Notes to the Consolidated Financial Statements

For the year ended 31 December 2019

 

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 2019, the companies of the Group employed and/or used the services of 14 full time equivalent people, (2018 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, as well as plans and discussions regarding the Greek asset, the Company has classified its assets in 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 substantial 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 ~45% 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 2019. 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, Ukraine, Greece and Bulgaria, reflects adjustments necessary for such consolidated financial information to be presented in accordance with IFRS.

 

4.1 Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries).

 

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

 

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognized amounts of acquiree's identifiable net assets.

 

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.

 

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39, either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured and its subsequent settlement is accounted for within equity.

 

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.

 

Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.

 

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.

 

Changes in ownership interests in subsidiaries without change of control and Disposal of Subsidiaries

 

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of non-controlling interests are also recorded in equity.

 

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

 

4.2 Functional and presentation currency

 

Items included in the Group's financial statements are measured applying the currency of the primary economic environment in which the entities operate (''the functional currency''). The national currency of Ukraine, the Ukrainian Hryvnia, is the functional currency for all the Group's entities located in Ukraine, the Romanian leu is the functional currency for all Group's entities located in Romania, the Bulgarian lev is the functional currency for all Group's entities in Bulgaria and the Euro is the functional currency for all the Greek and Cypriot subsidiaries.

 

 

 

4. Significant accounting policies (continued)

 

4.2 Functional and presentation currency (continued)

 

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, Greece and Bulgaria 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	2019	2018	2019	2018	2017
USD	1,1195	1,1810	1,1234	1,1450	1,1993
UAH	28,9406	32,1341	26,422	31,7141	33,4954
RON	4,7453	4,6535	4,7793	4,6639	4,6597
BGN	1,9558	1,9558	1,9558	1,9558	1,9558

 

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 prescribed date. It is important to note that the rights to complete a development may be lost or at least delayed if the lessee fails to complete a permitted development within the timescale set out by the ground lease.

 

In addition, in the event that a development has not commenced upon the expiry of a lease then the City Authorities are entitled to decline the granting of a new lease on the basis that the land is not used in accordance with the designation. Furthermore, where all necessary permissions and consents for the development are not in place, this may provide the City Authorities with grounds for rescinding or non-renewal of the ground lease. However Management believes that the possibility of such action is remote and was made only under limited circumstances in the past.

 

 

4. Significant accounting policies (continued)

 

4.4 Investment Property at fair value (continued)

 

Management believes that rescinding or non-renewal of the ground lease is remote if a project is on the final stage of development or on the operating cycle. In undertaking the valuations reported herein, the valuer of Ukrainian properties CBRE has made the assumption that no such circumstances will arise to permit the City Authorities to rescind the land lease or not to grant a renewal.

 

Land held under operating lease is classified and accounted for as investment property when the rest of the definition is met.

 

Investment property under development or construction initially is measured at cost, including related transaction costs.

 

The property is classified in accordance with the intention of the management for its future use. Intention to use is determined by the Board of Directors after reviewing market conditions, profitability of the projects, ability to finance the project and obtaining required construction permits.

 

The time point, when the intention of the management is finalized is the date of start of construction. At the moment of start of construction, freehold land, leasehold land and investment properties held for a future redevelopment are reclassified into investment property under development or inventory in accordance to the final decision of management.

 

Initial measurement and recognition

Investment property is measured initially at cost, including related transaction costs. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the consolidated statement of comprehensive income in the period of retirement or disposal.

 

Transfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation, or the commencement of an operating lease to third party. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sale.

 

If an investment property becomes owner occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment property is classified as investment property under construction until construction or development is complete. At that time, it is reclassified and subsequently accounted for as investment property.

 

Subsequent measurement

Subsequent to initial recognition, investment property is stated at fair value. Gains or losses arising from changes in the fair value of investment property are included in the statement of comprehensive income in the period in which they arise.

 

If a valuation obtained for an investment property held under a lease is net of all payments expected to be made, any related liabilities/assets recognized separately in the statement of financial position are added back/reduced to arrive at the carrying value of the investment property for accounting purposes.

 

Subsequent expenditure is charged to the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the statement of comprehensive income during the financial period in which they are incurred.

 

Basis of valuation

The fair values reflect market conditions at the financial position date. These valuations are prepared annually by chartered surveyors (hereafter "appraisers"). The Group appointed valuers in 2014, which remain the same in 2019:

·      CBRE Ukraine, for all its Ukrainian properties,

·      Real Act for all its Romanian, Greek and Bulgarian properties.

 

The valuations have been carried out by the appraisers on the basis of Market Value in accordance with the appropriate sections of the current Practice Statements contained within the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards (2018) (the "Red Book") and is also compliant with the International Valuation Standards (IVS).

 

"Market Value" is defined as: "The estimated amount for which a property should be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion

In expressing opinions on Market Value, in certain cases the appraisers have estimated net annual rentals/income from sale. These are assessed on the assumption that they are the best rent/sale prices at which a new letting/sale of an interest in property would have been completed at the date of valuation assuming: a willing landlord/buyer; that prior to the date of valuation there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the letting/sale; that the state of the market, levels of value and other circumstances were, on any earlier assumed date of entering into an agreement for lease/sale, the same as on the valuation date; that no account is taken of any additional bid by a prospective tenant/buyer with a special interest; that the principal deal conditions assumed to apply are the same as in the market at the time of valuation; that both parties to the transaction had acted knowledgeably, prudently and without compulsion.

 

A number of properties are held by way of ground leasehold interests granted by the City Authorities. The ground rental payments of such interests may be reviewed on an annual basis, in either an upwards or downwards direction, by reference to an established formula. Within the terms of the lease, there is a right to extend the term of the lease upon expiry in line with the existing terms and conditions thereof. In arriving at opinions of Market Value, the appraisers assumed that the respective ground leases are capable of extension in accordance with the terms of each lease. In addition, given that such interests are not assignable, it was assumed that each leasehold interest is held by way of a special purpose vehicle ("SPV"), and that the shares in the respective SPVs are transferable.

 

With regard to each of the properties considered, in those instances where project documentation has been agreed with the respective local authorities, opinions of the appraisers of value have been based on such agreements.

 

In those instances where the properties are held in part ownership, the valuations assume that these interests are saleable in the open market without any restriction from the co-owner and that there are no encumbrances within the share agreements which would impact the sale ability of the properties concerned.

 

The valuation is exclusive of VAT and no allowances have been made for any expenses of realization or for taxation which might arise in the event of a disposal of any property.

 

In some instances the appraisers constructed a Discounted Cash Flow (DCF) model. DCF analysis is a financial modeling technique based on explicit assumptions regarding the prospective income and expenses of a property or business. The analysis is a forecast of receipts and disbursements during the period concerned. The forecast is based on the assessment of market prices for comparable premises, build rates, cost levels etc. from the point of view of a probable developer.

 

To these projected cash flows, an appropriate, market-derived discount rate is applied to establish an indication of the present value of the income stream associated with the property. In this case, it is a development property and thus estimates of capital outlays, development costs, and anticipated sales income are used to produce net cash flows that are then discounted over the projected development and marketing periods. The Net Present Value (NPV) of such cash flows could represent what someone might be willing to pay for the site and is therefore an indicator of market value. All the payments are projected in nominal US Dollar/Euro amounts and thus incorporate relevant inflation measures.

 

Valuation Approach

In addition to the above general valuation methodology, the appraisers have taken into account in arriving at Market Value the following:

 

Pre Development

In those instances where the nature of the 'Project' has been defined, it was assumed that the subject property will be developed in accordance with this blueprint. The final outcome of the development of the property is determined by the Board of Directors decision, which is based on existing market conditions, profitability of the project, ability to finance the project and obtaining required construction permits.

 

Development

In terms of construction costs, the budgeted costs have been taken into account in considering opinions of value. However, the appraisers have also had regard to current construction rates prevailing in the market which a prospective purchaser may deem appropriate to adopt in constructing each individual scheme. Although in some instances the appraisers have adopted the budgeted costs provided, in some cases the appraisers' own opinions of costs were used.

 

Post Development

Rental values have been assessed as at the date of valuation but having regard to the existing occupational markets taking into account the likely supply and demand dynamics during the anticipated development period. The standard letting fees were assumed within the valuations. In arriving at their estimates of gross development value ("GDV"), the appraisers have capitalized their opinion of net operating income, having deducted any anticipated non-recoverable expenses, such as land payments, and permanent void allowance, which has then been capitalized into perpetuity.

 

The capitalization rates adopted in arriving at the opinions of GDV reflect the appraisers' opinions of the rates at which the properties could be sold as at the date of valuation.

 

In terms of residential developments, the sales prices per sq. m. again reflect current market conditions and represent those levels the appraisers consider to be achievable at present. It was assumed that there are no irrecoverable operating expenses and that all costs will be recovered from the occupiers/owners by way of a service charge.

 

The valuations take into account the requirement to pay ground rental payments and these are assumed not to be recoverable from the occupiers. In terms of ground rent payments, the appraisers have assessed these on the basis of information available, and if not available they have calculated these payments based on current legislation defining the basis of these assessments. Property tax is not presently payable in Ukraine.

 

4.5 Investment Property under development

 

Property that is currently being constructed or developed, for future use as investment property is classified as investment property under development carried at cost until construction or development is complete, or its fair value can be reliably determined. This applies even if the works have temporarily being stopped.

 

4.6 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.

 

4.7 Property, Plant and equipment and intangible assets

 

Property, plant and equipment and intangible non-current assets are stated at historical cost less accumulated depreciation and amortization and any accumulated impairment losses.

 

Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined and intangibles not inputted into exploitation, are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Group's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

 

Depreciation and amortization are calculated on the straight‑line basis so as to write off the cost of each asset to its residual value over its estimated useful life. The annual depreciation rates are as follows:

 

Type	%
Leasehold	20
IT hardware	33
Motor vehicles	25
Furniture, fixtures and office equipment	20
Machinery and equipment	15
Software and Licenses	33

 

No depreciation is charged on land.

 

Assets held under leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

 

The assets residual values and useful lives are reviewed, and adjusted, if appropriate, at each reporting date.

 

Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its recoverable amount.

 

Expenditure for repairs and maintenance of tangible and intangible assets is charged to the statement of comprehensive income of the year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

 

An item of tangible and intangible assets is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the statement of comprehensive income.

 

4.8 Inventory

 

Inventory principally comprises of residential property. Inventory is recognized initially at cost, including transaction costs, which represent its fair value at the time of acquisition. Costs related to the development of land are capitalised and recognized as inventory. Inventory is carried at the lower of cost and net realizable value.

 

4.9 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.

 

4.10 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.

4.11 Financial Instruments

 

4.11.1 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.

 

4.11.2 Classification and subsequent measurement

 

Financial assets

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

-           it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

-           its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

-           it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

-       its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.

 

Financial assets - Business model assessment:

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

-           the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

-           how the performance of the portfolio is evaluated and reported to the Group's management;

-           the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

-           how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

 

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets.

 

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

 

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest:

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

-           contingent events that would change the amount or timing of cash flows;

-           terms that may adjust the contractual coupon rate, including variable-rate features;

-           prepayment and extension features; and

-           terms that limit the Group's claim to cash flows from specified assets (e.g. non-recourse features).

 

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

 

Financial assets - Subsequent measurement and gains and losses:

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss. However for derivatives designated as hedging instruments.

Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

 

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI                                                                                                                                              

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

 

 

4.11.3 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.

 

4.11.4 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.

4.11.5 Derivative financial instruments and hedge accounting

 

Derivative financial instruments and hedge accounting -

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.

The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates and certain derivatives and non-derivative financial liabilities as hedges of foreign exchange risk on a net investment in a foreign operation.

At inception of designated hedging relationships, the Group documents the risk management objective and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

 

Cash flow hedges

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

The Group designates only the change in fair value of the spot element of forward exchange contracts as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward exchange contracts ('forward points') is separately accounted for as a cost of hedging and recognised in a costs of hedging reserve within equity.

When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included directly in the initial cost of the non-financial item when it is recognised.

For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss.

If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial item's cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.

If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.

Net investment hedges

When a derivative instrument or a non-derivative financial liability is designated as the hedging instrument in a hedge of a net investment in a foreign operation, the effective portion of, for a derivative, changes in the fair value of the hedging instrument or, for a non-derivative, foreign exchange gains and losses is recognised in OCI and presented in the translation reserve within equity. Any ineffective portion of the changes in the fair value of the derivative or foreign exchange gains and losses on the non-derivative is recognised immediately in profit or loss. The amount recognised in OCI is reclassified to profit or loss as a reclassification adjustment on disposal of the foreign operation.

 

4.12 Leases

 

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

 

                     the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

 

                     the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

 

                     the Company has the right to direct the use of the asset. The Company has this right when it has the decision making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

 

                     the Company has the right to operate the asset; or

                     the Company designed the asset in a way that predetermines how and for what purpose it will be used.

 

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non lease components and account for the lease and non lease components as a single lease component.

 

The Company as lessor

 

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

 

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub lease separately. It assesses the lease classification of a sub lease with reference to the right of use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies the sub lease as an operating lease.

 

If an arrangement contains lease and non lease components, the Company applies IFRS 15 to allocate the consideration in the contract.

The Company recognises lease payments received under operating leases as income on a straight line basis over the lease term as part of 'other income'.

 

The accounting policies applicable to the Company as a lessor in the comparative period were not different from IFRS 16. However, when the Company was an intermediate lessor the sub leases were classified with reference to the underlying asset.

 

The Company as lessee

 

The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

 

The right of use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of the right of use assets are determined on the same basis as those of property and equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

 

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability comprise the following:

                     fixed payments, including in substance fixed payments;

                     variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the 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.

 

4.13 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.

 

 

 

4.14 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.

 

 

4.15 Impairment of tangible and intangible assets other than goodwill

 

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

 

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment loss annually, and whenever there is an indication that the asset may be impaired.

 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‑tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

 

If the recoverable amount of an asset (or cash‑generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash‑generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash‑generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash‑generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

 

4.16 Share Capital

 

Ordinary shares are classified as equity.

 

4.17 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.

 

4.18 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.

 

4.19 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.

 

 

4.20 Non‑current liabilities

 

Non‑current liabilities represent amounts that are due in more than twelve months from the reporting date.

 

4.21 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:

 

4.21.1 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.

 

4.21.2 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).

 

4.21.3 Interest income

 

Interest income is recognized on a time-proportion (accrual) basis, using the effective interest rate method.

 

4.21.4 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.

 

4.22 Service charges and expenses recoverable from tenants

 

Income arising from expenses recharged to tenants is recognized on an accrual basis.

 

4.23 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.

 

 

4.24 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.

 

4.25 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)

 

4.26 Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax.

 

4.26.1 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.

 

4.26.2 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.

 

4.26.3 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.

 

4.26.4 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.

 

4.26.5 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.

 

4.27 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)

 

4.28 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 ·      Office segment ·      Retail segment	·      Residential segment	·      Land assets - the Group owns a number of land assets which are either available for sale or for potential development

 

The Group also monitors investment property assets on a Geographical Segmentation, namely the country where its property is located.

 

4.29 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.

 

4.30 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:

 

(i)                  Issued by the IASB and adopted by the European Union

 

Amendments

IFRS Interpretations Committee

 

•                      Amendments to IAS 1 and IAS 8: Definition of Material (issued on 31 October 2018) (effective for annual periods beginning on or after 1 January 2020).

The amendments clarify the definition of material and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS. In addition, the explanations accompanying the definition have been improved. Finally, the amendments ensure that the definition of material is consistent across all IFRS Standards. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

 

•                      Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020)

 

 

 

 

 

 

 

5. New accounting pronouncement (continued)

 

In March 2018 the IASB issued a comprehensive set of concepts for financial reporting, the revised ''Conceptual Framework for Financial Reporting'' (Conceptual Framework), replacing the previous version issued in 2010. The main changes to the framework's principles have implications for how and when assets and liabilities are recognised and derecognised in the financial statements, while some of the concepts in the revised Framework are entirely new (such as the ''practical ability'' approach to liabilities''. To assist companies with the transition, the IASB issued a separate accompanying document ''Amendments to References to the Conceptual Framework in IFRS Standards''. This document updates some references to previous versions of the Conceptual Framework in IFRS Standards, their accompanying documents and IFRS Practice Statements.

 

(ii)                Issued by the IASB but not yet adopted by the European Union

 

New standards

•                      IFRS 17 ''Insurance Contracts'' (effective for annual periods beginning on or after 1 January 2021).

In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e. life, non life, direct insurance and re insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply.

Amendments

•                      Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non current (issued on 23 January 2020) (effective for annual periods beginning on or after 1 January 2020).

 

•                      Amendment to IFRS 3 Business Combinations (issued on 22 October 2018) (effective for annual periods beginning on or after 1 January 2020)

The amendments revise definition of a business. A business must have inputs and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present, including for early stage companies that have not generated outputs. An organised workforce should be present as a condition for classification as a business if are no outputs. The definition of the term 'outputs' is narrowed to focus on goods and services provided to customers, generating investment income and other income, and it excludes returns in the form of lower costs and other economic benefits. It is also no longer necessary to assess whether market participants are capable of replacing missing elements or integrating the acquired activities and assets. An entity can apply a 'concentration test'. The assets acquired would not represent a business if substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets).

•                      IFRS 10 (Amendments) and IAS 28 (Amendments) ''Sale or Contribution of Assets between an Investor and its Associate or Joint Venture(effective date postponed indefinitely).

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (as defined in IFRS 3). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business. In December 2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting.

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.

 

 

6. Critical accounting estimates and judgments (continued)

 

·          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 2019 (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

 

After a significant deterioration in 2014 and 2015, the current political and economic situation in Ukraine remains volatile. In 2019, the Ukrainian government continues to implement a comprehensive structural reform program aimed at eliminating existing imbalances in the economy, public finances and governance, fighting corruption, and reforming the legal environment to provide conditions for economic recovery in the country.

 

The stabilization of Ukraine's economy in the near future depends on the success of the government's actions and the provision of continuous financial support to Ukraine by international donors and international financial institutions.

 

The National Bank of Ukraine continues to adhere to the policy of floating exchange rate of hryvnia. During 2019, the official exchange rate of hryvnia to the US dollar of the National Bank of Ukraine decreased by 13% from 27.6883 hryvnia for the US dollar on January 1, 2019 to 23.6862 hryvnia for the US dollar on December 31, 2019. During 2019, the National Bank of Ukraine reduced the discount rate from 18.0% to 13.5%.

 

7. Risk Management (continued)

 

7.1 Financial risk factors (continued)

 

7.1.1 Operating Country Risks (continued)

 

7.1.1.1 Ukraine(continued)

 

Regarding currency regulation, the National Bank of Ukraine continued the policy of reducing currency restrictions, and starting from March 2019, reduced the mandatory share of exchange of foreign currency earnings from 50% to 30%, and completely abolished this restriction starting from June 20, 2019.

 

In 2019, consumer inflation slowed to 4.1% (from 9.8% in 2018), and real GDP growth amounted to 3.2%. The slowdown in inflation was facilitated by moderate dynamics of food prices, as well as the strengthening of the hryvnia exchange rate due to the foreign exchange surplus in the market, which was maintained during most of 2019.

 

International rating agencies Fitch and Standard & Poor's have upgraded Ukraine's sovereign rating to B. The agencies noted a significant improvement in the macroeconomic situation, responsible fiscal and budgetary policies, and the emergence of a "window of opportunity" for economic reform. At the end of 2019, the international rating agency Moody's Investors Service reaffirmed Ukraine's sovereign credit rating in national and foreign currencies at Caa1 and changed the stable outlook to positive.

 

 

7.1.1.2 Romania

 

The Romanian economy continued to grow within 2019, featuring GDP growth of 4.1%, according to Eurostat. The strong growth has been mainly fueled from a large domestic market, a diversified and competitive industry mainly due to cheap labor, as well as a limited energy dependence thanks to coal, oil, and gas.

 

Inflation for 2019 was at 3.9%, following  a 2018 4.6% increase. Private consumption for the year will ease, although its solid level and substantial share in the economy (63% of GDP) will keep it as the main growth driver. The ongoing improvement on the labour market, with the unemployment rate dropping to 3.8% in mid-2019, and further growth of wages and pensions, will continue to support household spending. Labor cost continues to be amonst the lowest in Europe, giving a constant boost to foreign investment  and services sector.

 

On the other hand, exports' growth will be limited due to the global trade downturn and deteriorated prospects of main export destinations. Therefore, the contribution of next exports to GDP growth is likely to remain negative but less so. Moreover, increased public spending has raised questions in relation to the future level of budget deficit and the overall sustainability of current economic growth.

 

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. Risk Management (continued)

 

7.1 Financial risk factors (continued)

 

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 steady 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. It should be noted that the current political uncertainty in Ukraine, and any currency devaluation may affect the Group's financial position.

 

Management is monitoring foreign exchange fluctuations closely and acts accordingly.

 

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 44.1 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. Risk Management (continued)

 

7.3. Fair value estimation

 

The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the end of the reporting period.

 

 

8. Investment in subsidiaries

 

The Company has direct and indirect holdings in other companies, collectively called the Group, that were included in the consolidated financial statements, and are detailed below.

 

			Holding %
Name	Country of incorporation	Related Asset	as at  31 Dec 2019	as at  31 Dec 2018
SC Secure Capital Limited	Cyprus		100	100
LLC Aisi Ukraine	Ukraine	Kiyanovskiy Residence	100	100
LLC Trade Center	Ukraine		100	100
LLC Almaz‑Pres‑Ukraine	Ukraine	Tsymlyanskiy Residence	55	55
LLC Aisi Bela	Ukraine	Bela Logistic Park Balabino Project	-	100
LLC Retail Development Balabino	Ukraine		100	100
LLC Interterminal	Ukraine		100	100
LLC Aisi Ilvo	Ukraine		100	100
Myrnes Innovations Park Limited	Cyprus	Innovations Logistics Park	100	100
Best Day Real Estate Srl	Romania		100	100
Yamano Holdings Limited	Cyprus	EOS Business Park	100	100
N-E Real Estate Park First Phase Srl	Romania		100	100
Victini Holdings Limited	Cyprus	Victini Logistics	100	100
Victini Logistics Park S.A. (ex SPDI Logistics S.A.)	Greece		-	100
Zirimon Properties Limited	Cyprus	Delea Nuova (Delenco)	100	100
Bluehouse Accession Project IX Limited	Cyprus		100	100
Bluehouse Accession Project IV Limited	Cyprus		100	100
BlueBigBox 3 Srl	Romania		100	100
SPDI Real Estate Srl	Romania	Kindergarten	50	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	Cyprus	Residential and Land portfolio	100	100
Demetiva Holdings Limited	Cyprus		100	100
Ketiza Holdings Limited	Cyprus		90	90
Frizomo Holdings Limited	Cyprus		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		44,24	44,24
Rimasol Real Estate Srl	Romania		44,24	44,24
Ashor Ventures Limited	Cyprus		44,24	44,24
Ashor Development Srl	Romania		44,24	44,24
Jenby Ventures Limited	Cyprus		44,30	44,30
Jenby Investments Srl	Romania		44,30	44,30
Ebenem Limited	Cyprus		44,30	44,30
Ebenem Investments Srl	Romania		44,30	44,30
Sertland Properties Limited	Cyprus		100	100
Boyana Residence ood	Bulgaria		-	100
Mofben Investments Limited	Cyprus		100	100
SPDI Management Srl	Romania		100	100

 

During the reporting period the Group proceeded with the disposal of Aisi Bela in Ukraine as well as with the disposal of the Boyana Residence in Bulgaria, as  part of the Arcona's transaction. In addition the Group also disposed of Victini Logistics Park AE in Greece on top of the aforementioned transactions with Arcona.

 

The Group has resolved to streamline its structure in Cyprus and Romania for cost cutting and tax optimization purposes. Towards this goal, during 2018 the following mergers have been finalized:

 

Α. merger by absorption of SecVista Real Estate Srl acting as Absorbed Company, with Best Day Real Estate Srl acting as Absorbing Company,

 

 

 

8. Investment in subsidiaries (continued)

 

Β. merger by absorption of SecRom Real Estate Srl and Secure Property Development and Investment Srl acting as Absorbed Companies, with N-E Real Estate Park First Phase Srl acting as Absorbing Company.

 

Following extended but unsuccessful negotiations for more than 2 years with Tonescu Finance Srl, the company which has acquired Monaco Towers property's loan, SecMon Real Estate Srl entered voluntarily in January 2018 into insolvency process, in order to protect its interests against its creditor, given that the value of the assets is higher than the value of the relevant loan. The entering of SecMon Real Estate Srl in the insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl is not consolidated in the present consolidated financial statements.

 

9. Discontinued operations

 

9.(a) Description

 

The Company announced at 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 currently it is negotiating with Arcona the sale of the assets included in Stage 2 of the transaction, EOS and Delenco assets in Romania, as well as the Tsymlyanskiy and Kiyanovskiy assets in Ukraine. Stage 2 of the transaction is expected to close by the end of 2020 subject to COVID-19 effects.

 

Additionally, the Company also sold the Greek logistics property Victini Logistics, which was not part of the Arcona transaction.

 

The companies that are classified under discontinued operations  are the followings:

•                      Bulgaria: Boyana Residence ood (sold during 2019)

•                      Cyprus: Ashor Ventures Limited, Ebenem Limited, Jenby 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

•                      Greece: Victini Logistics Park S.A. (sold during 2019)

•                      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

•                      Ukraine: LLC Aisi Bela (sold during 2019), 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 & 4.10).

 

9. Discontinued operations (continued)

 

9.(b) Results of discontinued operations

 

For the year ended 31 December 2019

	Note	2019	2018
		€	€
Income	10	1.891.708	2.378.875
Asset operating expenses	11	(591.811)	(606.069)
Net Operating Income		1.299.897	1.772.806
Administration expenses	12	(220.509)	(260.714)
Share of profits/(losses) from associates	21	297.985	364.920
Valuation gains/(losses) from Investment Property	13	417.852	(1.218.297)
Net loss on disposal of inventory	14a	-	(13.553)
Net gain/(loss) on disposal of investment property	14b	(7.404)	(48.225)
Gain/(loss) on disposal of subsidiaries	20	(4.992.763)	-
Other operating income/(expenses), net	15	312.801	(363.435)
Operating profit / (loss)		(2.892.141)	233.502
Finance income	16	10.022	9.979
Finance costs	16	(1.430.529)	(1.542.580)
Profit / (loss) before tax and foreign exchange differences		(4.312.648)	(1.299.099)
Foreign exchange (loss), net	17a	(436.880)	(10.233)
Loss before tax		(4.749.528)	(1.309.332)
Income tax expense	18	(52.315)	(96.567)
Loss for the year		(4.801.843)	(1.405.899)
Loss attributable to:
Owners of the parent		(4.846.634)	(699.271)
Non-controlling interests		44.791	(706.628)
		(4.801.843)	(1.405.899)

 

9.(c) Cash flows from(used in) discontinued operation

	31 Dec 2019	31 Dec 2018
	€	€
Net cash flows provided in operating activities	1.897.780	2.930.026
Net cash flows from / (used in) financing activities	(2.770.679)	(3.910.958)
Net cash flows from / (used in) investing  activities	2.677.920	1.287.742
Net increase/(decrease) from discontinued operations	1.805.021	306.810

 

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 2019:

 

	Note	31 Dec 2019	31 Dec 2018
		€	€
Assets classified as held for sale
Investment properties	19.4a	42.180.852	63.345.537
Investment properties under development	19.4b	-	4.716.157
Tangible and intangible assets	23	14.342	42.534
Long-term receivables and prepayments	24	315.265	270.271
Investments in associates	21	5.380.021	5.313.235
Financial Asset at FV through OCI	22	1	1
Inventory	25	-	4.604.044
Prepayments and other current assets	26	1.470.772	682.134
Cash and cash equivalents	28	530.374	704.825
Total assets of group held for sale		49.891.627	79.678.738
Liabilities directly related with assets classified as held for sale
Borrowings	32	8.949.660	22.605.474
Finance lease liabilities	37	10.084.470	10.470.012
Trade and other payables	34	1.015.266	1.500.603
Taxation	36	216.563	498.530
Deposits from tenants	35	67.269	219.274
Total liabilities of group held for sale		20.333.228	35.293.893

 

10. Income

 

Income from continued operations for the year ended 31 December 2019 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) and Praktiker Craiova (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.

 

Continued operations	31 Dec 2019	31 Dec 2018
	€	€
Rental income	364.034	631.636
Service charges and utilities income	93.416	9.534
Service and property management income	-	128.293
Total income	457.450	769.463

 

Income from discontinued operations for the year ended 31 December 2019 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), EOS Business Park (Romania), and Victini Logistics (Greece) until the date of disposal,

b)     income from the sale of electricity by Victini Logistics to the Greek grid until the same of disposal,

b)     rental income and service charges by tenants of the Residential Portfolio, and;

c)     income from third parties and /or partners for consulting and managing real estate properties

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Rental income	1.726.978	1.963.724
Sale of electricity	128.623	294.773
Service charges and utilities income	33.982	118.211
Service and property management income	2.125	2.167
Total income	1.891.708	2.378.875

 

Occupancy rates in the various income producing assets of the Group as at 31 December 2019 were as follows:

 

Income producing assets
%		31 Dec 2019	31 Dec 2018
EOS Business Park	Romania	100	100
Innovations Logistics Park	Romania	70	37
Victini Logistics	Greece	-	100
Kindergarten	Romania	100	100

 

11. Asset operating expenses

 

The Group incurs expenses related to the proper operation and maintenance of all properties in Kiev, Bucharest, Athens, Sofia and Craiova. A part of these expenses is recovered from the tenants through the service charges and utilities recharge (Note 10).

 

Under continued operations are all the expenses related to Praktiker Craiova in 2018.

 

Continued operations	31 Dec 2019	31 Dec 2018
	€	€
Property related taxes	-	(77.723)
Repairs and technical maintenance	-	(4.150)
Property insurance	-	(36.446)
Total	-	(118.319)

 

 

 

 

 

 

 

 

 

 

11. Asset operating expenses (continued)

 

Under discontinued operations are all the expenses related to Innovations Logistics Park (Romania), EOS Business Park (Romania), Residential Portfolio (Romania), GreenLake (Romania), and all Ukrainian properties.

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Property related taxes	(199.725)	(227.819)
Property management fees	-	(120.630)
Repairs and technical maintenance	(195.428)	(69.377)
Utilities	(95.688)	(73.715)
Property security	(35.191)	(37.301)
Property insurance	(17.184)	(32.638)
Leasing expenses	(48.329)	(44.258)
Other operating expenses	(266)	(331)
Total	(591.811)	(606.069)

 

Property related taxes reflect local taxes of land and building properties (in the form of land taxes, building taxes, garbage fees, etc.).

 

Property Management fees in 2018 relate to Property Management Agreements for Victini Logistics Park with third party managers outsourcing the related services. The Park was sold during 2019 and no such services were rendered during the period.

 

Repairs and technical maintenance increased substantially during the period due to relevant works performed in Innovations Logistics Park in Bucharest, essential for hosting successfully new tenant in the cold spaces of the property.

 

Leasing expenses reflect expenses related to long term land leasing.

 

12. Administration Expenses

 

Continued operations	31 Dec 2019	31 Dec 2018
	€	€
Salaries and Wages	(459.789)	(556.580)
Incentives to Management	(280.000)	-
Advisory fees	(614.315)	(438.423)
Public group expenses	(100.084)	(210.097)
VAT expensed	(112.815)	-
Corporate registration and maintenance fees	(60.905)	(65.234)
Audit fees	(86.031)	(85.300)
Accounting fees	(23.879)	(14.841)
Legal fees	(442.051)	(193.644)
Depreciation/Amortization charge	(3.399)	(5.502)
Directors Renumeration	(73.108)	-
Corporate operating expenses	(185.795)	(199.226)
Total Administration Expenses	(2.442.171)	(1.768.847)

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Salaries and Wages	(44.753)	(43.073)
Advisory fees	(29.496)	(26.666)
Corporate registration and maintenance fees	(38.721)	(54.903)
Audit and accounting fees	(54.560)	(64.848)
Accounting fees	(12.141)	(841)
Legal fees	(11.406)	(20.650)
Depreciation/Amortization charge	(2.497)	(21.882)
Corporate operating expenses	(26.935)	(27.850)
Total Administration Expenses	(220.509)	(260.714)

 

Salaries and wages include the remuneration of the CEO, the CFO, the Group Commercial Director and the Country Managers of Ukraine and Romania, as well as the salary cost of personnel employed in the various Company's offices in the region.

 

Incentives to Management provided during 2019 for the successful disposal of Victini Logistics Park, and the completion of Stage 1 of the transaction with Arcona which was fully paid in shares of the Company.

 

Advisory fees are mainly related to advisors, brokers and other professionals engaged in relevant transactions and capital raising campaigns, as well as outsourced human resources support on the basis of relevant  contracts. In 2019 the advisory fees includes EUR 145k paid in Company's shares to advisors engaged with the successful completion of Stage 1 of the transaction with Arcona, as well as EUR 28k for due diligence expenses related to the Arcona transaction. In 2018 the advisory fees includes one-off elements related to the disposal of Praktiker asset (EUR 180k) and due diligence expenses (EUR 90k) for non consummated transactions, in relation to the acquisitions of logistic asset portfolios in Greece and Romania.

 

12. Administration Expenses (continued)

 

Audit and accounting expenses include the audit fees and accounting fees for the Company and all the subsidiaries.

 

Public group expenses include among others fees paid to the AIM:LSE stock exchange and the Nominated Adviser of the Company, as well as other expenses related to the listing of the Company.

 

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. The increase in 2019 came as a result of an over EUR 350k relevant costs for legal advices and support related to the transaction with Arcona. 

 

Directors fees for the period H1 2019 were paid fully in Company's shares.

 

Corporate operating expenses include office expenses, travel expenses, (tele)communication expenses, D&O insurance and all other general expenses for Cypriot, Romanian, Ukrainian, Bulgarian and Greek operations.

 

13. Valuation gains / (losses) from investment properties

 

Valuation gains /(losses) from investment property for the reporting period, excluding foreign exchange translation differences which are incorporated in the table of Note 19.2, are presented in the tables below.

 

 

Discontinued operations (Note 9)
Property Name (€)	Valuation gains/(losses)
	31 Dec 2019	31 Dec 2018
	€	€
Bela Logistic Park	-	(125.768)
Kiyanovskiy Residence	(543.263)	(23.024)
Tsymlyanskiy Residence	(77.541)	(7.914)
Balabino Project	-	(97.707)
Rozny Lane	20.152	(35.932)
Innovations Logistics Park	257.785	610.366
EOS Business Park	285.545	422.971
Residential Portfolio	27.366	1.362
GreenLake	381.385	(1.107.293)
Kindergarten	66.423	44.642
Victini Logistics	-	(900.000)
Total	417.852	(1.218.297)

 

14. Gain/ (Loss) from disposal of properties

 

During the reporting period the Group proceeded with selling properties classified under either Investment Property (Romanian residential assets) or Inventory (Bulgarian residential assets), both designated as non-core assets. The gain/ (losses) from disposal of such properties are presented below:

 

14a Inventory

 

During 2019 the Group completely disposed of the Boyana Residence, which was classified as inventory (Notes 20 & 26).

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Income from sale of inventory	-	194.953
Cost of inventory	-	(208.504)
Loss from disposal of inventory	-	(13.553)

 

14b Investment property

 

During October 2018, the Company proceeded with the sale of Praktiker Craiova.

 

Continued operations	31 Dec 2019	31 Dec 2018
	€	€
Income from sale of investment property	-	6.517.181
Cost of investment property	-	(7.362.362)
Loss from disposal of investment property	-	(845.181)

 

 

14. Gain/ (Loss) from disposal of properties (continued)

 

14b Investment property (continued)

 

During 2019 the Group sold 3 apartments in Romfelt Plaza (Doamna Ghica) and 4 apartments and 2 parking spaces in Zizin while during 2018 the Group sold 10 apartments in Romfelt Plaza and 5 apartments and 2 parking spaces in Zizin. Additionally a villa in SPDI Real Estate Srl was sold during 2018.

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Income from sale of investment property	608.073	1.499.392
Cost of investment property	(615.477)	(1.547.617)
Loss from disposal of investment property	(7.404)	(48.225)

 

15. Other operating income/(expenses), net

 

 

Continued operations	31 Dec 2019	31 Dec 2018
	€	€
Other income	114.166	-
Other income	114.166	-
Assets Written off	(2.007)	-
Impairment on Receivable from Arcona (Note 25)	(211.310)	-
Provisions and Impairment of prepayments and other current assets	(222.363)	(26.389)
Penalties	(7.213)	(4.959)
Other expenses	(113.902)	(368)
Other expenses	(556.795)	(31.716)
Other operating income/(expenses), net	(442.629)	(31.716)

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Accounts payable written off	462.198	85
Other income	9.910	30.010
Other income	472.108	30.095
Provisions and Impairment of prepayments and other current assets	(157.764)	(388.900)
Penalties	(1.458)	(4.334)
Other expenses	(85)	(296)
Other expenses	(159.307)	(393.530)
Other operating income/(expenses), net	312.801	(363.435)

 

 

Provision and impairment of prepayments and other current assets , include expected credit loss per IFRS9

 

Impairment on receivables from Arcona is related to the fair value adjustment of the receivable Arcona shares held in escrow from the disposal of the Boyana asset in Bulgaria. In particular, the 315.591 consideration Arcona shares valued at year end according to the NAV per share at that date and a loss of €211.310 was realized.

 

The accounts payable write off in 2019 of a total of €462.198 is related  to Aisi Bela and Boyana payables for construction. The settlement for the former was reached in late 2011 on the basis of maintaining the construction contract in an inactive state (to be reactivated at the option of the Group), while upon reactivation of the contract or termination of it (due to a sale of the asset) the Group would have to pay an additional UAH 5.400.000 (~USD 160.000) payable upon such event occurring. Due to the uncertainness of the payment period the latter amount used to be discounted at current discount rates in Ukraine presented as a non-current liability. This amount was written off during 2019 as a result of the forthcoming disposal of the asset during the year. Payables for construction write off related to Boyana asset, refer to an amount of ~€245.000 payable to the constructor of the project as part of the withholding of a Good Performance Guarantee. The amount has been written off during 2019 as a result of statute of limitations.

 

 

 

 

 

 

 

 

 

16. Finance costs and income

 

Continued operations
Finance income	31 Dec 2019	31 Dec 2018
	€	€
Interest received from non-bank loans (Note 41.1.1)	474.583	685.778
Interest income associated with banking accounts	1	405
Total finance income	474.584	686.183

 

 

Finance costs	31 Dec 2019	31 Dec 2018
	€	€
Interest expenses (bank)	(699)	(140.903)
Interest expenses (non-bank) (Note 41.1.2)	(50.693)	(120.376)
Finance charges and commissions	(17.725)	(24.329)
Bonds interest	(68.133)	(68.133)
Total finance costs	(137.250)	(353.741)
Net finance result	337.334	332.442

 

Discontinued operations (Note 9)
Finance income	31 Dec 2019	31 Dec 2018
	€	€
Interest received from non-bank loans (Note 41.1.1)	9.366	9.366
Interest income from bank deposits	656	613
Total finance income	10.022	9.979

 

 

Finance costs	31 Dec 2019	31 Dec 2018
	€	€
Interest expenses (bank)	(901.896)	(986.466)
Interest expenses (non-bank) (Note 41.1.2)	(7.155)	(7.251)
Finance leasing interest expenses	(496.950)	(513.461)
Finance charges and commissions	(24.528)	(35.402)
Total finance costs	(1.430.529)	(1.542.580)
Net finance result	(1.420.507)	(1.532.601)

 

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 3^rd parties provided as an advance payment for acquiring a participation in an investment property portfolio (Olympians portfolio) in Romania. The loan provided initially with a convertibility option which was not exercised. According to the last addendum, the loan had certain one-off and monthly payments for a period until 30 June 2020. The two parties are currently engaged in discussions for agreeing and signing a new addendum with a new re-payment schedule. The loan is bearing a fixed interest rate of 10% and secured by relevant corporate guarantees, while the Company is in the process of getting agreed security in the form of pledge of shares following the relevant process provided in the initial Loan Agreement.

 

Borrowing interest expense represents interest expense charged on bank and non-bank borrowings (Note 32).

 

Finance leasing interest expenses relate to the sale and lease back agreements of the Group (Note 37).

 

Finance charges and commissions include regular banking commissions and various fees paid to the banks.

 

Bonds interest represent interest calculated for the bonds issued by the Company during 2018 (Note 33).

 

Other finance expenses for 2019 includes interest on tax for prior years related to Cyprus companies.

 

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 2019 from continued operations amounted to €74.779 (2018: loss €71.390).

 

The exchange loss from discontinued operations for the year ended 31 December 2019 amounted to €436.880 (2018: loss €10.233) (Note 9).

 

 

 

 

 

 

17. Foreign exchange profit / (losses) (continued)

 

 

b.       Exchange difference on intercompany loans to foreign holdings

 

The Company has loans receivable from foreign group subsidiaries which are considered as part of the Group's net investments in those foreign operations (Note 41.3). For these intercompany loans the foreign exchange differences are recognized initially in other comprehensive income and in a separate component of equity. During 2019, the Group recognized a foreign exchange profit of €66.557 (2018:profit €1.850).

 

18. Tax Expense

Continued operations	31 Dec 2019	31 Dec 2018
	€	€
Income and defence tax expense	(36.380)	(613.034)
Taxes	(36.380)	(613.034)

 

Discontinued operations (Note 9)	31 Dec 2019	31 Dec 2018
	€	€
Income and defence tax expense	(52.315)	(96.567)
Taxes	(52.315)	(96.567)

 

For the year ended 31 December 2019, the corporate income tax rate for the Group's subsidiaries are as follows: in Ukraine 18%, and in Romania 16%. The corporate tax that is applied to the qualifying income of the Company and its Cypriot subsidiaries is 12,5%. For 2018 the amount of tax recorded mainly related to an amount of €506.728 which was derived from the sale of asset in Craiova, Romania.

 

The tax on the Group's results differs from the theoretical amount that would arise using the applicable tax rates as follows:

 

	31 Dec 2019	31 Dec 2018
	€	€
Profit / (loss) before tax	(10.975.189)	(6.759.507)
Tax calculated on applicable rates	(1.644.485)	(990.634)
Expenses not recognized for tax purposes	1.879.661	1.357.212
Tax effect of allowances and income not subject to tax	(413.424)	(303.862)
Tax effect on tax losses for the year	289.577	653.310
Tax effect on tax losses brought forward	(25.108)	(16.981)
10% additional tax	4.074	10.514
Overseas tax in excess of credit claim used during the year	20	42
Tax effect of Group tax relief	(1.620)	-
Total Tax	88.695	709.601

 

 

19. Investment Property

 

19.1 Investment Property Presentation

 

Investment Property consists of the following assets:

 

Income Producing Assets

 

·      Victini Logistics (ex GED) is a logistics park comprising 17.756 gross leasable sqm. It is fully let to the German multinational transportation and logistics company, Kuehne & Nagel and to a Greek commercial company trading electrical appliances GE Dimitriou SA. On the roof of the warehouse there is a 1MW photovoltaic park installed with the electricity generated being sold to Greek Electric Grid on a long term contract. The asset was sold within 2019.

·      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.

 

·      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 was 70% leased at the end of the reporting period while currently is 83%.

·      During 2017 the Company proceeded with an internal reorganization and the Kindergarten asset of GreenLake which was under the ownership of the associate GreenLake Development Srl was acquired by a separate entity (SPDI Real Estate). The Kindergarten is fully let to one of Bucharest's leading private schools and produces an annual rent inflow of ~€115.000.

 

 

Residential Assets

 

The Company owns a residential portfolio, consisting at the end of the reporting period of 19 apartments and villas across four separate complexes located in different residential areas of Bucharest (Residential portfolio: Romfelt Plaza, Blooming House, GreenLake Residential: GreenLake Parcel K). During 2017 Tonescu Finance (the company which acquired the Monaco Towers related loan) commenced against SecMon Real Estate Srl legal proceedings and in order for SecMon Real Estate Srl to protect itself it entered voluntarily into insolvency process in January 2018. The entering of SecMon Real Estate Srl in the insolvency process means loss of control as per the definition of IFRS 10. As such SecMon Real Estate Srl is not consolidated in the present financial statements. (Note 8)

 

Land Assets

 

·      Bela Logistic Park is a 22,4 Ha plot in Odessa situated on the main highway to Kiev. Following the issuance of permits in 2008, below ground construction for the development of a 103.000 sqm GBA logistic center commenced. Construction was put on hold in 2009. The asset was sold within 2019.

 

·      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.

 

·      Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for the development of a residential complex. It has been registered under the Group pursuant to a legal decision in 2015.

 

·      Balabino Project is a 26,38 Ha plot of land situated on the south entrance of Zaporizhia, a city in the south of Ukraine with a population of 800.000 people. Balabino Project is zoned for retail and entertainment development.

 

·      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 owns ~44% of these plots, but has effective management control.

·      Boyana Land: The complex of Boyana Residence ood includes adjacent land plots available for sale or development of ~22.000 sqm of gross buildable area.  The asset was sold within 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

Continued Operations

In 2019 , the Company did not have any Investment Property assets classified within continued operations.

2019 (€)			Fair Value movements			Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name	Type	Carrying amount as at 31/12/2018	Foreign exchange translation difference (a)	Fair value gain/(loss) based on local currency valuations (b)	Disposals 2018	Transfer to Assets held for sale	Additions 2018	Carrying amount as at 31/12/2017
Bela Logistic Park	Land	-	-	-	-	(4.586.009)	-	4.586.009
Kiyanovskiy Residence	Land	-	-	-	-	(2.668.223)	-	2.668.223
Tsymlyanskiy Residence	Land	-	-	-	-	(917.202)	-	917.202
Balabino Project	Land	-	-	-	-	(1334.111)	-	1.334.111
Rozny Lane	Land	-	-	-	-	(1.083.966)	-	1.083.966
Total Ukraine		-	-	-	-	(10.589.511)	-	10.589.511
Innovations Logistics Park	Warehouse	-	-	-	-	(10.000.000)	-	10.000.000
EOS Business Park	Office	-	-	-	-	(7.200.000)	-	7.200.000
Residential portfolio	Residential	-	-	-	-	(4.023.000)	-	4.023.000
GreenLake	Land	-	-	-	-	(17.963.000)	-	17.963.000
Kindergarten	Retail	-	-	-	-	(1.713.000)	-	1.713.000
Praktiker Craiova	Retail	-	-	-	(7.500.000)	-	-	7.500.000
Total Romania		-	-	-	(7.500.000)	(40.899.000)	-	48.399.000
Boyana	Land	-	-	-	-	(4.230.000)	-	4.230.000
Total Bulgaria		-	-	-	-	(4.230.000)	-	4.230.000
Victini Logistics	Warehouse	-	-	-	-	(16.100.000)	-	16.100.000
Total Greece		-	-	-	-	(16.100.000)	-	16.100.000
TOTAL		-	-	-	(7.500.000)	(71.818.511)	-	79.318.511

 

Discontinued

2019 (€)			Fair Value movements			Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name	Type	Carrying amount as at 31/12/2019	Foreign exchange translation difference (a)	Fair value gain/(loss) based on local currency valuations (b)	Disposals 2019	Transfer to Assets held for sale	Additions 2019	Carrying amount as at 31/12/2018
Bela Logistic Park	Land	-	-	-	(4.716.157)	-	-	4.716.157
Kiyanovskiy Residence	Land	2.759.480	507.983	(543.263)	-	-	-	2.794.760
Tsymlyanskiy Residence	Land	1.068.186	185.028	(77.541)	-	-	-	960.699
Balabino Project	Land	-	-	-	(1.310.044)	-	-	1.310.044
Rozny Lane	Land	1.068.186		20.152	-	-	-	1.048.034
Total Ukraine		4.895.852	693.011	(600.652)	(6.026.201)	-	-	10.829.694
Innovations Logistics Park	Warehouse	10.600.000	(257.785)	257.785	-	-	-	10.600.000
EOS Business Park	Office	7.700.000	(185.545)	285.545	-	-	-	7.600.000
Residential portfolio	Residential	733.000	(32.889)	27.366	(615.477)	-	-	1.354.000
GreenLake	Land	16.814.000	(409.385)	381.385	-	-	-	16.842.000
Kindergarten	Retail	1.438.000	(34.423)	66.423	-	-	-	1.406.000
Total Romania		37.285.000	(920.027)	1.018.504	(615.477)	-	-	37.802.000
Boyana	Land	-	-	-	(4.230.000)	-	-	4.230.000
Total Bulgaria		-	-	-	(4.230.000)	-	-	4.230.000
Victini Logistics	Warehouse	-	-	-	(15.200.000)	-	-	15.200.000
Total Greece		-	-	-	(15.200.000)	-	-	15.200.000
TOTAL		42.180.852	(227.016)	417.852	(26.071.678)	-	-	68.061.694

19. Investment Property (continued)

 

19.2 Investment Property Movement during the reporting period (continued)

 

Discontinued Operations

2018 (€)			Fair Value movements				Asset Value at the Beginning of the period or at Acquisition/Transfer date
Asset Name	Type	Carrying amount as at 31/12/2018	Foreign exchange translation difference (a)	Fair value gain/(loss) based on local currency valuations (b)	Transfer to  FA at fair value through OCI (Note 22)	Disposals 2018	Transfer from Continued Operations	Carrying amount as at 31/12/2017
Bela Logistic Park	Land	4.716.157	255.916	(125.768)	-	-	4.586.009	-
Kiyanovskiy Residence	Land	2.794.760	149.561	(23.024)	-	-	2.668.223	-
Tsymlyanskiy Residence	Land	960.699	51.411	(7.914)	-	-	917.202	-
Balabino Project	Land	1.310.044	73.639	(97.707)	-	-	1.334.111	-
Rozny Lane	Land	1.048.034	-	(35.932)	-	-	1.083.966	-
Total Ukraine		10.829.694	530.527	(290.345)	-	-	10.589.511	-
Innovations Logistics Park	Warehouse	10.600.000	(10.366)	610.366	-	-	10.000.000	-
EOS Business Park	Office	7.600.000	(7.392)	407.392	-	-	7.200.000	-
Residential portfolio	Residential	1.354.000	(2.322)	16.939	(1.486.000)	(1.197.617)	4.023.000	-
GreenLake	Land	16.842.000	(13.707)	(1.107.293)	-	-	17.963.000	-
Kindergarten	Retail	1.406.000	(1.642)	44.642	-	(350.000)	1.713.000	-
Total Romania		37.802.000	(35.429)	(27.954)	(1.486.000)	(1.547.617)	40.899.000	-
Boyana	Land	4.230.000			-	-	4.230.000	-
Total Bulgaria		4.230.000			-	-	4.230.000	-
Victini Logistics	Warehouse	15.200.000		(900.000)	-	-	16.100.000	-
Total Greece		15.200.000		(900.000)	-	-	16.100.000	-
TOTAL		68.061.694	495.098	(1.218.299)	(1.486.000)	(1.547.617)	71.818.511	-

 

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 €227.016 (a) (2018:  profit €495.098) 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 gain in terms of the local functional currencies amounting to €417.852 (b) (2018: loss €1.218.299), 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 Operation	Related Companies	Carrying amount as at
				31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
				Continued operations	Discontinued operations	Continued operations	Discontinued operations
					€	€	€
Bela Logistic Park	Odesa	Land and Development Works for Warehouse	LLC Aisi Bela	-	-	-	4.716.157
Kiyanovskiy Residence	Podil, Kiev City Center	Land for residential Development	LLC Aisi Ukraine LLC Trade Center	-	2.759.480	-	2.794.760
Tsymlyanskiy Residence	Podil, Kiev City Center	Land for residential Development	LLC Almaz‑Pres‑Ukraine	-	1.068.186	-	960.699
Balabino Project	Zaporizhia	Land for retail development	LLC Aisi Bela	-	-	-	1.310.044
Rozny Lane	Brovary district, Kiev	Land for residential Development	SC Secure Capital Limited	-	1.068.186	-	1.048.034
Total Ukraine				-	4.895.852	-	10.829.694
Innovations Logistics Park	Clinceni, Bucharest	Warehouse	Myrnes Innovations Park Limited Best Day Real Estate Srl	-	10.600.000	-	10.600.000
EOS Business Park	Bucharest	Office building	Yamano Ltd SPDI SRL First Phase srl	-	7.700.000	-	7.600.000
Praktiker Craiova	Craiova	Big Box retail	Bluehouse Accession Project IX Limited Bluehouse Accession Project IV Limited BlueBigBox 3 Srl	-	-	-	-
Kindergarten	Bucharest	Retail	SPDI Real Estate Srl	-	1.438.000	-	1.406.000
Residential Portfolio	Bucharest	Residential apartments (5 in total in 2 complexes)	Secure II, Demetiva Ltd Diforio Ltd, Frizomo Ltd, Ketiza Ltd, Sec Rom Ltd Sec Vista Srl, Sec Mon Ltd, Ketiza Srl	-	733.000	-	1.354.000
GreenLake	Bucharest	Residential villas (14 villas) & land for Residential Development	Edetrio Holdings Limited Emakei Holdings Limited Iuliu Maniu Limited Moselin Investments srl Rimasol Limited Rimasol Real Estate Srl Ashor Ventures Limited Ashor Develpoment Srl Jenby Ventures Limited Jenby Investments Srl Ebenem Limited Ebenem Investments Srl SPDI Real Estate	-	16.814.000	-	16.842.000
Total Romania				-	37.285.000	-	37.802.000
Boyana	Sofia	Land	Boyana Residence ood, Sertland Properties Limited	-	-	-	4.230.000
Total Bulgaria				-	-	-	4.230.000
Victini Logistics	Athens	Warehouse	Victini Holdings Limited, Victini Logistics Park S.A.	-	-	-	15.200.000
Total Greece				-	-	-	15.200.000
TOTAL				-	42.180.852	-	68.061.694

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, Kindergarten of GreenLake, the Residential Portfolio (consisting of apartments in 2 complexes) 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 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations (Note 9)	Continued operations	Discontinued operations (Note 9)
	€	€	€	€
At 1 January	-	63.345.537	74.732.502	-
Disposal of investment Property	-	(21.355.521)	(7.500.000)	(3.033.617)
Revaluation (loss)/gain on investment property	-	417.852	-	(1.092.530)
Translation difference	-	(227.016)	-	239.182
Transferred to Assets held for sale	-	-	(67.232.502)	67.232.502
At 31 December	-	42.180.852	-	63.345.537

 

Disposals of Investment Properties represent the sales of Balabino land plot in Ukraine, the Boyana Residence in Bulgaria and the Victini Logistics asset in Greece. All these assets were sold during 2019.

 

b.       Investment Properties Under Development

 

As at 31 December 2019 investment property under development represents the carrying value of Bela Logistic Park property, which has reached the +10% construction in late 2008 but it is stopped since then. This property sold during December 2019.

 

	31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations (Note 9)	Continued operations	Discontinued operations (Note 9)
	€	€	€	€
At 1 January	-	4.716.157	4.586.009	-
Revaluation on investment property	-	-	-	(125.768)
Disposal of IP	-	(4.716.157)	-	-
Translation difference	-	-	-	255.916
Transferred to Assets held for sale	-	-	(4.586.009)	4.586.009
At 31 December	-	-	-	4.716.157

 

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).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19. Investment Property (continued)

 

19.5 Investment Property valuation method presentation (continued)

 

To derive Fair Values the Group has adopted a combination of income and market approach weighted according to the predominant local market and economic conditions.

 

Fair value measurements at 31 Dec 2019 (€)	(Level 1)	(Level 2)	(Level 3)	Total
-	-	-	-	-
Recurring fair value measurements	-	-	-	-
Tsymlyanskiy Residence - Podil, Kiev City Center	-	1.068.186	-	1.068.186
Kiyanovskiy Residence - Podil, Kiev City Center	-	2.759.480	-	2.759.480
Rozny Lane - Brovary district, Kiev oblast	-	1.068.186	-	1.068.186
Innovations Logistics Park - Bucharest	-	-	10.600.000	10.600.000
EOS Business Park - Bucharest, City Center	-	-	7.700.000	7.700.000
Residential Portfolio (ex GreenLake) - Bucharest	-	733.000	-	733.000
GreenLake - Bucharest	-	16.814.000	-	16.814.000
Kindergarten - Bucharest	-	-	1.438.000	1.438.000
Totals	-	22.442.852	19.738.000	42.180.852

 

 

Fair value measurements at 31 Dec 2018 (€)	(Level 1)	(Level 2)	(Level 3)	Total
	-	-	-	-
Recurring fair value measurements	-	--	-	-
Balabino Project - Zaporizhia	-	1.310.044	-	1.310.044
Tsymlyanskiy Residence - Podil, Kiev City Center	-	960.699	-	960.699
Bela Logistics Park - Odessa	-		4.716.157	4.716.157
Kiyanovskiy Residence - Podil, Kiev City Center	--	2.794.760	-	2.794.760
Rozny Lane - Brovary district, Kiev oblast	-	1.048.034	-	1.048.034
Innovations Logistics Park - Bucharest	-		10.600.000	10.600.000
EOS Business Park - Bucharest, City Center	-		7.600.000	7.600.000
Residential Portfolio (ex GreenLake) - Bucharest	-	1.354.000	-	1.354.000
GreenLake - Bucharest	-	16.842.000	-	16.842.000
Kindergarten - Bucharest	-		1.406.000	1.406.000
Victini Logistics - Athens	-	-	15.200.000	15.200.000
Boyana- Land, Bulgaria	-	4.230.000		4.230.000
Totals		28.539.537	39.522.157	68.061.694

 

The table below shows yearly adjustments for Level 3 investment property valuations:

 

Level 3 Fair value measurements at 31 Dec 2019 (€)	Bela Logistics Park	Innovations Logistics Park	EOS Business Park	Victini Logistics	Kindergarten	Total
Opening balance	4.716.157	10.600.000	7.600.000	15.200.000	1.406.000	39.522.157
Profit/(loss) on revaluation	-	257.785	285.545	-	66.423	609.753
Translation difference	(4.716.157)	(257.785)	(185.545)	(15.200.000)	(34.423)	(20.393.910)
Closing balance	-	10.600.000	7.700.000	-	1.438.000	19.738.000

 

 

 

 

 

 

 

 

 

 

 

 

 

19. Investment Property (continued)

 

19.5 Investment Property valuation method presentation (continued)

 

Level 3 Fair value measurements at 31 Dec 2018 (€)	Bela Logistics Park	Innovations Logistics Park	EOS Business Park	Praktiker Craiova	Victini Logistics	Kindergarten	Total
Opening balance	4.586.009	10.000.000	7.200.000	7.500.000	16.100.000	1.713.000	47.099.009
Disposals	-	-	-	(7.500.000)	-	-	(7.500.000)
Profit/(loss) on revaluation	(125.768)	610.366	407.392	-	(900.000)	44.642	36.632
Translation difference	255.916	(10.366)	(7.392)	-	-	(351.642)	(113.484)
Closing balance	4.716.157	10.600.000	7.600.000	-	15.200.000	1.406.000	39.522.157

 

Information about Level 3 Fair Values is presented below:

 

	Fair value at  31 Dec 2019	Fair value at  31 Dec 2018	Valuation technique	Unobservable inputs	Relationship of unobservable inputs to fair value
	€	€	€	€	€
Bela Logistic Park - Odessa	-	4.716.157	Combined market and cost approach(2018)	Percentage of development works completion, deterioration rate(2018)	The higher the percentage of completion the higher the fair value. The higher the deterioration rate, the lower fair value(2018)
Innovations Logistics Park - Bucharest	10.600.000	10.600.000	Income approach	Future rental income and costs for 10 years, discount rate	The higher the rental income the higher the fair value. The higher the discount rate, the lower fair value
EOS Business Park - Bucharest, City Center	7.700.000	7.600.000	Income approach	Future rental income and costs for 10 years, discount rate	The higher the rental income the higher the fair value. The higher the discount rate, the lower fair value
Praktiker Craiova	-	-	Income approach(2018)	Future rental income and costs for 10 years, discount rate(2018)	The higher the rental income the higher the fair value. The higher the discount rate, the lower fair value(2018)
Victini Logistics	-	15.200.000	Income approach(2018)	Future rental income and costs for 10 years, discount rate for real estate property and for Photovoltaic(PV) 13 + 4 years (2018)	The higher the rental/PV income the higher the fair value. The higher the discount rate, the lower fair value(2018)
Kindergarten	1.438.000	1.406.000	Income approach	Future rental income and costs of discount rate, vacancy rate	The higher the rental income the higher the fair value. The higher the discount rate and the vacancy rate, the lower fair value
Total	19.738.000	39.522.157

 

 

 

 

 

 

 

 

 

 

 

 

 

20. Investment Property Acquisitions, Goodwill Movement and Disposals

 

 Disposal of subsidiaies

 

 

	Victini Logistics Park AE	Aisi Bela	Boyana	Total
ASSETS	€	€	€	€
Non-current assets
Investment property	15.200.000	1.318.104	4.230.000	20.748.104
Investment property under construction	-	4.745.167	-	4.745.167
Tangibles and intangibles assets	16.994	-	-	16.994
	15.216.994	6.063.271	4.230.000	25.510.265
Current assets
Inventories	-	-	4.604.044	4.604.044
Prepayments and other current assets	475.143	938	1.255	477.336
Cash and cash equivalents	35.994	27	2.187	38.208
	511.137	965	4.607.486	5.119.588
Total assets	15.728.131	6.064.236	8.837.486	30.629.853
Non-current liabilities
Borrowings	10.082.370	-	2.257.980	12.340.350
Deposits from tenants	151.930	-	-	151.930
	10.234.300	-	2.257.980	12.492.280
Current liabilities
Borrowings	-	-	336.329	336.329
Trade and other payables	586.870	78.068	24.046	688.984
Tax Payable	180.883	-	136.138	317.021
Provisions	42.512	-	-	42.512
	810.265	78.068	496.513	1.384.846
Total liabilities	11.044.565	78.068	2.754.493	13.877.126
Net assets disposed	4.683.566	5.986.168	6.082.993	16.752.727
Financed by
Cash consideration received	2.030.624	-	-	2.030.624
Retained receivables from tenants	337.600	-	-	337.600
Financial assets received	-	3.735.555	4.241.544	7.977.099
Bank Loan pending transfer (Notes 26 & 45c)	-	-	775.641	775.641
Net deferred consideration in the form of a loan receivable	-	-	639.000	639.000
Total result from disposal (Note 9)	(2.315.342)	(2.250.613)	(426.808)	(4.992.763)

 

On 8 August 2019 Victini Logistcs Park AE the owner of Victini Logistics property in Athens, Greece, was sold at a Gross Asset Value of EUR 12,5m payable in cash, excluding the receivables from the tenant of the property G. Dimitriou S.A. of a total of EUR 337.600 plus all future rent invoicing until 31/12/2020. The transaction resulted in a cash inflow of EUR 2,03m, plus the amount to be recovered in the future from G.Dimitriou S.A.

 

On 1 November 2019 the Company announced the disposal of Aisi Bella, the owner company of Bella and Balabino assets in Ukraine, to Arcona in exchange for the issue to the Company of 277.943 new shares in Arcona and 67.063 warrants over shares in Arcona. Based on the NAV per Arcona share the consideration corresponds to EUR 3,7m (excluding the issue of warrants), while the price paid for the warrants was EUR1. The warrants give the Company the right to receive ordinary shares  in Arcona of EUR 5 each nominal value, exercisable before 1 November 2024 and when the shares have traded at a volume weighted average price of EUR 8,10.   

 

On 5 December 2019 the Company announced the disposal of Boyana Residence, the owner company of Boyana assets in Sofia, Bulgaria, to Arcona in exchange of 315.591 new shares in Arcona and 77.201 warrants over shares in Arcona. Based on the NAV per Arcona share the consideration corresponds to EUR 4,2m (excluding the issue of warrants), while the price paid for the warrants was EUR1. The Company also maintained as part of the transaction, a Sellers Loan with Boyana Residence equal to EUR 750k, as adjusted finally by a reverse liability of EUR 111k to a net amount of EUR 639k, receivable by the end of 2020. Moreover, as part of the transaction it was agreed that an associated to Boyana loan from Alpha Bank at Sertland level of EUR 0,77m will be transferred to Arcona. The transfer completed successfully in August 2020. The warrants give the Company the right to receive ordinary shares  in Arcona of EUR 5 each nominal value, exercisable before 1 November 2024 and when the shares have traded at a volume weighted average price of EUR 8,10. The shares and the warrants issued to the Company in relation to this transaction held in escrow, to be released upon agreement on the terms of the extension of the loan associated with the asset. As at the reporting period, the shares and warrants were still in escrow, released successfully in February 2020.   

 

 

 

21. Investments in associates

 

	31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations	Continued operations	Discontinued operations
	€	€	€	€
Cost of investment in associates at the beginning of the period	-	5.313.235	5.115.587	-
Share of profits /(losses) from associates (Note 9)	-	297.985	-	364.920
Dividend Income	-	(121.772)	-	(143.263)
Foreign exchange difference	-	(109.427)	-	(24.009)
Transfer to assets classified as held for sale	-	-	(5.115.587)	5.115.587
Total	-	5.380.021	-	5.313.235

 

Dividend Income reflects dividends received from Delenco Srl, owner of the Delea Nuova building, where the Group maintains a 24,35% participation.

 

The share of profit from the associate GreenLake Development Srl was limited up to the interest of the Group in the associate.

 

As at 31 December 2019, the Group's interests in its associates and their summarised financial information, including total assets at fair value, total liabilities, revenues and profit or loss, were as follows:

 

Project Name	Associates	Total assets	Total liabilities	Profit/ (loss)	Holding	Share of profits from associates	Country	Asset type
		€	€	€	%	€
Delea Nuova Project	Lelar Holdings Limited and S.C. Delenco Construct Srl	24.263.233	(2.172.318)	1.223.558	24,35	297.985	Romania	Office building
GreenLake Project - Phase A	GreenLake Development Srl	8.403.831	(11.474.393)	(954.837)	40,35	-	Romania	Residential assets
Total		32.667.064	(13.646.711)	268.721		297.985

 

As at 31 December 2018, the Group's interests in its associates and their summarised financial information, including total assets at fair value, total liabilities, revenues and profit or loss, were as follows:

 

Project Name	Associates	Total assets	Total liabilities	Profit/ (loss)	Holding	Share of profits from associates	Country	Asset type
		€	€	€	%	€
Delea Nuova Project	Lelar Holdings Limited and S.C. Delenco Construct Srl	24.272.364	(2.455.680)	1.498.399	24,354	364.920	Romania	Office building
GreenLake Project - Phase A	GreenLake Development Srl	9.202.949	(11.567.196)	(839.107)	40,35	-	Romania	Residential assets
Total		33.475.313	(14.022.876)	659.292		364.920

 

 

22. Financial Assets at FV through OCI

 

The Group proceeded with an impairment of €297.200 for Monaco Towers (company SecMon Real Estate Srl) in 2018 for which following the court decision for entering into insolvency in January 2018, the Company lost the control over the asset (Note 8) and as such it was reclassified as Financial assets at fair value through OCI as per table below (where the fair value of the property was adjusted at 80% of its value): In 2019, the Management believes that the fair value of the Financial asset at fair value through OCI should remain the same as last year.

 

 

 

 

 

 

 

 

 

 

Discontinued operations (Note 9)
	Unadjusted	Adjusted
ASSETS	€	€
Non-current assets
Investment property	1.486.000	1.188.800
Current assets
Prepayments and other current assets	20.447	20.447
Cash and cash equivalents	10.321	10.321
Total assets	1.516.768	1.219.568
Current liabilities
Borrowings	(1.075.176)	(1.075.176)
Other liabilities	(19.433)	(19.433)
Intercompany loans	(1.845.700)	(124.958)
Total liabilities	(2.940.309)	(1.219.567)
Total Net equity	(1.423.541)	1
Add back Intercompany loans	1.845.700	-
Total Net equity (excluding IC)	422.159	1
Financial Asset at fair value through OCI		1

 

23. Tangible and intangible assets

 

As at 31 December 2019 the intangible assets were composed of the capitalized expenditure on the Enterprise Resource Planning system (Microsoft Dynamics-Navision) in the amount of €103.193 (2018: €103.193) which is under continued operations. Accumulated amortization as at the reporting date amounts to €103.193 (2018: €100.800) and therefore net value amounts to €0 (2018: €2.393).

 

As at 31 December 2019 the tangible non-current assets under continued operations were comprised mainly by electronic equipment (mobiles, computers etc.) of a net value of €565 (2018: €1.281).

 

As at 31 December 2019 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, Romania, Greece and Bulgaria, amount to €60.741 (2018:€129.516). Accumulated depreciation as at the reporting date amounts to €46.399 (2018: €86.982).

 

24. Long Term Receivables and prepayments

 

	31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations	Continued operations	Discontinued operations
	€	€	€	€
Long Term Receivables	852	315.265	850	270.271
Total	852	315.265	850	270.271

 

Long term receivables mainly include the cash collateral existing in favor of Piraeus Leasing and the guarantee deposit from a tenant in Innovations Logistics Park.

 

 

25. Inventory

 

	31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations	Continued operations	Discontinued operations
	€	€	€	€
At 1 January	-	4.604.044	4.812.550	-
Sale of Inventories (Note 14a)	-	-	-	(208.506)
Disposal of the asset (Note 19)	-	(4.604.044)	-	-
Transfer to assets classified as held for sale	-	-	(4.812.550)	4.812.550
At 31 December	-	-	-	4.604.044

 

The residential portfolio in Boyana, Sofia, Bulgaria is classified as Inventory.

 

Boyana residential portfolio was sold within 2019.

 

26. Prepayments and other current assets

 

	31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations	Continued operations	Discontinued operations
	€	€	€	€
Trade and other receivables	1.062.508	437.183	102.243	569.210
Bank Loan pending transfer (Note 20)	-	775.641	-	-
Receivable from Arcona (Note 20)	4.030.233	-	-	-
VAT and other tax receivables	145.910	111.350	123.975	93.331
Deferred expenses	14.533	15.245	72.630	1.254
Receivables due from related parties	71.147	6.927	54.689	1.010
Loan receivables from 3rd parties	5.575.555	124.958	5.312.919	124.958
Loan to associates (Note 41.4)	-	292.208	8.374	282.842
Allowance for impairment of prepayments and other current assets	(65.974)	(292.740)	(89.422)	(390.471)
Total	10.833.913	1.470.772	5.585.408	682.134

 

Trade and other receivables mainly include receivables from tenants and prepayments made for services.

 

Bank Loan pending transfer refers to the agreement, as part of the transaction for the sale of Boyana to Arcona, of the transfer of the relevant loan at Sertland level to Arcona upon signing relevant documentation with Alpha Bank. The transfer completed effectively in August 2020 (Note 20 & Note 45c).

 

Receivables from Arcona refer to the consideration shares and warrants in relation to the disposal of Boyana asset, which at year end were in escrow account, agreed then to be released to the Company upon agreement of the extension terms of the associated loans.  The consideration shares and warrants were released effectively in February 2020. The initial amount of the Receivable is €4.241.544 and the impairment charge at the year end is €211.310, resulting in a net amount €4.030.233 (Note 20 & Note 45c).

 

VAT receivable represent VAT which is refundable in Romania, Cyprus and Ukraine.

 

Deferred expenses include legal, advisory, consulting and marketing expenses related to ongoing share capital increase and due diligence expenses related to the possible acquisition of investment properties.

 

Loan receivables from 3^rd parties include an amount of €4.580.000 provided as an advance payment for acquiring a participation in an investment property portfolio (Olympians portfolio) in Romania, as well as associated interest of  €845.638 (2018 €610.853). The loan provided initially with a convertibility option which was not exercised. According to the last addendum the loan had certain one-off and monthly payments for a period until 30 June 2020. The two parties are currently engaged in discussions for agreeing and signing a new addendum with a new re-payment schedule.The loan is bearing a fixed interest rate of 10% and secured by relevant corporate guarantees, while the Company is in the process of getting agreed security in the form of pledge of shares following the relevant process provided in the initial Loan Agreement.

 

Moreover, Loans receivables from 3^rd parties include an amount of €750.000 which represents effectively part of the consideration for the disposal of Boyana asset to Arcona deferred until 31/12/2020 in the form of a loan. The loan has a scaling structure of interest rates: 6% until 31/3/2020, 8% until 30/6/2020 and 10% until 31/12/2020. Final agreement involved also a reverse payable of the Company of €111k which is classified appropriately.

 

Loans receivables from 3^rd parties also include an amount of €115.000 provided to the SPV that acquired Delia Lebada asset, as part of an agreement of obtaining a 5% stake on the property.

 

Loan receivable from 3^rd parties under discontinued operations include a loan receivable from SecMon Real Estate Srl which since January 2018 is classified as Financial Asset at Fair value through OCI (Note 22).

 

Loan to associates reflects a loan receivable from GreenLake Development Srl, holding company of GreenLake Project-Phase A (Notes 21 and 41.4).

 

27. 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 2019	31 Dec 2018
	€	€
Arcona shares	3.735.555	-
FV change in Arcona shares	(186.102)	-
Arcona shares at reporting date	3.549.453	-
Cost of Warrants over Arcona shares	1	-
FV change in warrants	32.189	-
Arcona warrants at reporting date	32.190	-
Total Financial Assets at FV	3.581.643	-
FV change in Arcona shares	(186.102)	---
FV change in warrants	32.189	-
Fair Value loss on Financial Assets at FV through P&L	(153.913)	-

 

The Company received during the year 277.943 Arcona shares as part of the disposal of Aisi Bella LLC, the owner company of Bella and Balabino assets in Ukraine, to Arcona Property Fund N.V.  At the time of the transaction the shares represented a total value of EUR 3.735.555 based on the NAV per share of Arcona at that time. At the end of the period the shares are re-valued to fair value based on the NAV per share of Arcona at that date, and as a result a relevant fair value loss of EUR 186.102 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. The warrants are exercisable upon the volume weighted average price of the Arcona shares traded on a regulated market at EUR 8,10 or higher. At year end, the warrants are re-valued to fair value and as a result a relevant gain of  EUR 32.189 is recognized. The terms and assumptions used for such warrant re-valuation are:

 

•                      Current stock price (as retrieved from Amsterdam Stock Exchange): EUR 6 per share

•                      Strike price of the warrants: EUR 8,10 per share

•                      Expiration date: 1 November 2024

•                      Standard deviation of stock price: 20,78%

•                      Annualized dividend yield on shares: 0,10%

•                      5 year Government Bond  rate (weighted average rate of Government Bonds of countries that Arcona is exposed): 0,521%

 

28. Cash and cash equivalents

 

Cash and cash equivalents represent liquidity held at banks.

 

	31 Dec 2019	31 Dec 2019	31 Dec 2018	31 Dec 2018
	Continued operations	Discontinued operations	Continued operations	Discontinued operations
	€	€	€	€
Cash with banks in USD	15.700	-	45.134	2.621
Cash with banks in EUR	151.349	51.539	205.679	233.184
Cash with banks in UAH	59	95	71	1.498
Cash with banks in RON	40.143	478.740	31.829	465.062
Cash with banks in BGN	-	-	-	2.460
Total	207.251	530.374	282.713	704.825