reporting
period:
-- 20% on Ukrainian domestic sales and imports of goods, works
and services and 0% on export of goods and provision of works or
services to be used outside Ukraine.
-- 19 % on Cyprus domestic sales and imports of goods, works and
services and 0% on export of goods and provision of works or
services to be used outside Cyprus.
-- 19% on Romanian domestic sales and imports of goods, works
and services (decreased from 20% from 1 January 2017) and 0% on
export of goods and provision of works or services to be used
outside Romania.
4. Significant accounting policies (continued)
4.26 Operating segments analysis
Segment reporting is presented on the basis of Management's
perspective and relates to the parts of the Group that are defined
as operating segments. Operating segments are identified on the
basis of their economic nature and through internal reports
provided to the Group's Management who oversee operations and make
decisions on allocating resources serve. These internal reports are
prepared to a great extent on the same basis as these consolidated
financial statements.
For the reporting period the Group has identified the following
material reportable segments, where the Group is active in
acquiring, holding, managing and disposing:
Commercial-Industrial Residential Land Assets
* Warehouse segment * Residential segment * Land assets - the Group owns a number of land assets
which are either available for sale or for potential
development
* Office segment
* Retail segment
------------------------------- ----------------------------------------------------------------
The Group also monitors investment property assets on a
Geographical Segmentation, namely the country where its property is
located.
4.27 Earnings and Net Assets value per share
The Group presents basic and diluted earnings per share (EPS)
and net asset value per share (NAV) for its ordinary shares.
Basic EPS amounts are calculated by dividing net profit/loss for
the year, attributable to ordinary equity holders of the Company by
the weighted average number of ordinary shares outstanding during
the year. Basic NAV amounts are calculated by dividing net asset
value as at year end, attributable to ordinary equity holders of
the Company by the number of ordinary shares outstanding at the end
of the year.
Diluted EPS is calculated by dividing net profit/loss for the
year, attributable to ordinary equity holders of the parent, by the
weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would
be issued on conversion of all the potentially dilutive ordinary
shares into ordinary shares.
Diluted NAV is calculated by dividing net asset value as at year
end, attributable to ordinary equity holders of the parent with the
number of ordinary shares outstanding at year end plus the number
of ordinary shares that would be issued on conversion of all the
potentially dilutive ordinary shares into ordinary shares.
4.28 Comparative Period
Where necessary, comparative figures have been adjusted to
conform to changes in presentation in the current year.
5. New accounting pronouncement
Standards issued but not yet effective
Up to the date of approval of the financial statements, certain
new standards, interpretations and amendments to existing standards
have been published that are not yet effective for the current
reporting period and which the Company has not early adopted,
as follows :
New standards
* IFRS 17 "Insurance Contracts" (effective for annual
periods beginning on or after 1 January 2024).
Amendments
* Amendments to IAS 1 Presentation of Financial
Statements: Classification of Liabilities as Current
or Non--current (issued on 23 January 2020 and 15
July 2020 respectively) (effective for annual periods
beginning on or after 1 January 2024).
* Amendments to IAS 8 Accounting Policies: Non- current
Liabilites with Covenants (effective for annual
periods beginning on or after 1 January 2024)
* The above are expected to have no significant impact
on the Company's financial statements when they
become effective.
6. Critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRSs
requires the use of certain critical accounting estimates and
requires Management to exercise its judgment in the process of
applying the Group's accounting policies. It also requires the use
of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. These estimates
are based on Management's best knowledge of current events and
actions and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual
results though may ultimately differ from those estimates.
As the Group makes estimates and assumptions concerning the
future, the resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
-- Provision for impairment of receivables
The Group reviews its trade and other receivables for evidence
of their recoverability. Such evidence includes the counter party's
payment record, and overall financial position, as well as the
state's ability to pay its dues (VAT receivable). If indications of
non-recoverability exist, the recoverable amount is estimated and a
respective provision for impairment of receivables is made. The
amount of the provision is charged through profit or loss. The
review of credit risk is continuous and the methodology and
assumptions used for estimating the provision are reviewed
regularly and adjusted accordingly. As at the reporting date
Management did not consider necessary to make a provision for
impairment of receivables.
-- Fair value of financial assets
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Company uses its judgment to select a variety of methods and make
assumptions that are mainly based on market conditions existing at
each reporting date. The fair value of the financial assets at fair
value through other comprehensive income has been estimated based
on the fair value of these individual assets .
-- Fair value of investment property
The fair value of investment property is determined by using
various valuation techniques. The Group selects accredited
professional valuers with local presence to perform such
valuations. Such valuers use their judgment to select a variety of
methods and make assumptions that are mainly based on market
conditions existing at each financial reporting date. The fair
value has been estimated as at 31 December 2022 (Note 19.2).
-- Income taxes
Significant judgment is required in determining the provision
for income taxes. There are transactions and calculations for which
the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognizes liabilities for
anticipated tax audit issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
-- Impairment of tangible assets
Assets that are subject to depreciation are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
-- Provision for deferred taxes
Deferred tax is not provided in respect of the revaluation of
the investment property and investment property under development
as the Group is able to control the timing of the reversal of this
temporary difference and the Management has intention not to
reverse the temporary difference in the foreseeable future. The
properties are held by subsidiary companies in Ukraine, Greece and
Romania. Management estimates that the assets will be realized
through a share deal rather than through an asset deal. Should any
subsidiary be disposed of, the gains generated from the disposal
will be exempt from any tax.
-- Application of IFRS 10
The Group has considered the application of IFRS 10 and
concluded that the Company is not an Investment Entity as defined
by IFRS 10 and it should continue to consolidate all of its
investments, as in 2016. The reasons for such conclusion are among
others that the Company continues:
a) not to be an Investment Management Service provider to Investors,
b) to actively manages its own portfolio (leasing, development,
allocation of capital expenditure for its properties, marketing
etc.) in order to provide benefits other than capital appreciation
and/or investment income,
c) to have investments that are not bound by time in relation to
the exit strategy nor to the way that are being exploited,
d) to provide asset management services to its subsidiaries, as
well as loans and guarantees (directly or indirectly),
e) even though is using Fair Value metrics in evaluating its
investments, this is being done primarily for presentation purposes
rather that evaluating income generating capability and making
investment decisions. The latter is being based on metrics like
IRR, ROE and others.
7. Risk Management
7.1 Financial risk factors
The Group is exposed to operating country risk, real estate
property holding and development associated risks, property market
price risk, interest rate risk, credit risk, liquidity risk,
currency risk, other market price risk, operational risk,
compliance risk, litigation risk, reputation risk, capital risk and
other risks, arising from the financial instruments it holds. The
risk management policies employed by the Group to manage these
risks are discussed below.
7.1.1 Operating Country Risks
The Group is exposed to risks stemming from the political and
economic environment of countries in which it operates.
Notably:
7.1.1.1 Ukraine
The risk associated with Company's interests in Ukraine has
increased dramatically with the invasion of the country by Russia
in February 2022. Currently, the political and economic risks
associated with Company's activities in the region do not really
allow for any relevant assessment for the future.
The fall in Ukraine's GDP by the end of 2022 is estimated at the
level of 30.4% (+/-2%), which is a better indicator than predicted
by previous forecasts. In 2022, the Ukrainian hryvnia significantly
depreciated against major foreign currencies. As at 31 December
2022, the official exchange rate of the National Bank of Ukraine to
the US dollar was 36.5686 hryvnias, and to the euro was 38.951
hryvnias (as at 31 December 2021: 27.2782 and 30.9226,
respectively). The war also affected the assessment of Ukraine's
solvency by international rating agencies. In 2022 Standard &
Poor's credit rating for Ukraine stood at CCC+ with stable outlook.
Moody's credit rating for Ukraine was last set at Caa3 with
negative outlook (increased in February 2023 up to Ca with stable
outlook). Fitch's credit rating for Ukraine was last reported at
CC.
The Company owns land plots in Ukraine, either in Kiev or close
to the capital, reported at time of publishing still under
Ukrainian control. The plots do not generate income and therefore
the cash flow of the Group is not affected by the invasion.
The Management, given the associated uncertainty, decided to
value Ukrainian assets lower than the current values as provided by
the third-party valuers (CBRE Ukraine). As a result, the Ukrainian
assets contribute EUR1,92 million in Group's assets, as compared to
EUR3,11 million provided by the valuers and EUR3,6 million in 2021
accounts.
Moreover, the war, as well as the preceded tensions during the
previous period, affect also the land leaseholds that the Company
has in the country. In particular, as of November 2021, the Group
had submitted properly the official request to the City of Kiev to
extend the lease of Tsymlyanskiy Residence property for another 5
years, since the Group has first extension rights over any other
interested party. The first step in the process whereby the
presiding committee of the municipality, before the final approval
by the City Council, did not place as many other cases had
accumulated which had time priority over Group's case. During the
period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. The Management remains confident
that the Group will be awarded the lease extension once the war
status permits. However, as a result of such development,
commencing from H1 2022 the asset does not contribute value to
Group's assets. The Management will monitor developments in the
country and change policy as appropriate.
The Company will revert to inform investors upon having a
clearer view on the developments associated with the conflict and
its consequences on real estate assets.
7.1.1.2 Romania
Romanian economy grew significantly by 4,8% in 2022 driven by
strong private consumption and robust investment despite the
ongoing war in neighboring Ukraine and the high inflation rate from
the increased energy prices which prevailed throughout the period.
Economic prospects are reported moderate on the back of the
continuing conflict in the region and the high interest rates. At
the same time, estimates for the fiscal and current account
deficits remain elevated as a result of the social and economic
measures adopted by the Government for the support of low income
citizens, weakening the macroeconomic indicators and therefore
increasing the associated risk.
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.2 Risks associated with property holding and development
associated risks
Several factors may affect the economic performance and value of
the Group's properties, including:
-- risks associated with construction activity at the
properties, including delays, the imposition of liens and defects
in workmanship;
-- the ability to collect rent from tenants on a timely basis or
at all, taking also into account currency rapid devaluation
risk;
-- the amount of rent and the terms on which lease renewals and
new leases are agreed being less favorable than current leases;
-- cyclical fluctuations in the property market generally;
-- local conditions such as an oversupply of similar properties
or a reduction in demand for the properties;
-- the attractiveness of the property to tenants or residential purchasers;
-- decreases in capital valuations of property;
-- changes in availability and costs of financing, which may
affect the sale or refinancing of properties;
-- covenants, conditions, restrictions and easements relating to the properties;
-- changes in governmental legislation and regulations,
including but not limited to designated use, allocation,
environmental usage, taxation and insurance;
-- the risk of bad or unmarketable title due to failure to
register or perfect our interests or the existence of prior claims,
encumbrances or charges of which we may be unaware at the time of
purchase;
-- the possibility of occupants in the properties, whether
squatters or those with legitimate claims to take possession;
-- the ability to pay for adequate maintenance, insurance and
other operating costs, including taxes, which could increase over
time; and
-- political uncertainty, acts of terrorism and acts of nature,
such as earthquakes and floods that may damage the properties.
7.1.3 Property Market price risk
Market price risk is the risk that the value of the Group's
portfolio investments will fluctuate as a result of changes in
market prices. The Group's assets are susceptible to market price
risk arising from uncertainties about future prices of the
investments. The Group's market price risk is managed through
diversification of the investment portfolio, continuous elaboration
of the market conditions and active asset management. To quantify
the value of its assets and/or indicate the possibility of
impairment losses, the Group commissioned internationally acclaimed
valuers.
7.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest
rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest--bearing assets apart from its cash balances
that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates
expose the Group to fair value interest rate risk. All of the
Group's borrowings are issued at a variable interest rate.
Management monitors the interest rate fluctuations on a continuous
basis and acts accordingly.
7.1.5 Credit risk
Credit risk arises when a failure by counter parties to
discharge their obligations could reduce the amount of future cash
inflows from financial assets at hand at the end of the reporting
period. Cash balances are held with high credit quality financial
institutions and the Group has policies to limit the amount of
credit exposure to any financial institution.
7.1.6 Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates.
Currency risk arises when future commercial transactions and
recognized assets and liabilities are denominated in a currency
that is not the Group's functional currency. Excluding the
transactions in Ukraine, all of the Group's transactions, including
the rental proceeds are denominated or pegged to EUR. In Ukraine,
even though there is no recurring income stream, the fluctuations
of UAH against EUR entails significant FX risk for the Group in
terms of its local assets valuation. Management monitors the
exchange rate fluctuations on a continuous basis and acts
accordingly, although there are no available financial tools for
hedging the exposure on UAH. It should be noted though that the
current war in Ukraine causing economic and political problems, as
well as any probable currency devaluation may affect Group's
financial position.
7. Risk Management (continued)
7.1 Financial risk factors (continued)
7.1.7 Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. The Group's core strategy is described in Note 42.1 of the
consolidated financial statements.
7.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines
and other penalties, which arises from non--compliance with laws
and regulations of each country the Group is present, as well as
from the stock exchange where the Company is listed. Although the
Group is trying to limit such risk, the uncertain environment in
which it operates in various countries increases the complexities
handled by Management.
7.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of
the Group's operations or any other undesirable situation that
arises from the possibility of non--execution or violation of legal
contracts and consequentially of lawsuits. The risk is restricted
through the contracts used by the Group to execute its
operations.
7.1.10 Insolvency risk
Insolvency arises from situations where a company may not meet
its financial obligations towards a lender as debts become due.
Addressing and resolving any insolvency issues is usually a slow
moving process in the Region. Management is closely involved in
discussions with creditors when/if such cases arise in any
subsidiary of the Group aiming to effect alternate repayment plans
including debt repayment so as to minimize the effects of such
situations on the Group's asset base.
7.2. Operational risk
Operational risk is the risk that derives from the deficiencies
relating to the Group's information technology and control systems,
as well as the risk of human error and natural disasters. The
Group's systems are evaluated, maintained and upgraded
continuously.
7.3. Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the end of the reporting
period.
8. Investment in subsidiaries
The Company has direct and indirect holdings in other companies,
collectively called the Group, that were included in the
consolidated financial statements, and are detailed below.
Holding %
Name Country Related Asset as at as at
of incorporation 31 Dec 31 Dec
2022 2021
------------------- --------------------- -------- --------
SC Secure Capital Limited Cyprus 100 100
------------------------------------------ -------- --------
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100
------------------- --------------------- -------- --------
LLC Trade Center Ukraine 100 100
------------------------------------------ -------- --------
Tsymlyanskiy
LLC Almaz--Pres--Ukraine Ukraine Residence* 55 55
------------------- --------------------- -------- --------
LLC Retail Development
Balabino** Ukraine 100 100
------------------------------------------ -------- --------
LLC Interterminal** Ukraine 100 100
------------------------------------------ -------- --------
LLC Aisi Ilvo Ukraine 100 100
------------------------------------------ -------- --------
Myrnes Innovations Innovations
Park Limited Cyprus Logistics Park 100 100
------------------- --------------------- -------- --------
Best Day Real Estate
Srl Romania 100 100
------------------------------------------ -------- --------
EOS Business
Yamano Holdings Limited Cyprus Park 100 100
------------------- --------------------- -------- --------
N-E Real Estate Park
First Phase Srl Romania - 100
------------------------------------------ -------- --------
Zirimon Properties Delea Nuova
Limited Cyprus (Delenco) 100 100
------------------- --------------------- -------- --------
Bluehouse Accession
Project IX Limited Cyprus 100 100
------------------------------------------ -------- --------
Bluehouse Accession
Project IV Limited
** Cyprus 100 100
------------------------------------------ -------- --------
BlueBigBox 3 Srl Romania - 100
------------------------------------------ -------- --------
SPDI Real Estate Srl Romania Kindergarten - 50
------------------- --------------------- -------- --------
SEC South East Continent
Unique Real Estate
Investments II Limited Cyprus 100 100
------------------------------------------ -------- --------
SEC South East Continent
Unique Real Estate
(Secured) Investments
Limited Cyprus 100 100
------------------------------------------ -------- --------
Diforio Holdings Limited Residential
** Cyprus and Land portfolio 100 100
------------------- --------------------- -------- --------
Demetiva Holdings Limited
** Cyprus 100 100
------------------------------------------ -------- --------
Ketiza Holdings Limited Cyprus 90 90
------------------------------------------ -------- --------
Frizomo Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
SecMon Real Estate
Srl Romania 100 100
------------------------------------------ -------- --------
Ketiza Real Estate
Srl Romania 90 90
------------------------------------------ -------- --------
Edetrio Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
Emakei Holdings Limited Cyprus 100 100
------------------------------------------ -------- --------
RAM Real Estate Management
Limited Cyprus 50 50
------------------------------------------ -------- --------
Iuliu Maniu Limited Cyprus 45 45
------------------------------------------ -------- --------
Moselin Investments
Srl Romania 45 45
------------------------------------------ -------- --------
Rimasol Enterprises
Limited Cyprus - 70,56
------------------------------------------ -------- --------
Rimasol Real Estate
Srl Romania - 70,56
------------------------------------------ -------- --------
Ashor Ventures Limited Cyprus - 44,24
------------------------------------------ -------- --------
Ashor Development Srl Romania - 44,24
------------------------------------------ -------- --------
Jenby Ventures Limited** Cyprus 44,30 44,30
------------------------------------------ -------- --------
Jenby Investments Srl Romania - 44,30
------------------------------------------ -------- --------
Ebenem Limited** Cyprus 44,30 44,30
------------------------------------------ -------- --------
Ebenem Investments
Srl Romania - 44,30
------------------------------------------ -------- --------
Sertland Properties
Limited Cyprus 100 100
------------------------------------------ -------- --------
Mofben Investments
Limited** Cyprus 100 100
------------------------------------------ -------- --------
SPDI Management Srl Romania 100 100
------------------------------------------ -------- --------
* As of November 2021, the Group had submitted properly the
official request to the City of Kiev to extend the lease of
Tsymlyanskiy Residence property for another 5 years, since the
Group has first extension rights over any other interested party.
The first step in the process whereby the presiding committee of
the municipality, before the final approval by the City Council,
did not place as too many other cases had accumulated which had
time priority over Group's case. During the period between December
15th 2021 and January 20th of 2022, the committee did not convene
at all as is usual during holiday and vacation times. Once the
holiday season was over, the main focus of the committee and the
City Council unfortunately were on issues not related to property
lease extensions, but rather more pressing matters for the
interests and operational stability of the City of Kiev. From there
on, all decisions have been put on hold due to the Russian
insurgence of Ukraine. The Management remains confident that the
Company will be awarded the lease extension once the war status
permits.
8. Investment in subsidiaries (continued)
** During 2020 the Company initiated the process of striking off
six holding subsidiaries in Cyprus, which became idle following
recent disposals of local asset owning companies and properties.
The companies to be struck off are: Bluehouse Accession Project IV
Limited, Demetiva Holdings Limited, Diforio Holdings Limited, Jenby
Ventures Limited, Ebenem Limited and Mofben Investments Limited.
Relevant official clearance from local Trade Registry and Tax
Authorities is expected in the following period. During 2022 the
Group has also initiated strike off process for two additional
Ukrainian entities, LLC Retail Development Balabino and LLC
Interterminal .
As part of Stage 2 of the transaction with Arcona, during the
first half of 2022 the Group proceeded with closing the disposal of
N-E Real Estate Park First Phase Srl, the entity which owns the EOS
asset, in exchange of 116.688 new ordinary shares in Arcona and
28.125 warrants over shares in Arcona.
During 2021 the Group proceeded with the disposal of Victini
Holdings Limited in Cyprus which was idle after the disposal in
2019 of its subsidiary that used to hold the warehouse asset in
Greece.
Additionally during 2021 the Group acquired an additional 26,32%
stake in Rimasol Enterprises Limited, which through Rimasol Real
Estate Srl owns Plot R in GreenLake, part of the Second Phase of
the overall GreenLake project. With this acquisition the total
stake of the Group in this particular plot increased to 70,56%.
During 2023 BlueBigBox 3 Srl, the SPV which used to hold
Praktiker Craiova property that was sold back in 2018, was entered
into an insolvency process initiated by a vendor (Note 43.b). The
case is associated with the Bluehouse litigation case (Note 40.3)
and Management monitors developments closely. The entering into
such process effectively means loss of control and therefore
Management decided to exclude the SPV from the current accounts.
The SPV currently holds no asset.
In an effort to accelerate monetization of assets that were to
be part of Stage 3 of the transaction with Arcona, and since the
discussions with Arcona took much longer than expected and
negotiations on their valuation did not conclude, the Company
managed to monetize remaining GreenLake assets in the broader
market. As such, the Kindergarten and the remaining Green Lake land
were sold during 2022 at values higher than those offered by
Arcona.
9. Discontinued operations
9.(a) Description
The Company announced on 18 December 2018 that it has entered
into a conditional implementation agreement for the sale of its
property portfolio, excluding its Greek logistics properties ('the
Non-Greek Portfolio'), in an all-share transaction to Arcona
Property Fund N.V. The transaction is subject to, among other
things, asset and tax due diligence (including third party asset
valuations) and regulatory approvals (including the approval of a
prospectus required in connection with the issuance and admission
to listing of the new Arcona Property Fund N.V. shares), as well as
successful negotiating and signature of transaction documents.
During 2019 and as part of the Arcona transaction the Company sold
the Boyana Residence asset in Bulgaria, as well as the Bela and
Balabino land plots in Ukraine, while in March and June 2021 has
signed SPAs related to Stage 2 of the transaction, namely for the
EOS and Delenco assets in Romania, as well as the Kiyanovskiy and
Rozny assets in Ukraine. In March and June 2022, the Company sold
effectively to Arcona the Delenco and EOS assets. Regarding the
Ukrainian assets, further discussions for closing have been put on
hold due to the existing circumstances in the country.
The companies that are classified under discontinued operations
are the followings:
-- Cyprus: Ashor Ventures Limited, Edetrio Holdings Limited,
Rimasol Enterprises Limited, Emakei Holdings Limited, Iuliu Maniu
Limited, Ram Real Estate Management Limited, Frizomo Holdings
Limited, Ketiza Holdings Limited and Victini Holdings Limited
-- Romania: Ashor Development Srl, Ebenem Investments Srl, Jenby
Investments Srl, Rimasol Real Estate Srl, Moselin Investments Srl,
Best Day Real Estate Srl, N-E Real Estate Park First Phase Srl,
Ketiza Real Estate Srl, SPDI Real Estate Srl and Secmon SRL
-- Ukraine: LLC Aisi Ukraine, LLC Almaz -- Pres -- Ukraine, LLC
Trade Center, LLC Retail Development Balabino
As a result, the Company has reclassified all assets and
liabilities related to these properties as held for sale according
to IFRS 5 (Note 4.3 & 4.8).
9. Discontinued operations (continued)
9.(b) Results of discontinued operations
For the year ended 31 December 2022
Note 2022 2021
EUR EUR
Income 10 505.785 939.720
Asset operating expenses 11 (446.380) (763.024)
------------- ----------------------
Net Operating Income 59.405 176.696
Administration expenses 12 (242.157) (289.086)
Share of profits/(losses) from associates 21 335.533 344.746
Valuation gains/(losses) from Investment
Property 13 (1.245.230) (754.979)
Net gain/(loss) on disposal of investment
property 14.1 (825.392) 653.567
Loss on Disposal of subsidiaries 20.2 (4.871.809) -
Other operating income/(expenses), net 15 (2.721.353) (12.510)
Operating profit / (loss) (9.511.003) 118.434
Dividends income 20 - 175.500
Finance income 16 7.982 9.366
Finance costs 16 (660.969) (863.480)
Profit/(Loss) before tax and foreign
exchange differences (10.163.990) (560.180)
Foreign exchange (loss), net 17a (165.165) (253.666)
Profit/(Loss) before tax (10.329.155) (813.846)
Income tax expense 18 (74.340) (67.328)
Profit/(Loss) for the year (10.403.495) (881.174)
Loss attributable to:
Owners of the parent (8.416.599) (659.215)
( 221.959
Non-controlling interests (1.986.896) )
(10.403.495) (881.174)
9.(c) Cash flows from(used in) discontinued operation
31 Dec 31 Dec
2022 2021
EUR EUR
----------- ------------
Net cash flows provided in operating activities 5.569.628 (712.598)
----------- ------------
Net cash flows from / (used in) financing (939.540) 3.280.967
activities
----------- ------------
Net cash flows from / (used in) investing 1.754.358 (2.275.600)
activities
----------- ------------
Net increase/(decrease) from discontinued
operations 6.384.446 292.769
----------- ------------
9.(d) Assets and liabilities of disposal group classified as
held for sale
The following assets and liabilities were reclassified as held
for sale in relation to the discontinued operation as at 31
December 2022:
Note 31 Dec 31 Dec
2022 2021
EUR EUR
------ ----------- -----------
Assets classified as held for sale
------ ----------- -----------
Investment properties 19.4a 11.631.996 31.554.991
------ ----------- -----------
Tangible and intangible assets 23 20 11.988
------ ----------- -----------
Long-term receivables and prepayments 24 315.000 333.263
------ ----------- -----------
Investments in associates 21 335.534 5.476.576
------ ----------- -----------
Prepayments and other current assets 25 1.267.713 1.240.028
------ ----------- -----------
Cash and cash equivalents 27 284.828 394.670
------ ----------- -----------
Total assets of group held for sale 13.835.091 39.011.516
------ ----------- -----------
Liabilities directly related with assets
classified as held for sale
------ ----------- -----------
Borrowings 31 4.021.192 8.022.899
------ ----------- -----------
Finance lease liabilities 36 6.225.930 6.515.847
------ ----------- -----------
Trade and other payables 33 431.307 997.392
------ ----------- -----------
Taxation 35 184.227 243.310
------ ----------- -----------
Deposits from tenants 34 23.002 64.231
------ ----------- -----------
Total liabilities of group held for 10.885.658 15.843.679
sale
------ ----------- -----------
10. Income
Income from continued operations for the year ended 31 December
2022 represents:
a) rental income, as well as service charges and utilities
income collected from tenants as a result of the rental agreements
concluded with tenants of Innovations Logistics Park (Romania). It
is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through the
SPV, is planned to be transferred as part of the transaction with
Arcona Property Fund N.V. Upon a final agreement for such transfer,
the Company will negotiate with the lender its release from the
aforementioned lease agreement, and if succeeds, upon completion
such income will be also transferred.
b) Asset and property managent income in 2021 is related to one
off services to a third party, while in 2022 represent services in
relation to the management of properties sold to Arcona .
Continued operations 31 Dec 31 Dec
2022 2021
EUR EUR
---------- ----------
Rental income 763.242 633.427
---------- ----------
Service charges and utilities income 276.996 232.870
---------- ----------
Asset & property management income 103.514 180.840
---------- ----------
Total income 1.143.752 1.047.137
---------- ----------
Income from discontinued operations for the year ended 31
December 2022 represents:
a) rental income, as well as service charges and utilities
income collected from tenants as a result of the rental agreements
concluded with tenants of Innovations Logistics Park (Romania),
Kindergarten (Romania), and EOS Business Park (Romania). Decrease
in 2022 is due to the sale of EOS and Kindergarten during the
year.
b) rental income and service charges by tenants of the Residential Portfolio, and;
Discontinued operations (Note 9) 31 Dec 31 Dec
2022 2021
EUR EUR
-------- --------
Rental income 489.653 916.498
-------- --------
Service charges and utilities income 16.132 23.222
-------- --------
Total income 505.785 939.720
-------- --------
Occupancy rates in the various income producing assets of the
Group as at 31 December 2022 were as follows:
Income producing assets
% 31 Dec 31 Dec
2022 2021
--------- ------- -------
EOS Business Park Romania - 100
--------- ------- -------
Innovations Logistics
Park Romania 80 65
--------- ------- -------
Kindergarten Romania - 100
--------- ------- -------
11. Asset operating expenses
The Group incurs expenses related to the proper operation and
maintenance of all properties in Kiev and Bucharest. Part of these
expenses is recovered from the tenants through the service charges
and utilities recharge process (Note 10 ).
Under continued operations ,there are no such expenses related
to the operation of the Assets.
Under discontinued operations all such expenses related to
Innovations Logistics Park (Romania), EOS Business Park (Romania),
Residential Portfolio (Romania), GreenLake (Romania), and all
Ukrainian properties .
Discontinued operations (Note 9) 31 Dec 31 Dec
2022 2021
EUR EUR
---------- ----------
Property related taxes (112.420) (253.917)
---------- ----------
Property management fees (3.758) (22.087)
---------- ----------
Repairs and technical maintenance (30.595) (179.009)
---------- ----------
Utilities (251.507) (218.519)
---------- ----------
Property security (35.527) (44.464)
---------- ----------
Property insurance (7.695) (10.267)
---------- ----------
Leasing expenses (4.878) (34.761)
---------- ----------
Total (446.380) (763.024)
---------- ----------
Property related taxes reflect local taxes of land and building
properties (in the form of land taxes, building taxes, garbage
fees, etc.). Relevant decrease in 2022 resulted from the disposal
of assets during the period, as well as the fact that during 2021
relevant costs were increased due to the land book taxes associated
with the acquisition of EOS asset from the leasing company in order
the project to be re-financed.
Repairs and technical maintenance increased substantially during
2021 due to works performed on residential units for facilitating
their successful sale, while in 2022 relevant costs decreased
substantially as a result of the disposal of most of the
residential properties.
11. Asset operating expenses (continued)
Utilities increase came from Innovations Logistics Park in
Bucharest, and matches with the increased service charges and
utilities income invoiced by the Company and included in continued
operations.
Leasing expenses reflect expenses related to long term land
leasing and registered lower due to the pending status of
Tsymlyanskiy lease
extension.
12. Administration Expenses
Continued operations 31 Dec 31 Dec
2022 2021
EUR EUR
------------ ------------
Salaries and Wages (263.477) (355.933)
------------ ------------
Incentives pursuant to RemCo proposal (184.500) -
------------ ------------
Advisory and broker fees (270.457) (360.578)
------------ ------------
Public group expenses (138.908) (144.330)
------------ ------------
VAT expensed (89.315) (68.135)
------------ ------------
Corporate registration and maintenance fees (32.458) (59.990)
------------ ------------
Audit fees (67.332) (78.668)
------------ ------------
Accounting and related fees (15.529) (29.180)
------------ ------------
Legal fees (233.098) (328.331)
------------ ------------
Depreciation /Amortization charge (2.784) (1.481)
------------ ------------
Directors Renumeration - (243.823)
------------ ------------
Corporate operating expenses (166.768) (127.844)
------------ ------------
Total Administration Expenses (1.464.626) (1.798.293)
------------ ------------
Discontinued operations (Note 9) 31 Dec 31 Dec
2022 2021
EUR EUR
---------- ----------
Salaries and Wages (30.221) (32.498)
---------- ----------
Advisory and broker fees (99.323) (83.066)
---------- ----------
Corporate registration and maintenance fees (33.142) (38.765)
---------- ----------
Audit fees (26.230) (35.160)
---------- ----------
Accounting and related fees (20.973) (29.034)
---------- ----------
Legal fees (4.488) (52.940)
---------- ----------
Depreciation /Amortization charge (4.508) (620)
---------- ----------
Corporate operating expenses (23.272) (17.003)
---------- ----------
Total Administration Expenses (242.157) (289.086)
---------- ----------
Salaries and wages include the remuneration of the CEO (2022:
EUR63.123, 2021: EUR100.997), the CFO, the Group Commercial
Director and the Country Managers of Ukraine and Romania, as well
as the salary cost of personnel employed in the various Company's
offices.
Incentives provided in 2022 to personnel for the successful
implementation of Group's plan pursuant to relevant Remuneration
Committee proposal dated 7 May 2021 as approved by the BoD on 01
June 2021.
Advisory fees are mainly related to advisors, brokers, valuers
and other professionals engaged in relevant transactions, as well
as outsourced human resources support on the basis of relevant
contracts.
Accounting and related fees include fees from external
accounting services, as well as fees for transfer pricing and tax
consulting services.
Public group expenses include among others fees paid to the
AIM:LSE stock exchange, Cyprus Stock Exchange as custodian, and the
Nominated Adviser of the Company, as well as other expenses related
to the listing of the Company, such as public relations and
registry expenses.
Corporate registration and maintenance fees represent fees
charged for the annual maintenance of the Company and its
subsidiaries, as well as fees and expenses related to the normal
operation of the companies including charges by the relevant local
authorities.
Legal fees represent legal expenses incurred by the Group in
relation to asset operations (rentals, sales, etc.), ongoing legal
cases in Ukraine, Cyprus and Romania, compliance with AIM listing,
as well as one-off fees associated with legal services and advise
in relation to due diligence processes and transactions. During the
current period, the Group incurred EUR146k relevant legal fees
associated with the closings as part of Stage 2 of the transaction
with Arcona, and EUR23k associated with the Bluehouse
litigation.
Corporate operating expenses include office expenses, travel
expenses, (tele)communication expenses, D&O insurance and all
other general expenses for Cypriot, Romanian and Ukrainian
operations.
12. Administration Expenses (continued)
The annual Directors fees including Chairman and Committee
remunerations have been set at GBP 129k, while the decision for
registering relevant fees for 2022 is still pending by the board.
In 2021 the Company posted also fees from previous periods which
were not included previously in Company's books and presented as
"Deferred Amounts" in table below (Note 39.1.2).
Summary 31 Dec 2022 31 Dec 2021
of Directors'
Total Remuneration
EUR EUR EUR EUR EUR EUR EUR
------------------- ------------ ---------- -------------- ----------- --------- ----------
Base remuneration Chairman/ Deferred Base Chairman/ Deferred Total
Committee Amounts remuneration Committee Amounts
Fees Fees
------------------- ------------ ---------- -------------- ----------- --------- ----------
Michael
Beys - - - (33.323) (5.950) (23.100) (62.373)
------------------- ------------ ---------- -------------- ----------- --------- ----------
Harin Thaker - - - (33.323) (3.570) (21.700) (58.593)
------------------- ------------ ---------- -------------- ----------- --------- ----------
Ian Domaille - - - (33.323) (7.141) (23.800) (64.264)
------------------- ------------ ---------- -------------- ----------- --------- ----------
Anthonios
Kaffas - - - (33.323) (3.570) (21.700) (58.593)
------------------- ------------ ---------- -------------- ----------- --------- ----------
Total - - - (133.292) (20.231) (90.300) (243.823)
------------------- ------------ ---------- -------------- ----------- --------- ----------
13. Valuation gains / (losses) from investment properties
Valuation gains /(losses) from investment property for the
reporting period, excluding foreign exchange translation
differences which are incorporated in the table of Note 19.2, are
presented in the tables below.
Discontinued operations (Note 9)
Property Name (EUR) Valuation gains/(losses)
---------------------------
31 Dec 31 Dec
2022 2021
-------------- -----------
EUR EUR
-------------- -----------
Kiyanovskiy Residence (798.325) (93.835)
-------------- -----------
Tsymlyanskiy Residence* - (964.178)
-------------- -----------
Rozny Lane (455.560) 75.740
-------------- -----------
Innovations Logistics Park 8.655 (240.706)
-------------- -----------
EOS Business Park - 107.164
-------------- -----------
Residential Portfolio - 4.438
-------------- -----------
GreenLake - 452.063
-------------- -----------
Kindergarten - (95.665)
-------------- -----------
Total (1.245.230) (754.979)
-------------- -----------
* As of November 2021, the Group had submitted properly the
official request to the City of Kiev to extend the lease of
Tsymlyanskiy Residence property for another 5 years, since the
Group has first extension rights over any other interested party.
The first step in the process whereby the presiding committee of
the municipality, before the final approval by the City Council,
did not place as many other cases had accumulated which had time
priority over Group's case. During the period between December 15th
2021 and January 20th of 2022, the committee did not convene at all
as is usual during holiday and vacation times. Once the holiday
season was over, the main focus of the committee and the City
Council unfortunately were on issues not related to property lease
extensions, but rather more pressing matters for the interests and
operational stability of the City of Kiev. From there on, all
decisions have been put on hold due to the Russian insurgence of
Ukraine. We remain confident that we will be awarded the lease
extension once the war status permits.
In relation to the Ukrainian assets excluding Tsymlyanskiy, and
in view of the ongoing conflict in the country, the Management,
although received updated third-party valuation reports to monitor
effectively the underlying values, decided in H1 2022 accounts to
impair the value of those assets at 50% of their value as at the
end of 2021 and continuous the same in current period.
Valuation gains and losses result not only from the differences
in the values of the properties as reported by valuers at the
different points in time, but also from the fluctuation of the FX
rate between the denominated currency of the valuation report
itself and the functional currency of the company which posts
valuation amount in its accounting books. For example, valuations
of Ukrainian assets are denominated in USD and translated to UAH
for entering effectively in the accounting books of the local
entities. Similarly, valuations of Romanian assets are denominated
in EUR and translated to RON for accounting purposes.
14. Gain/ (Loss) from disposal of properties
During the reporting period the Group proceeded with selling
properties classified under Investment Property (Romanian
residential and land assets) designated as non-core assets. The
gain/ (losses) from disposal of such properties are presented
below:
14.1 Investment property
During 2022 the Group sold 2 villas in Greenlake Parcel K and
Plot B Plot C, Plot F and Plot G in Ashor Development SRL under
Greenlake Land. The disposal of land plots made in combination with
the disposal of adjacent land plots owned by the associate Green
Lake Development SRL and resulted also in the full repayment of
GreenLake Phase A loan with Eurobank and the release of the
remaining assets of the associate in which SPDI has a 40,35%
interest.
In 2021 the Group sold 7 villas in Greenlake Parcel K, 5
apartments in Monaco Towers and 1 apartment, 3 parking spaces in
Zizin.
Discontinued operations (Note 9) 31 Dec 31 Dec
2022 2021
EUR EUR
------------ ------------
Income from sale of investment property 3.897.608 3.245.322
------------ ------------
Cost of investment property (4.723.000) (2.591.755)
------------ ------------
Profit/(Loss) from disposal of investment
property (825.392) 653.567
------------ ------------
15. Other operating income/(expenses), net
Continued operations 31 Dec 31 Dec
2022 2021
EUR EUR
--------- ---------
Other income 18.834 18.536
--------- ---------
Accounts payable written off 3.022 62.978
--------- ---------
Other income 21.856 81.514
--------- ---------
Penalties (348) (509)
--------- ---------
Impairment of prepayments and other current ( 5.932
assets (19.648) )
--------- ---------
Other expenses (5.250) (5.430)
--------- ---------
( 11.871
Other expenses (25.246) )
--------- ---------
Other operating income/(expenses), net (3.390) 69. 643
--------- ---------
Discontinued operations (Note 9) 31 Dec 31 Dec
2022 2021
EUR EUR
------------ ---------
Accounts payable written off 1.379 -
------------ ---------
Other income 4.571 1.679
------------ ---------
Other income 5.950 1.679
------------ ---------
Penalties (215) (240)
------------ ---------
Impairments (2.701.503) -
------------ ---------
Other expenses (25.585) (13.949)
------------ ---------
Other expenses (2.727.303) (14.189)
------------ ---------
Other operating income/(expenses), net (2.721.353) (12.510)
------------ ---------
Continued operations
Other income represents income from services to an associate
company.
The accounts payable written off under continued operations in
2021 are mainly related to writing off an old balance due to a
vendor.
Discontinued operations
Impairments in discontinued operations are related to an
intragroup balance between Ashor Development Srl and Green Lake
Development Srl (included as Associate in consolidated accounts),
born from the contribution of former's assets for the repayment of
latter's loan facility with Eurobank, pursuant to the cross
collateral agreement included in the relevant loan contract. The
small differences in the shareholding structure of the two
companies have been taken into account into a relevant MOU between
Green Lake Development Srl's shareholders, with which the proceeds
of the monetization of the remaining free of mortgage assets are
attributed to each shareholder accordingly.
Other expenses in discontinued operations represent mainly VAT
adjustments on the construction of buildings resulted from sales of
villas with no VAT to individuals. Such amounts have been received
from the clients through the selling price.
16. Finance costs and income
Continued operations
Finance income 31 Dec 31 Dec
2022 2021
-------- --------
EUR EUR
-------- --------
Interest received from non-bank loans 361.035 489.072
-------- --------
Total finance income 361.035 489.072
-------- --------
Finance costs 31 Dec 31 Dec
2022 2021
EUR EUR
---------- ----------
Interest expenses (non-bank) (127.748) (116.468)
---------- ----------
Finance charges and commissions (5.883) (5.808)
---------- ----------
Bonds interest (64.700) (68.133)
---------- ----------
Total finance costs (198.331) (190.409)
---------- ----------
Net finance result 162.704 298.663
---------- ----------
Discontinued operations (Note 9)
Finance income 31 Dec 31 Dec
2022 2021
------- -------
EUR EUR
------- -------
Interest received from-bank loans 10 -
------- -------
Interest received from non-bank loans (Note
39.1.1) 7.972 9.366
------- -------
Total finance income 7.982 9.366
------- -------
Finance costs 31 Dec 31 Dec
2022 2021
EUR EUR
---------- ----------
Interest expenses (bank) (353.428) (479.939)
---------- ----------
Interest expenses (non-bank) (4.892) (6.547)
---------- ----------
Finance leasing interest expenses (299.632) (373.209)
---------- ----------
Finance charges and commissions (3.017) (3.785)
---------- ----------
Total finance costs (660.969) (863.480)
---------- ----------
Net finance result (652.987) (854.114)
---------- ----------
Interest income from non-bank loans, reflects income from loans
granted by the Group for financial assistance of associates . This
amount includes also interest on Loan receivables from 3rd parties
provided as an advance payment for acquiring a participation in an
investment property portfolio (Olympians portfolio) in Romania The
funds provided initially with a convertibility option which was not
exercised, and is currently treated as a loan.
According to the last addendum of the loan agreement, part of
the principal equal to EUR 2,5 million will be contributed to a
joint venture between the Company and the borrower for the
development of logistics assets in Romania (Note 25). The remaining
principal plus the interest is repaid in installments, expected to
be fully repaid by the end of 2023. The loan is bearing a fixed
interest rate of 10%.
Interest expenses represent interest charged on Bank and
non-Bank borrowings (Note 31).
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group ( Note 36).
Finance charges and commissions include regular banking
commissions and various fees imposed by the Banks.
Bonds interest represents interest calculated for the bonds
issued by the Company during 2018 (Note 32).
17. Foreign exchange profit / (losses)
a. Non realised foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans
and/or payables/receivables denominated in non EUR currencies when
translated in EUR. The exchange loss for the year ended 31 December
2022 from continued operations amounted to EUR17.647 (2021: loss
EUR65.147).
The exchange loss from discontinued operations for the year
ended 31 December 2022 amounted to EUR165.165 (2021: loss
EUR253.666) (Note 9).
18. Tax Expense
Continued operations 31 Dec 31 Dec
2022 2021
EUR EUR
------- ---------
Reversal of tax/(Income and defence tax expense) 17.940 (51.824)
------- ---------
Taxes 17.940 (51.824)
------- ---------
Discontinued operations (Note 9) 31 Dec 31 Dec
2022 2021
EUR EUR
--------- ---------
Income and defence tax expense (74.340) (67.328)
--------- ---------
Taxes (74.340) (67.328)
--------- ---------
For the year ended 31 December 2022, the corporate income tax
rate for the Group's subsidiaries is 18% in Ukraine, and 16% in
Romania. The corporate tax that is applied to the qualifying income
of the Company and its Cypriot subsidiaries is 12,5%.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 31 Dec
2022 2021
EUR EUR
------------- ------------
Profit / (loss) before tax (11.587.480) (577.617)
------------- ------------
Tax calculated on applicable rates (318.782) 1.270.289
------------- ------------
Expenses not recognized for tax purposes 592.568 319.568
------------- ------------
Tax effect of allowances and income not subject
to tax (221.122) (817.941)
------------- ------------
Tax effect on tax losses for the year 2.644.670 390.502
------------- ------------
Tax effect on tax losses brought forward (2.617.009) (1.060.938)
------------- ------------
10% additional tax 8.057 4.339
------------- ------------
Tax effect of Group tax relief - (919)
------------- ------------
Defence contribution current year 17.173 14.252
------------- ------------
Prior year tax (161.955)
------------- ------------
Total Tax (56.400) 119.152
------------- ------------
19. Investment Property
19.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
-- EOS Business Park consists of 3.386 sqm gross leasable area
and includes a Class A office Building in Bucharest, which is
currently fully let to Danone Romania until 2025. In June 2022 the
Company proceeded to the sale of the Romanian SPV which holds the
asset as part of Stage 2 of the transaction with Arcona.
-- Innovations Logistics Park is a 16.570 sqm gross leasable
area logistics park located in Clinceni in Bucharest, which
benefits from being on the Bucharest ring road. Its construction
was tenant specific, was completed in 2008 and is separated in four
warehouses, two of which offer cold storage (freezing temperature),
the total area of which is 6.395 sqm. Innovations Logistics Park
was acquired by the Group in May 2014 and is 80% leased at the end
of the reporting period.
Residential Assets
-- At the end of the reporting period the Company does not own
any more residential units, having sold during the period the
remaining residential portfolio held by Moselin Investments Srl in
GreenLake Residential complex. The associate company Green Lake
Developments Srl still owns 7 units in the Green Lake Residential
complex, classified under associates (Note 21).
Land Assets
-- Kiyanovskiy Residence consists of four adjacent plots of
land, totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael's Spires and
historic Podil neighborhood .
-- Tsymlyanskiy Residence is a 0,36 Ha plot of land located in
the historic Podil District of Kiev and is destined for the
development of a residential complex. As of November 2021, the
Group had submitted properly the official request to the City of
Kiev to extend the lease of Tsymlyanskiy Residence property for
another 5 years, since the Group has first extension rights over
any other interested party. The first step in the process whereby
the presiding committee of the municipality, before the final
approval by the City Council, did not place as many other cases had
accumulated which had time priority over Group's case. During the
period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. We remain confident that we will be
awarded the lease extension once the war status permits.
-- Rozny Lane is a 42 Ha land plot located in Kiev Oblast,
destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in
2015.
-- GreenLake land is a 40.360 sqm plot and is adjacent to the
GreenLake part of the Company's residential portfolio, which is
classified under Investments in Associates (Note 21). It is
situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI used to own 44% of these plots, having
effectively management control. The land was sold during 2022.
19. Investment Property (continued)
19.2 Investment Property Movement during the reporting
period
The table below presents a reconciliation of the Fair Value
movements of the investment property during the reporting period
broken down by property and by local currency vs. reporting
currency.
Discontinued Operations
2022 ( EUR ) Fair Value Asset Value at the
movements Beginning of the period
or at Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair Disposals Transfer Additions Carrying
amount exchange value 2022 to 2022 amount
as at translation gain/(loss) Assets as at
31/12/2022 difference based held 31/12/2021
(a) on local for sale
currency
valuations
(b)
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Kiyanovskiy
Residence Land 1.406.338 (444.110) (798.325) - - - 2.648.773
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Tsymlyanskiy
Residence Land 1 - - - - - 1
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Rozny Lane Land 515.657 - (455.560) - - - 971.217
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Total Ukraine 1.921.996 (444.110) (1.253.885) - - - 3.619.991
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Innovations
Logistic
s Park Warehouse 9.710.000 1.345 8.655 - - 9.700.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
EOS Business Office - - - (6.700.000) - - 6.700.000
Park
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Residential Residential - - - - - - -
portfolio
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
GreenLake Land - - - (10.215.000) - - 10.215.000
& Resi
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Kindergarten Retail - - - (1.320.000) - - 1.320.000
------------- ----------- ------------ ------------ ------------- --------- ---------- ------------
Total Romania 9.710.000 1.345 8.655 (18.235.000) - - 27.935.000
----------- ------------ ------------ ------------- --------- ---------- ------------
TOTAL 11.631.996 (442.765) (1.245.230) (18.235.000) - - 31.554.991
----------- ------------ ------------ ------------- --------- ---------- ------------
2021 ( EUR ) Fair Value Asset Value at the
movements Beginning of the period
or at Acquisition/Transfer
date
Asset Name Type Carrying Foreign Fair Disposals Transfer Additions Carrying
amount exchange value 2021 to 2021 amount
as at translation gain/(loss) Assets as at
31/12/2021 difference based held 31/12/2020
(a) on local for sale
currency
valuations
(b)
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kiyanovskiy
Residence Land 2.648.773 297.620 (93.835) - - - 2.444.988
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Tsymlyanskiy
Residence Land 1 67.683 (964.178) - - - 896.496
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Rozny Lane Land 971.217 (1.019) 75.740 - - - 896.496
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Ukraine 3.619.991 364.284 (982.273) - - - 4.237.980
----------- ------------ ------------ ------------ --------- ---------- ------------
Innovations
Logistic
s Park Warehouse 9.700.000 (159.294) (240.706) - - - 10.100.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
EOS Business
Park Office 6.700.000 (107.164) 107.164 - - - 6.700.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Residential
portfolio Residential - (4.438) 4.438 (277.458) - 124.958 152.500
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Land
GreenLake & Resi 10.215.000 (197.765) 452.062 (2.314.297) - - 12.275.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Kindergarten Retail 1.320.000 (22.336) (95.664) - - 1.438.000
------------- ----------- ------------ ------------ ------------ --------- ---------- ------------
Total Romania 27.935.000 (490.997) 227.294 (2.591.755) - 124.958 30.665.500
----------- ------------ ------------ ------------ --------- ---------- ------------
TOTAL 31.554.991 (126.713) (754.979) (2.591.755) - 124.958 34.903.480
----------- ------------ ------------ ------------ --------- ---------- ------------
Discontinued Operations
Due to the situation in Ukraine and the associated uncertainty,
the Management has decided in H1 2022 to proceed with valueing
those assets 50% lower than the values provided by the third-party
valuers (CBRE Ukraine), and in turn decided to keep the same values
in current period. As a result, the Ukrainian assets contribute
EUR1,9 million in Group's assets, as compared to EUR3,1 million
provided by the valuers and EUR3,6 million in 2021 accounts.
The two components comprising the fair value movements are
presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation loss due to the devaluation of local
currencies of EUR 442.765 (a) (2021: loss EUR 126.713 ) is
presented as part of the exchange difference on translation of
foreign operations in other comprehensive income in the statement
of comprehensive income and then carried forward in the Foreign
currency translation reserve; and,
b. The fair value loss in terms of the local functional
currencies amounting to EUR 1.245.230 (b) (2021: loss EUR 754.979)
, is presented as Valuation gains/(losses) from investment
properties in the statement of comprehensive income and is carried
forward in Accumulated losses.
19. Investment Property (continued)
19.3 Investment Property Carrying Amount per asset as at the
reporting date
The table below presents the values of the individual assets as
appraised by the appointed valuer as at the reporting date.
Asset Name Location Principal Related Carrying amount as at
Operation Companies
31 Dec 31 Dec 31 Dec 31 Dec
202 2 202 2 2021 2021
------------ -------------- ------------- ------------- ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ -------------- ------------- ------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------ -------------- ------------- ------------- ------------- ------------ -------------
Kiyanovskiy Podil, Land for LLC Aisi 1.406.338 2.648.773
Residence Kiev residential Ukraine - -
City Development LLC Trade
Center Center
------------ -------------- ------------- ------------- ------------- ------------ -------------
Podil,
Kiev Land for LLC Almaz
Tsymlyanskiy City residential -- Pres
Residence Center Development -- Ukraine - 1 - 1
------------ -------------- ------------- ------------- ------------- ------------ -------------
Brovary Land for SC Secure
district, residential Capital
Rozny Lane Kiev Development Limited - 515.657 - 971.217
------------ -------------- ------------- ------------- ------------- ------------ -------------
Total Ukraine - 1.921.996 - 3.619.991
---------- ------------- ------------ -------------
Innovations Clinceni, Warehouse Myrnes 9.710.000 9.700.000
Logistics Bucharest Innovations - -
Park Park
Limited
Best Day
Real Estate
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
EOS Business Bucharest Office Yamano - - - 6.700.000
Park building Ltd
First Phase
srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Kindergarten Bucharest Retail Yamano - 1.320.000
Ltd - -
SPDI Real
Estate
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Residential Bucharest Residential Secure - -
Portfolio apartments II - -
Ketiza
Ltd,
Ketiza
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
GreenLake Bucharest Residential Edetrio -
villas Holdings 10.215.000
(2 villas) Limited
& Emakei
Land for Holdings
Residential Limited
Development Iuliu Maniu
Limited - -
Moselin
Investments
srl
Rimasol
Limited
Rimasol
Real Estate
Srl
Ashor
Ventures
Limited
Ashor
Develpoment
Srl
Jenby
Investments
Srl
Ebenem
Investments
Srl
------------ -------------- ------------- ------------- ------------- ------------ -------------
Total Romania - 9.710.000 - 27.935.000
---------- ------------- ------------ -------------
TOTAL - 11.631.996 - 31.554.991
---------- ------------- ------------ -------------
19. Investment Property (continued)
19.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Innovations Logistics park, EOS Business Park(2021), Kindergarten
in GreenLake(2021) and GreenLake parcel K, as well as all the land
assets namely Kiyanovskiy Residence, Tsymlyanskiy Residenceand
Rozny Lane in Ukraine, and GreenLake in Romania
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
(Note 9) (Note
9)
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
At 1 January - 31.554.991 - 34.903.480
------------- ------------- ------------ -------------
Additions - - - 124.958
------------- ------------- ------------ -------------
Disposal of Investment Property - (18.235.000) - (2.591.755)
------------- ------------- ------------ -------------
Revaluation (loss)/gain on
investment property - (1.245.230) - (754.979)
------------- ------------- ------------ -------------
Translation difference - (442.765) - (126.713)
------------- ------------- ------------ -------------
At 31 December - 11.631.996 - 31.554.991
------------- ------------- ------------ -------------
Disposals of Investment Properties represent the sale of EOS,
Kindergarten, GreenLake Phase 2 land, and apartments and parking
spaces in Residential Portfolio and villas in GreenLake parcel
K.
19.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the
following table represents an analysis based on the various
valuation methods. The different levels as defined by IFRS have
been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and
liquid markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived
from prices). Level 2 fair values of investment properties have
been derived using the market value approach by comparing the
subject asset with similar assets for which price information is
available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred
recently in the market. The most significant input into this
valuation approach is price per sqm.
- Level 3 relates to inputs for the asset or liability that are
not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using
the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of
income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements at 31 (Level (Level (Level Total
Dec 2022 (EUR) 1) 2) 3)
Recurring fair value measurements
-------- ---------- ---------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center* - 1 - 1
-------- ---------- ---------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center* - 1.406.338 - 1.406.338
-------- ---------- ---------- -----------
Rozny Lane - Brovary district,
Kiev oblas*t - 515.657 - 515.657
-------- ---------- ---------- -----------
Innovations Logistics Park -
Bucharest - - 9.710.000 9.710.000
-------- ---------- ---------- -----------
Totals - 1.921.996 9.710.000 11.631.996
-------- ---------- ---------- -----------
Fair value measurements at 31 (Level (Level (Level Total
Dec 2021 (EUR) 1) 2) 3)
Recurring fair value measurements
-------- ----------- ----------- -----------
Tsymlyanskiy Residence - Podil,
Kiev City Center* - 1 - 1
-------- ----------- ----------- -----------
Kiyanovskiy Residence - Podil,
Kiev City Center* - 2.648.773 - 2.648.773
-------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast* - 971.217 - 971.217
-------- ----------- ----------- -----------
Innovations Logistics Park -
Bucharest - - 9.700.000 9.700.000
-------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - - 6.700.000 6.700.000
-------- ----------- ----------- -----------
GreenLake - Bucharest - 10.215.000 - 10.215.000
-------- ----------- ----------- -----------
Kindergarten - Bucharest - - 1.320.000 1.320.000
-------- ----------- ----------- -----------
Totals - 13.834.991 17.720.000 31.554.991
-------- ----------- ----------- -----------
19. Investment Property (continued)
19.5 Investment Property valuation method presentation
(continued)
* Due to the situation in Ukraine and the associated
uncertainty, the Management has decided from H1 2022 to proceed
with valueing those assets lower than the current values as
provided by the third-party valuers (CBRE Ukraine). As a result,
the Ukrainian assets contribute EUR1,9 million in Group's assets,
as compared to EUR3,1 million provided by the valuers and EUR3,6
million in 2021 accounts.
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level 3 Fair Innovations EOS Business Kindergarten Total
value measurements Logistics Park Park
at 31 Dec 2022
(EUR)
Opening balance 9.700.000 6.700.000 1.320.000 17.720.000
---------------- ------------- ------------- ------------
Profit/(loss)
on revaluation 8.655 - - 8.655
---------------- ------------- ------------- ------------
Disposal - (6.700.000) (1.320.000) (8.020.000)
---------------- ------------- ------------- ------------
Translation difference 1.345 - - 1.345
---------------- ------------- ------------- ------------
Closing balance 9.710.000 - - 9.710.000
---------------- ------------- ------------- ------------
Level 3 Fair Innovations EOS Business Kindergarten Total
value measurements Logistics Park Park
at 31 Dec 2021
(EUR)
Opening balance 10.100.000 6.700.000 1.438.000 18.238.000
---------------- ------------- ------------- -----------
Profit/(loss)
on revaluation (240.706) 107.164 (95.664) (229.206)
---------------- ------------- ------------- -----------
Translation difference (159.294) (107.164) (22.336) (288.794)
---------------- ------------- ------------- -----------
Closing balance 9.700.000 6.700.000 1.320.000 17.720.000
---------------- ------------- ------------- -----------
Information about Level 3 Fair Values is presented below:
Fair Fair value Valuation Unobservable Relationship of
value at technique inputs unobservable inputs
at 31 Dec to fair value
31 Dec 2021
2022
EUR EUR EUR EUR EUR
---------- ----------- ---------------- --------------- ---------------------
Innovations 9.710.000 9.700.000 Income approach Future rental The higher the
Logistics income and rental income the
Park - Bucharest costs for higher the fair
10 years, value. The higher
discount the discount rate,
rate the lower fair
value
---------- ----------- ---------------- --------------- ---------------------
EOS Business - 6.700.000 Income approach Future rental The higher the
Park - Bucharest, income and rental income the
City Center costs for higher the fair
10 years, value. The higher
discount the discount rate,
rate the lower fair
value
---------- ----------- ---------------- --------------- ---------------------
Kindergarten - 1.320.000 Income approach Future rental The higher the
income and rental income the
costs of higher the fair
discount value. The higher
rate, vacancy the discount rate
rate and the vacancy
rate, the lower
fair value
---------- ----------- ---------------- --------------- ---------------------
Total 9.710.000 17.720.000
---------- ----------- ---------------- --------------- ---------------------
20. Investment Property Acquisitions, Goodwill Movement and
Disposals
20.1 Acquisition of asset
Based on the relevant agreement in 2021, the Company, in
February 2022, acquired 50% of the share capital of Equardo
Limited, an SPV holding stake in Victoria City (Vic City) project
in Bucharest. The participation took place through a share capital
increase of the order of EUR 8.000, where the remaining
shareholders waived their right to participate. Vic City is a land
plot in north Bucharest on Bucuresti Noi Boulevard near a metro
station, where a commercial mixed used center was to be developed.
The project was to be contributed to SPDI by its promoters at the
time, but neither its development nor its contribution progressed
due to other priorities. SPDI participated in Equardo Limited so as
to retain some of the value originally destined to be part of its
asset portfolio.
20.2 Disposals of subsidiaries and associates
20.2.1 (A) Disposal of EOS Bussiness Park
Following relevant SPA signed in June 2021 and as part of Stage
2 of the transaction with Arcona, during in June 2022 the Company
closed the agreement for the disposal of the Romanian SPV which
owns the EOS Business Park asset in Bucharest. In exchange for the
sale the Company received 116.688 new ordinary shares in Arcona and
28.125 warrants over shares in Arcona.
ASSETS EUR
Non-current assets
------------
Investment properties 6.700.000
------------
Other non-current assets 41.674
------------
6.741.674
------------
Current assets
------------
Prepayments and other
current assets 72.198
------------
Cash and cash equivalents 49.783
------------
121.981
------------
Total Assets 6.863.655
------------
LIABILITIES
------------
Interest bearing borrowings 3.347.799
------------
Other liabilities 44.372
------------
Total Liabilities 3.392.171
------------
NET ASSET 3.471.484
------------
Consideration:
------------
Shares in Arcona 1.386.249
------------
Loss on Disposal (2.085.235)
------------
In view of closing the transaction with Arcona for EOS, the
Company entered in December 2021 into a new loan facility for
re-financing the previous leasing contract of the asset, securing a
net amount of EUR 800k which was used to partially re-pay the
shareholder loan provided by the Company to the relevant SPV before
the closing of the transaction with Arcona.
20.2.1 (B) Disposal of Associate Lelar Holdings Limited (Note
21)
During 2022 and as part of Stage 2 of the transaction with
Arcona, the Company sold Lelar Holdings Limited, the Cypriot
holding company associated with Delea Nuova asset in Bucharest. In
exchange of the transfer, the Company received 362.688 new ordinary
shares in Arcona and 87.418 warrants over shares in Arcona, while
at the same time the parties agreed that the already declared
dividends by Lelar Holding Limited will be allocated and paid to
the Company. The relevant amount of such dividends corresponding to
the transferred ownership stake of 24,35% was EUR 298k which has
already been collected by the Company.
EUR
Value of associate 5.178.669
at date of Disposal
(Note 21)
----------
Consideration:
----------
Shares in Arcona 4.292.953
----------
Loss on Disposal (885.716)
----------
20. Investment Property Acquisitions, Goodwill Movement and
Disposals (continued)
20.2 Disposals of subsidiaries and associates (continued)
20.2.1 (C) Disposal of Kindergarden
ASSETS EUR
Non-current assets
----------
Investment properties 1.320.000
----------
Current assets
----------
Prepayments and other
current assets 16.369
----------
Cash and cash equivalents 2.308
----------
Total Assets 1.338.677
----------
LIABILITIES
----------
Interest bearing borrowings 628.063
----------
Other liabilities 14.214
----------
Total Liabilities 642.277
----------
NET ASSET 696.400
----------
Net share of the group
50% 348.200
----------
Consideration:
----------
Cash 130.750
----------
Net off debt between
the parties 44.250
----------
Total Consideration 175.000
----------
Loss on Disposal (173.200)
----------
The Company honouring certain commitment made in the past during
the restructuring of the holdings of Green Lake project, proceeded
to the sale of its 50% stake in Kindergarten asset in Greenlake,
Bucharest. The consideration of the transaction was set at
EUR175.000 plus release of available company's cash pledged by the
Bank.
20.2.1 (D) Disposal of GreenLake Phase II land
Rimasol Rimasol Ashor Ashor Ebenem Jenby Total
SRL LTD SRL LTD SRL SRL
ASSETS EUR EUR EUR EUR EUR EUR EUR
-------- --------- ---------- -------- -------- ---------- ------------
Non-current assets
-------- --------- ---------- -------- -------- ---------- ------------
Investment properties 808.000 - 1.510.000 - 612.000 2.562.000 5.492.000
-------- --------- ---------- -------- -------- ---------- ------------
Current assets
-------- --------- ---------- -------- -------- ---------- ------------
Prepayments and
other current
assets 5.789 - 118.695 - 3.406 8.644 136.534
-------- --------- ---------- -------- -------- ---------- ------------
Cash and cash
equivalents 62 - 18.982 - 44 40 19.128
-------- --------- ---------- -------- -------- ---------- ------------
Total Assets 813.851 - 1.647.677 - 615.450 2.570.684 5647.662
-------- --------- ---------- -------- -------- ---------- ------------
LIABILITIES
-------- --------- ---------- -------- -------- ---------- ------------
Interest bearing
borrowings 623 - 1.555 - 12.239 19.757 34.174
-------- --------- ---------- -------- -------- ---------- ------------
Other liabilities 31.622 94.736 26.259 4.626 16.801 25.773 199.817
-------- --------- ---------- -------- -------- ---------- ------------
Total Liabilities 32.245 94.736 27.814 4.626 29.040 45.530 233.991
-------- --------- ---------- -------- -------- ---------- ------------
NET ASSET 781.606 (94.736) 1.619.863 (4.626) 586.410 2.525.154 5.416.671
-------- --------- ---------- -------- -------- ---------- ------------
Group % Holding 70,56% 70,56% 44,24% 44,24% 44,30% 44,30%
-------- --------- ---------- -------- -------- ---------- ------------
Net share of
the group 551.501 (66.846) 716.627 (2.047) 259.780 1.118.643 2.577.658
-------- --------- ---------- -------- -------- ---------- ------------
Consideration:
-------- --------- ---------- -------- -------- ---------- ------------
Cash 400.000
-------- --------- ---------- -------- -------- ---------- ------------
Variable Compensation 450.000
-------- --------- ---------- -------- -------- ---------- ------------
Total Consideration 850.000
-------- --------- ---------- -------- -------- ---------- ------------
Loss on Disposal (1.727.658)
-------- --------- ---------- -------- -------- ---------- ------------
20. Investment Property Acquisitions, Goodwill Movement and
Disposals (continued)
20.2 Disposals of subsidiaries and associates (continued)
During the period, i n an effort to accelerate monetization of
assets that were to be part of Stage 3 of the transaction with
Arcona, and since the discussions with Arcona took much longer than
expected and negotiations on their valuation did not conclude, the
Company proceeded with monetization of the remaining GreenLake land
plots. The remaining land portfolio was not zoned for development
and its disposal resulted also to the settlement, after prolonged
negotiations with neighbouring land owners, of an ongoing
overlapping dispute over the GreenLake land at a cost of EUR500k
gross.
Total losses on Disposal (A) & (B) & (C) & (D) (4.871.809)
20.2.2 Disposal of Victini Holdings Limited
On 7 December 2021, the Company proceeded to the sale of Victini
Holdings Limited to a 3(rd) party. Before the sale, Victini
Holdings Limited declared dividends of EUR175.500 for all previous
financial years. The subsidiary company was idle since December
2019 when its own Greek subsidiary which held the warehouse in
Greece was sold.
21. Investments in associates
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Cost of investment in associates
at the beginning of the period - 5.476.576 - 5.071.656
------------ ------------- ------------ -------------
Acquisition of Investment 9.041 -
in associates -
------------ ------------- ------------ -------------
Share of profits /(losses)
from associates (Note 9) (9.040) 335.533 - 344.746
------------ ------------- ------------ -------------
Dividend Income - (297.906) - (198.137)
------------ ------------- ------------ -------------
Disposal of Investment (Note - -
20.2.1 B) (5.178.669) -
------------ ------------- ------------ -------------
Foreign exchange difference - - - 258.311
------------ ------------- ------------ -------------
Total 1 335.534 - 5.476.576
------------ ------------- ------------ -------------
During 2022 the Company acquired 50% of the share capital of
Equardo Holdings Limited, an SPV holding stake in Victoria City
(Vic City) project in Bucharest. The participation took place
through a share capital increase of the order of EUR 8.000. Vic
City is a plot of land for development in north Bucharest on
Bucuresti Noi Boulevard near the metro station, where a commercial
mixed use center was to be developed. The project was to be
contributed to SPDI by its promoters at the time, but neither its
development nor its contribution progressed due to other
priorities. SPDI participated in Equardo Holdings Limited so as to
retain some of the value originally destined to be part of its
asset portfolio.
Dividend Income reflects dividends declared by Lelar Holdings
Limited the holding SPV of Delea Nuova building, where the Group
used to hold a 24,35% participation. The associate was sold during
the 2022 with the declared dividends agreed to be paid to the
Company (Note 20.2.1 B).
The share of profit from the associate GreenLake Development Srl
and Equardo Holdings Limited were limited up to the interest of the
Group in the associate.
As at 31 December 2022, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value , total liabilities, revenues and profit or loss,
were as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
--------------- ---------- ------------- ---------- -------- ------------- -------- ------------
Delea Nuova Lelar Holdings - - - - - Romania Office
Project Limited building
and S.C.
Delenco
Construct
Srl
--------------- ---------- ------------- ---------- -------- ------------- -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 3.296.244 (2.960.711) 3.436.512 40,35 335.533 Romania assets
--------------- ---------- ------------- ---------- -------- ------------- -------- ------------
Equardo
Vic City Holdings
Project Limited 267.600 (259.831) (18.082) 50 (9.040) Romania Land
--------------- ---------- ------------- ---------- -------- ------------- -------- ------------
Total 3.563.844 (3.220.542) 3.418.430 326.493
---------- ------------- ---------- -------- ------------- -------- ------------
21. Investments in associates (continued)
As at 31 December 2021, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value , total liabilities, revenues and profit or loss,
were as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
------------- ------------ ------------ ------------------------------ -------- ----------- -------- ------------
Lelar
Holdings
Limited
and S.C.
Delea Delenco
Nuova Construct Office
Project Srl 22.927.561 (440.187) 1.415.561 24,35 344.746 Romania building
------------- ------------ ------------ ------------------------------ -------- ----------- -------- ------------
GreenLake GreenLake 5.447.484 (7.752.870) 1.503.720 40,35 - Romania Residential
Project Development assets
- Phase Srl
A
------------- ------------ ------------ ------------------------------ -------- ----------- -------- ------------
Total 28.375.045 (8.193.057) 2.919.281 344.746
----------- ------------ ------------------------------ -------- ----------- -------- ------------
23. Tangible and intangible assets
As at 31 December 2022 the tangible non-current assets under
continued operations were comprised mainly by electronic equipment
(mobiles, computers etc.) of a net value of EUR816 (2021:
EUR1.628).
As at 31 December 2022 the tangible non-current assets under
discontinued operations mainly consisted of the machinery and
equipment used for servicing the Group's investment properties in
Ukraine and Romania amount to EUR32.244 (2021: EUR81.144).
Accumulated depreciation as at the reporting date amounts to
EUR32.224 (2021: EUR69.156).
24. Long Term Receivables and prepayments
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Long Term Receivables 824 315.000 824 333.263
------------ ------------- ------------ -------------
Total 824 315.000 824 333.263
------------ ------------- ------------ -------------
Long term receivables under discontiniued operations mainly
include the cash collateral existing in favor of Piraeus Leasing in
relation to Innovations asset.
25. Prepayments and other current assets
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Trade and other receivables 603.257 1.019.634 498.869 576.656
------------ ------------- ------------ -------------
VAT and other tax receivables 132.771 52.836 199.808 127.550
------------ ------------- ------------ -------------
Deferred expenses - 128 - 433
------------ ------------- ------------ -------------
Receivables due from related
parties 75.095 195.115 44.084 516.631
------------ ------------- ------------ -------------
Loan receivables from 3(rd) - -
parties 3.463.985 3.825.949
------------ ------------- ------------ -------------
Loan to associates (Note 39.4) - 229.629 9.351 310.966
------------ ------------- ------------ -------------
Allowance for impairment of
prepayments and other current ( 67.680
assets (121.946) (229.629) ) (292.208)
------------ ------------- ------------ -------------
Total 4.153.162 1.267.713 4. 510.381 1.240.028
------------ ------------- ------------ -------------
Trade and other receivables mainly include receivables from
tenants and prepayments made for services. The increase during the
year in discontinued operations resulted from advances provided to
partners in relation to GreenLake Parcel K assets, for which there
is a plan to be matched by relevant distribution of dividends to
the partners during 2023.
VAT receivable represent VAT which is refundable in Romania,
Cyprus and Ukraine.
Deferred expenses include legal, advisory, consulting and
marketing expenses.
25. Prepayments and other current assets (continued)
Receivables due from related parties represent all kind of
receivables from related parties of the Group mainly associated
with the GreenLake project.
Loan receivables from 3(rd) parties include an amount of
EUR3.404.467 (2021: EUR 3.825.949) provided as an advance payment
for acquiring a participation in an investment property portfolio
(Olympians portfolio) in Romania. The accrued interest was
EUR59.517 (2021: EUR0). The loan provided initially with a
convertibility option which was not exercised. The loan is bearing
a fixed interest rate of 10%. In August 2022 the Company signed
with the borrower a Shareholders Agreement for a joint venture for
developing logistics properties in Romania. As part of this
agreement the Company will convert EUR2,5 million of the loan into
a 50% equity stake of the joint venture company. The objective of
this new company, in which borrower is contributing EUR2,5 million
in equity funds too, is to develop a portfolio of logistics
properties in Romania with a view of letting them to third party
tenants in a market that has very low vacancy and has shown
substantial strength and resilience in recent years. The remaining
part of the Olympians Loan is being repaid in regular intervals and
is expected to be fully repaid to the Company by the end of
2023.
Loan to associates reflects a loan receivable from GreenLake
Development Srl, holding company of GreenLake Project-Phase A
(Notes 21 and 39.4).
26. Financial Assets at FV through P&L
The table below presents the analysis of the balance of
Financial Assets at FV through P&L in relation to the continued
operations of the Company:
31 Dec 31 Dec
2021 2021
EUR EUR
------------ -----------------
Arcona shares 7.330.145 6.783.642
------------ -----------------
Aquired Arcona shares 5.679.202 -
------------ -----------------
FV change in Arcona shares (1.089.317) 546.503
------------ -----------------
Arcona shares at reporting date 11.920.030 7.330.145
------------ -----------------
Warrants over Arcona shares 140.577 3.602
------------ -----------------
Aquired Arcona Warrants 3 -
------------ -----------------
FV change in warrants 18.198 136.975
------------ -----------------
Arcona warrants at reporting date 158.778 140.577
------------ -----------------
Total Financial Assets at FV 12.078.808 7.470.722
------------ -----------------
FV change in Arcona shares (1.089.317) 546.503
------------ -----------------
FV change in warrants 18.198 136.975
------------ -----------------
Fair Value (loss)/ gain on Financial Assets
at FV through P&L (1.071.119) 683.478
------------ -----------------
The Company received during 2019 and 2020 593.534 Arcona shares
as part of the completion of Stage 1 of the transaction with
Arcona, for the sale of Bella and Balabino assets in Ukraine, and
the Boyana asset in Bulgaria. During the current period the Company
received 479.376 additional shares in Arcona as part of Stage 2 of
the transaction with Arcona, for the sale of EOS and Delea Nuova
assets in Romania.
At the end of the reporting period the shares are revalued at
their fair value based on the NAV per share of Arcona at the same
date, and as a result a relevant fair value loss of EUR1. 089.317
(2021: gain EUR 546.503) is recognized.
On top of the aforementioned shares, the Company received for
the sale of Bella and Balabino assets, 67.063 warrants over shares
in Arcona for a consideration of EUR 1, and 77.021 warrants over
Arcona shares for the sale of Boyana for a consideration of EUR 1.
The warrants are exercisable upon the volume weighted average price
of Arcona shares traded on a regulated market at EUR 8,10 or
higher.
Moreover, during the current period the Company received 28.125
warrants over shares in Arcona for the sale of EOS asset, and
87.418 warrants over shares in Arcona for the sale of Delea Nuova
asset for a total consideration of EUR 3. These warrants are
exercisable upon the volume weighted average price of Arcona shares
traded on a regulated market at EUR7,2 or higher.
At year end, the warrants are re-valued to fair value and as a
result a relevant gain of EUR 18.198 (2021: gain EUR 136.975) is
recognized. The terms and assumptions used for such warrant
re-valuation are:
Current stock price (as retrieved from Amsterdam Stock
Exchange): EUR 5,9 per share
-- Strike price of the warrants: EUR 8,10 and EUR 7,20 per share
-- Expiration date: 1 November 2024, 25 March 2027, 15 June 2027
-- Standard deviation of stock price: 21,61%
-- Annualized dividend yield on shares: 0%
-- 5 year Government Bond rate (weighted average rate of
Government Bonds of countries that Arcona is exposed): 5,629%
27. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Cash with banks in USD 1.472 7.734 15.778 -
------------ ------------- ------------ -------------
Cash with banks in EUR 38.704 80.151 2.081.700 7.872
------------ ------------- ------------ -------------
Cash with banks in UAH 395 813 84 1.826
------------ ------------- ------------ -------------
Cash with banks in RON 25.710 196.130 62.841 384.972
------------ ------------- ------------ -------------
Cash with banks in GBP 289 - 173 -
------------ ------------- ------------ -------------
Total 66.570 284.828 2.160.576 394.670
------------ ------------- ------------ -------------
28. Share capital
Number of Shares during 2022 and 2021
31 December 2022 31 December 2021
Authorised
----------------- -----------------
Ordinary shares of EUR 0,01 989.869.935 989.869.935
----------------- -----------------
Total ordinary shares 989.869.935 989.869.935
----------------- -----------------
RCP Class A Shares of EUR0,01 - -
----------------- -----------------
RCP Class B Shares of EUR0,01 8.618.997 8.618.997
----------------- -----------------
Total redeemable shares 8.618.997 8.618.997
----------------- -----------------
Issued and fully paid
----------------- -----------------
Ordinary shares of EUR0,01 129.191.442 129.191.442
----------------- -----------------
Total ordinary shares 129.191.442 129.191.442
----------------- -----------------
Total 129.191.442 129.191.442
----------------- -----------------
Nominal value (EUR) for 2021 and 2020
EUR 31 December 2022 31 December 2021
Authorised
----------------- -----------------
Ordinary shares of EUR 0,01 9.898.699 9.898.699
----------------- -----------------
Total ordinary shares 9.898.699 9.898.699
----------------- -----------------
RCP Class A Shares of EUR0,01 - -
----------------- -----------------
RCP Class B Shares of EUR0,01 86.190 86.190
----------------- -----------------
Total redeemable shares 86.190 86.190
----------------- -----------------
Issued and fully paid
----------------- -----------------
Ordinary shares of EUR0,01 1.291.281 1.291.281
----------------- -----------------
Total ordinary shares 1.291.281 1.291.281
----------------- -----------------
Total 1.291.281 1.291.281
----------------- -----------------
28.1 Authorised share capital
T he authorised share capital of the Company as at the date of
issuance of this report is as follows:
a) 989.869.935 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 28.3) .
28.2 Issued Share Capital
As at the end of 2022, the issued share capital of the Company
was as follows:
a) 129.191.442 Ordinary Shares of EUR0,01 nominal value each,
b) 392.500 Redeemable Preference Class A Shares of EUR0,01
nominal value each, cancelled during 2018 as per the Annual General
Meeting decision of 29 December 2017 (Note 28.3),
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each.
28. Share capital (continued)
28.2 Issued Share Capital (continued)
In respect of the Redeemable Preference Class B Shares , issued
in connection to the acquisition of Craiova Praktiker, following
the holders of the shares notifying the Company their intent to
redeem within 2016, the Company:
- in lieu of redemption the Company gave its 20% holding in
Autounion (Note 28.3) in October 2016, to the Craiova Praktiker
seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. and final
settlement for any resulting difference is expected to be provided
by Cypriot Courts (Note 40.3). As soon as the case is settled, the
Company will proceed with the cancellation of the Redeemable
Preference Class B Shares .
On 24(th) December 2019 the Company proceeded with the issue of
1.920.961 new Ordinary Shares as follows:
i. 1.219.000 new Ordinary Shares to certain advisors, directors
and executives of the Company involved in the closing of the Stage
I of the Arcona Transaction by means of settling relevant Company's
liabilities.
ii. 437.676 new Ordinary Shares to directors of the Company in
lieu of H1 2019 and before H2 2016 fees.
iii. 200.000 new Ordinary Shares to certain advisor in lieu of
cash fees for financial advisory services rendered in 2019.
iv. 64.285 new Ordinary Shares to certain executive of the
Company in lieu of cash fees for services rendered in 2018.
Following shares issuance completed within 2019, the issued
share capital of the Company as at the date of issuance of this
report is as follows:
a) 129.191.442 Ordinary Shares of EUR0,01 nominal value
each,
b) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, (Note 28.3) .
28.3 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as
follows:
Number of (as at) 31 December 2022 (as at) 31 December 2021
Ordinary shares of EUR0,01 Issued and Listed on AIM 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Total number of Shares Non-Dilutive Basis 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Total number of Shares Full Dilutive Basis 129.191.442 129.191.442
------------------------- ------------------------- -------------------------
Options - - -
------------------------- ------------------------- -------------------------
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker
Craiova asset acquisition do not have voting rights but have
economic rights at par with ordinary shares. As at the reporting
date all of the Redeemable Preference Class B Shares have been
redeemed but the Company is in legal proceedings with the holder in
respect of a final settlement (Notes 33, 40.3).
29. Foreign Currency Translation Reserve
Exchange differences relate to the translation from the
functional currency to EUR of Group's subsidiaries' accounts and
are recognized by entries made directly to the foreign currency
translation reserve. The foreign exchange translation reserve
represents unrealized profits or losses related to the appreciation
or depreciation of the local currencies against EUR in the
countries where Company's subsidiaries' functional currencies are
not EUR. The Company had EUR692.906 loss on foreign exchange
losses/gains on translation due to presentation currency for 2022,
in comparison to EUR64.299 relevant gain in 2021.
30. Non-Controlling Interests
Non-controlling interests represent the percentage
participations in the respective entities not owned by the
Group:
% Non-controlling
interest portion
Group Company 31 Dec 31 Dec
2022 2021
--------- ---------
LLC Almaz-Press-Ukraine 45,00 45,00
--------- ---------
Ketiza Holdings Limited 10,00 10,00
--------- ---------
Ketiza Real Estate Srl 10,00 10,00
--------- ---------
Ram Real Estate Management Limited 50,00 50,00
--------- ---------
Iuliu Maniu Limited 55,00 55,00
--------- ---------
Moselin Investments Srl 55,00 55,00
--------- ---------
Rimasol Enterprises Limited - 29,44
--------- ---------
Rimasol Real Estate Srl - 29,44
--------- ---------
Ashor Ventures Limited - 55,76
--------- ---------
Ashor Development Srl - 55,76
--------- ---------
Jenby Ventures Limited 55,70 55,70
--------- ---------
Jenby Investments Srl - 55,70
--------- ---------
Ebenem Limited 55,70 55,70
--------- ---------
Ebenem Investments Srl - 55,70
--------- ---------
SPDI Real Estate Srl - 50,00
--------- ---------
31. Borrowings
Project 31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
-------------- ------------ -------------- ------------ -------------
EUR EUR EUR EUR
-------------- ------------ -------------- ------------ -------------
Principal of bank
Loans
-------------- ------------ -------------- ------------ -------------
Piraeus Bank SA Land banking - 2.525.938 - 2.525.938
-------------- ------------ -------------- ------------ -------------
Kindergarten
Bancpost SA - SPDI RE - - - 510.188
-------------- ------------ -------------- ------------ -------------
Patria bank First Phase - - - 3.500.000
-------------- ------------ -------------- ------------ -------------
Loans from other
3(rd) parties and
related parties
(Note 39.5) 502.130 2.314 1.587.128 183.140
------------ -------------- ------------ -------------
Overdrafts - 17 - 1.048
------------ -------------- ------------ -------------
Total principal
of bank and non-bank 2.528.269 6.720.314
Loans 502.130 1.587.128
-------------- ------------ -------------- ------------ -------------
Interest accrued 1.492.923 1.251.191
on bank loans - -
-------------- ------------ -------------- ------------ -------------
Interests accrued
on non-bank loans
(Note 39.5) 95.227 - 116.438 51.394
------------ -------------- ------------ -------------
Total 597.357 4.021.192 1.703.566 8.022.899
------------ -------------- ------------ -------------
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Current portion - 4.021.192 1.577.500 3.787.614
------------ ------------- ------------ -------------
Non-current portion 597.357 - 126.066 4.235.285
------------ ------------- ------------ -------------
Total 597.357 4.021.192 1.703.566 8.022.899
------------ ------------- ------------ -------------
Continued Operations
Loans from other 3(rd) parties and related parties under
continued operations include among others:
) Loans from 3 Directors of EUR375k provided as bridge financing
for future property acquisitions . The loans used to bear interest
8% annually (Note 39.5) and were fully repaid during 2023 .
B) Safe Growth Investments, a third party company, provided a
loan of EUR1m to the Company in November 2020 to be used for
general working capital purposes. The loan used to bear interest of
5,35 % per annum and was fully repaid in April 2022.
31. Borrowings (continued)
Discontinued Operations
SEC South East Continent Unique Real Estate (Secured)
Investments Limited has a debt facility with Piraeus Bank for the
acquisition of the GreenLake land in Bucharest Romania. As at the
end of the reporting period the balance of the loan was
EUR2.525.938 plus accrued interest EUR1.492.923 and bears interest
of EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution.
During September 2019, the company received a termination notice
from Piraeus Bank and a payment order from court in relation to
this loan, and currently relevant discussions with the Bank are
taking place for a mutual agreed solution.
N-E Real Estate Park First Phase Srl entered in December 2021
into a loan agreement with Patria Bank for a credit facility of
EUR3.500.000 used to refinance the Leasing Contract with Alpha
Leasing and to repay some of shareholders loans. As at the end of
2021 the balance of the loan was EUR3.500.000 and bears interest of
EURIBOR 3M plus 3,5%. The repayment is done in monthly installments
of principal plus interest. A collateral deposit of EUR265.000 will
be made in monthly installments of EUR5.000, during the period
January 2022 - May 2026. The loan has the maturity date in December
2031 and was secured by a first rank mortgage over EOS building and
mortgage over the company's bank accounts and receivables. The SPV
has been sold during 2022 to Arcona and as such the loan has also
been transferred.
SPDI Real Estate Srl (Kindergarten) has a loan agreement with
Bancpost SA Romania. As at 30 June 2022 the balance of the loan was
EUR478.666 and bears interest of Euribor 3m plus 4,6% per annum.
The loan is repayable by 2027. During 2022 the SPV was sold and
therefore the loan has also been transferred.
Loans from other 3(rd) parties and related parties under
discontinued operations includes borrowings from non-controlling
interest parties. During the last nine years and in order to
support the GreenLake project the non-controlling shareholders of
Moselin Investments Srl and SPDI Real Estate SRL (other than the
Group) have contributed their share of capital injections by means
of shareholder loans. The loans bear interest 4% annually.
32. Bonds
The Company in order to acquire up to a 50% interest in a
portfolio of fully let logistics properties in Romania, the
Olympians Portfolio, issued a financial instrument, 35% of which
consists of a convertible bond and 65% of which is made up of a
warrant. The convertible loan element of the instrument which was
in the value of EUR723.690 (2021: EUR1.033.842) bears a 6,5%
coupon, has a 7 year term and is convertible into ordinary shares
of the Company at the option of the holder at 25p. starting from 1
January 2018.
33. Trade and other payables
The fair value of trade and other payables due within one year
approximate their carrying amounts as presented below.
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Payables to third parties 3.070.074 389.462 3.303.545 564.810
------------ ------------- ------------ -------------
Payables to related parties 495.157 13.883 881.763 218.359
------------ ------------- ------------ -------------
Deferred income from tenants - 7.840 - 7.839
------------ ------------- ------------ -------------
Accruals 68.827 20.122 87.735 206.384
------------ ------------- ------------ -------------
Pre-sale advances (Advances
received for sale of properties) 97.711 123.080 -
------------ ------------- ------------ -------------
Total 3.731.769 431.307 4.396.123 997.392
------------ ------------- ------------ -------------
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Current portion 3.731.769 7.840 4.396.123 989.553
------------- ------------- ------------ -------------
Non-current portion - 423.467 - 7.839
------------- ------------- ------------ -------------
Total 3.731.769 431.307 4.396.123 997.392
------------- ------------- ------------ -------------
Payables to third parties represents: a) payables due to
Bluehouse Capital (under continued operations) as a result of the
Redeemable Convertible Class B share redemption (Note 28.3) which
is under legal proceedings for a final settlement (Note 40.3) , b)
amounts payable to various service providers including auditors,
legal advisors, consultants and third party accountants related to
the current operations of the Group, and c) guarantee amounts
collected from tenants.
Payables to related parties under continued operations represent
amounts due to directors and accrued management remuneration (Note
39.2). Payables to related parties under discontinued operations
represent payables to non-contolling intetest shareholders.
Deferred income from tenants represents advances from tenants
which will be used as future rental income and utilities
charges.
Accruals mainly include the accrued, administration fees,
accounting fees, facility management and other fees payable to
third parties.
33. Trade and other payables (continued)
Pre-sale advances reflect the advance received in relation to
Kiyanovskiy Residence pre-sale agreement, which upon non closing of
the said sale, part of which will be returned to the prospective
buyer.
34. Deposits from Tenants
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- ------------- ------------ -------------
EUR EUR EUR EUR
------------- ------------- ------------ -------------
Deposits from tenants non-current - 23.002 - 64.231
------------- ------------- ------------ -------------
Total - 23.002 - 64.231
------------- ------------- ------------ -------------
Deposits from tenants appearing under non-current liabilities
include the amounts received from the tenants in Innovations
Logistics Park, EOS Business Park and tenants in residential assets
as advances/guarantees and are to be reimbursed to those at the
expiration of the lease agreements.
35. Taxation
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Corporate income tax - non
current 165.817 41.981 200.295 52.221
------------ ------------- ------------ -------------
Defence tax - non current 14.252 - 27.385 -
------------ ------------- ------------ -------------
Tax provision - non current 399.450 - 399.450 -
------------ ------------- ------------ -------------
Non- current 579.519 41.981 627.130 52.221
------------ ------------- ------------ -------------
Corporate income tax - current 30.631 12.064 127.528 9.085
------------ ------------- ------------ -------------
Other taxes including VAT
payable - current 6.943 130.182 128.909 182.004
------------ ------------- ------------ -------------
Current 37.574 142.246 256.437 191.089
------------ ------------- ------------ -------------
Total Provisions and Taxes
Payables 617.093 184.227 883.567 243.310
------------ ------------- ------------ -------------
Corporate income tax represents taxes payable in Cyprus and
Romania.
Other taxes represent local property taxes and VAT payable in
Romania.
36. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR6.168.403 and the current portion
of EUR57.527 (31 December 2021: EUR6.234.852 and EUR280.995,
accordingly).
Discontinued operations
31 Dec 2022 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- --------- ----------
42.2
&
Less than one year 42.6 568.486 287.549 280.937
------- -------------- --------- ----------
Between two and five years 6.574.889 645.268 5.929.621
------- -------------- --------- ----------
More than five years 21.831 6.529 15.302
-------------- --------- ----------
7.165.206 939.346 6.225.860
------- -------------- --------- ----------
Accrued Interest 70
-------------- --------- ----------
Total Finance Lease Liabilities 6.225.930
(Note 9d)
-------------- --------- ----------
31 Dec 2021 Note Minimum lease Interest Principal
payments
EUR EUR EUR
------- -------------- ---------- ----------
42.2
&
Less than one year 42.6 582.862 301.868 280.994
------- -------------- ---------- ----------
Between two and five years 7.144.878 934.758 6.210.120
------- -------------- ---------- ----------
More than five years 33.844 11.813 22.031
-------------- ---------- ----------
7.761.584 1.248.439 6.513.145
------- -------------- ---------- ----------
Accrued Interest 2.702
-------------- ---------- ----------
Total Finance Lease Liabilities 6.515.847
(Note 9d)
-------------- ---------- ----------
36. Finance Lease Liabilities (continued)
36 .1 Land Plots Financial Leasing
The Group holds land plots in Ukraine under leasehold agreements
which in terms of the accounts are classified as finance leases.
Lease obligations are denominated in UAH. The fair value of lease
obligations approximate to their carrying amounts as included
above. Following the appropriate discounting, finance lease
liabilities are carried at EUR34.210 under current and non-current
portion. The Group's obligations under finance leases are secured
by the lessor's title to the leased assets. Regarding Tsymlyanskiy,
as of November 2021, the Group had submitted properly the official
request to the City of Kiev to extend the lease property for
another 5 years, since the Group has first extension rights over
any other interested party. The first step in the process whereby
the presiding committee of the municipality, before the final
approval by the City Council, did not place as too many other cases
had accumulated which had time priority over Group's case. During
the period between December 15th 2021 and January 20th of 2022, the
committee did not convene at all as is usual during holiday and
vacation times. Once the holiday season was over, the main focus of
the committee and the City Council unfortunately were on issues not
related to property lease extensions, but rather more pressing
matters for the interests and operational stability of the City of
Kiev. From there on, all decisions have been put on hold due to the
Russian insurgence of Ukraine. We remain confident that we will be
awarded the lease extension once the war status permits, and we
continue calculate relevant future lease obligations.
36.2 Sale and Lease Back Agreements
A. Innovations Logistics Park
In May 2014 the Group concluded the acquisition of Innovations
Logistics Park in Bucharest, owned by Best Day Real Estate Srl,
through a sale and lease back agreement with Piraeus Leasing
Romania SA. As at the end of the reporting period the balance is
EUR6.201.629 (2021: EUR6.481.637) , bearing interest rate at 3M
Euribor plus 4,45% margin, being repayable in monthly tranches
until 2026 with a balloon payment of EUR5.244.926. At the maturity
of the lease agreement and upon payment of the balloon Best Day
Real Estate Srl will become owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. Best Day Real Estate Srl pledged its future receivables from its tenants.
2. Best Day Real Estate Srl pledged its shares.
3. Best Day Real Estate Srl pledged all current and reserved
accounts opened in Piraeus Leasing, Romania.
4. Best Day Real Estate Srl was obliged to provide cash
collateral in the amount of EUR250.000 in Piraeus Leasing Romania,
which had been deposited as follows, half in May 2014 and half in
May 2015.
SPDI provided a corporate guarantee in favor of the Leasing
company related to the liabilities of Best Day Real Estate Srl
arising from the sale and lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by the SPV N-E Real Estate Park
First Phase Srl, through a sale and lease back agreement with Alpha
Bank Romania SA. The leasing facility borne an interest of 3M
Euribor plus 5,25% margin. During December 2021 the SPV re-paid
fully the leasing facility and acquired the property, through a new
loan from Patria Bank of the order of EUR3,5 million, bearing an
interest rate of 3M Euribor plus 3,5% margin. The SPV was sold
during 2022 as part of Stage 2 of the transaction with Arcona.
37. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
31 Dec 2022 31 Dec 2021
Issued ordinary shares capital 129.128.442 129.128.442
------------ ------------
Weighted average number of ordinary shares (Basic) 129.128.442 129.128.442
------------ ------------
Diluted weighted average number of ordinary shares 129.128.442 129.128.442
------------ ------------
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2022 31 Dec 2021
EUR EUR
------------ ------------
Profit/(Loss) after tax attributable to owners of the parent (1.240.385) 184.405
------------ ------------
Basic (0,01) 0,00
------------ ------------
Diluted (0,01) 0,00
------------ ------------
c. Basic diluted and adjusted earnings per share from discontinued operations
Earnings per share 31 Dec 2022 31 Dec 2021
EUR EUR
------------ ------------
Loss after tax from discontinued operations attributable to owners of the parent (8.416.600) (659.215)
------------ ------------
Basic (0,06) (0,00)
------------ ------------
Diluted (0,06) (0,00)
------------ ------------
37. Earnings and net assets per share attributable to equity
holders of the parent (continued)
d. Net assets per share
Net assets per share 31 Dec 2022 31 Dec 2021
EUR EUR
------------ ------------
Net assets attributable to equity holders of the parent 13.111.260 23.253.524
------------ ------------
Number of ordinary shares 129.191.442 129.191.442
------------ ------------
Diluted number of ordinary shares 129.191.442 129.191.442
------------ ------------
Basic 0,10 0,18
------------ ------------
Diluted 0,10 0,18
------------ ------------
38. Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment -Innovations Logistics Park
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - Kindergarten of GreenLake
Residential
-- Residential segment
Land Assets
-- Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent
investment property (including investment properties under
development and prepayments made for the investment properties).
Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ------------ ---------- ------------ ------------ ------------ -------------
Segment profit
---------- ------------ ---------- ------------ ------------ ------------ -------------
Rental income (Note
10) - - - - - 763.242 763.242
---------- ------------ ---------- ------------ ------------ ------------ -------------
Service charges and
utilities income
(Note 10) - - - - - 276.996 276.996
---------- ------------ ---------- ------------ ------------ ------------ -------------
Property Management
income (Note 10) 103.514 - - - - - 103.514
---------- ------------ ---------- ------------ ------------ ------------ -------------
Impairment of
financial
investments ( Note
26 ) - - - - - (1.071.119) (1.071.119)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Gain on disposal
of subsidiaries - - - - - 1.041 1.041
---------- ------------ ---------- ------------ ------------ ------------ -------------
Share of profit/loss
of associated
(Note21) - - - - - (9.040) (9.040)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Profit from
discontinued
operation (Note 9b) (31.359) (2.285.712) (120.588) (64.466) (3.458.376) (586.990) (6.547.491)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Segment profit 72.155 (2.285.712) (120.588) (64.466) (3.458.376) (625.870) (6.482.857)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Administration
expenses
(Note 12) - - - - - - (1.464.626)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Other
(expenses)/income,
net (Note 15) - - - - - - (3.390)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Finance income (Note
16) - - - - - - 361.035
---------- ------------ ---------- ------------ ------------ ------------ -------------
Interest expenses
(Note 16) - - - - - - (192.448)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Other finance costs
(Note 16) - - - - - - (5.883)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Profit from
discontinued
operations (Note
9b) - - - - - - (3.856.004)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Foreign exchange
losses, net (Note
17a) - - - - - - (17.647)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Income tax expense
(Note 18) - - - - - - 17.940
---------- ------------ ---------- ------------ ------------ ------------ -------------
Exchange difference
on I/C loan to
foreign
holdings (Note 29) - - - - - - (692.906)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Total Comprehensive
Income - - - - - - (12.336.786)
---------- ------------ ---------- ------------ ------------ ------------ -------------
Continued Operations
Profit and Loss for the year 2022
38. Segment information (continued)
Profit and Loss for the year 2021
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- ------- ------------ ----------- ---------- ------------
Segment profit
---------- ---------- ------- ------------ ----------- ---------- ------------
Rental income (Note
10) - - - - - 633.427 633.427
---------- ---------- ------- ------------ ----------- ---------- ------------
Service charges and
utilities income
(Note 10) - - - - - 232.870 232.870
---------- ---------- ------- ------------ ----------- ---------- ------------
Property Management
income (Note 10) - - - - - 180.840 180.840
---------- ---------- ------- ------------ ----------- ---------- ------------
Impairment of financial
investments ( Note
26 ) - - - - - 683.478 683.478
---------- ---------- ------- ------------ ----------- ---------- ------------
Gain on disposal
of subsidiaries - - - - - 748 748
---------- ---------- ------- ------------ ----------- ---------- ------------
Profit from discontinued
operation (Note 9b) (214.232) 1.061.290 5.439 271.406 (488.324) (215.549) 420.030
---------- ---------- ------- ------------ ----------- ---------- ------------
Segment profit (214.232) 1.061.290 5.439 271.406 (488.324) 1.515.814 2.151.393
---------- ---------- ------- ------------ ----------- ---------- ------------
Administration expenses
(Note 12) - - - - - - (1.798.293)
---------- ---------- ------- ------------ ----------- ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - 69.643
---------- ---------- ------- ------------ ----------- ---------- ------------
Finance income (Note
16) - - - - - - 489.072
---------- ---------- ------- ------------ ----------- ---------- ------------
Interest expenses
(Note 16) - - - - - - (184.601)
---------- ---------- ------- ------------ ----------- ---------- ------------
Other finance costs
(Note 16) - - - - - - (5.808)
---------- ---------- ------- ------------ ----------- ---------- ------------
Profit from discontinued
operations (Note
9b) - - - - - - (1.301.204)
---------- ---------- ------- ------------ ----------- ---------- ------------
Foreign exchange
losses, net (Note
17a) - - - - - - (65.147)
---------- ---------- ------- ------------ ----------- ---------- ------------
Income tax expense
(Note 18) - - - - - - (51.824)
---------- ---------- ------- ------------ ----------- ---------- ------------
Exchange difference
on I/C loan to foreign
holdings (Note 29) - - - - - - 64.299
---------- ---------- ------- ------------ ----------- ---------- ------------
Total Comprehensive
Income - - - - - - (632.470)
---------- ---------- ------- ------------ ----------- ---------- ------------
* It is noted that part of the rental and service charges/
utilities income related to Innovations Logistics Park (Romania) is
currently invoiced by the Company as part of a relevant lease
agreement with the Innovations SPV and the lender, however the
asset, through the SPV, is planned to be transferred as part of the
transaction with Arcona Property Fund N.V. Upon a final agreement
for such transfer, the Company will negotiate with the lender its
release from the aforementioned lease agreement, and if succeeds,
upon completion such income will be also transferred.
38. Segment information (continued)
Discontinued Operations
Profit and Loss for the year 2022
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ------------ ---------- ------------ ------------ ---------- -------------
Segment profit
---------- ------------ ---------- ------------ ------------ ---------- -------------
Property Sales
income (Note
14.1) - - - - 3.897.608 - 3.897.608
---------- ------------ ---------- ------------ ------------ ---------- -------------
Cost of Property
sold (Note 14.1) - - - - (4.723.000) - (4.723.000)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Rental income
(Note 10) 63.940 332.356 90.054 3.303 - - 489.653
---------- ------------ ---------- ------------ ------------ ---------- -------------
Service charges
and utilities
income (Note
10) 9.152 - - - 6.980 - 16.132
---------- ------------ ---------- ------------ ------------ ---------- -------------
Valuation gains/(losses)
from investment
property (Note
13) 8.655 - - - (1.253.885) - (1.245.230)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Share of
profits/(losses)
from associates
(Note 21) - - - - 335.533 - 335.533
---------- ------------ ---------- ------------ ------------ ---------- -------------
Loss on disposal
of subsidiaries
(Note 20) - (2.602.950) (199.229) (65.746) (1.661.910) (341.974) (4.871.809)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Asset operating
expenses
(Note 11) (113.107) (15.118) (11.413) (2.022) (59.704) (245.016) (446.380)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Segment profit (31.360) (2.285.712) (120.588) (64.465) (3.458.377) (586.990) (6.547.493)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Administration
expenses
(Note 12) - - - - - - (242.157)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Other (expenses)/income,
net (Note 15) - - - - - - (2.721.353)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Finance income
(Note 16) - - - - - - 7.982
---------- ------------ ---------- ------------ ------------ ---------- -------------
Interest expenses
(Note 16) - - - - - - (657.952)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Other finance
costs (Note
16) - - - - - - (3.017)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Foreign exchange
losses, net
(Note 17a) - - - - - - (165.165)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Income tax expense
(Note 18) - - - - - - (74.340)
---------- ------------ ---------- ------------ ------------ ---------- -------------
Loss for the
year - - - - - - (10.403.495)
---------- ------------ ---------- ------------ ------------ ---------- -------------
38. Segment information (continued)
Profit and Loss for the year 2021
Warehouse Office Retail Residential Land Plots Corporate Total
EUR EUR EUR EUR EUR EUR EUR
---------- ---------- --------- ------------ ------------ ---------- ------------
Segment profit
---------- ---------- --------- ------------ ------------ ---------- ------------
Property Sales
income (Note
14.1) - - - 542.297 2.703.025 - 3.245.322
---------- ---------- --------- ------------ ------------ ---------- ------------
Cost of Property
sold (Note 14.1) - - - (277.457) (2.314.298) - (2.591.755)
---------- ---------- --------- ------------ ------------ ---------- ------------
Rental income
(Note 10) 133.253 652.998 119.936 4.277 6.034 - 916.498
---------- ---------- --------- ------------ ------------ ---------- ------------
Service charges
and utilities
income (Note
10) 16.064 - - 6.608 550 - 23.222
---------- ---------- --------- ------------ ------------ ---------- ------------
Valuation gains/(losses)
from investment
property (Note
13) (240.706) 107.164 (95.664) 4.438 (530.211) - (754.979)
---------- ---------- --------- ------------ ------------ ---------- ------------
Share of profits/(losses)
from associates
(Note 21) - 344.746 - - - - 344.746
---------- ---------- --------- ------------ ------------ ---------- ------------
Asset operating
expenses
(Note 11) (122.843) (43.618) (18.833) (8.757) (353.424) (215.549) (763.024)
---------- ---------- --------- ------------ ------------ ---------- ------------
Segment profit (214.232) 1.061.290 5.439 271.406 (488.324) (215.549) 420.030
---------- ---------- --------- ------------ ------------ ---------- ------------
Administration
expenses
(Note 12) - - - - - - (289.086)
---------- ---------- --------- ------------ ------------ ---------- ------------
Other (expenses)/income,
net (Note 15) - - - - - - (12.510)
---------- ---------- --------- ------------ ------------ ---------- ------------
Dividends income
(Note 20) - - - - - - 175.500
---------- ---------- --------- ------------ ------------ ---------- ------------
Finance income
(Note 16) - - - - - - 9.366
---------- ---------- --------- ------------ ------------ ---------- ------------
Interest expenses
(Note 16) - - - - - - (859.695)
---------- ---------- --------- ------------ ------------ ---------- ------------
Other finance
costs (Note
16) - - - - - - (3.785)
---------- ---------- --------- ------------ ------------ ---------- ------------
Foreign exchange
losses, net
(Note 17a) - - - - - - (253.666)
---------- ---------- --------- ------------ ------------ ---------- ------------
Income tax expense
(Note 18) - - - - - - (67.328)
---------- ---------- --------- ------------ ------------ ---------- ------------
Loss for the
year - - - - - - (881.174)
---------- ---------- --------- ------------ ------------ ---------- ------------
38. Segment information (continued )
Discontinued Operations
Total Operations
Balance Sheet as at 31 December 2022
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR
------------ -------- -------- ------------- ----------- ----------- -----------
Assets
------------ -------- -------- ------------- ----------- ----------- -----------
Long-term receivables
and prepayments - - - - - 824 824
------------ -------- -------- ------------- ----------- ----------- -----------
Investment in
associate - - - - - 1 1
------------ -------- -------- ------------- ----------- ----------- -----------
Financial Assets
at FV through
P&L - - - - - 12.078.808 12.078.808
------------ -------- -------- ------------- ----------- ----------- -----------
Assets held for
sale 10.025.000 1 - - 1.286.313 2.523.777 13.835.091
------------ -------- -------- ------------- ----------- ----------- -----------
Segment assets 10.025.000 1 - - 1.286.313 14.603.410 25.914.724
------------ -------- -------- ------------- ----------- ----------- -----------
Tangible and intangible
assets - - - - - - 816
Prepayments and
other current
assets - - - - - - 4.153.162
---------- ---------- ---------- -----------
Cash and cash
equivalents - - - - - - 66.570
---------- ---------- ---------- -----------
Total assets - - - - - - 30.135.272
---------- ---------- ---------- -----------
Liabilities associated
with assets classified
as held for disposal 6.224.647 - - - 4.045.477 615.534 10.885.658
---------- ---------- ---------- -----------
Borrowings 9.630 - - - - 587.727 597.357
---------- ---------- ---------- -----------
Segment liabilities 6.234.277 - - - 4.045.477 1.203.261 11.483.015
---------- ---------- ---------- -----------
Trade and other
payables - - - - - - 3.731.769
---------- ---------- ---------- -----------
Taxation - - - - - - 617.093
---------- ---------- ---------- -----------
Bonds - - - - - - 822.736
---------- ---------- ---------- -----------
Total liabilities - - - - - - 16.654.613
---------- ---------- ---------- -----------
Balance Sheet as at 31 December 2021
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR
------------ ------------ ----------- ------------- ------------ ----------- -----------
Assets
------------ ------------ ----------- ------------- ------------ ----------- -----------
Long-term receivables
and prepayments - - - - - 824 824
------------ ------------ ----------- ------------- ------------ ----------- -----------
Financial Assets
at FV through
P&L - - - - - 7.470.722 7.470.722
------------ ------------ ----------- ------------- ------------ ----------- -----------
Assets held for
sale 10.015.000 12.176.575 1.338.263 - 12.939.514 2.542.164 39.011.516
------------ ------------ ----------- ------------- ------------ ----------- -----------
Segment assets 10.015.000 12.176.575 1.338.263 - 12.939.514 10.013.710 46.483.062
------------ ------------ ----------- ------------- ------------ ----------- -----------
Tangible and intangible
assets - - - - - - 1.628
Prepayments and
other current
assets - - - - - - 4.510.381
----------- ----------- --------- --- ----------- ----------- -----------
Cash and cash
equivalents - - - - - - 2.160.576
----------- ----------- --------- --- ----------- ----------- -----------
Total assets - - - - - - 53.155.647
----------- ----------- --------- --- ----------- ----------- -----------
Liabilities associated
with assets classified
as held for disposal 6.545.868 3.504.083 696.741 - 3.856.285 1.240.702 15.843.679
----------- ----------- --------- --- ----------- ----------- -----------
Borrowings - - - - - 1.703.566 1.703.566
----------- ----------- --------- --- ----------- ----------- -----------
Segment liabilities 6.545.868 3.504.083 696.741 3.856.285 2.944.268 17.547.245
----------- ----------- -------------- ----------- ---------- -----------
Trade and other
payables - - - - - - 4.396.123
----------- ----------- --------- --- ----------- ----------- -----------
Taxation - - - - - - 883.567
----------- ----------- --------- --- ----------- ----------- -----------
Bonds - - - - - - 1.327.056
----------- ----------- --------- --- ----------- ----------- -----------
Total liabilities - - - - - - 24.153.991
----------- ----------- --------- --- ----------- ----------- -----------
38. Segment information (continued)
Discontinued operations
Assets and Liabilities held for sale 2022
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR EUR
----------- ------- ------- ------------ ---------- ---------- -----------
Assets
----------- ------- ------- ------------ ---------- ---------- -----------
Investment properties 9.710.000 - - - 950.779 971.217 11.631.996
----------- ------- ------- ------------ ---------- ---------- -----------
Long-term receivables
and prepayments 315.000 - - - - - 315.000
----------- ------- ------- ------------ ---------- ---------- -----------
Investments in
associates - 1 - - 335.533 - 335.534
----------- ------- ------- ------------ ---------- ---------- -----------
Segment assets 10.025.000 1 - - 1.286.313 971.217 12.282.530
----------- ------- ------- ------------ ---------- ---------- -----------
Tangible and intangible
assets - - - - - - 20
Prepayments and
other current assets - - - - - - 1.267.713
---------- ---------- -----------
Cash and cash equivalents - - - - - - 284.828
---------- ---------- -----------
Total assets - - - - - - 13.835.091
---------- ---------- -----------
Borrowings 16 - - - 4.021.176 - 4.021.192
---------- ---------- -----------
Finance lease liabilities 6.201.629 - - - 24.301 - 6.225.930
---------- ---------- -----------
Deposits from tenants 23.002 - - - - - 23.002
---------- ---------- -----------
Segment liabilities 6.224.647 - - - 4.045.477 - 10.270.124
---------- ---------- -----------
Trade and other
payables - - - - - - 431.307
---------- ---------- -----------
Taxation - - - - - - 184.227
---------- ---------- -----------
Total liabilities - - - - - - 10.885.658
---------- ---------- -----------
Assets and Liabilities held for sale 2021
Warehouse Office Retail Residential Land Corporate Total
plots
EUR EUR EUR EUR EUR EUR EUR
----------- ----------- ---------- ------------ ----------- ---------- -----------
Assets
----------- ----------- ---------- ------------ ----------- ---------- -----------
Investment properties 9.700.000 6.700.000 1.320.000 - 12.939.514 895.477 31.554.991
----------- ----------- ---------- ------------ ----------- ---------- -----------
Long-term receivables
and prepayments 315.000 - 18.263 - - - 333.263
----------- ----------- ---------- ------------ ----------- ---------- -----------
Investments in
associates - 5.476.576 - - - - 5.476.576
----------- ----------- ---------- ------------ ----------- ---------- -----------
Segment assets 10.015.000 12.176.576 1.338.263 - 12.939.514 895.477 37.364.830
----------- ----------- ---------- ------------ ----------- ---------- -----------
Tangible and intangible
assets - - - - - - 11.988
Prepayments and
other current assets - - - - - - 1.240.028
---------- ---------- -------- ---------- -----------
Cash and cash equivalents - - - - - - 394.670
---------- ---------- -------- ---------- -----------
Total assets - - - - - - 39.011.516
---------- ---------- -------- ---------- -----------
Borrowings - 3.504.083 696.741 - 3.822.075 - 8.022.899
---------- ---------- -------- ---------- -----------
Finance lease liabilities 6.481.637 - - - 34.210 - 6.515.847
---------- ---------- -------- ---------- -----------
Deposits from tenants 64.231 - - - - - 64.231
---------- ---------- -------- ---------- -----------
Segment liabilities 6.545.868 3.504.083 696.741 - 3.856.285 - 14.602.977
---------- ---------- -------- ---------- -----------
Trade and other
payables - - - - - - 997.392
---------- ---------- -------- ---------- -----------
Taxation - - - - - - 243.310
---------- ---------- -------- ---------- -----------
Total liabilities - - - - - - 15.843.679
---------- ---------- -------- ---------- -----------
38. Segment information (continued)
Discontinued operations
Geographical information
31 Dec 31 Dec 31 Dec 31 Dec
2021 2021 2021 2021
Income ( Note 10) Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Ukraine - - - -
------------ ------------- ------------ -------------
Romania 103.514 505.785 - 939.720
------------ ------------- ------------ -------------
Greece - - - -
------------ ------------- ------------ -------------
Bulgaria - - - -
------------ ------------- ------------ -------------
Cyprus * 1.040.238 - 1.047.137 -
------------ ------------- ------------ -------------
Total 1.143.752 505.785 1.047.137 939.720
------------ ------------- ------------ ------------- -----
* It is noted that part of the rental and service charges/ utilities
income related to Innovations Logistics Park (Romania) is currently
invoiced by the Company as part of a relevant lease agreement with
the Innovations SPV and the lender, however the asset, through the
SPV, is planned to be transferred as part of the transaction with
Arcona Property Fund N.V. or in the broader market. Upon a final agreement
for such transfer, the Company will negotiate with the lender its
release from the aforementioned lease agreement, and if succeeds,
upon completion such income will be also transferred.
--- --------------------------------------------------------------------------------------------------------
Gain/(loss) from disposal of investment 31 Dec 31 Dec 31 Dec 31 Dec
properties (Note 1 4.1) 2022 2022 2021 2021
------------ ------------- ------------ -------------
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Romania - (825.392) - 653.567
------------ ------------- ------------ -------------
Total - (825.392) - 653.567
------------ ------------- ------------ -------------
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------ ------------- ------------ -------------
EUR EUR EUR EUR
------------ ------------- ------------ -------------
Carrying amount of assets ( investment
properties and investment in associates)
------------ ------------- ------------ -------------
Ukraine - 1.921.996 - 3.619.991
------------ ------------- ------------ -------------
Romania - 10.045.534 - 33.411.576
------------ ------------- ------------ -------------
Cyprus 1 - - -
------------ ------------- ------------ -------------
Total 1 11.967.530 - 37.031.567
------------ ------------- ------------ -------------
39. Related Party Transactions
The following transactions were carried out with related
parties:
39.1 Income/ Expense
39.1.1 Income
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Interest Income from loan to associates 230 7.972 325 9.366
Total 230 7.972 325 9.366
Interest income from associates relates to interest income from
GreenLake Development Srl.
39.1.2 Expenses
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
------------- -------------
EUR EUR EUR EUR
Management Remuneration (Note
12) 155.959 - 244.350 -
----------- ------------- ----------- -------------
Incentives pursuant to RemCo 184.500 - - -
proposal (Note 12)
----------- ------------- ----------- -------------
Directors fees (Note 12) - - 243.823 -
Interest expenses on Director
and Management Loans (Note 16) 37.513 - 40.194 -
Total 377.972 - 528.367 -
Management remuneration includes the remuneration of the CEO,
the CFO, the Group Commercial Director, and that of the Country
Managers of Ukraine and Romania pursuant to the decisions of the
Remuneration Committee.
Incentives provided in 2022 to personnel for the sussessful
implementation of Group's plan pursuant to relevant Remuneration
Committee proposal dated 7 May 2021 as approved by the BoD on 01
June 2021.
The annual Directors fees including Chairman and Committee
remunerations have been set at GBP 129k, while the decision for
registering relevant fees for 2022 is still pending by the Board.
In 2021 the Company registed also fees from previous periods which
were not posted previously in Company's books.
39.2 Payables to related parties (Note 33)
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Board of Directors & Committees
remuneration 218.171 - 373.187 -
Sec South East Continet Unique
Real Esate Management Limited 65 - 65 -
Management Remuneration 276.921 - 508.511 -
Total 495.157 - 881.763 -
39 .2.1 Board of Directors & Committees
The amount payable represents remuneration and expenses payable
to Non-Executive Directors until the end of the reporting period.
The members of the Board of Directors pursuant to a recommendation
by the Remuneration Committee and in order to facilitate the
Company's cash flow used to receive their payment in shares of the
Company. During 2018 the directors received 344.371 ordinary shares
in lieu of their 2016 H1 remuneration amounting to GBP 120.530.
During 2019, Non-Executive Directors received 261.000 ordinary
shares amounting to EUR
73.108 in lieu of their H1 2019 fees, and 176.576 ordinary
shares amounting to EUR 74.162,04 in lieu of their before H2 2016
fees. Since H2 2019 it has been decided that relevant fees will be
paid in cash.
39 .2.2 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO of the Company.
39. Related Party Transactions (continued)
39.3 Loans from SC Secure Capital Limited to the Group's
subsidiaries
SC Secure Capital Limited, the finance subsidiary of the Group
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs. The following table presents the amounts of such
loans which are eliminated for consolidation purposes, but their
related exchange difference affects the equity of the Consolidated
Statement of Financial Position.
Borrower Limit Principal Limit - Principal
- as at as at as at as at
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
EUR EUR EUR EUR
LLC " Trade Center" 5.800 6.074 5.800 5.707
---------- --------- ----------- ---------
LLC "Aisi Ukraine" 23.062.351 295.549 23.062.351 220.514
--------- -----------
LLC " Almaz-Press-Ukraine " 8.236.554 275.778 8.236.554 259.126
--------- -----------
LLC "Aisi Ilvo" 150.537 19.398 150.537 24.435
--------- -----------
Total 31.455.242 596.799 31.455.242 509.782
--------- -----------
A potential Ukrainian Hryvnia weakening/strengthening by 10%
against the US dollar with all other variables held constant, would
result in an exchange difference on I/C loans to foreign holdings
of EUR59.680 (2021: EUR50.978), estimated on balances held at 31
December 2022.
39.4 Loans to associates (Note 25)
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loans to GreenLake Development
Srl - 229.629 9.351 310.966
Total - 229.629 9.351 310.966
The loan was provided to GreenLake Development Srl from Edetrio
Holdings Limited (discontinued operations) and from Sc Capital
(continued operations). The agreement with Edetrio Holdings Limited
was signed on 14 June 2012 and bears interest 5% and the agreement
with Sc Capital Limited was signed on 4 December 2017 and bears
interest 4% per annum. The loan with Sc Capital was fully repaid
during 2022.
39.5 Loans from related parties (Note 31)
31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Loan from Directors and Management 492.500 - 577.500 -
Interest accrued on loans from
related parties 95.227 - 114.060 -
Total 587.727 - 691.560 -
Loans from directors of the order of EUR 375.000 reflect loans
provided from three directors as bridge financing for future
property acquisitions. The loans bear interest 8% annually. The
loans have been repaid partially during 2023 and current balance is
EUR 100.000.
Rest amount of the order of EUR 117.500 reflect payables to one
director, converted to loan for facilitating Company's cash
flow.
40. Contingent Liabilities
40.1 Tax Litigation
The Group performed during the reporting period part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three following subsequent
calendar years; however, under certain circumstances a tax year may
remain open for longer. Overall following the sales of Terminal
Brovary, Balabino and Bela, the exposure of the Group in Ukraine
has been significantly reduced.
The Group performed during the reporting and comparative periods
part of its operations in Romania. In respect of Romanian tax
system, many aspects are subject to varying interpretations and
frequent changes, which in many cases have retroactive effects. In
certain circumstances it is also possible that tax authorities may
act arbitrary.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
advanced tax systems. Management believes that it has adequtely
provided for tax liabilities, based on its interpretation of tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant.
40.2 Construction related litigation
There are no material claims from contractors due to the
postponement of projects or delayed delivery other than those
disclosed in the financial statements.
40.3 Bluehouse Accession case
BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. (Bluehouse)
filed in Cypriot courts in December 2018 lawsuit against the
Company for the total amount of EUR 5.042.421,87, in relation to
the Praktiker Craiova acquisition in 2015, and the redemption of
the Redeemable Preference Class A shares which were issued as part
of the transaction to the vendor, plus special compensations of
EUR2.500.000 associated with the related pledge agreement. The
redemption of such shares was requested in 2016, and in lieu of
such redemption the Company transferred to the vendor the 20%
holding in Autounion asset which was used as a guarantee to the
transaction for the effective redemption of the Redeemable
Preference Class A shares. At the same time the Company has posted
in its accounts a relevant payable provision for Bluehouse in the
amount of EUR2.521.211 (Note 33). On the other hand, the Company
during 2019, as part of the judicial process, has filed a claim
against Bluehouse for concealing certain key information during the
Praktiker Craiova transaction, which if revealed would have
resulted in a significant reduction of the final acquisition price.
Management believes the Company has good grounds of defence and
valid arguments and the amount already provided is adequate to
cover an eventual final settlement between the parties. The next
hearing of the combined cases in front of Cypriot Courts has been
set on 16 October 2023.
40.4 Other Litigation
The Group has a number of other minor legal cases pending.
Management does not believe that the result of these will have a
substantial overall effect on the Group's financial position.
Consequently no such provision is included in the current financial
statements.
40.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2022.
41. Commitments
The Group had no other commitments as at 31 December 2022.
42. Financial Risk Management
42.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity for
implementing its strategy to maximize the return to stakeholders
through the optimization of the debt-equity structure and value
enhancing actions in respect of its portfolio of investments. The
capital structure of the Group consists of borrowings (Note 31 ),
bonds (Note 32), trade and other payables (Note 33) deposits from
tenants (Note 34), financial leases (Note 36), taxes payable (Note
35 ) and equity attributable to ordinary or preferred
shareholders.
Management reviews the capital structure on an on-going basis.
As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each
investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of
equity (issuance of shares to the Group's shareholders) or in the
form of debt. Management balances the capital structure of the
Group with a view of maximizing the shareholder's Return on Equity
(ROE) while adhering to the operational requirements of the
property assets and exercising prudent judgment as to the extent of
gearing.
42. Financial Risk Management (continued)
42.2 Categories of Financial Instruments
Note 31 Dec 31 Dec 31 Dec 31 Dec
2022 2022 2021 2021
Continued Discontinued Continued Discontinued
operations operations operations operations
EUR EUR EUR EUR
Financial Assets
------------ ----------- ------------
Cash at Bank 27 66.570 284.828 2.160.576 394.670
Long-term Receivables and
prepayments 24 824 315.000 824 333.263
Financial Assets at FV
through P&L 26 12.078.808 - 7.470.722 -
Prepayments and other receivables 25 4.153.162 1.267.713 4.510.381 1.240.028
Total 16.299.364 1.867.541 14.142.503 1.967.961
Financial Liabilities
Borrowings 31 597.357 4.021.192 1.703.566 8.022.899
Trade and other payables 33 3.731.769 431.307 4.396.123 997.392
Deposits from tenants 34 - 23.002 - 64.231
Finance lease liabilities 36 - 6.225.930 - 6.515.847
Taxation 35 617.093 184.227 883.567 243.310
Bonds 32 822.736 - 1.327.056 -
Total 5.768.955 10.885.658 8.310.312 15.843.679
-----------
42.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk, as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not
entered into any derivative contracts.
42.4 Economic Market Risk Management
The Group currently operates in Romania and Ukraine. The Group's
activities expose it primarily to financial risks of changes in
currency exchange rates and interest rates. The exposures and the
management of the associated risks are described below. There has
been no change in the way the Group measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized
financial assets and liabilities are denominated in a currency that
is not the Group's functional currency. Most of the Group's
financial assets are denominated in the functional currency.
Management is monitoring the net exposures and adopts policies to
encounter them so that the net effect of devaluation is
minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant floating interest-bearing assets. On December 31(st) ,
2022, cash and cash equivalent (including continued and
discontinued operations) financial assets amounted to EUR351.398
(2021: EUR2.555.246) of which approx . EUR1.208 in UAH and
EUR221.840 in RON (Note 27) while the remaining are mainly
denominated in either USD,GBP or EUR.
The Group is exposed to interest rate risk in relation to its
borrowings (including continued and discontinued operations)
amounting to EUR4.618.549 (31 December 2021: EUR9.726.465 ) as they
are issued at variable rates tied to the Libor or Euribor.
Management monitors the interest rate fluctuations on a continuous
basis and evaluates hedging options to align the Group's strategy
with the interest rate view and the defined risk appetite. Although
no hedging has been applied for the reporting period, such may take
place in the future if deemed necessary in order to protect the
cash flow of a property asset through different interest rate
cycles.
Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's
strategy with the interest rate view and the defined risk appetite.
Although no hedging has been applied for the reporting period, such
may take place in the future if deemed necessary in order to
protect the cash flow of a property asset through different
interest rate cycles.
42. Financial Risk Management (continued)
42.4 Economic Market Risk Management (continued)
Interest Rate Risk (continued)
As at 31 December 2022 the weighted average interest rate for
all the interest bearing borrowing and financial leases of the
Group stands at 5,36% (31 December 2021: 5,07%).
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2022 is presented below:
Actual +100 bps +200 bps
as at 31.12.2022
Weighted average interest
rate 5,36% 6,36% 7,36%
%Influence on yearly
finance costs 30.304 60.608
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2021 is presented below:
Actual +100 bps +200 bps
as at 31.12.2021
Weighted average interest
rate 5,07% 6,07% 7,07%
%Influence on yearly
finance costs 83.074 1466.149
The Group's exposures to financial risk are discussed also in
Note 7.
42.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The Credit risk of
receivables is reduced as the majority of the receivables represent
VAT to be offset through VAT income in the future. In respect of
receivables from tenants these are kept to a minimum of 2 months
and are monitored closely.
42.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which applies a framework for the Group's
short, medium and long term funding and liquidity management
requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and
budgets while maintaining adequate reserves. The following table
details the Group's contractual maturity of its financial
liabilities. The tables below have been drawn up based on the
undiscounted contractual maturities including interest that will be
accrued.
42. Financial Risk Management (continued)
42.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2022 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
Financial assets
Cash at Bank 66.570 66.570 66.570 - -
Prepayments and
other receivables 4.153.162 4.153.162 4.153.162 - -
Financial Assets
at FV through P&L 12.078.808 12.078.808 12.078.808 - -
Long-term Receivables
and prepayments 824 824 - - 824
Total Financial
assets 16.299.364 16.299.364 16.298.540 - 824
Financial liabilities
Borrowings 597.357 647.571 120.334 527.237 -
Trade and other
payables 3.731.769 3.731.769 3.731.769 - -
Bonds issued 822.736 1.010.896 146.086 47.040 817.770
Taxes payable and
provisions 617.093 617.093 37.574 579.519 -
Total Financial
liabilities 5.768.955 6.007.329 4.035.763 1.153.796 817.770
Total net assets/(liabilities) 10.530.409 10.292.035 12.262.778 (1.153.796) (816.946)
Discontinued Operations
31 December 2022 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
------------ ------------- ------------ ----------- ------------
Financial assets
------------ ------------- ------------ ----------- ------------
Cash at Bank 284.828 284.828 284.828 - -
------------ ------------- ------------ ----------- ------------
Long-term receivables 315.000 315.000 - - 315.000
------------ ------------- ------------ ----------- ------------
Prepayments and
other receivables 1.267.713 1.267.713 1.267.713 - -
------------ ------------- ------------ ----------- ------------
Total Financial
assets 1.867.541 1.867.541 1.552.541 - 315.000
------------ ------------- ------------ ----------- ------------
Financial liabilities
------------ ------------- ------------ ----------- ------------
Borrowings 4.021.192 4.033.067 4.018.994 14.073 -
------------ ------------- ------------ ----------- ------------
Trade and other
payables 431.307 431.307 423.467 - 7.840
------------ ------------- ------------ ----------- ------------
Deposits from tenants 23.002 23.002 - - 23.002
------------ ------------- ------------ ----------- ------------
Finance lease liabilities 6.225.930 7.165.206 568.486 555.418 6.041.302
------------ ------------- ------------ ----------- ------------
Taxation 184.227 184.227 142.246 41.981 -
------------ ------------- ------------ ----------- ------------
Total Financial
liabilities 10.885.658 11.836.809 5.153.193 611.472 6.072.144
------------ ------------- ------------ ----------- ------------
Total net assets/(liabilities) (9.018.117) (9.969.269) (3.600.652) (611.472) (5.757.144)
------------ ------------- ------------ ----------- ------------
42. Financial Risk Management (continued)
42.6 Liquidity Risk Management (continued)
Continued Operations
31 December 2021 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
Financial assets
Cash at Bank 2.160.576 2.160.576 2.160.576 - -
Prepayments and
other receivables 4.510.381 4.510.381 4.510.381 - -
Financial Assets
at FV through P&L 7.470.722 7.470.722 7.470.722 - -
Long-term Receivables
and prepayments 824 824 - - 824
Total Financial
assets 14.142.503 14.142.503 14.141.679 - 824
Financial liabilities
Borrowings 1.703.566 1.862.279 570.795 1.291.484 -
Trade and other
payables 4.396.123 4.396.123 4.396.123 - -
Bonds issued 1.327.056 1.595.855 360.414 67.200 1.168.241
Taxes payable and
provisions 883.567 883.567 312.635 570.932 -
Total Financial
liabilities 8.310.312 8.737.824 5.639.967 1.929.616 1.168.241
Total net assets/(liabilities) 5.832.191 5.404.679 8.501.712 (1.929.616) (1.167.417)
Discontinued Operations
31 December 2021 Carrying Total Less than From one More than
amount Contractual one year to two years
Cash Flows two years
EUR EUR EUR EUR EUR
------------- ------------- ------------ ----------- ------------
Financial assets
------------- ------------- ------------ ----------- ------------
Cash at Bank 394.670 394.670 394.670 - -
------------- ------------- ------------ ----------- ------------
Long-term receivables 333.263 333.263 - - 333.263
------------- ------------- ------------ ----------- ------------
Prepayments and
other receivables 1.240.028 1.240.028 1.240.028 - -
------------- ------------- ------------ ----------- ------------
Total Financial
assets 1.967.961 1.967.961 1.634.698 - 333.263
------------- ------------- ------------ ----------- ------------
Financial liabilities
------------- ------------- ------------ ----------- ------------
Borrowings 8.022.899 8.537.740 7.534.289 215.460 787.991
------------- ------------- ------------ ----------- ------------
Trade and other
payables 997.392 997.392 989.553 - 7.839
------------- ------------- ------------ ----------- ------------
Deposits from tenants 64.231 64.231 - - 64.231
------------- ------------- ------------ ----------- ------------
Finance lease liabilities 6.515.847 7.761.584 582.862 569.794 6.608.928
------------- ------------- ------------ ----------- ------------
Taxation 243.310 243.310 213.540 29.770 -
------------- ------------- ------------ ----------- ------------
Total Financial
liabilities 15.843.679 17.604.257 9.320.244 815.024 7.468.989
------------- ------------- ------------ ----------- ------------
Total net assets/(liabilities) (13.875.718) (15.636.296) (7.685.546) (815.024) (7.135.726)
------------- ------------- ------------ ----------- ------------
43. Events after the end of the reporting period
a) Operating cost optimization measures
As part of the cost optimization process adopted by the Board,
the Company has agreed in 2023 with a Cyprus based advisory company
wholly owned by the Company's CEO Lambros Anagnostopoulos, to
externalize all existing HR and office costs in all jurisdictions
that the Company currently operates in, except Ukraine.
Such externalization will take place by the advisor assuming a)
all direct individual personnel contracts, b) the service contracts
with local real estate service providers, and c) all HR and office
costs in Romania. In return, SPDI will pay fixed monthly fee of EUR
24,000 plus VAT which represents an annual reduction of 35% and 50%
vis a vis similar costs incurred by the Company in 2021 and 2020
respectively. Such fee has been set to reflect effectively the
reduced personnel time/cost and office costs of the Company during
this phase of transformation of the Company. The advisory contract
will be able to be terminated by either party with one month's
notice, after an initial period of eight months elapses.
b) Bluebigbox3 Srl insolvency procedure
During 2023, against Bluebigbox3 Srl has been opened an
insolvency procedure by Bucharest Tribunal, initiated by creditor
Emeu Property Services for a due liability of 350.000 lei. The case
is in strong connection with the main litigation of the Company
with Bluehouse (Note 40.3) since the above mentioned creditor is an
affiliate to Bluehouse and acted as Property Manager of the
Praktiker Craiova asset after its acquisition by the Company. The
Company believes that the creditor acted in sync with Bluehouse and
concealed certain key information which if revealed would have
resulted in a significant reduction of the final acquisition price.
Bluebigbox3 Srl currently is idle with no asset in its
procession.
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