TIDMSPDI
RNS Number : 8718C
Secure Property Dev & Inv PLC
30 June 2016
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
30 June 2016
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
Final Results
Secure Property Development & Investment PLC, the AIM quoted
South Eastern European focused property company, is pleased to
announce its full year financial results for the year ended 31
December 2015.
Financial Highlights
-- 87% increase in total asset value to EUR125 million (2014:
EUR67million) reflecting the acquisition of prime real estate with
blue chip tenants in the South Eastern European region
-- 64% increase in net operating income to EUR5.9 million (2014: EUR3.6 million)
-- 31% increase of net assets to EUR42.5 million (2014: EUR32.5
million), while NAV per share was EUR0.35 from EUR0.75, principally
as a result of dilution created by the issuance of new shares (from
the Open Offer in March 2015 and as consideration for certain of
the acquisitions and, to a lesser extent, revaluation of the
Ukraine assets
-- EUR8 million cash raised via Open Offer in March 2015
Operational Highlights
-- Continued to successfully implement strategy to expand geographic spread of the portfolio
-- Acquisition of three income producing properties let to blue
chip tenants located in South Eastern European countries which
offer high yields and capital growth, bringing the total portfolio
to seven as at year end
-- Strengthened Board with appointments of Calypso Nomikos and
Vagharshak Barseghyan - two highly qualified entrepreneurial
members with extensive investment and real estate knowledge in the
region
Post Balance Sheet Highlights
-- Proposed sale of the Brovary Terminal in Ukraine with fixed
four-year lease agreement (with an affiliate of the prospective
buyer) raising the warehouse occupancy rate to 100% generating
US$150,000 of Net Operating Income ('NOI') per month until the sale
is concluded
-- Sale of the Linda residential portfolio in Bucharest for EUR660,000 (gross of debt)
-- In discussions with Nestle in Romania relating to the
termination of its rental contract in the Innovations Logistics
Park, which is expected to result in a settlement being payable to
SPDI by Nestle
Lambros G. Anagnostopoulos, Chief Executive Officer, said, "2015
saw us delivering on our strategy of expanding our portfolio in the
South Eastern European region with properties let to blue chip
tenants in countries which offer high yields and capital growth.
The injection of three more income producing properties into our
portfolio increased our total asset value by an impressive 87% to
EUR125 million and boosted our revenues by 64% to EUR5.9 million.
The year witnessed strong shareholder support demonstrated by the
EUR8 million Open Offer in March 2015, a bolstering of our highly
competent Board, and this, coupled with the significant growth of
our solid income producing portfolio, puts us in a strong position
to continue this progress in 2016 and beyond."
* *S * *
Copies of the Annual report and Accounts are being posted to
Shareholders and are available on the Company's website at
www.secure-property.eu
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +30-210-7226470
Constantinos SPDI Tel: +30-210-7226470
Bitros SP Angel Corporate Tel: +44 (0) 20
Tercel Moore Finance LLP 3463 2260
Jeff Keating SP Angel Corporate Tel: +44 (0) 20
Finance LLP 3463 2260
Lottie Brocklehurst St Brides Partners Tel: +44 (0) 20
Ltd 7236 1177
Frank Buhagiar St Brides Partners Tel: +44 (0) 20
Ltd 7236 1177
1. Chairman's Statement
2015 saw significant momentum build behind our strategy: to turn
SPDI into the leading London listed property company focused on
South East European region, and during the year under review we
have doubled the number of our income producing properties. SPDI
has undergone a structural shift, which has seen us build a
portfolio of prime real estate properties with a broad geographic
spread, highly attractive yields and significant capital growth
potential. To put the year into context, SPDI has gone from having
just one income producing property in 2012, to a portfolio of seven
properties in four South Eastern European countries at the end of
2015.
The acquisitions we completed in 2015 lie behind the financial
performance we have reported today, specifically a 50% increase in
the asset value of our property portfolio to EUR117 million; and a
52% step-up in our revenues from income producing assets to EUR5.5
million. Our acquisition-led strategy is overlain with a strict
risk management policy that requires all potential targets match
our stated investment criteria. It is with risk management very
much in mind that we look to invest in prime real estate that:
benefits from excellent addresses and transport links; is let out
to blue chip customers on long leases with strong covenants;
generates visible income streams, and offers scope for significant
capital appreciation by providing exposure to the on-going European
yield convergence play.
All acquisitions made in 2015 are representative of what we look
for: a fully let logistics park west of Athens predominantly let to
Kuehne + Nagel generating a EUR1.5 million net operating income
('NOI'); a fully let office building in Sofia let to one of
Bulgaria's largest insurance companies, generating EUR2.9 million
gross rental income; a fully let retail property in Craiova,
Romania rented to Praktiker with EUR1 million of gross rental
income, and a fully let office building in Bucharest mostly let to
Romania's Telecom Regulatory Authority generating EUR1.85 million
of gross rental income. As well as providing a cash flow generative
platform that we can use to acquire additional properties in our
area of interest, by acquiring these assets we have proven our
ability to source, identify, and execute transactions at attractive
yields in South Eastern Europe, a market that continues to offer
the right dynamics for the execution of our strategy. Furthermore,
the commencement of the European Central Bank's (ECB) quantitative
easing programme early in 2015 provides a significant tailwind to
the on-going European yield compression play, which in our view has
a long way to run, particularly in the exciting emerging European
countries which are our core area of focus.
To be able to successfully navigate these markets requires a
first rate management team and Board. SPDI has both and it is the
team's vision and direction, which has not only been key to the
turnaround of the Company, but is also a key differentiating factor
for the Company. We have strengthened our team further this year
and welcomed Kalypso Maria Nomikou and Vagharshak Barseghyan to the
Board, two highly qualified entrepreneurial members with extensive
investment and real estate knowledge in the region. They have
already enhanced the capabilities of our highly skilled team and
will help the Board identify and secure future acquisitions which
offer material and sustainable cash flows.
As well as acquiring assets, the management team is also focused
on actively managing our growing portfolio of real estate to ensure
we maximise value for our shareholders. The performance of each
asset as well as that of the local and regional property markets
are all constantly monitored to ascertain the optimal strategy for
each asset. All options are considered, including development and
sale. With this in mind post period end we announced the proposed
sale of the Brovary Terminal in Ukraine, as well as the sale of the
Linda residential portfolio in Bucharest. Subject to the completion
of the transactions, the proceeds will be reinvested both into
growing our portfolio further as well as potentially returning some
cash to our shareholders.
Having de-risked our portfolio through the acquisition of prime
real estate, we now have an excellent platform from which to access
further opportunities and in the process capitalise on the huge
potential across the region. Our portfolio is our competitive
advantage and having expanded our income-producing assets this year
we aim to continue to grow, as we look to generate value by taking
advantage of the highly positive regional macro and property market
fundamentals. It is clear however that our current share price,
which is trading at a significant discount to the net asset value
of our existing properties, has not kept pace with SPDI's
transformation into a diversified revenue-generative property
company focused on the dynamic SEE region. We are confident this
disconnect will narrow as the income generating capability of our
existing portfolio becomes apparent and we move closer to the point
at which we are in a position to sustainably distribute a portion
of our earnings as dividends. In the meantime, we will continue to
identify and invest in highly attractive growth opportunities in
the real estate market whilst maintaining our focus on efficient
asset management, as we look to repeat the successes of 2015 in the
year ahead and beyond.
At the tail end of the period as well as in the first part of
2016 the Company faced some challenges created mainly by the
continuing turmoil in the Ukrainian Economy as well as the
recapitalization of the Greek banks that took place in December
2015. Those factors resulted in the reduction of the occupancy of
the Terminal Brovary in Kiev and substantially prolonged
transaction times, respectively. As our Auditor's Report notes in
an emphasis of the matter, at the end of 2015 our current
liabilities in effect exceeded current assets by EUR21.1m, but this
is qualified by Notes 36.7 and 37 of the accounts that explain the
two current liabilities that create this imbalance (which relate to
our residential business in Romania and Terminal Brovary in
Ukraine) are either long term liabilities reclassified as short
term or reflect an agreed but yet to be contractually approved
practice to repay certain loans in tandem with the residential
sales progress and as such there is every indication that these
debts will be repaid in 2016 in the normal course of business. In
parallel both tenant issues (Nestle replacement following the
expression of their intent to vacate the Innovation Terminal, and
Praktiker's tenancy extension for an additional five years) as well
as the potential sale of Terminal Brovary have taken longer than
originally expected which made it necessary for management to very
carefully, and successfully, manage our cash position and banking
relationships in 2016.
Another perennial challenge for the Company was that operating
in Ukraine showed up in our accounts in 2015 with a EUR5m (2014:
EUR7.5m) foreign exchange loss related to the EBRD loan and a
EUR13.6m unrealized foreign exchange loss (2014: loss EUR19.7m)
stemming from intercompany loans. This was due to the continued
weakness of the Ukrainian currency, both of which are expected to
be mitigated upon the Terminal Brovary sale completion. In light of
the continued problems in that country, the agreed sale of Terminal
Brovary in June 2016 at a substantial profit to its Net Asset Value
is all the more impressive. The 53% fall in NAV per share during
2015 is the result of a combination of factors: share issuance from
the Open Offer and purchase of properties, and revaluation of
assets caused by the continuing difficulties faced by the Ukrainian
economy.
I would like to take this opportunity to thank our shareholders
for their continued support throughout the year. This was further
demonstrated by the raising of EUR8 million via an open offer in
March 2015 which has helped facilitate our progress. Thanks to
their support, we are delivering on our objective to position SPDI
as the go to publicly traded vehicle for institutional and retail
investors looking to gain exposure to the attractive yields
available in SEE, a region that is increasingly gaining the
recognition it deserves for its favourable supply and demand
dynamics and attractive yields.
Paul Ensor
Chairman of the Board
2 Letter to the Shareholders
29 June 2016
Dear Shareholders,
During 2015 the Company continued its growth trajectory thanks
to a number of acquisitions of high yielding income producing
assets in South East Europe (the "Region") resulting in a
substantial increase in our Assets Under Management ("AUM"). In
parallel our strategy of diversifying regionally also continued
with the Company entering one more SEE country. By the end of 2015,
SPDI was present in four emerging economies of SEE owning seven
income producing assets in the Region.
During the first quarter of the year in order to strengthen our
acquisition capacity, the directors of SPDI offered its
shareholders the opportunity to participate in a rights issue (open
offer) that generated EUR8m new cash in March 2015. The Company
used the capital raised to acquire assets, it also issued new
shares for the same reason. In August 2015 we raised a further
EUR2m of new capital through the execution of warrants bringing the
total new equity raised for the year to EUR10m.
During the year, SPDI acquired three income producing assets: a)
20% of the Autounion office building situated in a very prominent
location close to the international airport of Sofia, Bulgaria,
which is fully let to one of the country's largest insurance
companies, Eurohold until 2027, b) the Praktiker big box retail
unit in Craiova, Romania, in exchange for SPDI redeemable
convertible shares, and c) 24% of the Delea Nuova office building,
a well located property facing three main roads in the city center
of Bucharest almost fully let with the main tenant being the
country's telecommunications regulator, in exchange for SPDI
ordinary shares. Together with the latter the Company acquired also
a residential portfolio in Bucharest and Sofia. The three income
producing assets generate a combined EUR2m of gross rental
income.
The macroeconomic environment in the Region and throughout
Europe stabilised even further in 2015 with most of our countries
of interest showing strong economic growth and signs that the
property markets were picking up after years of stagnation. New
international investors made their presence felt in Romania, where
acquisition yields dropped across property types while transaction
volumes increased. In Greece an agreement with the country's
lenders, which was reached in extremis in August, followed by fresh
elections that confirmed the government in place, signalled a
period of lower political uncertainty. The country reached year end
with a new EUR14bn recapitalisation of Greece's systemic financial
institutions, the majority of which the Company has business
relationships with. Ukraine experienced yet further foreign
exchange destabilisation in H1, but the Hryvnia rate stabilised by
Q4 offering a rare stability in the country's economy. At the same
time, Europe as a whole experienced sluggish growth with the ECB
expanding its QE package.
On the heels of a successful 2014, the 2015 accounts show an
even better and more effective operational picture. If we disregard
asset revaluation and Ukrainian related FX losses, the operating
results as presented in the Management Report (excluding financial
costs, that are high in our region) show positive numbers across
the board. Our revenues topped EUR5,9m, while our EBITDA surpassed
EUR2,4m, 3 times more than the 2014 figure, while cash generation
improved on the back of the income producing asset
acquisitions.
SPDI has been successfully put on a solid foundation, both
financially and operationally, against the backdrop of the global
economic and financial sector issues between 2010-2014, having
successfully averted any substantial effects from the war in
Ukraine and sheltered the Company and its assets from the financial
trouble that have hit both Greece and to a lesser extent Cyprus in
the last few years, even though none of the above have been put
squarely in the past. While 2014 was a turnaround year for the
Company, the progress made in 2015 has served to confirm that the
implementation of our growth strategy of acquiring quality income
producing assets that generate strong cash flows is bearing fruit.
As the economic fundamentals in the Region improve (not unlike our
stated expectations) we are striving to position the Company in the
centre of the growth story of the Region that would lead to
substantial positive results for our shareholders. Having
experienced in practice the firm support of our shareholders
through the success of the open offer, management will continue
being guided by our vision, and exerting every effort in achieving
our common goals.
Best regards,
Lambros G. Anagnostopoulos
Chief Executive Officer
3 Management Report
3.1 Corporate Overview & Financial Performance
In 2015 the Company's management focused on further acquiring
income producing assets with a view to increase and diversify its
income generating base. More specifically, during the reporting
period the Company acquired:
-- 20% of Autounion, a 19.000 sqm office building in Sofia,
fully let to one of Bulgaria's largest insurance companies,
generating a gross rental income of EUR2,9m annually;
-- 24,35% of Delea Nuova office building, an almost fully let
10.000 sqm office building in Bucharest mostly let to Romania's
Telecom Regulatory Authority ANCOM. Delea Nuova generates a gross
rental income of EUR1,85m annually;
-- A portfolio of residential properties in Bucharest and Sofia,
partly let and partly intended for sale, generating EUR0,3m annual
rental revenues;
-- A fully let 9.000 sqm retail property in Craiova, Romania,
rented to Praktiker until 2020, generating a gross rental income of
EUR1m.
In addition in July 2015 following intensive legal battle which
started in 2011, we have finally been able to register ownership
over Rozny land plot in Kiev Oblast, destined for residential
development. The ownership of Rozny plot was under contention by an
Ukrainian third party even though the claims were unsubstantiated
(as finally proven).
While the Company continued on the 2014 trend of adding assets
to its portfolio resulting in an 52% increase in rental income for
the year to EUR5,5m, it maintained its overall lean and strict
operations management, keeping the recurring annual operating and
administrative costs to below EUR2,7m, an increase of 17% compared
to 2014, even though the size of the Company almost doubled. At the
same time, management continued the implementation of the Company's
strategy through spending time and resources to identify further
acquisition opportunities for potential future transactions.
In parallel, the Company's Board of Directors was strengthened
with the addition of two new Directors with extensive experience in
investing in real estate as well as in other markets in our region
of focus. Ms. Kalypso Nomikou and Mr. Vago Barseghyan, have a long
and successful entrepreneurial and business track record, focusing
in shipping and corporate finance respectively, both globally and
in South East Europe where they have been involved in various
investments.
The political instability in Ukraine continued throughout 2015
albeit at an abating rate. As the crisis and the war have taken a
heavy toll on the country's economy, the trend offers hopes of
stability returning to the country in the not too distant future.
Despite efforts to avert the effects of the crisis, Terminal
Brovary, the Company's logistic complex in Kiev, has not been
spared with many of its tenants experiencing substantial financial
concerns. Consequently, the Terminal saw its occupancy decrease to
55% as a result of many tenants deciding to downsize their
Ukrainian operations, or moving to other cheaper alternatives, as
the market has become denominated in local currency (UAH) from US$
following the substantial devaluation vis a vis the US$ in the last
18 months. Such evolution increases the FX exposure of the
Company.
During the reporting period the Greek government continued
discussions with the creditor institutions (EU/ECB/IMF/ESM) for
extending the 2010 financial assistance program. The prolongation
of the negotiation for yet another six months resulted in
maintaining of a higher political and economic risk profile for the
country. Following a referendum in July 2015 amidst a capital
controls environment instigated in June 2015, a preliminary
agreement signed in August 2015 and snap elections in September
2015, Greece has finally managed to conclude a deal with the
creditors that was eventually ratified in May 2016 but the
implementation of the agreement and the reforms attached to it are
still to come. Such political and economic turmoil has not had a
substantial effect on the operation of the Company in the country
where its logistics terminal is fully let.
In view of the Open Offer and the exercise of the Warrants
(March and August 2015 respectively), which resulted in 38.102.375
new ordinary shares being issued by SPDI, as well as the issuance
of new redeemable shares for the acquisition of the Craiova asset,
the Company's capital structure was 90.014.723 ordinary shares,
9.011.497 redeemable preference shares and 18.028.294 Class A
warrants at the end of the year. At the end of the reporting period
SPDI had EUR43m of equity and EUR82m of liabilities, out of which
EUR65m is bank debt. As a result the debt to equity ratio was
1,51x. The Loan to overall Value ratio (debt as a % of Total Asset
Value) was 52%.
Most of its income producing assets debt profiles follows the
WALT of the tenancy agreements while the residential asset related
debt is being repaid directly from sale proceeds. Whenever a need
arises to re-profile debt, the Company enters into discussions with
the relevant financial institutions to that effect, even though
such discussions in the Region, and especially as far as Greek
banks are concerned are time consuming and may take more than 6-9
months.
In 2015, the Company finalised the streamlining of the Ukrainian
operating companies by merging most of them and eliminating others,
ending with nine for the six assets it owns in the country. A
similar exercise is being implemented in Romania and Cyprus.
The Company has also implemented an ERP system, based on
Microsoft Dynamics (Navision). Upon full implementation by end
2016, the system will allow for the real time monitoring of income
and expenses across all countries and assets resulting in operating
efficiencies.
The Audit Committee monitors the integrity of the consolidated
financial statements, potential conflicts of interest of the
directors and senior managers as well reviews the effectiveness of
the Company's internal controls. The Committee also supervises the
relationship with the Auditor, providing relevant recommendations
for maximizing the effectiveness of the external audit.
The Remuneration Committee has the responsibility to determine
and periodically review the policy and implementation for the
remuneration of the Directors and Executive Management of the
Company so as to ensure that all are provided with appropriate,
reasonable and fair incentives for an enhanced performance.
The Board is ultimately responsible for the Group's strategy,
financial performance and risk management systems. As the Group
grows, the Board is also responsible for the alignment of the
implemented strategy with the vested interests of the shareholders,
through annual budgets and cash flow preparation and their
respective revisions when appropriate. Monitoring the on-going
financial performance is a responsibility of the management which
reports to the BoD in order to maintain a tight liquidity
control.
2015 saw SPDI continue its growth trend which commenced the year
before through the acquisition of new assets leading to the Company
being by the end of the reporting period active in Romania,
Bulgaria, Greece and Ukraine. Most notably, the Company's annual
operating income increased by 64% to EUR5,9m (excluding any
property fair value adjustments to the cost of goods sold) from
EUR3,6m in 2014. The operating income does not include the %
participation by the Company of the operating income of the
projects that the Company maintains a minority participation in,
which is reported as dividend income, but includes net income
resulting from on-going sales of residential assets (sales income
minus the cost of the asset sold). Overall, EBITDA from operations
has increased 3x to EUR2,4m (2014: EUR0,8m).
3.2 Property Holdings
The Company's portfolio consists of commercial income producing
and residential properties in Romania, Greece, Bulgaria and Ukraine
as well as land plots in Ukraine, Bulgaria and Romania.
Commercial
Terminal Brovary Logistic Park consists of a 49.180 sqm gross
leasable Class A warehouse and associated office space, situated on
the junction of the main Kiev - Moscow highway and the Borispil
road which was fully completed in 2012. Following the near collapse
of the Ukraine economy and its currency (that saw a drop by 70%)
the facility experienced an increased vacancy with tenants
shrinking their warehousing needs as their bottom line sales were
substantially affected. The Terminal was 45% leased at the end of
the reporting period.
Innovations Terminal Logistic Park consists of a 16.570 sqm
gross leasable Class A warehouse 6.395 sqm of which is for cold
storage. Innovations was 87% leased at the end of the reporting
period, 61% to Nestle and 26% to other local companies. Post period
end Nestle notified the Company of its intent to leave the
warehouse and the Company is in the process of both negotiating a
break agreement with Nestle on their three year remaining contract
and receiving the approval for such agreement by the financing
Bank. At the same time the Company is actively looking to find
replacement tenants.
GED Logistics Terminal consists of a 17.756 sqm gross leasable
area, industrial and associated office space, situated on the west
side of Athens, close to the Port of Piraeus. The facility has been
in operation since 2010 and as at the end of the reporting period
was 100% leased, to Kuehne + Nagel (70%) and GE Dimitriou SA (30%).
The park also has a photovoltaic energy production facility
installed on its roof.
EOS Business Park which serves as the Danone Head Quarters in
Romania, is a 3.386 sqm gross leasable Class A office building,
situated in the North Eastern Part of Bucharest. The building is
fully let to Danone until 2026.
Autounion consists of 19.476 sqm of gross leasable office area,
situated in a prime business area near the International Airport of
Sofia. The BREEAM-certified building was completed in 2008 and is
fully leased to Eurohold, one of the largest Bulgarian insurance
companies, until 2027.
Praktiker Craiova consists of 9.385 sqm of gross leasable retail
area, situated on one of the main arteries of Craiova, the sixth
biggest city in Romania in terms of population. The retail unit is
fully leased to Praktiker, a regional DIY retailers in Europe,
until 2020. Early in 2016 the tenant offered to extend the lease
agreement for an additional five years until December 2025, in
exchange for reducing the annual rent to the levels of the
temporary reduction that tenant and the previous owner had agreed
for the last few months of 2015, namely to EUR600k. Such offer is
under discussion.
Delenco office building consists of 10.280 sqm of gross leasable
office area, spread over 11 floors. The building was completed in
2007 and it is located in Bucharest's centre. At the end of the
reporting period, the Delenco office building was 97% let, with
ANCOM (the Romanian Telecommunications Regulator) being the anchor
tenant (70% of GLA).
Residential portfolio
This consists of five distinct groups of residential units in
Bucharest and one in Sofia. As the market prices for residential
properties picked up in 2015, the Company sold a number of units
and by the end of 2015 still manages a total of 228 apartments and
villas. The Group acquired the portfolio in two stages, the first
in August 2014 and the second in May 2015.
Land Assets
Bela Logistic Centre is a 22,4 Ha plot in Odessa situated on the
main highway to Kiev. Following the issuance of permits in 2008,
below ground construction for the development of a 103.000 sqm
gross buildable area of logistic center commenced. Construction was
put on hold in 2009 due to the global economic crisis.
Kiyanovskiy Lane consists of four adjacent plots of land,
totaling 0,55 Ha earmarked for a residential development, which are
well located, overlooking the scenic Dnipro River, St. Michael's
Spires and historic Podil neighborhood.
Tsymlyanskiy Lane is a 0,36 Ha plot of land located in the
historic Podil District of Kiev earmarked for the development of a
residential complex.
Balabino project is a 26,38 Ha plot of land situated on the
south entrance of Zaporozhye, a city in the south of Ukraine with a
population of 800.000 people. Balabino is zoned for retail and
entertainment development.
Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined
for the development of a residential complex. It has been
registered under the Company pursuant to a legal decision in July
2015.
Pantelimon Lake consists of a 40.000 sqm plot of land in east
Bucharest situated on the shore of Pantelimon Lake, opposite the
prestigious Lebada Hotel. The Company is in negotiations with its
co-owner of the plot and the lending bank to re-profile/restructure
the loan. The construction permit, which allows for gross buildable
area of54.000 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 gross buildable area of 21.851 sqm.
Green Lake land The Green Lake residences complex includes
adjacent land plots of 40.360 sqm. 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.
In 2015, the Company maintained in position its RICS accredited
valuers, namely CBRE Ukraine for the Ukrainian Assets, and Real Act
for the Romanian, Bulgarian and Greek Assets. The valuations have
been carried out by the appraisers on the basis of Market Value in
accordance with the current Practice Statements contained within
the Royal Institution of Chartered Surveyors ("RICS") Valuation -
Professional Standards (2014) (the "Red Book") and is also
compliant with the International Valuation Standards (IVS).
At the year-end, the Company's property assets (including its %
participation in assets classified under associates and available
for sale) were valued at EUR117m, an increase of 50% compared to
December 2014, due to acquisitions effected throughout the
reporting period. It should be noted that the fair value of the
Ukrainian assets has been reduced by 24% due to the continuing
crisis in the country, while valuations in Romania, and Greece
showed marginal increases.
During the year the Company's asset portfolio became even more
diversified in terms of geography as well as asset class. At the
end of the reporting period, 80% of the Company's portfolio is
outside Ukraine with Romania becoming the prime country of
operations (49%) in terms of Gross Asset Value.
Gross Asset Value
EURm/% 2015 2014 2013
Ukraine 24 21% 32 42% 40 100%
Greece 17 14% 17 21%
Romania 58 49% 29 37%
Bulgaria 18 16% 0%
Total 117 100% 78 100% 40 100%
In respect of the income generation capacity of the Company's
assets (excluding income resulting from asset sales) only 25% of
expected annualized income comes from Ukraine, with Romania being
the prime source with 45%.
Annualized Net Operating Income
EURm 2015 2014 2013
Ukraine 1,8 25% 2,4 40% 2,7 100%
Greece 1,5 21% 1,5 25%
Romania 3,2 45% 2,1 35%
Bulgaria 0,6 8% 0%
Total 7,0 100% 6,0 100% 2,7 100%
Excluding a) the revaluation losses attributable mostly to the
situation in Ukraine, b) the foreign exchange losses (related to
the EBRD Terminal Brovary loan or the intercompany loans that have
been affected on paper by the devaluation of the UAH) and c) any
one off gains/losses, costs or impairments/provisions related to
the properties acquired during the period the table below compares
the performance of the last 2 operating periods, showing
significant improvement.
EUR 2015 2014
Rental Income 5.448.960 3.577.445
Income from Sale of Asset - Cost
of properties sold 387.808 14.458
Income from Operations of Investments 5.836.768 3.591.903
Investment property operating
expenses (1.124.583) (756.561)
Net Opereting Income from Investment
Property 4.712.185 2.835.342
Share of profits from associates
(ex revaluation) 166.863
Net Income from Avaliable for
Sale assets (ex revaluation) 485.529
Total Income 5.364.577 2.835.342
Administration expenses (2.981.338) (2.684.422)
Operating Result (EBITDA) 2.383.239 150.920
Finance costs, net (3.771.100) (1.267.331)
Income tax expense (80.188) (220.476)
Operating Result after finance
and tax expenses for the year (1.468.049) (1.336.887)
Other income / (expenses), net 621.252 (136.058)
Other finance costs (603.495) (110.072)
Gain realized on acquisition
of subsidiaries 2.181.834 766.221
Fair Value (Losses) /Gains from
investments (6.785.554) 9.297.525
Foreign exchange losses, net (10.659.602) (18.354.598)
(Loss) / Profit for the year (16.713.614) (9.873.869)
The table below summarizes the main financial position of each
of the Company's assets (representing the Company's participation
at each asset) at the end of the reporting.
2015
EURm GAV* Debt* NAV
Innovations Rom 14,4 7,4 7,0
Eos Rom 6,6 3,9 2,7
Praktiker Rom 7,2 4,8 2,4
Delenco Rom 5,3 0,9 4,4
Autounion Bul 7,0 2,5 4,5
GED logistics Gr 16,5 12,3 4,2
Terminal Brovary Ukr 12,3 12,2 0,1
Residential units Rom & Bul 26,0 14,8 11,2
Land banking Rom & Ukr 21,9 6,2 15,6
Total Value 117,1 65 52
Other balance sheet
items, net ** -9,6 -9,6
Net Asset Value total 42,4
Mcap 31/12/2015 (Share price
at GBP0,245) 29,9
Mcap 27/6/2016 (Share price at
GBP0,14) 15,7
Discount as of the reporting
date vs NAV 31/12/2015 -63%
* Reflects the Company's participation
at each asset
**Refer to balance sheet and
related notes of the financial
statements
The Net Equity attributable to the shareholders as at 31
December 2015 stood at EUR43m representing a 31% increase over the
2014 Net Asset Value driven by the new assets acquired for shares
during the year as well as the new equity raised.
The NAV per share as at 31 December 2015 stood at GBP 0,35. To
compare with the 2014 equivalent NAV per share, one needs to take
into account the more than doubling of the ordinary shares the
Company has on issue, as a result of the March 2015 Open Offer
(rights issues) to its existing shareholders as well as the issuing
of more shares in exchange of assets that have been acquired. Even
though the open offer was effected at a much lower price than the
12 month average to that date, the discount of the Market Value vis
a vis the Company's NAV increased to 29% by year end.
3.3 Financial and Risk Management
The Group's overall bank principal debt exposure at the end of
the reporting period was at EUR65m (including property assets fully
or partially owned by the Company):
a. the EUR12,2m construction debt to Terminal Brovary from EBRD.
This loan is denominated in US$ and stands at $13,25m at the end of
the reporting period.
b. the EUR3,9m finance lease of the EOS business park with Alpha Bank Romania.
c. the EUR7,4m finance lease of the Innovations park with Bank of Piraeus Romania.
d. the EUR12,3m debt financing of the GED Logistics park and photovoltaic with Eurobank.
e. the EUR4,8m debt financing of the Praktiker Craiova with Marfin Bank Romania.
f. the EUR0,9m (24% participation at the total of EUR3,7m) debt
financing of the Delenco office building with CEC.
g. the EUR2,5m (20% participation at the total of EUR12,6m) debt
financing of the Autounion office building with Unicredit.
h. the EUR14,8m being the Company's portion on the residential portfolio debt financing.
i. with the remaining EUR6,2m being the Company's portion on
land plot related debt financing in Romania and Bulgaria.
Overall, the Group's Loan to Value ratio at the end of 2015
stands at 52%.
Throughout 2015 the Company continued to focus on generating and
preserving liquidity and optimizing its cash flow in a credit
environment that had not improved much from a year before. The
Company raised cash, which it used to acquire more assets, keeping
a tight cash flow schedule, and managing its liabilities in a way
to limit the need to carry cash on its balance sheet to a minimum.
The reduction of Terminal Brovary rental income (due to tenants
leaving or accepting lower rent to stay), as well as temporary cash
shortfalls linked with tenants leaving until new tenants sign up in
other property assets, have caused some cash shortfalls to the
Company.
3.4 2016 and beyond
Going into 2016, the Company is poised to follow its strategy by
identifying new income producing assets in Romania, Bulgaria and/or
Greece, as well as the capital sources necessary to effect such
acquisitions. As the political turmoil in Greece is beginning to
level off, and the economic growth of Romania shows signs of
further improvement, the time is ripe for the Company to seek
making yet another step towards its stated goal of becoming a
leading income producing property company in the South East Europe
region. At the same time, and as the markets pick up, the Company
will not close its eyes to possibilities of realizing values
through the sale of assets, should these opportunities
materialise.
4 Regional Economic Developments
4.1 Romania
Romania's GDP registered a 3,7% growth y-o-y in Q4 2015, the
second highest among EU28 countries after the Czech Republic. After
this result, the country's economic growth for 2015 reached a real
3,8%, compared to 2014's 2,8%.
The year ended with CPI falling in negative territory (-0,7%
y-o-y), mainly due to VAT rate decreasing for all food products
from 24% to 9% as of June 2015. Unemployment rate fell slightly to
6,7% compared to 2014. The Romanian government and the trade unions
have reached an agreement to increase the gross minimum wage to
EUR276 from EUR232 per month, as of May 2016. Also, the government
reduced VAT from 24% to 20% and dividend withholding tax from 16%
to 5% as of 1 January 2016.
Romania's current account deficit widened to EUR1,76bln in 2015,
from EUR0,69bln a year earlier. Foreign direct investments totaled
EUR3,04bln in the period under review, approximately 25% higher
than in 2014. Long-term external debt at end-2015 stood at EUR71bln
down 6,3% from end 2014. Debt stands at 44% of GDP.
In May 2015, the Romanian National Bank cut its key monetary
policy rate to a record low of 1,75%. Exchange rates remained
relatively stable throughout 2015 at RON 4,50 to the Euro.
In December 2015, Moody's changed the outlook on Romania's Baa3
government ratings to positive from stable and affirmed Romania's
Baa3/P-3 ratings, the lowest investment grade level. Moody's said
that the country's significant progress in correcting its
macroeconomic imbalances is one of the key drivers for changing its
outlook.
Romania is expected to continue as the Region's outperformer in
2016, with an accelerating growth of more than 4%, mainly driven by
private consumption. Reforms in taxation are likely to attract even
higher investment volumes, along with improved EU funds absorption
rate and public investment spending. However, scheduled elections
for late 2016 may be a cause for some political uncertainty.
4.2 Bulgaria
Bulgaria's economy registered a 2,9% annual growth rate in 2015
(2014: 1,5%), the highest rate since 2011, beating June's estimate
of 1,1%. Growth in 2015 was higher than initially expected due to
stronger exports to the EU stemming from lower energy prices, the
recovery of investments as a result of improved implementation of
EU-funded projects and better labour market performance.
The country's current account showed a surplus of EUR542m in
2015, compared to a surplus of EUR493m a year earlier, according to
the Bulgarian Central Bank. FDI rose to EUR1,58bln in 2015,
increasing by approximately 23% in comparison with the previous
year's volume.
Annual EU-harmonized CPI stood at minus 1,1% y-o-y, while
unemployment recorded a rate of 10%, lower than 2014 rate of 11,5%.
Exchange rates remained stable throughout 2015 at BGN 1,96 to the
Euro.
The Bulgarian government announced the increase of the minimum
monthly wage to EUR 215 as of 1 January 2016, up from EUR195.
The low energy cost, the aforementioned wage rise and the low
inflation rates in the country benefits consumers in terms of
disposal income. The on-going Euro area recovery is also expected
to boost Bulgaria's economic performance in 2016, due to the
country's high exposure to the area via trade and capital
flows.
4.3 Ukraine
The deep recession which was a result of the on-going conflict
in the Eastern border and sharp depreciation of the national
currency in H1 2015, seems to be fading out as also the decline of
GDP continues to decelerate. In Q4 2015, GDP registered a drop of
3,2% y-o-y compared to declines of 7,2% in Q3 and 14,6% in Q2.
Based on these results, the annual average contraction of GDP
reached 9,9% in 2015.
In Q4 2015, important reforms were carried out. In particular,
Ukrainian authorities concentrated efforts on further business
deregulation, trade liberalization, deepening cooperation with the
EU and privatization. The IMF has endorsed the government's fiscal
budget for 2016 and it is expected that the third tranche from its
programme is expected to be available within Q3 2016. Due to the
successful public debt restructuring, Standard & Poor's
increased the ratings of sovereign foreign debt from SC to B-.
The consolidated budget deficit for 2015 reached about 3,5% of
GDP, including government transfers to Naftogaz, the Pension Fund,
and for banking re-capitalization. Net FDI reached USD 2,3 bln
mainly from bank recapitalization.
During the year, the sharp depreciation of the UAH and the
resultant increase in prices for imported goods and increase of the
state-regulated tariffs led to an inflation of 43,3%, compared to
12% in 2014. Unemployment rate eased down to 9,4% from 11% a year
earlier. After reaching a record of 30 UAH/USD in February,
exchange rate seemed to stabilize between 24-25 UAH/USD.
A major development concerning international trade is that the
Free Trade Agreement (FTA) between Ukraine and the EU has become
effective on 1 January 2016. According to the government, the FTA
will eliminate 97% of EU tariffs on Ukrainian exports and will
reduce the average tariff on Ukrainian exports from 7,6% to
0,5%.
According to the latest forecasts, Ukraine is expected to return
to a modest growth in 2016, if political reforms continue being
implemented. Nevertheless, the conflict in eastern Ukraine remains
a significant problem, as ceasefire violations from time to time
jeopardize the country's stability.
4.4 Greece
After lengthy negotiations that started in February 2015, in
August 2015 and among fears of "Grexit", Greece and the Eurozone
stepped back from the brink and reached an agreement on a new
three-year adjustment programme offering EUR86bln of financing in
return for a number of reforms and measures to be implemented by
the Greek government. This agreement led to the re-opening of the
banks that had been closed for several weeks because of imposed
capital controls in June 2015.
In September 2015, following a second snap election victory in
less than 12 months the SYRIZA party remained in power so as to
undertake the task of completing to pursue the implementation of
the August agreement. A necessary step in this process being the
formal evaluation by the lender technocrats of the political
implementation of the required processes, political uncertainty
lingers on in the country for as long as it is not completed,
leading to deepening recession and lack of liquidity in the
markets.
Greek GDP contracted by 0,2% in 2015 as a consequence of the
aforementioned political uncertainty and also the capital controls'
imposition, which reduced liquidity in the economy.
In autumn, another bank recapitalization - the third in as many
years - took place for EUR14bn and proved to be successful, as
systemic banks managed to find the necessary capital through mostly
private (and foreign) investors.
Greek budget showed a primary surplus of EUR1,23bln in 2015
compared to a surplus of EUR0,53bln a year ago, while the general
government deficit came to 7,2% of GDP compared to a 3,6% deficit
in 2014.
Inflation rate remained in negative territory for the third
consecutive year, being at minus 1,7% for 2015. Unemployment rate
in the country eased slightly, standing at 24,6% at the end of
2015.
Political uncertainty mainly driven by the uncertainty of
whether the government will proceed with the necessary economic
reforms leading to a positive evaluations by the lenders, along
with the on-going refugee crisis, are the two biggest issues that
put the country's stability in question for 2016 and going
forward.
5 Real Estate Market Developments
5.1 Romania
The total investment volume registered in Romania for 2015
recorded a 42% decrease, but the low level of investment volume can
be explained by two major one-off transactions at the end of
2014.
Total industrial and logistics stock in Romania reached 2,1m
sqm, of which 1m sqm is in Bucharest. Leasing demand in 2015
outpaced 2014 by 22%, reaching a total of 375.000 sqm. During the
year, the investment volume reached approximately EUR300m, almost
seven times higher than last year's volume. This number was
achieved through portfolio acquisitions, distressed assets
acquisitions and also sale-and-lease back transactions. Average
prime rental rate remained at EUR3,8 per sqm, while vacancy rate in
the country continued on its decreasing trend, reaching 5% from
11-12% in 2014. In Bucharest, vacancy rate dropped further to 3,3%,
but the demand driven pressure is expected to ease after the
delivery of projects under development. As a result of the high
investment volume, yields compressed to 8,75% for prime properties,
from last year's 9,5%.
Bucharest's office space stock recorded a 6,3% increase in 2015,
compared to last year, reaching 2,37m sqm in total. Currently,
approximately 0,41m sqm are under construction and scheduled for
delivery in 2016. Adverse market conditions in 2009-2010, led to a
significantly low number of signed contracts and with typical
leases being signed for five years, the number of contracts
expiring in 2015 was relatively small. Thus, total leasing activity
in 2015 was 20% lower than a year earlier. The majority of lease
agreements was signed by IT companies, continuing last year's
trend. Prime headline rental rate recorded a slight increase by
2,8% during the year, reaching EUR18,5 per sqm (in CBD sub-market).
Vacancy rate continued on its decreasing trend, reaching 11,9% from
13% in 2014. Yield for prime properties registered a 3,2% decrease
to 7,5% in 2015.
The total modern retail supply in Romania reached approximately
3,2m sqm at the end of 2015 with Bucharest's stock currently
standing at just over 1m sqm. Prime rental rates for shopping
centers varies between EUR60-70 per sqm per month, for high street
shops between EUR50-60 per sqm per month and for retail parks it is
EUR8,5 per sqm per month. According to the national statistics
office, retail sales rose by an annual 8,9% in 2015, mainly driven
by food sales. Some of the most important retailers as Lidl, Mega
Image, Rewe and Selgros have already expressed their intention to
expand during 2016.
Romanian authorities issued a total of 39.112 building permits
in 2015, a 3,8% increase in comparison with last year's numbers. In
Bucharest, developers seem to adjust better to the existing demand,
as the residential projects that target middle class buyers
accounted for more than one third of the total stock delivered.
Less than 50% of the transactions concluded on this segment are
carried out by funding from the state guarantees programme Prima
Casa (First Home), as the majority of middle class buyers already
own a unit and are generally interested in moving into a house of
higher quality. The purchase of a new house is now more feasible
than before, due to the improved economic sentiment, the increase
in the net average wage and also due to the successive decrease of
the monetary policy interest rate by the National Bank, which
allowed the banks to offer attractive mortgage loans in RON
(Romanian local currency) with rates similar to Prima Casa. Prices
have remained stable this year in Bucharest, standing at
EUR1.000-1.100 per sqm.
5.2 Bulgaria
The total value of closed transactions on the investment market
in Bulgaria in 2015 was EUR210 m, 10% lower than in 2014. More than
half of this volume stems from deals for development land.
During 2015, about 70.000 sqm of class A offices were delivered.
As a consequence, the Sofia office stock increased slightly to
1,70m sqm. The pipeline of buildings, which are under construction,
amounts to 160.000 sqm. Also, construction of 115.000 sqm of office
space is suspended and if the trend of resuming such projects
continues in 2016, office space supply will be even higher. The
total class A and B vacant office space in Sofia decreased to
219.000 sqm. Thus the average vacancy rate for office space in the
Bulgarian capital continued on its shrinking trend, reaching 12,9%,
compared to 15,4% in the same period last year. Asking rents vary
between EUR11-14 per sqm for Class A offices - depending on
location, increased by almost 5% compared to 2014. At the same
time, asking rents for Class B properties remained relatively
stable between EUR6,5 and EUR8,5 per sqm.
In 2015, total modern retail stock in Bulgaria remained the same
- approx. 844.000 sqm, as no new retail units were delivered.
Shopping centers account for nearly 95% of the total stock. Vacancy
rate in Sofia stood at 10% lower than last year's 12,4%, while in
the other major cities it recorded a drop of 3% points to 12,4%.
The situation in the Bulgarian retail market is not expected to
change in 2016, as no new developments are planned for the time
being, except for remodeling existing developments or resuming
suspended construction projects.
Residential stock in Sofia showed a slight increase of 2% in
newly completed projects in 2015. The high level of demand pushed
the vacancy rates further down to 11% of the total stock. The
number of transactions in 2015 showed a significant 25% y-o-y
growth, while pre-sales accounted for 37% of all deals. As far as
prices are concerned, a 5% y-o-y growth was registered. In
addition, due to increasing demand and limited supply, the discount
from the asking to the final price shrunk to 5% from 9% a year
earlier.
5.3 Ukraine
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.
As of the end of 2015, total stock of modern warehousing and
logistics space in the greater Kiev area amounted to 1,79m sqm,
only a 3,5% increase in comparison with 2014, due to Ukraine's weak
economic performance that led to a drop in demand from the
occupier's side. The cumulative take-up reached 160.700 sqm,
decreasing by around 25% compared to last year's performance. This
number was generated mainly by logistics companies' relocation,
cost cutting criteria being the driving force. As a result of
Ukraine's weak economic performance vacancy rates generally
increased, reaching 9,8% by the end of the year, from 6,1% a year
earlier. Rental rates remained relatively stable at US$3-5 per sqm
for Class A properties and US$2-3 for Class B. The majority of the
new leases in 2015 were signed in the Ukrainian hryvnya without
binding the rental payment to the US dollar.
The total office take-up in Kiev was around 174.000 sqm of GLA
in 2015, twice as high as the figure registered during 2014. On the
supply side, there was no major change in the office property
market in Kiev and across Ukraine in 2015. The total office stock
in Kiev reached around 1,8m sqm with approximately 70.000 sqm of
offices delivered during 2015. The office vacancy rate in Kiev
varied between 23-24% during Q1-Q3 2015, and decreased to around
21,5% by the end of the year. During 2015, a further downward
correction in rental rates for classes B and C was witnessed,
whilst rental rates for A-class properties remained in the range of
USD 17-28 per sqm per month.
5.4 Greece
The property market is expected to recover gradually, once
Greece emerges 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.
The Industrial and Logistics market seemed stagnant in the first
nine months of the year but in the last quarter investment activity
started picking up. As a result, demand increased despite the fact
that rents remained stable. Prime rental rates for industrial space
are approximately EUR2,5 per sqm, while for logistics space they
range from EUR3 to EUR4 per sqm. Demand for logistics space is
expected to continue its increasing trend, especially after the
successful privatization of Piraeus Port and the announcement for a
tender regarding the Thriassio Freight Center in Attica
Prefecture.
No major changes were observed in the office sector throughout
2015. Rental rates in prime office districts were stable through
the whole year at EUR8-15/sqm depending on locations. This
relatively large range is also a sign of market inefficiency due to
the low transaction volume. Developers' unwillingness to commit to
new constructions still exists, therefore there is no pipeline of
new projects and this situation is not expected to change over the
short or medium term.
6 Property Assets
6.1 Terminal Brovary Logistic Park, Ukraine
The Brovary Logistic Park consists of a 49.180 sqm GLA Class A
warehouse and associated office space. The building has large
facades to the Brovary ring road, at the intersection of the
Brovary ( -95/ -01 highway) and Borispol ring roads. It is located
10 km from 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.
As of the end of 2015, the Park was 45% leased, representing a
decrease of 45% over the last year end numbers. This reduction was
essentially driven by the on-going crisis of the Ukrainian economy,
creating reduced warehouse storage needs.
Post period end, in May 2016 the Company fully leased the
warehouse space while it also signed a letter of intent to sell the
property to Rozetka, the leading Ukrainian internet retailer. Such
sale is subject to EBRD approval as well as to various other
conditions precedent.
6.2 Innovations Logistics Park, Romania
The Park incorporates approximately 8.470 sqm of multipurpose
warehousing space, 6.395 sqm of cold storage and 1.705 sqm of
office space. It is located in the area of Clinceni, south west of
Bucharest center, 200m from the city's ring road and 6km from
Bucharest-Pitesti (A1) highway. Its construction was completed in
2008 and was tenant specific. It comprises four separate
warehouses, two of which offer cold storage.
In 2015 the warehouse was 87% leased with Nestle Ice Cream
Romania being the anchor tenant. Following a request by Nestle Ice
Cream, the Company has entered into discussions with Nestle and
Bank of Piraeus to proceed with execution of an amicable settlement
agreement, in breaking the remaining of Nestle's fix tenancy
contract (until September 2018). In the meantime the Company has
identified potential replacement tenants with whom it is having
preliminary discussions.
6.3 EOS Business Park - Danone headquarters, Romania
The park consists of 5.000 sqm of land including a class "A"
office building of 3.386 sqm GLA and 90 parking places. It is
located next to the Danone factory, in the North-Eastern part of
Bucharest with access to the Colentina Road and the Fundeni Road.
The Park is very close to Bucharest's ring road and the DN 2
national road (E60 and E85) and is also serviced by public
transportation. The park is highly energy efficient.
The Company acquired the asset in November 2014. The complex at
the end of 2015 is fully let to Danone Romania, the French
multinational food company, until 2026.
6.4 Praktiker Retail Center, Romania
The retail park consists of 21.860 sqm of land including a
retail BigBox of 9.385 sqm GLA and 280 parking places. It is
located in Craiova, on one of the main arteries of the city, along
with most of the DIY companies.
The Company finalised the acquisition of the asset in July 2015.
As at year-end, the complex is fully let to Praktiker Romania, a
regional DIY retailer, until 2020 and the Company is negotiating
the extension of the Praktiker lease agreement until December 2025
for an annual rent of EUR600.000
6.5 Delenco office building, Romania
The property is a 10.280 sqm office building, which consists of
two underground levels, a ground floor and ten above-ground floors.
The building is strategically located in the very center of
Bucharest, close to three main squares of the city: Unirii, Alba
Iulia and Muncii, only 300m from the metro station.
The Company acquired 24,35% of the property in May 2015. As of
the end of 2015, the building is 97% let, with ANCOM (the Romanian
Telecommunications Regulator) being the anchor tenant (70% of
GLA).
6.6 Autounion office building, Bulgaria
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.
The Company acquired 20% of the property in April 2015. As at
year-end 2015 Autounion is fully let to Eurohold Bulgaria, one of
the largest Bulgarian insurance companies, on a long lease
extending to 2027.
6.7 GED Logistics center, Athens Greece
The 17.756 sqm complex that consists of industrial and office
space is situated on a 44.268 sqm land plot in the West Attica
Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki
Odos (the Athens ring road) and is 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).
The complex at the end of 2015 is 100% occupied, with the major
tenant (approximately 70%) being the German transportation and
logistics company Kuehne + Nagel.
6.8 Residential portfolio
-- Romfelt Plaza (Doamna Ghica), Bucharest, Romania
Romfelt Plaza is a residential complex located in Bucharest,
Sector 2, relatively close to the city center, easily accessible by
public transport and nearby supporting facilities and green
areas.
At the end of 2015, 20 apartments were available while 12 of
them were rented, indicating an occupancy rate of 60%.
-- Linda Residence, Bucharest, Romania
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.
At the end of 2015, 22 apartments were available with 4 of them
being rented indicating an occupancy rate of approximately 18%.
In May 2016, the Company accepted an offer to sell in bulk most
of the remaining units (16) it owned in Linda Residence.
-- Monaco Towers, Bucharest, Romania
Monaco Towers is a residential complex located in South
Bucharest, Sector 4, enjoying good car access due to the large
boulevards, public transportation, and a shopping mall (Sun Plaza)
reachable within a short driving distance or easily accessible by
subway.
At the end of 2015, 26 units were available, 11 of them being
rented indicating an occupancy rate of 42%.
-- Blooming House, Bucharest, Romania
Blooming House is a residential development project located in
Bucharest, Sector 3, a residential area with the biggest
development and property value growth in Bucharest, offering a
number of supporting facilities such as access to Vitan Mall,
kindergartens, café, schools and public transportation (both bus
and tram).
At the end of 2015, 22 units were available 11 of them being
rented indicating an occupancy rate of 50%.
-- Green Lake, Bucharest, Romania
A residential compound of 40.500 sqm GBA, which at the end of
2015 consisted of 40 unsold apartments plus 37 unsold villas,
situated on the banks of Grivita Lake, in the northern part of the
Romanian capital - the only residential project in Bucharest with a
200 meters frontage to a lake. The compound also includes
facilities such as one of Bucharest's leading private schools
(International School for Primary Education), outdoor sport courts
and restaurants. Additionally Green Lake includes land plots
totaling 40.360 sqm. SPDI owns 43% of this property asset
portfolio.
During the period, eight apartments and villas were sold while
at the end of 2015, 77 units were unsold with 26 of them being let
(occupancy rate of 34% - 53% for apartments and 14% for
villas).
-- Boyana Residence, Sofia, Bulgaria
A residential compound, which consisted at acquisition date (May
2015) of 67 apartments plus 83 underground parking slots developed
on a land surface of 5.700 sqm, situated in the Boyana high end
suburb of Sofia, at the foot of Vitosha mountain with GBA totaling
to 11.400 sqm. The complex includes adjacent land plots with
surface of 17.000 sqm with building permits under renewal to
develop GBA of 21.851 sqm.
During 2015, six apartments were sold, with 61 units remaining
unsold at the end of 2015.
6.9 Land Assets
-- Aisi Bela - Bela Logistic Center, Odessa, Ukraine
The site consists of a 22,4 Ha plot of land with zoning
allowance to construct up to 103.000 sqm GBA industrial properties
and is situated on the main Kiev - Odessa highway, 20km from Odessa
port, in an area of high demand for logistics and distribution
warehousing.
The Company has hired a new security agency to safeguard the
premise and does not intend to recommence construction in the near
future.
-- Kiyanovskiy Lane - Kiev, Ukraine
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.
Certain local developers have approached the Company in late
2015 in order to explore the possibility of co-development. Such
proposals are being evaluated by the Company.
-- Tsymlyanskiy Lane - Kiev, Ukraine
The 0,36 Ha plot is located in the historic and rapidly
developing Podil District in Kiev. The Company owns 55% of the
plot, with one local co-investor owning the remaining 45%.
During Q4 2015, a number of interested parties approached the
Company with the intent to partnering in commencing the development
of this property. Such proposals are being evaluated.
-- Balabino- Zaporozhye, Ukraine
The 26,38 Ha 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.
The site is zoned for retail and entertainment. Development has
been put on hold.
-- Rozny Lane - Kiev Oblast, Kiev, Ukraine
The 42 Ha land plot located in Kiev Oblast, destined for the
development of a residential complex.
Following protracted legal battle it has been registered under
the Company pursuant to a legal decision in July 2015.
-- Delia Lebada, Romania
The site consists of a 40.000 sqm plot of land in east Bucharest
situated on the shore of Pantelimon Lake, opposite to a famous
Romanian hotel, the Lebada Hotel. The lake itself, having a 360 Ha
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.
The construction permit, which allows for 54.000 sqm to be
built, was renewed in April 2014 but the project has been on hold.
As the lending bank (Bank of Cyprus) expressed the intent not to
renew the land acquisition loan (that the Company inherited upon
acquisition of the asset as part of a portfolio in 2015 and which
was in default), the Company entered in negotiations with the
co-owner and the financing bank either acquire the associated loan,
or sell the property all together. In the meantime the SPV owning
the plot has entered into an insolvency status.
7 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015
Note 2015 2014
EUR EUR
Operating income 11.2 5.130.637 3.591.903
Valuation (losses)/gains from Investment Property 11.2 (2.335.247) 9.297.525
------------- -------------
2.795.390 12.889.428
Administration expenses 11.3 (2.981.338) (2.684.422)
Investment property operating expenses 11.4 (1.124.583) (756.561)
Gain realized on acquisition of subsidiaries 11.11 2.181.834 766.221
Other operating income/(expenses), net 11.5 621.252 (136.058)
Share of profits/(losses) from associates 11.12 (1.244.572) -
Impairment allowance for inventory and provisions 11.6 (1.675.659) -
Goodwill impairment 11.11 (657.082) -
Operating profit / (loss) (2.084.758) 10.078.608
Finance income 11.7 63.596 80.895
Interest expenses 11.7 (3.834.696) (1.348.226)
Other finance costs 11.7 (603.495) (110.072)
Foreign exchange (loss), net 11.8 (5.071.048) (7.512.640)
Profit / (Loss) before tax (11.530.401) 1.188.565
Income tax expense 11.9 (80.188) (220.476)
Profit / (Loss) for the year (11.610.589) 968.089
Other comprehensive income
Exchange difference on I/C loans to foreign holdings 11.8 (13.653.402) (19.746.111)
Exchange difference on translation of foreign operations 11.19 8.064.848 8.904.153
Available-for-sale financial assets - fair value gain 11.15 485.529 -
Total comprehensive income for the year (16.713.614) (9.873.869)
Profit / (Loss) attributable to:
Owners of the parent (11.015.852) 927.337
Non-controlling interests (594.737) 40.752
(11.610.589) 968.089
Total comprehensive income attributable to:
Owners of the parent (15.981.196) (9.577.120)
Non-controlling interests (732.418) (296.749)
(16.713.614) (9.873.869)
Earnings / (Losses) per share
(Euro cent per share): 11.26
Basic earnings/(losses) for
the year attributable to ordinary
equity owners of the parent (0,16) 0,03
Diluted earnings/(losses)
for the year attributable
to ordinary equity owners
of the parent (0,13) 0,03
8 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2015
Note 2015 2014
EUR EUR
ASSETS
Non--current assets
Investment properties 11.10 94.340.471 53.533.187
Investment properties under 11.10 5.125.389 5.083.216
development
Prepayments made for investments 11.10 100.000 2.674.219
Tangible and intangible
assets 11.13 164.617 200.203
Goodwill 11.11 - 43.269
Long-term receivables 252.916 125.909
Investments in associates 11.12 4.887.944 -
Available for sale financial 11.15 2.783.535 -
assets
107.654.872 61.660.003
Current assets
Inventories 11.14 11.300.000 -
Prepayments and other current 11.16 4.795.223 4.251.489
assets
Cash and cash equivalents 11.17 895.422 891.938
16.990.645 5.143.427
Total assets 124.645.517 66.803.430
EQUITY AND LIABILITIES
EQUITY AND LIABILITIES
Issued share capital 11.18 900.145 338.839
Share premium 122.874.268 97.444.044
Foreign currency translation 11.19 6.653.023 (1.411.825)
reserve
Exchange difference on 11.28 (33.399.513) (19.746.111)
I/C loans to foreign holdings
Available for sale financial 485.529 -
assets - fair value reserve
Accumulated losses (55.080.327) (44.064.475)
Equity attributable to 42.433.125 32.560.472
equity holders of the parent
Non Controlling interests 11.20 615.527 651.882
Non-controlling interests 25 615.527 651.882
Total equity 43.048.652 33.212.354
Non - Current liabilities
Borrowings 11.21 26.263.559 12.255.716
Finance lease liabilities 11.25 11.273.639 11.463.253
Redeemable preference shares 11.18 - 349.325
Trade and other payables 11.22 4.672.888 214.685
Deposits from tenants 11.23 623.770 499.831
42.833.856 24.782.810
Current liabilities
Borrowings 11.21 27.417.220 5.960.706
Trade and other payables 11.22 3.044.036 1.654.852
Taxes payable 11.24 822.005 431.828
Redeemable preference shares 11.18 6.430.536 349.325
Provisions 11.24 724.445 68.253
Deposits from tenants 11.23 132.684 161.579
Finance lease liabilities 11.25 192.083 181.723
38.763.009 8.808.266
Total liabilities 81.596.865 33.591.076
Total equity and liabilities 124.645.517 66.803.430
Net Asset Value (NAV) EUR
per share: 11.26
Basic NAV attributable to
equity holders of the parent 0,47 0,96
Diluted NAV attributable
to equity holders of the
parent 0,41 0,84
On 29 June 2016 the Board of Directors of SECURE PROPERTY
DEVELOPMENT & INVESTMENT PLC authorised these financial
statements for issue.
Lambros Anagnostopoulos Paul Ensor Constantinos Bitros
Director & Chief Director & Chairman Chief Financial Officer
Executive Officer of the Board
9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2015
Attributable to owners of the Company
Share Share Accumulated Exchange Foreign Available Total Non- Total
capital premium, losses, difference currency for controlling
Net(1) net of on I/C translation sale interest
non-controlling loans reserve(4) financial
interest(2) to foreign asset
holdings(3) assets
- fair
value
reserve(5)
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 for the
year - - 927.337 - - - 927.337 40.752 968.089
Exchange difference
on I/C loans to
foreign holdings
(Note 11.19) - - - (19.746.111) - - (19.746.111) - (19.746.111)
Foreign currency - - - - 8.904.153 - 8.904.153 (337.501) 8.566.652
translation reserve
Issue of share 57.122 4.739.203 - - - 4.796.325 - 4.796.325
capital, net (Note
11.18) -
Reduction of share (4.101.301) - 4.101.301 - - - - -
capital -
Balance - 31
December
2014 338.839 97.444.044 (44.064.475) (19.746.111) (1.411.825) - 32.560.472 651.882 33.212.354
Loss for the year - - (11.015.852) - - - (11.015.852) (594.737) (11.610.589)
Exchange difference
on I/C loans to
foreign holdings
(Note 11.19) - - - (13.653.402) - - (13.653.402) - (13.653.402)
Foreign currency
translation reserve - - - - 8.064.848 - 8.064.848 (137.681) 7.927.167
Fair value gain
on
available-for-sale
financial assets
(Note 11.15) - - - - - 485.529 485.529 - 485.529
Acquisition of
non-controlling
interest - - - - - - - 696.063 696.063
Issue of share
capital, net (Note
11.18) 561.306 25.430.224 - - - - 25.991.530 - 25.991.530
Balance - 31
December
2015 900.145 122.874.268 (55.080.327) (33.399.513) 6.653.023 485.529 42.433.125 615.527 43.048.652
(1) Share premium is not available for distribution.
(2) Companies which do not distribute 70% of their profits after
tax, as defined by the relevant tax law, within two years after the
end of the relevant tax year, will be deemed to have distributed as
dividends 70% of these profits. Special contribution for defense at
20% will be payable on such deemed dividends to the extent that the
shareholders (companies and individuals) are Cyprus tax residents.
The amount of deemed distribution is reduced by any actual
dividends paid out of the profits of the relevant year at any time.
This special contribution for defense is payable on account of the
shareholders.
(3) Exchange differences on intercompany loans to foreign
holdings arose as a result of devaluation of the Ukrainian Hryvnia
during 2014 and 2015. The Group treats the mentioned loans as a
part of the net investment in foreign operations (Note 11.28).
(4) Exchange differences related to the translation from the
functional currency of the Group's subsidiaries are accounted for
directly to the foreign currency translation reserve. The foreign
currency translation reserve represents unrealized profits or
losses related to the appreciation or depreciation of the local
currencies against the euro in the countries where the Company's
subsidiaries own property assets.
(5) Available For Sale financial assets are measured at fair
value. Fair value changes on AFS assets are recognized directly in
equity, through other comprehensive income.
10 CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2015
Note 2015 2014
EUR EUR
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before tax and 1.188.565
non-controlling interests (11.530.401)
Adjustments for:
(9.297.525)
(Gains)/losses on revaluation (9.297.525)
of investment property 11.2 2.335.247
Other non-cash movements 35.071 (593.717)
Write offs of prepayments 11.5 47.316 3.973
Impairment of assets 11.5 342.280 -
Accounts payable written off 11.5 (1.197.740) (12.422)
Depreciation/ Amortization charge 11.3 40.823 17.897
Interest income 11.7 (63.596) (80.895)
Interest expense 11.7 3.834.696 1.385.223
Share of losses from associates 11.12 1.244.572 -
Gain on acquisition of subsidiaries 11.11 (2.181.834) (766.221)
Impairment on Inventory 11.6 975.659 -
Goodwill Impairment 11.11 657.082 -
Effect of foreign exchange differences 11.8 5.071.048 7.512.640
------------ ------------
Cash flows used in operations
before working capital changes (389.777) (642.482)
Change in inventories 11.13 24.341 -
Change in prepayments and other (1.754.061)
current assets 11.15 1.242.809
Change in trade and other payables 11.22 1.131.688 (710.064)
Change in VAT and other taxes
receivable 11.15 (290.593) 1.408.353
Increase in Provisions 11.24 656.192 (50.770)
Change in other taxes payables 11.24 87.524 (49.029)
Increase in deposits from tenants 11.23 (117.497) 211.228
Cash generated from operations 2.344.687 (1.586.825)
Income tax paid (238.616) (284.153)
Net cash flows provided/(used) (1.870.978)
in operating activities 2.106.071
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure on investment
property 11.10 - (60.155)
Prepayment made for acquisition
of investment property 11.10 (100.000) (624.841)
Cash outflow on available for -
sales financial assets (2.298.005)
Interest received 63.596 80.895
Cash outflow on acquisition of (6.210.254)
subsidiaries 11.11 (1.786.934)
Net cash flows from / (used in) (6.814.355)
investing activities (4.121.343)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital/shareholders 1.727.691
advances 11.18 10.839.040
Net (repayment) of borrowings 11.21 (5.672.198) (565.389)
Interest and financial charges (1.170.847)
paid (2.619.506)
Decrease in financial lease liabilities 11.25 (179.255) (82.444)
Repayment of preference shares 11.18 (349.325) -
Net cash flows from / (used in)
financing activities 2.018.756 (90.989)
Net increase/(decrease) in cash (8.956.072)
at banks (203.603)
At beginning of the year 891.938 9.668.260
Effect of foreign exchange rates
on cash and cash equivalents (207.087) (179.750)
At end of the year 11.17 895.422 891.938
============ ============
11 Notes to the Consolidated Financial Statements
For the year ended 31 December 2015
11.1 Investment in subsidiaries
The Company has direct and indirect holdings in other companies,
collectively called the Group, that were included in the
consolidated financial statements, and are detailed below:
Holding %
Name Country Related as at as at
of incorporation Asset 31 Dec 31 Dec
2015 2014
SC SECURE Capital
Limited Cyprus 100 100
Brovary
SL SECURE Logistics Logistics
Limited Cyprus Park 100 100
LLC Aisi Brovary Ukraine 100 100
LLC Terminal Brovary Ukraine 100 100
Kiyanovskiy
LLC Aisi Ukraine Ukraine Residence 100 100
LLC Retail Development
Balabino Ukraine 100 100
LLC Trade Center Ukraine 100 100
Tsymlianskiy
LLC Almaz--press--Ukrayina Ukraine Residence 55 55
Bela Logistic
LLC Aisi Bela Ukraine Park 100 100
LLC Merelium Investments Ukraine Merged - 100
Zaporizhia
LLC Interterminal Ukraine Retail Center 100 100
LLC Aisi Outdoor Ukraine Merged - 100
LLC Aisi Ilvo Ukraine 100 100
LLC Aisi Donetsk Ukraine Merged - 100
Innovations
Myrnes Innovations Logistics
Park Limited Cyprus Park 100 100
Best Day Real Estate
SRL Romania 100 100
Yamano Holdings EOS Business
Limited Cyprus Park 100 100
Secure Property
Development and
Investment Srl Romania 100 100
N-E Real Estate
Park First Phase
Srl Romania 100 100
Victini Holdings
Limited Cyprus GED Logistics 100 100
SPDI Logistics Greece 100 -
S.A.
Zirimon Properties Cyprus Delea Nuova 100 -
Limited
Bluehouse Accession Cyprus Praktiker 100 -
Project IX Limited Craiova
Bluehouse Accession Cyprus 100 -
Project IV Limited
Bluebigbox 3 Srl Romania 100 -
SEC South East
Continent Unique
Real Estate Investments
II Limited Cyprus 100 100
SEC South East Cyprus 100 -
Continent Unique
Real Estate (Secured)
Investments Limited
Residential
Diforio Holdings and Land
Limited Cyprus portfolio 100 100
Demetiva Holdings
Limited Cyprus 100 100
Ketiza Holdings
Limited Cyprus 90 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
Edetrio Holdings Cyprus 100 -
Limited
Emakei Holdings Cyprus 100 -
Limited
RAM Real Estate Cyprus 50 -
Management 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 Cyprus 44,24 -
Limited
Ashor Development Romania 44,24 -
Srl
Jenby Ventures Cyprus 44,30 -
Limited
Jenby Investments Romania 44,30 -
Srl
Ebenem Limited Cyprus 44,30 -
Ebenem Investments Romania 44,30 -
Srl
Sertland Properties Cyprus 100 -
Limited
Boyana Residence Bulgaria 100 -
ood
Mofben Investments Cyprus 100 -
Limited
Delia Lebada Invest Romania 65 -
srl
Within the reporting period the subsidiaries LLC Aisi Outdoor,
LLC Merelium Investments and LLC Aisi Donetsk were merged to LLC
Aisi Ilvo. The reorganization (merger) process was finished in June
2015. The Group is planning to further streamline its structure in
Cyprus, Ukraine and Romania throughrout 2016-2017.
During the reporting period the Company realized a number of
acquisitions: GED Warehouse, Praktiker Craiova and a part of the
mixed portfolio including commercial, residential properties and
land were categorized under "Investment Property" (Notes 11.10
& 11.11). Another part of the mixed portfolio (Delea Nuova
office Building , Green Lake land has been categozied under
"Associates" (Note 11.12). The 20% acquisition of Autounion has
been recored under "Available for Sale Fianancial Assets" (Note
11.15).
11.2 Operating Income
Operating income in the net amount of EUR5.130.637 for the year
ended 31 December 2015 represents:
a) rental income as well as service charges and utilities income
collected from tenants as a result of the rental agreements
concluded with tenants of the Terminal Brovary Logistic Park
(Ukraine), Innovations Logistics Park (Romania), EOS Business Park
(Romania), Praktiker Craiova (Romania), and GED Logistics
(Greece),
b) income from the sale of electricity by GED Logistics to the
Greek grid,
c) rental income and service charges by tenants of the Residential Portfolio, and
d) sales proceeds income from sale of several apartments and
parking spaces from the Residential Portfolio minus the deduction
of Cost of assets Sold, representing the fair value of the previous
year of the apartments and parking spaces sold in 2015. The net
income from sale of assets incudes both sales from Investment
Property assets and Inventory assets.
31 Dec 31 Dec
2015 2014
EUR EUR
Rental income 4.605.022 3.063.875
Sale of electricity 297.962 -
Service charges and utilities income 545.976 513.570
Total income from rental contracts 5.448.960 3.577.445
Income from sale of assets 1.725.326 107.917
Cost of assets sold (2.043.649) (93.459)
Net Income from sale of assets (318.323) 14.458
Total Operating income 5.130.637 3.591.903
Occupancy rates in the various income producing assets of the
Group as at 31 December 2015 were as follows:
Income producing assets
% 31 Dec 31 Dec
2015 2014
EOS Business Park Romania 100% 100%
Innovations Logistics
Park (Note 11.32) Romania 87% 100%
GED Logistics Greece 100% n/a
Terminal Brovary
(Note 11.32) Ukraine 47% 94%
Praktiker Craiova Romania 100% n/a
(Note 11.32)
Valuation gains /(losses) from investment property for the
reporting period, excluding foreign exchange translation
differences which are incorporated in the table of Note 11.10, are
presented in the table below.
Property Name (EUR) Valuation gains/(losses)
31 Dec 31 Dec
2015 2014
EUR EUR
Brovary Logistic Park (589.179) 8.512.454
Bela Logistic Center 1.513.658 1.646.852
Kiyanovskiy Lane 278.302 1.155.225
Tsymlyanskiy Lane 178.669 184.450
Balabino Lane (8.143) 269.744
Rozny Lane (Note 11.10) (865.054) (2.440.200)
Innovations Logistics Park 400.000 1.000.000
EOS Business Park 150.000 550.000
Residential Portfolio 251.500 (1.581.000)
Green Lake (865.000) -
Pantelimon Lake (10.000) -
Praktiker Craiova (2.870.000) -
GED Logistics 100.000 -
Total (2.335.247) 9.297.525
11.3 Administration Expenses
31 Dec 31 Dec
2015 2014
EUR EUR
Salaries and Wages (1.108.614) (807.171)
Legal fees (241.092) (410.394)
Advisory fees (323.232) (380.525)
Corporate registration and maintenance
fees (226.326) (210.164)
Directors' remuneration (278.417) (171.197)
Audit and accounting fees (191.230) (143.261)
Public group expenses (155.766) (101.780)
Depreciation/Amortization charge (40.823) (17.897)
Sundry expenses (415.838) (442.033)
Total Administration Expenses (2.981.338) (2.684.422)
Salaries and wages include the remuneration of the CEO, the CFO,
the Group Commercial Director, the Group Investment Director and
the Country Managers of Ukraine and Romania, as well as the salary
cost of personnel employed in the region.
Legal fees represent legal expenses incurred by the Group in
relation to asset operations (rentals, sales etc), ongoing legal
cases in Ukraine, debt restructurings as well as its compliance
with AIM listing.
Advisory fees are mainly related to outsourced human resources
support on the basis of advisory contracts, capital raising
advisory expenses and marketing expenses incurred by the Group in
relation to Cypriot, Ukrainian, Romanian, Bulgarian and Greek
operations.
Directors' remuneration represents the remuneration of all
non-executive Directors and committee members (Note 11.28)
Audit and accounting expenses includes the audit fees and
accounting fees for the Company and all the subsidiaries.
Public group expenses include among others fees paid to the AIM:
LSE stock exchange and the Nominated Advisor of the Company as well
as other expenses related to the listing of the Company.
Depreciation/Amortization expense is mainly related to
amortization of software (ERP - Navision) and for the depreciation
of the generator in Terminal Brovary.
Sundry expenses include office expenses, travel expenses,
communication expenses, D&O insurance and all other general
expenses for Cypriot, Romanian, Ukrainian, Bulgarian and Greek
operations.
11.4 Investment property operating expenses
The Group incurs expenses related to the proper operation and
maintenance of all the income generating properties in Kiev,
Bucharest, Athens, Sofia and Craiova. A part of these expenses is
recovered from the tenants through the rental agreements
(11.2).
31 Dec 31 Dec
2015 2014
EUR EUR
Property Management fees (253.060) (316.768)
Property related taxes (363.080) (59.301)
Expenses for Utilities (274.149) (244.557)
Property security (55.688) (11.984)
Repairs and technical maintenance (70.247) (6.399)
Leasing expenses (30.861) (36.997)
Property Insurance (48.258) (11.919)
Other Investment property operating
expenses (29.240) (68.636)
Total (1.124.583) (756.561)
Property Management fees relate to Property Management
Agreements for Terminal Brovary Logistics Park, Innovation
Logistics Park, and Praktiker Craiova with third party Managers
outsourcing the related services.
Property related taxes reflect local taxes related to land and
building properties (in the form of land taxes, building taxes,
garbage fees, etc).
Leasing expenses reflect expenses related to long term land
leasing.
11.5 Other operating income/(expenses), net
31 Dec 31 Dec
2015 2014
EUR EUR
Compensation received 182.638 -
Accounts payable written off 1.197.740 12.422
Other income 1.380.378 12.422
Impairment of assets (342.280) -
Provision/impairment of prepayments
and other current assets (47.316) (3.973)
Transaction costs (287.999) -
Other expenses (81.531) (144.507)
Other expenses (759.126) (148.480)
Total 621.252 (136.058)
Compensation received relates to the extraordinary income due to
early break off tenancy agreements by tenants in Terminal
Brovary.
Accounts payable written off represent a write off of management
fees associated with SEC South East Continent Unique Estate
Investments Ltd charged by a related party, SECURE Management Ltd,
which has accepted to forgo any claim on such payable amount.
Impairment of assets represents an amount paid by a subsidiary 8
years ago for acquiring an option to buy properties which has not
been exercised.
Transaction costs represent due diligence costs for properties
that were considered for acquisition which at the end were not
acquired. Such expenses were presented previously as Deferred
expenses.
Other income/(expenses) represents mainly non recoverable
VAT.
11. 6 Impairment allowance for inventory and provisions
31 Dec 31 Dec
2015 2014
EUR EUR
Impairment of Inventory (975.659) -
Provision (Note 11.24, 11.29) (700.000) -
Total (1.675.659) -
Impairment of Inventory relates to Boyana residence (Note
11.14).
Provision reflects potential contigent liabilities from legal
cases (Notes 11.24 and 11.29).
11.7 Finance costs and income
Finance income 31 Dec 31 Dec
2015 2014
EUR EUR
Interest from non bank loans 48.730 -
Bank interest income 14.866 80.895
Total finance income 63.596 80.895
Finance costs 31 Dec 31 Dec
2015 2014
EUR EUR
Borrowing interest expenses (Note (3.283.056) (1.091.474)
11.21)
Finance leasing interest expenses
(Note 11.25) (551.640) (256.752)
Finance charges and commissions (258.493) (68.744)
Default interest (325.707) -
Other finance expenses (19.295) (41.328)
Total finance costs (4.438.191) (1.458.298)
Net finance result (4.374.595) (1.377.403)
Borrowing interest expense represents interest expense charged
on bank and non-bank borrowings.
Finance leasing interest expenses relate to the sale and lease
back agreements of the Group.
Finance charges and commissions include regular banking
commissions, and various fees paid to the banks, including a fee
paid to EBRD for the restructuring of the Terminal Brovary loan
amounting to EUR99.154.
Default interest relates to interest charged by Bank of Cyprus
in relation to the loan over Delia Lebada Invest srl (Note
11.21).
11.8 Foreign exchange profit / (losses)
a. Foreign exchange loss - non realised
Foreign exchange losses (non-realised) resulted from the loans
and/or payables/receivables denominated in non EUR currencies when
translated in EUR, mainly the EBRD loan (Note 11.21). The exchange
loss for the year ended 31 December 2015 amounted to EUR5.071.048
(2014: loss EUR 7.512.640).
b. Exchange difference on intercompany loans to foreign holdings
The intercompany loans provided by SC Secure Capital Limited to
Ukrainian subsidiaries (Note 11.28) incurred an exchange loss
(non-realised) of EUR13.653.402, due to the UAH devaluation which
took place during the reporting period (2014: loss EUR19.746.111).
Settlement of these loans is not planned to occur in the
foreseeable future and in substance is part of the Group's net
investment in its foreign operations.
11.9 Income Tax Expense
31 Dec 31 Dec
2015 2014
EUR EUR
Current income and defence tax expense (80.188) (220.476)
Taxes (80.188) (220.476)
For the year ended 31 December 2015, the corporate income tax
rate for the Company's subsidiaries are as follows: in Ukraine 19%,
in Romania 16%, in Greece 26% and in Bulgaria 10%. The corporate
tax that is applied to the qualifying income of the Company and its
Cypriot subsidiaries is 12,5%.
The tax on the Group's results differs from the theoretical
amount that would arise using the applicable tax rates as
follows:
31 Dec 31 Dec
2015 2014
EUR EUR
Profit / (loss) before tax (11.530.401) 1.188.565
Tax calculated on applicable rates (3.340.505) 318.134
Expenses not recognized for tax
purposes 483.029 941.488
Tax effect of allowances and income
not subject to tax (248.073) (139.164)
Tax effect of group tax relief (8.573) -
Tax effect on tax losses for the
year 3.181.833 (882.377)
Tax effect on tax losses brought
forward (822) (43.807)
10% additional tax 7.200 13.989
Defence tax 2.092 2.656
Overseas tax in excess of credit
claim used during the year 166 6.598
Prior year tax 3.841 2.959
Total Tax 80.188 220.476
11.10 Investment Property
11.10.1 Investment Property Presentation
Investment Property consists of the following assets:
Income Producing Assets
-- Terminal Brovary Logistic Park consists of a 49.180 sqm gross
leasable Class A warehouse and associated office space, situated on
the junction of the main Kyiv - Moscow highway and the Borispil
road. The facility is in operation since Q1 2010 and as at the end
of the reporting period its warehouse space is 47% leased (45%
occupancy).
-- Innovations Logistic Park is a 16.570 sqm gross leasable area
logistics park located in Clinceni in Bucharest, which benefits
from being on the Bucharest ring road. Its construction was tenant
specific, was completed in 2008 and is separated in four
warehouses, two of which offer cold storage (freezing temperature),
the total area of which is 6.395 sqm. Innovations was acquired by
the Group in May 2014 and was 87% leased at the end of the
reporting period.
-- EOS Business Park is a 3.386 sqm gross leasable area and
includes a Class A office Building in Bucharest, which is currently
fully let to Danone Romania. EOS Business Park was acquired by the
Group in October 2014.
-- GED Logistics is a logistics park comprising 17.756 gross
leasable sqm and has a net operating income ("NOI") of
approximately EUR1,5 million per annum. It is fully let to the
German multinational transportation and logistics company, Kuehne +
Nagel (70%) and to a Greek commercial company trading electrical
appliances GE Dimitriou SA (30%). The NOI also includes income from
selling electric energy produced by the 1MW photovoltaic park
installed on the roof of the property to the Greek Electric
Grid.
-- Praktiker Craiova, a DIY retail property was acquired by the
Group in July 2015. Situated in a prime location in Craiova,
Romania it is wholly let to Praktiker, a regional DIY retailer. The
property has a Gross Lettable Area ('GLA') of 9.385 square meters
and at the time the agreement to acquire the property was
concluded, it produced an annualized gross rental income of EUR1
million. Early in 2016 the tenant offered to extend the lease
agreement for an additional 5 years until 2025, in exchange of
reducing the annual rent to the levels of the temporary reduction
that the tenant and the previous owner had agreed for the last few
months of 2015, namely to EUR600k. Such offer is under
discussion.
Residential Assets
-- The Company owns a residential portfolio, consisting at the
end of the reporting period of partly let and income producing 104
apartments and villas across five separate complexes (Residential
portfolio: Romfelt, Linda, Monaco, Blooming House, Green Lake
Residential: Green Lake Parcel K) located in different residential
areas of Bucharest and Sofia. The Group acquired the portfolio
partly in August 2014 and partly May 2015. The aggregate
residential portfolio is 27% let at the end of the reporting
period.
Land Assets
-- Bela Logistic Center is a 22,4 Ha plot in Odessa situated on
the main highway to Kyiv. Following the issuance of permits in
2008, below ground construction for the development of a 103.000
sqm GBA logistic center commenced. Construction was put on hold in
2009 following adverse macro-economic developments at the time.
-- Kiyanivsky Lane consists of four adjacent plots of land,
totaling 0,55 Ha earmarked for a residential development,
overlooking the scenic Dnipro River, St. Michael's Spires and
historic Podil neighborhood.
-- Tsymlianskiy Lane, is a 0,36 Ha plot of land located in the
historic Podil District of Kyiv and is destined for the development
of a residential complex.
-- Rozny Lane is a 42 Ha land plot located in Kiev Oblast,
destined for the development of a residential complex. It has been
registered under the Group pursuant to a legal decision (Note
11.10).
-- Balabino project is a 26,38 Ha plot of land situated on the
south entrance of Zaporizhia, a city in the south of Ukraine with a
population of 800.000 people. Balabino is zoned for retail and
entertainment development.
-- Green Lake land is a 40.360 sqm plot and is adjacent to the
Green Lake part of the Company's residential portfolio (classified
under Associates). It is situated in the northern part of Bucharest
on the bank of Grivita Lake in Bucharest. SPDI owns 44,24% of these
plots, but has effective management control.
-- 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 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.
--
11.10.2 Investment Property Movement during the reporting
period
The table below presents a reconciliation of the Fair Value
movements of the investment property during the reporting period
broken down by property and by local currency vs. reporting
currency.
2015 (EUR) Fair Value Asset Value at
movements the Beginning of
the period or at
Acquisition/Transfer
date
Asset Type Carrying Foreign Fair Disposals Transfer Additions Carrying
Name amount exchange value 2015 from 2015 amount
31/12/2015 translation gain/(loss) prepayments as at
difference based made 31/12/2014
(a) on local for
currency investments
valuations
(b)
Terminal Warehouse 12.264.323 (4.609.808) (589.179) - - 17.463.310
Brovary
Logistic
Park
Bela Land 5.125.389 (1.471.485) 1.513.658 - - 5.083.216
Logistic
Center
Kiyanivskiy Land 3.203.368 (1.092.315) 278.302 - - 4.017.381
Lane
Tsymlyanskiy
Lane Land 1.006.773 (319.719) 178.669 - - 1.147.823
Balabino Land 1.555.922 (567.608) (8.143) - - 2.131.673
Rozny Land 1.194.085 - (324.395) 1.518.480 - -
Lane
Total (8.060.935) 1.048.912 -
Ukraine
Overall 24.349.860 (7.012.023) 1.518.480 29.843.403
change
in Ukraine
Innovations Warehouse 14.400.000 - 400.000 - - 14.000.000
Logistics
Park
EOS Business Office 6.550.000 - 150.000 - - 6.400.000
Park
Residential Residential 6.722.000 - 251.500 - - 8.373.000
portfolio (1.902.500)
Green Land 17.932.000 - (865.000) - 18.797.000 -
Lake
Pantelimon Land 5.812.000 - (10.000) - 5.822.000 -
Lake
Praktiker Retail 7.200.000 - (2.870.000) - 10.070.000 -
Craiova
Total 58.616.000 - (2.943.500) (1.902.500) - 34.689.000 28.773.000
Romania
GED Logistics Warehouse 16.500.000 - 100.000 - 16.400.000 -
Total 16.500.000 - 100.000 - - 16.400.000 -
Greece
TOTAL 99.465.860 (8.060.935) (1.794.588) (1.902.500) 1.518.480 51.089.000 58.616.403
The two components comprising the fair value movements are
presented in accordance with the requirements of IFRS in the
consolidated statement of comprehensive income as follows:
a. The translation loss due to the devaluation of local
currencies of EUR8.060.935 (a) is presented as part of the exchange
difference on translation of foreign operations in other
comprehensive income of the Profit and Loss Account and then
carried forward in the Foreign currency translation reserve;
and,
b. The fair value loss in terms of the local functional
currencies amounting to EUR1.794.588 (b), is presented as Valuation
gains/(losses) from investment properties under the Profit and Loss
Account and is carried forward in Accumulated losses.
The fair value of the properties held by the Group in Ukraine
has decreased overall, as a result of the political uncertainty, by
EUR7.012.023. The reduction includes a EUR324.395 fair value loss
for the Rozny property that the Group finally registered under its
name in July 2015 following protracted legal actions (Note
11.10).
The fair value of the unsold units of the Residential portfolio
as at the end of the reporting period has increased by EUR251.500
compared to the 2014 valuation (which was used for discharging the
units sold during the period).
2014 (EUR) Fair Value movements
Type Carrying Foreign Fair Additions/ Carrying
Asset Name amount Exchange Value acquisitions amount
31/12/2014 Translation gain/(loss) 2014 31/12/2013
difference
Terminal Industrial 17.463.310 (9.382.086) 8.512.454 60.155 18.272.787
Brovary Logistic
Park
Bela Logistic Land 5.083.216 (3.089.631) 1.646.852 - 6.525.995
Center
Kiyanovskiy Land 4.017.381 (2.503.662) 1.155.225 - 5.365.818
Lane
Tsymlyanskiy
Lane Land 1.147.823 (776.892) 184.450 - 1.740.265
Balabino Land 2.131.673 (1.473.579) 269.743 - 3.335.509
Sub total (17.225.850) 11.768.724
Total Ukraine 29.843.403 (5.457.126) 60.155 35.240.374
Innovations Industrial 14.000.000 - 1.000.000 13.000.000 -
Logistics
Park
EOS Business Office 6.400.000 - 550.000 5.850.000 -
Park
Residential Residential 8.373.000 - (1.581.000) 9.954.000 -
portfolio
Total Romania 28.773.000 (31.000) 28.804.000 -
TOTAL 58.616.403 (5.488.126) 28.864.155 35.240.374
11.10.3 Investment Property Valuations per asset
The table below presents the values of the individual assets as
appraised by the appointed valuer.
Asset Description/ Principal Related Companies Carrying amount
Name Location Operation as at
31 Dec 31 Dec
2015 2014
EUR EUR
Terminal Brovary, Warehouse LLC TERMINAL 12.264.323 17.463.310
Brovary Kiev oblast BROVARY
Logistics LLC AISI BROVARY
Park SL LOGISTICS
LIMITED
Bela Odesa Land and LLC AISI BELA 5.125.389 5.083.216
Logistic Development
Center Works for
Warehouse
Kiyanivskiy Podil, Land for LLC AISI UKRAINE 3.203.368 4.017.381
Lane Kiev City residential
Center development
Tsymlianskiy Podil, Land for LLC ALMAZ PRES 1.006.773 1.147.823
Lane Kiev City residential UKRAINE
Center development
Balabino Zaporizhia Land for LLC INTERTERMINAL 1.555.922 2.131.673
retail LLC AISI Ilvo,
development
Rozhny Brovary Land for SC Secure Capital 1.194.085 -
Lane district, residential
Kyiv oblast Development
Total 24.349.860 29.843.403
Ukraine
Innovations Clinceni, Warehouse MYRNES INNOVATIONS 14.400.000 14.000.000
Logistic Bucharest PARK LIMITED
Park BEST DAY REAL
ESTATE SRL
EOS Business Bucharest Office YAMANO LIMITED 6.550.000 6.400.000
Park building SPDI SRL,
N-E Real Estate
Park First Phase
Srl
Residential Bucharest Residential Secure Investment 6.722.000 8.373.000
Portfolio apartments II
(90 in Demetiva Limited
total in Diforio Limited
4 complexes) Frizomo Limited
Ketiza Limited
SecRom Srl
SecVista Srl
SecMon Srl
Ketiza Srl
Green Bucharest Residential Secure Investment 17.932.000 -
Lake apartments I
(14 in Edetrio Holdings
total) Limited
& Emakei Holdings
land for Limited
residential Iuliu Maniu
development Limited
Ram Real Estate
Management Limited
Moselin Investments
srl
Rimasol Limited
Rimasol Real
Estate Srl
Ashor Ventures
Limited
Ashor Develpoment
Srl
Jenby Ventures
Limited
Jenby Investments
Srl
Ebenem Limited
Ebenem Investments
Srl
Pantelimon Bucharest Land for Secure Investment 5.812.000 -
Lake residential I
development Mofben Investments
Limited
Delia Lebada
Invest srl
Praktiker Craiova Big Box Bluehouse Accession 7.200.000 -
Craiova retail Project IX
Bluehouse Accession
Project IV
BlueBigBox 3
srl
GED Logistics Athens Warehouse Victini Holdings 16.500.000 -
Limited.
SPDI Logistics
S.A.
TOTAL 99.465.860 58.616.403
11.10.4 Investment Property analysis
a. Investment Properties
The following assets are presented under Investment Property:
Terminal Brovary, Innovations, EOS Business Park, GED Logistics
Park, Craiova Praktiker, the Residential Portfolio (consisting of
apartments in 4 complexes and Green Lake) as well as all the land
assets namely Kiyanivskiy Lane, Tsymlyanskiy Lane, Balabino and
Rozny in Ukraine, Pantelimon Lake and Green Lake in Romania.
31 Dec 31 Dec
2015 2014
EUR EUR
At 1 January 53.533.187 28.714.379
Capital expenditure on investment
property - 60.155
Acquisitions of investment property 51.089.000 28.744.000
Disposal of investment Property (1.902.500) -
Transfer from prepayments made 1.518.480 -
Revaluation gain/(loss) on investment
property (3.308.246) 10.090.872
Translation difference (6.589.450) (14.076.219)
At 31 December 94.340.471 53.533.187
b. Investment Properties Under Development
As at 31 December 2015 investment property under development
represents the carrying value of Bela Logistic Center project,
which has reached the +10% construction in late 2008 but it is
stopped since then.
31 Dec 31 Dec
2015 2014
EUR EUR
At 1 January 5.083.216 6.525.995
Revaluation on investment property 1.513.658 1.646.852
Translation difference (1.471.485) (3.089.631)
At 31 December 5.125.389 5.083.216
c. Prepayments made for Investments
From time to time, when the Company acquires a new project, it
may proceed with downpayment in order to facilitate such
transactions. Movements of such prepayments are presented below for
2014 and 2015.
31 Dec 31 Dec
2015 2014
EUR EUR
At 1 January 2.674.219 3.625.553
Advances for acquisition transferred
to Investment in subsidiary (624.841) 624.841
Translation difference 9.761 -
Transfer to Investment Property (1.518.480) -
Advances for investments from acquisition
of subsidiaries 100.000 -
Impairment provision (540.659) (1.576.175)
At 31 December 100.000 2.674.219
Advances for acquisition transferred to Investment in subsidiary
reflects a down payment provided for the acquisition of GED
logistics park in 2014 that has been closed upon transaction
finalization in 2015.
Transfer to Investment Property relates to Kiev Oblast-Rozny
Property. The Group made an advance payment of US$12mil for the
acquisition of a project in Podil (Kyiv) in 2007. As of the end of
the reporting period Management continues its effort to collect the
original US $12mil as the seller defaulted but at the same time
succeeded in enforcing the collateral (a 42ha land plot Kiev Oblast
named Rozny-) after a protracted legal battle. Such asset was
transferred to Investment Property at EUR1.518.480 when the Group
took ownership (July 2015) while the amount of EUR540.659
represents the impairment at the date of transfer. The Group will
keep pursuing legally the difference from the advance payment.
11.10.5 Investment Property valuation method presentation
In respect of the Fair Value of Investment Properties the
following table represents an analysis based on the various
valuation methods. The different levels as defined by IFRS have
been defined as follows:
- Level 1 relates to quoted prices (unadjusted) in active and
liquid markets for identical assets or liabilities.
- Level 2 relates to inputs other than quoted prices that are
observable for the asset or liability indirectly (that is, derived
from prices). Level 2 fair values of investment properties have
been derived using the market value approach by comparing the
subject asset with similar assets for which price information is
available. Under this approach the first step is to consider the
prices for transactions of similar assets that have occurred
recently in the market. The most significant input into this
valuation approach is price per square meter.
- Level 3 relates to inputs for the asset or liability that are
not based on observable market data (that is, unobservable inputs).
Level 3 valuations have been performed by the external valuer using
the income approach (discounted cash flow) due to the lack of
similar sales in the local market (unobservable inputs).
To derive Fair Values the Group has adopted a combination of
income and market approach weighted according to the predominant
local market and economic conditions.
Fair value measurements (Level (Level (Level Total
at 31 Dec 2015 (EUR) 1) 2) 3)
Recurring fair value measurements
Balabino- Zaporizhia - 1.555.922 - 1.555.922
Tsymlyanskiy Lane - Podil,
Kyiv City Center - 1.006.773 - 1.006.773
Bela Logistics Center-
Odessa - - 5.125.389 5.125.389
Terminal Brovary Logistics
Park - Brovary Kyiv Oblast - 12.264.323 12.264.323
Kiyanivskiy Lane - Podil,
Kyiv City Center - 3.203.368 - 3.203.368
Rozny Lane - Brovary district,
Kyiv oblast - 1.194.085 - 1.194.085
Innovations Logistics
Park - Bucharest - - 14.400.000 14.400.000
EOS Business Park - Bucharest,
City Center - - 6.550.000 6.550.000
Residential Portfolio
(ex Green Lake) - Bucharest - 6.722.000 - 6.722.000
Green Lake - Bucharest - 17.932.000 17.932.000
Pantelimon Lake - Bucharest - 5.812.000 - 5.812.000
Praktiker - Craiova - - 7.200.000 7.200.000
GED Logistics - Athens - 16.500.000 - 16.500.000
Totals - 53.926.148 45.539.712 99.465.860
Fair value measurements (Level (Level (Level Total
at 31 Dec 2014 (EUR) 1) 2) 3)
Recurring fair value
measurements
Balabino - Zaporizhia - 2.131.673 - 2.131.673
Tsymlyanskiy - Podil,
Kyiv City Center - - 1.147.823 1.147.823
Bela Logistics Center
- Odessa - 5.083.216 - 5.083.216
Terminal Brovary Logistics
Park - Brovary Kyiv Oblast - - 17.463.310 17.463.310
Kiyanivskiy Lane - Podil,
Kyiv City Center - - 4.017.381 4.017.381
Innovations Logistics
Park - Bucharest - - 14.000.000 14.000.000
EOS Business Park - Bucharest,
City Center - - 6.400.000 6.400.000
Residential Portfolio
- Bucharest - 8.373.000 - 8.373.000
The table below shows yearly adjustments for Level 3 investment
property valuations:
Level Terminal Kiyanivskiy Tsymlyanskiy Bela Innovations EOS Praktiker Total
3 Fair Brovary Lane Lane Logistics Logistics Business Craiova
value Logistics Center Park Park
measurements Park
at 31
Dec 2015
(EUR)
Opening 17.463.310 4.017.381 1.147.823 - 14.000.000 6.400.000 - 43.028.514
balance
Transfer
to and
from level
2 due
to change
of valuation
methods - (4.017.381) (1.147.823) 5.083.216 - - - (81.988)
Acquisitions - - - - - - 10.070.000 10.070.000
Additions - - - - - - - -
Disposals - - - - - - - -
Profit/(loss)
on
revaluation (589.179) - - 1.513.658 400.000 150.000 (2.870.000) (1.395.521)
Translation
difference (4.609.808) - - (1.471.485) - - - (6.081.293)
Closing
balance 12.264.323 - - 5.125.389 14.400.000 6.550.000 7.200.000 45.539.712
Level 3 Terminal Kiyanivskiy Tsymlyanskiy Innovations EOS Business Total
Fair value Brovary Lane Lane Logistics Park
measurements Logistics Park
at 31 Dec Park
2014 (EUR)
EUR EUR EUR EUR EUR EUR
Opening 18.272.787 5.365.818 1.740.265 - - 25.378.870
balance
Acquisitions - - - 13.000.000 5.850.000 18.850.000
Additions 60.155 - - - - 60.155
Disposals - - - - - -
Profit
on revaluation 8.512.454 1.155.225 184.450 1.000.000 550.000 11.402.129
Translation (9.382.086) (2.503.662) (776.892) - - (12.662.640)
difference
Closing 17.463.310 4.017.381 1.147.823 14.000.000 6.400.000 43.028.514
balance
Information about Level 3 Fair Values is presented below:
Fair Fair value Valuation Unobservable Relationship
value at technique inputs of unobservable
at 31 Dec inputs to
31 2014 fair value
Dec
2015
EUR EUR EUR EUR EUR
Terminal 12.264.323 17.463.310 Combined Future The higher
Brovary market rental the rental
Logistics and income income income the
Park- Brovary approach and costs higher the
Kyiv Oblast for 14 fair value.
months, The higher
discount the discount
rate rate, the
lower fair
value
Bela Logistics 5.125.389 - Combined Percentage The higher
Center - market of development the percentage
Odessa and cost works of completion
approach completion, the higher
deterioration the fair value.
rate The higher
the deterioration
rate the lower
the fair value
Innovations 14.400.000 14.000.000 Income Future The higher
Logistics approach rental the rental
Park - Bucharest income income the
and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate rate, the
lower fair
value
EOS Business 6.550.000 6.400.000 Income Future The higher
Park - Bucharest, approach rental the rental
City Center income income the
and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate rate, the
lower fair
value
Praktiker 7.200.000 - Income Future The higher
Craiova approach rental the rental
income income the
and costs higher the
for 10 fair value.
years, The higher
discount the discount
rate rate, the
lower fair
value
Kiyanivskiy - 4.017.381 Combined Future The higher
Lane market rental the price
and income income of sales/rental
approach and costs income the
for 4 higher the
years fair value
Tsymlyanskiy - 1.147.823 Combined Future The higher
Lane market rental the price
and income income of sales/rental
approach and costs income the
for 4 higher the
years fair value
Total 45.539.712 43.028.514
11.11 Investment Property Acquisitions and Goodwill Movement
a. Investment Property Acquisitions
In March 2015 the Group completed the acquisition of an income
producing logistics park (the "GED Logistics Park"), located in the
West Attica Industrial Area of Athens, Greece. The GED 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.
In July 2015 the Group acquired Praktiker Craiova, a DIY retail
property. Situated in a prime location in Craiova, Romania it is
wholly let to Praktiker,a regional DIY retailer. At the time of
concluding the acquisition the building produced a gross rental
income of EUR1 million and has a Gross Lettable Area ('GLA') of
9.385 square metres. The acquisition has been effected through the
issuance of the Redeemable Convertible Preference Shares ('RCPS')
to the vendors (Note 11.18). The Purchase Price was EUR6,1m while
the property has debt amounting to EUR5m (Note 11.32).
During the reporting period the Company acquired the mixed use
portfolio of Sec South, a private equity entity, which included
investment properties, inventories and investment in associates,
(Notes 11.10,11.11,11.12) via in kind contribution by the vendors
and in exchange of 18.028.294 ordinary shares of EUR0,01 and 2
equivalent set of warrants as described below (Note 11.18). 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 of
GBP0,45. Assuming that all sellers would exersises the 10p warrants
the effective share price acquisition would be 37,5p. 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. The acquisition was 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
portfolio and land), Pantelimon Lake (land) and Boyana (residential
portfolio and land) projects. The transaction did not include Hotel
Yugoslayvija, a Sec South property that was under development, but
prior to having received zoning and construction permits. The Hotel
Yugoslayvija is being transferred to the old shareholders of Sec
South but the process has not finalized yet. The vendors of the Sec
South included Ionian Equity Participations Limited, a substantial
shareholder in the Company, holding then in excess of 10% of the
Company's issued share capital, as well as an entity in which
Lambros Anagnostopoulos (a director of the Company and the CEO) had
a majority stake and Constantinos Bitros (the CFO of the Company)
with stakes in Sec South of less than 20%, 4% and 1% respectively.
Sec South transferred four properties in SPDI, the net equity of
which was EUR15.782.190 (fair value at acquisition).
The fair value of identifiable assets and liabilities of
acquired projects during 2015 as of the date of their acquisition
was as follows:
EUR GED Logistics SEC South Praktiker Total
East Craiova
ASSETS
Non-current assets
Investment property 16.400.000 24.619.000 10.070.000 51.089.000
Investments in associates - 6.132.516 - 6.132.516
Other non-current assets 29.911 69.536 - 99.447
Current assets
Inventories - 12.300.000 - 12.300.000
Prepayments and other
current assets 353.366 1.203.036 384.884 1.941.286
Cash and cash equivalents 160 777.247 26.425 803.832
Total assets 16.783.437 45.101.335 10.481.309 72.366.081
Non-current liabilities
Interest bearing borrowings 12.549.180 23.865.253 4.892.950 41.307.383
Deposits from tenants 211.243 - - 211.243
Current liabilities
Interest bearing borrowings 135.110 1.431.464 - 1.566.574
Trade and other payables 492.060 3.074.332 120.961 3.687.353
Taxes payable 56.776 252.033 - 308.809
Total liabilities 13.444.369 28.623.082 5.013.911 47.081.362
Net assets acquired 3.339.068 16.478.253 5.467.398 25.284.719
(including non-controlling
interest)
Non-controlling interest - (696.063) - (696.063)
Net assets acquired
attributable to equity
holders 3.339.068 15.782.190 5.467.398 24.588.656
Financed by
Cash consideration paid 1.786.934 - - 1.786.934
Issue of shares - 15.152.490 6.081.211 21.233.701
Total consideration 1.786.934 15.152.490 6.081.211 23.020.635
Gain realized on acquisition
Goodwill =Net Assets 1.552.134 629.700 - 2.181.834
- Total consideration - - (613.813) (613.813)
In May 2014, the Group acquired 100% of the shares of Myrnes
Innovations Park Limited ("Myrnes"), a Cyprus registered company
which in turn owns 100% of the shares of Best Day Real Estate SRL
("Best Day"), a Romanian entity, owner of a multipurpose
warehousing space in South Bucharest, Romania. The purchase price
was funded by EUR4,4 million of the Company's existing cash
resources and by issuance of 785.000 redeemable preference shares
to the sellers of the asset. The then existing leasing contracted
with the Bank of Piraeus Romania and associated with the asset of
EUR7.500.000 remained (Note 11.25).
The acquisition of a Residential Portfolio consisting of
appartment units in four residential complexes (Romfelt, Linda,
Monaco, Blooming House) was completed in August 2014. The Company
acquired all the shares of SEC South East Continent Unique Real
Estate Investments II Ltd in exchange for 3.702.910 of the
Company's shares. No cash consideration was paid for this
acquisition. Lambros Anagnostopoulos (a director and the CEO of the
Company) and Constantinos Bitros (the CFO of the Company) had small
stakes in the Portfolio (less than 5% in aggregate) and received
133.437 and 33.357 SPDI shares respectively.
The acquisition of EOS Business Park in Bucharest was completed
in October 2014. SECURE PROPERTY DEVELOPMENT & INVESTMENT Srl a
subsidiary of the Company acquired the shares of NE REAL ESTATE
PARK FIRST PHASE Srl, owner of the property. The acquisition price
was EUR5,85 million with EUR1,85 million being the cash
consideration with the remainder funded by a sales and lease back
with Alpha Bank Romania (Note 11.25).
The fair value of identifiable assets and liabilities of
acquired projects during 2014 as of the date of their acquisition
was as follows:
(EUR) Innovations Residential EOS Business Total
Logistics Portfolio Park
Park
ASSETS
Non-current assets
Investment property 13.000.000 9.894.000 5.850.000 28.744.000
Tangible and intangible
assets - 5.701 7.584 13.285
Other non-current
assets 124.396 510 - 124.906
13.124.396 9.900.211 5.857.584 28.882.191
Current assets
Cash and cash equivalents 30.823 134.667 83.864 249.354
Trade and other - 178.176 2.445.863 2.624.039
receivables
30.823 312.843 2.529.727 2.873.393
Total assets 13.155.219 10.213.054 8.387.311 31.755.584
(EUR) Innovations Residential EOS Business Total
Logistics Portfolio Park
Park
LIABILITIES
Non-current liabilities
Interest bearing - 6.311.417 - 6.311.417
borrowings
Finance lease liabilities 7.414.992 - 3.905.656 11.320.648
Deposits from tenants - 57.749 - 57.749
7.414.992 6.369.166 3.905.656 17.689.814
Current liabilities
Interest bearing
borrowings 75.560 - 75.560
Finance lease liabilities 85.008 - 85.954 170.962
Trade and other
payables 192.592 574.118 41.336 808.046
277.600 649.678 127.290 1.054.568
Total liabilities 7.692.592 7.018.844 4.032.946 18.744.382
Net assets acquired 5.462.627 3.194.210 4.354.365 13.011.202
(including non-controlling
interest)
Non-controlling
interest - 248.668 - 248.668
.
Net assets acquired 3.442.878 4.354.365 13.259.870
attributable to
equity holders 5.462.627
Financed by
Cash consideration 4.372.000 2.087.608 6.459.608
paid
Issuance of redeemable-convertible
shares 698.650 698.650
Issuance of ordinary - 3.068.634 - 3.068.634
shares
Accounts receivable - - 2.310.026 2.310.026
swap (netting)
Total consideration 5.070.650 3.068.634 4.397.634 12.536.918
Gain realized on
acquisition 391.977 374.244 - 766.221
Goodwill - - (43.269) (43.269)
b. Goodwill Movement
Management decided to fully impair the goodwill resulting mainly
from the 2015 acquisitions and to a lesser extent from the 2014
acquisitions as they expect that the future cashflow to be
generated from the related properties, based on year end valuations
and sales price expectations do not validate any more.
Goodwill 31 Dec 31 Dec
2015 2014
EUR EUR
Opening Balance 43.269 -
Goodwill on acquisitions (Note 11.11) 613.813 43.269
Goodwill impairment (657.082) -
Total - 43.269
11.12 Investments in associates
In May 2015 by acquiring the mixed use Sec South portfolio (Note
11.11) the Group acquired participation in certain properties
classified under Investments in Associates. The associates acquired
are as follows:
a) Green Lake Development srl, is a residential compound company
which consists as at end of the reporting period of 40 apartments
plus 23 villas as well as 4 commercial use designated buildings
(Phase A of Green Lake project). The compound is situated on the
banks of Grivita Lake, in the northern part of the Romanian
capital. The compound includes also facilities such as private
kindergarten, nautical club, outdoor sport courts, and restaurants.
The Company has a 40,35% participation in this asset. The property
as of the end of the reporting period was 41% let.
b) The Company acquired a 24,35% participation in the Delea
Nuova office building property in Bucharest. The property is a
10.280 sqm office building, which consists of two underground
levels, a ground floor and ten above-ground floors. As of the end
of the reporting period, the building was 100% let, with ANCOM (the
Romanian Telecommunications Regulator) being the anchor tenant (70%
of GLA).The table below summarizes the movements in the carrying
amount of the Group's investment in associates.
EUR
At 1 January 2015 -
Cost of investment in associates 6.132.516
Share of profits /(losses) from associates (1.244.572)
At 31 December 2015 4.887.944
Share of profits/(losses) from associates reflects the post
acquisition after tax profits of each associate derived from rental
income, change in the fair value of properties, minus operational
and financial expenses for the year ended 31 December 2015.
As at 31 December 2015, the Group's interests in its associates
and their summarised financial information, including total assets
at fair value, total liabilities, revenues and profit or loss, were
as follows:
Project Associates Total Total Profit/ Holding Share Country Asset
Name assets liabilities (loss) of profits type
from
associates
EUR EUR EUR % EUR
Lelar
Holdings
Limited
and
S.C.
Delea Delenco
Nuova Construct Office
Project S.R.L. 24.232.215 (4.158.521) (2.895.756) 24,354% (705.232) Romania building
GreenLake
Project GreenLake
- Phase Development Residential
A Srl 15.651.396 (16.080.270) (2.374.548) 40,35% (539.340) Romania assets
Total 39.880.611 (20.238.791) (5.270.304) (1.244.572)
The share of profit from the associate GreenLake Delevopment Srl
was limited up to the interest of the Group in the associate.
11.13 Tangible and intangible assets
As at 31 December 2015 the intangible assets were composed of
the capitalized expenditure on the Enterprise Resource Planning
system (Microsoft Dynamics-Navision) in the amount of EUR90.647.
Amortization was recognized during 2015 and amounts to EUR30.213 as
the system was already in use.
As at 31 December 2015 and 2014 the tangible non-current assets
mainly consisted of the machinery and equipment used for the
servicing the Group's investment properties in Ukraine and
Romania.
11.14 Inventories
31 Dec 31 Dec
2015 2014
EUR EUR
Inventories 11.300.000 -
In May 2015 by acquiring the mixed use Sec South portfolio (Note
11.11) the Group also acquired also 100% of a residential portfolio
in Boyana, Sofia, Bulgaria which is classified as Inventory. The
Group had at Boyana Residence 61 apartment units as at the end of
the reporting period and adjacent land plots with surface of 17.000
sqm.
11.15 Available for sale financial assets
In April 2015 the Group completed the acquisition of a 20%
interest in a fully let and income generating office building in
Sofia, Autounion, for a cash consideration of EUR4.059.839
including the assignment of a loan amounting to EUR1.859.278
including accumulated interest up to the acquisition date (Note
11.16). The holding is classified as "Available for Sale Financial
Assets" in conformity with IAS 39.
31 Dec 31 Dec
2015 2014
EUR EUR
At 1 January
Acquisition cost of the investment 2.298.006 -
Fair Value gain 485.529 -
At 31 December 2.783.535 -
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 one of the largest Bulgarian insurance
companies on a long lease extending to 2027.
Fair value gain for the reporting period represents the
difference between the fair value of the investment at acquisition
date minus the fair value of investment at the reporting date.
11.16 Prepayments and other current assets
31 Dec 31 Dec
2015 2014
EUR EUR
Prepayments and other receivables 792.565 922.115
Loan to Available for Sale Financial -
Assets (Note 11.15) 1.905.933
Loan to associates 254.718 -
VAT and other tax receivable 938.464 1.229.057
Deferred expenses 921.427 2.100.317
Receivables due from related parties 3.384 -
Allowance for impairment of prepayments -
and other current assets (21.268)
Total 4.795.223 4.251.489
Prepayments and other receivables include receivables from
tenants, as well as short term financial support to
subsidiaries.
Loan to Available for Sale Financial Assets reflects a loan
receivable from Bluehouse V, holding company of Autounion building
(Note 11.15).
Loan to associates reflects a loan receivable from Greenlake
Developement SRL, holding company of Greenlake Phase A (Note 11.12,
Note 11.28).
VAT and other tax receivable is mainly the current portion of
the Terminal Brovary VAT receivable, to be offset from VAT charged
over rental income during the next years.
Deferred expenses include legal, advisory, consulting and
marketing expenses related to ongoing share capital increase and
due diligence expenses related to the possible acquisition of
investment properties in the near future.
11.17 Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
31 Dec 31 Dec
2015 2014
EUR EUR
Cash with banks in USD 25.205 43.612
Cash with banks in EUR 214.177 495.052
Cash with banks in UAH 40.505 150.029
Cash with banks in RON 569.424 201.984
Cash with banks in BGN 3.701 -
Cash equivalents 42.410 1.261
Total 895.422 891.938
11.18 Share capital
Number of Shares during 2015
31 December 13 March 31 May 29 June 1 July 27 July 12 August 31 December
2014 2015 2015 2015 2015 2015 2015 2015
Increase Increase Repayment Increase Exercise Exercise
of share of share of of share of of
capital capital redeemable capital warrants warrants
preference
shares
Authorised
Ordinary 989.869.935 989.869.935
shares of
EUR0,01
Total 989.869.935 989.869.935
equity
Redeemable
Preference
Class A
Shares of
EUR0,01 785.000 785.000
Redeemable 8.618.997 8.618.997
Preference
Class B
Shares of
EUR0,01
Total 990.654.935 8.618.997 999.273.932
Issued and
fully paid
Ordinary 33.884.054 23.777.748 18.028.294 - 8.785.580 5.539.047 90.014.723
shares of
EUR0,01
Total 33.884.054 23.777.748 18.028.294 - 8.785.580 5.539.047 90.014.723
equity
Redeemable
Preference
Class A
Shares of
EUR0,01 785.000 (392.500) 392.500
Redeemable 8.618.997 8.618.997
Preference
Class B
Shares of
EUR0,01
Total 34.669.054 23.777.748 18.028.294 (392.500) 8.618.997 8.785.580 5.539.047 99.026.220
Number of Shares during 2014
31 December 20 March 16 May 2014 24 June 2014 28 August 30 October 31 December
2013 2014 2014 2014 2014
Reduction of Increase of Share Capital
Share
Capital
Authorised
Ordinary
shares of
EUR0,01 989.869.935 - - - - - 989.869.935
Ordinary
Shares of
EUR0,92 1 (1) - - - - -
Deferred
Shares of
EUR0,99 4.142.727 (4.142.727) - - - - -
Total equity 994.012.663 (4.142.728) - - - - 989.869.935
Redeemable
Preference
Shares of
EUR0,01 - - 785.000 - - - 785.000
Total 994.012.663 (4.142.728) 785.000 - - - 990.654.935
Issued and
fully paid
Ordinary
shares of
EUR0,01 28.171.833 - - 616.726 3.934.853 1.160.642 33.884.054
Ordinary
Shares of
EUR0,92 1 (1) - - - - -
Deferred
Shares of
EUR0,99 4.142.727 (4.142.727) - - - - -
Total equity 32.314.561 (4.142.728) - 616.726 3.934.853 1.160.642 33.884.054
Redeemable
Preference
Shares of
EUR0,01 - - 785.000 - - - 785.000
Total 32.314.561 (4.142.728) 785.000 616.726 3.934.853 1.160.642 34.669.054
Value (EUR) for 2015
EUR 31 December 13 March 31 May 29 June 1 July 27 July 12 August 31 December
2014 2015 2015 2015 2015 2015 2015 2015
Increase Increase Repayment Increase Exercise Exercise
of share of share of of share of of
capital capital redeemable capital warrants warrants
preference
shares
Authorised
Ordinary 9.898.699
shares of
EUR0,01 9.898.699
Total 9.898.699
equity 9.898.699
Redeemable
Preference
Class A
Shares of
EUR0,01 7.850 7.850
Redeemable
Preference
Class B
Shares of
EUR0,01 - 86.190 86.190
Total 9.906.549 86.190 9.992.739
Issued and
fully paid
Ordinary
shares of
EUR0,01 338.839 237.777 180.283 87.856 55.390 900.145
Total
equity 338.839 237.777 180.283 87.856 55.390 900.145
Redeemable
Preference
Class A
Shares of
EUR0,01 7.850 (3.925) 3.925
Redeemable
Preference
Class B
Shares of
EUR0,01 - 86.190 86.190
Total 346.689 237.777 180.283 (3.925) 86.190 87.856 55.390 990.260
Value (EUR) for 2014
EUR 31 December 20 March 16 May 2014 24 June 2014 28 August 30 October 31 December
2013 2014 2014 2014 2014
Reduction of Increase of Share Capital
Share
Capital
Authorised
Ordinary
shares of
EUR0,01 9.898.699 - - - - - 9.898.699
Ordinary
Shares of
EUR0,92 1 (1) - - - - -
Deferred
Shares of
EUR0,99 4.101.300 (4.101.300) - - - - -
Total equity 14.000.000 (4.101.301) - - - - 9.898.699
Redeemable
Preference
Shares of
EUR0,01 - - 7.850 - - - 7.850
Total 14.000.000 (4.101.301) 7.850 - - - 9.906.549
Issued and
fully paid
Ordinary
shares of
EUR0,01 281.717 - - 6.167 39.349 11.606 338.839
Ordinary
Shares of
EUR0,92 1 (1) - - - - -
Deferred (4.101.300) - - -
Shares of
EUR0,99 4.101.300 - -
Total equity 4.383.018 (4.101.301) - 6.167 39.349 11.606 338.839
Redeemable
Preference
Shares of
EUR0,01 - - 7.850 - - - 7.850
Total 4.383.018 (4.101.301) 7.850 6.167 39.349 11.606 346.689
11.18.1 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.
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 of 1(st) 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.
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, 785.000 Redeemable Preference Class A Shares of
EUR0,01 nominal value each and 8.618.997 Redeemable Preference
Class B Shares of EUR0,01 nominal value each.
11.18.2 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.
A. 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, with 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, with the allotment of 18.028.294 ordinary
shares of EUR0,01 each for the purpose of an in kind contribution
of mixed Portfolio acquisition (Notes 11.10,11.11,11.12). The
shares issued for this purpose are locked in for 12 months.
3. On 27/7/2015 and on 12/8/2015, with the allotment of
14.324.627 (8.785.580 and 5.539.047 respectively) ordinary shares
of EUR0,01 each which were the Class A Warrants exercised (part of
the total of 18.028.294 warrants) that have been provided as part
of the in kind contribution of mixed Portfolio acquisition and
(Notes 11.10,11.11,11.12).
B. 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 with the appropriate authorities will
be completed during 2016.
C. Finally, further to the resolutions approved at the EGM of 24
June 2015 the Board has proceeded on 1 (st) July 2015 in issuing
8.618.997 Redeemable Preference Shares Class B of EUR0,01 each 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 11.32).
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,
b) 392.500 Redeemable Preference Class A Shares of EUR0,01
nominal value each, following the above described redemption which
shall be officially finalized during 2016, and
c) 8.618.997 Redeemable Preference Class B Shares of EUR0,01 nominal value each.
11.18.3 Option schemes
A. Under the scheme adopted in 2007, each of the directors
serving at the time, who is still a Director of the Company is
entitled to subscribe for 2.631 Ordinary Shares exercisable as set
out below:
Exercise Number
Price of
US$ Shares
Exercisable until 1 August
2017 57 1.754
Exercisable until 1 August
2017 83 877
B. Under a second scheme also adopted in 2007, director Franz M.
Hoerhager is entitled to subscribe for 1.829 ordinary shares
exercisable as set out below:
Exercise Number
Price of
GBP Shares
Exercisable until 1 August
2017 40 1.219
Exercisable until 1 August
2017 50 610
C. Under a scheme adopted in 2015, pursuant to an approval by
the AGM of 31/12/2013, the Company proceeded in 2015 in issuing
590.000 options to its employees, as a reward for their effort and
support during the previous year. Each option entitles the Option
holder to one Ordinary Share. Exercise price stands at GBP 0,15.
The Option holders lose and thus may not exercise any option from
the moment they cease to offer their services to the Company. The
CEO and the CFO of the Company did not receive any options.
a. 147.500 Options may be exercised within 2016. Out of the
Options that may be exercised in 2016, none has been exercised
until the reporting date.
b. 147.500 Options may be exercised within 2017,
c. 295.000 Options may be exercised within 2018.
The Company considers that all option schemes are currently out
of money and therefore has not made any relevant provision.
11.18.4 Class A Warrants issued
During the reporting period the Company acquired the Sec South
portfolio (Notes 11.10,11.11,11.12) in exchange of Ordinary shares
(issued at GBP 0,65 each ). To the sellers the Company also
provided 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 then two sets of Class A Warrants as
follows:
1) 18.028.294 warrants corresponding to 18.028.294 ordinary
shares, exercisable within 45 days from signing at an exercise
price of GBP0,10 per ordinary share. By August 2015 (Note 11.18) ,
14.324.627 out of a total of 18.028.294 warrants were exercised.
Any remaining warrants have lapsed.
2) 18.028.294 warrants corresponding to 18.028.294 ordinary
shares, exercisable by 31 December 2016 at an exercise price of
GBP0,45 per ordinary share.
11.18.5 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 31(st) 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 freeze on the earlier of (i) the expiration of the Class B
Warrants; and (ii) capital increase(s) undertaken by the Company
generating cumulative gross
proceeds in excess of US$100.000.000. As of the reporting date,
the aggregate amount of class B warrant is 12.859.246.
11.18.6 Capital Structure as at the end of the reporting
period
As at the reporting date the Company's share capital is as
follows:
Number of (as at) 31 December 2015 (as at) 31 December 2014
Ordinary shares of EUR0,01 Issued and Listed in AIM 90.014.723 33.884.054
Class A Warrants 18.028.294 -
Class B Warrants 12.859.246 4.840.579
Total number of Shares Non-Dilutive Basis 90.014.723 33.884.054
Total number of Shares Full Dilutive Basis 102.873.969 38.724.633
Options 4.460 4.460
During the EGM dated 24 June 2015 the shareholders approved the
issuance of 785.000 redeemable convertible preference SPDI shares
of nominal value EUR0,01 each. The Preference Shares have no voting
powers or rights to dividend. 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. 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 Date the holders have the option to unilaterally
convert 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 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. The above approval has
effective date 1(st) July 2015.
Redeemable Preference Shares Class A
The Redeemable Preference Shares Class A do not have voting or
dividend rights. The remaining 392.500 of the Redeemable Shares
Class A may be redeemed by the Company at a price of EUR0,89
each.
The holders of the Redeemable Preference Shares Class A have
notified the Company for redemption and the Company has entered
into discussions with them in order to setoff such redemption
amount with rentals owed to Best Day srl by the holders.
Redeemable Preference Shares Class B
The Redeemable Preference Shares Class B, amounting to 8.618.997
and issued to BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L
which was the seller of Praktiker Craiova asset (Note 11.11) do not
have voting rights but 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 by 1(st) July
2016 (the "Redemption Date") which may be prolonged by 3 months;
the redemption price shall be EUR0,7056 per Redeemable Preference
Share Class B. The Redeemable Preference Shares Class B 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 other
respects (Note 11.32).
11.19 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.
11.20 Non-Controlling Interests
Non-controlling interests represent the percentage
participations in the respective entities not owned by the
Group:
% Non-controlling
interest portion
Group Company 31 Dec 31 Dec
2015 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 55,70 -
Jenby Investments Srl 55,70 -
Ebenem Limited 55,70 -
Ebenem Investments Srl 55,70 -
11.21 Borrowings
Project 31 Dec 31 Dec
2015 2014
EUR EUR
Principal of bank Loans
European Bank for Reconstruction Terminal
and Development ("EBRD") Brovary 12.164.107 11.808.915
Banca Comerciala Romana Monaco Towers 1.210.962 1.783.826
Bancpost SA Blooming
House 1.739.634 2.157.501
Alpha Bank Romania Romfelt
Plaza 869.602 1.184.688
Raiffeisen Bank Romania Linda Residence 429.858 1.093.176
Bancpost SA GreenLake
- Parcel
K 3.099.639 -
Alpha Bank Bulgaria Boyana 3.460.813 -
Alpha Bank Bulgaria Boyana/Sertland 736.864
Bank of Cyprus Delia Lebada/Pantelimon 4.569.725 -
Eurobank Ergasias SA GED Logistics 12.343.116 -
Piraeus Bank SA GreenLake-Phase
2 2.525.938 -
Marfin Bank Romania Praktiker
Craiova 4.839.149 -
Loans by non-controlling
shareholders 2.713.458 -
Overdrafts 26.516 -
Total Principal of Bank
Loans 50.729.381 18.028.106
Restructuring fees and
interest payable to EBRD 32.767 29.685
Interest accrued on bank
loans 2.175.165 240.619
Interests accrued on non-bank
loans 743.466 -
Prepaid fees to EBRD - (81.988)
Total 53.680.779 18.216.422
31 Dec 31 Dec
2015 2014
EUR EUR
Current portion 27.417.220 5.960.706
Non-current portion 26.263.559 12.255.716
Total 53.680.779 18.216.422
EBRD loan related to Terminal Brovary (Note 11.32)
The restructuring of the Brovary construction loan with the EBRD
which was signed in December 2014 and became effective in February
2015. According to the agreement the loan repayment was extended to
2022, with a balloon payment of US$3.633.333. The loan has an
interest of 3 M LIBOR + 6,75%.
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 11.10), 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 reserve accounts
opened by LLC Terminal Brovary in Unicreditbank Ukraine.
7. LLC Aisi Brovary entered into a call and put option agreement
with EBRD, pursuant to which following an Event of Default (as
described in the Agreement) EBRD has the right (Call option) to
purchase at the Call Price from LLC Aisi Brovary, 20% of the
Participatory Interest of LLC Terminal Brovary on the relevant
Settlement Date.
8. LLC Terminal Brovary has granted EBRD a second ranking
mortgage in relation to its own and LLC Aisi Brovary's obligations
under the call and put option agreement.
9. LLC Terminal Brovary has pledged its rights arising in
connection with the existing Lease agreements with Tenants.
10. LLC Aisi Brovary has entered with EBRD into a conditional
assignment agreement of 20% and 80% corporate rights in LLC
Terminal Brovary.
11. SL Secure Logistics Limited has entered with EBRD into a
conditional assignment agreement of 99% corporate rights in LLC
Aisi Brovary.
12. SPDI PLC has issued a corporate guarantee dated 12 January
2009 guaranteeing all liabilities and fulfilment of conditions
under the existing loan agreement remains in force. The maturity of
the guarantee is equal to the maturity of the loan.
The existing credit agreement with EBRD includes among others
the following requirements for LLC Terminal Brovary and the Group
as a whole:
1. At all times LLC Brovary Logistics shall maintain a balance
in the Debt Service Reserve Amount (DSRA) account equal to not less
than the sum of all payments of principal and interest on the Loan
which will be due and payable during the next six months.
2. LLC Terminal Brovary shall achieve a "CNRI"(Contract Net
Rental Income is the aggregate of monthly lease payments, net of
value added tax, contracted by the Borrower pursuant to the Lease
Agreements as of the relevant testing date and converted into
Dollars at the official exchange rate established by the National
Bank of Ukraine as of such testing date) according to the following
schedule:
(1) on 31 December 2015, CNRI of USD 230.000 or more; and
(2) on 30 June and 31 December in each year commencing on the
date of 30 June 2016, CNRI of USD 250.000 or more, in respect of
the six month period commencing on any such date.
3. LLC Terminal Brovary shall achieve a "DSCR"(Debt Service
Coverage Ratio is the sum of net income minus operating expenses
plus amortization, divided with the sum of paid principal &
interest) according to the following schedule:
i. in respect of the 6 months period ending on 30 June 2015 and
31 December 2015, the DSCR of more than 1,15x.
ii.in respect of the 6 months period ending on 30 June or 31
December in any year commencing on the date of 30 June 2016, the
DSCR of more than 1,2x.
As certain of the covenants were breached as at the end of the
reporting period and also Terminal Brovary LLC was late in repaying
the March 2015 installments, the loan is classified as current
(Note 11.32). As of the reporting date all March principal
installments have been repaid. As of the reporting date the
covenants remain in breach. In addition as at reporting date an
agreement has been signed for the potential disposal of the asset
(Note 11.32).
Other bank Borrowings
SecMon Real Estate Srl (2011) entered into a loan agreement with
Banca Comerciala Romana for a credit facility for financing part of
the acquisition of the Monaco Towers Project apartments. As of the
end of the reporting period the balance of the loan was
EUR1.210.962 and bears interest of EURIBOR 3M plus 5%. The loan was
repayable in October 2015 and the Company is in discussions for
extension of its maturity. The loan is secured by all assets of
SecMon 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 was EUR1.739.634. 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.
SecRom Real Estate Srl entered (2009) into a loan agreement with
Alpha Bank- Romania for a credit facility for financing part of the
acquisition of the Doamna Ghica Project apartments. As of the end
of the reporting period, the balance of the loan was EUR869.602,
bears interest of EURIBOR 3M+5,25% and is repaid on the basis of
investment property sales. The loan matures in October 2016 and the
Company is in discussion for extension of its maturity. The loan is
secured by all assets of SecRom 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 was
EUR429.858. The loan bears interest of EURIBOR 1M+5,2%. The loan is
secured by all assets of SecVista Real Estate Srl as well as its
shares. As at the reporting date, and due to a bulk sale of
appartment units in the said project, the loan has been fully
repaid (Note 11.32).
Moselin Investments Srl (2010) entered into a construction loan
agreement with Bancpost SA covering the construction works of
Parcel K -Green Lake project. As of the end of the reporting period
the balance of the loan was EUR3.099.639 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 with the property
itself and the shares of Moselin Investments Srl.
Boyana Residence ood entered (2011) into a loan agreement with
Alpha Bank- Bulgaria for a construction loan related to the
construction of the Boyana Residence projects (finished in 2014).
As of the end of the reporting period the balance of the loan was
EUR3.460.813 and bears interest of EURIBOR 3M plus 5,75%. The loan
matures in 2017. 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.
Sertland Properties Limited entered (2008) into a loan agreement
with Alpha Bank- Bulgaria for an acquisition loan related to the
acquisition of 70% of Boyana Residence ood. As of the end of the
reporting period the balance of the loan was EUR736.864 and bears
interest of EURIBOR 3M plus 5,75%. The loan matures in 2017. The
loan currently is being repaid through sales proceeds of Boyana
Residence apartment sales. 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.
SPDI Logistics SA entered (April 2015) into a loan agreement
with EUROBANK SA to refinance the then existing debt facility
related to GED Logistics terminal. As of the end of the reporting
period the balance of the loan is EUR12.343.166 and bears interest
of EURIBOR 6M plus 3,2%+30% of the asset swap. The loan is
repayable by 2022, has a balloon payment of EUR8.660.000 and is
secured by all assets of SPDI Logistics SA as well as its
shares.
SEC South East Continent Unique Real Estate (Secured)
Investments Limited has a debt facility with Piraeus Bank (since
2007) for the acquisition of the Green Lake project land in
Bucharest Romania. As of the end of the reporting period the
balance of the loan was EUR2.525.938 and bears interest of EURIBOR
3M plus 4% plus the Greek law 128/78 0,6% contribution. The term of
the loan facility extends to 2017.
BBB3 srl (Praktiker Craiova) has a loan agreement with Marfin
Bank Romania. As of the end of the reporting period the balance of
the loan was EUR4.839.149 and bears interest of EURIBOR 6M plus 5%
and 3M plus 4,5%. The loan which is repayable by 2020 with a ballon
of EUR2.110.000 is secured by the asset as well as the shares of
the SPV. The Company is in discussions with the lending bank to
reschedule the loan to match the cash flow to be agreed with the
tenant (Note 11.32).
Delia Lebada Invest Srl, a subsidiary, entered into a loan
agreement with the Bank of Cyprus Limited in 2007 to effectively
finance a leveraged buy-out of the subsidiary by the 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 by SEC South
East Continent Unique Real Estate (Secured) Investments Limited.
The loan bears 7% fixed interest while the interest is payable
quarterly. The balance of the loan as at the end of the reporting
period was EUR4.569.725 (without any accrued interest and default
penalty). The loan is in default and the Bank has initiated
insolvency procedures to take over the Pantelimon lake asset. The
Company is currently in discussion with its partner and the bank in
an effort to find an amicable settlement to the case.
Other non bank borrowing include borrowings from non-controlling
interests. During the last six years and in order to support the
Green Lake project the minority shareholders of Moselin and Rimasol
ltd (other than the Company) have contributed their share of
capital injections by means of shareholder loans. The loans bear
interest between 5% and 7% annually and are repayable in 2016 and
2017.
Management expects such loans not to be repaid in the
foreseeable future, as these reflect mainly the equity
consideration of the shareholders and will be repaid to them post
project completions/sale.
11.22 Trade and other payables
The fair value of trade and other payables due within one year
approximate their carrying amounts as presented below.
31 Dec 31 Dec
2015 2014
EUR EUR
Payables to related parties (Note
11.28) 743.200 335.004
Payables due for construction 405.904 202.200
Payables to third parties 6.209.235 916.827
Deferred income from tenants current 99.554 145.267
Accruals 259.031 270.239
Total 7.716.924 1.869.537
31 Dec 31 Dec
2015 2014
EUR EUR
Current portion 3.044.036 1.654.852
Non - current portion 4.672.888 214.685
Total 7.716.924 1.869.537
Payables to related parties represent amounts due to board of
directors and committee members and accrued management remuneration
as well as the balances with Secure Management Ltd and Grafton
Properties (Note 11.28).
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$160.000) payable upon such event
occurring. Since it is uncertain when the latter amount is to be
paid, it has been discounted at the current discount rates in
Ukraine and is presented as a non-current liability. Payables for
construction include an amount of EUR245.000 payable to Boyana's
constructor which has been withheld as Good Performance
Guarantee.
Payables to third parties represent shareholder payable balances
owed to minority partners of the property assets acquired within
the period as well as amounts payable to various service providers
including auditors, legal advisors, consultants and third party
accountants related to the current operations of the Group.
Deferred income from tenants represents advances from tenants
which will be used as future rental income and utilities
charges.
Accruals mainly include the accrued audit fees, administration
fees and accounting fees of the year 2015 (expenses not invoiced
within 2015).
11.23 Deposits from Tenants
31 Dec 31 Dec
2015 2014
EUR EUR
Deposits from tenants non-current 623.770 499.831
Deposits from tenants current 132.684 161.579
Total 756.454 661.410
Deposits from tenants appearing under current and non-current
liabilities include the amounts received from the tenants of LLC
Terminal Brovary, Innovations, EOS Business Park, Craiova
Praktiker, GED Logistics and companies representing residential
segment as advances/guarantees and are to be reimbursed to these
clients at the expiration of the leases agreements.
11.24 Provisions and Taxes Payables
31 Dec 31 Dec
2015 2014
EUR EUR
Corporate income 482.389 322.727
Defence tax 24.920 34.202
Other taxes including VAT payable 314.696 74.899
Provision (Notes 11.6, 11.29) 724.445 68.253
Total Provisisons and Tax Liabilities 1.546.450 500.081
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.
11.25 Finance Lease Liabilities
As at the reporting date the finance lease liabilities consist
of the non-current portion of EUR11.273.639 and the current portion
of EUR192.083 (31 December 2014: EUR 11.463.253 and EUR 181.723,
accordingly).
31 Dec 2015 Note Minimum
lease payments Interest Principal
EUR EUR EUR
Less than one year 775.146 586.626 188.520
Between two and 3.592.679 2.169.534 1.423.145
five years
More than five years 11.31 12.373.657 2.573.824 9.799.833
16.741.482 5.329.984 11.411.498
Accrued Interest 54.224
Total Finance Lease 11.465.722
Liabilities
31 Dec 2014 Minimum
lease payments Interest Principal
EUR EUR EUR
Less than one year 766.289 584.677 181.612
Between two and 3.424.203 2.205.329 1.218.874
five years
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
Total Finance Lease 11.644.976
Liabilities
11.25.1 Land Plots Financial Leasing
The Group rents in Ukraine land plots classified as finance
leases. Lease obligations are denominated in UAH. The fair value of
lease obligations approximate to their carrying amounts as
presented above. Following the appropriate discounting finance
lease liabilities are carried at EUR210.448 under current and
non-current portion. The Group's obligations under finance leases
are secured by the lessor's title to the leased assets.
11.25.2 Sale and Lease Back Agreements
A. Innovations Logistic Park
In May 2014 the Group concluded the acquisition of Innovations
Logistics Park in Bucharest, owned by Best Day Srl, through a lease
back agreement with Piraeus Leasing Romania SA. As of the end of
the reporting period the balance is EUR7.365.404, bearing interest
rate at 3M Euribor plus 4,45% margin, being repayable in monthly
tranches until 2026 with a balloon of EUR5.244.926. 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 sale 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 a
sale and lease back agreement with Alpha Bank Romania SA. As of the
end of the reporting period the balance is EUR3.889.870 bearing
interest rate at 3M Euribor plus 5,25% margin, being repayable in
monthly tranches until 2024 with a balloon of EUR2.653.600. 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.
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.
11.26 Earnings and net assets per share attributable to equity
holders of the parent
a. Weighted average number of ordinary shares
31 Dec 2015 31 Dec 2014
Issued ordinary shares capital 90.014.723 33.884.054
Weighted average number of ordinary shares (Basic) 69.460.155 30.037.571
Diluted weighted average number of ordinary shares 82.631.610 34.204.860
b. Basic diluted and adjusted earnings per share
Earnings per share 31 Dec 2015 31 Dec 2014
EUR EUR
Profit/(loss) after tax attributable to owners of the parent (11.015.852) 927.337
Basic (0,16) 0,03
Diluted (0,13) 0,03
c. Net assets per share
Net assets per share 31 Dec 2015 31 Dec 2014
EUR EUR
Net assets attributable to equity holders of the parent 42.433.125 32.560.472
Number of ordinary shares 90.014.723 33.884.054
Diluted number of ordinary shares 102.873.969 38.866.775
Basic 0,47 0,96
Diluted 0,41 0,84
11.27 Segment information
All commercial and financial information related to the
properties held directly or indirectly by the Group is being
provided to members of executive management who report to the Board
of Directors. Such information relates to rentals, valuations,
income, costs and capital expenditures. The individual properties
are aggregated into segments based on the economic nature of the
property. For the reporting period the Group has identified the
following material reportable segments:
Commercial-Industrial
-- Warehouse segment
-- Office segment
-- Retail segment
Residential
-- Residential segment
Land Assets
-- Land assets
There are no sales between the segments.
Segment assets for the investment properties segments represent
investment property (including investment properties under
development and prepayments made for the investment
properties).
Segment liabilities represent interest bearing borrowings,
finance lease liabilities and deposits from tenants.
Profit and Loss for the year 2015
Warehouse Office Retail Residential Land Total
Plots
EUR EUR EUR EUR EUR EUR
Segment
profit
Sales - - - 1.725.326 - 1.725.326
income
Cost of - - - (2.043.649) - (2.043.649)
sales
Rental
income 3.627.698 523.013 258.191 196.120 - 4.605.022
Service
charges
and utilities
income 470.413 75.563 - - - 545.976
Sale of
electricity 297.962 - - - - 297.962
Valuation
gains/(losses)
from investment
property (89.178) 150.000 (2.870.000) 251.500 222.431 (2.335.247)
Gain realized 1.552.134 - - - - 1.552.134
on acquisition
of subsidiaries
(Note
11.11)
Share
of profits/(losses)
from associates (705.232) - - (539.340) (1.244.572)
Investment
properties
operating
expenses (622.699) (155.931) (31.010) (156.863) (158.080) (1.124.583)
Impairment - - - - (1.675.659) (1.675.659)
of inventory
and provisions
Goodwill
impairment (43.269) (613.813) (657.082)
Segment
profit 5.236.330 (155.856) (3.256.632) (27.566) (2.150.648) (354.372)
Gain realized
on acquisition
of subsidiaries
(Note
11.11) 629.700
Administration (2.981.338)
expenses
Other
(expenses)/income,
net 621.252
Finance
income 63.596
Interest (3.834.696)
expenses
Other
finance
costs (603.495)
Foreign (5.071.048)
exchange
losses,
net
Income
tax expense (80.188)
Exchange (13.653.402)
difference
on I/C
loan to
foreign
holdings
Exchange 8.064.848
difference
on translation
foreign
holdings
Available
for sale
financial
assets
gains 485.529
Total
Comprehensive
Income 5.236.330 (155.856) (3.256.632) (27.566) (2.150.648) (16.713.614)
Profit and Loss for the year 2014
Warehouse Office Residential Land Total
Plots
EUR EUR EUR EUR EUR
Segment profit
Sales income - - 107.917 - 107.917
Cost of sales - - (93.459) - (93.459)
Rental income 2.857.904 46.601 159.370 - 3.063.875
Service charges
and utilities
income 506.599 6.971 - - 513.570
Valuation gains/(losses) 10.328.525 550.000 (1.581.000) - 9.297.525
from investment
property
Segment profit 13.693.028 603.572 (1.407.172) - 12.889.428
Gain realized
on acquisition
of subsidiaries
(Note 11.11) - - - - 766.221
Investment properties
operating expenses (598.328) (38.869) (23.066) - (660.263)
Administration - - - - (2.743.723)
expenses
Other (expenses)/income,
net - - - - (136.058)
Finance costs - - - - (1.414.400)
(net)
Foreign exchange - - - - (7.512.640)
losses, net
Income Tax expense (220.476)
Exchange difference (19.746.111)
on I/C loan to
foreign holdings
Exchange difference 8.904.153
on translation
foreign holdings
Total Comprehensive 13.094.700 564.703 (1.430.238) - (9.873.869)
Income
Balance Sheet as at 31 December 2015
Warehouse Office Retail Residential Land Total
plots
EUR EUR EUR EUR EUR EUR
Assets
Investment
properties 43.164.324 6.550.000 7.200.000 6.847.538 30.578.609 94.340.471
Investment
property
under development - - - - 5.125.389 5.125.389
Prepayments
made for
investments 100.000 - - - - 100.000
Goodwill - - - - - -
Long-term
receivables 250.000 - - 1.185 1.731 252.916
Investments
in associates - 4.887.943 - - 1 4.887.944
Available-for-sale
financial
assets - 2.783.535 - - - 2.783.535
Inventories - - - 6.990.150 4.309.850 11.300.000
Segment
assets 43.514.324 14.221.478 7.200.000 13.838.873 40.015.580 118.790.255
Tangible
and intangible
assets 164.617
Prepayments
and other
current
assets 4.795.223
Cash and
cash equivalents 895.422
Total assets 124.645.517
Interest
bearing
borrowings 24.539.925 - 4.839.149 4.586.129 19.715.576 53.680.779
Finance
lease liabilities 7.508.988 3.889.870 - - 66.864 11.465.722
Deposits
from tenants 614.018 - - 37.444 104.992 756.454
Redeemable
preference
shares 349.325 - 6.081.211 - - 6.430.536
Segment
liabilities 33.012.256 3.889.870 10.920.360 4.623.573 19.887.432 72.333.491
Trade and
other payables - - - - - 7.716.924
Taxes payables - - - - - 1.546.450
Total liabilities 33.012.256 3.889.870 10.920.360 4.623.573 19.887.432 81.596.865
Balance Sheet as at 31 December 2014
Warehouse Office Residential Land plots Total
EUR EUR EUR EUR EUR
Assets
Investment 31.463.310 6.400.000 8.373.000 7.296.877 53.533.187
properties
Investment - - - 5.083.216 5.083.216
property under
development
Prepayments 624.841 - - 2.049.378 2.674.219
made 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 - - - - 4.251.489
and other
current assets
Cash and cash
equivalents - - - - 891.938
Total assets 66.803.430
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
Provisions - - - 68.253 68.253
Segment liabilities 20.671.254 3.981.252 6.500.091 137.114 31.289.711
Trade and - - - 1.869.537
other payables -
Taxes payables
and Provisions - - - - 431.828
Total liabilities 20.671.254 3.981.252 6.500.091 137.114 33.591.076
Geographical information
Operating income from 3(rd) parties 31 Dec 31 Dec
2015 2014
EUR EUR
Ukraine 1.835.181 2.439.780
Romania 2.182.045 1.152.123
Greece 1.163.832 -
Bulgaria (50.421) -
Total 5.130.637 3.591.903
31 Dec 31 Dec
2015 2014
EUR EUR
Carrying amount of assets (investment
properties, associates, inventory
and available for Sale)
Ukraine 24.349.860 31.892.781
Romania 63.503.944 28.773.000
Greece 16.600.000 624.841
Bulgaria 14.083.535 -
Total 118.537.339 61.290.622
11.28 Related Party Transactions
The following transactions were carried out with related
parties:
11.28.1 Expenses /Income
11.28.1.1 Expenses
31 Dec 31 Dec
2015 2014
------------------------- ---------- --------
EUR EUR
------------------------- ---------- --------
Board of Directors 278.417 171.197
------------------------- ---------- --------
Management Remuneration 863.810 553.379
------------------------- ---------- --------
Back office expenses 8.874 70.289
------------------------- ---------- --------
Total 1.151.101 794.865
------------------------- ---------- --------
Board of Directors expense represents the remuneration of all
the non-executive members of the Board and committees pursuant to
the decision of the Remuneration Committee.
Name Position 2015 Remuneration 2014 Remuneration
(EUR) (EUR)
----------------------- ------------------------ ------------------ ------------------
Paul Ensor Chairman 33.132 19.820
----------------------- ------------------------ ------------------ ------------------
Non-Executive Director
Antonios Achilleoudis until 22 July 2015 14.383 22.298
----------------------- ------------------------ ------------------ ------------------
Barseghyan Non-Executive Director 16.921 -
Vagharshak since 22 July 2015
----------------------- ------------------------ ------------------ ------------------
Ian Domaille Non-Executive Director 45.141 27.006
----------------------- ------------------------ ------------------ ------------------
Franz Horhager Non-Executive Director 33.132 19.820
----------------------- ------------------------ ------------------ ------------------
Antonios Kaffas Non-Executive Director 38.101 22.793
----------------------- ------------------------ ------------------ ------------------
Kalypso Maria Non-Executive Director 16.921 -
Nomikou since 22 July 2015
----------------------- ------------------------ ------------------ ------------------
Alvaro Portela Non-Executive Director 33.132 19.820
----------------------- ------------------------ ------------------ ------------------
Non-Executive Director
Robert Sinclair until 22 July 2015 13.499 19.820
----------------------- ------------------------ ------------------ ------------------
Harin Thaker Non-Executive Director 34.055 19.820
----------------------- ------------------------ ------------------ ------------------
Management remuneration includes the remuneration of the CEO,the
CFO the Group Commercial Director, the Group Investment Director
and that of the Country Managers of Ukraine and Romania pursuant to
the decisions of the remuneration committee. During 2015 the
remuneration has been increased as the the Gross Asset Value of the
Company grew. The increase was as mandated by the remuneration
policy.
11.28.1.2 Income
31 Dec 31 Dec
2015 2014
EUR EUR
Interest Income from loan from associates 2.055 -
Total 2.055 -
11.28.2 Payables to related parties
31 Dec 31 Dec
2015 2014
EUR EUR
Board of Directors & Committees 475.389 193.212
Grafton Properties 123.549 123.548
SECURE Management Ltd 1.062 18.244
Management Remuneration 143.200 -
Total 743.200 335.004
11.28.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to
non-Executive Directors until the end of the reporting period. The
members of the Board of Directors pursuant to a recommendation by
the remuneration committee and in order to facilitate the Company's
cash flow, receive their payment in exchange for shares in the
Company's capital. This was approved also by the Annual General
Meeting of the Company's shareholders.
11.28.2.2 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 on the Company raising US $50m of capital in the
markets.
11.28.2.3 Management Remuneration
Management Remuneration represents deferred amounts payable to
the CEO and CFO of the Company, as well as the Group Commercial
Director, the Group Investment Director and the Country Managers
for Romania and Ukraine.
11.28.3 Loans from SC Secure Capital Ltd to the Company's
subsidiaries
SC Secure Capital Ltd, the finance subsidiary of the Company
provided capital in the form of loans to the Ukrainian subsidiaries
of the Company so as to support the acquisition of assets,
development expenses of the projects, as well as various
operational costs.
Borrower Limit Principal Principal
-as of as of as of
31 Dec 31 Dec 31 Dec
2015 2015 2014
EUR EUR EUR
LLC "TERMINAL BROVARY" 28.827.932 26.798.804 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 26.951.100 27.730.561
All loans from SC Secure Capital Limited to the Company's
subsidiaries are USD denominated and in 2015 they generated a
foreign exchange loss totaling EUR13.653.402 as a result of the
devaluation of the Ukrainian Hryvnia during the reporting period.
As settlement of these loans is not likely to occur in the
foreseeable future and in substance is part of the Group's net
investment in its foreign operations, the foreign exchange loss is
recognised in other comprehensive income.
The Loan agreement between SC Secure Capital Limited (old Aisi
Capital Limited) (Lender) and Limited Liability Company "Terminal
Brovary" (Borrower) was signed on 19 December 2006 and originally
had a Repayment Date of 19 December 2012. Under this agreement the
Lender agrees to provide USD 30.000.000 to the Borrower with the
interest rate to be Libor (3 months) plus 7,5% per annum. The
Borrower has the obligation to repay the Loan in full on the
Repayment Date together with the accrued interest. In 2015 no
interest was calculated for this loan.
A potential Ukrainian Hryvnia weakening/strengthening by 30%
against the US dollar with all other variables held constant, would
result in an exchange difference on I/C loans to foreign holdings
of (EUR8.085.330)/ EUR 8.996.341 respectively, estimated on
balances held at 31 December 2015.
11.28.4 Loans to associates
31 Dec 31 Dec
2015 2014
EUR EUR
Loans to Greenlake Development SRL 254.718 -
Total 254.718 -
11.29 Contingent Liabilities
11.29.1 Tax Litigation
The Group performed during the reporting period a part of its
operations in the Ukraine, within the jurisdiction of the Ukrainian
tax authorities. The Ukrainian tax system can be characterized by
numerous taxes and frequently changing legislation, which may be
applied retroactively, open to wide and in some cases, conflicting
interpretation. Instances of inconsistent opinions between local,
regional, and national tax authorities and between the National
Bank of Ukraine and the Ministry of Finance are not unusual. Tax
declarations are subject to review and investigation by a number of
authorities, which are authorised by law to impose severe fines and
penalties and interest charges. Any tax year remains open for
review by the tax authorities during the three subsequent calendar
years; however, under certain circumstances a tax year may remain
open for longer.
The Group performed during the reporting period part of its
operations also in Romania, Greece and Bulgaria. In respect of
Romanian, Bulgarian and Greek taxation systems all are subject to
varying interpretation and to constant changes, which may be
retroactive. In certain circumstances the tax authorities can be
arbitrary in certain cases.
These facts create tax risks which are substantially more
significant than those typically found in countries with more
developed tax systems. Management believes that it has adequately
provided for tax liabilities, based on its interpretation of tax
legislation, official pronouncements and court decisions. However,
the interpretations of the relevant authorities could differ and
the effect on these consolidated financial statements, if the
authorities were successful in enforcing their interpretations,
could be significant.
At the same time the Group's entities are involved in court
proceedings with tax authorities; Management believes that the
estimates provided within the financial statements present a
reasonable estimate of the outcome of these court cases.
11.29.2 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.
11.29.3 Delia Lebada srl debt towards Bank of Cyprus
Sec South East Continent Unique Real Estate Investment ltd has
provided in 2007 a corporate guarantee to the Bank of Cyprus in
respect to the loan provided by the latter to its subsidiary Delia
Lebada srl, the owner of the Pantelimon Lake plot (Note 11.10). As
the loan is in default, the bank has initiated an insolvency
procedure. Depending on the final outcome of the procedure (that
may include an auctioning of the plot), the Bank may call the
difference between the price received from the auction and
EUR4.569.725 (without any accrued interest and default penalty)
which is the total liability. The Group is in discussions with the
bank and its partner in the project to find an amicable settlement
to the case. Management believes that the case has been adequately
being provided for.
11.29.4 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 on the Group's financial position. Consequently no
such provision is included in the current financial statements.
11.29.5 Other Contingent Liabilities
The Group had no other contingent liabilities as at 31 December
2015.
11.30 Commitments
The Group had no other commitments as at 31 December 2015.
11.31 Financial Risk Management
11.31.1 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 11.21), trade and other payables (Note 11.22)
deposits from tenants (Note 11.23), financial leases (Note 11.25),
taxes payable (Note 11.24) and equity attributable to ordinary or
preferred shareholders. 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.
11.31.2 Categories of Financial Instruments
Note 31 Dec 31 Dec
2015 2014
EUR EUR
Financial Assets
Cash at Bank 11.17 895.422 891.938
Long Term Receivables 252.916 125.909
Prepayments made for investments 11.10 100.000 2.674.219
Prepayments and other receivables 11.16 4.795.223 4.251.489
Available for sale investments 11.15 2.783.535 -
Total 8.827.096 7.943.555
Financial Liabilities
Borrowings 11.21 53.680.779 18.216.422
Trade and other payables 11.22 7.716.924 1.869.537
Deposits from tenants 11.23 756.454 661.410
Finance lease liabilities 11.25 11.465.722 11.644.976
Taxes payable and provisions 11.24 1.546.450 431.828
Redeemable preference shares 11.18 6.430.536 698.650
Total 81.596.865 33.522.823
11.31.3 Financial Risk Management Objectives
The Group's Treasury function provides services to its various
corporate entities, coordinates access to local and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group, mainly the investing and
development functions. Its primary goal is to secure the Group's
liquidity and to minimize the effect of the financial asset price
variability on the cash flow of the Group. These risks cover market
risks including foreign exchange risks and interest rate risk as
well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using
derivative instruments whenever appropriate. The use of financial
derivatives is governed by the Group's approved policies which
indicate that the use of derivatives is for hedging purposes only.
The Group does not enter into speculative derivative trading
positions. The same policies provide for the investment of excess
liquidity. As at the end of the reporting period, the Group had not
entered into any derivative contracts.
11.31.4 Economic Market Risk Management
The Group operates in Romania, Bulgaria, Greece and Ukraine. The
Group's activities expose it primarily to financial risks of
changes in currency exchange rates and interest rates. The
exposures and the management of the associated risks are described
below. There has been no change in the way the Group 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 adopts policies to
contain them so that the net effect of devaluation is
minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest-bearing assets. On December 31(st) , 2015,
cash and cash equivalent financial assets amounted to EUR 895.422
(2014: EUR 891.938) of which approx. EUR 40.000 in UAH and
EUR570.000 in RON (Note 11.17) while the remaining are mainly
denominated in either USD or EUR.
The Group is exposed to interest rate risk in relation to its
borrowings amounting to EUR53.680.779 (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.
Management monitors the interest rate fluctuations on a
continuous basis and evaluates hedging options to align the Group's
strategy with the interest rate view and the defined risk appetite.
Although no hedging has been applied for the reporting period, such
may take place in the future if deemed necessary in order to
protect the cash flow of a property asset through different
interest rate cycles.
As at 31 December 2015 the average interest rate for all the
interest bearing borrowing and financial leases of the Group stands
at 5,00% (31 December 2014: 5,77%).
The sensitivity analysis for LIBOR and EURIBOR changes applying
to the interest calculation on the borrowings principal outstanding
as at 31 December 2014 is presented below:
Actual +100 bps +200 bps
as at 31.12.2015
Weighted average
interest rate 5,00% 6,00% 7,00%
Influence on yearly - (648.116) (1.296.232)
finance costs
11.31.5 Credit Risk Management
The Group has no significant credit risk exposure. The credit
risk emanating from the liquid funds is limited because the Group's
counterparties are banks with high credit-ratings assigned by
international credit rating agencies. The Credit risk of
receivables is reduced as the majority of the receivables represent
VAT to be offset through VAT income in the future. In respect of
receivables from tenants these are kept to a minimum of 2 months
and are monitored closely.
11.31.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which applies a framework for the Group's
short, medium and long term funding and liquidity management
requirements. The Treasury function of the Group manages liquidity
risk by preparing and monitoring forecasted cash flow plans and
budgets while maintaining adequate reserves. The following table
details the Group's contractual maturity of its financial
liabilities. The tables below have been drawn up based on the
undiscounted contractual maturities including interest that will be
accrued.
31 December 2015 Carrying Total Less From one More
amount Contractual than to than
Cash one year two years two years
Flows
EUR EUR EUR EUR EUR
Financial assets
895.
Cash at Bank 895.422 895.422 422 - -
Prepayments and 4.795.223 4.795.223
other receivables 4.795.223
Available for 2.783.535 2.783.534
sale investments 2.783.534
Long Term Receivables 252.916 252.916 252.916
Prepayments made
for investments 100.000 100.000 100.000
Total Financial 8.827.096 8.827.096
assets 8.827.096
Financial liabilities - -
Borrowings 53.680.779 56.037.869 24.198.982 14.649.577 17.189.310
Trade and other
payables 7.716.924 7.716.924 3.044.036 - 4.672.888
Deposits from
tenants 756.454 756.454 132.684 - 623.770
Finance lease
liabilities 11.465.722 16.741.482 775.146 840.158 15.126.178
Redeemable preference
shares 6.430.536 6.430.536 6.430.536 - -
Taxes payable 1.546.450 1.546.450 1.546.450 - -
Total Financial
liabilities 81.596.865 89.229.715 36.127.834 15.489.735 37.612.146
Total net liabilities 72.069.769 80.402.619 27.300.738 15.489.735 37.612.146
31 December 2014 Carrying Total Less than From one More
amount Contractual one year to than
Cash two years two years
Flows
EUR EUR EUR EUR EUR
Financial assets
Cash at Bank 891.938 891.938 891.938 - -
Prepayments and 4.251.489 4.251.489 4.251.489 - -
other receivables
Total Financial 5.143.427 5.143.427 5.143.427 - -
assets
Financial liabilities
Interest bearing 18.216.422 22.319.389 6.665.533 2.743.797 12.910.059
borrowings
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
Taxes payable 698.650 698.650 349.325 349.325 -
Total Financial 33.090.995 43.025.121 9.597.578 4.005.858 29.421.685
liabilities
Total net liabilities 27.947.568 37.881.694 4.454.151 4.005.858 29.421.685
11.31.7 Net Current Liabilities
The current liabilities amounting to EUR38.763.009 exceed
current assets amounting to EUR16.990.645 by EUR21.772.364. This
difference is primarily a result of:
a) the bank borrowings related to the residential portfolio
EUR11.117.514 that are repayable by ongoing sales proceeds, which
according to the IFRS appear to be repayable within the next 12
months.
b) the EBRD Terminal Brovary debt, amounting to EUR12.164.107
which is also presented as a current liability due to the breach of
certain covenants should be viewed as under transfer upon
completion of the sale of Terminal Brovary (Note 11.32).
Based on the above, current assets are in effect higher than
current liabilities by EUR1.509.257. An additional EUR429.858 have
been repaid by May 2016 to the lending bank of the Linda project,
with the related loan being fully repaid (Note 11.32).
11.32 Events after the end of the reporting period
a. Sale of Linda
In May 2016, the Company signed a binding agreement to sell its
Linda Residences residential property sub-portfolio (part of its
Residential portfolio) in East Bucharest, Romania for EUR660.000
(gross of debt). The Linda Residences portfolio, which was
purchased in an all-share transaction as part of a broader property
portfolio in 2014 is located at Pantelimon lake in East Bucharest
in a heavily populated area and comprises of 16 apartment units in
different property blocks. Pursuant to the sale, the related bank
debt amounting to EUR225.000 at the time (Note 11.21) has been
fully repaid.
b. Announcement for the rental and disposal of Terminal Brovary
In January 2016 the Group received an unsolicited offer to sell
the Terminal Brovary to Rozetka, the leading Ukrainian internet
retailer, partly owned by the Horizon Private Equity Group.
Following negotiations the Group agreed with the potential buyer on
a price for the acquisition, subject to a number of steps including
an agreement with the lending bank, EBRD. As such steps may take
time, Rozetka agreed to lease all unlet warehouse areas of the
Terminal, bringing its warehouse occupancy up to 100%, through a
four year lease agreement, that would be valid even if the sale
does not take place. If the sale is concluded by October 2016, such
lease payments by Rozetka will be set off against the
consideration. The Letter of Intent for the sale and the firm lease
agreement were signed on 6 June 2016.
c. EBRD loan
While the negotiations for the sale of the Terminal Brovary
continued and EBRD is in discussions with the buyer for agreeing a
loan roll-over or repayment, the Company has not repaid the
installment due to EBRD in March 2016. In view of this the EBRD
loan is in default, yet all three parties (buyer, the Company and
EBRD) are focusing on the sale transaction. As of the reporting
date all March principal installments have been paid.
d. Innovations Park- Nestle
Nestle- Ice Cream, the anchor tenant of the Innovations
portfolio notified the Group of their intention to break the lease
agreement and leave the premises. As the rental agreement is based
on a closed contract until September 2018, Nestle and the Company
entered into discussion to find an amicable solution that would
facilitate both parties and agreed in principle for Nestle to
leave. Such agreement to be implemented, needs the consent of the
lending bank, (as lending came in the form of sale and lease back
agreement, the effective owner of the asset) Bank of Piraeus
Romania. The Bank of Piraeus has still not formally provided such
consent, and discussions are ongoing, while neither Nestle is
paying its rental dues to the Group, nor the Bank of Piraeus
demanding its lease payment due by the Group since January 2016.
The Group has retained legal advisors to explore all its legal
rights in case the agreement is at the end not successfully
implemented.
e. Delia - BOC Loan
Delia Lebada Invest Srl, a subsidiary, entered into a loan
agreement with the Bank of Cyprus Limited in 2007 to effectively
finance a leveraged buy-out of the subsidiary by Sec South. The
bank loan amounting to EUR4.830.000 is secured with a mortgage and
a corporate guarantee by SEC South. The balance of the loan as at
31 December 2015 is EUR4.569.725 (without any accrued interest and
default penalty). Following acquisition by the Group in mid 2015,
and as the loan was already in default and the Bank initiated
insolvency procedures to take over the Pantelimon lake asset. The
insolvency procedure may culminate in auctioning off the land plot
within the second half of 2016. The Group is currently in
discussion with its partner and the bank in an effort to find an
amicable settlement, prior to auctioning off the land plot.
f. Praktiker Craiova
The Company is in discussions with the tenant of its retail unit
is Craiova, Praktiker, to extend the lease agreement for an
additional five years until December 2025, in exchange for reducing
the annual rent to the levels of the temporary reduction that the
tenant and previous owner had agreed for the last few months of
2015, namely to EUR600k. At the same time the Company is in
discussions with the lending bank to reprofile the payment schedule
of the debt, to match the new rental conditions. As such the
redemption value of the redeemable convertible shares is also under
discussion with their owners (Notes 11.18 & 11.11).
g. United Kingdom possibility of exiting the European Union
On Thursday 23(rd) June 2016, the United Kingdom passed a
referendum for exiting the European Union. The final decision of
Britain to exit the European Union, which may materialize in the
next few years, may affect the UK stock markets and GBP foreign
exchange rates and thus the Group's share price as it is listed on
the AIM Market of the London Stock Exchange and its share price is
quoted in GBP. The Group's operations are in South East Europe and
denominated in other currencies, which are not expected to be
affected.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKKDBPBKDQAN
(END) Dow Jones Newswires
June 30, 2016 11:29 ET (15:29 GMT)