On 3 April 2014, the Board of Directors of the Company committed
to a plan to sell Gelida Holding Limited and its subsidiary
Mezokred Holding LLC to the ultimate controlling party of the
Group. Accordingly, the assets and liabilities of the
abovementioned subsidiaries are presented as classified as held for
sale as at 30 June 2014. Assets of these subsidiaries are
represented by investment property, which is a land plot, including
the finance lease asset, measured at fair value of USD 7,423
thousand, prepayments for investment property in the amount of USD
55 thousand, property under construction measured at cost of USD
756 thousand and other assets of USD 79 thousand as at 30 June
2014. As at 30 June 2014, the Group recognized a gain on
revaluation of this land plot in the amount of USD 1,930 thousand.
Based on representation obtained from the ultimate controlling
party, management believes that subsidiaries Gelida Holding Limited
and Mezokred Holding LLC will be sold without causing financial
losses or equity reduction to Arricano. Accordingly, management
believes that the assets of these subsidiaries, classified as held
for sale, are not impaired as at 30 June 2014.
As at 30 June 2014, the Group is involved as a defendant in a
lawsuit alleging invalidation of a resolution of the Kyiv City
Council, according to which the latter has approved an allocation
of a land plot for construction of the hypermarket to Mezokred
Holding LLC and entitled Mezokred Holding LLC to lease this land
plot for a period of 25 years (refer to note 23(d)(iii)).
Included in assets classified as held for sale as at 30 June
2014, is a land plot with a carrying amount of USD 3,657 thousand
(unaudited) (31 December 2013: USD 5,410 thousand), which is
intended to be transferred by one of the Group's subsidiaries,
Comfort Market Luks LLC, to a third party by the end of 2014 in
accordance with an investment agreement concluded between the
parties. Based on this investment agreement, Comfort Market Luks
LLC acts as an intermediary in construction of a hypermarket with a
total estimated area of 11,769 square meters and a parking lot with
a total estimated area of 20,650 square meters.
As at 30 June 2014, Comfort Market Luks LLC has received advance
payment from this third party amounting to USD 17,684 thousand
(unaudited) (31 December 2013: USD 14,636 thousand) under the
investment agreement (refer to note 16). Simultaneously, Comfort
Market Luks LLC has concluded a contract of mandate, according to
which this third party will act as a developer in the construction
of this hypermarket and parking lot. As at 30 June 2014, prepayment
made to this third party and other assets under the contract of
mandate amounted to USD 12,664 thousand (unaudited) (31 December
2013: USD 8,110 thousand) and prepayments made to other third
parties and other assets under the abovementioned investment
agreement amounted to USD 1,011 thousand (unaudited) (31 December
2013: USD 784 thousand) (refer to note 6).
8 Trade and other receivables
Trade and other receivables are as follows:
30 June 31 December
2014 2013
(unaudited)
(in thousands of USD)
Trade receivables from related parties 7,276 10,761
Other receivables from related parties 9,188 9,654
Allowance for impairment (14,249) (17,282)
2,215 3,133
Trade receivables from third parties 1,010 1,426
Other receivables from third parties 46 53
Allowance for impairment (165) (288)
891 1,191
3,106 4,324
Trade receivables are mainly comprised of accounts receivable
from related party, OKey Ukraine, under the common control of the
ultimate controlling party. The Group ceased working with OKey
Ukraine in August 2009. As the result of financial difficulties
faced by this tenant, an allowance for impairment is
recognized.
As at 30 June 2014, other receivables from related parties
amounting to USD 8,826 thousand (31 December 2013: USD 9,260
thousand) comprise receivables due from Dniprovska Prystan PrJSC,
which are overdue. In 2012 the court ruled to initiate bankruptcy
proceedings against the mentioned related party and, as at 30 June
2014 the decision which would declare Dniprovska Prystan PrJSC
insolvent has not yet been made. Management of the Group believes
that it will be able to recover a portion of the balance amounting
to USD 1,853 thousand (31 December 2013: USD 2,739 thousand) due to
existence of sufficient assets of short-term nature and,
accordingly, this portion of receivable is not considered to be
impaired. As at 30 June 2014 management has recognised an allowance
for impairment for the remaining portion of receivables amounting
to USD 6,973 thousand (31 December 2013: USD 6,521 thousand) due to
significant uncertainty in settlement of these balances by
Dniprovska Prystan PrJSC.
9 Cash and cash equivalents
Cash and cash equivalents are as follows:
30 June 31 December
2014 2013
(unaudited)
(in thousands of USD)
Bank balances 1,414 2,892
Call deposits - 8,798
Cash in transit 200 150
1,614 11,840
Excluded from cash and cash equivalents as at 30 June 2014 are
restricted deposits in amounts of USD 1,648 thousand and USD 958
thousand with maturity in 2014 and 2020, respectively (unaudited)
(31 December 2013: USD 663 thousand and USD 820 thousand,
respectively). These deposits serve as pledge under three different
loan facilities (refer note 23(a)).
As at 30 June 2014, cash and cash equivalents placed with two
bank institutions amounted to USD 1,036 thousand, or 64% of the
total balance of cash and cash equivalents (31 December 2013: USD
11,476 thousand, or 97%). In accordance with Moody's rating, these
banks are rated as A2 as at 30 June 2014 and 31 December 2013.
10 Share capital and Other Equity
Share capital is as follows:
2014 2014 2014 2013 2013 2013
Number of shares US dollars EUR Number of shares US dollars EUR
Issued and fully paid
At 1 January and 30 June (unaudited) 103,270,637 66,750 51,635 64,620,000 41,067 32,310
Authorised
At 1 January 106,000,000 68,564 53,000 85,026,309 53,856 42,513
Forfeiture of shares (unaudited) - - - (20,406,309) (12,789) (10,203)
At 30 June (unaudited) 106,000,000 68,564 53,000 64,620,000 41,067 32,310
Par value, EUR - - 0.0005 - - 0.0005
All shares rank equally with regard to the Company's residual
assets. The holders of ordinary shares are entitled to receive
dividends as declared from time to time, and are entitled to one
vote per share at meetings of the Company.
During the six months ended 30 June 2014 and 30 June 2013 the
Parent Company did not declare any dividends.
Initial public offering of the Company's shares
In 2012, the Company was contemplating an initial public
offering of its shares (the "IPO") at the London AIM. The Company's
authorised share capital was increased to meet the minimum
requirements established for the share capital of public companies
under the laws of Cyprus. On 12 September 2012 the authorised share
capital of the Company was divided into 3,231,000 ordinary shares
of nominal value Euro 0.01 each and on the same day the authorised
share capital was further increased to Euro 42,513.16 divided into
4,251,316 ordinary shares of nominal value Euro 0.01 each by the
creation of 1,020,316 ordinary shares of Euro 0.01 each. On 19
September 2012 the authorised share capital was further divided
into 85,026,320 ordinary shares with nominal value of Euro 0.0005
each, of which 64,620,000 ordinary shares with nominal value of EUR
0.0005 each were allotted to existing shareholders.
Further, with a view to fulfill obligations of the Company under
share purchase agreements with new investors, concluded with a view
to facilitate the IPO process, on 26 September 2012 the Board of
Directors of the Company took a decision on allotment of 20,406,309
shares to new investors for total consideration of USD 70,000
thousand. As at 31 December 2012, these shares were unpaid.
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