TIDMSPDI
RNS Number : 3360J
Secure Property Dev & Inv PLC
28 June 2017
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
28 June 2017
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
2016 Audited Annual Results
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property company, is pleased to
announce its full year audited financial results for the year ended
31 December 2016.
Financial Highlights
Diversified portfolio of South Eastern European prime income
producing properties; the majority of which are let to blue chip
tenants and continue to provide a cash flow generative
platform:
-- 8% increase in operating income to EUR6.4 million (2015:
EUR5.9 million) thanks to active portfolio management
-- EBITDA from operations sustained at the same positive level
as 2015 at EUR2.5 million in 2016, due to Nestle break fee and
reduced corporate and property costs
Significant asset backing behind the Company:
-- Net Equity of EUR38.9 million as at 31 December 2016 (31
December 2016: EUR42.5 million) - reduction due to sale of non-core
assets
-- In GBP / share terms, 6% increase in net asset value per
share to 37p (2015: 35p) (mostly due to Sterling depreciation) -
circa 100% premium to current share price
Successful management of portfolio costs:
-- 13% reduction in administrative expenses to EUR2.6 million
(2015: EUR3 million) - in line with strategy to reduce corporate
costs by 30% by 2017 vis a vis 2015
-- 16% reduction in interest costs EUR3.2 million (2015:
EUR3.7m) - expected to decrease further in 2017 towards EUR2.5m
following Terminal Brovary sale and repayment of the EBRD EUR12
million debt
-- 12% reduction in operational gearing to 46% (2015: 52%)
Operational Highlights
Active management of portfolio to maximise income and capital
appreciation of each asset:
-- Secured 100% occupancy for the Brovary Terminal in Ukraine
following signing of fixed four-year lease agreement generating
US$150,000 of Net Operating Income per month -sale of the asset was
completed post period end (see below)
-- Sale of the Linda residential portfolio in Bucharest for
EUR660,000 gross - successfully negotiated settlement of associated
debt at a 26% haircut
-- Successful refinancing of retail property in Romania which
included an extension of the lease to Praktiker, the blue chip
regional DIY retailer, for an additional 5 years until 2025
-- EUR1.4 million cash settlement reached with Nestle on the
early termination of its lease on the Innovations Logistics
Terminal in Romania - equivalent to eighteen months of rent, and up
to two years when other gains are taken into account
Post Period End Highlights
-- Completion of the sale of Brovary Terminal at a Gross Asset
Value of over EUR16 million generating a profit for SPDI of EUR2.7
million and a cash inflow of more than EUR3 million
-- Signing of lease agreement with Aquila srl, a large Romanian
logistics operator, for 5,740 sqm of space in the Innovations
Logistics Park in Bucharest, with an annual rent of EUR300,000
-- Received over EUR100,000 net of VAT for the provision of
asset management services to a third party in Romania
-- Issue of new ordinary shares to the Non-Executive Directors
of the Company who were in office in 2015 in lieu of fees accrued
in 2015 at GBP0.35 per share, a 100% premium to the previous
closing share price on 12 May 2017 - demonstrating strong
support
Lambros G. Anagnostopoulos, Chief Executive Officer, said,
"SPDI's strategy to acquire prime real estate at attractive prices
in selected South Eastern European countries we favour, is
underpinned by strong asset management that allows us to extract
income and generate value from all our assets. Following a series
of acquisitions in 2014 and 2015, the year under review was a
period during which the active management of our properties would
come to the fore, by consolidating our property portfolio,
streamlining our operating structure and costs and focusing on
generating value of core and non-core assets alike.
"An 8% increase in full year net operating income to EUR6.4
million demonstrates the progress we have made, even during a
consolidation period. Today our core portfolio of prime real estate
in selected South Eastern European countries not only provides
exposure to a region that is enjoying rapid growth thanks to its
growing economies and the standards of living of their residents,
its strategic importance in terms of continental trade flows and
the ongoing yield compression play, but also a highly cash
generative and asset backed platform. We intend to take full
advantage of this to not only continue our corporate and cost
consolidation but also to acquire additional properties that match
our criteria in the year ahead and beyond, as we look to transform
SPDI into a leading London listed property company focused on
selected Emerging European countries."
* *S * *
Copies of the Annual report and Accounts are being posted to
Shareholders today and are available on the Company's website at
www.secure-property.eu
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +357 22
Constantinos Bitros 030783
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Andrew Emmott Strand Hanson Tel: +44 (0)
Ritchie Balmer Limited 20 7409 3494
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Jon Belliss Beaufort Securities Tel: +44 (0)
Elliot Hance Limited 20 7382 8300
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Lottie Brocklehurst St Brides Partners Tel: +44 (0)
Frank Buhagiar Ltd 20 7236 1177
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Notes to Editors
Secure Property Development and Investment plc is an AIM listed
property development and investment company focused on the South
East European markets. The Company's strategy is focused on
generating healthy investment returns principally derived from: the
operation of income generating commercial properties and capital
appreciation through investment in high yield real estate assets.
The Company is focused primarily on commercial and industrial
property in populous locations with blue chip tenants on long term
rental contracts. The Company's senior management consists of a
team of executives that possess extensive experience in managing
real estate companies both in the private and the publicly listed
sector, in various European countries.
1. Chairman's Statement
While 2016 was in many respects a year of consolidation, we are
hopeful that 2017 will be a year of growth. SPDI's strategy for the
past few years has been to capitalise on favorable market dynamics
of Romania, Bulgaria and selectively Greece while reducing exposure
to Ukraine. In 2016 with the agreed profitable sale of the Group's
principal Ukrainian asset, Terminal Brovary, we achieved a major
goal consistent with this allocation strategy, generating cash for
new investments planned in target countries in 2017.
During the year the favorable fundamentals of our target markets
continued to prevail, and as economic growth picked up across the
Eurozone in the latter part of 2016 and early 2017, we remain
convinced that will continue to lead to even faster economic growth
in Romania and Bulgaria, with a more stable outlook for Greece.
Property markets in our region have continued to experience a
steady yield compression as the global search for yield has forced
funds to deploy new allocations of cash to these markets as the
more established CEE (Poland, Czech, Hungary) property markets have
become increasingly crowded with foreign buyers.
The Board remains confident that SPDI is in the right place, at
the right time. We are grateful to our shareholders for their
continued support in 2016, and look forward capitalising upon the
significant opportunities that we can see for the Group in
2017.
Paul Ensor
Chairman of the Board
2. Letter to the Shareholders
27 June 2017
Dear Shareholders,
2016 has been a year of active portfolio management, as we
continue with our strategy to transform SPDI into a leading London
listed property company focused on selected South East European
countries. In early 2017, our Company secured both a profitable
exit from its main Ukraine income producing asset (Terminal
Brovary) and a cash generating agreement based on the departure of
the main tenant in its Romanian logistics terminal (the Innovations
Park). The result of the two deals was to generate substantial cash
and profits, albeit with a reduction of the income producing
capacity of the Company at the same time. Finalising these deals
took up most of 2016 and, as a result, the Company not only had to
wait both for the cash inflow to be realised, but, more
importantly, to roll out the next steps of our growth strategy that
were to follow completion of the two deals. With the two deals
completed, we are now ready for 2017 and beyond and look forward to
the remainder of the year with optimism.
Underpinning our confidence is the continuing progress being
made by the markets in which the Company is active. In 2016,
Romania maintained its position as the fastest growing economy of
the European Union and saw property prices rise across all sectors.
While property development picked up for the first time since the
crisis that hit Europe in 2008/9, the Company managed to sell an
increased number of non-core residential assets as the South
Eastern European property market improved markedly.
Greece experienced a normalisation of its economic indices along
with its relations with its lenders (the EU, the ECB and the IMF)
hinting to a possible pick up of the economic cycle that has been
lacking in recent years. Meanwhile, Ukraine's economy proved
resilient despite relations with Russia remaining tense. The local
residential market in particular saw a substantial pick-up in
development activity.
In addition to an increased pace of sales of non-core
residential units in both Romania and Bulgaria, the Company fully
let the Brovary terminal, the occupancy of which had been impacted
by the war and the resulting 70% + depreciation of the local
currency (UAH) in Ukraine, and eventually succeeded in selling it
for a substantial profit. On the other hand, it was unable to
market the space vacated by Nestle in the Terminal Innovations
Logistics Park in Bucharest due to complications with the lease
termination deal linked with the lending bank. Ultimately, the
Company agreed with Nestle to effect their departure in August
2016, at a fee equal to eighteen months' rent. However, the
extended period it took for the lending bank to sign off on the
deal meant marketing the Innovation's empty space was not possible
during the year. In parallel, a bigger deal with Blue House, the
property private equity group from whom SPDI acquired two buildings
in 2015, was shelved. Although SPDI had also secured an option to
buy the remaining stake of the property bought in 2015 in Bulgaria,
the Company decided not to exercise that option and to return the
20% stake in the Sofia office building Autounion, choosing to
consolidate its assets in the faster growing Romania instead.
Finally, the Company continued generating value from its
existing assets via refinancings, including the Praktiker let
property in Romania. Here the tenant agreed to extend its lease by
five additional years to 2025, while the lending bank agreed to a
refinancing scheme that extends the maturity of the loan, and
reduces the annual amortisation by 70%.
2016 saw SPDI consolidate and prepare for the next phase of
growth in 2017 and beyond. Despite the impressive results of the
last three years, there is much more to go for, particularly in
growing our net operating income to where we want it to be. SPDI's
Directors and Management remain focussed on achieving this so that
2017 can be yet another trend setting year for SPDI.
Best regards,
Lambros G. Anagnostopoulos
Chief Executive Officer
3. Management Report
3.1. Corporate Overview & Financial Performance
In 2016 the Company's management focused on executing a) the
profitable sale of its logistics Terminal Brovary in Ukraine and b)
the cash generating termination of Nestle's lease agreement for its
logistics Innovations Terminal. In parallel, the Company picked up
the pace of disposing of non-core assets to take advantage of
rising market prices; restructured the operations and financing of
core assets to generate further value; and prepared the ground for
the next phase of growth by creating a strong pipeline of potential
acquisitions.
The political instability in Ukraine appears to have tapered
off, even though the country still experiences some war like
conditions on its border with Russia in the East. As the economy
demonstrated signs of improvement, the Company not only managed to
fully let its main logistics asset in the country (which it later
sold) but also entertained sale proposals with a view to reducing
its presence in this region of South East Europe which has been in
constant turmoil since 2014.
Greece continues to be in an adverse economic situation of
austerity and debt. As the current staff review (1) has been
successfully completed in mid-June 2017, the ensuing agreement with
the EU, the IMF and the ESM will facilitate the country's return to
economic normality that will allow GDP growth. Should the current
debt be reduced in terms of the Net Present Value sometime in the
near future, this will further enhance the potential for growth and
will stimulate the country's productive force after 10 years of
recession during which 30% of the GDP has been lost.
During 2016, the Company proceeded with capitalizing various
shareholder loans that have been provided by itself and its
minority partners to Green Lake in the past.
At the same time, the Company devoted significant time and
effort in restructuring its debt to long term, an effort that is
expected to bear fruits within 2017, while the sale of Terminal
Brovary will result in further deleveraging of the Company. At the
same time, the said sale will bring the annual average cost of
servicing the debt down to 4.7% as the EBRD loan was the most
expensive loan for the Company.
Going forward, the said transaction will also facilitate the
simplification of the annual financial reporting as the Ukrainian
foreign exchange variation (and to a far lesser degree the EUR/USD
one) that has been having a considerable effect on the annual
results will practically be taken out of the equation.
In 2016, the Company continued optimizing its corporate
structure by merging or closing down low activity SPV corporate
entities, an effort that will continue in 2017.
Taking advantage of its recently installed new ERP system, based
on Microsoft Dynamics (Navision), the Company expects 2017 to show
both the real-time monitoring of income and expenses across all
countries as well as a reduction in operating expenses related to
such tasks.
As management was focused on executing the two main deals, the
sale of Terminal Brovary and closing the Nestle departure from the
Innovations Park, and in view of the pending reduction in Net
Operating Income as a result of the former, it allocated time to
plan for a more efficient cost structure. Being active in four
countries, registered in a fifth (Cyprus) and listed in a sixth one
(UK), the Company has a cost base that can be deemed to be
misaligned with the size of its property asset portfolio. As such
Management, together with the Board, planned and commissioned a
restructuring plan that would see the corporate costs of the
Company drop in 2017 by 30% vis a vis 2015 to no more than EUR2m. A
number of senior executives decided to contribute to such effort by
deferring part of their salary, while the directors decided to
relinquish their own. Consequently, the Company continues to
benefit from high quality human assets despite its income pool
shrinking following the sale of its key income generating
asset.
The Company enjoys the support of a large number of active
experienced directors who have been guiding the Company without
receiving any monetary remuneration.
SPDI increased operating income by 10% in 2016, even though its
primary Ukrainian asset, Terminal Brovary, was partially empty in
the first quarter of the year. An increase in non-core asset sales
as well as the settlement with Nestle for breaking its contract at
Innovations warehouse, more than compensated for such lost income,
while EoS Business Park in Romania and GED warehouse in Greece
recorded stable income. The Company also managed to extend the
Praktiker lease for another 5 years, stabilising the asset, albeit
at a lower annual rental income. As a result, the Company's annual
operating income(2) (including non-core asset sales) increased by
8% to EUR6.4m in 2016 compared with EUR5.9m in 2015.
In terms of the income stemming from SPDI's core income
producing assets, the Company recorded EUR6m including the Nestle
break fee (of an aggregate EUR1.7 or 18 months of rental income
plus 3 months guarantee) vs EUR5.2m in 2015.
EBITDA from operations remained at the same levels with 2015 to
EUR2.5m in 2016, mainly as a result of the Nestle break fee as well
as of the reduced corporate and property costs and even though the
Company has lost its income from Autounion.
Interest costs were reduced by 16% to EUR3.2m vs EUR3.7m in 2015
and are expected to further decrease towards EUR2.5m following
completion of the Terminal Brovary sale and the ensuing repayment
of the EBRD EUR12m debt which will bring the average debt servicing
cost to 4.7% in 2017.
[1]Current staff review is the official designation of the paper
prepared by the staff of the 3 institutions that is submitted to
Eurogroup for approval.
2 The operating income does not include the % participation by
the Company of the operating income of the properties that the
Company maintains a minority participation in, which is reported as
income from associates, but includes net income resulting from
on-going sales of residential assets (sales income minus the cost
of the asset sold).
EUR 2016 2015
Rental, Utilities, Management 6.070.940 5.448.960
& Sale of electricity Income
Income from Sale of Asset less
Cost of properties sold 283.934 537.560
Income from Operations of Investments 6.354.874 5.986.520
Asset operating expenses (992.441) (1.124.583)
Net Operating Income from Investments 5.362.433 4.861.937
Share of profits from associates
(ex revaluation) 247.720 166.863
Net Income from Available for
Sale assets (ex revaluation) (485.529) 485.529
Total Income 5.124.624 5.514.329
Administration expenses (2.614.188) (3.013.942)
Operating Result (EBITDA) 2.510.436 2.500.387
Finance costs, net (3.181.625) (3.771.100)
Income tax expense (174.315) (80.188)
Operating Result after finance
and tax expenses for the year (845.504) (1.350.901)
Other income / (expenses), net (1.304.304) 653.856
Other finance (costs) / income
and interest write off 595.917 (603.495)
Gain realized on acquisition - 2.181.834
of subsidiaries
Fair Value (Losses) from investments (36.549) (6.935.306)
Disposal of Autounion (206.491)
Foreign exchange losses, net (1.700.333) (10.659.602)
Result for the year (3.497.264) (16.713.614)
Excluding a) the revaluation losses attributable mostly to the
situation in Ukraine, b) the foreign exchange losses (related to
the EBRD Terminal Brovary loan or the intercompany loans that have
been affected on paper by the devaluation of the UAH) and c) any
one off gains/losses, costs or impairments/provisions related to
the properties acquired during the previous period the table above
compares the performance of the last 2 operating periods with
operating result after finance expenses and tax being improved by
37% from minus EUR1.3m to a negative EUR850k.
3.2. Property Holdings
The Company's portfolio at year end consists of commercial
income producing and residential properties in Romania, Greece,
Bulgaria and Ukraine as well as land plots in Ukraine, Bulgaria and
Romania.
Commercial Key Features
Property Location
Gross
GED Logistics Athens, Leasable
Terminal Greece Area: 17,756 sqm
Anchor Kuehne + Nagel and
Tenant: GE Dimitriou SA
Occupancy
Rate: 100%
Gross
EOS Business Bucharest, Leasable
Park Romania Area: 3,386 sqm
Anchor Danone Romania lease
Tenant: runs to 2026
Occupancy
Rate: 100%
Gross
Craiova, Leasable
Praktiker Craiova Romania Area: 9,385 sqm
Anchor Praktiker lease runs
Tenant: to 2025
Occupancy
Rate: 100%
Delenco (SPDI Gross
has a 24.35% Bucharest, Leasable
interest) Romania Area: 10,280 sqm
Anchor ANCOM (Romanian telecoms
Tenant: regulator)
Occupancy
Rate: 100%
Innovations Gross
Terminal Logistic Bucharest, Leasable
Park Romania Area: 16,570 sqm
Aquila srl (large
Anchor Romanian logistics
Tenant: operator)
Occupancy 60% (25% at year
Rate: end)
Gross
Kiev, Leasable
Terminal Brovary Ukraine Area: 49,180 sqm
(Sale completed Rozetka UA (leading
in January Anchor Ukrainian internet
2017) Tenant: retailer)
Occupancy
Rate: 100%
Land & Residential
Assets Location Key Features
Bela Logistic Plot of land
Centre Odessa, Ukraine ( th. sqm): 224
Kiyanovskiy Plot of land
Lane Kiev, Ukraine ( th. sqm): 6
Tsymlyanskiy Plot of land
Lane Kiev, Ukraine ( th. sqm): 4
Zaporozhye, Plot of land
Balabino project Ukraine ( th. sqm): 264
Plot of land
Rozny Lane Kiev, Ukraine ( th. sqm): 420
Pantelimon Bucharest, Plot of land
Lake Romania ( th. sqm): 40
Plot of land
Boyana Land Sofia, Bulgaria ( th. sqm): 20
Green Lake
land (SPDI
has a 44% Bucharest, Plot of land
interest) Romania ( th. sqm): 40
Romfelt, Linda,
Monaco, Blooming,
Green Lake, Romania & Sold units
Boyana Bulgaria during 2016: 62
Romfelt, Monaco,Blooming, Available
Green Lake, Romania & units (end
Boyana Bulgaria 2016): 166
Autounion consists of 19,476 sqm of gross leasable office area,
situated in a prime business area near the International Airport of
Sofia. The BREEAM-certified building was completed in 2008 and is
fully leased to Eurohold, one of the largest Bulgarian insurance
companies, until 2027. The Company has returned its 20% holding to
the seller Bluehouse Capital as part of settling the amounts owning
under the redeemable convertible shares issued to Bluehouse Capital
following the acquisition of Praktiker in 2015. The Company is
still in negotiation with Bluehouse Capital as to whether any
further amount is payable and the method of payment.
Linda Residence is a residential complex located in Bucharest,
Sector 3, close to subway transportation which connects the project
to all areas in Bucharest in less than 30 minutes, where the
Company owned 22 apartments (2,165 sqm) at the end of 2015. During
2016, the Company sold all of the apartments with the proceeds from
the sale being EUR660,000 and repaid the associated debt at a 26%
discount which generated a net cash flow for the Company of
EUR450,000.
In 2016, the Company's accredited valuers, namely CBRE Ukraine
for the Ukrainian Assets, and Real Act for the Romanian, Bulgarian
and Greek Assets remained appointed. The valuations have been
carried out by the appraisers on the basis of Market Value in
accordance with the current Practice Statements contained within
the Royal Institution of Chartered Surveyors ("RICS") Valuation -
Professional Standards (2014) (the "Red Book") and is also
compliant with the International Valuation Standards (IVS).
At the year-end, and following the increase in the pace of
selling non-core assets, the Company's participation in property
assets was valued at EUR100m. Excluding Terminal Brovary which was
successfully sold early 2017, the remaining assets are valued at
EUR85m. It should be noted that in most cases the fair value of the
Company's properties has increased as a result of improving market
conditions while the decrease of the Innovations valuation due to
its high vacancy at year end was countered by the recognition of
Terminal Brovary at its agreed sale value.
In recent years, following the successful implementation of the
Company's strategy, SPDI's portfolio became even more diversified
in terms of geography as well as asset class. At the end of the
reporting period, taking into account the % participation in the
properties that the Company holds directly, Romania is the prime
country of operations (47%) in terms of Gross Asset Value, which
following the sale of Terminal Brovary has increased further to 55%
of the Company's GAV with the exposure to Ukraine being reduced to
14%.
Gross Asset Value
2016 (ex
EURm/% Brovary) 2016
Ukraine 12 14% 27 27%
Greece 17 19% 17 17%
Romania 46 55% 46 47%
Bulgaria 10 12% 10 10%
Total 85 100% 100 100%
In respect of the Company's rental income generation capacity,
Romania is the prime source with 51%. Excluding Terminal Brovary in
the Ukraine, NOI sources are split between Greece (34%) and Romania
(66%).
Annualised Net Operating Income**
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EURm 2016* 2016 2015 2014 2013
Ukraine 0,0 0% 1,3 23% 1,8 25% 2,4 40% 2,7 100%
Greece 1,5 34% 1,5 26% 1,5 21% 1,5 25%
Romania 2,8 66% 2,8 51% 3,2 45% 2,1 35%
Bulgaria 0,0 0% 0,0 0% 0,6 8% 0%
Total 4,3 100% 5,5 100% 7,0 100% 6,0 100% 2,7 100%
------ ----- ----- ----- ----- ----- ----- ----- ----- -----
2016* figure excludes Terminal Brovary
**Annualised Net Operating Income includes NOI from Terminal
Brovary logistics, Innovations logistics, GED logistics park, EOS
office building, Praktiker retail center, Residential units as well
as Delenco office building (in which the Company has 24.35%
participation)
The table below summarises the main financial position of each
of the Company's assets (representing the Company's participation
in each asset) at the end of the reporting period.
2016
EURm
Property Country GAV* Debt (principal)* NAV
Innovations Rom 11,0 7,3 3,7
Eos Rom 6,9 4,8 2,1
Delenco Rom 6,1 0,8 5,2
Praktiker Rom 7,5 4,5 3,0
GED logistics Gr 16,5 11,7 4,8
Terminal
Brovary Ukr 14,9 11,6 3,3
Residential
units Rom & Bul 11,4 7,1 4,3
Rom & Ukr
Land banking & Bul 25,9 6,2 19,7
Total Value 100,1 54 46
Other balance
sheet items,
net ** -7,3
Net Asset
Value total 38,9
Mcap 31/12/2016 (Share
price at GBP0,15) 15,8
Mcap 26/6/2017 (Share
price at GBP0,20) 21,4
Discount as of the
reporting date vs
NAV 31/12/2016 -59%
* Reflects the Company's
participation at each
asset
**Refer to balance
sheet and related
notes of the financial
statements
The Net Equity attributable to the shareholders as at 31
December 2016 stood at EUR38.9m vs EUR42.5m in 2015, with the
decrease attributed mostly to one off items for the Company.
Following the sale of Terminal Brovary, the highest income
generating property asset, the Company has now fewer income
producing assets than in 2016 generating less income than in 2016.
The Company has an operational structure capable of managing many
more assets and needs to grow its property base accordingly.
The NAV per share as at 31 December 2016 stood at GBP 0.37 and
the discount of the Market Value vis a vis the Company's NAV
increased to 59% at year end.
3.3. Financial and Risk Management
The Group's overall bank principal debt exposure at the end of
the reporting period was EUR53m (including only property assets
fully owned by the Company) and comprised the following:
a) EUR11.6m construction debt due to EBRD in respect of Terminal
Brovary. This loan is denominated in US$ and stands at $12m at the
end of the reporting period. This debt was taken out of the
Company's balance sheet as the sale of Terminal Brovary was
effected in January 2017.
b) EUR3.8m finance lease of the EOS business park with Alpha
Bank Leasing Romania and a EUR1m facility received by First Phase
from Alpha Bank Romania.
c) EUR7.3m finance lease of the Innovations park with Bank of Piraeus Romania.
d) EUR11.7m debt financing of the GED Logistics park and photovoltaic with Eurobank.
e) EUR4.5m debt financing of the Praktiker Craiova with Marfin Bank Romania.
f) EUR7.1m being the Company's portion on the residential portfolio debt financing.
g) EUR6.2m being the Company's portion on land plot related debt
financing in Romania and Bulgaria.
Overall, the Group's Loan to Value ratio at the end of 2016
stood at 46%.
Throughout 2016 the Company focused on managing and preserving
liquidity through cash flow optimisation so as to secure the
Company's future. With the sale of Terminal Brovary and the closure
of the Nestle / Bank of Piraeus negotiation for the break of the
former's contract at Innovation, the Company is to focus more on
expanding its asset base so as to establish growth.
3.4. 2017 and beyond
At the start of 2017, SPDI effected the closing of the two major
deals it pursued last year. As a result, it has less involvement in
Ukraine and generates less operating income overall. Consequently
2017 is the year that SPDI will focus on picking up its growth
pace, as was evident in 2014/15, in order to pursue the
shareholders' and directors' vision to become a large institutional
and professionally managed regional property company. With the
directors and management committed to succeeding, in an environment
that shows signs of substantial improvement, 2017, promises to be
the year of breakthrough, during which SPDI will manage to realise
the opportunities it has identified.
4. Regional Economic Developments (1)
4.1. Romania
Economic growth in Romania accelerated further, from 3.8% in
2015 to 4.8% in 2016, amongst the highest in the European Union
(EU), on the back of domestic demand. The contribution of private
consumption to growth was higher than expected, on the back of
improved income prospects driven by low inflation and wage hikes,
as well as fiscal easing. Consumption will be pushed further up by
the wage hike for the entire health sector and cut in employees'
social security contribution by mid-2017. Private investments had a
positive contribution to growth, on the back of historically low
cost of funding and improved industrial confidence and this
continues into 2017. Government spending is likely to remain
subdued due to the end of the previous EU-funding period, despite
higher staff costs. Meanwhile, slightly improved economic prospects
of Romania's trade partners should support further net exports.
Overall, growth is forecasted to reach 3.8% in 2017.
In terms of risks the focus has now shifted to the budget
execution, which may put the government on a collision course with
EU institutions. The consolidated government balance in cash terms
switched to a marginal deficit in February down from a marginal
surplus in January 2017 with total revenues down by -1.4% yoy in
Jan-Feb compared to the full year target of +13.9% a trend which
may continue as further tax cuts have come into force since the
beginning of the year. At the same time, total expenditures have
started expanding as the budget implementation incorporated the
ruling coalition's electoral program for further generous hikes.
According to the latest IMF forecast, the fiscal deficit is
expected to increase to 3.7% of GDP in 2017 and further up to 3.9%
in 2018.
The National Bank of Romania stands out in the region for
proactively encouraging NPL sales and write-offs. Also, previous
threats to financial stability from potentially damaging laws have
lessened after recent decisions of the constitutional court. While
overall credit growth has been sluggish, mortgage lending has grown
primarily due to the government's Prima Casa guarantee program.
Romania has made considerable gains in the fight against
corruption. Lower corruption and strong institutions are associated
with multiple economic benefits: it helps raise tax collections,
improve the allocation of scarce public resources, and attract both
domestic and foreign investment. Maintaining the momentum will
require effective implementation of the national anti-corruption
strategy, preventing conflict of interest in public procurement,
and strengthening the management of seized assets.
1 Sources: World Bank Group, Eurostat, EBRD, National Bank of
Greece, Elstat, Eurobank Research, and Economic Research Division,
National Institute of Statistics- Romania, National Statistical
Institute -Republic of Bulgaria, National Institute of Statistics -
Ukraine, SigmaBleyzer.
Macroeconomic data and
forecasts
------------------------- ------ ------ ------ ----- ------
2012 2013 2014 2015 2016e
------------------------- ------ ------ ------ ----- ------
GDP (EUR bn) 131,8 142,2 149,3 160 170
------------------------- ------ ------ ------ ----- ------
Population (mn) 20 19,9 19,9 19,9 19,9
------------------------- ------ ------ ------ ----- ------
Real GDP (y-o-y %) 0,7 3,4 2,9 3,8 4,8
------------------------- ------ ------ ------ ----- ------
CPI (average, y-o-y %) 3,4 4 1,1 -0,7 -1,6
------------------------- ------ ------ ------ ----- ------
Unemployment rate (%) 7 7,1 6,8 6,7 5,9
------------------------- ------ ------ ------ ----- ------
Net FDI (EUR bn) 2,2 2,6 2,5 3,0 3,9
------------------------- ------ ------ ------ ----- ------
Sources : IMF, National
Sources, Eurobank EFG,
Eurostat, EBRD
------------------------- ------ ------ ------ ----- ------
4.2. Bulgaria
Following a 3.6% nominal growth in 2015, driven by net exports,
the Bulgarian economy grew by 3.4% in 2016, with a shift of growth
drivers towards domestic demand. While private consumption grew on
the back of 10.5% in minimum wage increase as of January 2016 and
better labour market conditions, government spending remained
subdued due to transition to the new EU funds programming period.
In 2017, domestic demand will remain as the driver of growth,
supported by improved income prospects, on the back of almost 9.5%
hike in minimum wages and wage improvement for teachers as of 2017,
as well as lower cost of funding, on the back of financial sector
stabilization. However, the contribution of net exports to growth
will remain limited due to strong domestic demand. Overall, growth
is expected to stand above 3.0% in 2017.
Bulgaria's external and fiscal position is strong, the banking
sector capital position is solid and the buffers (fiscal and
foreign exchange reserves) are sizeable. Budget execution
outperformed the target by a wide margin in 2016 (+1.6% of GDP
surplus vs. a target of a - 2.0% deficit). The current account
balance is in surplus for the fourth consecutive year. Sustained
labor market improvement coupled with positive real wage growth
supported final consumption recovery throughout 2016. The
unemployment rate declined further to 7.1% in 2016 as the economy
adds new jobs in the areas of specialized services. Eurobank's GDP
growth forecast for 2017 stands currently at 3.3%, above the
recently released BNB quarterly economic review forecast of
2.8%.
Macroeconomic data and
forecasts
------------------------- ----- ----- ----- ----- ------
2012 2013 2014 2015 2016e
------------------------- ----- ----- ----- ----- ------
GDP (EUR bn) 39,7 41 42 44 46,5
------------------------- ----- ----- ----- ----- ------
Population (mn) 7,3 7,3 7,2 7,3 7,3
------------------------- ----- ----- ----- ----- ------
Real GDP (y-o-y %) 0,8 0,9 1,7 2,9 3,4
------------------------- ----- ----- ----- ----- ------
CPI (average, y-o-y %) 3 1,4 -1,6 -1,1 -0,8
------------------------- ----- ----- ----- ----- ------
Unemployment rate (%) 12,3 12,9 11,5 10 7,1
------------------------- ----- ----- ----- ----- ------
Net FDI (EUR bn) 1,2 1,1 1,2 1,6 0,7
------------------------- ----- ----- ----- ----- ------
Sources : IMF, National
Sources, Eurobank EFG,
Eurostat
------------------------- ----- ----- ----- ----- ------
4.3. Greece
The Greek economy experienced a marginal nominal GDP drop in
2016, partly as a result of base effects from the upturn in
consumer spending in the first half of 2015. The only positive
signs in 2016 have been the contribution of gross fixed capital
formation to growth and the yet record year for tourism with
tourist arrivals growing 7.6% yoy but other parts of the national
accounts, including private consumption, government consumption and
net exports, turned downwards again.
Regarding Greece's 2017 growth outlook, it is surrounded by a
very high degree of uncertainty, not least because of the delays
encountered in reaching a staff level agreement on the 2nd
programme review. In any case, the markets are growing increasingly
concerned about the future and the uncertainty has already started
to take its toll on the domestic economy. Therefore, a swift
agreement with official creditors is key for averting a renewed
deterioration in domestic economic conditions, amid heightening
market jitters ahead of the heavy debt service payments falling due
in July 2017. Against this backdrop, current forecasts for real GDP
growth this year fall within the 1.5%-2.0% range, contingent on the
assumed timeline for securing an agreement on the pending programme
review.
Macroeconomic data and forecasts
------------------------------------- ------ ------ ------ ----- ------
2012 2013 2014 2015 2016e
------------------------------------- ------ ------ ------ ----- ------
GDP (EUR bn) 193,4 182,1 179,1 176 177
------------------------------------- ------ ------ ------ ----- ------
Population (mn) 11,1 11 11 10,9 10,9
------------------------------------- ------ ------ ------ ----- ------
Real GDP (y-o-y %) -6,6 -3,9 0,7 -0,2 -0,1
------------------------------------- ------ ------ ------ ----- ------
CPI (average, y-o-y %) 3 -0,9 -1,4 -1,7 0
------------------------------------- ------ ------ ------ ----- ------
Unemployment rate (%) 24,5 27,5 26,6 24,6 23,4
------------------------------------- ------ ------ ------ ----- ------
Net FDI (EUR bn) 1,35 1,6 1 0 0
------------------------------------- ------ ------ ------ ----- ------
Sources : IMF, National Sources,
Eurobank EFG, European Commission,
EBRD
------------------------------------- ------ ------ ------ ----- ------
4.4. Ukraine
Ukraine's economy experienced growth in 2016 after around 16%
cumulative real GDP contraction in the past two years. However, the
pace of recovery was slower than anticipated amid weak reform
momentum in the aftermath of a government reshuffle as well as lack
of foreign investment. Helped by a low comparison base of the
previous year, GDP grew by an estimated 0.8% yoy in the first half
of 2016. Inflation declined (from 48.7% yoy in 2015 to 7.9% yoy in
September 2016) on the back of exchange rate stabilisation, subdued
domestic demand and prudent fiscal and monetary policies.
After a year-long delay, the IMF completed the second programme
review on 14 September 2016 and released a US$ 1 billion tranche.
This helped to restore calm in the foreign exchange market and
cleared the way for international assistance from other donors.
Tight capital controls introduced in 2014-2015 remain mostly in
place, although the National Bank of Ukraine continued their
gradual relaxation. EBRD forecasts GDP growth for 2017 at 2.0%.
Macroeconomic data and forecasts
----------------------------------------- ------ ------ ------ ----- -----
2012 2013 2014 2015 2016
----------------------------------------- ------ ------ ------ ----- -----
GDP (USD bn) 176,2 177,4 127,6 98 93,3
----------------------------------------- ------ ------ ------ ----- -----
Population (mn) 45,6 45,5 42,7 42,5 42,5
----------------------------------------- ------ ------ ------ ----- -----
Real GDP (y-o-y %) 0,2 0 -6 -9,9 2,3
----------------------------------------- ------ ------ ------ ----- -----
CPI (average, y-o-y %) 0,6 -0,2 24,9 43,3 12,4
----------------------------------------- ------ ------ ------ ----- -----
Unemployment rate (%) 7,5 7,4 10,5 9,4 9,7
----------------------------------------- ------ ------ ------ ----- -----
Net FDI (USD bn) 6,6 3,3 0,2 2,3 3,2
----------------------------------------- ------ ------ ------ ----- -----
Sources : IMF, National Sources,
European Commission, Oxford Economics,
SigmaBleyzer, EBRD
----------------------------------------- ------ ------ ------ ----- -----
5. Real Estate Market Developments (1)
5.1. Romania
2016 maintained a comfortable market liquidity, marking a total
investment volume of EUR910m, up from EUR820m in 2015. Although the
growing investment activity has already put pressure on pricing,
the risk-return yield that Romania offers remains very attractive
both by Eurozone and CEE standards. The current yield levels are
7.5% for office, 7% for retail and slightly below 9% for
industrial.
New deliveries of industrial spaces during 2015 stood at 150,000
sqm, and the market remained very bullish in 2016 as well. During
2016, new deliveries stood at 350,000 sqm, of which 60% were in
Bucharest. By early 2017, the total stock of industrial space stood
at 3,000,000 sqm.
Total take-up of industrial spaces during 2016 stood at 350,000
sqm, of which approximately 60,000 sqm were geared towards
speculative developments. The largest generator of demand is the
FMCG (Fast Moving Consumer Goods) sector (in the past 2 years,
their demand reached approx. 200,000 sqm in the main cities of
Romania), followed by e-commerce, electro-IT companies, and
logistics companies. The vacancy rate in Bucharest has decreased to
2% by the end of 2016 (down from 5% in the previous year), while
the vacancy rate for the rest of the country stood at 5%. This
decline in the vacancy rate is remarkable when taking into account
the large volume of new deliveries. Market rates for logistics
remained broadly unchanged during 2016, ranging between 3.8 EUR/sqm
and 4.25 EUR/sqm.
The stock of modern office spaces in Bucharest reached 2.1m sqm,
after registering new deliveries of 230,000 sqm during 2016. In
fact, the volume of new deliveries marks the fastest pace of
expansion since 2009 and is 112% more than the yearly average of
deliveries in the post-crisis period.
1 Sources : Danos Research, Eurobank, Jones Lang LaSalle, DTZ
Research, CBRE Research, Colliers International, Cushman &
Wakefield, MBL Research.
In terms of geographical distribution, the highest contributors
to the stock are Floreasca-Barbu Vacarescu (42% of total
deliveries), Dimitrie Pompeiu (26% of total deliveries) and the
Central West Area (24% of total deliveries). In total, these zones
accounted for 92% of the total deliveries in the market.
Total take-up in the market for 2016 reached 369,000 sqm, up by
52% from the previous year. IT and BPO/SSC (Business Process
Outsourcing and Shared Service Center) were the main drivers behind
this expansion and accounted for a total of 50% of the
transactions. It is clear that tenants continue to have the
upper-hand. Net take-up during 2016 reached 166,600 sqm, which
covers 73% of the area delivered to the market in the same period.
We expect supply to continue outpacing demand during 2017 as well,
which will invariably increase competition in the market.
Rental rates for Class A office space are ranging from
EUR10/sqm/month in North Pipera to EUR18/sqm/month in a prime CBD
like Piata Victoriei.
2016 saw the delivery of a series of new retail projects, with
Bucharest acting as the main point of attention for developers.
Total deliveries of new stock stood at 240,000 sqm of GLA, out of
which Bucharest accounted for more than 40%.
There are no new projects announced for delivery in Bucharest
during 2017 - 2018. Within this period, we expect the existing
shopping centers to focus on consolidating their market position in
order to maximize the centers' attraction. Several shopping centers
already announced extensions aimed at creating additional space for
anchor tenants and/or entertainment areas.
Overall, Bucharest's ratio of retail stock increased from 573
sqm per 1,000 capita in 2015 and currently stands at 626 sqm per
1,000 capita, however still behind the CEE markets.
Rent levels remained broadly unchanged (EUR55-65/sqm/month) in
2016, as the market was able to absorb organically the newly
released supply in retail centers. Although the performance of the
retailers continued to increase in 2016, they were rather
conservative during the negotiation process and signed contracts
for constant base rent levels, compensating with turnover rents in
the case of very successful locations.
2016 was the best year in terms of residential market
performance in the past 10 years, continuing a trend that began in
2015, when the market showed clear signs of revival. The apartment
supply in Bucharest has decreased to 7,000-8,000 units, 35% lower
than in 2015, and most of this is represented by projects finalized
before 2015. There was a 20% increase in deliveries in 2016.
Most demand is still generated through the Prima Casa program,
for mass market dwellings, however due to economic improvements and
wage growth, there is also increased demand in the mid-market
segment. In addition, in 2016 there was a clear switch of
preferences towards new apartments rather than older ones.
Second-hand apartments still account for the majority of
transactions, as their locations and general infrastructure are
often preferable to new apartments and they are generally more
affordable.
Prices started to pick up in Bucharest, especially for old
apartments, although prices for new apartments were relatively
stable at EUR800-1,000/usable sqm for mass market apartments and
EUR1,000-1,700/usable sqm for mid-market apartments.
5.2. Bulgaria
The total value of completed investment deals in 2016 was
slightly above EUR262m. The biggest share of investment volume
involved hotels (27%), followed by industrial and logistics space
(20%), the third position is split between office and retail
properties (18%).
Total stock of class A and B office space in nearing the
2,000,000 sqm mark, expected to be surpassed in 2017. Vacancy rate
is 10-12% as the take up rate has increased in 2016, due to demand
from IT and the services sectors. Rental levels remain stable at
EUR12-13/sqm from class A buildings and EUR7-8 for class B. As
another 115-150,000 sqm of class A building are coming to the
market, rents may phase a downward pressure throughout 2017, but as
demand is strong, such reduction will be temporary.
In 2016 Sofia residential market experienced a 5% increase in
the number of completed residential projects. Total supply reached
7,048 units (apartments, row or single houses), concentrated in 57
projects. The neighborhoods in the southern parts of Sofia and at
the foot of the Vitosha Mountain remained the most popular.
The trend towards pre-sales continued over the year. The share
of these transactions grew significantly from 37% in 2015 to 57% in
2016. Insufficient supply of completed quality residential product
saw this pre-sale proportion grow. The higher level of comfort that
buyers now have when buying real estate from experienced developers
added to the momentum.
Asking prices for mid-plus and high-end residential units
registered a 9% yoy growth in 2016. These were in the range of EUR
900 - 1,550 per sqm including VAT, depending on the characteristics
of the compound and the specific negotiated terms.
5.3. Greece
The markets are under strain due to the ongoing uncertainty in
which they operate, as a result of the protracted negotiations for
the completion of the 2nd review of the bailout programme as well
as the sharp increase in the tax burden in 2017. This is reflected
in the weakening of the economic climate and the sharp drop in
consumer confidence, in February 2017.
The industrial market in Greece had a relatively good year in
spite of the weak economic climate. According to the latest study
of National Bank of Greece, the logistics sector proved resilient
in the crisis bringing its contribution to GDP to 2.9% in 2016 from
2.5% in 2008 and showing signs of convergence with European
standards.
Prime rents were stable in Q1 2017 at EUR4.0/sqm/month with
significant increase in demand for high quality space which is in
major shortage especially of large warehouses that meet the
requirements of occupiers in terms of quality.
Focusing on the future outlook of the industry, the momentum
would be maintained and demand for industry services is expected to
grow over the next five years (based on increased trend of
outsourcing). At the same time, expected favorable impact of a
series of external factors that would act as accelerators for the
industry over the next five years - mainly participation in wider
networks 4PL and the upscale presence of COSCO.
5.4. Ukraine
2016 was characterised by an increase in the number of office
lease transactions in Grade and business centers. Due to a steady
increase in the demand for high quality office spaces vacancy
levels dropped by 3,1% compared to the previous year.
Some of the main trends for the warehouse market in Kyiv region
in 2016 were: a mild growth in demand among tenants, a slight
increase in the number of large purchase deals, as well as a
moderate reduction in vacancy rates and their stabilization.
6. Property Assets
6.1. GED Logistics center, Athens Greece
The 17,756 sqm complex that consists of industrial and office
space is situated on a 44,268 sqm land plot in the West Attica
Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki
Odos (the Athens ring road) and is 20 minutes from the port of
Piraeus (where COSCO runs a container port handling 4m containers a
year) and the National Road connecting Athens to the north of the
country. The roof of the warehouse buildings house a photovoltaic
park of 1,000KWp.
The buildings are characterized by high construction quality and
state-of-the-art security measures. The complex includes 100 car
parking spaces, as well as two central gateways (south and
west).
The complex at the end of 2016 is 100% occupied, with the major
tenant (approximately 70%) being the German transportation and
logistics company Kuehne + Nagel.
6.2. EOS Business Park - Danone headquarters, Romania
The park consists of 5,000 sqm of land including a class "A"
office building of 3,386 sqm GLA and 90 parking places. It is
located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road.
The Park is very close to Bucharest's ring road and the DN 2
national road (E60 and E85) and is also served by public
transportation. The park is highly energy efficient.
The Company acquired the office building in November 2014. The
complex is fully let to Danone Romania, the French multinational
food company, until 2026.
6.3. Praktiker Retail Center, Romania
The retail park consists of 21,860 sqm of land including a
retail BigBox of 9,385 sqm GLA and 280 parking places. It is
located in Craiova, on one of the main arteries of the city, along
with most of the DIY companies. Craiova is an important city for
the Romanian automotive industry as Ford bought the Daewoo
facilities in 2007 and produces two of its models from there. Ford
is committed to continue investing and it is completing a brand new
engine production facility.
As at year-end, the complex is fully let to Praktiker Romania, a
regional DIY retailer, until 2020 and the Company negotiated the
extension of the Praktiker lease agreement until December 2025 for
an annual rent of EUR600,000, which was effected in July 2016. SPDI
renegotiated the outstanding debt facility in H1 2016 and managed
the outflows to match the timing and magnitude of the inflows.
6.4. Delenco office building, Romania
The property is a 10,280 sqm office building, which consists of
two underground levels, a ground floor and ten above-ground floors.
The building is strategically located in the very centre of
Bucharest, close to three main squares of the city: Unirii, Alba
Iulia and Muncii, only 300m from the metro station.
The Company acquired 24.35% of the property in May 2015. At the
end of 2016, the building is 100% let, with ANCOM (the Romanian
Telecommunications Regulator) being the anchor tenant (70% of
GLA).
6.5. Innovations Logistics Park, Romania
The Park incorporates approximately 8,470 sqm of multipurpose
warehousing space, 6,395 sqm of cold storage and 1,705 sqm of
office space. It is located in the area of Clinceni, south west of
Bucharest centre, 200m from the city's ring road and 6km from
Bucharest-Pitesti (A1) highway. Its construction was completed in
2008 and was tenant specific. It comprises four separate
warehouses, two of which offer cold storage.
The Company signed with Nestle Ice Cream an agreement vacating
the premises, in July 2016. Such agreement was effected in August
2016 for a EUR1.4m cash settlement payable by Nestle, which
represents approximately 18 months of rent plus the three months'
rental guarantee deposits and certain fixed assets that Nestle had
installed in the premises. At the same time, the Company was in
extensive discussions through 2016 with the lender of the property,
Piraeus Bank Leasing, in order to review the sale and leaseback
agreement following the settlement with Nestle finally managing to
strike an agreement in February 2017. Based on the amended
agreement the Innovations Park is subject to a sale and lease Back
for a period of nine years and during this period SPDI is free to
lease out spaces of the Innovations Park at its own discretion. In
April 2017, the Company signed a lease agreement with Aquila srl, a
large Romanian logistics operator, for 5,740 sqm of ambient space
in the warehouse, which produces an annual rent payable by Aquila
ofEUR300,000. As at the issuance date of this report the terminal
is 60% leased.
6.6. Terminal Brovary Logistic Park, Ukraine
The Brovary Logistic Park consists of a 49,180 sqm GLA Class A
warehouse and associated office space. The building has large
facades to the Brovary ring road, at the intersection of the
Brovary ( -95/ -01 highway) and Borispol ring roads. It is located
10 km from the Kiev city border and 5 km from Borispol
international airport.
The building is divided into six independent sections (each at
least 6,400 sqm), with internal clear ceiling of 12m height and
industrial flooring constructed with an anti-dust overlay quartz
finish. The terminal accommodates 90 parking spaces for cars and
trucks, as well as 24 hour security.
In May 2016 the Company fully leased the warehouse space to
Rozetka UA, the leading Ukrainian internet retailer. In September
2016, the Company signed a sale and purchase agreement with Temania
Enterprises Ltd (company related to Rozetka UA) for the sale of its
Terminal Brovary warehouse at a gross asset value of over US$16
million (before the deduction of the outstanding EBRD). The sale
was completed successfully at the end of January 2017, generating
for the Company a net cash inflow of over US$3m.
6.7. Residential portfolio
-- Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Romfelt Plaza is a residential complex located in Bucharest,
Sector 2, relatively close to the city center, easily accessible by
public transport and nearby supporting facilities and green
areas.
During 2016 two units were sold and at the end of 2016, 18
apartments were available while 13 of them were rented, indicating
an occupancy rate of 72%.
-- Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in South
Bucharest, Sector 4, enjoying good car access due to the large
boulevards, public transportation, and a shopping mall (Sun Plaza)
reachable within a short driving distance or easily accessible by
subway.
During 2016 four units were sold and at the end of 2016, 22
apartments were available while 9 of them were rented, indicating
an occupancy rate of 41%.
-- Blooming House, Bucharest, Romania
Blooming House is a residential development project located in
Bucharest, Sector 3, a residential area with the biggest
development and property value growth in Bucharest, offering a
number of supporting facilities such as access to Vitan Mall,
kindergartens, café, schools and public transportation (both bus
and tram).
During 2016 seven units were sold and at the end of 2016, 15
apartments were available while 6 of them were rented, indicating
an occupancy rate of 40%.
-- Green Lake, Bucharest, Romania
A residential compound of 40,500 sqm GBA, which consists of
apartments and villas, situated on the banks of Grivita Lake, in
the northern part of the Romanian capital - the only residential
property in Bucharest with a 200 meter frontage to a lake. The
compound also includes facilities such as one of Bucharest's
leading private schools (International School for Primary
Education), outdoor sports courts and a mini-market. Additionally
Green Lake includes land plots totaling 40,360 sqm. SPDI owns 43%
of this property asset portfolio.
At the end of 2015 the portfolio consisted of 40 unsold
apartments plus 37 unsold villas. During 2016, six apartments and
villas were sold while at the end of 2016, of the 71 units that
were unsold 26 of them were let (occupancy rate of 37%).
-- Boyana Residence, Sofia, Bulgaria
A residential compound, which consisted at acquisition date (May
2015) of 67 apartments plus 83 underground parking slots developed
on a land surface of 5,700 sqm, situated in the Boyana high end
suburb of Sofia, at the foot of Vitosha mountain with Gross
Buildable Area ("GBA") totaling to 11,400 sqm. The complex includes
adjacent land plots with building permits under renewal to develop
GBA of 21,851 sqm.
During 2016, twenty one apartments were sold, with 40 units
remaining unsold at the end of 2016.
6.8. Land Assets
-- Aisi Bela - Bela Logistic Center, Odessa, Ukraine
The site consists of a 22.4 Ha plot of land with zoning
allowance to construct up to 103,000 sqm GBA industrial properties
and is situated on the main Kiev - Odessa highway, 20km from Odessa
port, in an area of high demand for logistics and distribution
warehousing.
The Company does not intend to recommence construction in the
near future.
-- Kiyanovskiy Lane - Kiev, Ukraine
The property consists of 0.55 Ha of land located at Kiyanovskiy
Lane, near Kiev city centre. It is destined for the development of
business to luxury residences with beautiful protected views
overlooking the scenic Dnipro River, St. Michaels' Spires and
historic Podil.
Discussions with local developers who approached the Company in
order to explore possibilities of value generation are in
progress.
-- Tsymlyanskiy Lane - Kiev, Ukraine
The 0.36 Ha plot is located in the historic and rapidly
developing Podil District in Kiev. The Company owns 55% of the
plot, with one local co-investor owning the remaining 45%.
Discussions are on-going with interested parties with a view to
partnering in the development of this property.
-- Balabino- Zaporozhye, Ukraine
The 26.38 Ha site is situated on the south entrance of
Zaporozhye city, 3km away from the administrative border of
Zaporozhye. It borders the Kharkov-Simferopol Highway (which
connects eastern Ukraine and Crimea and runs through the two
largest residential districts of the city) as well as another major
artery accessing the city centre.
The site is zoned for retail and entertainment. Development has
been put on hold.
-- Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast is destined to be
developed as a residential complex. Following protracted legal
battle, it has been registered under the Company pursuant to a
legal decision in July 2015.
The Company is evaluating potential commercialization options to
maximize the property's value.
-- Delia Lebada, Romania
The site consists of a 40,000 sqm plot of land in east Bucharest
situated on the shore of Pantelimon Lake, opposite a famous
Romanian hotel, the Lebada Hotel. The lake itself, having a 360 Ha
surface, is the largest lake of Bucharest and accommodates many
leisure activities such as fishing, cycling, walking, etc. At the
back of the property there is a forest which transforms the area
into a very attractive habitat for families and adds value to the
residential units to be developed.
The construction permit, which allows for 54,000 sqm to be
built, was renewed in April 2014 but the property has been on hold.
Following the SPV owning the plot entering into an insolvency
status the lending bank (Bank of Cyprus) entered into discussions
with the Company and its partners in respect to the future of the
defaulted loan. Such discussions are expected to be concluded
within Q3-2017 and result into an amicable solution for all
involved parties.
7. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
Note 2016 2015
EUR EUR
Income 2 6.070.940 5.448.960
Asset operating expenses 3 (992.441) (1.124.583)
-------------- ---------------
Net Operating Income 5.078.499 4.324.377
Administration expenses 4 (2.614.188) (3.013.942)
Share of profits/(losses)
from associates 14 469.248 (1.244.572)
Valuation gains/(losses) from
Investment Property 5 896.793 (2.335.247)
Net loss on disposal of inventory 6 (368.907) (51.359)
Net loss on disposal of investment
property 6 (438.516) (266.964)
Result on disposal of available
for sale financial assets 18 (206.491) -
Impairment allowance for inventory
and provisions 7 (63.513) (1.675.659)
Gain realized on acquisition 13a - 2.181.834
of subsidiaries
Other operating income/(expenses),
net 8 (1.304.304) 653.856
Goodwill impairment 13b - (657.082)
Operating profit / (loss) 1.448.621 (2.084.758)
Finance income 9 1.153.243 63.596
Finance costs 9 (3.738.951) (4.438.191)
Foreign exchange (loss), net 10a (1.041.239) (5.071.048)
Loss before tax (2.178.326) (11.530.401)
Income tax expense 11 (174.315) (80.188)
Loss for the year (2.352.641) (11.610.589)
Other comprehensive income
Exchange difference on I/C 10b (4.167.542) (13.653.402)
loans to foreign holdings
Exchange difference on translation 22 3.508.448 8.064.848
of foreign operations
Available-for-sale financial
assets - fair value gain 18 - 485.529
Available-for-sale financial
assets - Gains recycled to
loss for the year 18 (485.529) -
Total comprehensive income (3.497.264) (16.713.614)
for the year
Loss attributable to:
Owners of the parent (2.363.693) (11.015.852)
Non-controlling interests 11.052 (594.737)
(2.352.641) (11.610.589)
Total comprehensive income
attributable to:
Owners of the parent (3.477.567) (15.981.196)
Non-controlling interests (19.697) (732.418)
(3.497.264) (16.713.614)
Earnings / (Losses) per share
(Euro cent per share): 30b
Basic earnings/(losses) for
the year attributable to
ordinary equity owners of
the parent (0,03) (0,16)
Diluted earnings/(losses)
for the year attributable
to ordinary equity owners
of the parent (0,02) (0,13)
8. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2016
Note 2016 2015
EUR EUR
ASSETS
Non--current assets
Investment properties 12.4a 95.654.207 94.340.471
Investment properties under 12.4b 5.027.986 5.125.389
development
Tangible and intangible
assets 15 129.396 164.617
Long-term receivables and
prepayments 16 351.181 352.916
Investments in associates 14 5.217.310 4.887.944
Available for sale financial 18 ___________- ____2.783.535
assets
106.380.080 107.654.872
Current assets
Inventory 17 5.028.254 11.300.000
Prepayments and other current 19 2.778.361 4.795.223
assets
Cash and cash equivalents 20 1.701.007 895.422
9.507.622 16.990.645
Total assets 115.887.702 124.645.517
EQUITY AND LIABILITIES
Issued share capital 21 900.145 900.145
Share premium 122.874.268 122.874.268
Foreign currency translation 22 10.161.471 6.653.023
reserve
Exchange difference on 31.3 (37.567.055) (33.399.513)
I/C loans to foreign holdings
Available for sale financial
assets - fair value reserve - 485.529
Accumulated losses (57.444.020) (55.080.327)
Equity attributable to 38.924.809 42.433.125
equity holders of the parent
Non-controlling interests 23 7.237.827 615.527
Total equity 46.162.636 43.048.652
Non--current liabilities
Borrowings 24 16.895.155 26.263.559
Finance lease liabilities 28 11.081.379 11.273.639
Trade and other payables 25 451.123 4.672.888
Deposits from tenants 26 217.328 623.770
28.644.985 42.833.856
Current liabilities
Borrowings 24 31.580.299 27.417.220
Trade and other payables 25 7.038.170 3.044.036
Taxes payable 27 1.147.018 822.005
Redeemable preference shares 21.6 - 6.430.536
Provisions 27 742.166 724.445
Deposits from tenants 26 271.019 132.684
Finance lease liabilities 28 301.409 192.083
41.080.081 38.763.009
Total liabilities 69.725.066 81.596.865
Total equity and liabilities 115.887.702 124.645.517
Net Asset Value (NAV) EUR
per share: 30c
Basic NAV attributable to
equity holders of the parent 0,43 0,47
Diluted NAV attributable
to equity holders of the
parent 0,38 0,41
On 27 June 2017 the Board of Directors of SECURE PROPERTY
DEVELOPMENT & INVESTMENT PLC authorised these financial
statements for issue.
9. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
Attributable to owners of the Company
-------------------------------------------------------------------------------------------------
Share Share Accumulated Exchange Foreign Available Total Non- Total
capital premium, losses, difference currency for sale controlling
Net(1) net of on I/C translation financial interest
non-controlling loans reserve(4) assets
interest(2) to foreign - fair
holdings(3) value
reserve(5)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31
December
2014 338.839 97.444.044 (44.064.475) (19.746.111) (1.411.825) - 32.560.472 651.882 33.212.354
Loss for the year - - (11.015.852) - - - (11.015.852) (594.737) (11.610.589)
Exchange difference
on I/C loans to
foreign holdings
(Note 10b) - - - (13.653.402) - - (13.653.402) - (13.653.402)
Foreign currency
translation reserve - - - - 8.064.848 - 8.064.848 (137.681) 7.927.167
Fair value gain
on
available-for-sale
financial assets
(Note 18) - - - - - 485.529 485.529 - 485.529
Acquisition of
non-controlling
interest - - - - - - - 696.063 696.063
Issue of share 561.306 25.430.224 - - - - 25.991.530 - 25.991.530
capital, net (Note
21)
Balance - 31
December
2015 900.145 122.874.268 (55.080.327) (33.399.513) 6.653.023 485.529 42.433.125 615.527 43.048.652
Loss for the year - - (2.363.693) - - - (2.363.693) 11.052 (2.352.641)
Exchange difference
on I/C loans to
foreign holdings
(Note 10b) - - - (4.167.542) - - (4.167.542) - (4.167.542)
Foreign currency
translation reserve - - - - 3.508.448 - 3.508.448 (30.749) 3.477.699
Available-for-sale
financial assets
- Gains recycled
to loss for the
year (Note 18) (485.529) (485.529) - (485.529)
Restructuring
of the business
(Note 29) - - - - - 6.641.997 6.641.997
Balance - 31
December
2016 900.145 122.874.268 (57.444.020) (37.567.055) 10.161.471 - 38.924.809 7.237.827 46.162.636
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defense at
20% will be payable on such deemed dividends to the extent that the
shareholders (companies and individuals) are Cyprus tax residents.
The amount of deemed distribution is reduced by any actual
dividends paid out of the profits of the relevant year at any time.
This special contribution for defense is payable on account of the
shareholders.
(3) Exchange differences on intercompany loans to foreign
holdings arose as a result of devaluation of the Ukrainian Hryvnia
during 2015 and 2016. The Group treats the mentioned loans as a
part of the net investment in foreign operations (Note 32.3).
(4) Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted for
directly to the foreign currency translation reserve. The foreign
currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local
currencies against the euro in the countries where the Group's
subsidiaries own property assets.
(5) Available For Sale financial assets are measured at fair
value. Fair value changes on AFS assets are recognized directly in
equity, through other comprehensive income.
10. CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2016
Note 2016 2015
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax and non-controlling
interests (2.178.326) (11.530.401)
Adjustments for:
(Gains)/losses on revaluation
of investment property 5 (896.793) 2.335.247
Net loss on disposal of investment
property 6b 438.516 266.964
Other non-cash movements (1.367) 35.071
Write offs of prepayments 8 6.701 47.316
Impairment of assets 8 - 342.280
Accounts payable written off 8 (109.602) (1.197.740)
Depreciation/ Amortization charge 4 58.491 40.823
Interest income 9 (1.153.243) (63.596)
Interest expense 9 3.571.387 3.834.696
Share of losses/(profit) from
associates 14 (469.248) 1.244.572
Gain on acquisition of subsidiaries 13a - (2.181.834)
Results on disposal of available
for sale assets 18 206.491 -
Impairment of inventory 7 63.513 975.659
Goodwill impairment 13b - 657.082
Effect of foreign exchange differences 10a 1.041.239 5.071.048
------------------------ ------------
Cash flows from/(used in) operations
before working capital changes 577.759 (122.813)
Change in inventory 17 1.522.234 24.341
Change in prepayments and other
current assets 19 (380.280) (659.770)
Change in trade and other payables 25 (2.134.760) 1.131.688
Change in VAT and other taxes
receivable 19 560.009 (290.593)
Change in Provisions 27 17.721 656.192
Change in other taxes payables 27 157.026 87.524
Increase in deposits from tenants 26 (268.107) (117.497)
Cash generated from operations 51.602 709.072
Income tax paid (2.879) (238.616)
Net cash flows provided in operating
activities 48.723 470.456
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal
of investment property 6b 2.043.055 1.635.615
Prepayment made for acquisition
of investment property 12 - (100.000)
Cash outflow on available for
sales financial assets - (2.298.006)
Capital expenditure on property
plant and equipment (23.266) -
Dividend received from associates 127.570 -
Interest received 886 63.596
Increase in long term receivables 1.734
Cash outflow on acquisition of
subsidiaries 13 - (1.786.934)
Net cash flows from / (used in)
investing activities 2.149.979 (2.485.728)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share
capital/shareholders advances 21 - 10.839.040
Proceeds from bank loans 24 1.000.000 -
Repayment of borrowings 24 (2.881.423) (5.672.198)
Interest and financial charges
paid (3.716.433) (2.619.506)
Decrease in financial lease liabilities 28 (82.934) (179.255)
Increase in Non controlling interest 4.287.673
Repayment of preference shares 21 - (349.325)
Net cash flows from / (used in)
financing activities (1.393.117) 2.018.756
Net increase/(decrease) in cash
at banks 797.092 (203.603)
Cash:
At beginning of the year 895.422 891.938
Effect of foreign exchange rates
on cash and cash equivalents (8.493) (207.086)
At end of the year 20 1.701.007 895.422
======================== ============
11. Notes to the Consolidated Financial Statements
For the year ended 31 December 2016
1. 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. The
Group is planning to streamline its structure in Cyprus and Romania
throughout 2017.
Holding %
---------------------------- ------------------- ------------------- ------------------
Name Country Related Asset as at as at
of incorporation 31 Dec 31 Dec
2016 2015
---------------------------- ------------------- ------------------- -------- --------
SC SECURE Capital
Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
SL SECURE Logistics Brovary Logistics
Limited Cyprus Park 100 100
---------------------------- ------------------- ------------------- -------- --------
LLC Aisi Brovary Ukraine 100 100
---------------------------- ---------------------------------------- -------- --------
LLC Terminal Brovary Ukraine 100 100
---------------------------- ---------------------------------------- -------- --------
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100
---------------------------- ------------------- ------------------- -------- --------
LLC Retail Development
Balabino Ukraine 100 100
---------------------------- ---------------------------------------- -------- --------
LLC Trade Center Ukraine 100 100
---------------------------- ---------------------------------------- -------- --------
Tsymlianskiy
LLC Almaz--press--Ukrayina Ukraine Residence 55 55
---------------------------- ------------------- ------------------- -------- --------
Bela Logistic
LLC Aisi Bela Ukraine Park 100 100
---------------------------- ------------------- ------------------- -------- --------
Zaporizhia
LLC Interterminal Ukraine Retail Center 100 100
---------------------------- ------------------- ------------------- -------- --------
LLC Aisi Ilvo Ukraine 100 100
---------------------------- ---------------------------------------- -------- --------
Innovations
Myrnes Innovations Logistics
Park Limited Cyprus Park 100 100
---------------------------- ------------------- ------------------- -------- --------
Best Day Real Estate
SRL Romania 100 100
---------------------------- ---------------------------------------- -------- --------
Yamano Holdings EOS Business
Limited Cyprus Park 100 100
---------------------------- ------------------- ------------------- -------- --------
Secure Property
Development and
Investment Srl Romania 100 100
---------------------------- ---------------------------------------- -------- --------
N-E Real Estate
Park First Phase
Srl Romania 100 100
---------------------------- ---------------------------------------- -------- --------
Victini Holdings
Limited Cyprus GED Logistics 100 100
---------------------------- ------------------- ------------------- -------- --------
SPDI Logistics
S.A. Greece 100 100
---------------------------- ---------------------------------------- -------- --------
Zirimon Properties
Limited Cyprus Delea Nuova 100 100
---------------------------- ------------------- ------------------- -------- --------
Bluehouse Accession Praktiker
Project IX Limited Cyprus Craiova 100 100
---------------------------- ------------------- ------------------- -------- --------
Bluehouse Accession
Project IV Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
Bluebigbox 3 Srl Romania 100 100
---------------------------- ---------------------------------------- -------- --------
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
---------------------------- ---------------------------------------- -------- --------
Residential
Diforio Holdings and Land
Limited Cyprus portfolio 100 100
---------------------------- ------------------- ------------------- -------- --------
Demetiva Holdings
Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
Ketiza Holdings
Limited Cyprus 90 90
---------------------------- ---------------------------------------- -------- --------
Frizomo Holdings
Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
SecMon Real Estate
SRL Romania 100 100
---------------------------- ---------------------------------------- -------- --------
SecVista Real Estate
SRL Romania 100 100
---------------------------- ---------------------------------------- -------- --------
SecRom Real Estate
SRL Romania 100 100
---------------------------- ---------------------------------------- -------- --------
Ketiza Real Estate
SRL Romania 90 90
---------------------------- ---------------------------------------- -------- --------
Edetrio Holdings
Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
Emakei Holdings
Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
RAM Real Estate
Management Limited Cyprus 50 50
---------------------------- ---------------------------------------- -------- --------
Iuliu Maniu Limited Cyprus 45 45
---------------------------- ---------------------------------------- -------- --------
Moselin Investments
srl Romania 45 45
---------------------------- ---------------------------------------- -------- --------
Rimasol Enterprises
Limited Cyprus 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 100 100
---------------------------- ---------------------------------------- -------- --------
Mofben Investments
Limited Cyprus 100 100
---------------------------- ---------------------------------------- -------- --------
Delia Lebada Invest
srl Romania 65 65
---------------------------- ---------------------------------------- -------- --------
During the reporting period the Group did not proceed with any
acquisitions. In 2015 it realized a number of acquisitions: GED
Warehouse, Praktiker Craiova and a part of the mixed portfolio
including commercial, residential properties and land which were
categorized under "Investment Property" (Notes 12 & 13).
Another part of the mixed portfolio (Delea Nuova office Building,
Green Lake land) has been categorized under "Associates" (Note 14).
The 20% acquisition of Autounion has been recorded under "Available
for Sale Financial Assets" (Note 18).
2. Income
Income for the year ended 31 December 2016 represents:
a) rental income as well as service charges and utilities income
collected from tenants as a result of the rental agreements
concluded with tenants of the Terminal Brovary Logistic Park
(Ukraine), Innovations Logistics Park (Romania), EOS Business Park
(Romania), Praktiker Craiova (Romania), and GED Logistics
(Greece)
b) the income from Nestle (EUR1,6m) pursuant to the agreement to
early termination of their rental contract at Innovations Logistics
Park (Romania)
c) income from the sale of electricity by GED Logistics to the Greek grid,
d) rental income and service charges by tenants of the Residential Portfolio, and;
e) income from third parties and /or partners for managing real estate properties in Romania.
31 Dec 31 Dec
2016 2015
-------------------------------------- ---------- ----------
EUR EUR
-------------------------------------- ---------- ----------
Rental income 5.262.607 4.605.022
-------------------------------------- ---------- ----------
Sale of electricity 315.599 297.962
-------------------------------------- ---------- ----------
Service charges and utilities income 458.648 545.976
-------------------------------------- ---------- ----------
Service and property management 34.086 -
income
-------------------------------------- ---------- ----------
Total income 6.070.940 5.448.960
-------------------------------------- ---------- ----------
Occupancy rates in the various income producing assets of the
Group as at 31 December 2016 were as follows:
Income producing assets
----------------------------------------------------
% 31 Dec 31 Dec
2016 2015
----------------------- --------- ------- -------
EOS Business Park Romania 100 100
----------------------- --------- ------- -------
Innovations Logistics
Park (Note 36b) Romania 25 87
----------------------- --------- ------- -------
GED Logistics Greece 100 100
----------------------- --------- ------- -------
Terminal Brovary
(Note 36a) Ukraine 100 47
----------------------- --------- ------- -------
Praktiker Craiova Romania 100 100
----------------------- --------- ------- -------
3. Asset operating expenses
The Group incurs expenses related to the proper operation and
maintenance of all the income generating properties in Kiev,
Bucharest, Athens, Sofia and Craiova. A part of these expenses is
recovered from the tenants through the rental agreements (Note 2).
The effective reduction between 2015 and 2016 is attributed in part
to cost optimizing and in part to reduced occupancy at Innovations
Logistics Park.
31 Dec 31 Dec
2016 2015
----------------------------------- ---------- ------------
EUR EUR
----------------------------------- ---------- ------------
Property related taxes (283.193) (363.080)
----------------------------------- ---------- ------------
Utilities (207.086) (274.149)
----------------------------------- ---------- ------------
Property management fees (173.363) (253.060)
----------------------------------- ---------- ------------
Repairs and technical maintenance (101.325) (70.247)
----------------------------------- ---------- ------------
Property security (86.574) (55.688)
----------------------------------- ---------- ------------
Property insurance (49.622) (48.258)
----------------------------------- ---------- ------------
Leasing expenses (89.335) (30.861)
----------------------------------- ---------- ------------
Other operating expenses (1.943) (29.240)
----------------------------------- ---------- ------------
Total (992.441) (1.124.583)
----------------------------------- ---------- ------------
Property related taxes reflect local taxes related to land and
building properties (in the form of land taxes, building taxes,
garbage fees, etc).
Property Management fees relate to Property Management
Agreements for Terminal Brovary Logistics Park, Innovation
Logistics Park and Praktiker Craiova with third party managers
outsourcing the related services.
Leasing expenses reflect expenses related to long term land
leasing.
4. Administration Expenses
31 Dec 31 Dec
2016 2015
---------------------------------------- ------------ ------------
EUR EUR
---------------------------------------- ------------ ------------
Salaries and Wages (977.304) (1.108.614)
---------------------------------------- ------------ ------------
Advisory fees (403.185) (323.232)
---------------------------------------- ------------ ------------
Audit and accounting fees (192.514) (191.230)
---------------------------------------- ------------ ------------
Public group expenses (146.047) (155.766)
---------------------------------------- ------------ ------------
Corporate registration and maintenance
fees (185.772) (226.326)
---------------------------------------- ------------ ------------
Directors' remuneration (140.779) (278.417)
---------------------------------------- ------------ ------------
Legal fees (127.926) (241.092)
---------------------------------------- ------------ ------------
Depreciation/Amortization charge (58.491) (40.823)
---------------------------------------- ------------ ------------
Corporate operating expenses (382.170) (448.442)
---------------------------------------- ------------ ------------
Total Administration Expenses (2.614.188) (3.013.942)
---------------------------------------- ------------ ------------
Salaries and wages include the remuneration of the CEO, the CFO,
the Group Commercial Director, the Group Investment Director and
the Country Managers of Ukraine and Romania who have accepted a
reduction in their remuneration, as well as the salary cost of
personnel employed in the region.
Advisory fees are mainly related to outsourced human resources
support on the basis of advisory contracts, capital raising
advisory expenses and marketing expenses incurred by the Group in
relation to Cypriot, Ukrainian, Romanian, Bulgarian and Greek
operations.
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 Group.
Corporate registration and maintenance fees represent fees paid
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.
Directors' remuneration represents the remuneration of all
non-executive Directors and committee members for H1-2016 (Note
32.1.2). Following a BOD decision the Directors will receive no
remuneration thereafter.
Legal fees represent legal expenses incurred by the Group in
relation to asset operations (rentals, sales, etc), ongoing legal
cases in Ukraine and compliance with AIM listing.
Corporate operating expenses include office expenses, travel
expenses, communication expenses, D&O insurance and all other
general expenses for Cypriot, Romanian, Ukrainian, Bulgarian and
Greek operations.
5. 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 12.2, are
presented in the table below.
Property Name (EUR) Valuation gains/(losses)
---------------------------- ---------------------------
31 Dec 31 Dec
2016 2015
---------------------------- ------------- ------------
EUR EUR
---------------------------- ------------- ------------
Brovary Logistic Park 3.561.403 (589.179)
---------------------------- ------------- ------------
Bela Logistic Center 283.654 1.513.658
---------------------------- ------------- ------------
Kiyanivskiy Lane 356.023 278.302
---------------------------- ------------- ------------
Tsymlyanskiy Lane 111.893 178.669
---------------------------- ------------- ------------
Balabyne Lane 77.597 (8.143)
---------------------------- ------------- ------------
Rozny Lane (55.673) (865.054)
---------------------------- ------------- ------------
Innovations Logistics Park (3.384.853) 400.000
---------------------------- ------------- ------------
EOS Business Park 337.684 150.000
---------------------------- ------------- ------------
Residential Portfolio 133.130 251.500
---------------------------- ------------- ------------
Green Lake 53.139 (865.000)
---------------------------- ------------- ------------
Pantelimon Lake (941.179) (10.000)
---------------------------- ------------- ------------
Praktiker Craiova 329.975 (2.870.000)
---------------------------- ------------- ------------
GED Logistics - 100.000
---------------------------- ------------- ------------
Boyana - Land 34.000 -
---------------------------- ------------- ------------
Total 896.793 (2.335.247)
---------------------------- ------------- ------------
6. Gain/(Loss) from disposal of properties
During the reporting period the Group progressed with selling
properties classified under either Investment Property (Romanian
residential assets) or Inventory (Bulgarian residential assets),
designated as non-core assets. The sales proceed from sale of
apartments and parking spaces minus the cost of assets sold,
representing the fair value of the previous year of the apartments
and parking spaces sold in 2016 is presented below.
6a Inventory (Note 17)
31 Dec 31 Dec
2016 2015
---------------------------------------- ------------ ----------
EUR EUR
---------------------------------------- ------------ ----------
Income from sale of inventory 1.153.326 89.711
---------------------------------------- ------------ ----------
Cost of inventory (1.522.233) (141.070)
---------------------------------------- ------------ ----------
Gain/(Loss) from disposal of inventory (368.907) (51.359)
---------------------------------------- ------------ ----------
6b Investment property
A large part of sold properties during 2016 represent the bulk
sale of all the apartments held by the Group at the Linda Residence
project. This sale resulted in EUR660.000 of income vs the carrying
value of EUR1.014.000 reflecting the 2015 stated fair value. During
the sale process the financing bank agreed to provide a discount of
EUR326.937 against the one off repayment of the associated debt
(Note 9). The net cash proceeds from the sale were EUR450k.
31 Dec 31 Dec
2016 2015
----------------------------------------- ------------ ------------
EUR EUR
----------------------------------------- ------------ ------------
Income from sale of investment property 2.043.055 1.635.615
----------------------------------------- ------------ ------------
Cost of investment property (2.481.571) (1.902.579)
----------------------------------------- ------------ ------------
Gain/(Loss) from disposal of investment
property (438.516) (266.964)
----------------------------------------- ------------ ------------
7. Impairment allowance for inventory and provisions
31 Dec 31 Dec
2016 2015
----------------------------- --------- ------------
EUR EUR
----------------------------- --------- ------------
Impairment of Inventory (63.513) (975.659)
----------------------------- --------- ------------
Provisions (Notes 27, 33.3) - (700.000)
----------------------------- --------- ------------
Total (63.513) (1.675.659)
----------------------------- --------- ------------
Impairment of Inventory relates to Boyana residence (Note
17).
Provisions reflect potential contingent liabilities from legal
cases (Notes 27, 33).
8. Other operating income/(expenses), net
31 Dec 31 Dec
2016 2015
------------------------------------- ------------ ----------
EUR EUR
------------------------------------- ------------ ----------
Break fees received - 182.638
------------------------------------- ------------ ----------
Accounts payable written off 109.602 1.197.740
------------------------------------- ------------ ----------
Other income 109.602 1.380.378
------------------------------------- ------------ ----------
Impairment of assets - (342.280)
------------------------------------- ------------ ----------
Impairment of prepayments and other
current assets (6.701) (47.316)
------------------------------------- ------------ ----------
Transaction costs written off (506.837) (287.999)
------------------------------------- ------------ ----------
Penalties (521.595) (16.753)
------------------------------------- ------------ ----------
Other expenses (378.773) (32.174)
------------------------------------- ------------ ----------
Other expenses (1.413.906) (726.522)
------------------------------------- ------------ ----------
Other operating income/(expenses),
net (1.304.304) 653.856
------------------------------------- ------------ ----------
Break fees received represents extraordinary income due to early
break fees of tenancy agreements by tenants in Terminal
Brovary.
Accounts payable written off in 2015 represent a write off of
management fees associated with SEC South East Continent Unique
Real Estate (SECURED) Investments Ltd charged by a related party,
Secure Management Ltd, which has accepted to forgo any claim on
such payable amount.
Impairment of assets in 2015 represents an amount paid by a
subsidiary 8 years ago for acquiring an option to buy properties
which has not been exercised.
Transaction costs represent due diligence costs, previously held
under deferred expenses, for properties that were considered for
acquisition which at the end were not acquired (in 2016 mainly
Bluehouse assets).
Penalties in 2016 mainly represents penalties associated with
the 20% share disposal in Autounion (Note 18).
Other income/(expenses) in 2016 includes EUR246.337 of
transaction expenses related to Terminal Brovary sale and
EUR109.654 reflects a non realized loss due to amounts related with
non controlling interest restructuring of the Group.
9. Finance costs and income
Finance income 31 Dec 31 Dec
2016 2015
------------------------------------ ---------- -------
EUR EUR
------------------------------------ ---------- -------
Income associated to partial write 326.937 -
off of bank loans
------------------------------------ ---------- -------
Interest received from non bank
loans (Note 32.1) 61.925 48.730
------------------------------------ ---------- -------
Interest (non bank) written off 763.481 -
------------------------------------ ---------- -------
Interest income associated with
banking accounts 900 14.866
------------------------------------ ---------- -------
Total finance income 1.153.243 63.596
------------------------------------ ---------- -------
Income associated to partial write off of bank loans reflects
the amount foregone by the Raiffeisen Bank reflecting a discount of
26% of the principal amount (at the time of the agreement in 2015),
upon complete sale of all the Linda Residence units (Note 6b)
(effected in 2016) and full repayment of the remaining associated
debt.
Interest received from non bank loans, reflects income from
loans granted by the Group for financial assistance of associates
or available for sale properties.
Interest (non bank) written off, represents accrued interest
expense associated to one of the projects where the Company
maintains a partnership participation and is under consolidation,
whereas the shareholders have agreed to write off the interest and
capitalize the shareholders' loan principal.
Finance costs 31 Dec 31 Dec
2016 2015
------------------------------------ ------------ ------------
EUR EUR
------------------------------------ ------------ ------------
Interest expenses (bank) (2.970.765) (3.283.056)
------------------------------------ ------------ ------------
Interest expenses (non bank) (Note (14.996) -
32.1)
------------------------------------ ------------ ------------
Finance leasing interest expenses (585.626) (551.640)
------------------------------------ ------------ ------------
Finance charges and commissions (123.413) (258.493)
------------------------------------ ------------ ------------
Default interest - (325.707)
------------------------------------ ------------ ------------
Other finance expenses (44.151) (19.295)
------------------------------------ ------------ ------------
Total finance costs (3.738.951) (4.438.191)
------------------------------------ ------------ ------------
Net finance result (2.585.708) (4.374.595)
------------------------------------ ------------ ------------
Interest expense (bank) represents interest expense charged on
bank borrowings.
Interest expense (non-bank) represents interest expense charged
on non-bank borrowings, mainly from related parties. (Note
32.1).
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group (Note 28).
Finance charges and commissions include regular banking
commissions and various fees paid to the banks.
Default interest in 2015 relates to interest charged by Bank of
Cyprus in relation to the loan over Delia Lebada Invest srl.
10. Foreign exchange profit / (losses)
a. Foreign exchange loss - non realised
Foreign exchange losses (non-realised) resulted from the loans
and/or payables/receivables denominated in non EUR currencies when
translated in EUR, mainly the EBRD loan (Note 24). The exchange
loss for the year ended 31 December 2016 amounted to EUR1.041.239
(2015: loss EUR5.071.048).
b. Exchange difference on intercompany loans to foreign holdings
The intercompany loans provided by SC Secure Capital Limited to
Ukrainian subsidiaries (Note 32.3) incurred an exchange loss
(non-realised) of EUR4.167.542, due to the UAH devaluation which
took place during the reporting period (2015: loss EUR13.653.402).
Settlement of these loans is not planned to occur in the
foreseeable future and in substance is part of the Group's net
investment in its foreign operations.
11. Income Tax Expense
31 Dec 31 Dec
2016 2015
---------------------------------------- ---------- ---------
EUR EUR
---------------------------------------- ---------- ---------
Current income and defence tax expense (174.315) (80.188)
---------------------------------------- ---------- ---------
Taxes (174.315) (80.188)
---------------------------------------- ---------- ---------
For the year ended 31 December 2016, the corporate income tax
rate for the Group's subsidiaries are as follows: in Ukraine 18%,
in Romania 16%, in Greece 29% and in Bulgaria 10%. The corporate
tax that is applied to the qualifying income of the Company and its
Cypriot subsidiaries is 12,5%.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 31 Dec
2016 2015
------------------------------------- ------------ -------------
EUR EUR
------------------------------------- ------------ -------------
Profit / (loss) before tax (1.483.129) (11.530.401)
------------------------------------- ------------ -------------
Tax calculated on applicable rates 410.850 (3.340.505)
------------------------------------- ------------ -------------
Expenses not recognized for tax
purposes 2.923.266 483.029
------------------------------------- ------------ -------------
Tax effect of allowances and income
not subject to tax (2.530.411) (248.073)
------------------------------------- ------------ -------------
Tax effect of group tax relief (51.711) (8.573)
------------------------------------- ------------ -------------
Tax effect on tax losses for the
year 190.224 3.181.833
------------------------------------- ------------ -------------
Tax effect on tax losses brought
forward (776.537) (822)
------------------------------------- ------------ -------------
10% additional tax 6.657 7.200
------------------------------------- ------------ -------------
Defence tax 17 2.092
------------------------------------- ------------ -------------
Overseas tax in excess of credit
claim used during the year 1.044 166
------------------------------------- ------------ -------------
Prior year tax 916 3.841
------------------------------------- ------------ -------------
Total Tax 174.315 80.188
------------------------------------- ------------ -------------
12. Investment Property
12.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
-- GED Logistics is a logistics park comprising 17.756 gross
leasable sqm. It is fully let to the German multinational
transportation and logistics company, Kuehne + Nagel (70%) and to a
Greek commercial company trading electrical appliances GE Dimitriou
SA (30%). On the roof of the warehouse there is a 1MW photovoltaic
park installed with the electricity generated being sold to Greek
Electric Grid on a long term contract.
-- EOS Business Park is a 3.386 sqm gross leasable area and
includes a Class A office Building in Bucharest, which is currently
fully let to Danone Romania. EOS Business Park was acquired by the
Group in October 2014.
-- Praktiker Craiova, a DIY retail property was acquired by the
Group in July 2015. Situated in a prime location in Craiova,
Romania and it is fully let to Praktiker, a regional DIY retailer.
The property has a gross lettable area of 9.385 sqm and is 100%
rented until 2025.
-- Innovations Logistic Park is a 16.570 sqm gross leasable area
logistics park located in Clinceni in Bucharest, which benefits
from being on the Bucharest ring road. Its construction was tenant
specific, was completed in 2008 and is separated in four
warehouses, two of which offer cold storage (freezing temperature),
the total area of which is 6.395 sqm. Innovations was acquired by
the Group in May 2014 and was 25% leased at the end of the
reporting period. As at the date of issuance of the financial
statements occupancy stands at 60% (Note 36b).
-- Terminal Brovary Logistic Park consists of a 49.180 sqm gross
leasable Class A warehouse and associated office space, situated on
the junction of the main Kiev - Moscow highway and the Borispil
road. The facility is in operation since Q1 2010 and as at the end
of the reporting period its warehouse space is 100% leased. The
Company has agreed to sell the property and the sale concluded
beginning of 2017 (Note 36a).
Residential Assets
-- The Company owns a residential portfolio, consisting at the
end of the reporting period of partly let and income producing 69
apartments and villas across four separate complexes located in
different residential areas of Bucharest (Residential portfolio:
Romfelt, Monaco, Blooming House, Green Lake Residential: Green Lake
Parcel K). The Group acquired the portfolio partly in August 2014
and partly May 2015 (Note 13) and in May 2016 proceeded in full
divestment from Linda Residences. The aggregate residential
portfolio is 40% let at the end of the reporting period.
Land Assets
-- Bela Logistic Center is a 22,4 Ha plot in Odessa situated on
the main highway to Kiev. Following the issuance of permits in
2008, below ground construction for the development of a 103.000
sqm GBA logistic center commenced. Construction was put on hold in
2009.
-- Kiyanivsky Lane consists of four adjacent plots of land,
totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael's Spires and
historic Podil neighborhood.
-- Tsymlianskiy Lane is a 0,36 Ha plot of land located in the
historic Podil District of Kiev and is destined for the development
of a residential complex.
-- Rozny Lane is a 42 Ha land plot located in Kiev Oblast,
destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision in
2015.
-- Balabino project is a 26,38 Ha plot of land situated on the
south entrance of Zaporizhia, a city in the south of Ukraine with a
population of 800.000 people. Balabino is zoned for retail and
entertainment development.
-- Green Lake land is a 40.360 sqm plot and is adjacent to the
Green Lake part of the Company's residential portfolio, which is
classified under Investments in Associates (Note 14). It is
situated in the northern part of Bucharest on the bank of Grivita
Lake in Bucharest. SPDI owns 44% of these plots, but has effective
management control.
-- Pantelimon Lake consists of a 40.000 sqm plot of land in east
Bucharest situated on the shore of Pantelimon Lake, opposite to a
famous Romanian hotel, the Lebada Hotel. The construction permit,
which allows for 54.000 sqm residential space to be built, is under
renewal.
-- Boyana Land: The complex of Boyana Residence includes
adjacent land plots with building permits to develop gross
buildable area of 21,851 sqm (Note 17).
12.2 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.
2016 (EUR) Fair Value Asset Value at
movements the Beginning of
the period or at
Acquisition/Transfer
date
----------------------------- ------------- -------------------------- ------------ ------------------------------------
Asset Type Carrying Foreign Fair Disposals Transfer Additions Carrying
Name amount exchange value 2016 from 2016 amount
as at translation gain/(loss) Inventory as at
31/12/2016 difference based 31/12/2015
(a) on local
currency
valuations
(b)
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Terminal Warehouse 14.900.000 (925.726) 3.561.403 - - 12.264.323
Brovary
Logistics
Park
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Bela Logistic
Center Land 5.027.986 (381.057) 283.654 - - 5.125.389
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Kiyanivskiy
Lane Land 3.320.368 (239.023) 356.023 - - 3.203.368
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Tsymlyanskiy
Lane Land 1.043.544 (75.122) 111.893 - - 1.006.773
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Balabyne Land 1.517.883 (115.636) 77.597 - - 1.555.922
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Rozny Land 1.138.412 - (55.673) - - 1.194.085
Lane
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Total (1.736.564) 4.334.897 -
Ukraine
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Overall 26.948.193 2.598.333 - - 24.349.860
change
in Ukraine
-------------- ------------- ------------- -------------------------- ------------ ---------- ---------- ------------
Innovations Warehouse 11.000.000 (15.147) (3.384.853) - - - 14.400.000
Logistics
Park
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
EOS Business
Park Office 6.860.000 (27.684) 337.684 - - - 6.550.000
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Residential
portfolio Residential 4.375.000 1.440 133.130 (2.481.570) - - 6.722.000
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Green
Lake Land 17.919.000 (66.139) 53.139 - - - 17.932.000
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Pantelimon
Lake Land 4.860.000 (10.821) (941.179) - - - 5.812.000
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Praktiker
Craiova Retail 7.500.000 (29.975) 329.975 - - - 7.200.000
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Total 52.514.000 (148.326) (3.472.104) (2.481.570) - - 58.616.000
Romania
----------------------------- ------------ ------------ ------------ ------------ ---------- ---------- ------------
Boyana Land 4.720.000 - 34.000 - 4.686.000 - -
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Total 4.720.000 - 34.000 4.686.000 -
Bulgaria
----------------------------- ------------ ------------ ------------ ------------ ---------- ---------- ------------
GED Logistics Warehouse 16.500.000 - - - - 16.500.000
-------------- ------------- ------------- ------------ ------------ ------------ ---------- ---------- ------------
Total 16.500.000 - - - - - 16.500.000
Greece
----------------------------- ------------ ------------ ------------ ------------ ---------- ---------- ------------
TOTAL 100.682.193 (1.884.890) 896.793 (2.481.570) 4.686.000 - 99.465.860
----------------------------- ------------ ------------ ------------ ------------ ---------- ---------- ------------
2015 (EUR) Fair Value Asset Value at
movements the Beginning of
the period or at
Acquisition/Transfer
date
----------------------------- ------------ -------------------------- ------------- ---------------------------------------
Asset Type Carrying Foreign Fair Disposals Transfer Additions Carrying
Name amount exchange value 2015 from 2015 amount
31/12/2015 translation gain/(loss) prepayments as at
difference based made 31/12/2014
(a) on local for
currency investments
valuations (Note
(b) 12.4c)
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Terminal Warehouse 12.264.323 (4.609.808) (589.179) - - 17.463.310
Brovary
Logistics
Park
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Bela Logistic Land 5.125.389 (1.471.485) 1.513.658 - - 5.083.216
Center
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Kiyanivskiy Land 3.203.368 (1.092.315) 278.302 - - 4.017.381
Lane
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Tsymlyanskiy
Lane Land 1.006.773 (319.719) 178.669 - - 1.147.823
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Balabyne Land 1.555.922 (567.608) (8.143) - - 2.131.673
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Rozny Land 1.194.085 - (324.395) 1.518.480 - -
Lane
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Total (8.060.935) 1.048.912 -
Ukraine
------------------------------------------- ------------ ------------ ------------- ------------ ----------- ------------
Overall 24.349.860 (7.012.023) 1.518.480 29.843.403
change
in Ukraine
----------------------------- ----------- -------------------------- ------------- ------------ ----------- ------------
Innovations Warehouse 14.400.000 - 400.000 - - 14.000.000
Logistics
Park
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
EOS Business Office 6.550.000 - 150.000 - - 6.400.000
Park
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Residential Residential 6.722.000 - 251.500 - - 8.373.000
portfolio (1.902.500)
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Green Land 17.932.000 - (865.000) - 18.797.000 -
Lake
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Pantelimon Land 5.812.000 - (10.000) - 5.822.000 -
Lake
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Praktiker Retail 7.200.000 - (2.870.000) - 10.070.000 -
Craiova
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Total 58.616.000 - (2.943.500) (1.902.500) - 34.689.000 28.773.000
Romania
----------------------------- ----------- ------------ ------------ ------------- ------------ ----------- ------------
GED Logistics Warehouse 16.500.000 - 100.000 - 16.400.000 -
-------------- ------------- ------------ ------------ ------------ ------------- ------------ ----------- ------------
Total 16.500.000 - 100.000 - - 16.400.000 -
Greece
----------------------------- ----------- ------------ ------------ ------------- ------------ ----------- ------------
TOTAL 99.465.860 (8.060.935) (1.794.588) (1.902.500) 1.518.480 51.089.000 58.616.403
----------------------------- ----------- ------------ ------------ ------------- ------------ ----------- ------------
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 EUR1.884.890 (a) 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 EUR896.793 (b), is presented as Valuation
gains/(losses) from investment properties in the statement of
comprehensive income and is carried forward in Accumulated
losses.
In respect of the main fair value changes of the various
properties as at the reporting date:
- Terminal Brovary valuation reflects the price of which the
property was sold in January 2017 (Note 36a).
- The decrease in the valuation of Innovations reflect the low
occupancy of the property.
- The fair value of the unsold units of the Residential
portfolio as at the end of the reporting period has increased by
EUR133.130 compared to the 2015 valuation (which was used for
discharging the units sold during the period).
12.3 Investment Property Carrying Amount per asset as at the
reporting date
The table below presents the values of the individual assets as
appraised by the appointed valuer as at the reporting date.
Asset Name Location Principal Related Companies Carrying amount
Operation as at
--------------- ----------- -------------- --------------------- --------------------------
31 Dec 31 Dec
2016 2015
--------------- ----------- -------------- --------------------- ------------ ------------
EUR EUR
--------------- ----------- -------------- --------------------- ------------ ------------
Terminal Brovary, Warehouse LLC Terminal 14.900.000 12.264.323
Brovary Kiev Brovary
Logistics oblast LLC Aisi Brovary
Park SL Logistics
Limited
--------------- ----------- -------------- --------------------- ------------ ------------
Bela Logistic Odesa Land and LLC Aisi Bela 5.027.986 5.125.389
Center Development
Works for
Warehouse
--------------- ----------- -------------- --------------------- ------------ ------------
Kiyanivskiy Podil, Land for LLC Aisi Ukraine 3.320.368 3.203.368
Lane Kiev residential LLC Trade Center
City development
Center
--------------- ----------- -------------- --------------------- ------------ ------------
Tsymlyanskiy Podil, Land for LLC Almaz Pres 1.043.544 1.006.773
Lane Kiev residential Ukraine
City development
Center
--------------- ----------- -------------- --------------------- ------------ ------------
Balabyne Zaporizhia Land for LLC Interterminal 1.517.883 1.555.922
retail LLC Aisi Ilvo,
development
--------------- ----------- -------------- --------------------- ------------ ------------
Rozny Lane Brovary Land for SC Secure Capital 1.138.412 1.194.085
district, residential Limited
Kiev Development
--------------- ----------- -------------- --------------------- ------------ ------------
Total Ukraine 26.948.193 24.349.860
--------------- ----------- -------------- --------------------- ------------ ------------
Innovations Clinceni, Warehouse Myrnes Innovations 11.000.000 14.400.000
Logistics Bucharest Park Limited
Park Best Day Real
Estate Srl
--------------- ----------- -------------- --------------------- ------------ ------------
EOS Business Bucharest Office Yamano Limited 6.860.000 6.550.000
Park building SPDI SRL,
N-E Real Estate
Park First Phase
Srl
--------------- ----------- -------------- --------------------- ------------ ------------
Praktiker Craiova Big Box Bluehouse Accession 7.500.000 7.200.000
Craiova retail Project IX Limited
Bluehouse Accession
Project IV Limited
BlueBigBox 3
srl
--------------- ----------- -------------- --------------------- ------------ ------------
Residential Bucharest Residential Secure Investments 4.375.000 6.722.000
Portfolio apartments II Limited
(55 in Demetiva Limited
total in Diforio Limited
3 complexes) Frizomo Limited
Ketiza Limited
SecRom Srl
SecVista Srl
SecMon Srl
Ketiza Srl
--------------- ----------- -------------- --------------------- ------------ ------------
Green Lake Bucharest Residential Secure Investments 17.919.000 17.932.000
villas I Limited
(14 villas) Edetrio Holdings
& Limited
land for Emakei Holdings
residential Limited
development Iuliu Maniu
Limited
Ram Real Estate
Management 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
--------------- ----------- -------------- --------------------- ------------ ------------
Pantelimon Bucharest Land for Secure Investments 4.860.000 5.812.000
Lake residential I Limited
development Mofben Investments
Limited
Delia Lebada
Invest srl
--------------- ----------- -------------- --------------------- ------------ ------------
Total Romania 52.514.000 58.616.000
--------------- ----------- -------------- --------------------- ------------ ------------
Boyana Sofia Land Boyana Residence 4.720.000 transferred
ood, from
Sertland Properties Inventory
Limited
--------------- ----------- -------------- --------------------- ------------ ------------
Total Bulgaria 4.720.000
--------------- ----------- -------------- --------------------- ------------ ------------
GED Logistics Athens Warehouse Victini Holdings 16.500.000 16.500.000
Limited.
SPDI Logistics
S.A.
--------------- ----------- -------------- --------------------- ------------ ------------
Total Greece 16.500.000 16.500.000
--------------- ----------- -------------- --------------------- ------------ ------------
TOTAL 100.682.193 99.465.860
--------------- ----------- -------------- --------------------- ------------ ------------
12.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Terminal Brovary Logistics Park, Innovations Logistic park, EOS
Business Park, GED Logistics, Praktiker Craiova, the Residential
Portfolio (consisting of apartments in 3 complexes) and Green Lake
parcel K as well as all the land assets namely Kiyanivskiy Lane,
Tsymlyanskiy Lane, Balabyne and Rozny in Ukraine, Pantelimon Lake
and Green Lake in Romania as well as the land in Sofia, Bulgaria
(Boyana) which has been reclassified from Inventory.
31 Dec 31 Dec
2016 2015
-------------------------------------- ------------ ------------
EUR EUR
-------------------------------------- ------------ ------------
At 1 January 94.340.471 53.533.187
-------------------------------------- ------------ ------------
Acquisitions of investment property - 51.089.000
-------------------------------------- ------------ ------------
Disposal of investment Property (2.481.570) (1.902.500)
-------------------------------------- ------------ ------------
Transfer from Inventory/prepayments
made 4.686.000 1.518.480
-------------------------------------- ------------ ------------
Revaluation gain/(loss) on investment
property 613.139 (3.308.246)
-------------------------------------- ------------ ------------
Translation difference (1.503.833) (6.589.450)
-------------------------------------- ------------ ------------
At 31 December 95.654.207 94.340.471
-------------------------------------- ------------ ------------
b. Investment Properties Under Development
As at 31 December 2016 investment property under development
represents the carrying value of Bela Logistic Center property,
which has reached the +10% construction in late 2008 but it is
stopped since then.
31 Dec 31 Dec
2016 2015
----------------------------------- ---------- ------------
EUR EUR
----------------------------------- ---------- ------------
At 1 January 5.125.389 5.083.216
----------------------------------- ---------- ------------
Revaluation on investment property 283.654 1.513.658
----------------------------------- ---------- ------------
Translation difference (381.057) (1.471.485)
----------------------------------- ---------- ------------
At 31 December 5.027.986 5.125.389
----------------------------------- ---------- ------------
c. Prepayments made for Investments
From time to time, when the Group acquires a new property, it
may proceed with downpayment in order to facilitate such
transactions. Movements of such prepayments are presented below for
2016 and 2015.
31 Dec 31 Dec
2016 2015
------------------------------------------- ----------- ------------
EUR EUR
------------------------------------------- ----------- ------------
At 1 January 100.000 2.674.219
------------------------------------------- ----------- ------------
Advances for acquisition transferred
to Investment in subsidiary - (624.841)
------------------------------------------- ----------- ------------
Translation difference - 9.761
------------------------------------------- ----------- ------------
Transfer to Investment Properties - (1.518.480)
------------------------------------------- ----------- ------------
Transfer to long term receivables (100.000) -
and prepayments of investments (Note
16)
------------------------------------------- ----------- ------------
Advances for investments from acquisition
of subsidiaries - 100.000
------------------------------------------- ----------- ------------
Impairment provision - (540.659)
------------------------------------------- ----------- ------------
At 31 December - 100.000
------------------------------------------- ----------- ------------
12.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the
following table represents an analysis based on the various
valuation methods. The different levels as defined by IFRS have
been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and
liquid markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived
from prices). Level 2 fair values of investment properties have
been derived using the market value approach by comparing the
subject asset with similar assets for which price information is
available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred
recently in the market. The most significant input into this
valuation approach is price per sqm.
- Level 3 relates to inputs for the asset or liability that are
not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using
the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of
income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements (Level (Level (Level Total
at 31 Dec 2016 (EUR) 1) 2) 3)
---------------------------------- ------- ----------- ----------- ------------
Recurring fair value measurements
---------------------------------- ------- ----------- ----------- ------------
Balabyne - Zaporizhia - 1.517.883 - 1.517.883
---------------------------------- ------- ----------- ----------- ------------
Tsymlyanskiy Lane - Podil,
Kiev City Center - 1.043.544 - 1.043.544
---------------------------------- ------- ----------- ----------- ------------
Bela Logistics Center-
Odessa - - 5.027.986 5.027.986
---------------------------------- ------- ----------- ----------- ------------
Terminal Brovary Logistics
Park - Brovary Kiev Oblast - 14.900.000 - 14.900.000
---------------------------------- ------- ----------- ----------- ------------
Kiyanivskiy Lane - Podil,
Kiev City Center - 3.320.368 - 3.320.368
---------------------------------- ------- ----------- ----------- ------------
Rozny Lane - Brovary district,
Kiev oblast - 1.138.412 - 1.138.412
---------------------------------- ------- ----------- ----------- ------------
Innovations Logistics
Park - Bucharest - - 11.000.000 11.000.000
---------------------------------- ------- ----------- ----------- ------------
EOS Business Park - Bucharest,
City Center - - 6.860.000 6.860.000
---------------------------------- ------- ----------- ----------- ------------
Residential Portfolio
(ex Green Lake) - Bucharest - 4.375.000 - 4.375.000
---------------------------------- ------- ----------- ----------- ------------
Green Lake - Bucharest - 17.919.000 17.919.000
---------------------------------- ------- ----------- ----------- ------------
Pantelimon Lake - Bucharest - 4.860.000 - 4.860.000
---------------------------------- ------- ----------- ----------- ------------
Praktiker - Craiova - - 7.500.000 7.500.000
---------------------------------- ------- ----------- ----------- ------------
GED Logistics - Athens - - 16.500.000 16.500.000
---------------------------------- ------- ----------- ----------- ------------
Boyana- Land - 4.720.000 - 4.720.000
---------------------------------- ------- ----------- ----------- ------------
Totals - 53.794.207 46.887.986 100.682.193
---------------------------------- ------- ----------- ----------- ------------
Fair value measurements (Level (Level (Level Total
at 31 Dec 2015 (EUR) 1) 2) 3)
---------------------------------- ------- ----------- ----------- -----------
Recurring fair value measurements
---------------------------------- ------- ----------- ----------- -----------
Balabyne - Zaporizhia - 1.555.922 - 1.555.922
---------------------------------- ------- ----------- ----------- -----------
Tsymlyanskiy Lane - Podil,
Kiev City Center - 1.006.773 - 1.006.773
---------------------------------- ------- ----------- ----------- -----------
Bela Logistics Center-
Odessa - - 5.125.389 5.125.389
---------------------------------- ------- ----------- ----------- -----------
Terminal Brovary Logistics
Park - Brovary Kiev Oblast - - 12.264.323 12.264.323
---------------------------------- ------- ----------- ----------- -----------
Kiyanivskiy Lane - Podil,
Kiev City Center - 3.203.368 - 3.203.368
---------------------------------- ------- ----------- ----------- -----------
Rozny Lane - Brovary district,
Kiev oblast - 1.194.085 - 1.194.085
---------------------------------- ------- ----------- ----------- -----------
Innovations Logistics
Park - Bucharest - - 14.400.000 14.400.000
---------------------------------- ------- ----------- ----------- -----------
EOS Business Park - Bucharest,
City Center - - 6.550.000 6.550.000
---------------------------------- ------- ----------- ----------- -----------
Residential Portfolio
(ex Green Lake) - Bucharest - 6.722.000 - 6.722.000
---------------------------------- ------- ----------- ----------- -----------
Green Lake - Bucharest - 17.932.000 17.932.000
---------------------------------- ------- ----------- ----------- -----------
Pantelimon Lake - Bucharest - 5.812.000 - 5.812.000
---------------------------------- ------- ----------- ----------- -----------
Praktiker - Craiova - - 7.200.000 7.200.000
---------------------------------- ------- ----------- ----------- -----------
GED Logistics - Athens - 16.500.000 - 16.500.000
---------------------------------- ------- ----------- ----------- -----------
Totals - 53.926.148 45.539.712 99.465.860
---------------------------------- ------- ----------- ----------- -----------
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level 3 Bela Innovations EOS Praktiker GED Logistics Total
Fair value Logistics Logistics Business Craiova
measurements Center Park Park
at 31 Dec
2016 (EUR)
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Opening -
balance 5.125.389 14.400.000 6.550.000 7.200.000 33.275.389
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Transfer
to and
from level
2 due to
change 16.500.000
of valuation
methods - - - - 16.500.000
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Acquisitions - - - - - -
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Additions - - - - - -
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Disposals - - - - - -
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Profit/(loss)
on revaluation 283.654 (3.384.853) 337.684 329.975 - (2.433.540)
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Translation
difference (381.057) (15.147) (27.684) (29.975) - (453.863)
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Closing
balance 5.027.986 11.000.000 6.860.000 7.500.000 16.500.000 46.887.986
----------------- ----------- ------------ ---------- ---------- -------------- ------------
Level Terminal Kiyanivskiy Tsymlyanskiy Bela Innovations EOS Praktiker Total
3 Fair Brovary Lane Lane Logistic Logistics Business Craiova
value Logistics Center Park Park
measurements Park
at 31
Dec 2015
(EUR)
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Opening 17.463.310 4.017.381 1.147.823 - 14.000.000 6.400.000 - 43.028.514
balance
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Transfer
to and
from level
2 due
to change
of valuation
methods - (4.017.381) (1.147.823) 5.083.216 - - - (81.988)
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Acquisitions - - - - - - 10.070.000 10.070.000
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Additions - - - - - - - -
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Disposals - - - - - - - -
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Profit/(loss)
on
revaluation (589.179) - - 1.513.658 400.000 150.000 (2.870.000) (1.395.521)
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Translation
difference (4.609.808) - - (1.471.485) - - - (6.081.293)
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Closing
balance 12.264.323 - - 5.125.389 14.400.000 6.550.000 7.200.000 45.539.712
--------------- ------------ ------------ ------------- ------------ ------------ ---------- ------------ ------------
Information about Level 3 Fair Values is presented below:
Fair Fair value Valuation Unobservable Relationship
value at technique inputs of unobservable
at 31 Dec inputs to fair
31 Dec 2015 value
2016
--------------- ----------- ----------- ------------ ---------------- -------------------
EUR EUR EUR EUR EUR
--------------- ----------- ----------- ------------ ---------------- -------------------
Bela Logistic 5.027.986 5.125.389 Combined Percentage The higher
Center market of development the percentage
- Odessa and cost works of completion
approach completion, the higher
deterioration the fair value.
rate The higher
the deterioration
rate the lower
the fair value
--------------- ----------- ----------- ------------ ---------------- -------------------
Terminal - 12.264.323 Combined Future The higher
Brovary market rental the rental
Logistics and income income income the
Park- Brovary approach and costs higher the
Kiev Oblast for 14 fair value.
months, The higher
discount the discount
rate rate, the lower
fair value
--------------- ----------- ----------- ------------ ---------------- -------------------
Innovations 11.000.000 14.400.000 Income Future The higher
Logistics approach rental the rental
Park - income income the
Bucharest and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate rate, the lower
fair value
--------------- ----------- ----------- ------------ ---------------- -------------------
EOS Business 6.860.000 6.550.000 Income Future The higher
Park - approach rental the rental
Bucharest, income income the
City Center and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate rate, the lower
fair value
--------------- ----------- ----------- ------------ ---------------- -------------------
Praktiker 7.500.000 7.200.000 Income Future The higher
Craiova approach rental the rental
income income the
and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate rate, the lower
fair value
--------------- ----------- ----------- ------------ ---------------- -------------------
GED Logistics 16.500.000 - Income Future The higher
approach rental the rental/PV
income income the
and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate for rate, the lower
real estate fair value
property
and for
Photovoltaic
25 + 6
years
for PV
--------------- ----------- ----------- ------------ ---------------- -------------------
Total 46.887.986 45.539.712
--------------- ----------- ----------- ------------ ---------------- -------------------
13. Investment Property Acquisitions and Goodwill Movement
a. Investment Property Acquisitions
In March 2015 the Group completed the acquisition of an income
producing logistics park (the "GED Logistics"), located in the West
Attica Industrial Area of Athens, Greece (Note 12.1).
In July 2015 the Group acquired Praktiker Craiova, a DIY retail
property (Note 12.1). The acquisition was effected through the
issuance of Class B Redeemable Convertible Preference Shares
('RCPS') to the vendors (Note 21.6). The Company is in discussion
with the vendor vis a vis the finalization of the redemption
process (Note 18).
During 2015 the Group acquired the mixed use portfolio of Sec
South, a private equity entity, which included investment
properties, inventories and investment in associates, (Notes 12,
13, 14) via in kind contribution by the vendors and in exchange of
18.028.294 ordinary shares of EUR0,01 and two equivalent sets of
warrants as described below (Note 21.4 and 21.5).The shares were
issued at a price of GBP 0,65 per share while the first set of
warrants had an exercise price of GBP 0,10 and the second of GBP
0,45. Out of the 1st set of 18.028.294 warrants, 14.324.627 were
exercised in 2015 and an equal amount of ordinary shares was issued
(Note 21.2) while the 2(nd) set has expired without being exercised
(Note 21.2). The vendors of the Sec South included Ionian Equity
Participations Limited, a substantial shareholder in the Company,
holding then in excess of 10% of the Company's issued share
capital, as well as an entity in which Lambros Anagnostopoulos (a
director of the Company and the CEO) had a majority stake and
Constantinos Bitros (the CFO of the Company) with stakes in Sec
South of less than 20%, 4% and 1% respectively. Sec South
transferred properties in SPDI, the net equity of which was
EUR15.782.190 (fair value at acquisition).
The fair value of identifiable assets and liabilities of
acquired projects during 2015 as of the date of their acquisition
was as follows:
EUR GED Logistics SEC South Praktiker Total
East Craiova
ASSETS
Non-current assets
Investment property 16.400.000 24.619.000 10.070.000 51.089.000
Investments in associates - 6.132.516 - 6.132.516
Other non-current assets 29.911 69.536 - 99.447
Current assets
Inventories - 12.300.000 - 12.300.000
Prepayments and other
current assets 353.366 1.203.036 384.884 1.941.286
Cash and cash equivalents 160 777.247 26.425 803.832
Total assets 16.783.437 45.101.335 10.481.309 72.366.081
Non-current liabilities
Interest bearing borrowings 12.549.180 23.865.253 4.892.950 41.307.383
Deposits from tenants 211.243 - - 211.243
Current liabilities
Interest bearing borrowings 135.110 1.431.464 - 1.566.574
Trade and other payables 492.060 3.074.332 120.961 3.687.353
Taxes payable 56.776 252.033 - 308.809
Total liabilities 13.444.369 28.623.082 5.013.911 47.081.362
Net assets acquired 3.339.068 16.478.253 5.467.398 25.284.719
(including non-controlling
interest)
Non-controlling interest - (696.063) - (696.063)
Net assets acquired
attributable to equity
holders 3.339.068 15.782.190 5.467.398 24.588.656
Financed by
Cash consideration paid 1.786.934 - - 1.786.934
Issue of shares - 15.152.490 6.081.211 21.233.701
Total consideration 1.786.934 15.152.490 6.081.211 23.020.635
Gain realized on acquisition
Goodwill =Net Assets 1.552.134 629.700 - 2.181.834
- Total consideration - - (613.813) (613.813)
b. Goodwill Movement
Management decided to fully impair the goodwill resulting mainly
from the 2015 acquisitions and to a lesser extent from the 2014
acquisitions as they expect that the future cashflows to be
generated from the related properties, based on year end valuations
and sales price expectations do not validate any more. The total
impairment was EUR657.082.
14. Investments in associates
In May 2015 by acquiring the mixed use Sec South portfolio (Note
13) the Group acquired participation in certain properties
classified under Investments in Associates. The associates acquired
were as follows:
a) Green Lake Development srl, is a residential compound company
which consists as at end of the reporting period of 35 apartments
plus 22 villas as well as 4 commercial use designated buildings
(Phase A of Green Lake project). The compound is situated on the
banks of Grivita Lake, in the northern part of the Romanian
capital. The compound includes also facilities such as private
kindergarten, nautical club, outdoor sport courts, and restaurants.
The Company has a 40,35% participation in this asset. The property
as of the end of the reporting period was 46% let.
b) The Group acquired a 24,35% participation in the Delea Nuova
office building property in Bucharest. The property is a 10.280 sqm
office building, which consists of two underground levels, a ground
floor and ten above-ground floors. As of the end of the reporting
period, the building was 100% let, with ANCOM (the Romanian
Telecommunications Regulator) being the anchor tenant (70% of GLA).
The table below summarizes the movements in the carrying amount of
the Group's investment in associates.
EUR 31 Dec 31 Dec
2016 2015
------------------------------------------- ---------- ------------
Cost of investment in associates
at the beginning of the period 4.887.944 6.132.516
------------------------------------------- ---------- ------------
Share of profits /(losses) from associates 469.248 (1.244.572)
------------------------------------------- ---------- ------------
Dividend Income (127.569) -
------------------------------------------- ---------- ------------
Foreign exchange difference (12.313) -
------------------------------------------- ---------- ------------
Total 5.217.310 4.887.944
------------------------------------------- ---------- ------------
As at 31 December 2016, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value, total liabilities, revenues and profit or loss, were
as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
----------- ------------- ------------ -------------- ------------ -------- ------------ -------- ------------
EUR EUR EUR % EUR
----------- ------------- ------------ -------------- ------------ -------- ------------ -------- ------------
Lelar
Holdings
Limited
and
S.C.
Delea Delenco
Nuova Construct Office
Project S.R.L. 24.887.951 (3.461.850) 1.926.778 24,354% 469.248 Romania building
----------- ------------- ------------ -------------- ------------ -------- ------------ -------- ------------
GreenLake GreenLake 13.867.862 (14.698.363) (1.563.486) 40,35% - Romania Residential
Project Development assets
- Phase Srl
A
----------- ------------- ------------ -------------- ------------ -------- ------------ -------- ------------
Total 38.755.813 (18.160.213) 363.292 469.248
-------------------------- ------------ ------------- ------------ -------- ------------ -------- ------------
The share of profit from the associate GreenLake Delevopment Srl
was limited up to the interest of the Group in the associate.
As at 31 December 2015, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value, total liabilities, revenues and profit or loss, were
as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
----------- ------------- ------------ -------------- ------------- -------- ------------ -------- ------------
EUR EUR EUR % EUR
----------- ------------- ------------ -------------- ------------- -------- ------------ -------- ------------
Lelar
Holdings
Limited
and
S.C.
Delea Delenco
Nuova Construct Office
Project S.R.L. 24.232.215 (4.158.521) (2.895.756) 24,354% (705.232) Romania building
----------- ------------- ------------ -------------- ------------- -------- ------------ -------- ------------
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 15.651.396 (16.080.270) (2.374.548) 40,35% (539.340) Romania assets
----------- ------------- ------------ -------------- ------------- -------- ------------ -------- ------------
Total 39.883.611 (20.238.791) (5.270.304) (1.244.572)
-------------------------- ------------ -------------- ------------ -------- ------------ -------- ------------
15. Tangible and intangible assets
As at 31 December 2016 the intangible assets were composed of
the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of EUR96.183.
Accumulated amortization as at the reporting date amounts to
EUR62.270 as the system was already in use.
As at 31 December 2016 and 2015 the tangible non-current assets
mainly consisted of the machinery and equipment used for the
servicing the Group's investment properties in Ukraine and
Romania.
16. Long Term Receivables and prepayments
31 Dec 31 Dec
2016 2015
---------------------------- -------- --------
EUR EUR
---------------------------- -------- --------
Long Term Receivable 251.181 252.916
---------------------------- -------- --------
Prepayment for Investments 100.000 100.000
---------------------------- -------- --------
Total 351.181 352.916
---------------------------- -------- --------
Long term receivable mainly includes the cash collateral from
Piraeus Leasing.
17. Inventory
EUR 30 Dec 31 Dec
2016 2015
-------------------------------- ------------ ------------
At 1 January 11.300.000 -
-------------------------------- ------------ ------------
Sale of Inventories (1.522.233) -
-------------------------------- ------------ ------------
Transfer to Investment Property (4.686.000) -
-------------------------------- ------------ ------------
Acquisition of subsidiaries - 12.300.000
-------------------------------- ------------ ------------
Impairment of inventory (63.513) (1.000.000)
-------------------------------- ------------ ------------
At 31 December 5.028.254 11.300.000
-------------------------------- ------------ ------------
In May 2015 by acquiring the mixed use Sec South portfolio (Note
13) the Group acquired 100% of a residential portfolio in Boyana,
in Sofia, Bulgaria which is classified as Inventory.
After a decision of the Board of Directors of Boyana to change
the initial plan for construction in the land and hold this land
for capital appreciation, EUR4.686.000 which related to the land
that was transferred to Investment Properties (Note 12.2) and from
now on will be treated under IAS 40.
18. Available for sale financial assets
In April 2015 the Group completed the acquisition of a 20%
interest in a fully let and income generating office building in
Sofia, Autounion, for a cash consideration of EUR4.059.839
including the assignment of a loan amounting to EUR1.859.278
together with accumulated interest up to the acquisition date (Note
19). The holding was classified as "Available for Sale Financial
Assets" in conformity with IAS 39. Autounion is a Class A BREEAM
certified office building, located close to the Sofia Airport. The
building has a Gross Lettable Area of 19.476 sqm over ten floors,
includes underground parking and is fully let to one of the largest
Bulgarian insurance companies on a long lease extending to
2027.
In Q3-2016, as a result of the vendor (BLUEHOUSE ACCESSION
PROPERTY HOLDINGS III S.A.R.L) of BIGBLUEBOX 3 (Praktiker Craiova)
requesting redemption of the 8.618.997 Secured Redeemable
Convertible Preference Class B Shares ("RCPS"), the Company
transferred, the security, its 20% participation over Autounion to
the said vendor. Although there is a difference appearing as a
liability to the vendor (Note 25), the Group is in negotiation as
to the final settlement amount and the method of payment.
Fair value gain for the period represents the difference between
the fair value of the investment at acquisition date minus the fair
value of investment at the reporting date.
31 Dec 31 Dec
2016 2015
------------------------------------ ------------- ----------
EUR EUR
------------------------------------ ------------- ----------
At 1 January 2.783.535 -
------------------------------------ ------------- ----------
Acquisition cost of the investment - 2.298.006
------------------------------------ ------------- ----------
Fair Value gain - 485.529
------------------------------------ ------------- ----------
Disposal of AFS investment (2.783.535) -
------------------------------------ ------------- ----------
At 31 December - 2.783.535
------------------------------------ ------------- ----------
As a result of Autounion transfer a net loss of EUR206.491 was
recognized in the Group's consolidated statement of comprehensive
income for 2016. The amount reflects the aggregate book value of
20% interest in Autounion EUR2.783.535 plus the assigned loan
including accumulated interest up to the disposal date amounting to
EUR1.968.486 minus the accumulated fair value gain in the amount of
EUR485.529 that was initially recognised in equity and recycled to
the loss of the year as of the disposal date minus a pledged value
of EUR4.060.000. The total remaining liability recognized at the
reporting date to the vendor amounts to EUR2.521.211 (Note 25).
19. Prepayments and other current assets
31 Dec 31 Dec
2016 2015
----------------------------------------- ---------- ----------
EUR EUR
----------------------------------------- ---------- ----------
Trade and other receivables 992.482 792.565
----------------------------------------- ---------- ----------
VAT and other taxes receivable 378.455 938.464
----------------------------------------- ---------- ----------
Deferred expenses 159.866 921.427
----------------------------------------- ---------- ----------
Receivables due from related parties 7.284 3.384
----------------------------------------- ---------- ----------
Loan receivable from 3(rd) parties 1.000.000 -
----------------------------------------- ---------- ----------
Loan to associates (Note 32.4) 264.110 254.718
----------------------------------------- ---------- ----------
Loan to Available for Sale Financial
Assets (Note 18) - 1.905.933
----------------------------------------- ---------- ----------
Allowance for impairment of prepayments
and other current assets (23.836) (21.268)
----------------------------------------- ---------- ----------
Total 2.778.361 4.795.223
----------------------------------------- ---------- ----------
Trade and other receivables mainly include receivables from
tenants (including the Greek electricity grid administrator) and
prepayments made for services.
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 in the near future.
Loan receivable from 3(rd) party represents an amount provided
as an advance payment for acquiring a participation into an
investment property and has a maturity date 30 June 2018.
Loan to associates reflects a loan receivable from Greenlake
Development SRL, holding company of Greenlake Phase A (Note 14,
Note 32.4).
Loan to Available for Sale Financial Assets reflects a loan
receivable from Bluehouse V, holding company of Autounion building
disposed in 2016 (Note 18).
20. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec
2016 2015
------------------------ ---------- --------
EUR EUR
------------------------ ---------- --------
Cash with banks in USD 17.670 25.205
------------------------ ---------- --------
Cash with banks in EUR 152.742 214.177
------------------------ ---------- --------
Cash with banks in UAH 31.744 40.505
------------------------ ---------- --------
Cash with banks in RON 1.319.686 569.424
------------------------ ---------- --------
Cash with banks in BGN 179.165 3.701
------------------------ ---------- --------
Cash equivalents - 42.410
------------------------ ---------- --------
Total 1.701.007 895.422
------------------------ ---------- --------
An amount of EUR1,1m held in accounts related to properties that
carry debt facilities is restricted cash, as the lending banks
control its usage to conform to contractual obligations.
21. Share capital
Number of Shares during 2016 and 2015
31 December 13 March 31 May 29 June 1 July 27 July 12 August 31 December 13 October 31 December
2014 2015 2015 2015 2015 2015 2015 2015 2016 2016
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Increase Increase Repayment Increase Exercise Exercise Redemption
of share of share RCPS of share of of of
capital capital capital warrants warrants redeemable
shares
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Authorised
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Ordinary 989.869.935 989.869.935 989.869.935
shares of
EUR0,01
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Total 989.869.935 989.869.935 989.869.935
equity
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
RCP Class A
Shares of
EUR0,01 785.000 785.000 785.000
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
RCP Class B 8.618.997 8.618.997 8.618.997
Shares of
EUR0,01
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Total 990.654.935 8.618.997 999.273.932 999.273.932
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Issued and
fully paid
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Ordinary 33.884.054 23.777.748 18.028.294 - 8.785.580 5.539.047 90.014.723 90.014.723
shares of
EUR0,01
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Total 33.884.054 23.777.748 18.028.294 - 8.785.580 5.539.047 90.014.723 90.014.723
equity
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
RCP Class A
Shares of
EUR0,01 785.000 (392.500) 392.500 (392.500) -
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
RCP Class B 8.618.997 8.618.997 (8.618.997) -
Shares of
EUR0,01
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Total 34.669.054 23.777.748 18.028.294 (392.500) 8.618.997 8.785.580 5.539.047 99.026.220 (99.026.220) 90.014.723
------------ ------------ ----------- ----------- ---------- ---------- ---------- ---------- ------------ ------------- -------------
Nominal value (EUR) for 2016 and 2015
EUR 31 13 March 31 May 29 June 1 July 27 July 12 31 13 October 31
December 2015 2015 2015 2015 2015 August December 2016 December
2014 2015 2015 2016
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Increase Increase Repayment Increase Exercise Exercise Redemption
of share of share RCPS of share of of of
capital capital capital warrants warrants redeemable
shares
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Authorised
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Ordinary 9.898.699 9.898.699 9.898.699
shares of
EUR0,01
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Total equity 9.898.699 9.898.699 9.898.699
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
RCP Class A
Shares of
EUR0,01 7.850 7.850 7.850
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
RCP Class B
Shares of
EUR0,01 - 86.190 86.190 86.190
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Total 9.906.549 86.190 9.992.739 9.992.739
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Issued and
fully paid
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Ordinary
shares of
EUR0,01 338.839 237.777 180.283 87.856 55.390 900.145 900.145
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Total equity 338.839 237.777 180.283 87.856 55.390 900.145 900.145
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
RCP Class A
Shares of
EUR0,01
(Note 21.6) 7.850 (3.925) 3.925 (3.925) -
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
RCP Class B
Shares of
EUR0,01
(Note 21.6) - 86.190 86.190 (86.190) -
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
Total 346.689 237.777 180.283 (3.925) 86.190 87.856 55.390 990.260 (990.190) -
------------- ---------- --------- --------- ---------- --------- --------- --------- ---------- ----------- ----------
21.1 Authorised share capital
As at the end of 2015 the authorized share capital of the
Company was 989.869.935 Ordinary Shares of EUR0,01 nominal value
each, 785.000 Redeemable Preference Class A Shares of EUR0,01
nominal value each and 8.618.997 Redeemable Preference Class B
Shares of EUR0,01 nominal value each.
No changes were effected during the reporting period as far as
the authorized share capital of the Company is concerned and
therefore at the end of the reporting period the authorized share
capital of the Company remained at 989.869.935 Ordinary Shares of
EUR0,01 nominal value each, 785.000 Redeemable Preference Class A
Shares of EUR0,01 nominal value each and 8.618.997 Redeemable
Preference Class B Shares of EUR0,01 nominal value each. Yet the
Company is in process to cancel the Class A and Class B Redeemable
Preference Shares (Note 21.6), a process that will be completed in
2017.
21.2 Issued Share Capital
As at the end of 2015 the issued share capital of the Company
was as follows:
a) 90.014.723 Ordinary Shares of EUR0,01 nominal value each,
b) 392.500 Redeemable Preference Class A Shares of EUR0,01
nominal value each,
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each.
No changes were effected throughout the reporting period in
respect of the issued share capital of the Company and as at the
end of the reporting period the issued share capital of the Company
remained as follows:
a) 90.014.723 Ordinary Shares of EUR0,01 nominal value each,
b) 392.500 Redeemable Preference Class A Shares of EUR0,01
nominal value each, subject to cancellation during 2017 (Note
21.6),
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01
nominal value each, subject to cancellation during 2017 (Note
21.6).
In respect of the Class A Redeemable Preference Shares, issued
in connection to the Innovations acquisition and the Class B
Redeemable Preference Shares, issued in connection to the
acquisition of Craiova Praktiker, following the holders of such
shares notifying the Company on their intent to redeem within 2016,
the Company:
- actually proceeded in effecting full redemption of the Class A
shares (392.500) which was finalized in Q1-2017 while the process
of cancelling them will be concluded within 2017
- for the Class B Redeemable Preference Shares, in lieu of
redemption the Company gave its 20% holding in Autounion (Note 18)
in October 2016, to the Craiova Praktiker seller BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L and has been negotiating
the resulting difference (if any) for a final settlement. As soon
as the case is settled, the Company will proceed with the
cancelation of the Class B Redeemable Preference Shares
21.3 Option schemes
A. Under the scheme adopted in 2007, each of the directors
serving at the time, who is still a Director of the Company is
entitled to subscribe for 2.631 Ordinary Shares exercisable as set
out below:
Exercise Number
Price of
---------------------------- --------- -------
USD Shares
---------------------------- --------- -------
Exercisable until 1 August
2017 57 1.754
---------------------------- --------- -------
Exercisable until 1 August
2017 83 877
---------------------------- --------- -------
B. Under a second scheme also adopted in 2007, director Franz M.
Hoerhager is entitled to subscribe for 1.829 ordinary shares
exercisable as set out below:
Exercise Number
Price of
---------------------------- --------- -------
GBP Shares
---------------------------- --------- -------
Exercisable until 1 August
2017 40 1.219
---------------------------- --------- -------
Exercisable until 1 August
2017 50 610
---------------------------- --------- -------
C. Under a scheme adopted in 2015, pursuant to an approval by
the AGM of 31/12/2013, the Company proceeded in 2015 in issuing
590.000 options to its employees, as a reward for their effort and
support during the previous year. Each option entitles the Option
holder to one Ordinary Share. Exercise price stands at GBP 0,15.
The Option holders lose and thus may not exercise any option from
the moment they cease to offer their services to the Company. The
CEO and the CFO of the Company did not receive any options.
a. 147.500 Options may be exercised within 2016. Out of the
Options that may be exercised in 2016, none has been exercised
until the reporting date,
b. 147.500 Options may be exercised within 2017,
c. 295.000 Options may be exercised within 2018.
The Company considers that all option schemes are currently out
of money and therefore has not made any relevant provision.
21.4 Class A Warrants issued
The Company acquired the Sec South portfolio in 2015 (Notes
12,13) in exchange of Ordinary shares which were issued at GBP 0,65
each. The sellers were also provided certain Class A Warrants
giving the right to the Warrant holders to subscribe in cash at the
Exercise price for additional Ordinary Shares in the Company. The
Company issued then two sets of Class A Warrants as follows:
1) 18.028.294 warrants corresponding to 18.028.294 ordinary
shares, exercisable within 45 days from signing at an exercise
price of GBP 0,10 per ordinary share. 14.324.627 out of these
warrants were exercised by August 2015 (Notes 21.2). The remaining
warrants have lapsed.
2) 18.028.294 warrants corresponding to 18.028.294 ordinary
shares, were exercisable by 31 December 2016 at an exercise price
of GBP 0,45 per ordinary share. None of these warrants were
exercised by 31 December 2016 and thus the warrants have
lapsed.
21.5 Class B Warrants issued
On 8 August 2011 the Company issued an amount of Class B
Warrants for an aggregate corresponding to 12,5% of the issued
share capital of the Company after the exercise date. The Class B
Warrants may be exercised at any time until 30 June 2017. The
exercise price of the Class B Warrants will be the nominal value
per Ordinary Share as at the date of exercise. The Class B Warrant
Instruments have anti-dilution protection so that, in the event of
further share issuances by the Company, the number of Ordinary
Shares to which the holder of a Class B Warrant is entitled will be
adjusted so that he receives the same percentage of the issued
share capital of the Company (as nearly as practicable), as would
have been the case had the issuances not occurred. This
anti-dilution protection will freeze on the earlier of (i) the
expiration of the Class B Warrants; and (ii) capital increase(s)
undertaken by the Company generating cumulative gross proceeds in
excess of USD 100.000.000. As at the financial statements issue
date none of the Class B Warrants have been exercised. As of the
reporting date, the aggregate amount of Class B Warrant is
12.859.246.
21.6 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as
follows:
Number of (as at) 31 December 2016 (as at) 31 December 2015
---------------------------- -------------------------- ------------------------- -------------------------
Ordinary shares of EUR0,01 Issued and Listed in AIM 90.014.723 90.014.723
---------------------------- -------------------------- ------------------------- -------------------------
Class A Warrants - 18.028.294
---------------------------- -------------------------- ------------------------- -------------------------
Class B Warrants 12.859.246 12.859.246
---------------------------- -------------------------- ------------------------- -------------------------
Total number of Shares Non-Dilutive Basis 90.014.723 90.014.723
---------------------------- -------------------------- ------------------------- -------------------------
Total number of Shares Full Dilutive Basis 102.873.969 102.873.969
---------------------------- -------------------------- ------------------------- -------------------------
Options 4.460 4.460
-------------------------------------------------------- ------------------------- -------------------------
Redeemable Preference Class A Shares
The Redeemable Preference Class A Shares which do not have
voting or dividend rights where issued as part of the Innovation
acquisition purchase consideration. As at the reporting date all of
the Redeemable Shares Class A shares have been redeemed and the
Company will proceed in their cancellation within 2017.
Redeemable Preference Class B Shares
The Redeemable Preference Class B Shares, issued to BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L as part of the Praktiker
Craiova asset acquisition (Note 13) do not have voting rights but
have economic rights at par with ordinary shares. As at the
reporting date all of the Redeemable Shares Class B have been
redeemed (Note 26) but the Company is in discussions with the
vendor in respect of a final settlement (Note 18).
22. Foreign Currency Translation Reserve
Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted by
entries made directly to the foreign currency translation reserve.
The foreign exchange translation reserve represents unrealized
profits or losses related to the appreciation or depreciation of
the local currencies against the EUR in the countries where the
Company's subsidiaries' functional currencies are not EUR.
23. Non-Controlling Interests
Non-controlling interests represent the percentage
participations in the respective entities not owned by the
Group:
% Non-controlling
interest portion
------------------------------------ --------------------
Group Company 31 Dec 31 Dec
2016 2015
------------------------------------ --------- ---------
LLC Almaz-Press-Ukraine 45,00 45,00
------------------------------------ --------- ---------
Ketiza Limited 10,00 10,00
------------------------------------ --------- ---------
Ketiza srl 10,00 10,00
------------------------------------ --------- ---------
Ram Real Estate Management Limited 50,00 50,00
------------------------------------ --------- ---------
Iuliu Maniu Limited 55,00 55,00
------------------------------------ --------- ---------
Moselin Investments Srl 55,00 55,00
------------------------------------ --------- ---------
Rimasol Enterprises Limited 55,76 55,76
------------------------------------ --------- ---------
Rimasol Real Estate Srl 55,76 55,76
------------------------------------ --------- ---------
Ashor Ventures Limited 55,76 55,76
------------------------------------ --------- ---------
Ashor Development Srl 55,76 55,76
------------------------------------ --------- ---------
Jenby Ventures Limited 55,70 55,70
------------------------------------ --------- ---------
Jenby Investments Srl 55,70 55,70
------------------------------------ --------- ---------
Ebenem Limited 55,70 55,70
------------------------------------ --------- ---------
Ebenem Investments Srl 55,70 55,70
------------------------------------ --------- ---------
Delia Lebada Invest SRL 35,00 35,00
------------------------------------ --------- ---------
24. Borrowings
Project 31 Dec 31 Dec
2016 2015
----------------------------------- ------------------------- ----------- -----------
EUR EUR
----------------------------------- ------------------------- ----------- -----------
Principal of bank Loans
----------------------------------- ------------------------- ----------- -----------
European Bank for Reconstruction Terminal
and Development ("EBRD") Brovary 11.551.023 12.164.107
----------------------------------- ------------------------- ----------- -----------
Banca Comerciala Romana Monaco Towers
/Tonescu Finance 924.562 1.210.962
----------------------------------- ------------------------- ----------- -----------
Bancpost SA Blooming
House 1.245.657 1.739.634
----------------------------------- ------------------------- ----------- -----------
Romfelt
Alpha Bank Romania Plaza 809.919 869.602
----------------------------------- ------------------------- ----------- -----------
Alpha Bank Romania EOS Business
Park 991.000 -
----------------------------------- ------------------------- ----------- -----------
Raiffeisen Bank Romania Linda Residence - 429.858
----------------------------------- ------------------------- ----------- -----------
Bancpost SA GreenLake
- Parcel
K 3.092.926 3.099.639
----------------------------------- ------------------------- ----------- -----------
Alpha Bank Bulgaria Boyana 2.680.492 3.460.813
----------------------------------- ------------------------- ----------- -----------
Alpha Bank Bulgaria Boyana/Sertland 693.514 736.864
----------------------------------- ------------------------- ----------- -----------
Bank of Cyprus Delia Lebada/Pantelimon 4.569.725 4.569.725
----------------------------------- ------------------------- ----------- -----------
Eurobank Ergasias SA SPDI Logistics 11.726.960 12.343.116
----------------------------------- ------------------------- ----------- -----------
Piraeus Bank SA GreenLake-Phase
2 2.525.938 2.525.938
----------------------------------- ------------------------- ----------- -----------
Marfin Bank Romania Praktiker
Craiova 4.502.128 4.839.149
----------------------------------- ------------------------- ----------- -----------
Loans by non-controlling
shareholders - 2.713.458
----------------------------------- ------------------------- ----------- -----------
Loans from other 3(rd)
parties 359.134 -
----------------------------------- ------------------------- ----------- -----------
Overdrafts 2.062 26.516
-------------------------------------------------------------- ----------- -----------
Total principal of bank
and non bank Loans 45.675.040 50.729.381
----------------------------------- ------------------------- ----------- -----------
Restructuring fees and
interest payable to EBRD 29.898 32.767
-------------------------------------------------------------- ----------- -----------
Interest accrued on bank
loans 2.723.889 2.175.165
----------------------------------- ------------------------- ----------- -----------
Interests accrued on non-bank
loans 46.627 743.466
-------------------------------------------------------------- ----------- -----------
Total 48.475.454 53.680.779
-------------------------------------------------------------- ----------- -----------
31 Dec 31 Dec
2016 2015
-------------------- ----------- -----------
EUR EUR
-------------------- ----------- -----------
Current portion 31.580.299 27.417.220
-------------------- ----------- -----------
Non-current portion 16.895.155 26.263.559
-------------------- ----------- -----------
Total 48.475.454 53.680.779
-------------------- ----------- -----------
EBRD loan related to Terminal Brovary
According to the agreement the loan expires in 2022 and has a
balloon payment of USD 3.633.333. The loan bears interest of 3 M
LIBOR + 6,75%. Such loan has a maturity date in 2022 and following
Terminal Brovary sale (Note 36a), the Company sold LLC Terminal
Brovary with its assets and liabilities (EBRD loan included).
Under the current agreement the collaterals accompanying the
existing loan facility are as follows:
1. LLC Terminal Brovary pledged all movable property with the
carrying value more than USD 25.000.
2. LLC Terminal Brovary pledged its Investment property, Brovary
Logistics Centre the construction of which was finished in 2010
(Note 12), and all property rights on the center.
3. SPDI PLC pledged 100% corporate rights in SL SECURE Logistics
Ltd, a Cyprus Holding Company which is the Shareholder of LLC
Terminal Brovary and LLC Aisi Brovary.
4. SL SECURE Logistics Ltd pledged 99% corporate rights in LLC Aisi Brovary.
5. LLC Aisi Brovary pledged 100% corporate rights in LLC Terminal Brovary.
6. LLC Terminal Brovary pledged all current and reserve accounts
opened by LLC Terminal Brovary in Unicreditbank Ukraine.
7. LLC Aisi Brovary entered into a call and put option agreement
with EBRD, pursuant to which following an Event of Default (as
described in the Agreement) EBRD has the right (Call option) to
purchase at the Call Price from LLC Aisi Brovary, 20% of the
Participatory Interest of LLC Terminal Brovary on the relevant
Settlement Date.
8. LLC Terminal Brovary has granted EBRD a second ranking
mortgage in relation to its own and LLC Aisi Brovary's obligations
under the call and put option agreement.
9. LLC Terminal Brovary has pledged its rights arising in
connection with the existing Lease agreements with Tenants.
10. LLC Aisi Brovary has entered with EBRD into a conditional
assignment agreement of 20% and 80% corporate rights in LLC
Terminal Brovary.
11. SL SECURE Logistics Ltd has entered with EBRD into a
conditional assignment agreement of 99% corporate rights in LLC
Aisi Brovary.
12. SPDI PLC has issued a corporate guarantee dated 12 January
2009 guaranteeing all liabilities and fulfilment of conditions
under the existing loan agreement remains in force. The maturity of
the guarantee is equal to the maturity of the loan.
The existing credit agreement with EBRD includes among others
the following requirements for LLC Terminal Brovary and the Group
as a whole:
1. At all times LLC Brovary Logistics shall maintain a balance
in the Debt Service Reserve Amount (DSRA) account equal to not less
than the sum of all payments of principal and interest on the Loan
which will be due and payable during the next six months.
2. LLC Terminal Brovary shall achieve a "CNRI"(Contract Net
Rental Income is the aggregate of monthly lease payments, net of
value added tax, contracted by the Borrower pursuant to the Lease
Agreements as of the relevant testing date and converted into
Dollars at the official exchange rate established by the National
Bank of Ukraine as of such testing date) according to the following
schedule:
(1) on 31 December 2015, CNRI of USD 230.000 or more; and
(2) on 30 June and 31 December in each year commencing on the
date of 30 June 2016, CNRI of USD 250.000 or more, in respect of
the six month period commencing on any such date.
3. LLC Terminal Brovary shall achieve a "DSCR"(Debt Service
Coverage Ratio is the sum of net income minus operating expenses
plus amortization, divided with the sum of paid principal &
interest) according to the following schedule:
i. in respect of the 6 months period ending on 30 June 2015 and
31 December 2015, the DSCR of more than 1,15x.
ii.in respect of the 6 months period ending on 30 June or 31
December in any year commencing on the date of 30 June 2016, the
DSCR of more than 1,2x.
Other bank Borrowings
SecMon Real Estate Srl (2011) entered into a loan agreement with
Banca Comerciala Romana for a credit facility for financing part of
the acquisition of the Monaco Towers Project apartments. As of the
end of the reporting period the balance of the loan was EUR924.562
and bears interest of EURIBOR 3M plus 5%. In June 2016, Banca
Comerciala Romana has assigned the loan, all rights and securities
to Tonescu Finance SRL. The loan, which is currently expired, is
secured by all assets of SecMon Real Estate Srl as well as its
shares. The Group is in discussion with Tonescu Finance SRL for a
potential restructuring.
Ketiza Real Estate Srl entered (2012) into a loan agreement with
Bancpost SA for a credit facility for financing the acquisition of
the Blooming House Project and 100% of the remaining (without VAT)
construction works of Blooming House project. As of the end of the
reporting period the balance of the loan was EUR1.245.657. The loan
bears interest of EURIBOR 3M plus 3,5% and matures in May 2017. The
Group is in discussion for extending the loan to 2020. The bank
loan is secured by all assets of Ketiza Real Estate Srl as well as
its shares and is being repaid through sales proceeds.
SecRom Real Estate Srl entered (2009) into a loan agreement with
Alpha Bank Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. As of the end
of the reporting period, the balance of the loan was EUR809.919,
bears interest of EURIBOR 3M+5% and is repayable on the basis of
investment property sales. The loan has a maturity date in March
2017 and the Group has been in discussions with the lender for a
restructuring. Following an agreement with the bank the loan was
extended in Q1-2017 for another 3 years. The loan is secured by all
assets of SecRom Real Estate Srl as well as its shares and is being
repaid through sales proceeds.
SecVista Real Estate Srl entered (2011) into a loan agreement
with Raiffeisen Bank Romania for a credit facility for financing
part of the acquisition of the Linda Residence Project apartments.
Due to a bulk sale of all the apartment units of the said project
in 2016, the loan was fully repaid in May 2016 and an amount of
EUR326.937 was written off (Note 6b and 9).
Moselin Investments Srl (2010) entered into a construction loan
agreement with Bancpost SA covering the construction works of
Parcel K Green Lake project. As of the end of the reporting period
the balance of the loan was EUR3.092.926 and bears interest of
EURIBOR 3M plus 5%. The loan is repayable from the sales proceeds
while it matures in June 2017. The Group is in discussion for
extending the loan to 2022. The loan is secured with the property
itself and the shares of Moselin Investments Srl and is being
repaid through sales proceeds.
Boyana Residence ood entered (2011) into a loan agreement with
Alpha Bank Bulgaria for a construction loan related to the
construction of the Boyana Residence project (finished in 2014). As
of the end of the reporting period the balance of the loan was
EUR2.680.492 and bears interest of EURIBOR 3M plus 5,75%. The loan
maturity was extended following negotiation with the bank to March
2019. The loan currently is being repaid through sales proceeds.
The facility is secured through a mortgage over the property and a
pledge over the company's shares as well as those of Sertland
Properties Limited. The Company has provided corporate guarantees
for this loan.
Sertland Properties Limited entered (2008) into a loan agreement
with Alpha Bank Bulgaria for an acquisition loan related to the
acquisition of 70% of Boyana Residence ood. As of the end of the
reporting period the balance of the loan was EUR693.514 and bears
interest of EURIBOR 3M plus 5,75%. The loan maturity was extended
following negotiation with the bank to March 2019. The loan
currently is being repaid through sales proceeds of Boyana
Residence apartments. The loan is secured with a pledge on
company's shares, and a corporate guarantee by SEC South East
Continent Unique Real Estate (Secured) Investments Limited.
Delia Lebada Invest Srl, a subsidiary, entered into a loan
agreement with the Bank of Cyprus Limited in 2007 to effectively
finance a leveraged buy-out of the subsidiary by the Group. The
principal balance of the loan as at the end of the reporting period
was EUR4.569.725 (without any accrued interest and default
penalty). As the loan is in default the bank has initiated
insolvency procedures to take over the Pantelimon lake asset. The
Group is currently in discussion with its partner and the bank in
an effort to find an amicable settlement to the case. The Company
has provided corporate guarantees for this loan.
SPDI Logistics SA entered (April 2015) into a loan agreement
with EUROBANK SA to refinance the existing debt facility related to
GED Logistics terminal. As of the end of the reporting period the
balance of the loan is EUR11.726.960 and bears interest of EURIBOR
6M plus 3,2%+30% of the asset swap. The loan is repayable by 2022,
has a balloon payment of EUR8.660.000 and is secured by all assets
of SPDI Logistics SA as well as its shares.
SEC South East Continent Unique Real Estate (Secured)
Investments Limited has a debt facility with Piraeus Bank (since
2007) for the acquisition of the Green Lake project land in
Bucharest Romania. As of the end of the reporting period the
balance of the loan was EUR2.525.938 (without any accrued interest
and default penalty) and bears interest of EURIBOR 3M plus 4% plus
the Greek law 128/78 0,6% contribution. The loan matured in
February 2017 and the Group is in discussions with the bank for
prolongation of the term of facility to 2022. The Company has
provided corporate guarantees for this loan.
BlueBigBox3 srl (Praktiker Craiova) has a loan agreement with
Marfin Bank Romania. As of the end of the reporting period the
balance of the loan was EUR4.502.128 and bears interest of EURIBOR
6M plus 5% and 3M plus 4,5%. The loan which is repayable by 2025
with a balloon payment of EUR2.159.628 and is secured by the asset
as well as the shares of BlueBigBox3 srl.
N-E Real Estate Park First Phase SRL entered in 2016 into a loan
agreement with Alpha Bank Romania for a credit facility of
EUR1.000.000 for working capital purposes. As of the end of the
reporting period, the balance of the loan was EUR991.000, bears
interest of EURIBOR 1M+4,5% and is repayable from the free cash
flow resulting from the rental income of the related property. The
loan matures in April 2024 and is secured by a second rank mortgage
over assets of N-E Real Estate Park First Phase SRL as well as its
shares.
Other non bank borrowing includes borrowings from
non-controlling interests. During the last eight years and in order
to support the GreenLake project the non controlling shareholders
of Moselin and Rimasol Limited (other than the Group) have
contributed their share of capital injections by means of
shareholder loans. The loans bear interest between 5% and 7%
annually and were repayable in 2016 and 2017. An amount of EUR2,7m
from such loans as presented in 2015 financial statements has been
agreed to be capitalized (the process is to be concluded within
2017) and therefore appears under equity section.
25. Trade and other payables
The fair value of trade and other payables due within one year
approximate their carrying amounts as presented below.
31 Dec 31 Dec
2016 2015
-------------------------------------- ---------- ----------
EUR EUR
-------------------------------------- ---------- ----------
Payables to third parties 4.734.924 6.209.235
-------------------------------------- ---------- ----------
Payables to related parties (Note
32.2) 1.146.150 743.200
-------------------------------------- ---------- ----------
Deferred income from tenants current 635.240 99.554
-------------------------------------- ---------- ----------
Accruals 536.160 259.031
-------------------------------------- ---------- ----------
Payables due for construction 436.819 405.904
-------------------------------------- ---------- ----------
Total 7.489.293 7.716.924
-------------------------------------- ---------- ----------
31 Dec 31 Dec
2016 2015
-------------------- ---------- ----------
EUR EUR
-------------------- ---------- ----------
Current portion 7.038.170 3.044.036
-------------------- ---------- ----------
Non-current portion 451.123 4.672.888
-------------------- ---------- ----------
Total 7.489.293 7.716.924
-------------------- ---------- ----------
Payables to third parties represents: a) payable balances to
third party shareholders of entities where the Group maintains a
participation. An amount of EUR4m has been been agreed to be
capitalized during 2016 (the process is to be concluded within
2017) and therefore has been transferred under equity section, b)
payables due to Bluehouse Capital as a result the Redeemable
Convertible Class B share redemption (Note 18) that are under
negotiation for a final settlement and c) amounts payable to
various service providers including auditors, legal advisors,
consultants and third party accountants related to the current
operations of the Group.
Payables to related parties represent amounts due to board of
directors and board committee members and accrued management
remuneration as well as the balances with Secure Management Ltd and
Grafton Properties (Note 32.2).
Deferred income from tenants represents advances from tenants
which will be used as future rental income and utilities
charges.
Accruals mainly include the accrued, administration fees,
accounting fees, facility management and other fees payable to
third parties for the year 2016 (expenses not invoiced within 2016)
as well as legal fees for the sale of Terminal Brovary logistics
which was finalized at the beginning of 2017.
Payables for construction represent amounts payable to the
contractor of Bela Logistic Center in Odessa. The settlement 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 (because of the sale of the asset) the Group would have to
pay an additional UAH 5.400.000 (USD 160.000) payable upon such
event occurring. Since it is uncertain when the latter amount is to
be paid, it has been discounted at the current discount rates in
Ukraine and is presented as a non-current liability. Payables for
construction also include an amount of EUR245.000 payable to
Boyana's constructor which has been withheld as Good Performance
Guarantee.
26. Deposits from Tenants
31 Dec 31 Dec
2016 2015
----------------------------------- -------- --------
EUR EUR
----------------------------------- -------- --------
Deposits from tenants non-current 217.328 623.770
----------------------------------- -------- --------
Deposits from tenants current 271.019 132.684
----------------------------------- -------- --------
Total 488.347 756.454
----------------------------------- -------- --------
Deposits from tenants appearing under current and non-current
liabilities include the amounts received from the tenants of
]Terminal Brovary Logistics, Innovations Logistics Park, EOS
Business Park, Craiova Praktiker, GED Logistics and companies
representing residential segment as advances/guarantees and are to
be reimbursed to these clients at the expiration of the lease
agreements.
27. Provisions and Taxes Payables
31 Dec 31 Dec
2016 2015
-------------------------------------- ---------- ----------
EUR EUR
-------------------------------------- ---------- ----------
Corporate income tax 648.825 482.389
-------------------------------------- ---------- ----------
Defence tax 29.918 24.920
-------------------------------------- ---------- ----------
Other taxes including VAT payable 468.275 314.696
-------------------------------------- ---------- ----------
Provision (Notes 7, 33.3) 742.166 724.445
-------------------------------------- ---------- ----------
Total Provisions and Tax Liabilities 1.889.184 1.546.450
-------------------------------------- ---------- ----------
Corporate income tax represents taxes payable in Cyprus and
Romania.
Other taxes represent local property taxes and VAT payable in
Ukraine, Romania, Greece, Bulgaria and Cyprus.
28. Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR11.081.379 and the current portion
of EUR301.409 (31 December 2015: EUR11.273.639 and EUR192.083,
accordingly).
31 Dec 2016 Note Minimum
lease payments Interest Principal
---------------------- ------- ---------------- ----------- ------------
EUR EUR EUR
---------------------- ------- ---------------- ----------- ------------
35.2
&
Less than one year 35.6 961.744 665.796 295.948
---------------------- ------- ---------------- ----------- ------------
Between two and 3.754.280 2.138.258 1.616.022
five years
---------------------- ------- ---------------- ----------- ------------
More than five years 11.822.949 2.477.889 9.345.060
---------------------- ------- ---------------- ----------- ------------
16.538.973 5.281.943 11.257.030
---------------------- ------- ---------------- ----------- ------------
Accrued Interest 125.758
------------------------------- ---------------- ----------- ------------
Total Finance Lease 11.382.788
Liabilities
------------------------------- ---------------- ----------- ------------
31 Dec 2015 Note Minimum
lease payments Interest Principal
---------------------- ------- ---------------- ----------- ------------
EUR EUR EUR
---------------------- ------- ---------------- ----------- ------------
35.2
&
Less than one year 35.6 775.146 586.626 188.520
---------------------- ------- ---------------- ----------- ------------
Between two and 3.592.679 2.169.534 1.423.145
five years
---------------------- ------- ---------------- ----------- ------------
More than five years 12.373.657 2.573.824 9.799.833
---------------------- ------- ---------------- ----------- ------------
16.741.482 5.329.984 11.411.498
---------------------- ------- ---------------- ----------- ------------
Accrued Interest 54.224
------------------------------- ---------------- ----------- ------------
Total Finance Lease 11.465.722
Liabilities
------------------------------- ---------------- ----------- ------------
28.1 Land Plots Financial Leasing
The Group rents in Ukraine land plots classified as finance
leases. Lease obligations are denominated in UAH. The fair value of
lease obligations approximate to their carrying amounts as
presented above. Following the appropriate discounting finance
lease liabilities are carried at EUR291.322 under current and
non-current portion. The Group's obligations under finance leases
are secured by the lessor's title to the leased assets.
28.2 Sale and Lease Back Agreements
A. Innovations Logistic Park
In May 2014 the Group concluded the acquisition of Innovations
Logistics Park in Bucharest, owned by Best Day Srl, through a sale
and lease back agreement with Piraeus Leasing Romania SA. As of the
end of the reporting period the balance is EUR7.308.731, bearing
interest rate at 3M Euribor plus 4,45% margin, being repayable in
monthly tranches until 2026 with a balloon payment of EUR5.244.926.
At the maturity of the lease agreement Best Day SRL will become
owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. Best Day SRL pledged its future receivables from its tenants.
2. Best Day SRL pledged its shares.
3. Best Day SRL pledged all current and reserved accounts opened
in Piraeus Leasing, Romania.
4. Best Day SRL is obliged to provide cash collateral in the
amount of EUR250.000 in Piraeus Leasing Romania, which had been
deposited as follows, half in May 2014 and half in May 2015.
5. SPDI provided a corporate guarantee in favor of the bank
towards the liabilities of Best Day SRL arising from the sale and
lease back agreement.
In late February 2017 the Group finally agreed and signed
(following twelve months of discussions) an amended sale and lease
back agreement with the Piraeus Leasing Romania for Innovations
Logistics Park in Bucharest, governing the allocation of the Nestle
Romania, early termination fee of EUR1,6 million payable to SPDI
(Note 36b).
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by N-E Real Estate Park First
Phase SRL, through a sale and lease back agreement with Alpha Bank
Romania SA. As of the end of the reporting period the balance is
EUR3.782.735 bearing interest rate at 3M Euribor plus 5,25% margin,
being repayable in monthly tranches until 2024 with a balloon
payment of EUR2.546.600. At the maturity of the lease agreement by
N-E Real Estate Park First Phase SRL will become owner of the
asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. N-E Real Estate Park First Phase SRL pledged its future receivables from its tenants.
2. N-E Real Estate Park First Phase SRL pledged Bank Guarantee receivables from its tenants.
3. N-E Real Estate Park First Phase SRL pledged its shares.
4. N-E Real Estate Park First Phase SRL pledged all current and
reserved accounts opened in Alpha Bank Romania SA.
5. N-E Real Estate Park First Phase SRL is obliged to provide
cash collateral in the amount of EUR300.000 in Alpha Bank Romania
SA, starting from October 2019.
6. SPDI provided a corporate guarantee in favor of the bank
towards the liabilities of N-E Real Estate Park First Phase SRL
arising from the sales and lease back agreement.
29. Restructuring of the business
During 2016 the non controlling shareholders of Moselin, Iuliu
Maniu, Ram, Rimasol Ltd, Rimasol SRL, Ashor Limited, Ashor SRL,
Ebenem Limited, Ebenem SRL, Jenby Limited and Jenby SRL (in
agreement with the Group) agreed to capitalize the bigger part of
their capital injections by means of shareholder loans and payables
effected from 2008 onwards. An amount of EUR6.641.997 from such
loans and payables have been transferred to the equity section
while the process of capitalization will be finalized within
2017.
30. Earnings and net assets per share attributable to equity holders of the parent
a. Weighted average number of ordinary shares
31 Dec 2016 31 Dec 2015
--------------------------------------------------- ------------ ------------
Issued ordinary shares capital 90.014.723 90.014.723
--------------------------------------------------- ------------ ------------
Weighted average number of ordinary shares (Basic) 90.014.723 69.460.155
--------------------------------------------------- ------------ ------------
Diluted weighted average number of ordinary shares 102.873.969 82.631.610
--------------------------------------------------- ------------ ------------
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2016 31 Dec 2015
----------------------------------------------------- ------------ --------------
EUR EUR
----------------------------------------------------- ------------ --------------
Loss after tax attributable to owners of the parent (2.363.693) (11.015.852)
----------------------------------------------------- ------------ --------------
Basic (0,03) (0,16)
----------------------------------------------------- ------------ --------------
Diluted (0,02) (0,13)
----------------------------------------------------- ------------ --------------
c. Net assets per share
Net assets per share 31 Dec 2016 31 Dec 2015
--------------------------------------------------------- ------------ ------------
EUR EUR
--------------------------------------------------------- ------------ ------------
Net assets attributable to equity holders of the parent 38.924.809 42.433.125
--------------------------------------------------------- ------------ ------------
Number of ordinary shares 90.014.723 90.014.723
--------------------------------------------------------- ------------ ------------
Diluted number of ordinary shares 102.873.969 102.873.969
--------------------------------------------------------- ------------ ------------
Basic 0,43 0,47
--------------------------------------------------------- ------------ ------------
Diluted 0,38 0,41
--------------------------------------------------------- ------------ ------------
31. Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment - GED Logistics, Innovations Logistics
Park, Terminal Brovary Logistics Park
-- Office segment - Eos Business Park - Delea Nuova (Associate)
-- Retail segment - Craiova Praktiker
Residential
-- Residential segment
Land Assets
-- Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent
investment property (including investment properties under
development and prepayments made for the investment properties).
Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
Profit and Loss for the year 2016
Warehouse Office Retail Residential Land Total
Plots
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
EUR EUR EUR EUR EUR EUR
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Segment profit
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Property Sales income
(Note 6) - - - 3.196.381 - 3.196.381
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Cost of Property
sold (Note 6) - - - (4.003.804) - (4.003.804)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Rental income (Note
2) 4.022.457 579.894 545.564 114.692 - 5.262.607
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Service charges
and utilities income
(Note 2) 374.497 66.784 - 17.367 - 458.648
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Sale of electricity
(Note 2) 315.599 - - - - 315.599
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Asset Management
fees (Note 2) - - - 34.086 - 34.086
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Valuation gains/(losses)
from investment
property (Note 5) 176.550 337.684 329.975 133.131 (80.547) 896.793
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Share of profits/(losses)
from associates
(Note 14) 469.248 - - - 469.248
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Result on disposal
of available for
sale financial assets
(Note 18) - (206.491) - - - (206.491)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Asset operating
expenses (Note 3) (530.020) (71.045) (111.500) (80.429) (199.447) (992.441)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Impairment of inventory
and provisions (Note
7) - - - (63.513) - (63.513)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Segment profit 4.359.083 1.176.074 764.039 (652.089) (279.994) 5.367.113
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Administration expenses
(Note 4) (2.614.188)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Other (expenses)/income,
net (Note 8) (1.304.304)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Finance income(Note
9) (Note 6) 1.153.243
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Interest expenses
(Note 9) (3.571.387)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Other finance costs
(Note 9) (167.564)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Foreign exchange
losses, net (Note
10a) (1.041.239)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Income tax expense
(Note 11) (174.315)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Exchange difference
on I/C loan to foreign
holdings (Note 10b) (4.167.542)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Exchange difference
on translation foreign
holdings (Note 22) 3.508.448
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Available-for-sale
financial assets
- Profit transferred
to net profit due
to disposal (485.529)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Total Comprehensive
Income (3.497.264)
--------------------------- ---------- ---------- ---------- ------------ ---------- ------------
Profit and Loss for the year 2015
Warehouse Office Retail Residential Land Total
Plots
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
EUR EUR EUR EUR EUR EUR
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Segment profit
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Property Sales income
(Note 6) - - - 1.725.326 - 1.725.326
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Cost of sales (Note
6) - - - (2.043.649) - (2.043.649)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Rental income (Note
2) 3.627.698 523.013 258.191 196.120 - 4.605.022
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Service charges
and utilities income
(Note 2) 470.413 75.563 - - - 545.976
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Sale of electricity
(Note 2) 297.962 - - - - 297.962
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Valuation gains/(losses)
from investment
property (Note 5) (89.178) 150.000 (2.870.000) 251.500 222.431 (2.335.247)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Gain realized on
acquisition of subsidiaries
(Note 13) 1.552.134 - - - - 1.552.134
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Share of profits/(losses)
from associates
(Note 14) (705.232) - - (539.340) (1.244.572)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Asset operating
expenses (Note 3) (622.699) (155.931) (31.010) (156.863) (158.080) (1.124.583)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Impairment of inventory
and provisions (Note
7) - - - - (1.675.659) (1.675.659)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Goodwill impairment
(Note 13b) (43.269) (613.813) (657.082)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Segment profit 5.236.330 (155.856) (3.256.632) (27.566) (2.150.648) (354.372)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Gain realized on
acquisition of subsidiaries
(Note 13) 629.700
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Administration expenses
(Note 4) (3.013.942)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Other (expenses)/income,
net (Note 8) 653.856
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Finance income (Note
9) 63.596
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Interest expenses
(Note 9) (3.834.696)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Other finance costs
(Note 9) (603.495)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Foreign exchange
losses, net (Note
10a) (5.071.048)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Income tax expense
(Note 11) (80.188)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Exchange difference
on I/C loan to foreign
holdings (Note 10b) (13.653.402)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Exchange difference
on translation foreign
holdings (Note 22) 8.064.848
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Available for sale
financial assets
gains (Note 18) 485.529
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Total Comprehensive
Income (16.713.614)
------------------------------ ---------- ---------- ------------ ------------ ------------ -------------
Balance Sheet as at 31 December 2016
Warehouse Office Retail Residential Land Corporate Total
plots
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
EUR EUR EUR EUR EUR EUR
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Assets
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Investment -
properties 42.400.000 6.860.000 7.500.000 4.375.000 34.519.207 95.654.207
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Investment
properties -
under development - - - - 5.027.986 5.027.986
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Long-term receivables
and prepayments 350.000 - - 309 - 872 351.181
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Investments -
in associates - 5.217.310 - - - 5.217.310
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Inventory - - - 5.028.254 - - 5.028.254
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Segment assets 42.750.000 12.077.310 7.500.000 9.403.563 39.547.193 872 111.278.938
----------------------- ----------- ----------- ---------- ------------ ----------- ---------- ------------
Tangible and
intangible
assets 129.396
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Prepayments
and other current
assets 2.778.361
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Cash and cash
equivalents 1.701.007
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Total assets 115.887.702
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Borrowings 23.308.195 991.176 4.518.976 3.063.513 16.219.462 374.132 48.475.454
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Finance lease
liabilities 7.550.279 3.782.735 - - 49.774 11.382.788
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Deposits from
tenants 451.640 - - 36.707 - 488.347
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Redeemable
preference
shares - - - - - -
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Segment liabilities 31.310.114 4.773.911 4.518.976 3.100.220 16.269.236 374.132 60.346.589
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Trade and other
payables - - - - - 7.489.293
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Taxes payable
and provisions - - - - - 1.889.184
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Total liabilities 31.310.114 4.773.911 4.518.976 3.100.220 16.269.236 374.132 69.725.066
--------------------- ----------- ---------- ---------- ---------- ----------- -------- ------------
Balance Sheet as at 31 December 2015
Warehouse Office Retail Residential Land Total
plots
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
EUR EUR EUR EUR EUR EUR
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Assets
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Investment properties 43.164.324 6.550.000 7.200.000 6.847.538 30.578.609 94.340.471
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Investment properties
under development - - - - 5.125.389 5.125.389
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Long-term receivables
and prepayments 350.000 - - 1.185 1.731 352.916
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Goodwill - - - - - -
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Investments in
associates - 4.887.943 - - 1 4.887.944
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Available-for-sale
financial assets - 2.783.535 - - - 2.783.535
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Inventory - - - 6.990.150 4.309.850 11.300.000
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Segment assets 43.514.324 14.221.478 7.200.000 13.838.873 40.015.580 118.790.255
----------------------- ----------- ----------- ---------- ------------ ----------- ------------
Tangible and
intangible assets 164.617
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Prepayments and
other current
assets 4.795.223
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Cash and cash
equivalents 895.422
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Total assets 124.645.517
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Borrowings 24.539.925 - 4.839.149 4.586.129 19.715.576 53.680.779
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Finance lease
liabilities 7.508.988 3.889.870 - - 66.864 11.465.722
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Deposits from
tenants 614.018 - - 37.444 104.992 756.454
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Redeemable preference
shares 349.325 - 6.081.211 - - 6.430.536
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Segment liabilities 33.012.256 3.889.870 10.920.360 4.623.573 19.887.432 72.333.491
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Trade and other
payables - - - - - 7.716.924
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Taxes payable
and provisions - - - - - 1.546.450
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Total liabilities 33.012.256 3.889.870 10.920.360 4.623.573 19.887.432 81.596.865
----------------------- ----------- ---------- ----------- ---------- ----------- ------------
Geographical information
Income from Rental Contracts (Note 31 Dec 31 Dec
2) 2016 2015
--------------------------------------- ---------- ----------
EUR EUR
--------------------------------------- ---------- ----------
Ukraine 1.559.878 1.835.181
--------------------------------------- ---------- ----------
Romania 3.031.037 2.449.009
--------------------------------------- ---------- ----------
Greece 1.478.702 1.163.832
--------------------------------------- ---------- ----------
Bulgaria 1.323 938
--------------------------------------- ---------- ----------
Total 6.070.940 5.448.960
--------------------------------------- ---------- ----------
Loss from disposal of inventory (Note
6a)
--------------------------------------- ---------- ----------
EUR EUR
--------------------------------------- ---------- ----------
Bulgaria (368.907) (51.359)
--------------------------------------- ---------- ----------
Total (368.907) (51.359)
--------------------------------------- ---------- ----------
Loss from disposal of investment
properties (Note 6b)
--------------------------------------- ---------- ----------
Romania (438.516) (266.964)
--------------------------------------- ---------- ----------
Total (438.516) (266.964)
--------------------------------------- ---------- ----------
31 Dec 31 Dec
2016 2015
-------------------------------------- ------------ ------------
EUR EUR
-------------------------------------- ------------ ------------
Carrying amount of assets (investment
properties, associates, inventory
and available for sale investments)
-------------------------------------- ------------ ------------
Ukraine 26.948.193 24.349.860
-------------------------------------- ------------ ------------
Romania 57.731.310 63.503.944
-------------------------------------- ------------ ------------
Greece 16.500.000 16.600.000
-------------------------------------- ------------ ------------
Bulgaria 9.748.254 14.083.535
-------------------------------------- ------------ ------------
Total 110.927.757 118.537.339
-------------------------------------- ------------ ------------
32. Related Party Transactions
The following transactions were carried out with related
parties:
32.1 Income/ Expense
32.1.1 Income
31 Dec 31 Dec
2016 2015
----------------------------------------- ------- -------
EUR EUR
----------------------------------------- ------- -------
Interest income on loan to related
parties 52.533 46.675
----------------------------------------- ------- -------
Interest Income from loan to associates 9.392 2.055
----------------------------------------- ------- -------
Total 61.925 48.730
----------------------------------------- ------- -------
Interest income on loan to related parties relates to interest
income from Bluehouse V until October 2016 when the investment was
disposed and interest income from associates relates to interest
income from GreenLake Development SRL.
32.1.2 Expenses
31 Dec 31 Dec
2016 2015
------------------------------------- -------- ----------
EUR EUR
------------------------------------- -------- ----------
Board of Directors 140.779 278.417
------------------------------------- -------- ----------
Management Remuneration 721.305 863.810
------------------------------------- -------- ----------
Interest expenses on Narrowpeak and 14.996 -
Secure Management Limited loan
------------------------------------- -------- ----------
Back office expenses 24.560 8.874
------------------------------------- -------- ----------
Total 901.640 1.151.100
------------------------------------- -------- ----------
Board of Directors expense includes the remuneration of all
Non-Executive Directors and committee members for H1-2016.
Following a BOD decision the Directors will receive no remuneration
thereon.
Name Position 2016 Remuneration 2015 Remuneration
(EUR) (EUR)
----------------------- ------------------------ ------------------ ------------------
Paul Ensor Chairman 16.352 33.132
----------------------- ------------------------ ------------------ ------------------
Barseghyan
Vagharshak Non-Executive Director 16.352 16.921
----------------------- ------------------------ ------------------ ------------------
Ian Domaille Non-Executive Director 22.280 45.141
----------------------- ------------------------ ------------------ ------------------
Franz Horhager Non-Executive Director 16.352 33.132
----------------------- ------------------------ ------------------ ------------------
Antonios Kaffas Non-Executive Director 18.805 38.101
----------------------- ------------------------ ------------------ ------------------
Kalypso Maria
Nomikou Non-Executive Director 16.352 16.921
----------------------- ------------------------ ------------------ ------------------
Alvaro Portela Non-Executive Director 16.352 33.132
----------------------- ------------------------ ------------------ ------------------
Harin Thaker Non-Executive Director 17.934 34.055
----------------------- ------------------------ ------------------ ------------------
Non-Executive Director
Antonios Achilleoudis until 22 July 2015 - 14.383
----------------------- ------------------------ ------------------ ------------------
Non-Executive Director
Robert Sinclair until 22 July 2015 - 13.499
----------------------- ------------------------ ------------------ ------------------
Management remuneration includes the remuneration of the CEO,
the CFO, the Group Commercial Director, the Group Investment
Director and that of the Country Managers of Ukraine and Romania
pursuant to the decisions of the remuneration committee.
32.2 Payables to related parties (Note 25)
31 Dec 31 Dec
2016 2015
--------------------------------- ---------- --------
EUR EUR
--------------------------------- ---------- --------
Board of Directors & Committees 619.562 475.389
--------------------------------- ---------- --------
Grafton Properties 123.549 123.549
--------------------------------- ---------- --------
Secure Management Services Ltd 15.179 -
--------------------------------- ---------- --------
SECURE Management Ltd 1.062 1.062
--------------------------------- ---------- --------
Management Remuneration 386.798 143.200
--------------------------------- ---------- --------
Total 1.146.150 743.200
--------------------------------- ---------- --------
32.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to
Non-Executive Directors until the end of the reporting period. The
members of the Board of Directors pursuant to a recommendation by
the remuneration committee and in order to facilitate the Company's
cash flow, will receive part of their payment in exchange for
shares in the Company's capital.
32.2.2 Loan payable to Grafton Properties
During the Company restructuring in 2011 and under the
Settlement Agreement of July 2011, the Company undertook the
obligation to repay to certain lenders who had contributed funds
for the operating needs of the Company between 2009-2011, by
lending to AISI Realty Capital LLC as the SC Secure Capital Ltd was
named then, the total amount of USD 450.000. As of the reporting
date the liability towards Grafton Properties, representing the
Lenders, was USD 150.000, which is contingent on the Group raising
USD 50m of capital in the markets.
32.2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO and CFO of the Company, as well as the Group Commercial
Director, the Group Investment Director and the Country Managers
for Romania and Ukraine.
32.3 Loans from SC Secure Capital Ltd to the Group's
subsidiaries
SC Secure Capital Ltd, the finance subsidiary of the Group
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs.
Borrower Limit Principal Principal
-as of as of as of
31 Dec 31 Dec 31 Dec
2016 2016 2015
-------------------------- ------------ ----------- -----------
EUR EUR EUR
-------------------------- ------------ ----------- -----------
LLC "TERMINAL BROVARY" 30.724.931 30.724.931 26.798.804
-------------------------- ------------ ----------- -----------
LLC "AISI UKRAINE" 23.062.351 14.257 12.275
-------------------------- ------------ ----------- -----------
LLC "ALMAZ PRES UKRAINE" 8.236.554 162.633 140.021
-------------------------- ------------ ----------- -----------
Total 30.901.821 26.951.101
---------------------------------------- ----------- -----------
All loans from SC Secure Capital Ltd to the Group's subsidiaries
are USD denominated and in 2016 they generated a foreign exchange
loss totaling EUR4.167.542 as a result of the devaluation of the
Ukrainian Hryvnia during the reporting period. As settlement of
these loans is not likely to occur in the foreseeable future and in
substance is part of the Group's net investment in its foreign
operations, the foreign exchange loss is recognised in other
comprehensive income.
In that context SC Secure Capital Ltd has provided a loan to
Limited Liability Company "Terminal Brovary" whose outstanding
capital at the reporting date was EUR30.724.931. This loan was
transferred to SL SECURE Logistics Limited by the end of 2016. This
loan is expected to be transferred together with the sale of
Terminal Brovary to the buyer (Note 36a).
A potential Ukrainian Hryvnia weakening/strengthening by 10%
against the US dollar with all other variables held constant, would
result in an exchange difference on I/C loans to foreign holdings
of (EUR3.090.182)/ EUR3.090.182 respectively, estimated on balances
held at 31 December 2016.
32.4 Loans to associates
31 Dec 31 Dec
2016 2015
------------------------------------ -------- --------
EUR EUR
------------------------------------ -------- --------
Loans to Greenlake Development SRL 264.110 254.718
------------------------------------ -------- --------
Total 264.110 254.718
------------------------------------ -------- --------
The loan was given to GreenLake Development SRL from Edetrio
Holdings Limited. The agreement was signed on 17 February 2012 and
bears interest 5%. The maturity date is 30 April 2018.
33. Contingent Liabilities
33.1 Tax Litigation
The Group performed during the reporting period a part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three subsequent calendar
years; however, under certain circumstances a tax year may remain
open for longer.
The Group performed during the reporting period part of its
operations also in Romania, Greece and Bulgaria. In respect of
Romanian, Bulgarian and Greek taxation systems all are subject to
varying interpretation and to constant changes, which may be
retroactive. In certain circumstances the tax authorities can be
arbitrary in certain cases.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
developed tax systems. Management believes that it has adequately
provided for tax liabilities, based on its interpretation of tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant.
At the same time the Group's entities are involved in court
proceedings with tax authorities; Management believes that the
estimates provided within the financial statements present a
reasonable estimate of the outcome of these court cases.
33.2 Construction related litigation
There are no material claims from contractors due to the
postponement of projects or delayed delivery other than those
disclosed in the financial statements.
33.3 Delia Lebada SRL debt towards Bank of Cyprus
Sec South East Continent Unique Real Estate (SECURED) Investment
Ltd has provided in 2007 a corporate guarantee to the Bank of
Cyprus in respect to the loan provided by the latter to its
subsidiary Delia Lebada SRL, the owner of the Pantelimon Lake plot
(Note 12). As the loan is in default, the bank has initiated an
insolvency procedure. Depending on the final outcome of the
procedure (that may include an auctioning of the plot), the Bank
may call the difference between the price received from the auction
and EUR6.594.396 which is the total liability (out of which
EUR4.569.725 is the principal and the remaining relates to
interest, overdues and penalties). The Group is in discussions with
the bank and its partner in the project to find an amicable
settlement to the case. Management believes that the case has been
adequately being provided for.
33.4 Other Litigation
The Group has a number of legal cases pending. Management does
not believe that the result of these will have a substantial
overall effect on the Group's financial position. Consequently no
such provision is included in the current financial statements.
33.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2016.
34. Commitments
The Group had no other commitments as at 31 December 2016.
35. Financial Risk Management
35.1 Capital Risk Management
The Group manages its capital to ensure adequate liquidity will
being able to implement its stated growth strategy in order to
maximize the return to stakeholders through the optimization of the
debt-equity structure and value enhancing actions in respect of its
portfolio of investments. The capital structure of the Group
consists of borrowings (Note 24), trade and other payables (Note
25) deposits from tenants (Note 26), financial leases (Note 28),
taxes payable (Note 27) and equity attributable to ordinary or
preferred shareholders. The Group is not subject to any externally
imposed capital requirements, but certain of its cash balances are
restricted (Note 20).
Management reviews the capital structure on an on-going basis.
As part of the review Management considers the differential capital
costs in the debt and equity markets, the timing at which each
investment project requires funding and the operating requirements
so as to proactively provide for capital either in the form of
equity (issuance of shares to the Group's shareholders) or in the
form of debt. Management balances the capital structure of the
Group with a view of maximizing the shareholder's Return on Equity
(ROE) while adhering to the operational requirements of the
property assets and exercising prudent judgment as to the extent of
gearing.
35.2 Categories of Financial Instruments
Note 31 Dec 31 Dec
2016 2015
--------------------------------------- ----- ----------- -----------
EUR EUR
--------------------------------------- ----- ----------- -----------
Financial Assets
--------------------------------------- ----- ----------- -----------
Cash at Bank 20 1.701.007 895.422
--------------------------------------- ----- ----------- -----------
Long-term Receivables and prepayments 16 351.181 352.916
--------------------------------------- ----- ----------- -----------
Prepayments and other receivables 19 2.778.361 4.795.223
--------------------------------------- ----- ----------- -----------
Available for sale investments 18 - 2.783.535
--------------------------------------- ----- ----------- -----------
Total 4.830.549 8.827.096
--------------------------------------- ----- ----------- -----------
Financial Liabilities
--------------------------------------- ----- ----------- -----------
Borrowings 24 48.475.454 53.680.779
--------------------------------------- ----- ----------- -----------
Trade and other payables 25 7.489.293 7.716.924
--------------------------------------- ----- ----------- -----------
Deposits from tenants 26 488.347 756.454
--------------------------------------- ----- ----------- -----------
Finance lease liabilities 28 11.382.788 11.465.722
--------------------------------------- ----- ----------- -----------
Taxes payable and provisions 27 1.889.184 1.546.450
--------------------------------------- ----- ----------- -----------
Redeemable preference shares 21 - 6.430.536
--------------------------------------- ----- ----------- -----------
Total 69.725.066 81.596.865
--------------------------------------- ----- ----------- -----------
35.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not
entered into any derivative contracts.
35.4 Economic Market Risk Management
The Group operates in Romania, Bulgaria, Greece and Ukraine. The
Group's activities expose it primarily to financial risks of
changes in currency exchange rates and interest rates. The
exposures and the management of the associated risks are described
below. There has been no change in the way the Group measures and
manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized
financial assets and liabilities are denominated in a currency that
is not the Group's functional currency. Most of the Group's
financial assets are denominated in the functional currency.
Management is monitoring the net exposures and adopts policies to
contain them so that the net effect of devaluation is
minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest-bearing assets. On December 31(st) , 2016,
cash and cash equivalent financial assets amounted to EUR1.701.007
(2015: EUR895.422) of which approx. EUR32.000 in UAH and
EUR1.320.000 in RON (Note 20) while the remaining are mainly
denominated in either USD or EUR.
The Group is exposed to interest rate risk in relation to its
borrowings amounting to EUR48.475.454 (31 December 2015:
EUR53.680.779) as they are issued at variable rates tied to the
Libor or Euribor. Management monitors the interest rate
fluctuations on a continuous basis and evaluates hedging options to
align the Group's strategy with the interest rate view and the
defined risk appetite. Although no hedging has been applied for the
reporting period, such may take place in the future if deemed
necessary in order to protect the cash flow of a property asset
through different interest rate cycles.
Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's
strategy with the interest rate view and the defined risk appetite.
Although no hedging has been applied for the reporting period, such
may take place in the future if deemed necessary in order to
protect the cash flow of a property asset through different
interest rate cycles.
As at 31 December 2016 the weighted average interest rate for
all the interest bearing borrowing and financial leases of the
Group stands at 5,32% (31 December 2015: 5,00%). Considering the
finalization of Terminal Brovary sale, the weighted average
interest rate for all the interest bearing borrowing and financial
leases of the Group would be 4,67%.
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2016 is presented below:
Actual +100 bps +200 bps
as at 31.12.2016
--------------------- ------------------ ---------- ------------
Weighted average
interest rate 5,32% 6,32% 7,32%
--------------------- ------------------ ---------- ------------
Influence on yearly - (567.770) (1.135.541)
finance costs
--------------------- ------------------ ---------- ------------
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2015 is presented below:
Actual +100 bps +200 bps
as at 31.12.2015
--------------------- ------------------ ---------- ------------
Weighted average
interest rate 5,00% 6,00% 7,00%
--------------------- ------------------ ---------- ------------
Influence on yearly - (648.116) (1.296.232)
finance costs
--------------------- ------------------ ---------- ------------
35.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The Credit risk of
receivables is reduced as the majority of the receivables represent
VAT to be offset through VAT income in the future. In respect of
receivables from tenants these are kept to a minimum of 2 months
and are monitored closely.
35.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which applies a framework for the Group's
short, medium and long term funding and liquidity management
requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and
budgets while maintaining adequate reserves. The following table
details the Group's contractual maturity of its financial
liabilities. The tables below have been drawn up based on the
undiscounted contractual maturities including interest that will be
accrued.
31 December 2016 Carrying Total Less than From one More
amount Contractual one year to than
Cash two years two years
Flows
----------------------- ----------- ------------- ----------- ----------- -----------
EUR EUR EUR EUR EUR
----------------------- ----------- ------------- ----------- ----------- -----------
Financial assets
----------------------- ----------- ------------- ----------- ----------- -----------
Cash at Bank 1.701.007 1.701.007 1.701.007 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Prepayments and 2.778.361 2.778.361
other receivables 2.778.361 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Long-term Receivables
and prepayments 351.181 351.181 - - 351.181
----------------------- ----------- ------------- ----------- ----------- -----------
Total Financial
assets 4.830.549 4.830.549 4.479.368 - 351.181
----------------------- ----------- ------------- ----------- ----------- -----------
Financial liabilities
----------------------- ----------- ------------- ----------- ----------- -----------
Borrowings 48.475.454 48.475.454 31.580.299 1.597.840 15.297.315
----------------------- ----------- ------------- ----------- ----------- -----------
Trade and other
payables 7.489.293 7.489.293 7.038.170 - 451.123
----------------------- ----------- ------------- ----------- ----------- -----------
Deposits from
tenants 488.347 488.347 271.019 - 217.328
----------------------- ----------- ------------- ----------- ----------- -----------
Finance lease
liabilities 11.382.788 16.538.973 961.744 930.592 14.646.637
----------------------- ----------- ------------- ----------- ----------- -----------
Taxes payable
and provisions 1.889.184 1.889.184 1.889.184 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Total Financial
liabilities 69.725.066 74.881.251 41.740.416 2.528.432 30.612.403
----------------------- ----------- ------------- ----------- ----------- -----------
Total net liabilities 64.894.517 70.050.702 37.261.048 2.528.432 30.261.222
----------------------- ----------- ------------- ----------- ----------- -----------
31 December 2015 Carrying Total Less than From one More
amount Contractual one year to than
Cash two years two years
Flows
----------------------- ----------- ------------- ----------- ----------- -----------
EUR EUR EUR EUR EUR
----------------------- ----------- ------------- ----------- ----------- -----------
Financial assets
----------------------- ----------- ------------- ----------- ----------- -----------
Cash at Bank 895.422 895.422 895.422 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Prepayments and 4.795.223 4.795.223
other receivables 4.795.223 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Available for 2.783.535 2.783.535
sale investments 2.783.535 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Long-term Receivables
and prepayments 352.916 352.916 - - 352.916
----------------------- ----------- ------------- ----------- ----------- -----------
Total Financial
assets 8.827.096 8.827.096 8.474.180 - 352.916
----------------------- ----------- ------------- ----------- ----------- -----------
Financial liabilities - -
----------------------- ----------- ------------- ----------- ----------- -----------
Borrowings 53.680.779 56.037.869 24.198.982 14.649.577 17.189.310
----------------------- ----------- ------------- ----------- ----------- -----------
Trade and other
payables 7.716.924 7.716.924 3.044.036 - 4.672.888
----------------------- ----------- ------------- ----------- ----------- -----------
Deposits from
tenants 756.454 756.454 132.684 - 623.770
----------------------- ----------- ------------- ----------- ----------- -----------
Finance lease
liabilities 11.465.722 16.741.482 775.146 840.158 15.126.178
----------------------- ----------- ------------- ----------- ----------- -----------
Redeemable preference
shares 6.430.536 6.430.536 6.430.536 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Taxes payable
and provisions 1.546.450 1.546.450 1.546.450 - -
----------------------- ----------- ------------- ----------- ----------- -----------
Total Financial
liabilities 81.596.865 89.229.715 36.127.834 15.489.735 37.612.146
----------------------- ----------- ------------- ----------- ----------- -----------
Total net liabilities 72.769.769 80.402.619 27.653.654 15.489.735 37.259.230
----------------------- ----------- ------------- ----------- ----------- -----------
35.7 Net Current Liabilities
The current liabilities amounting to EUR41.080.081 exceed
current assets amounting to EUR9.507.622 by EUR31.572.459. This
difference is primarily a result of:
a) the EBRD Terminal Brovary debt, amounting to EUR11.580.922
which is presented as a current liability due to the breach of
certain covenants should be viewed as under transfer upon
completion of the sale of Terminal Brovary (Note 36a).
b) the bank borrowings related to the residential portfolio
EUR6.369.466 that are repayable by ongoing sales proceeds, which
according to the IFRS appear to be repayable within the next 12
months. Most of these loans have been or are under the process to
be extended for 2-5 years.
c) an amount of EUR6.594.396, registered as the total liability
to the Bank of Cyprus, currently under final settlement
d) an aggregate amount of EUR3.624.319, registered as the total
liability of the Group towards Alpha Bank in respect to the Boyana
project which was under restructuring that has been signed in March
2017 (Note 36g)
e) an aggregate amount of EUR2.661.592 registered as the total
liability of the Group towards the Bank of Piraeus in respect to
the Green Lake project which is under restructuring.
Based on the above, current liabilities are higher than current
assets by EUR741.764.
36. Events after the end of the reporting period
a. Sale of Terminal Brovary
In late January 2017 the Group completed the sale transaction of
the Terminal Brovary Logistics Park to Temania Enterprises Ltd
(company related to Rozetka Group). The transaction was concluded
at a Gross Asset Value of over USD 16 (or EUR15) million (before
the deduction of the outstanding EBRD loan, which was transferred
to the buyer, while the SPDI guarantee to EBRD loan was cancelled.
The transaction generated a profit for SPDI of EUR2,7 million,
already included in the 2016 financial statements by way of
presenting the property at a fair value equal to the transaction
value, as well as a cash inflow of more than EUR3million. As part
of the transaction the Group also sold SL SECURE Logisitcs Ltd,
thus transferring its loan towards Terminal Brovary to the buyer
(Note 32.3).
b. Amendment of the Sale & Leaseback of Romanian Logistics Park
In late February 2017 the Group agreed to an amended Sale and
Leaseback agreement ("SLB") with the Bank of Piraeus Romania
("BoP") regarding the Group's Innovations Logistics Park in
Bucharest. The agreement which followed SPDI's agreement with the
previous anchor tenant, Nestle Romania, of the Innovations
Logistics Park for an early termination of their tenancy agreement
for an agreed fee of EUR1,39 million payable to SPDI, stipulated
the allocation of the termination fee.
c. Appointment of Joint Broker
In March 2017 the Group appointed Beaufort Securities Ltd as the
Group's Joint Broker.
d. Directors Buying shares
The directors proceeded in March 2017 with the acquisition of
438.939 ordinary shares of the Company.
e. New lease Agreement for Innovations Logistics Park
In the middle of April 2017 the Group signed a lease agreement
with Aquila SRL a large Romanian logistics operator, for 5.740 sqm
of ambient space in the Group's Innovations Logistics Park in
Bucharest, Romania. Under the terms of the Agreement, the annual
rent payable by Aquila to the Group is EUR300.000.
f. Issuance of shares
In the middle of May 2017 the Company announced the issue of new
ordinary shares to the Non-Executive Directors of the Company who
were in office in 2015 in lieu of fees accrued in 2015. The new
shares were issued at GBP 0,35 per share, which represented a 100%
premium to the closing share price on 12 May 2017. The Company has
also issued a number of new ordinary shares to an adviser in lieu
of fees for services offered in 2017. As a result a total of
626.133 new ordinary shares have been issued, of which
Non-Executive Directors received 519.474 shares and third party
advisers and former directors received 106.659 shares.
g. Debt restructuring
SecRom Real Estate Srl (Doamna Ghica Project) has signed a
restructuring of its loan (EUR809.919) with Alpha Bank Romania,
extending its maturity to 2020. All other terms remain
substantially the same.
Boyana Residence ood has signed a restructuring of its loan
(EUR2.680.492) with Alpha Bank SA, extending its maturity to 2019.
All other terms remain substantially the same.
Sertland Properties Limited (Boyana land) has signed a
restructuring of its loan (EUR693.514) with Alpha Bank SA extending
its maturity to 2019. All other terms remain substantially the
same.
This information is provided by RNS
The company news service from the London Stock Exchange
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