TIDMSPDI
RNS Number : 6185A
Secure Property Dev & Inv PLC
30 September 2015
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
30 September 2015
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
Interim Results
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property and investment company, is
pleased to announce its interim results for the period ended 30
June 2015.
Financial Highlights
-- 103% increase in total asset value to EUR134 million (31
December 2014: EUR66million) reflecting the transformational
property acquisitions made during the period across the region
-- 77% increase in rental income to EUR2.3 million (H12014: EUR1.3million)
-- EBITDA turned positive to EUR1.5 million compared to a loss of EUR0.4million for H12014
-- EUR8 million cash raised via Open Offer in March 2015
-- 84% increase in Net Asset Value to EUR59 million (31 December
2014: EUR32 million) due to share capital increase via Open Offer
and issue of shares in settlement of asset acquisitions
-- The loan to value ratio as at 30 June 2015 stands at 53% (31
December 2014: 48%) demonstrating strong asset backing behind the
Company
Operational Highlights
-- Successfully implemented strategy to expand the geographic
spread of the portfolio to encompass fast growing South Eastern
European countries which offer high yields and capital growth
-- Acquired three income producing assets in Romania, Greece and
Bulgaria that, combined, generate EUR3 million of Net Operating
Income ('NOI') annually, increasing the Company's annualised NOI by
73% to EUR7 million by the end of H12015;
o NOI now stands at c. EUR8 million following the completion of
the acquisition in Craiova post period end
-- Blue chip tenants on long leases in acquired properties
including: multinational logistics company Kuehne and Nagel;
Pratiker; and the Romanian Telecoms Regulator - long lease terms
provide revenue visibility
-- Acquisitions add a combined EUR64.5 million of gross asset
value since year end, increasing total Assets under Management
('AuM') to EUR126 million
-- Provides further geographic diversification of portfolio, and
ensures SPDI's position as a South Eastern Europe regional property
company
-- Cash generative and asset backed platform in place to take
advantage of highly positive South Eastern European property market
fundamentals and the ongoing European yield compression play
Lambros G. Anagnostopoulos, Chief Executive Officer, said,
"Thanks to the acquisition of a further five properties, the six
months under review has seen excellent progress made towards
delivering on our objective to build a diversified portfolio of
prime properties in South Eastern Europe with visible income
streams and significant capital growth potential. The numbers speak
for themselves: we now have a portfolio of six income producing
property assets in four countries in the region as well as
residential and land non-core assets; our AuM now stands at EUR126
million; while our annualised NOI totals c. EUR8m. As a result we
now have a cash generative, asset backed platform in place which
will allow us to accelerate the roll-out of our strategy through
the acquisition of additional properties that fit our investment
criteria: prime locations; strong covenants with blue chip tenants
on long term rental contracts; secured at attractive high
yields.
"We believe we are in the right market at the right time. The
supply and demand dynamics of the region's commercial property
markets remain favourable in terms of future rental growth and
potential capital uplift. Meanwhile the commencement of the ECB's
quantitative easing programme earlier in the year provides a
significant tailwind to the ongoing European yield compression play
which in our view has a long way to run further, particularly in
our core area of focus. Backed by a strong team of non-executive
directors, seasoned executives and experienced staff and advisers,
which has proven its ability to identify and secure prime
properties at attractive prices, Secure is ideally placed to
deliver on its goal to create the leading institutional South
Eastern European income producing and dividend yielding property
company."
* * ENDS * *
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +30-210-7226470
Constantinos Bitros SPDI Tel: +30-210-7226470
Tercel Moore SP Angel Corporate Finance Tel: +44 (0) 20 3463
LLP 2260
Jeff Keating SP Angel Corporate Finance Tel: +44 (0) 20 3463
LLP 2260
Lottie Brocklehurst St Brides Partners Ltd Tel: +44 (0) 20 7236
1177
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
1177
1. Management Report
In summary
The first half of 2015 saw SPDI complete the first phase of its
expansion and diversification plan. By the end of June 2015, the
Company owned assets in Romania, Bulgaria, Greece and Ukraine,
the four largest (by population) countries of South East Europe,
attaining three distinct stated goals:
a) diversifying its asset base with no-one country presenting more
than 50% of its AUM.
b) growing to more than EUR 100m of Assets under Management, and
c) building up a strong Operating Revenue stream that would facilitate
both return to its shareholders as well as further asset growth.
To achieve these goals, management's efforts in the first months
of 2015 were focused on both the efficient raising of capital and
the acquisition of assets, which meet our investment criteria.
SPDI raised more than EUR 10m of new capital through an open offer
to its shareholders in March 2015 and through the execution of
warrants in July 2015. In parallel SPDI concluded or signed the
agreement for the acquisition of the following assets:
1. A fully let 17.000 sqm logistics park west of Athens, the majority
of which is let to the German logistics operator Kuehne + Nagel,
generating EUR 1,5 net operating income. The logistics centre
also has a 1MW photovoltaic park installation on its roof generating
and selling electricity to the grid,
2. A fully let 19.000 sqm office building in Sofia (20% ownership)
let to one of Bulgaria's largest insurance companies, generating
EUR 2,9m net operating income,
3. A fully let 9.000 sqm retail property in Craiova, Romania, rented
to Praktiker, a leading European DIY retailer, generating EUR 1m
of net operating income,
4. A fully let 10.000 sqm office building in Bucharest (24,35%
ownership) mostly let to Romania's Telecom Regulatory Authority
generating EUR 1,75m net operating income, and
5. A portfolio of residential properties in Bucharest and Sofia,
the majority of which are currently let, generating more than EUR
0,3m annual rental revenues. These properties are for sale.
True to our strategy to grow the Company with the lowest possible
cash outlay, the last three assets were acquired by SPDI in exchange
for newly issued shares in the Company. This has not only facilitated
the task of surpassing the EUR 100m AUM mark and ending the period
with EUR 126m AUM, but has also brought onto the Company's shareholder
register a number of highly respected institutional investors in
the region who share the Company's vision and strategy to build
the prime professional real estate company in the region. In addition,
the acquisitions increased the Company's annualized Net Operating
Income by EUR 3m.
While the economic climate in Europe improved further in the first
half of 2015, Greece lapsed back into political turmoil with the
new Government elected in January 2015 abandoning the path prescribed
by the agreements between the old government and its EU creditors.
By August 2015, and after various failed attempts to change course
and a July referendum, a new agreement with the creditors had been
signed, indicating signs of stabilization, needed for the country
to return to a growth path following six years of harsh recession.
At the same time, Ukraine continued its path towards taking political
stabilization measures, even though the economic recession that
has followed the 2014 war with Russia and the ensuing large devaluation
of the local currency has taken a bigger bite of the economy than
the semester before hand. Even though the IMF and other international
bodies are working with the Ukrainian government to minimize the
effects of such recession, the country's economy is not expected
to pick up within 2015. On the contrary, Romania's economy continues
its fast ascent, with GDP growth above 3,4%, low unemployment and
FDI picking up, making Romania a high growth economy target for
the next few years. It is this fundamental macroeconomic environment
that guided SPDI's growth pattern that has left the Company at
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the end of the period with its highest property exposure in Romania
(58%) and much lower in Greece (16%), Ukraine (35%) or Bulgaria
(17%).
The global macroeconomic picture has also provided a positive
tailwind over the review period. In March 2015, Europe entered
a period of Quantitative Easing which signals the continuation
of the low interest rate environment while the US is expected to
turn the corner with interest rates picking up. As a result, European
Real Estate is becoming more and more attractive for global investors,
particularly South East Europe where asset prices are low. This
is the macro environment in which the Company expects to prevail
for the next 12 months and plans to take advantage of for the benefit
of its shareholders. As a result, and following the success of
the Open Offer to shareholders and the ensuing property asset acquisitions,
the Company engaged a small number of advisers - brokers on both
sides of the Atlantic to facilitate further growth, as per its
vision guided strategy.
As at period end, all our income generating properties have prime
locations, generate substantial income from blue chip tenants,
provide immediate stable cash flows with long term visibility,
and offer scope for significant capital uplift over the short to
medium term, as the on-going European yield compression play gathers
momentum across the continent. Thanks to the progress made during
the six months, Secure has a highly cash generative platform from
which to accelerate the roll-out of its strategy to grow its portfolio
of prime real estate, and in the process build the leading institutional
South Eastern European income producing and dividend yielding property
company.
P&L
The table below presents the operating performance in the last
3 years:
2015 1H 2014 1H 2013 1H
EUR
Rental Income 2.319.351 1.272.609 1.371.162
Sevice charges and utilities
Income 279.901 133.520 -
Income from sale of electricity 135.140 - -
Property Operating expenses (287.584) (254.857) (291.190)
Share of profits from associates 354.949
Net Income from Investment 2.801.757 1.151.272 1.079.972
properties
Sales of assets 671.368 -
Cost of sale of assets (469.850) - -
Net Income from sale of 201.518 - -
assets
Income from operations 3.003.275 1.151.272 1.079.972
Administration expenses (1.599.125) (1.543.497) (1.070.535)
Other income/ (expenses),
net 42.270 (16.624) 174.325
Operating profit 1.446.420 (408.849) 183.762
Gains on acquisitions 5.237.790 391.205 -
Finance costs, net (1.643.882) (565.132) (602.250)
Profit/(loss) before tax 5.040.328 (582.776) (418.488)
Income tax expense (2.894) (12.931) -
Profit /(Loss) for the
year 5.037.434 (595.707) (418.488)
Investment property related 4.737.805 13.225.535 -
gains (Note1)
Foreign exchange losses,
net (Note 2) (4.976.537) (14.590.388) (19.518)
Profit / (Loss) for the
year 4.798.702 (1.960.560) (438.006)
Note 1: this includes a) the upward revaluation of Ukrainian assets
caused by the foreign exchange difference between the US$ and the
EUR (in itself mostly negated by the devaluation of the UAH) minus
b) a precautionary provision that management has taken on the recently
acquired assets.
Note 2: these relate to the EBRD loan towards Terminal Brovary
(mostly hedged due to the USD denominated income) and to various
intercompany loans for which any associated losses, (predominately
paper), are caused by the devaluation of the UAH from 8 at the
beginning of the year to 23 to the US$ by the end of the reporting
period (a drop of 65%).
2. Regional Economic Developments (1)
Romania
Romania's GDP expanded by a real 3,7% yoy in H1 2015, as per the
indication provided by the country's statistics office. In Q2 2015,
GDP grew by 3,2% yoy, one of the highest in EU-28. According to
recent reports, this growing trend is expected to continue throughout
the rest of 2015, forecasting a yoy GDP growth of 3,4% overall.
CPI is negative at 1,7% so far for the year while the recent VAT
rate decreasing for all food products from 24% to 9% has contributed
another -0,2% for June. The unemployment rate was 6,8% at the end
of June, remaining stable compared with a year ago, while the industrial
output index for the first seven months of 2015 registered a 2,6%
increase yoy.
In May, the National Bank of Romania decreased the monetary policy
rate to a record low of 1,75%. Exchange rates remained stable over
the first 6 months, fluctuating between RON 4,40 to RON 4,48 to
the EUR. Government debt decreased below 38,5% of GDP, the third
lowest in the EU, while foreign direct investments in H1 2015 totaled
EUR 1,66 billion, 39% higher than last year.
Macroeconomic data and forecasts
----------------------------------------------------------------
2011 2012 2013 2014 2015f
----------------------- ------- ------ ------ ------
GDP (EUR bn) 131,4 131,8 142,2 149,3 156,0
----------------------- ------- ------ ------ ------ ------
Population (mn) 20,1 20,0 19,9 19,9 19,9
----------------------- ------- ------ ------ ------ ------
GDP (constant prices
y-o-y %) 2,2 0,7 3,4 2,9 3,4
----------------------- ------- ------ ------ ------ ------
CPI (average, y-o-y
%) 5,8 3,4 4,0 1,1 -0,5
----------------------- ------- ------ ------ ------ ------
Unemployment rate
(%) 7,4 7,0 7,1 6,8 6,5
----------------------- ------- ------ ------ ------ ------
Net FDI (EUR bn) 1,8 2,2 2,6 2,5 3,1
----------------------- ------- ------ ------ ------ ------
Sources : IMF, National Sources, Eurobank EFG,
European Comission
Bulgaria
The pace of growth in Q1 2015 (2% yoy) was the strongest since
Q2 2011 increasing by 2,2% year-on-year with the strongest contribution
coming from net exports.
Bulgaria posted a consolidated budget surplus of EUR 455 million
for H1 2015 or 1,1% of the country's projected GDP, compared to
a deficit of EUR 509 million for the same period last year.
CPI in June 2015 stood at -0,6% yoy. Foreign direct investment
for the period January-May 2015 amounted to EUR 617 million, compared
to the EUR 622 million for the same period in 2014. The unemployment
rate was 9,6% in June, matching EU's average rate, while the country's
industrial output rose by 5,7% yoy. Exchange rates remained stable
over the first 6 months at BGN 1,96 to the EUR.
Macroeconomic data and forecasts
----------------------------------------------------------------
2011 2012 2013 2014 2015f
---------------------------- ----- ----- ----- -----
GDP (EUR bn) 38,5 39,7 39,9 40,4 40,9
---------------------------- ----- ----- ----- ----- ------
Population (mn) 7,3 7,3 7,3 7,2 7,2
---------------------------- ----- ----- ----- ----- ------
GDP (constant prices y-o-y
%) 1,8 0,8 0,9 1,7 1,8
---------------------------- ----- ----- ----- ----- ------
CPI (average, y-o-y %) 4,2 3,0 1,4 -1,6 0,2
---------------------------- ----- ----- ----- ----- ------
Unemployment rate (%) 11,2 12,3 12,9 11,7 9,8
---------------------------- ----- ----- ----- ----- ------
Net FDI (EUR bn) 1,2 1,2 1,1 1,2 1,5
---------------------------- ----- ----- ----- ----- ------
Sources : IMF, National Sources, Eurobank EFG,
European Comission
Ukraine
The ongoing conflict in the Eastern border and sharp depreciation
of the hryvnya in Q1 2015, have led the economy into a deep recession
without signs of clear stabilization as of yet. In accordance with
the preliminary estimates of the Ministry of Economic Development
and Trade of Ukraine, in the first half of 2015 real GDP contracted
by -16,3% yoy. If this is sustained through the year the aggregate
recession in Ukraine since late 2013 is expected to exceed 50%
in USD terms.
The official exchange rate was 15,78 UAH / USD at the start of
2015 and reached its record of 30 UAH/USD in February 2015. By
the end of the first quarter of 2015 the official exchange rate
stabilized at around 23 UAH/USD and during the second quarter of
2015 it was largely stable, varying in the range of 20,5-22 UAH/USD.
In January-June 2015, consumer price inflation reached 48,1% year-on-year,
compared to 5,8% in the first half of 2014, with the main contributor
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being the sharp depreciation of the UAH and the resultant increase
in prices for imported goods, increase of the state-regulated tariffs
and high inflation expectations.
Currently Ukraine remains dependant on the USD 17,5 billion IMF
loan. After the review of the authorities' performance under the
programme, IMF allocated the second tranche amounting to USD 1,7
billion in early August 2015 and discussions for a restructuring
of the debt including a write off are fully fledged at the moment.
Macroeconomic data and forecasts
----------------------------------------------------------------------
2011 2012 2013 2014 2015f
------------------------------ ------ ------ ------ ------
GDP (USD bn) 163,4 176,2 177,4 127,6 115,8
------------------------------ ------ ------ ------ ------ ------
Population (mn) 45,6 45,6 45,5 42,7 42,5
------------------------------ ------ ------ ------ ------ ------
GDP (constant prices y-o-y
%) 5,2 0,2 0,0 -6,0 -9,2
------------------------------ ------ ------ ------ ------ ------
CPI (average, y-o-y %) 8,0 0,6 -0,2 12,1 51,0
------------------------------ ------ ------ ------ ------ ------
ILO Unemployment rate (%) 7,9 7,5 7,4 10,5 11,0
------------------------------ ------ ------ ------ ------ ------
Net FDI (USD bn) 7,0 6,6 3,3 0,2 0,5
------------------------------ ------ ------ ------ ------ ------
Sources : IMF, National Sources, European Comission,
Oxford Economics
Greece
After bailout talks between the Greek government and foreign lenders
broke down during the last weekend of June, the European Central
Bank froze vital ELA funding support to Greek banks, leaving Athens
with little choice but to shut down the system to keep the banks
from collapsing by imposing capital controls. As a result of these
actions the Athens Stock Exchange closed from June 26 to August
3.
On July 13, Eurozone leaders reached a unanimous agreement over
a third Greek bailout. The Greek government managed to pass the
measures by parliamentary majority on August 14, so Greece will
be able to benefit from the EUR 86 bln of bailout loans. Following
that, the government resigned and announced early elections for
September 20, which resulted in the same government coalition.
Amidst a very negative environment Greece's GDP grew 0,8% in Q2
2015, mainly driven by the ongoing tourist season and higher private
consumption during the days of capital controls as people feared
losing their money and preferred to spend it!
Assuming that the elections will facilitate the formation of a
coalition government that will actively pursue fulfilling the prerequisites
of the bailout program the Greek economy is expected to be slowly
back on track within 2016.
Macroeconomic data and forecasts
--------------------------------------------------------------------
2011 2012 2013 2014e 2015f
---------------------------- ------ ------ ------ ------
GDP (EUR bn) 208,5 193,4 182,1 179,1 175,2
---------------------------- ------ ------ ------ ------ ------
Population (mn) 10,8 11,1 11,0 11,0 10,9
---------------------------- ------ ------ ------ ------ ------
GDP (constant prices y-o-y
%) -1,1 -6,6 -3,9 -0,9 -0,8
---------------------------- ------ ------ ------ ------ ------
CPI (average, y-o-y %) 4,2 3,0 0,9 -1,4 -0,3
---------------------------- ------ ------ ------ ------ ------
Unemployment rate (%) 17,9 24,5 27,5 26,6 25,0
---------------------------- ------ ------ ------ ------ ------
Net FDI (EUR bn) 0,8 1,4 1,6 1,0 0,0
---------------------------- ------ ------ ------ ------ ------
Sources : IMF, National Sources, Eurobank EFG,
European Comission
[1] Sources : World Bank Group, Eurostat, 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, Bank of Serbia.
3. Real Estate Market Developments(2)
3.1 Romania
General
The total investment volume registered in Romania in the first
six months of 2015 was modest compared to H1 2015, recording a
78% decrease, but the low level of investment volume can be explained
by the effervescence registered at the end of 2014.
Logistics Market
In H1 2015, the industrial property stock increased by 100.000
sqm to approximately 2.000.000 sqm., of which half is in Bucharest
with another 160.000sqm yet to be added by year end. But still
take up is very high levels with vacancy in Bucharest being less
than 9% (outside Bucharest 10-12%) while prime rents remained relatively
stable at EUR 3,5-4 per sqm.
Office Market
Total stock of office space reached 2,25 million sqm in H1 2015,
with new deliveries accounting for approx. 50.000 sqm. In Q1 2015,
37% from total leasing activity (56.000 sqm) was dominated by transactions
performed by tenants from the IT&C sector. This trend continued
even stronger in the second quarter, reaching 72% of TLA (75.000
sqm). Vacancy rates continue to be uneven between sub-markets,
which is also reflected in the evolution of the rental levels.
While in South, Baneasa and Pipera North vacancy rates are above
30%, the vacancy rate in Dimitrie Pompeiu, Floreasca Barbu Vacarescu,
North, Central-North, CBD and West is below 10%. Overall vacancy
stands at 13%, slightly decreased from 14% at the end of 2014.
Headline rent remains at EUR 18,5 per sqm.
Retail Market
Modern retail stock reached the 3 million sqm mark with some 120.000
sqm GLA delivered in H1 2015. Two important shopping centers opened
so far this year: Coresi Shopping Resort in Brasov and Mega Mall
in Bucharest. During the first six months of 2015, at least 30
new retailers have entered the local market targeting mainly Bucharest.
Prime rent in Bucharest for retail parks is EUR 8,5 per sqm and
60-70 per sqm for shopping centres.
Residential Market
During H1 2015, prices for residential projects remained relatively
stable as in 2014 but demand has picked up as the spending capacity
of Romanians improves. Some new projects targeted more affluent
purchasers, in contrast with previous years' focus on low income
products. Both local and international developers sought to finalize
one and two bedroom apartments in semi-central locations, or in
the vicinity of popular office districts. Romanian authorities
issued 18.229 building permits for residential projects in H1 2015,
up 3,1% year-on-year, according to the national statistics office.
3.2 Bulgaria
General
The total value of closed transactions on the investment market
in Bulgaria in the first half of 2015 was slightly above EUR 90
mln. It is expected by the end of the year the total sales transactions
volume will be similar or higher than in 2014 (EUR 220 mln).
Office Market
Office stock in Sofia has increased to 1,64 million sqm, as new
deliveries for H1 2015 amounted to 14.000 sqm. Development of several
projects have commenced, increasing the active construction to
198.600 sqm. Overall office market vacancy rates continued to decline
to 14,2% in H1 2015 from 15,4% in Q4 2014, a new 4 year low. Market
demand continues to be driven primarily by the IT sector. Rental
rates for class A offices have increased to EUR 11,5 per sqm, while
in CBD (Central Business District) properties the average rate
is EUR 13,7 per sqm.
Retail Market
Total modern retail stock in Bulgaria is 844.000 sqm with shopping
centers accounting for 95%. The vacancy rate in Sofia dropped to
11% (from 12% in 2014). No new project openings are expected by
the end of the year. Retail activity will be concentrated on the
repositioning of existing shopping centers and unfreezing projects
at the development stage.
Residential Market
A total of 2.100 residential building permits were issued in H1
2015. Sofia represents the major part of approved projects with
37% of the total. The market appears to be absorbing the new supply
with developers reporting a significant amount of sales, increased
by 8% compared to last year. Average sales prices in Sofia are
around EUR 770 per sqm almost 50% lower than the pre-crisis pricing
level.
3.3 Ukraine
General
Due to the deepening of the economic recession in Ukraine, many
businesses were adopting a wait-and-see attitude in relation to
further activity in the country, whilst the purchasing power of
the country's population further decreased.
Logistics Market
In late June 2015, total stock of modern warehousing and logistics
space in the Greater Kiev area amounted to 1.778.000 sqm. Overall
development activity in the Greater Kiev area remains very low.
During H1 2015 vacancy in the sector increased, reaching 12% in
late June 2015 with asking rents dropping to the range of USD 2,5-5
per sqm for prime warehousing space in the Greater Kiev area, while
for B-class properties average monthly rent was at around USD 2
per sqm.
Office Market
The total office stock in Kiev reached over 1,7 million sqm at
the end of June 2015. In the first half of 2015 a majority of tenants
decided to stay in their current properties and as a result, lease
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renewals and renegotiations accounted for almost 77% of total office
take-up during the first six months of 2015. During the first half
of 2015, vacancy in the office property sector in Kiev hovered
at 23%. The indicative prime rent declined by 8% on average from
USD 25 to USD 23 per sqm per month.
Retail Market
Total modern retail stock in Kiev amounted to around 1,55 million
sqm in late June 2015. As of August 2015, DTZ estimates that presently
around 560.000 sqm (GLA) of new 'modern' retail space in Kiev are
actively in either the planning or construction stages. In late
June 2015, average monthly rents in quality retail schemes in Kiev
varied in the range of USD 45-65 per sqm for premises of 100-250
sqm. The retail premises in high street locations in Kiev commanded
monthly rents of USD 30-50 per sqm.
3.4 Greece
General
The property market is expected to recover gradually, assuming
Greece will emerge from the recession cycle. In terms of investment
interest, the most dynamic sectors appear to be that of hospitality,
as a result of a projected substantial growth in tourism.
Logistics Market
The market is characterised by the absence of activity with very
few leasing deals occurring, linked to the economic uncertainty
shrouding the Greek market. Deals that are closing stem from existing
occupiers taking advantage of the weak fundamentals and either
moving to secure better price space or indeed renegotiating their
existing leases to be more flexible and at a lower rent. Prime
rents are EUR 3-4 per sqm for logistic space, stable for the last
12 months.
Office Market
Prime supply levels in the office sector have stabilized as weaker
demand and the lack of new developments balance each other out.
There is no pipeline of new or refurbished projects in most markets
and this is not expected to change over the short to medium term,
with most developers unwilling to commit to new construction. In
prime office locations, rental rates have been stable between EUR
8- 15 per sqm.
(2) Sources : National Bank of Greece, Bank of Greece, Eurobank,
Jones Lang LaSalle, DTZ Research, CBRE Research, Colliers
International, Cushman & Wakefield, MBL Research.
4. Property Assets
4.1 Aisi Brovary - Terminal Brovary Logistic Park , Ukraine
Project description
The Brovary Logistic Park consists of a 49.180 sqm GLA Class A
warehouse and associated office space. The building has large facades
to Brovary ring road, at the intersection of the Brovary ( -95/
-01 highway) and Borispil ring roads. It is located 10 km from
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 and municipal provided sewage,
water and garbage collection.
Current status
As of the end of June, the park remained 72% leased, with 79% of
its warehouse capacity leased.
4.2 Innovations Logistics Park, Romania
Project description
The Park incorporates approximately 8.470 sqm of multipurpose warehousing
space, 6.395 sqm of cold storage and 1.705 sqm of office space.
It is located in the area of Clinceni, south west of Bucharest
center, 200m from the city's ring road and 6km from Bucharest-Pitesti
(A1) highway. Its construction was tenant specific, was completed
in 2008 and it comprises four separate warehouses, two of which
offer cold storage.
Current status
As of the end of June the warehouse was 87% leased with Nestle
Ice Cream Romania being the anchor tenant (100% of cold space and
79% of total NOI).
4.3 EOS Business Park - Danone headquarters, Romania
Project description
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 serviced by public transportation. The
park is highly energy efficient.
Current status
The Company acquired the asset in November 2014. The complex at
the end of June is fully let to Danone Romania, the French multinational
food company, until 2026.
4.4 Praktiker Retail Center, Romania
Project description
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.
Current status
The Company has reached a binding agreement in May 2015 for the
acquisition of the asset which was finalised in July 2015. The
complex at the end of June is fully let to Praktiker Romania, a
leading DIY retailer, until 2020.
4.5 Delenco office building, Romania
Project description
The property is a 10.280 sqm office building, which consists of
two underground levels, a ground floor and ten above-ground floors.
The building is strategically located in the very center of Bucharest,
close to three main squares of the city: Unirii, Alba Iulia and
Muncii, only 300m from the metro station.
Current status
The Company acquired 24,35% of the property in May 2015. As of
the end of June, the building is 100% let, with ANCOM (the Romanian
Telecommunications Regulator) being the anchor tenant (70% of GLA).
4.6 Autounion office building, Bulgaria
Project description
A 19.476 sqm Class A office building which is located in a prime
business area of Sofia, very close to the international airport
and close to the city center. The building is BREEAM certified.
Current status
The Company acquired 20% of the property in April 2015. Autounion
at the end of H1 2015 is fully let to Eurohold Bulgaria, a leading
Bulgarian insurance company, on long lease extending to 2027.
4.7 GED Logistics Park and Photovoltaic Park, Greece
Project description
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 10 minutes from the port of Piraeus (where
COSCO runs two of the three piers of one of the biggest container
port in the Mediterranean Sea) and the National Road connecting
Athens to the north of the country. The roofs 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).
Current status
The complex at the end of June is 100% occupied, while the major
tenant (approximately 70%) being the German transportation and
logistics company Kuehne + Nagel.
4.8 Residential portfolio
-- Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Project description
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.
The residential unit portfolio acquired by the Company comprised
2.990 sqm across nine studios, six two bed apartments and thirteen
three bed apartments, all located in buildings A, D, E, F, and
I.
Current status
During the period, 2 apartments were sold while as of the end of
June total existing leases stood at 16 indicating an occupancy
rate of 64%.
-- Linda Residence, Bucharest, Romania
Project description
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.
The 2.642 sqm residential portfolio acquired by the Company comprised
twenty seven apartments including two studios, fifteen two bed,
eight three bed and two four bed apartments, as well as 27 storage
spaces, and 20 surface parking spaces.
Current status
During the period, 2 apartments were sold while as of the end of
June there are a total of 2 existing leases indicating an occupancy
rate of approximately 8%.
-- Monaco Towers, Bucharest, Romania
Project description
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.
The residential portfolio acquired by the Company comprised forty
apartments, twenty five two-room apartments and fifteen three-room
apartments, totaling 3.609 sqm.
Current status
During the period, 5 apartments were sold while as of the end of
June the total existing leases stood at 22 indicating an occupancy
rate of 63%.
-- Blooming House, Bucharest, Romania
Project description
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).
The residential unit portfolio acquired by the Company comprised
twenty seven apartments, comprising twelve two bed, fourteen three
(MORE TO FOLLOW) Dow Jones Newswires
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bed, and one five bed, totaling 2.387 sqm, plus 28 parking spaces,
13 above ground, 15 underground.
Current status
During the period, 2 apartments were sold while at the end of June
the total existing leases stood at 13 indicating an occupancy rate
of approximately 52%.
-- Green Lake, Bucharest, Romania
Project description
A residential compound of 40.500 sqm GBA, which at the end of June
consisted of 35 unsold apartments plus 23 unsold villas, situated
on the banks of Grivita Lake, in the northern part of the Romanian
capital. The compound also includes facilities such as Bucharest's
leading private kindergarten, outdoor sport courts and restaurants.
Additionally the plot includes a 48.360 sqm land area with a Gross
Buildable Area of 82.250 sqm (63.400 sqm above ground). SPDI owns
40% of this property asset portfolio.
Current status
During the period, 4 apartments and villas were sold while at the
end of June, 82 units were unsold with the occupancy rate being
41% (64% for apartments and 16% for villas).
-- Boyana Residence, Sofia, Bulgaria
Project description
A residential compound, which consists 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 GBA totaling to 11.400 sqm. The complex
includes adjacent land plots with surface of 17.000 sqm with building
permits to develop GBA of 21.851 sqm.
Current status
During the period, 6 apartments were sold while at the end of June
61 units remained unsold.
4.9 Land Bank
-- Aisi Bela - Bela Logistic Center , Odessa, Ukraine
Project description
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.
Current status
Following the completion of planning and issuance of permits in
2008, construction commenced, with column foundation and peripheral
walls for 100.000 sqm completed in 2009. Development was then put
on hold, due to lack of funding and deteriorating market conditions.
-- Kiyanovskiy Lane - Kiev, Ukraine
Project description
The project 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.
Current status
The concept design of the project is under review with the proposed
development to include residential apartments (GBA of circa 21.000
sqm) and 100 parking spaces across two basement levels.
-- Tsymlyanskiy Lane - Kiev, Ukraine
Project description
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%.
Current status
In 2009, all necessary documents were submitted to relevant authorities
for approval and issuance of a construction permit. The plan was
to develop approximately 10.000 sqm GBA of 40 high end residential
units and office spaces on lower floors, as well as 41 parking
spaces over three underground levels. Since then, the project has
been on hold. In 2014 the company renewed its holding permit.
-- Balabino- Zaporozhye, Ukraine
Project description
The 26,38 site is situated on the south entrance of Zaporozhye
city, three km 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.
Current status
The site is zoned for retail and entertainment and various development
options are being evaluated as per the market's needs.
-- Delia Lebada, Romania
Project description
The site 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 lake itself, having a 360
hectare surface, is the largest lake of Bucharest and provides
for many leisure activities like 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.
Current status
The construction permit, which allows for 54.000 sqm to be built,
was renewed in April 2014 and since then, the project has been
on hold.
For the six months ended 30 June 2015
Note Six month ended
---------------------------
30 June 30 June 2014
2015 Restated(*)
EUR EUR
Operational income 8 2.935.910 1.406.129
Investment Property related gains 15 d 4.737.805 13.225.535
Administration expenses 9 (1.599.125) (1.543.497)
Investment property operating
expenses 10 (287.584) (254.857)
Other operating income/(expenses),
net 11 42.270 (16.624)
Gain realized on acquisition 16 5.237.790 391.205
Share of profits from associates 17 354.949 -
Operating profit 11.422.015 13.207.891
Finance income 12 13.199 52.915
Finance costs 12 (1.657.081) (618.047)
Foreign exchange loss 13 a (4.976.537) (3.966.512)
Income/(loss) before tax 4.801.596 8.676.247
Income tax expense 14 (2.894) (12.931)
Profit/(loss) for the period 4.798.702 8.663.316
Other comprehensive (loss)/income
Exchange difference on intercompany 13 b,
loans to foreign holdings 28.3 (7.323.715) (10.623.876)
Exchange difference on translation
of foreign operations 21 5.022.908 1.358.894
Total comprehensive Profit/ (loss)
for the period 2.497.895 (601.666)
Profit/(loss) attributable to:
Owners of the parent 4.706.590 8.690.773
Non-controlling interests 92.112 (27.457)
------------ -------------
4.798.702 8.663.316
------------ -------------
Total comprehensive Profit/(loss)
attributable to:
Owners of the parent 2.496.590 (574.209)
Non-controlling interests 1.305 (27.457)
------------ -------------
2.497.895 (601.666)
------------ -------------
Profit/(loss) per share (EUR per
share): 6
Basic Profit/(loss) for the period
attributable to ordinary equity
owners of the parent 0,09 0,31
Diluted Profit/(loss) for the
period attributable to ordinary
equity owners of the parent 0,07 0,27
(*) Note 13
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
30 June 31 December 30 June
Note 2015 2014 2014
EUR EUR EUR
ASSETS
Non-current assets
Investment properties 15b 105.779.543 53.533.187 42.296.658
Investment property under 15a
construction 5.541.156 5.083.216 6.634.330
Prepayments made for investments 15c 2.334.337 2.674.219 3.685.739
Tangible and intangible
assets 201.318 200.203 64.684
Goodwill 43.269 43.269 -
Long-term receivables 253.027 125.909 126.437
Investments in associates 17 12.007.807 - -
126.160.457 61.660.003 52.807.848
Current assets
Prepayments and other 18
current assets 5.325.967 4.251.489 3.082.991
Cash and cash equivalents 19 2.832.054 891.938 3.100.367
8.158.021 5.143.427 6.183.358
Total assets 134.318.478 66.803.430 58.991.206
EQUITY AND LIABILITIES 72.035.042
Issued share capital 20 756.899 338.839 4.389.185
Share premium 121.227.562 97.444.044 92.815.992
Translation difference 21
reserve 3.701.890 (1.411.825) (8.957.084)
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September 30, 2015 02:00 ET (06:00 GMT)
Exchange difference on
intercompany loans to
foreign holdings (27.069.826) (19.746.111) (10.623.876)
Accumulated losses (39.357.885) (44.064.475) (40.402.340)
------------- ------------- -------------
Equity attributable to
equity holders of the
parent 59.258.640 32.560.472 37.221.877
Non-controlling interests 22 1.349.250 651.882 921.174
Total equity 60.607.890 33.212.354 38.143.051
Non-current liabilities
Interest bearing borrowings 23 44.750.322 12.255.716 -
Finance lease liabilities 27 11.340.099 11.463.253 7.362.229
Redeemable preference
shares 20 - 349.325 -
Trade and other payables 24 428.553 214.685 326.626
Deposits from tenants 25 638.519 499.831 434.067
------------- ------------- -------------
57.157.493 24.782.810 8.122.922
Current liabilities
Interest bearing borrowings 23 10.343.906 5.960.706 10.930.710
Trade and other payables 24 4.702.110 1.654.852 933.863
Taxes payable 26 862.229 431.828 206.361
Redeemable preference
shares 20 349.325 349.325 -
Provisions 26 - 68.253 81.800
Deposits from tenants 25 117.387 161.579 119.781
Finance lease liabilities 27 178.138 181.723 452.718
------------- ------------- -------------
16.553.095 8.808.266 12.725.233
Total liabilities 73.710.588 33.591.076 20.848.155
Total equity and liabilities 134.318.478 66.803.430 58.991.206
EUR EUR Net Asset Value (NAV)
per share: 6
Basic NAV attributable to equity
holders of the parent 0,78 0,96 1,30
Diluted NAV attributable to equity
holders of the parent 0,48 0,84 1,14
On 25(th) September 2015 the Board of Directors of SECURE
PROPERTY DEVELOPMENT & INVESTMENT PLC authorised these
financial statements for issue.
Lambros Anagnostopoulos Paul Ensor Constantinos Bitros
Director & Chief Executive Director & Chairman Chief Financial Officer
Officer of the Board
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2015
Attributable to owners of the Company
Share Share Accumulated Exchange Foreign Total Non- Total
capital premium, losses, difference currency controlling
net(1) net of on translation interests
non-controlling intercompany reserve(4)
interest(2) loans to
foreign
holdings(3)
EUR EUR EUR EUR EUR EUR EUR EUR
Balance - 31 4.383.018 92.704.841 (49.093.113) - (10.315.978) 37.678.768 948.631 38.627.399
December 2013
Profit/(loss) for - - 8.690.773 - - 8.690.773 (27.457) 8.663.316
the period
Issue of share
capital 6.167 111.151 - - - 117.318 - 117.318
Exchange - - - (10.623.876) - (10.623.876) - (10.623.876)
difference on
intercompany
loans to foreign
holdings
Foreign currency - - - - 1.358.894 1.358.894 - 1.358.894
translation
reserve
------------ ------------ ---------------- ------------- ------------- ------------- ------------- -------------
Balance - 30 June 4.389.185 92.815.992 (40.402.340) (10.623.876) (8.957.084) 37.221.877 921.174 38.143.051
2014
Profit/(loss) for - - (7.763.436) - - (7.763.436) 68.209 (7.695.227)
the period
Issue of share 50.955 4.628.052 - - - 4.679.007 - 4.679.007
capital
Reduction of (4.101.301) - 4.101.301 - - - - -
share capital
Exchange - - - (9.122.235) - (9.122.235) - (9.122.235)
difference on
intercompany
loans to foreign
holdings
Foreign currency - - - - 7.545.259 7.545.259 (337.501) 7.207.758
translation
reserve
------------ ------------ ---------------- ------------- ------------- ------------- ------------- -------------
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
Profit/(loss) for - - 4.706.590 - - 4.706.590 92.112 4.798.702
the period
Issue of share 418.060 23.783.518 - - - 24.201.578 - 24.201.578
capital, net
(note 20)
Exchange - - - (7.323.715) - (7.323.715) - (7.323.715)
difference on
intercompany
loans to foreign
holdings
Foreign currency - - - - 5.113.715 5.113.715 (90.807) 5.022.908
translation
reserve
Acquisition of
subsidiary
including
Non-Controlling
Interest - - - - - - 696.063 696.063
Balance - 30 June 756.899 121.227.562 (39.357.885) (27.069.826) 3.701.890 59.258.640 1.349.250 60.607.890
2015
(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.
The Group treats the mentioned loans as a part of the net
investment in foreign operations.
(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 EUR in the countries where the Company's
subsidiaries own property assets.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2015
Note 30 June 2015 30 June
2014
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(Loss) before tax and non-controlling 4.801.596 8.676.247
interest
Adjustments for:
Depreciation of property, plant and
equipment 9 6.979 5.940
Other expenses/(income) (108.550) (5.926)
Interest expense 12 1.435.894 579.501
Interest income 12 (13.199) (52.915)
Change in tax provisions (68.253) (38.806)
Foreign exchange loss/(gain) 13 4.976.537 3.966.512
Investment property related loss/ 15 (4.737.805) (13.225.535)
(gain) d
Loss/ (Gain) realized on acquisition 16 (5.237.790) (391.205)
Share of loss / (profit) from associates 17 (354.949) -
Cash flows used in operations before
working capital changes 700.460 (486.187)
Decrease/(increase) in prepayments
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and other current assets 18 1.718.119 (560.644)
Increase in VAT recoverable 18 (6.059) 121.773
Decrease in trade and other payables 24 (267.057) (345.682)
Change in other taxes and duties 338.734 27.233
Decrease in deposit from tenants (112.731) 151.984
Increase in long-term receivables (127.118) -
Income tax paid (198.353) (262.128)
----------------- -------------
Net Working Capital Changes 1.345.535 (867.464)
Net cash flows used in operating activities 2.045.995 (1.353.651)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investment in associates 17 (4.059.839) -
Capital expenditures on investment
property and prepayment on acquisition (110.539) (422)
Interest received 13.199 52.915
Payment for the acquisition of subsidiary (1.786.934) (4.332.624)
Net cash flows used in investing activities (5.944.113) (4.280.131)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 20 8.001.212 -
Repayment of preference shares (349.325) -
Repayment of borrowings (313.676) (218.948)
Repayment of finance leases (126.739) (8.169)
Interest and financial charges paid (1.373.238) (695.146)
Net cash flow from financing activities 5.838.234 (922.263)
Effect of foreign exchange rates on
cash (34.130) (11.848)
Net increase/(decrease) in cash at 1.905.986 (6.556.045)
banks
Cash:
At beginning of the period 19 891.938 9.668.260
At end of the period 2.832.054 3.100.367
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the six months ended 30 June 2015
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the "Company")
was incorporated in Cyprus on 23 June 2005 and is a public limited
liability company, listed on the London Stock Exchange (AIM): ISIN
CY0102102213. Its registered office is at Kyriacou Matsi 16, Eagle
House, 10(th) floor, Agioi Omologites, 1082 Nicosia, Cyprus.
Principal activities
The principal activities of the Group, which are unchanged from
last year, are directly or indirectly to invest in and/or manage
real estate properties as well as real estate development projects
in Central, East and South East Europe (the "Region"). These
include the acquisition, development, operation and selling of
property assets, in the Region.
The Group maintains offices in Nicosia, Cyprus; Kiev, Ukraine;
and Bucharest, Romania.
As at the reporting date, the Group had 24 Full Time Equivalent
(FTEs: 9 in Ukraine and 10 in Romania, 5 in Cyprus) employed
persons, including the CEO and the CFO (December 2014 à 19).
2. Adoption of new and revised Standards and Interpretations
The accounting policies adopted for the preparation of these
condensed consolidated interim financial statements for the six
months ended 30 June 2015 are consistent with those followed for
the preparation of the annual financial statements for the year
ended 31 December 2014.
3. Significant accounting policies
Basis of preparation
The condensed consolidated interim financial statements for the
six months ended 30 June 2015 have been prepared in accordance with
International Accounting Standard 34 "Interim Financial
Reporting".
Certain information and footnote disclosures normally included
in the consolidated financial statements prepared in accordance
with the International Financial Reporting Standards ("IFRS") have
been condensed or omitted. However, such information reflects all
adjustments (consisting of normal recurring adjustments), which
are, in the opinion of the Group's Management, necessary to fairly
state the results of interim periods.
Interim results are not necessarily indicative of the results to
be expected for the full year.
The 31 December 2014 statement of financial position was derived
from the audited consolidated financial statements.
Basis of consolidation
The condensed consolidated interim financial statements
incorporate the financial statements of the Company and entities
(including special purpose entities) controlled by the Company (its
subsidiaries).
The Group's condensed consolidated interim financial statements
comprise the financial statements of the parent company, SECURE
PROPERTY DEVELOPMENT & INVESTMENT PLC and the financial
statements of the following subsidiaries:
Holding %
------------------------------ ---------------- ---------------- ---------------------------------------------
Name Country of Related as at as at as at 30.06.2014
incorporation Asset 30.06.2015 31.12.2014
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
SC SECURE Capital
Limited Cyprus 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
Brovary
SL SECURE Logistics Logistics
Limited Cyprus Park 100 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Brovary Ukraine 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
LLC Terminal Brovary Ukraine 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Retail Development
Balabyno Ukraine 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
LLC Trade Center Ukraine 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
Tsymlianskiy
LLC Almaz--press--Ukrayina Ukraine Residence 55 55 55
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Bela Logistic
LLC Aisi Bela Ukraine Park 100 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Merelium Investments Ukraine Merged - 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Zaporizhia
LLC Interterminal Ukraine Retail Center 100 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Outdoor Ukraine Merged - 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Vida Ukraine Merged - - 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Val Ukraine Merged - - 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Ilvo Ukraine 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
LLC Aisi Consta Ukraine Merged - - 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Roslav Ukraine Merged - - 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
LLC Aisi Donetsk Ukraine Merged - 100 100
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September 30, 2015 02:00 ET (06:00 GMT)
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Innovations
Myrnes Innovations Logistics
Park Limited Cyprus Park 100 100 100
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Best Day Real Estate
SRL Romania 100 100 100
------------------------------ ---------------------------------- ------------ ------------ -----------------
EOS Business
Yamano Holdings 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 -
------------------------------ ---------------------------------- ------------ ------------ -----------------
SEC South East Continent
Unique Real Estate Residential
Investments II Limited Cyprus Portfolio 100 100 -
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Diforio Holdings Limited Cyprus 100 100 -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Demetiva Holdings
Limited Cyprus 100 100 -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Ketiza Holdings Limited Cyprus 45 45 -
------------------------------ ---------------------------------- ------------ ------------ -----------------
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 45 -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Victini Holdings Limited Cyprus GED Warehouse 100 - -
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
GED Logistics S.A. Greece 100 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
SEC South East Continent Cyprus 100 - -
Unique Real Estate
(Secured) Investments
Limited
------------------------------ ---------------------------------- ------------ ------------ -----------------
Edetrio Holdings Limited Cyprus 100 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Emakei Holdings Limited Cyprus 100 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
RAM Real Estate Management Cyprus 50 - -
Limited
------------------------------ ---------------------------------- ------------ ------------ -----------------
Iuliu Maniu Limited Cyprus 45 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Moselin Investments Romania 45 - -
srl
------------------------------ ---------------------------------- ------------ ------------ -----------------
Rimasol Enterprises Cyprus 44,24 - -
Limited
------------------------------ ---------------------------------- ------------ ------------ -----------------
Rimasol Real Estate Romania 44,24 - -
Srl
------------------------------ ---------------------------------- ------------ ------------ -----------------
Ashor Ventures Limited Cyprus 44,24 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Ashor Development Romania 44,24 - -
Srl
------------------------------ ---------------------------------- ------------ ------------ -----------------
Jenby Ventures Limited Cyprus 44,24 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Jenby Investments Romania 44,24 - -
Srl
------------------------------ ---------------------------------- ------------ ------------ -----------------
Ebenem Limited Cyprus 44,24 - -
------------------------------ ---------------------------------- ------------ ------------ -----------------
Ebenem Investments Romania 44,24 - -
Srl
------------------------------ ---------------------------------- ------------ ------------ -----------------
Sertland Properties Cyprus 100 - -
Limited
------------------------------ ---------------------------------- ------------ ------------ -----------------
Boyana Residence ood Bulgaria Residential 100 - -
Portfolio
and Land
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Mofben Investments Cyprus Pantelimon 100 - -
Limited Lake
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Delia Lebada Invest Romania 65 - -
srl
------------------------------ ---------------------------------- ------------ ------------ -----------------
Zirimon Properties Cyprus Delea Nuova 100 - -
Limited
------------------------------ ---------------- ---------------- ------------ ------------ -----------------
Within the reporting period the subsidiaries LLC Aisi Outdoor,
LLC Merelium Investments and LLC Aisi Donetsk were under merged
to LLC Aisi Ilvo. The reorganization (merger) process was finished
in June 2015.
During the reporting period the Company realized a number of acquisitions
namely of GED Warehouse and a mixed portfolio including commercial,
residential properties and land (notes 15 & 16).
Functional and presentation currencies
Items included in the Group's financial statements are measured
applying the currency of the primary economic environment in which
the entities operate ("the functional currency"). The national
currency of Ukraine, the Ukrainian Hryvnia, is the functional currency
for all the Group's entities located in Ukraine, the Euro for all
the Romanian, Bulgarian and Greek subsidiaries, while the parent
company and its Cyprus based subsidiaries use either the Euro or
the US dollar as the functional currency.
The condensed consolidated interim financial statements are presented
in Euro which is the Group's presentation currency.
As Management records the condensed consolidated interim financial
information of the entities domiciled in Cyprus, Romania and Ukraine
in their functional currencies, in translating financial information
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of the entities domiciled in these countries into Euro for inclusion
in the condensed consolidated interim financial statements, the
Group follows a translation policy in accordance with International
Accounting Standard No. 21, "The Effects of Changes in Foreign
Exchange Rates", and the following procedures are performed:
* All assets and liabilities are translated at closing
rate;
* Income and expense items are translated using
exchange rates at the dates of the transactions, or
where this is not practicable the average rate has
been used;
* All resulting exchange differences are recognized as
a separate component of equity;
* When a foreign operation is disposed of through sale,
liquidation, repayment of share capital or
abandonment of all, or part of that entity, the
exchange differences deferred in equity are
reclassified to the consolidated statement of
comprehensive income as part of the gain or loss on
sale.
The relevant exchange rates for the entities domiciled in countries
where the Group operates into Euro are as follows:
Average As at
---------- ------------------------------------- -------------------------------------
Currency 01/01/2015 2014 01/01/2014 30/06/2015 31/12/2014 30/06/2014
-30/06/2015 -30/06/2014
---------- ------------ -------- ------------- ----------- ----------- -----------
USD 1,1115 1,3285 1,3703 1,1189 1,2141 1,3566
---------- ------------ -------- ------------- ----------- ----------- -----------
UAH 23,8303 15,6833 14,0973 23,5414 19,2329 16,0868
---------- ------------ -------- ------------- ----------- ----------- -----------
RON 4,4479 4,4446 4,4643 4,4725 4,4821 4,3830
---------- ------------ -------- ------------- ----------- ----------- -----------
BGN 1,9558 - 1,9558 1,9558 - 1,9558
---------- ------------ -------- ------------- ----------- ----------- -----------
4. Financial risk Management
4.1 Financial risk factors
The Group is exposed to operating country risk, real estate holding
and development associated risks, market price risk, interest
rate risk, credit risk, liquidity risk, currency risk, other market
price risk, operational risk, compliance risk, litigation risk,
reputation risk, capital risk management and other risks arising
from the financial instruments it holds. The risk management policies
employed by the Group to manage these risks are discussed below.
Financial Risk Management is also described in note 31 of the
condensed consolidated interim financial statements.
4.1.1 Operating Country Risks
The Group is exposed to country risk, stemming from the political
and economic environment of countries in which it operates. Notably:
4.1.1.1 Cyprus
During the past 10 years Cyprus has become an established financial
center taking advantage of favorable double tax treaties with
various countries around the world, most importantly with Eastern
European countries where the Group operates. Due to the world
financial crisis erupting in 2008 and the ensuing debt crisis
which had a liquidity effect of the Cypriot banking system as
in all of the south and east European countries, following the
restructuring of the Greek public debt certain of the Cypriot
banks have taken a blow to their solvency (write off of EUR4,5bn
of Greek debt) and have requested the support of the ECB through
the ELA mechanism.
Thus, the indebtedness of the Cypriot Republic and its two main
banks Bank of Cyprus and Cyprus Popular Bank (Laiki) created the
basis for the country to be part of a financial rescue plan under
the supervision of the IMF, the ECB and the European Union in
early 2013, a moment when the Cypriot State stopped being able
to borrow from the international debt markets.
At the same time, the recent discovery of potentially significant
natural gas and oil deposits within the boundaries of the Cypriot
exclusive economic zone perplexes the geographic and political
relationships and developments as Cyprus is in the crossroad
of 3 continents.
Any failure to effect and implement an economic restructuring
plan, may have a significant negative effect on the financials
of the Cypriot economy that could lead to a default and the abandonment
of the Euro currency. Such result would have a destabilizing
effect on the operations of the Company at the corporate level.
Cyprus has achieved within the first half of 2015 to return to
the international debt markets which signifies a return to normality.
On that note, the Company had proactively evaluated the probable
effect of the measures in relation to the levy on deposits and
the restrictions on capital movement applied to Cyprus based
financial institutions. The Company held most of its liquidity
with non-Cypriot owned banking institutions, partly in Cyprus
and partly outside Cyprus and to this date all operations of
the Group's throughout Ukraine continued to be carried out normally.
4.1.1.2 Ukraine
Nearly two years after the clashes that resulted in the fall
of the incumbent government in November 2013, the deterioration
and finally breaking off of Russia-Ukraine relations and the
loss of part of Ukraine's geographic area, the situation remains
particularly volatile. The social and geopolitical instability
continues to affect not only Ukraine's economic and political
well-being, but also relations between Russia and the rest of
the world, as the international financial markets remain volatile.
Although Ukraine had made significant progress in increasing
its gross domestic product, decreasing inflation, stabilizing
its currency, increasing real wages and improving its trade balance
between 2011 and 2013 these gains have already being reversed
as a result of the current tough relations with Russia which
has plunged the country into a state of war and separatism.
The implementation of reforms has been impeded by lack of political
consensus, controversies over privatization, the restructuring
of the energy sector, the removal of exemptions and privileges
for certain state-owned enterprises or for certain industry sectors,
the limited extent of cooperation with international financial
institutions and non-stable taxing environment. Ukraine has engaged
in broad discussion with its lender including IMF, for a restructuring
of its foreign debt. Such discussions are crucial for the future
economic development of the country. Overall, the future remains
uncertain for the country, even though steps have been made towards
European integration Should the IMF reforms are implemented and
the foreign debt is restructured as well as political stability
reemerges the country's economy has the potential to boom. As
Ukraine's government relies to a significant extent on official
or multilateral borrowings to avoid bankruptcy, finance its budget
deficit, fund its payment obligations under domestic and international
borrowings and support foreign exchange reserves on the current
debt discussions are critical for Ukraine's ability to achieve
a stable political environment to implement strategic, institutional
and structural reforms but seems to be mainly depending on how
long and how severe the current geopolitical conflict will last.
In the first quarter of 2015, real GDP decreased by (-17,2%)
year-on-year. In January-June 2015, consumer price inflation
reached 48,1% year-on-year, compared to 5,8% inflation in the
first half of 2014. Major sources of price inflation during the
first six months of 2015 were sharp depreciation of the hryvnya
and the resultant increase in prices for imported goods, growth
of the state-regulated tariffs and high inflation expectations.
The basic consumer price index, which reflects demand pressure,
increased by 40,6% in January-June 2015, compared to the 4% growth
in the first half of 2014.
Apart from the international and internal political turmoil,
Ukraine's legal system continuous to be in transition and is,
therefore, subject to greater risks and uncertainties than a
more mature legal system. In particular, risks associated with
the Ukrainian legal system include, but are not limited to:
(i) inconsistencies between and among the Constitution of Ukraine
and various laws, presidential decrees, governmental, ministerial
and local orders, decisions, resolutions and other acts;
(ii) provisions in the laws and regulations that are ambiguously
worded or lack specificity and thereby raise difficulties when
implemented or interpreted;
(iii) difficulty in predicting the outcome of judicial application
of Ukrainian legislation; and
(iv) the fact that not all Ukrainian resolutions, orders and
decrees and other similar acts are readily available to the public
or available in understandably organized form.
Furthermore, several fundamental Ukrainian laws either have only
relatively recently become effective or are still pending hearing
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or adoption by the Parliament. The recent origin of much of Ukrainian
legislation, the lack of consensus about the scope, content and
pace of economic and political reform and the rapid evolution
of the Ukrainian legal system in ways that may not always coincide
with market developments, place the enforceability and underlying
constitutionality of laws in doubt, and result in ambiguities,
inconsistencies and anomalies.
In addition, Ukrainian legislation often contemplates implementing
regulations. Often such implementing regulations have either
not yet been promulgated, leaving substantial gaps in the regulatory
infrastructure, or have been promulgated with substantial deviation
from the principal rules and conditions imposed by the respective
legislation, which results in a lack of clarity and growing conflicts
between companies and regulatory authorities.
Tax laws are changing and compared to more developed market economies
are in a non-mature level thus creating often an unclear tax
environment of unusual complexity. This particularly may affect
negatively the ability of the Group to recuperate VAT paid and/or
to utilize operating losses as a carry forward tax shield.
During the year from the first quarter of 2014, the Ukrainian
hryvnya was subject to significant devaluation. Starting from
7,99 UAH / USD in February 2014, the official exchange rate depreciated
to 15,78 UAH / USD at the end of 2014 and reached its record
low of 30 UAH/USD in February 2015. By the end of the first quarter
of 2015 the official exchange rate stabilized at around 23 UAH/USD.
As a result the National Bank of Ukraine, among other measures,
imposed certain temporary restrictions to the Banks on processing
client payments and on purchasing foreign currencies on the inter-banking
market as well as certain capital controls towards foreign payments.
The final resolution and impact of the political crisis are difficult
to predict and the ongoing crisis may further adversely affect
Ukrainian economy. Subsequent to 30th of June 2015 the Group
has been operating in the normal course of business and the Management
of the Group believes that it has undertaken all necessary measures
to maintain the economic stability of the Group under these circumstances.
4.1.1.3 Greece
During the period the Hellenic Republic continued discussions
with the creditor institutions (EU/ECB/IMF/ESM) resulting in
retaining the risk of political and economic instability of the
country. Failure to reach agreement at the end of June led to
the implementation of capital controls in the banking sector,
a 3-week bank holiday on 27 June, as well as the lapse of the
existing economic support program for the country which led to
the failure of the Hellenic Republic to repay an instalment to
the IMF on 30 June.
Following a referendum on a deal proposed by international institutions
and further negotiations, a preliminary agreement was reached
on 12 July for a 3-year EUR86 billion support package, which
was followed in August by the signing of a related agreement
and the ratifications by Greek and a number of EU member country
parliaments of this agreement in August, signaling the commitment
of Greece to remain in the Eurozone and effect any necessary
reforms requested by the creditor institutions as a prerequisite
to capital deployment. As such and following elections in September
which secured another tenure for the government that reached
this agreement, political and economic instability seems to be
withdrawing.
Overall, the program has an aim to reduce the risk of economic
instability in Greece; however there is still risk around implementation
of the program. The implementation of the program and its effects
on the economy are beyond the Group's control.
Various risks emerge should the program not be implemented as
planned, including restrictions on use of local bank deposits,
liquidity of the financial sector and businesses, recoverability
of receivables, impairment of assets, sufficiency of financing
by the lending banks, serving of existing financing arrangements
and/or compliance with existing terms and financial covenants
of such arrangements. These and any possible further negative
developments in Greece could impact the results and financial
position of the Group s Greek operations to some extent, in a
manner not currently determinable.
The Group has been closely assessing developments in Greece and
preparing for a number of eventualities around the Greek crisis,
in line with its established risk management policy in order
to ensure that timely actions and response are undertaken so
as to minimize any impact on the Group's business and operations.
4.1.2 Risks associated with property holding
Several factors may affect the economic performance and value
of the Group's properties, including:
* risks associated with construction activity at the
properties, including delays, the imposition of liens
and defects in workmanship;
* the ability to collect rent from tenants , on a
timely basis or at all, taking also into account the
UAH rapid devaluation;
* the amount of rent and the terms on which lease
renewals and new leases are agreed being less
favorable than current leases;
* cyclical fluctuations in the property market
generally;
* local conditions such as an oversupply of similar
properties or a reduction in demand for the
properties;
* the attractiveness of the property to tenants or
residential purchasers;
* decreases in capital valuations of property;
* changes in availability and costs of financing, which
may affect the sale or refinancing of properties;
* covenants, conditions, restrictions and easements
relating to the properties;
* changes in governmental legislation and regulations,
including but not limited to designated use,
allocation, environmental usage, taxation and
insurance;
* the risk of bad or unmarketable title due to failure
to register or perfect our interests or the existence
of prior claims, encumbrances or charges of which we
may be unaware at the time of purchase;
* the possibility of occupants in the properties,
whether squatters or those with legitimate claims to
take possession;
* the ability to pay for adequate maintenance,
insurance and other operating costs, including taxes,
which could increase over time; and
* political uncertainty, acts of terrorism and acts of
nature, such as earthquakes and floods that may
damage the properties.
4.1.3 Property Market price risk
Market price risk is the risk that the value of the Company's
portfolio investments will fluctuate as a result of changes in
market prices. The Group's assets are susceptible to market price
risk arising from uncertainties about future prices of the investments.
The Group's market price risk is managed through diversification
of the investment portfolio, continuous elaboration of the market
conditions and active asset management. To quantify the value
of its assets and/or indicate the possibility of impairment losses,
the Company commissioned internationally acclaimed valuers.
Valuations reported as at 31 December 2014 take into account
recent political developments in Ukraine. Given the nature of
the Group's assets the most immediate effect would be the prolongation
of the period needed to market and effectively sell an asset
under such duress conditions.
The BoD is monitoring the situation to ensure that assets value
is preserved while at the same time through diversification according
to the strategic plan of the Company, Ukrainian operations are
gradually becoming part of a larger structure.
4.1.4 Interest rate risk
Interest rate risk is the risk that the value of financial instruments
will fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group
has no significant interest--bearing assets apart from its cash
balances that are mainly kept for liquidity purposes.
The Group is exposed to interest rate risk in relation to its
borrowings. Borrowings issued at variable rates expose the Group
to cash flow interest rate risk. Borrowings issued at fixed rates
expose the Group to fair value interest rate risk. All of the
Group's borrowings are issued at a variable interest rate. Management
monitors the interest rate fluctuations on a continuous basis
and acts accordingly.
4.1.5 Credit risk
Credit risk arises when a failure by counter parties to discharge
their obligations could reduce the amount of future cash inflows
from financial assets at hand at the end of the reporting period.
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Cash balances are held with high credit quality financial institutions
and the Group has policies to limit the amount of credit exposure
to any financial institution.
Management has been in continuous discussions with banking institutions
monitoring their ability to extend financing as per the Group's
needs. The sovereign debt crisis has affected the pan-European
banking system during 2011 and 2012 imposing financing uncertainties
for new development projects. The financial crisis in the European
Union periphery has strained any remaining liquidity and the
financial institutions in the region (including those that have
Italian, Greek or Austrian parent) have entered into deleveraging
programs.
4.1.6 Currency risk
Currency risk is the risk that the value of financial instruments
will fluctuate due to changes in foreign exchange rates.
Currency risk arises when future commercial transactions and
recognized assets and liabilities are denominated in a currency
that is not the Group's functional currency. Most of the Group's
transactions, including the rental proceeds are denominated in
EUR or pegged to EUR or USD (the latter being the case of Ukraine).
For the rest of the foreign exchange exposure Management monitors
the exchange rate fluctuations on a continuous basis and acts
accordingly, by limiting net exposures to a few days to 2 months.
Apart from liquidity maintained in local currency for operating
reasons the Group's liquid assets are held in EUR denominated
deposit accounts while most of the inflows of the company are
pegged to the EUR/USD It should be noted that the current political
uncertainty in Ukraine, and the currency devaluation may affect
the Group's income streams indirectly through affecting the financial
condition of the tenants of the Group's properties their solvency
and their income generating capacity. Management is monitoring
the situation closely and acts accordingly.
4.1.7 Capital risk management
The Group manages its capital to ensure that it will be able
to continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. The Group's core strategy is described in note 31 of
the condensed consolidated interim financial statements.
4.1.8 Compliance risk
Compliance risk is the risk of financial loss, including fines
and other penalties, which arises from non--compliance with laws
and regulations of the state. Although the Group is trying to
limit such risk, the uncertain environment in which it operates
in various countries increases the complexities handled by Management.
4.1.9 Litigation risk
Litigation risk is the risk of financial loss, interruption of
the Group's operations or any other undesirable situation that
arises from the possibility of non--execution or violation of
legal contracts and consequentially of lawsuits. The risk is
restricted through the contracts used by the Group to execute
its operations and is discussed in note 29.
4.2. Operational risk
Operational risk is the risk that derives from the deficiencies
relating to the Group's information technology and control systems
as well as the risk of human error and natural disasters. The
Group's systems are evaluated, maintained and upgraded continuously.
4.3. Fair value estimation
The fair values of the Group's financial assets and liabilities
approximate their carrying amounts at the end of the reporting
period. Valuations reported as at 31 December 2014 take into
account past political developments in Ukraine which given the
nature of the Group's assets the most immediate effect would
be the prolongation of the period needed to market and effectively
sell an asset under such duress conditions.
5. Critical accounting estimates and judgments
The accounting estimates and judgments used in the preparation
of the condensed consolidated interim financial statements are
consistent with those followed in the preparation of the Group's
annual financial statements for the year ended 31 December 2014.
6. Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
30 June 2015 30 June 2014
--------------------------------------------------- ------------- -------------
Issued ordinary shares 75.690.096 28.788.559
--------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares (Basic) 51.191.365 28.192.277
--------------------------------------------------- ------------- -------------
Diluted weighted average number of ordinary shares 64.480.647 32.304.928
--------------------------------------------------- ------------- -------------
b. Basic diluted and adjusted earnings per share
30 June 2015 30 June 2014
-------------------------------------------------------------- ------------- -------------
EUR EUR
-------------------------------------------------------------- ------------- -------------
Profit/(loss) after tax attributable to owners of the parent 4.706.590 8.690.773
-------------------------------------------------------------- ------------- -------------
Basic 0,09 0,31
-------------------------------------------------------------- ------------- -------------
Diluted 0,07 0,27
-------------------------------------------------------------- ------------- -------------
c. Net assets per share
30 June 2015 31 December 2014
--------------------------------------------------------- ------------- -----------------
EUR EUR
--------------------------------------------------------- ------------- -----------------
Net assets attributable to equity holders of the parent 59.258.640 32.560.472
--------------------------------------------------------- ------------- -----------------
Number of ordinary shares 75.690.096 33.884.054
--------------------------------------------------------- ------------- -----------------
Diluted number of ordinary shares 122.559.555 38.866.775
--------------------------------------------------------- ------------- -----------------
Basic 0,78 0,96
--------------------------------------------------------- ------------- -----------------
Diluted 0,48 0,84
--------------------------------------------------------- ------------- -----------------
7. 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:
Industrial
-- Warehouse segment - the Group acquires, develops, operates and disposes warehouses
Commercial
-- Office segment - the Group acquires, develops, operates and disposes offices
Residential
-- Residential segment - the Group is in the process of
disposing residential properties
Land Assets
-- Land assets - the Group owns a number of land assets which
are either available for sale or for potential development
There are no sales between the segments.
Segment assets for the investment properties segments represent
investment property (including investment properties under
construction and prepayments made for the investment properties).
Segment liabilities represent interest bearing borrowings, finance
lease liabilities and deposits from tenants.
For the six months 30 Warehouse Office Residential Land Assets Total
June 2015 (EUR)
------------------------------- ---------- --------- ------------ ------------ ------------
Segment profit
------------------------------- ---------- --------- ------------ ------------ ------------
Sales income - - 671.368 - 671.368
------------------------------- ---------- --------- ------------ ------------ ------------
Cost of sales - - (469.850) - (469.850)
------------------------------- ---------- --------- ------------ ------------ ------------
Rental income 1.976.449 233.594 109.308 - 2.319.351
------------------------------- ---------- --------- ------------ ------------ ------------
Service charges and utilities
income 241.788 38.113 - - 279.901
------------------------------- ---------- --------- ------------ ------------ ------------
Income from electricity
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September 30, 2015 02:00 ET (06:00 GMT)
production 135.140 - - - 135.140
------------------------------- ---------- --------- ------------ ------------ ------------
Investment properties
operating expenses (237.698) (33.480) (16.406) (287.584)
------------------------------- ---------- --------- ------------ ------------ ------------
Investment property related
gains FX related 4.711.511 - - 3.340.085 8.051.596
------------------------------- ---------- --------- ------------ ------------ ------------
Gain realized on acquisition
of subsidiaries (note
16) 1.552.134 - - - 1.552.134
------------------------------- ---------- --------- ------------ ------------ ------------
Share of profits from
associates (note 17) - 43.390 - 311.559 354.949
------------------------------- ---------- --------- ------------ ------------ ------------
Segment profit 8.379.324 281.617 294.420 3.651.644 12.607.005
------------------------------- ---------- --------- ------------ ------------ ------------
Management provision (3.313.791)
on Investment Property
acquired (note 15 d)
------------------------------- ---------- --------- ------------ ------------ ------------
Gain realized on acquisition
of subsidiaries 3.685.656
------------------------------- ---------- --------- ------------ ------------ ------------
Administration expenses (1.599.125)
------------------------------- ---------- --------- ------------ ------------ ------------
Other income/(expenses),
net 42.270
------------------------------- ---------- --------- ------------ ------------ ------------
Finance income 13.199
------------------------------- ---------- --------- ------------ ------------ ------------
Finance costs (1.657.081)
------------------------------- ---------- --------- ------------ ------------ ------------
Foreign exchange losses,
net (4.976.537)
------------------------------- ---------- --------- ------------ ------------ ------------
Profit before tax 4.801.596
------------------------------- ---------- --------- ------------ ------------ ------------
For the period 1 January 2014 to 30 June 2014, the Group had
income only from the warehouse segment.
30 June 2015 Warehouse Office Residential Land Assets Provision Total
(EUR) on Acquired
Assets
(note 15
d)
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Assets
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Investment 49.447.093 6.400.000 20.889.348 32.356.893 (3.313.791) 105.779.543
properties
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Investment - - - 5.541.156 5.541.156
property under
construction
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Prepayments 100.000 - - 2.234.337 2.334.337
made for investments
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Goodwill - 43.269 - - 43.269
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Long-term
receivables 250.104 - 1.193 1.730 253.027
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Investments - 7.033.963 - 4.973.844 12.007.807
in associates
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Segment assets 49.797.197 13.477.232 20.890.541 45.107.960 (3.313.791) 125.959.139
----------------------- ------------- ------------
Tangible and
intangible
assets 201.318
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Prepayments 5.325.967
and other
current assets
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Cash and cash 2.832.054
equivalents
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Total assets 134.318.478
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Liabilities
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Interest bearing - 11.506.239 18.473.095 55.094.228
borrowings 25.114.894
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Finance lease 3.934.972 - 54.597 11.518.237
liabilities 7.528.668
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Deposits from
tenants 717.898 - 38.008 - 755.906
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Redeemable
preference
shares 349.325 - - - 349.325
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Segment liabilities 33.710.785 3.934.972 11.544.247 18.527.692 67.717.696
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Trade and 5.130.663
other payables
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Taxes payable 862.229
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
Total liabilities 73.710.588
----------------------- ----------- ----------- ------------ ------------ ------------- ------------
31 December 2014 Warehouse Office Residential Land Assets Total
(EUR)
------------------------- ----------- ---------- ------------ ------------ -----------
Assets
------------------------- ----------- ---------- ------------ ------------ -----------
Investment properties 31.463.310 6.400.000 8.373.000 7.296.877 53.533.187
------------------------- ----------- ---------- ------------ ------------ -----------
Investment property - - 5.083.216 5.083.216
under construction
------------------------- ----------- ---------- ------------ ------------ -----------
Prepayments made 624.841 - - 2.049.378 2.674.219
for investments
------------------------- ----------- ---------- ------------ ------------ -----------
Goodwill 43.269 43.269
------------------------- ----------- ---------- ------------ ------------ -----------
Long-term receivables 125.909 125.909
------------------------- ----------- ---------- ------------ ------------ -----------
Segment assets 32.214.060 6.443.269 8.373.000 14.429.471 61.459.800
------------------------- ----------- ---------- ------------ ------------ -----------
Tangible and intangible
assets 200.203
------------------------- ----------- ---------- ------------ ------------ -----------
Prepayments and 4.251.489
other current
assets
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September 30, 2015 02:00 ET (06:00 GMT)
------------------------- ----------- ---------- ------------ ------------ -----------
Cash and cash
equivalents 891.938
------------------------- ----------- ---------- ------------ ------------ -----------
Total assets 66.803.430
------------------------- ----------- ---------- ------------ ------------ -----------
Liabilities
----------------------- ----------- ---------- ---------- -------- -----------
Interest bearing - 6.459.810 - 18.216.422
borrowings 11.756.612
----------------------- ----------- ---------- ---------- -------- -----------
Finance lease 3.981.252 - 68.861 11.644.976
liabilities 7.594.863
----------------------- ----------- ---------- ---------- -------- -----------
Deposits from
tenants 621.129 - 40.281 - 661.410
----------------------- ----------- ---------- ---------- -------- -----------
Redeemable preference
shares 698.650 - - - 698.650
----------------------- ----------- ---------- ---------- -------- -----------
Provision - - - 68.253 68.253
----------------------- ----------- ---------- ---------- -------- -----------
Segment liabilities 20.671.254 3.981.252 6.500.091 137.114 31.289.711
----------------------- ----------- ---------- ---------- -------- -----------
Trade and other 1.869.537
payables
----------------------- ----------- ---------- ---------- -------- -----------
Taxes payable 431.828
----------------------- ----------- ---------- ---------- -------- -----------
Total liabilities 33.591.076
----------------------- ----------- ---------- ---------- -------- -----------
Geographical information
Revenue (EUR) 30 June 2015 30 June
2014
--------------- -------------- ----------
Ukraine 1.191.853 1.241.528
--------------- -------------- ----------
Romania 1.310.316 164.601
--------------- -------------- ----------
Greece 432.185 -
--------------- -------------- ----------
Bulgaria 1.556 -
--------------- -------------- ----------
Total 2.935.910 1.406.129
--------------- -------------- ----------
30 June 2015 31 December
2014
----------------------------------------------- -------------- ------------
Carrying amount of investment property,
including under construction and prepayments
made for investments (EUR)
----------------------------------------------- -------------- ------------
Ukraine 34.766.288 31.892.781
----------------------------------------------- -------------- ------------
Romania 53.392.000 28.773.000
----------------------------------------------- -------------- ------------
Greece 16.510.539 624.841
----------------------------------------------- -------------- ------------
Bulgaria 12.300.000 -
----------------------------------------------- -------------- ------------
Provision on Acquired Assets (note 15 d) (3.313.791)
----------------------------------------------- -------------- ------------
Total 113.655.036 61.290.622
----------------------------------------------- -------------- ------------
The increase in value of investment properties, including under
construction in Ukraine is due to the foreign currency exchange
rates fluctuations. While for the purpose of these condensed
consolidated interim financial statements the valuation results are
expressed in USD (and are the same as of 31/12/2014) the resulting
increase presented in the above table is derived from the
devaluation of the EUR against the USD.
8. Operational income
Operational income in the amount of EUR2.935.910 for the period
ended 30 June 2015 represents rental income as well as service
charges and utilities income collected from tenants generated
during the reporting periods as a result of the rental agreements
concluded with tenants of the Terminal Brovary Logistic Park,
Innovations Logistics Park, EOS Business Park, GED Logistics and
sales or rental agreements for Residential Portfolio while for the
period ended 30 June 2014 it was only generated by Terminal Brovary
and Innovations Logistics Park.
30 June 2015 30 June 2014
-------------------------------------- ------------- -------------
EUR EUR
-------------------------------------- ------------- -------------
Income from sales of assets 671.368 -
-------------------------------------- ------------- -------------
Cost of assets sold (469.850) -
-------------------------------------- ------------- -------------
Rental income 2.319.351 1.272.609
-------------------------------------- ------------- -------------
Service charges and utilities income 279.901 133.520
-------------------------------------- ------------- -------------
Sales of electricity 135.140 -
-------------------------------------- ------------- -------------
Total Revenues 2.935.910 1.406.129
-------------------------------------- ------------- -------------
Income and Cost from sales of assets reflects figures associated
with the sales of residential units.
Rental income and service charges and utilities income represent
inflows for the rental agreements that the Company has with various
tenants that rent space in its properties (mainly commercial and
industrial). Vacancy rates in the various income producing assets
of the company as at 30 June 2015 are as follows:
Income producing assets
------------------------------------------------------
% 30 June 30 June
2015 2014
EOS Business Park Romania 0 n/a
Innovations Logistics
Park Romania 13 0
GED Logistics Greece 0 n/a
Terminal Brovary Ukraine 28 0
Income from sales of assets represents several apartments and
parking spaces sold in Residential Portfolio while Cost of assets
sold represents the acquisition value of the apartment and parking
space reduced by the related depreciation amount until the
finalisation of the sale.
The income from electricity is generated at GED Logistics using
the alternative energy sources and sold to the Greek Electric
Grid.
9. Administration Expenses
30 June 2015 30 June
2014
-------------------------------------- ------------- ----------
EUR EUR
-------------------------------------- ------------- ----------
Salaries and Wages 573.350 365.513
-------------------------------------- ------------- ----------
Advisory fees 243.398 636.877
-------------------------------------- ------------- ----------
Legal fees 201.548 133.271
-------------------------------------- ------------- ----------
Travelling and other office expenses 129.606 142.219
-------------------------------------- ------------- ----------
Property Taxes and duties 125.505 12.380
-------------------------------------- ------------- ----------
Directors' remuneration 119.628 84.395
-------------------------------------- ------------- ----------
Public group expenses 71.970 52.450
-------------------------------------- ------------- ----------
Audit and accounting fees 62.159 54.375
-------------------------------------- ------------- ----------
Depreciation 6.979 5.940
-------------------------------------- ------------- ----------
Sundry expenses 64.982 56.077
-------------------------------------- ------------- ----------
Total Administration Expenses 1.599.125 1.543.497
-------------------------------------- ------------- ----------
Salaries and wages include the remuneration:
a) of the CEO, the CFO, the Group Commercial Director and the
Managing Directors Ukraine and Romania
b) of personnel employed in Ukraine, Romania and Cyprus
Legal and advisory fees mainly represent expenses of the Company
regarding the various legal and tax cases it has in Ukraine as well
as fees for the normal operation of the Group.
Property taxes and duties reflect mainly property taxes and fees
paid for Ukrainian and Romanian land plots and residential
assets.
Directors' remuneration represents the remuneration of all
non-executive Directors and committee members (note 28).
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Public group expenses include among others fees paid to the AIM:
LSE stock exchange and the Nominated Advisor of the Company related
to the listing of the Company.
10. Investment property operating expenses
30 June 2015 30 June 2014
------------------------------------------- ------------- -------------
EUR EUR
------------------------------------------- ------------- -------------
Property management, utility expenses and
other property costs 287.584 254.857
------------------------------------------- ------------- -------------
The Group has Maintenance and Property Management Agreements in
respect of the servicing of Terminal Brovary Logistics Park,
Innovation Logistics Park and GED Logistics Park. The Group is also
incurring property operating expenses including utility expenses,
insurance premiums, land and building taxes as well as various
other expenses needed for the proper operation of the income
generating properties in Kiev and in Bucharest. Part of these
expenses are recovered from the tenants through the rental
agreements.
11. Other operating income/ (expenses), net
30 June 2015 30 June 2014
--------------------------------------- ------------- -------------
EUR EUR
--------------------------------------- ------------- -------------
Income from enforcement of guarantees 122.867 -
--------------------------------------- ------------- -------------
Penalties (1.559) (8.241)
--------------------------------------- ------------- -------------
Other expenses, net (79.038) (8.383)
--------------------------------------- ------------- -------------
Total 42.270 (16.624)
--------------------------------------- ------------- -------------
Income from enforcement of guarantees relates to the income from
the tenants of Terminal Brovary LLC for the early termination of
the lease agreements.
Penalties recognized in the period ended 30 June 2015 and 30
June 2014 relate to Terminal Brovary LLC which were accrued by the
tax authority on the land leased in Brovary.
Other expenses for the period ended 30 June 2015 mainly consist
of maintenance and repair expenses at the operating companies of
the Group representing residential, warehouse and office segments,
as well as other operating expenses concerning the functioning of
the Group.
12. Finance costs and income
Finance income 30 June 2015 30 June 2014
---------------------- ------------- -------------
EUR EUR
---------------------- ------------- -------------
Bank interest income 13.199 52.915
---------------------- ------------- -------------
Net finance result 13.199 52.915
---------------------- ------------- -------------
Finance costs 30 June 2015 30 June 2014
----------------------------------------- ------------- -------------
EUR EUR
----------------------------------------- ------------- -------------
Borrowing interest expenses (note 23) 1.104.169 529.384
----------------------------------------- ------------- -------------
Finance leasing interest expenses (note
27) 331.725 50.117
----------------------------------------- ------------- -------------
Finance charges and commissions 221.187 38.546
----------------------------------------- ------------- -------------
Net finance result 1.657.081 618.047
----------------------------------------- ------------- -------------
Borrowing interest represents interest expense charged on bank
borrowings (note 23) as well as on loans granted to associate
companies (note 17).
Finance leasing interest expenses relate to the sales and lease
back agreements of the Group with Piraeus Leasing Romania for
Innovations Logistics Park and with Alpha Bank for EOS Business
Park as well as to the land lease agreements of Ukrainian entities
of the Group signed with the municipal authorities in Kiev (note
27).
Finance charges and commissions include fees paid to the banks,
including a fee payable to EBRD for the restructuring of the
Terminal Brovary loan.
13. Foreign exchange profit/ (losses)
a. Foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans
and /or payables denominated in non EUR currencies when translated
in EUR, mainly the EBRD loan (note 23) The exchange loss for the
period end 30 June 2015 amounted to EUR4.976.537.
b. Exchange difference on intercompany loans to foreign holdings
The intercompany loans provided by SC Secure Capital Limited to
Ukrainian subsidiaries (note 28.3) incurred an exchange loss
(non-realised) of EUR7.323.715, due to the UAH devaluation which
took place during the reporting period.
The foreign exchange loss for the period as reported in the
financial statements of June 2014 amounting to EUR14.590.388 have
been restated in order to reflect the split between the foreign
exchange loss and the exchange difference on intercompany loans to
foreign holdings. As a result the foreign exchange loss for the
reporting period ending 30th June 2016 are presented as
EUR3.966.512 and the remaining EUR10.623.876 are presented under
exchange difference on intercompany loans to foreign holdings. The
restatement was made in order to better reflect the devaluation of
UAH during 2014 which is took place at 31 December 2014 on and had
an effective date 1 January 2014 (note 28.3).
14. Income Tax expense
The corporate income tax rate for the Company's Ukrainian
subsidiaries is 19%, for the Romanian subsidiaries is 16% , for the
Greek subsidiary 26% and for the Bulgarian subsidiaries 20% for the
six months ended 30 June 2015. The corporate tax that is applied to
the qualifying income of the Company and its Cypriot subsidiaries
is 12.5% for the six months ended 30 June 2015.
15. Investment Property (all)
Investment Property consists of the following assets:
-- Terminal Brovary Logistic Park consists of a 49.180 sqm 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 is 72% leased.
-- 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, the total area of
which being 6.395 sqm. Innovations was acquired by the Company in
May 2014 and as of the end of the reporting period is 87%
leased.
-- 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, the French multinational food company.
EOS Business Park was acquired by the Group in October 2014.
-- GED Logistics is a logistics park comprising 17.756 leasable
sq m and has a net operating income ("NOI") of approximately EUR1.5
million. It is fully let 70% to the German multinational
transportation and logistics company, Kuehne + Nagel and 30% to a
Greek commercial company trading electrical appliances GE Dimitriou
SA. The NOI also includes income from selling electric energy
produced by the 1MW photovoltaic park installed on the roof of the
warehouse property to the Greek Electric Grid.
-- Residential portfolio is an income producing residential
portfolio in Bucharest, Romania consisting as of end of June of 184
apartments and villas across six separate complexes (Romfelt,
Linda, Monaco, Blooming House, Moselin - Green Lake Parcel K and
Boyana) located in different residential areas of Bucharest and
Sofia. The Group acquired it partly in August 2014 and partly May
2015. The aggregate residential portfolio is 30% let at the end of
June.
-- 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 sq
m GBA logistic center commenced. Construction was put on hold in
2009 following adverse macro-economic developments at the time.
-- Kiyanovsky 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 neighbourhood.
-- 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.
-- 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.
-- Pantelimon Lake consists of a 40.000 sq m plot of land in
east Bucharest situated on the shore of Pantelimon Lake, opposite
to a very famous Romanian hotel, the Lebada Hotel. The construction
permit, which allows for 54.000 sqm residential space to be built,
was renewed in April 2014.
-- Boyana Land The complex of Boyana Residence includes adjacent
land plots with surface of 17.000 sqm with building permits to
develop GBA of 21.851 sqm.
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-- Green Lake land Green Lake land plot includes a 48.360m(2)
land area with a Gross Buildable Area of 82.250 sqm (63.400 sqm
above ground). The Green Lake project is situated in the northern
part of Bucharest on the bank of Grivita Lake in Bucharest. SPDI
owns 44,24% of these plots.
Asset Name Description/ Principal Related Companies Carrying amount (EUR)
Location Operation as at
--------------- ------------- -------------------- ---------------------- --------------------------
30 June 31 December
2015 2014
--------------- ------------- -------------------- ---------------------- ------------ ------------
Terminal Brovary, Warehouse LLC TERMINAL BROVARY 19.036.554 17.463.310
Brovary Kiev oblast LLC AISI BROVARY
Logistics SL LOGISTICS LIMITED
Park
--------------- ------------- -------------------- ---------------------- ------------ ------------
Bela Logistic Odesa Land and LLC AISI BELA 5.541.156 5.083.216
Center Development
Works for
Warehouse
--------------- ------------- -------------------- ---------------------- ------------ ------------
Kiyanovskiy Podil, Land for LLC AISI UKRAINE 4.379.301 4.017.381
Lane Kiev City residential LLC TORGOVIY CENTR
Center development RETAIL DEVELOPMENT
BALABYNO
--------------- ------------- -------------------- ---------------------- ------------ ------------
Tsymlianskiy Podil, Land for LLC ALMAZ PRES 1.251.229 1.147.823
Lane Kiev City residential UKRAINE
Center development
--------------- ------------- -------------------- ---------------------- ------------ ------------
Balabino Zaporizhia Land for LLC INTERTERMINAL 2.323.711 2.131.673
retail development
--------------- ------------- -------------------- ---------------------- ------------ ------------
Total Ukraine 32.531.951 29.843.403
--------------- ------------- -------------------- ---------------------- ------------ ------------
Innovations Clinceni, Warehouse MYRNES INNOVATIONS 14.000.000 14.000.000
Logistic Bucharest PARK LIMITED
Park BEST DAY REAL
ESTATE SRL
--------------- ------------- -------------------- ---------------------- ------------ ------------
EOS Business Bucharest Office building YAMANO LIMITED 6.400.000 6.400.000
Park SPDI SRL,
N-E Real Estate
Park First Phase
Srl
--------------- ------------- -------------------- ---------------------- ------------ ------------
Residential Bucharest Residential Secure Investment 8.373.000 8.373.000
Portfolio apartments II
Demetiva Ltd
Diforio Limited
Frizomo Limited
Ketiza Limited
Sec Rom Srl
Sec Vista Srl
Sec Mon Srl
Ketiza Srl
--------------- ------------- -------------------- ---------------------- ------------ ------------
Green Lake Bucharest Residential Edetrio Holdings 18.797.000 -
apartments Limited
land for Emakei Holdings
residential Limited
development Iuliu Maniu Limited
Moselin Investments
srl
Rimasol Limited
Rimasol Real Estate
Srl
Ashor Ventures
Limited
Ashor Develpoment
Srl
Jenby Ventures
Limited
Jenby Investments
Srl
Ebenem Limited
Ebenem Investments
Srl
--------------- ------------- -------------------- ---------------------- ------------ ------------
Pantelimon Bucharest Land for Mofben Investments 5.822.000 -
Lake residential Limited
development Delia Lebada Invest
srl
--------------- ------------- -------------------- ---------------------- ------------ ------------
Total Romania 53.392.000 28.773.000
--------------- ------------- -------------------- ---------------------- ------------ ------------
Boyana Sofia Residential Sertland Properties 12.300.000 -
Project apartments Limited
and Boyana Residence
land for ood
residential
development
--------------- ------------- -------------------- ---------------------- ------------ ------------
Total Bulgaria 12.300.000 -
--------------- ------------- -------------------- ---------------------- ------------ ------------
GED Logistics Athens Warehouse Victini Holdings 16.410.539 -
Limited.
GED Logistics
S.A.
--------------- ------------- -------------------- ---------------------- ------------ ------------
Total Greece 16.410.539 -
--------------- ------------- -------------------- ---------------------- ------------ ------------
Provision on acquired Investment Properties (3.313.791)
---------------------------------------------------------------------------- ------------ ------------
TOTAL 111.320.699 58.616.403
--------------- ------------- -------------------- ---------------------- ------------ ------------
Carrying amounts of the properties owned as of 30 June 2015
stated in these condensed consolidated interim financial statements
remain the same as were presented in the Group's audited
consolidated financial statements as of 31 December 2014 for the
assets the Company owned at the time and at the fair value at
acquisition for assets acquired during the period; the carrying
amounts of Ukrainian properties remain the same in terms of their
value in US$ as provided by CBRE an external valuer. The exchange
gains related to the Ukrainian assets of EUR8.051.596 presented in
these condensed consolidated interim financial statements arose
from UAH devaluation as well as the translation from the valuation
currency (US$) to the reporting currency (EUR) which took place
during the reporting period.
c. Investment Property Under Construction
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As at 30 June 2015 investment property under construction
represents the carrying value of Bela Logistic Center project,
which has reached the +10% construction in late 2008 but it is
stopped since then. The Company's external valuer has appraised the
property's value at US$6.200.000 as at 31 December 2014.
d. Investment Property
30 June
2015
------------------------------------------------ ------------
EUR
------------------------------------------------ ------------
At 1 January 53.533.187
------------------------------------------------ ------------
Capital expenditure on investment property 10.539
------------------------------------------------ ------------
Revaluation gain/(loss) on investment property 3.366.380
------------------------------------------------ ------------
Acquisition of investment property 53.329.539
------------------------------------------------ ------------
Translation difference (4.460.102)
------------------------------------------------ ------------
At 30 June 105.779.543
------------------------------------------------ ------------
Terminal Brovary, Kiyanovskiy Lane, Tsymlyanskiy Lane, Balabino,
Innovations, EOS Business Park, Residential Portfolio, (note 15
above), Pantelimon Lake land, Green Lake land, Boyana land and GED
Logistics S.A. are included in the Investment Property
category.
e. Prepayment made for Investments
The Group has made an advance payment of US$12mil. (representing
principal plus interest) for the acquisition of a project in Podil
(Kiev) in 2007. As of the end of the reporting period the
Management does not expect such acquisition to proceed while the
seller has already defaulted on his credit to the Group.
As a consequence, the Group has progressed the legal proceedings
initiated in 2013, for the transfer of the collateral (land plot of
42 ha in Kiev Oblast) in the Group's name as well as legal
proceeding against the company which collected the original
US$12mil. payment. As the collateral's value, as valued by CBRE,
has been reduced the Group has reduced the amount of the receivable
to the value of the collateral having a carrying value of EUR
2.049.378.
f. Investment property related gains
30 June 2015 30 June 2014
-------------------------------------------- ------------- -------------
EUR EUR
-------------------------------------------- ------------- -------------
Gain as a result of functional currency 8.051.596 13.225.535
devaluation
-------------------------------------------- ------------- -------------
Provision on acquired Investment Properties (3.313.791) -
-------------------------------------------- ------------- -------------
Investment Property related gains 4.737.805 13.225.535
-------------------------------------------- ------------- -------------
Gain as a result of functional currency devaluation is the
revaluation of Ukrainian assets attributable to the foreign
exchange difference between the US$ and the EUR (to a great extent
negated by the devaluation of the UAH).
Management has taken a provision of EUR3.313.791 in relation to
the non-core (residential and adjacent land plots) property assets
included in the portfolio acquired during the period, so as to
reflect the consideration paid rather than the Fair Value of the
assets acquired. Such provision is to be reviewed at year end by
taking into account the valuations then as well as the operational
performance of the assets under the SPDI management.
16. Investment Property Acquisitions
During the reporting period the Group completed the acquisition
of an income producing logistics park (the "Park"), located in the
West Attica Industrial Area of Athens, Greece. The Park comprises a
fully let 17.756 leasable sqm warehouse property which has a
photovoltaic alternative energy production facility installed on
its roof. 70% of the space is let to the multinational
transportation and logistics Company Kuehne + Nagel, with the
remaining 30% let to GE Dimitriou SA, a Greek company which trades
electrical appliances.
During the reporting period the Group acquired a number of prime
property assets in Romania and Bulgaria. The acquisition is in line
with the Company's strategy to build a diversified portfolio of
prime commercial real estate in East and Southeast Europe, which
generates cash flow from blue chip tenants and offers substantial
potential for capital growth. The acquired investment properties
include Green Lake (residential and land), Pantelimon Lake (land)
and Boyana (residential and land) projects.
The fair value of identifiable assets and liabilities of
acquired projects as of the date of their acquisition was as
follows:
EUR GED Logistics SEC South Total
East
ASSETS
Non-current assets
Investment property 16.400.000 36.919.000 53.319.000
Investments in associates - 7.958.336 7.958.336
Other non-current assets 29.911 69.536 99.447
-------------- -----------
Current assets
Prepayments and other current 353.366 2.433.172 2.786.538
assets
Cash and cash equivalents 160 777.247 777.407
Total assets 16.783.437 48.157.291 64.940.728
Non-current liabilities
Interest bearing borrowings 12.549.180 23.865.253 36.414.433
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 3.566.392
Taxes payable 56.776 252.033 308.809
-------------- ----------- -----------
Total liabilities 13.444.369 28.623.082 42.067.451
Net assets acquired (net of non-controlling 3.339.068 18.838.146 22.177.214
interest)
Non-controlling interest - 696.063 696.063
Gain realized on acquisition 1.552.134 3.685.656 5.237.790
(Net Assets - Total consideration)
Financed by
Cash consideration paid 1.786.934 - 1.786.934
Issue of shares - 15.152.490 15.152.490
-----------
Total consideration 1.786.934 15.152.490 16.939.424
During the reporting period the Company acquired the mixed
Portfolio of Sec South, which includes investment properties and
investment in associates, (notes 15, 16, 17) via in kind
contribution to the vendors by issuing 18.028.294 ordinary shares
of EUR0,01 and 2 equivalent set of warrants as described below
(note 20).The shares were issued at a price of 0.65 GBP per share
while the first set of warrants had an exercise price of GBP0,10
and the second GBP0,45. In parallel the Company in exchange of
these shares wrote off a past liability of the portfolio of EUR0,2m
and took over via assignment a loan that had been contributed by a
partner of a project amounting to EUR838.561.
17. Investments in associates
In April 2015 the Company completed the acquisition of an
interest in a fully let and income generating office building in
Sofia. The Company has acquired 20% of the corporate entity owning
the building for a cash consideration of EUR4.059.839. Autounion is
a Class A BREEAM certified office building, located to close to
Sofia Airport. The building has a Gross Lettable Area of 19.476
square sqm over ten floors, includes underground parking and is
fully let to a leading Bulgarian insurance company on a long lease
extending to 2027.
In May 2015 the Group acquired a number of prime property assets
in Romania and Bulgaria (in exchange of shares - note 20) some of
them being investment properties (notes 15, 16) and some of them
being associates. The associates acquired are as follows:
a) Green Lake Development is residential compound which consists
as of end of June of 44 apartments plus 24 villas as well as 4
commercial designated buildings, 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 project as of the end of
June was 50% let.
b) The Company acquired a 24,35% participation in the Delea
Nuova Project in Bucharest. The project 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 June, the building is
100% let, with ANCOM (the Romanian Telecommunications Regulator)
being the anchor tenant (70% of GLA).
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The table below summarizes the movements in the carrying amount
of the Group's investment in associates.
EUR 30 June 2015
--------------------------------------- -------------
At 1 January -
--------------------------------------- -------------
Acquisition of participation interest 12.018.175
--------------------------------------- -------------
Share of profits from associates 354.949
--------------------------------------- -------------
Dividend Received (365.317)
At 30 June 12.007.807
--------------------------------------- -------------
Share of profits from associates reflects the post aquisition
after tax proifts of each associate derived from rental income
minus operational and financial expenses for the period ended 30
June 2015.
As at 30 June 2015, the Group's interests in its associates and
their summarised financial information, including total assets,
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
----------- -------------- ------------ -------------- -------- -------- ------------- --------- -------------
Bluehouse
Accession
Autounion Project Office
Project V 24.090.574 23.401.587 197.241 20,00 39.448 Bulgaria building
----------- -------------- ------------ -------------- -------- -------- ------------- --------- -------------
Delea Lelar
Nuova Holdings Office
Project Limited 8.628.492 3.637.013 16.186 24,35 3.942 Romania building
----------- -------------- ------------ -------------- -------- -------- ------------- --------- -------------
Green Residential
Lake assets
Project GreenLake and land
- Phase Development for
A Srl 14.414.863 16.503.089 772.140 40,35 311.559 Romania development
----------- -------------- ------------ -------------- -------- -------- ------------- --------- -------------
Total 47.133.929 43.541.689 985.567 354.949
--------------------------- ------------ ------------- -------- -------- ------------- --------- -------------
18. Prepayments and other current assets
30 June 2015 31 December
2014
----------------------------------- -------------- ------------
EUR EUR
----------------------------------- -------------- ------------
Prepayments and other receivables 3.060.078 922.115
----------------------------------- -------------- ------------
VAT and other tax receivable 1.235.116 1.229.057
----------------------------------- -------------- ------------
Deferred expenses 1.024.490 2.100.317
----------------------------------- -------------- ------------
Receivables from related parties 6.283 -
----------------------------------- -------------- ------------
Total 5.325.967 4.251.489
----------------------------------- -------------- ------------
Prepayments and other receivables reflect prepayments of clients
(EUR743.000),receivables from associate companies (EUR1.458.000)
and pre-payments made for the acquisition of assets and/or share
capital increases (EUR458.000).
VAT and other tax receivable mainly represents the current
portion of the Terminal Brovary VAT receivable (EUR 745.944), to be
offset from VAT charged over rental income during the next years.
The remaining is VAT income to be collected from tenant and
residential unit buyers.
Deferred expenses include legal, advisory, consulting and
marketing expenses related to the ongoing share capital increases
and due diligence expenses related to the possible acquisition of
investment.
19. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
30 June 2015 31 December
2014
---------------------- ------------- ------------
EUR EUR
---------------------- ------------- ------------
Cash at banks in USD 84.812 43.612
---------------------- ------------- ------------
Cash at banks in EUR 1.867.993 495.052
---------------------- ------------- ------------
Cash at banks in UAH 81.095 150.029
---------------------- ------------- ------------
Cash at banks in RON 497.716 201.984
---------------------- ------------- ------------
Cash at banks in BGN 201.562 -
---------------------- ------------- ------------
Cash equivalents 98.876 1.261
---------------------- ------------- ------------
Total 2.832.054 891.938
---------------------- ------------- ------------
20. Share capital
Number of Shares 31 December 2014 13 March 2015 31 May 2015 29 June 2015 30 June 2015
(as at)
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Increase of Share Increase of Share Repayment of
Capital Capital redeemable
preference shares
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Authorised
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Ordinary shares of
EUR0,01 989.869.935 - - - 989.869.935
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Total equity 989.869.935 - - - 989.869.935
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Redeemable
preference shares
of EUR0,01 785.000 - - - 785.500
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Total 990.654.935 - - - 990.654.935
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Issued and fully
paid
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Ordinary shares of
EUR0,01 each 33.884.054 23.777.748 18.028.294 - 75.690.096
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Total equity 33.884.054 23.777.748 18.028.294 - 75.690.096
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Redeemable
preference shares
of EUR0,01 785.000 - - (392.500) 392.500
-------------------- ----------------- ------------------- -------------------- ------------------- -------------
Total 34.669.054 23.777.748 18.028.294 (392.500) 76.082.596
==================== ================= =================== ==================== =================== =============
Value (as at) 31 December 13 March 31 May 2015 29 June 30 June
2014 2015 2015 2015
(EUR)
----------------------- ------------ ---------- ------------ --------------- ----------
Increase Increase Repayment
of Share of Share of redeemable
Capital Capital preference
shares
----------------------- ------------ ---------- ------------ --------------- ----------
Authorised
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September 30, 2015 02:00 ET (06:00 GMT)
----------------------- ------------ ---------- ------------ --------------- ----------
Ordinary shares
of EUR0,01 9.898.699 - - - 9.898.699
----------------------- ------------ ---------- ------------ --------------- ----------
Total equity 9.898.699 - - - 9.898.699
----------------------- ------------ ---------- ------------ --------------- ----------
Redeemable preference
shares of EUR0,01 7.850 - - - 7.850
----------------------- ------------ ---------- ------------ --------------- ----------
Total 9.906.549 - - - 9.906.549
----------------------- ------------ ---------- ------------ --------------- ----------
Issued and fully
paid
----------------------- ------------ ---------- ------------ --------------- ----------
Ordinary shares
of EUR0,01 338.839 237.777 180.283 - 756.899
----------------------- ------------ ---------- ------------ --------------- ----------
Total equity 338.839 237.777 180.283 - 756.899
----------------------- ------------ ---------- ------------ --------------- ----------
Redeemable preference
shares of EUR0,01 7.850 - - (3.925) 3.925
----------------------- ------------ ---------- ------------ --------------- ----------
Total 346.689 237.777 180.283 (3.925) 760.824
----------------------- ------------ ---------- ------------ --------------- ----------
20.1 Authorised Share Capital
As at the end of 2014 the authorized share capital of the
Company was 989.869.935 Ordinary Shares of EUR0,01 nominal value
each and 785.000 Preference Shares of EUR0,01 nominal value
each.
As at the end of the reporting period the authorized share
capital of the Company is 989.869.935 Ordinary Shares of EUR0,01
nominal value each and 785.000 Preference Shares of EUR0,01 nominal
value each.
During the EGM dated 24 June 2015, it was approved by the
shareholders of the Company that the authorized share capital of
the Company will be increased to EUR9.992.739,35 divided into: (a)
989.869.935 ordinary shares of EUR 0,01 each; (b) 785.000
Redeemable Preference Shares Class A of EUR0,01 each; and (c)
8.618.997 Redeemable Preference Shares Class B of EUR0,01 each by
the creation of 8.618.997 Redeemable Preference Shares Class B of
EUR0,01 each. The above approval has effective date 1 July 2015.
The reorganization of the capital was mandated by the acquisition
growth plan of the Company since the creation of the Redeemable
Preference Shares Class B was necessary to be issued to BLUEHOUSE
ACCESSION PROPERTY HOLDINGS III S.A.R.L which was the seller of the
income producing real estate asset in Craiova, Romania, which the
Company acquired in July 2015 (note 32).
20.2 Issued Share Capital
As at the end of 2014 the issued share capital of the Company
was 33.884.054 Ordinary Shares of EUR0,01 nominal value each, and
785.000 Preference Shares of EUR0,01 nominal value each.
Further to the resolutions approved at the AGM of 31 December
2014 the Board has proceeded in allocating shares as follows:
1. On 13/3/2015, the allotment of 23.777.748 ordinary shares of
EUR0,01 each for the purpose of capital raising of EUR8.000.000 in
the Company by its existing shareholders.
2. On 31/5/2015, the allotment of 18.028.294 ordinary shares of
EUR0,01 each for the purpose of an in kind contribution of mixed
Portfolio acquisition and (notes 15,16,17).
Furthermore the Company proceeded on 29/6/2015 with payment of
half of the issued convertible shares (392.500) but the
cancellation of these shares within the appropriate authorities
will be completed in second semester of 2015.
As at the end of the reporting period the issued share capital
of the Company is as follows:
a) 75.690.096 Ordinary Shares of EUR0, 01 nominal value each
and
b) 392.500 Convertible Shares of EUR0, 01 nominal value each,
following the above described redemption which shall be officially
finalized in second semester of 2015.
20.3 Director's Option scheme
Under the said scheme each of the directors serving at the time,
which is remain a Director of the Company is entitled to subscribe
for 2.631 Ordinary Shares exercisable as set out below:
Exercise Price Number of
-------------------------------- --------------- ----------
US$ Shares
-------------------------------- --------------- ----------
Exercisable till 1 August 2017 57 1.754
-------------------------------- --------------- ----------
Exercisable till 1 August 2017 83 877
-------------------------------- --------------- ----------
The Company considers the said options well out of the money (as
the share price at the reporting date is USD 0,46), thus the
possibility of exercising them is remote and therefore no provision
has been made in respect of this.
Director Franz M. Hoerhager Option scheme, 12 October 2007
Under the said scheme, director Franz M. Hoerhager is entitled
to subscribe for 1.829 ordinary shares exercisable as set out
below:
Exercise Price Number of
-------------------------------- --------------- ----------
GBP Shares
-------------------------------- --------------- ----------
Exercisable till 1 August 2017 40 1.219
-------------------------------- --------------- ----------
Exercisable till 1 August 2017 50 610
-------------------------------- --------------- ----------
The Company considers the said options well out of the money (as
the share price at the reporting date is GBP 0, 30), thus the
possibility of exercising them is remote and therefore no provision
has been made in respect of this.
20.4 Class A Warrants issued
During the period ended 30 June 2015 the Company acquired the
Sec South portfolio (notes 16,17) in exchange of Ordinary shares
(issued at GBP0.65 each ) and of Class A Warrants giving the right
to the Warrant holders to subscribe in cash at the Exercise Amount
for the Ordinary Shares. The Company issued two sets of Warrants as
follows:
1) 18.028.294 warrants corresponding to 18.028.294 ordinary
shares, exercisable within 45 days from signing at an exercise
amount of GBP0.10 per ordinary share. These warrants were exercised
(in part) by August 2015 (14.324.627 out of a total of 18.028.294
warrants) (note 32), indicating an effective share issuing price
for the sellers of 41p. Following their exercise these have lapsed.
Out of these exercised warrants Ionian Equity Participations
Limited, a substantial shareholder in the Company, exercised
2.995.360 warrants; an entity in which Lambros Anagnostopoulos (the
CEO and a director of the Company) has a majority stake exercised
716.014 warrants; and, Constantinos Bitros (the CFO of the Company)
exercised 98.010 warrants. (note 32)
2) warrants corresponding to 18.028.294 ordinary shares,
exercisable by 31 December 2016 at an exercise amount of GBP0.45
per ordinary share.
The shares that will be received under the above warrants bear a
lock-in period of 12 months.
20.5 Class B Warrants issued
On 8 August 2011 the Company issued an amount of Class B
Warrants for an aggregate equivalent to 12,5% of the issued share
capital of the Company at the exercise date. Each Class B Warrant
entitles the holder to receive one Ordinary Share. The Class B
Warrants may be exercised at any time until 31st December 2016,
pursuant to a decision by the AGM of 30/12/2013. 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 lapse 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 US$100.000.000.
As of the reporting date, the aggregate amount of class B warrant
is 10.812.871.
20.6 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) 30 June 2015 (as at) 31 December 2014
---------------------------- -------------------------- --------------------- -------------------------
Ordinary shares of EUR0,01 Issued and Listed in AIM 75.690.096 33.884.054
---------------------------- -------------------------- --------------------- -------------------------
Class A Warrants 36.056.588 -
---------------------------- -------------------------- --------------------- -------------------------
Class B Warrants 10.812.871 4.840.579
---------------------------- -------------------------- --------------------- -------------------------
Total number of Shares Non-Dilutive Basis 75.690.096 33.884.054
---------------------------- -------------------------- --------------------- -------------------------
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:00 ET (06:00 GMT)
Total number of Shares Full Dilutive Basis 122.559.555 38.724.633
---------------------------- -------------------------- --------------------- -------------------------
Options 4.460 4.460
-------------------------------------------------------- --------------------- -------------------------
20.7 Redeemable Preference Shares
During the reporting period the Company repaid half of 785.000
preference SPDI shares of nominal value EUR0, 01 each, pending
finalization of the process in the second semester of 2015. The
Preference Shares have no voting powers or rights to dividend. The
remaining 392.500 of the Preference Shares may be redeemed by 31
January 2016 (the "Redemption Date 2") at the price of EUR0, 89. At
any time prior to the Redemption Dates the holders shall have the
option to unilaterally reconvert the Preference Shares into
ordinary shares of EUR0, 01 each.
During the EGM dated 24 June 2015,the shareholders approved the
reorganization of the Capital of the company (note 20.1) via the
reclassification of the old Redeemable shares as Redeemable
Preference Shares Class A and via the issuance of 8.618.997
Redeemable Preference Shares Class B of EUR0.01 for the purpose of
acquiring Craiova asset in Romania (note 32). The above approval
has effective date 1 July 2015.
Redeemable Preference Shares Class A
The Redeemable Preference Shares Class A do not have voting or
dividend rights. The 392.500 of the Redeemable Preference Shares
Class A were redeemed on 31 January 2015 ("Redemption Date 1") at a
price of EUR0,89 each and the remaining 392.500 of the Redeemable
Shares Class A may be redeemed by the Company on 31 January 2016 at
a price of EUR0,89 each or the holders of the Redeemable Preference
Shares Class A shall have the option to immediately convert the
Redeemable Preference Shares Class A into ordinary Shares of
EUR0,01 each.
Redeemable Preference Shares Class B
The Redeemable Preference Shares Class B shall not have voting
rights and shall have economic rights at par with ordinary shares.
The Redeemable Preference Shares Class B, if not converted into
ordinary Shares, may be redeemed at the sole discretion of the
holder of the Redeemable Preference Shares Class B on the
expiration of the 12th month following the date of issue of the
Redeemable Preference Shares Class B (the "Redemption Date"); the
redemption price shall be EUR0,7056 per Redeemable Preference Share
Class B. The Redeemable Preference Shares Class B shall have
priority on the winding-up of the Company, over any other shares or
class of shares issued by the Company from time to time including
without limitation the Redeemable Preference Shares Class A but
otherwise rank pari passu with the ordinary shares in all
respects.
21. 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.
22. Non-Controlling Interests
Non-controlling interests represent the equity value of
shareholdings not owned by the Group:
% Non-controlling interest
portion
------------------------------------ ---------------------------
Group Company 30 June 2015 31 December
2014
------------------------------------ ------------- ------------
LLC Almaz-Press-Ukraine 45,00 45,00
------------------------------------ ------------- ------------
Ketiza Limited 10,00 55,00
------------------------------------ ------------- ------------
Ketiza srl 10,00 55,00
------------------------------------ ------------- ------------
Ram Real Estate Management Limited 50,00 -
------------------------------------ ------------- ------------
Iuliu Maniu Limited 55,00 -
------------------------------------ ------------- ------------
Moselin Investments Srl 55,00 -
------------------------------------ ------------- ------------
Rimasol Enterprises Limited 55,76 -
------------------------------------ ------------- ------------
Rimasol Real Estate Srl 55,76 -
------------------------------------ ------------- ------------
Ashor Ventures Limited 55,76 -
------------------------------------ ------------- ------------
Ashor Development Srl 55,76 -
------------------------------------ ------------- ------------
Jenby Ventures Limited 55,76 -
------------------------------------ ------------- ------------
Jenby Investments Srl 55,76 -
------------------------------------ ------------- ------------
Ebenem Limited 55,76 -
------------------------------------ ------------- ------------
Ebenem Investments Srl 55,76 -
------------------------------------ ------------- ------------
23. Interest bearing borrowings
30 June 2015 31 December
2014
----------------------------------------------- ------------- ------------
EUR EUR
----------------------------------------------- ------------- ------------
Principal of bank Loans
----------------------------------------------- ------------- ------------
Principal EBRD loan 12.559.955 11.808.915
----------------------------------------------- ------------- ------------
Banca Comerciala Romana 1.615.529 1.783.826
----------------------------------------------- ------------- ------------
Bancpost SA 2.088.583 2.157.501
----------------------------------------------- ------------- ------------
Alpha Bank Romania 1.103.753 1.184.688
----------------------------------------------- ------------- ------------
Raiffeisen Bank Romania 1.004.819 1.093.176
----------------------------------------------- ------------- ------------
Bancpost SA 3.091.754 -
----------------------------------------------- ------------- ------------
Alpha Bank Bulgaria 1.781.266 -
----------------------------------------------- ------------- ------------
Alpha Bank Bulgaria 3.720.418
----------------------------------------------- ------------- ------------
Bank of Cyprus 4.569.725 -
----------------------------------------------- ------------- ------------
Eurobank Ergasias SA 12.522.728 -
----------------------------------------------- ------------- ------------
Piraeus Bank SA 2.800.000 -
----------------------------------------------- ------------- ------------
Loans by non-controlling shareholders 6.063.693 -
----------------------------------------------- ------------- ------------
Total Principal of Bank Loans 52.922.223 18.028.106
----------------------------------------------- ------------- ------------
Restructuring fees and interest payable
to EBRD 32.211 29.685
----------------------------------------------- ------------- ------------
Interest accrued on bank loans 1.482.011 240.619
----------------------------------------------- ------------- ------------
Interests accrued on non-bank loans 657.783 -
----------------------------------------------- ------------- ------------
Prepaid fees to EBRD - (81.988)
----------------------------------------------- ------------- ------------
Total 55.094.228 18.216.422
----------------------------------------------- ------------- ------------
30 June 2015 31 December
2014
-------------------- ------------- ------------
EUR EUR
-------------------- ------------- ------------
Current portion 10.343.906 5.960.706
-------------------- ------------- ------------
Non-current portion 44.750.322 12.255.716
-------------------- ------------- ------------
Total 55.094.228 18.216.422
-------------------- ------------- ------------
EBRD loan related to Terminal Brovary
(MORE TO FOLLOW) Dow Jones Newswires
September 30, 2015 02:00 ET (06:00 GMT)
In February 2015 the restructuring of the Brovary construction
loan with the EBRD which was signed in December 2014 was effected.
According to the agreement the loan repayment is being extended to
2022, with a balloon payment of US$3.633.333. The loan has an
interest of 3 M LIBOR + 6.75% and the capital repayments are
scheduled as follows: 2015-$900.000 2016-$1.000.000 2017-$1.220.000
2018-$1.350.000 2019-$1.500.000 2020-$1.650.000 2021-$1.800.000
2022-$4.983.333, 32.
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 US$25.000.
2. LLC Terminal Brovary pledged its Investment property, Brovary
Logistics Centre the construction of which was finished in 2010
(note 15), 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, 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 reserved
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 Limited has entered with EBRD into a
conditional assignment agreement of 99% corporate rights in LLC
Aisi Brovary.
The issued 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 2014, CNRI of USD 200,000 or more;
(2) on 30 June 2015, CNRI of USD 220,000 or more;
(3) on 31 December 2015, CNRI of USD 230,000 or more; and
(4) 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 31 December 2014,
the DSCR of more than 1,10x.
ii. in respect of the 6 months period ending on 30 June 2015 and
31 December 2015, the DSCR of more than 1,15x.
iii. 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 (related to residential projects)
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 is EUR1.103.753,
bears interest of EURIBOR 3M+5,25% and is repaid on the basis of
investment property sales. The loan matures in October 2016 and is
secured by all assets of SecRom Real Estate Srl as well as its
shares.
Ketiza Real Estate Srl entered (2012) into a loan agreement with
Bancpost S.A. for a credit facility for financing the acquisition
of the Blooming House Project and 100% of the remaining (without
VAT) construction works Blooming House project. As of the end of
the reporting period the balance of the loan is EUR2.088.583. The
loan bears interest of EURIBOR 3M plus 3,5% and matures in May
2017. The bank loan is secured by all assets of Ketiza Real Estate
Srl as well as its shares.
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.
As of the end of the reporting period the balance of the loan is
EUR1.004.819. The loan bears interest of EURIBOR 1M+5,2% and is
currently under restructuring negotiation. The loan is secured by
all assets of SecVista Real Estate Srl as well as its shares.
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 is EUR1.615.529
and bears interest of EURIBOR 3M plus 5%. The loan is repayable in
October 2015 and is secured by all assets of SecMon Real Estate Srl
as well as its shares.
GED Logistics SA entered (April 2015) into a loan agreement with
EUROBANK SA to refinance the existing debt facility. As of the end
of the reporting period the balance of the loan is EUR12.522.728
and bears interest of EURIBOR 6M plus 3,2%. The loan is repayable
by 2022, has a balloon payment of EUR8.660.000 and is secured by
all assets of GED 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 is EUR2.800.000 and bears interest of EURIBOR
3M plus 4% plus the Greek law 128/78 0, 6% contribution. The term
of the loan facility has expired but the Company has agreed with
the Bank a prolongation of the maturity until 2017 to be
implemented in Q3-2015.
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 is EUR3.091.754 and bears interest of
EURIBOR 3M plus 5%. The loan is repayable from the sales proceeds
while it matures in 2017. The loan is secured as follows with the
property itself and the shares of Moselin Investments Srl.
Other Borrowings from acquisitions
Delia Lebada Invest Srl, a subsidiary, entered into a loan
agreement with the Bank of Cyprus Limited to effectively finance a
leveraged buy-out of the subsidiary by the Company. The bank loan
amounting to EUR4.830.000 is secured with a mortgage at 120% of the
loan value and with a corporate guarantee. The loan bears 7% fixed
interest while interest is payable quarterly. The balance of the
loan as of end of the period ended 30 June 2015 is EUR4.569.725.
The Company is currently in discussion with its partner to sell the
asset and with the bank for the loan restructuring at the same
time. In the meantime Delia Lebada Invest Srl has entered into
protection from creditor's procedure.
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 is EUR1.781.266 and bears
interest of EURIBOR 3M plus 5,75%. The loan matures in 2017 and
discussions have been initiated with the bank for a prolongation.
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.
Boyana Residence ood entered (2011) into a loan agreement with
Alpha Bank- Bulgaria for a construction loan related to the
constructions of the Boyana Residence projects (finished in 2014).
As of the end of the reporting period the balance of the loan is
EUR3.720.418 and bears interest of EURIBOR 3M plus 5,75%. The loan
matures in 2017 and discussions have been initiated with the bank
for a prolongation. 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 shares as well as those of
Sertland Properties Limited.
Other bank borrowing include as well borrowing from
non-controlling interests. During the last five years and in order
to support of Parcel K of Green Lake project and Boyana project the
shareholders of Moselin and Boyana (other than the Company) have
contributed their share by means of shareholder loans. The loans
bear interest at 7% annually and are repayable in 2016.
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24. Trade and other payables
30 June 2015 31 December
2014
------------------------------------------- ------------- ------------
EUR EUR
------------------------------------------- ------------- ------------
Payables to related parties (note 28.2) 1.789.720 335.004
------------------------------------------- ------------- ------------
Payables for construction, non-current 406.150 202.200
------------------------------------------- ------------- ------------
Other payables 2.829.685 916.827
------------------------------------------- ------------- ------------
Deferred income from tenants, non-current 22.403 12.485
------------------------------------------- ------------- ------------
Deferred income from tenants, current 34.402 132.782
------------------------------------------- ------------- ------------
Accruals 48.303 270.239
------------------------------------------- ------------- ------------
Total 5.130.663 1.869.537
------------------------------------------- ------------- ------------
30 June 2015 31 December
2014
----------------------- ------------- ------------
EUR EUR
----------------------- ------------- ------------
Current portion 4.702.110 1.654.852
----------------------- ------------- ------------
Non - current portion 428.553 214.685
----------------------- ------------- ------------
Total 5.130.663 1.869.537
----------------------- ------------- ------------
The fair values of trade and other payables due within one year
approximate their carrying amounts as presented above.
Payables to related parties represent the balances with Secure
Management Ltd and Grafton Properties as well as amounts due to
board of directors and committee members and accrued management
remuneration (note 28.2).
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 UAH5.400.000 (US$ 450.000) 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 includes as well EUR245.000 amount payable to Boyana's
constructor which has been withheld as Good Performance
Guarantee.
Other payables mainly represent shareholder loan balances owned
to minority partners of the property assets acquired within the
period.
Deferred income from tenants represents advances from tenants
which will be used as future rental income and utilities
charges.
Payables for services include payables to non-controlling
shareholders in the amount of EUR1.003.168. The rest of payables
and accruals for services represent amounts payable to various
service providers including auditors, legal advisors, consultants
and third party accountants related to the current operations of
the Group as well as with due diligence related expenses incurred
in preparation of new acquisitions.
25. Deposits from Tenants
Deposits from tenants appearing under current and non-current
liabilities include the amounts received from the tenants of LLC
Terminal Brovary, Best Day SRL, GED Logistics S.A. and companies
representing residential segment as advances/guarantees and are to
be reimbursed to these clients at the expiration of the leases
agreements.
26. Taxes payable & Provisions for taxes
30 June 2015 31 December
2014
----------------------------------- ------------- ------------
EUR EUR
----------------------------------- ------------- ------------
Corporate income and defense tax 379.568 356.929
----------------------------------- ------------- ------------
Other taxes including VAT payable 482.661 74.899
----------------------------------- ------------- ------------
Provisions for taxes in Ukraine - 68.253
----------------------------------- ------------- ------------
Total Tax Liability 862.229 500.081
----------------------------------- ------------- ------------
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.
27. Finance lease liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR11.340.099 and the current portion
of EUR 178.138 (31 December 2014: EUR 11.463.253 and EUR 181.723,
accordingly).
30 June 2015 Minimum lease
payments
(EUR) Interest Principal
---------------------------- -------------- ---------- -----------
Less than one year 760.565 592.214 168.351
---------------------------- -------------- ---------- -----------
Between two and five years 3.461.289 2.155.663 1.305.626
---------------------------- -------------- ---------- -----------
More than five years 12.709.921 2.723.358 9.986.563
---------------------------- -------------- ---------- -----------
16.931.775 5.471.235 11.460.540
---------------------------- -------------- ---------- -----------
Accrued Interest 57.697
11.518.237
---------------------------- -------------- ---------- -----------
31 December 2014 Minimum lease
payments
(EUR) Interest Principal
---------------------------- -------------- ---------- -----------
Less than one year 766.289 584.677 181.612
---------------------------- -------------- ---------- -----------
Between two and five years 3.424.203 2.205.329 1.218.874
---------------------------- -------------- ---------- -----------
More than five years 13.285.643 3.094.876 10.190.767
---------------------------- -------------- ---------- -----------
17.476.135 5.884.882 11.591.253
---------------------------- -------------- ---------- -----------
Accrued Interest 53.723
---------------------------- -------------- ---------- -----------
11.644.976
---------------------------- -------------- ---------- -----------
27.1 Land Plot Financial Leasing
The Group rents land plots classified as finance lease. 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 EUR 152.479 under current and
non-current portion. The Group's obligations under finance leases
are secured by the lessor's title to the leased assets.
27.2 Sale and Lease Back Agreement
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 lease
back agreement with Piraeus Leasing Romania SA. As of the end of
the reporting period the balance is EUR7.400.470 bearing interest
rate at 3M Euribor plus 4,45% margin, being repayable in monthly
tranches until 2026. At the maturity of the lease agreement Best
Day will become owner of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. Best Day pledged its future receivables from its tenants.
2. Best Day pledged its shares.
3. Best Day pledged all current and reserved accounts opened in Piraeus Leasing, Romania.
4. Best Day is obliged to provide cash collateral in the amount
of EUR250.000 in Piraeus Leasing Romania, which had been be
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 arising from the sales and
lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS
Business Park in Bucharest, owned by First Phase Srl, through
receiving debt from Alpha Bank Romania SA in the form of a sale and
lease back agreement. As of the end of the reporting period the
balance is EUR3.934.972 bearing interest rate at 3M Euribor plus
5,25% margin, being repayable in monthly tranches until 2024. At
the maturity of the lease agreement First Phase will become owner
of the asset.
Under the current finance lease agreement the collaterals for
the facility are as follows:
1. First Phase pledged its future receivables from its tenants.
2. First Phase pledged Bank Guarantee receivables from its tenants.
3. Best Day pledged its shares.
4. First Phase pledged all current and reserved accounts opened in Alpha Bank Romania SA.
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5. First Phase 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 First Phase arising from the sales and
lease back agreement.
28. Related Party Transactions
The following represent transactions with related parties:
28.1 Expenses
The below expenses were recognized during the reporting
period:
30 June 2015 30 June 2014
--------------------------------- ------------- -------------
EUR EUR
--------------------------------- ------------- -------------
Management Remuneration 467.030 174.714
--------------------------------- ------------- -------------
Board of Directors & Committees 119.628 84.395
--------------------------------- ------------- -------------
SECURE Management Ltd - 35.176
--------------------------------- ------------- -------------
Total 586.658 294.285
--------------------------------- ------------- -------------
Management remuneration includes the remuneration of the CEO,
CFO the Commercial Director and that of the country directors of
Ukraine and Romania pursuant the decisions of the remuneration
committee.
Board of Directors expense represents the remuneration of all
the non-executive members of the Board pursuant to the decision of
the Remuneration Committee.
28.2 Payables to related parties
The amounts below were payables as at the end of the reporting
period:
30 June 2015 31 December
2014
--------------------------------- ------------- ------------
EUR EUR
--------------------------------- ------------- ------------
Grafton Properties 123.548 123.548
--------------------------------- ------------- ------------
Secure Management Ltd 1.189.966 18.244
--------------------------------- ------------- ------------
Board of Directors & Committees 316.204 193.212
--------------------------------- ------------- ------------
Management Remuneration 160.002 -
--------------------------------- ------------- ------------
Total 1.789.720 335.004
--------------------------------- ------------- ------------
28.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to
non-Executive Directors and members of Committees covering the
period ended 30 June 2015 remuneration. The members of the Board of
Directors have agreed in order to facilitate the Company's cash
flow, to exchange part of their fees related to prior years for
shares in the Company's capital. This was approved by the Annual
General Meeting of the Company's shareholders.
28.2.2 Loan payable to Grafton Properties
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, the total amount
of US$450.000. As of the reporting date the liability towards
Grafton Properties, representing the Lenders, was US$150.000, which
is contingent to the Company raising US $50m of capital in the
markets.
28.2.3 Payable to Secure Management
Payable to Secure Management represents a liability existing at
the time of acquisition of the mixed portfolio of Sec South related
to accrued management fee, which is under negotiation for eventual
write down or off.
28.2.4 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO and CFO of the Company, as well as the Commercial Director
and the Country Managers for Romania and Ukraine.
28.3 Loans from SC Secure Capital Ltd to the Company's
subsidiaries
SC Secure Capital Ltd, the finance subsidiary of the Company has
proceeded to provide 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 (EUR) Limit Principal Principal
as of as of
30 June 2015 31 December
2014
-------------------------- ------------ -------------- -------------
LLC "TERMINAL BROVARY" 28.827.932 26.882.801 27.578.265
-------------------------- ------------ -------------- -------------
LLC "AISI UKRAINE" 23.062.351 12.275 12.275
-------------------------- ------------ -------------- -------------
LLC "ALMAZ PRES UKRAINE" 8.236.554 140.021 140.021
-------------------------- ------------ -------------- -------------
Total 27.035.097 27.730.561
---------------------------------------- -------------- -------------
All loans from SC Secure Capital Limited to the Company's
subsidiaries are USD denominated and in 2014 they generated a forex
loss totaling EUR19.746.111 as a result of devaluation of the
Ukrainian Hryvnia during the reporting period.
29. Contingent liabilities
The Group is involved in various legal proceedings in the
ordinary course of its business.
29.1 Tax litigation
The Group performed during the reporting period a part of its
operations in the Ukraine and therefore 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
interpretation and in some cases, conflicting. 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. 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.
29.2 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.
29.3 Other Litigation
The Company has a number of legal cases pending. Management does
not believe that the result of these will have a substantial
overall effect (in excess of EUR0,5m) on the Group's financial
position. Consequently no such provision is included in the current
financial statements.
29.4 Other Contingent Liabilities
The Group had no other contingent liabilities as at 30 June
2015.
30. Commitments
The Group had no commitments as at 30 June 2015.
31. Financial Risk Management
31.1 Capital Risk Management
The Group manages its capital to ensure that it will be 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 23), trade and other payables (note 24) deposits
from tenants (note 25), taxes payable (note 26) and equity
attributable to ordinary shareholders (note 20, issued capital,
reserves and retained earnings) as well as to preferred
shareholders (note 20.7).
The Group is not subject to any externally imposed capital
requirements.
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.
31.2 Significant Accounting Policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis on which
income and expenses are recognized, in respect of each class of
financial asset, financial liabilities and equity instruments are
disclosed in note 3 of the condensed consolidated interim financial
statements.
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31.3 Categories of Financial Instruments
Note 30 June 2015 31 December
2014
------------------------------ ----- ------------- ------------
EUR EUR
------------------------------ ----- ------------- ------------
Financial Assets
------------------------------ ----- ------------- ------------
Cash at Bank 19 2.832.054 891.938
------------------------------ ----- ------------- ------------
Total 2.832.054 891.938
------------------------------ ----- ------------- ------------
Financial Liabilities
------------------------------ ----- ------------- ------------
Interest bearing borrowings 23 55.094.228 18.216.422
------------------------------ ----- ------------- ------------
Trade and other payables 24 5.130.663 1.869.537
------------------------------ ----- ------------- ------------
Deposits from tenants 25 755.906 661.410
------------------------------ ----- ------------- ------------
Finance lease liabilities 27 11.518.237 11.644.976
------------------------------ ----- ------------- ------------
Taxes payable 26 862.229 431.828
------------------------------ ----- ------------- ------------
Redeemable preference shares 20 349.325 698.650
------------------------------ ----- ------------- ------------
Total 73.710.588 33.522.823
------------------------------ ----- ------------- ------------
31.4 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 30 June 2015, the Group had not entered into any
derivative contracts.
31.5 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 to the Group's manner in which it
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 enacts 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 June 30th, 2015, cash and
cash equivalent financial assets amounted to EUR2.832.054 (31
December 2014: EUR 891.938).
The Group is exposed to interest rate risk in relation to its
borrowings amounting to EUR55.094.228 (31 December 2014:
EUR18.216.422) 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.
The Group's exposures to financial risk are discussed also in
note 4.
31.6 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.
31.7 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.
30 June 2015 Carrying Total Less than From one More than
EUR amount one year to two years
two years
----------------------- ----------- ----------- ----------- ----------- -----------
Financial assets
----------------------- ----------- ----------- ----------- ----------- -----------
Cash at Bank 2.832.054 2.832.054 2.832.054 - -
----------------------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
----------------------- ----------- ----------- ----------- ----------- -----------
Interest bearing 55.094.228 62.870.420 14.873.728 16.671.853 31.324.839
borrowings
----------------------- ----------- ----------- ----------- ----------- -----------
Trade and other
payables 5.130.663 5.130.663 4.702.110 188.759 239.794
----------------------- ----------- ----------- ----------- ----------- -----------
Deposits from
tenants 755.906 755.906 117.387 80.346 558.173
----------------------- ----------- ----------- ----------- ----------- -----------
Finance lease
liabilities 11.518.237 16.931.775 760.565 768.414 15.402.796
----------------------- ----------- ----------- ----------- ----------- -----------
Redeemable preference
shares 349.325 349.325 349.325 - -
----------------------- ----------- ----------- ----------- ----------- -----------
Taxes payable 862.229 862.229 862.229 - -
----------------------- ----------- ----------- ----------- ----------- -----------
Total 73.710.588 86.900.318 21.665.344 17.709.372 47.525.602
----------------------- ----------- ----------- ----------- ----------- -----------
Total net liabilities 70.878.534 84.068.264 18.833.290 17.709.372 47.525.602
----------------------- ----------- ----------- ----------- ----------- -----------
31 December 2014 Carrying Total Less than From one More than
EUR amount one year to two years
two years
----------------------- ----------- ----------- ----------- ----------- -----------
Financial assets
----------------------- ----------- ----------- ----------- ----------- -----------
Cash at Bank 891.938 891.938 891.938 - -
----------------------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
----------------------- ----------- ----------- ----------- ----------- -----------
Interest bearing
borrowings 18.216.422 22.319.389 6.665.533 2.743.797 12.910.059
----------------------- ----------- ----------- ----------- ----------- -----------
Trade and other
payables 1.869.537 1.869.537 1.654.852 73.841 140.844
----------------------- ----------- ----------- ----------- ----------- -----------
Deposits from
tenants 661.410 661.410 161.579 68.973 430.858
----------------------- ----------- ----------- ----------- ----------- -----------
Finance lease
liabilities 11.644.976 17.476.135 766.289 769.922 15.939.924
----------------------- ----------- ----------- ----------- ----------- -----------
Redeemable preference
shares 698.650 698.650 349.325 349.325 -
----------------------- ----------- ----------- ----------- ----------- -----------
Taxes payable 431.828 431.828 431.828 - -
----------------------- ----------- ----------- ----------- ----------- -----------
Total 33.522.823 43.456.949 10.029.406 4.005.858 29.421.685
----------------------- ----------- ----------- ----------- ----------- -----------
Total net liabilities 32.630.885 42.565.011 9.137.468 4.005.858 29.421.685
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