SPDI Secure Property Development & Investment Plc

 of market value. All the payments are projected in nominal US 
 dollar 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 
 passing in the market which a prospective purchaser may deem 
 appropriate to adopt in constructing each individual scheme. 
 Although in some instances the appraisers have adopted the budgeted 
 costs provided, in some cases the appraisers' own opinions of 
 costs were used. 
Post Development 
 Rental values have been assessed as at the date of valuation 
 but having regard to the existing occupational markets taking 
 into account the likely supply and demand dynamics during the 
 anticipated development period. The standard letting fees were 
 assumed within the valuations. In arriving at their estimates 
 of gross development value ("GDV"), the appraisers have capitalized 
 their opinion of net operating income, having deducted any anticipated 
 non-recoverable expenses, such as land payments, and permanent 
 void allowance, which has then been capitalized into perpetuity. 
The capitalization rates adopted in arriving at the opinions 
 of GDV reflect the appraisers' opinions of the rates at which 
 the properties could be sold as at the date of valuation. 
In terms of residential developments, the sales prices per sq. 
 m. again reflect current market conditions and represent those 
 levels the appraisers consider to be achievable at present. It 
 was assumed that there are no irrecoverable operating expenses 
 and that all costs will be recovered from the occupiers/owners 
 by way of a service charge. 
The valuations take into account the requirement to pay ground 
 rental payments and these are assumed not to be recoverable from 
 the occupiers. In terms of ground rent payments, the appraisers 
 have assessed these on the basis of information available, and 
 if not available they have calculated these payments based on 
 current legislation defining the basis of these assessments. 
 Property tax is not presently payable in Ukraine. 
3.18 Non--current liabilities 
Non--current liabilities represent amounts that are due in more 
 than twelve months from the reporting date. 
3.19 Project/Special Purpose Vehicle Related Transaction Expenses 
Expenses incurred by the Group for acquiring a subsidiary or 
 associated company and are directly attributable to such acquisition 
 are recognized in the statement of comprehensive income. 
 
3.20 Provisions 
 
 Provisions are recognized when the Group has a present obligation 
 (legal 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. 
 The amount recognized as a provision is the best estimate of 
 the consideration required to settle the present obligation at 
 the end of the reporting period, taking into account the risks 
 and uncertainties surrounding the obligation. When a provision 
 is measured using the cash flows estimated to settle the present 
 obligation, its carrying amount is the present value of those 
 cash flows (where the effect of the time value of money is material). 
When some or all of the economic benefits required to settle 
 a provision are expected to be recovered from a third party, 
 a receivable is recognized as an asset if it is virtually certain 
 that reimbursement will be received and the amount of the receivable 
 can be measured reliably. 
3.21 Financial liabilities and equity instruments 
3.21.1 Classification as debt or equity 
Debt and equity instruments issued by a Group entity are classified 
 as either financial liabilities or as equity in accordance with 
 the substance of the contractual arrangements and the definitions 
 of a financial liability and an equity instrument. 
3.21.2 Equity instruments 
An equity instrument is any contract that evidences a residual 
 interest in the assets of an entity after deducting all of its 
 liabilities. Equity instruments issued by the Group are recognized 
 at the proceeds received, net of direct issue costs. Ordinary 
 shares are classified as equity. The difference between the fair 
 value of the consideration received by the Company and the nominal 
 value of the share capital being issued is taken to the share 
 premium account 
 Repurchase of the Company's own equity instruments is recognized 
 and deducted directly in equity. No gain or loss is recognized 
 in the statement of comprehensive income on the purchase, sale, 
 issue or cancellation of the Company's own equity instruments. 
3.21.3 Financial liabilities 
 Financial liabilities are classified as either financial liabilities 
 "at FVTPL" or "other financial liabilities". 
 
3.21.3.1 Financial liabilities at FVTPL 
 Financial liabilities are classified as at FVTPL when the financial 
 liability is either held for trading or it is designated as at 
 FVTPL. 
A financial liability is classified as held for trading if: 
  *    it has been acquired principally for the purpose of 
       repurchasing it in the near term; or 
 
 
  *    on initial recognition it is part of a portfolio of 
       identified financial instruments that the Group 
       manages together and has a recent actual pattern of 
       short-term profit-taking; or 
 
 
  *    it is a derivative that is not designated and 
       effective as a hedging instrument. 
 
 
A financial liability other than a financial liability held for 
 trading may be designated as at FVTPL upon initial recognition 
 if: 
 
  *    such designation eliminates or significantly reduces 
       a measurement or recognition inconsistency that would 
       otherwise arise; or 
 
 
  *    the financial liability forms part of a group of 
       financial assets or financial liabilities or both, 
       which is managed and its performance is evaluated on 
       a fair value basis, in accordance with the Group's 
       documented risk management or investment strategy, 
       and information about the grouping is provided 
       internally on that basis; or 
 
  *    it forms part of a contract containing one or more 
       embedded derivatives, and IAS 39 Financial 
       Instruments: Recognition and Measurement permits the 
       entire combined contract (asset or liability) to be 
       designated as at FVTPL. 
Financial liabilities at FVTPL are stated at fair value, with 
 any gains or losses arising on remeasurement recognized in profit 
 or loss. The net gain or loss recognized in profit or loss incorporates 
 any interest paid on the financial liability and is included 
 in the "other gains and losses" line item in the consolidated 
 statement of comprehensive income. Fair value is determined in 
 the manner described in section 2.20.8. 
 
  3.21.3.2 Other financial liabilities 
Other financial liabilities (including borrowings) are subsequently 
 measured at amortised cost using the effective interest method. 
The effective interest method is a method of calculating the 
 amortised cost of a financial liability and of allocating interest 
 expense over the relevant period. The effective interest rate 
 is the rate that exactly discounts estimated future cash payments 
 (including all fees and points paid or received that form an 
 integral part of the effective interest rate, transaction costs 
 and other premiums or discounts) through the expected life of 
 the financial liability, or (where appropriate) a shorter period, 
 to the net carrying amount on initial recognition. 
3.21.3.3 De-recognition of financial liabilities 
The Group derecognises financial liabilities when, and only when, 
 the Group's obligations are discharged, cancelled or they expire. 
 The difference between the carrying amount of the financial liability 
 derecognized and the consideration paid and payable is recognized 
 in profit or loss. 
3.22 Value added tax 
      VAT is levied at the following rates: 
        *    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. 
 
 
        *    17% 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. 
 
 
 
       A taxpayer's VAT liability equals the total amount of VAT collected 
       within a reporting period, and arises on the earlier of the date 
       of shipping goods to a customer or the date of receiving payment 
       from the customer. A VAT credit is the amount that a taxpayer 
       is entitled to offset against his VAT liability in a reporting 
       period. Rights to VAT credit arise on the earlier of the date 
       of payment to the supplier or the date goods are received. The 
       part of VAT credit expected to be recovered in the long-term 
       prospective is classified as non-current being discounted for 
       reflecting principal market assumptions as to projects realization. 
       Initial loss on discounting VAT credit, non-current was recognized 
       as part of finance costs. 
3.23 Offsetting financial instruments 
Financial assets and financial liabilities are offset and the 
 net amount reported in the consolidated statement of financial 

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