Secure Property Dev & Inv PLC Final Results - Replacement (0393F)

TIDMSPDI

RNS Number : 0393F

Secure Property Dev & Inv PLC

25 July 2016

The following amends the Secure Property Development & Investment PLC announcement released at 1629 on 30 June 2016 under RNS number 8718C.

In the above announcement, the NAV per share was reported as EURO 0.35 and 0.75 for 2015 and 2014 respectively instead of the correct denomination of GBP 0.35 and 0.75 for 2015 and 2014 respectively. All other details

remain unchanged.   The full amended text is shown below. 

Secure Property Development & Invest PLC/ Index: AIM / Epic: SPDI / Sector: Real Estate

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 GBP0.35 from GBP0.75, 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: [phone] 
    Constantinos Bitros       SPDI                          Tel: [phone] 
     Tercel Moore              SP Angel Corporate Finance    Tel: [phone] 
                               LLP                           2260 
    Jeff Keating              SP Angel Corporate Finance    Tel: [phone] 
                               LLP                           2260 
    Lottie Brocklehurst       St Brides Partners Ltd        Tel: [phone] 
                                                             1177 
    Frank Buhagiar            St Brides Partners Ltd        Tel: [phone] 
                                                             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 GBP0,35. 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 development    11.10       5.125.389        5.083.216 
  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 assets        11.15            2.783.535                    - 
                                                             107.654.872      61.660.003 
      Current assets 
      Inventories                                11.14       11.300.000       - 
      Prepayments and other current assets       11.16       4.795.223        4.251.489 
  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 reserve       11.19       6.653.023        (1.411.825) 
      Exchange difference on I/C loans           11.28       (33.399.513)     (19.746.111) 
       to foreign holdings 
      Available for sale financial assets                    485.529          - 
       - fair value reserve 
      Accumulated losses                                     (55.080.327)     (44.064.475) 
      Equity attributable to equity holders                  42.433.125       32.560.472 
       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 Executive  Director & Chairman  Chief Financial Officer 
 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 sale                    controlling 
                                     Net(1)        net of            on I/C loans    translation   financial                   interest 
                                                   non-controlling   to foreign      reserve(4)    asset 
                                                   interest(2)       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 non-controlling                            1.188.565 
  interests                                                (11.530.401) 
Adjustments for: 
                                                                         (9.297.525) 
(Gains)/losses on revaluation of investment                               (9.297.525) 
 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 current                                  (1.754.061) 
 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) in operating                              (1.870.978) 
 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 subsidiaries         11.11  (1.786.934)   (6.210.254) 
Net cash flows from / (used in) investing                                (6.814.355) 
 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 paid                        (2.619.506)   (1.170.847) 
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 at banks                   (203.603)     (8.956.072) 
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 of        Related Asset          as at     as at 
                                     incorporation                            31 Dec    31 Dec 
                                                                              2015      2014 
 SC SECURE Capital Limited          Cyprus                                   100       100 
 SL SECURE Logistics                                  Brovary Logistics 
  Limited                           Cyprus             Park                  100       100 
 LLC Aisi Brovary                   Ukraine                                  100       100 
 LLC Terminal Brovary               Ukraine                                  100       100 
                                                      Kiyanovskiy 
 LLC Aisi Ukraine                   Ukraine            Residence             100       100 
 LLC Retail Development 
  Balabino                          Ukraine                                  100       100 
 LLC Trade Center                   Ukraine                                  100       100 
                                                      Tsymlianskiy 
 LLC Almaz--press--Ukrayina         Ukraine            Residence             55        55 
                                                      Bela Logistic 

 LLC Aisi Bela                      Ukraine            Park                  100       100 
 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 
 Myrnes Innovations Park                              Innovations 
  Limited                           Cyprus             Logistics Park        100       100 
 Best Day Real Estate 
  SRL                               Romania                                  100       100 
                                                      EOS Business 
 Yamano Holdings Limited            Cyprus             Park                  100       100 
 Secure Property Development 
  and Investment Srl                Romania                                  100       100 
 N-E Real Estate Park 
  First Phase Srl                   Romania                                  100       100 
 Victini Holdings Limited           Cyprus            GED Logistics          100       100 
 SPDI Logistics S.A.                Greece                                   100       - 
 Zirimon Properties Limited         Cyprus            Delea Nuova            100       - 
 Bluehouse Accession                Cyprus            Praktiker Craiova      100       - 
  Project IX Limited 
 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 Continent           Cyprus                                   100       - 
  Unique Real Estate (Secured) 
  Investments Limited 
                                                      Residential 
 Diforio Holdings Limited           Cyprus             and Land 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 Limited           Cyprus                                   100       - 
 Emakei Holdings Limited            Cyprus                                   100       - 
 RAM Real Estate Management         Cyprus                                   50        - 
  Limited 
 Iuliu Maniu Limited                Cyprus                                   45        - 
 Moselin Investments                Romania                                  45        - 
  srl 
 Rimasol Enterprises                Cyprus                                   44,24     - 
  Limited 
 Rimasol Real Estate                Romania                                  44,24     - 
  Srl 
 Ashor Ventures Limited             Cyprus                                   44,24     - 
 Ashor Development Srl              Romania                                  44,24     - 
 Jenby Ventures Limited             Cyprus                                   44,30     - 
 Jenby Investments Srl              Romania                                  44,30     - 
 Ebenem Limited                     Cyprus                                   44,30     - 
 Ebenem Investments Srl             Romania                                  44,30     - 
 Sertland Properties                Cyprus                                   100       - 
  Limited 
 Boyana Residence ood               Bulgaria                                 100       - 
 Mofben Investments Limited         Cyprus                                   100       - 
 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 2015   31 Dec 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 2015   31 Dec 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 (Note    Romania    100%          n/a 
  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 2015    31 Dec 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 2015   31 Dec 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 2015   31 Dec 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 2015   31 Dec 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 2015   31 Dec 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 2015   31 Dec 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 2015   31 Dec 2014 
                                                   EUR           EUR 
 Borrowing interest expenses (Note 11.21)          (3.283.056)   (1.091.474) 
 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 2015   31 Dec 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 2015    31 Dec 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 movements                       Asset Value at the Beginning 
                                                                                         of the period or at 
                                                                                         Acquisition/Transfer 
                                                                                         date 
 Asset Name      Type           Carrying      Foreign       Fair value    Disposals      Transfer      Additions    Carrying 
                                 amount       exchange      gain/(loss)    2015          from           2015         amount 
                                 31/12/2015   translation   based                        prepayments                 as at 
                                              difference    on local                     made for                    31/12/2014 
                                              (a)           currency                     investments 
                                                            valuations 
                                                            (b) 
 Terminal        Warehouse      12.264.323    (4.609.808)   (589.179)                    -             -            17.463.310 
  Brovary 
  Logistic 
  Park 
 Bela Logistic   Land           5.125.389     (1.471.485)   1.513.658                    -             -            5.083.216 
  Center 
 Kiyanivskiy     Land           3.203.368     (1.092.315)   278.302                      -             -            4.017.381 
  Lane 
 Tsymlyanskiy 
  Lane           Land           1.006.773     (319.719)     178.669                      -             -            1.147.823 
 Balabino        Land           1.555.922     (567.608)     (8.143)                      -             -            2.131.673 
 Rozny Lane      Land           1.194.085     -             (324.395)                    1.518.480     -            - 
 Total Ukraine                                (8.060.935)   1.048.912     - 
 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 Lake      Land           17.932.000    -             (865.000)                    -             18.797.000   - 
 Pantelimon      Land           5.812.000     -             (10.000)                     -             5.822.000    - 
  Lake 
 Praktiker       Retail         7.200.000     -             (2.870.000)                  -             10.070.000   - 
  Craiova 
 Total Romania                   58.616.000   -             (2.943.500)   (1.902.500)    -             34.689.000   28.773.000 
 GED Logistics   Warehouse      16.500.000    -             100.000                      -             16.400.000   - 
 Total Greece                    16.500.000   -             100.000       -              -             16.400.000   - 
 
 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 Exchange   Fair Value     Additions/      Carrying 
   Asset Name                        amount         Translation        gain/(loss)    acquisitions    amount 
                                     31/12/2014     difference                        2014            31/12/2013 
 Terminal Brovary    Industrial     17.463.310     (9.382.086)        8.512.454      60.155          18.272.787 
  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 Name      Description/   Principal             Related Companies        Carrying amount 
                  Location       Operation                                      as at 
                                                                               31 Dec       31 Dec 
                                                                                2015         2014 
                                                                               EUR          EUR 
 Terminal        Brovary,       Warehouse             LLC TERMINAL BROVARY     12.264.323   17.463.310 
  Brovary         Kiev oblast                          LLC AISI BROVARY 
  Logistics                                            SL LOGISTICS LIMITED 
  Park 
 Bela Logistic   Odesa          Land and              LLC AISI BELA            5.125.389    5.083.216 
  Center                         Development 
                                 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 UKRAINE   1.006.773    1.147.823 
  Lane            Kiev City      residential 
                  Center         development 
 Balabino        Zaporizhia     Land for              LLC INTERTERMINAL        1.555.922    2.131.673 
                                 retail development    LLC AISI Ilvo, 
 Rozhny          Brovary        Land for              SC Secure Capital        1.194.085    - 
  Lane            district,      residential 
                  Kyiv oblast    Development 
 Total Ukraine                                                                 24.349.860   29.843.403 
 
 
 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 building    YAMANO LIMITED            6.550.000    6.400.000 
  Park                                            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 total       Demetiva Limited 
                               in 4 complexes)    Diforio Limited 
                                                  Frizomo Limited 
                                                  Ketiza Limited 
                                                  SecRom Srl 
                                                  SecVista Srl 
                                                  SecMon Srl 
                                                  Ketiza Srl 
 Green Lake      Bucharest    Residential        Secure Investment         17.932.000   - 
                               apartments         I 
                               (14 in total)      Edetrio Holdings 
                               &                  Limited 
                               land for           Emakei Holdings 
                               residential        Limited 
                               development        Iuliu Maniu Limited 
                                                  Ram Real Estate 
                                                  Management Limited 
                                                  Moselin Investments 
                                                  srl 
                                                  Rimasol Limited 
                                                  Rimasol Real Estate 
                                                  Srl 
                                                  Ashor Ventures Limited 
                                                  Ashor Develpoment 
                                                  Srl 
                                                  Jenby Ventures Limited 
                                                  Jenby Investments 
                                                  Srl 
                                                  Ebenem Limited 
                                                  Ebenem Investments 
                                                  Srl 
 Pantelimon      Bucharest    Land for           Secure Investment         5.812.000    - 
  Lake                         residential        I 
                               development        Mofben Investments 
                                                  Limited 
                                                  Delia Lebada Invest 
                                                  srl 
 Praktiker       Craiova      Big Box retail     Bluehouse Accession       7.200.000    - 
  Craiova                                         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 at 31       (Level   (Level       (Level       Total 
  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 at 31       (Level   (Level      (Level       Total 
  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 3          Terminal      Kiyanivskiy   Tsymlyanskiy   Bela          Innovations   EOS         Praktiker     Total 
  Fair value       Brovary       Lane          Lane           Logistics     Logistics    Business     Craiova 
  measurements     Logistics                                  Center        Park         Park 
  at 31 Dec        Park 
  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 Fair           Terminal      Kiyanivskiy   Tsymlyanskiy   Innovations   EOS Business   Total 
  value measurements     Brovary       Lane          Lane           Logistics     Park 
  at 31 Dec              Logistics                                  Park 
  2014 (EUR)             Park 
                        EUR           EUR           EUR            EUR           EUR            EUR 
 Opening balance        18.272.787    5.365.818     1.740.265      -             -              25.378.870 
 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 balance        17.463.310    4.017.381     1.147.823      14.000.000    6.400.000      43.028.514 
 

Information about Level 3 Fair Values is presented below:

 
                      Fair         Fair value        Valuation       Unobservable         Relationship of 
                       value        at                technique       inputs               unobservable inputs 
                       at           31 Dec 2014                                            to fair value 
                       31 Dec 
                       2015 
                      EUR          EUR                  EUR          EUR                  EUR 
 Terminal Brovary     12.264.323   17.463.310         Combined       Future rental        The higher the 
  Logistics                                          market and       income and           rental income 
  Park- Brovary                                    income approach    costs for            the higher the 
  Kyiv Oblast                                                         14 months,           fair value. The 
                                                                      discount             higher the discount 
                                                                      rate                 rate, the lower 
                                                                                           fair value 
 Bela Logistics       5.125.389    -                  Combined       Percentage           The higher the 
  Center - Odessa                                    market and       of development       percentage of 
                                                    cost approach     works completion,    completion the 
                                                                      deterioration        higher the fair 
                                                                      rate                 value. The higher 
                                                                                           the deterioration 
                                                                                           rate the lower 
                                                                                           the fair value 
 Innovations          14.400.000   14.000.000     Income approach    Future rental        The higher the 
  Logistics                                                           income and           rental income 
  Park - Bucharest                                                    costs for            the higher the 
                                                                      10 years,            fair value. The 

                                                                      discount             higher the discount 
                                                                      rate                 rate, the lower 
                                                                                           fair value 
 EOS Business         6.550.000    6.400.000      Income approach    Future rental        The higher the 
  Park - Bucharest,                                                   income and           rental income 
  City Center                                                         costs for            the higher the 
                                                                      10 years,            fair value. The 
                                                                      discount             higher the discount 
                                                                      rate                 rate, the lower 
                                                                                           fair value 
 Praktiker            7.200.000    -              Income approach    Future rental        The higher the 
  Craiova                                                             income and           rental income 
                                                                      costs for            the higher the 
                                                                      10 years,            fair value. The 
                                                                      discount             higher the discount 
                                                                      rate                 rate, the lower 
                                                                                           fair value 
 Kiyanivskiy          -            4.017.381          Combined       Future rental        The higher the 
  Lane                                               market and       income and           price of sales/rental 
                                                   income approach    costs for            income the higher 
                                                                      4 years              the fair value 
 Tsymlyanskiy         -            1.147.823          Combined       Future rental        The higher the 
  Lane                                               market and       income and           price of sales/rental 
                                                   income approach    costs for            income the higher 
                                                                      4 years              the 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 (including      3.339.068       16.478.253   5.467.398    25.284.719 
  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 - Total       1.552.134       629.700      -            2.181.834 
  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 receivables     -             178.176       2.445.863     2.624.039 
                                 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 borrowings            -             6.311.417     -             6.311.417 
 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 (including         5.462.627     3.194.210     4.354.365     13.011.202 
  non-controlling interest) 
 
 Non-controlling interest               -             248.668       -             248.668 
 
                                                       . 
 Net assets acquired attributable                      3.442.878    4.354.365      13.259.870 
  to equity holders                    5.462.627 
 
 Financed by 
 Cash consideration paid                4.372.000                   2.087.608     6.459.608 
 Issuance of redeemable-convertible 
  shares                               698.650                                    698.650 
 Issuance of ordinary                  -              3.068.634     -             3.068.634 
  shares 
 Accounts receivable swap               -             -             2.310.026     2.310.026 
  (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 Price   Number 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 Price   Number 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 2015   31 Dec 
                                                      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 2015   31 Dec 
                                                                                     2014 
                                                                      EUR           EUR 
 Principal of bank Loans 
  European Bank for Reconstruction         Terminal Brovary 
   and Development ("EBRD")                                           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 2015   31 Dec 
                                      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 five                        3.592.679       2.169.534    1.423.145 
  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 Liabilities                                          11.465.722 
 
 
 31 Dec 2014                         Minimum lease 
                                      payments         Interest     Principal 
                                     EUR             EUR          EUR 
 Less than one year                  766.289         584.677      181.612 
 Between two and five                3.424.203       2.205.329    1.218.874 
  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 Liabilities                                  11.644.976 
 

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 Plots       Total 
                                EUR         EUR          EUR           EUR           EUR           EUR 
 Segment profit 
 Sales income                        -           -             -     1.725.326             -      1.725.326 
 Cost of sales                       -           -             -   (2.043.649)             -    (2.043.649) 
 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 exchange                                                                               (5.071.048) 
  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 Plots      Total 
                                 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 expenses             -           -            -            -        (2.743.723) 
 Other (expenses)/income, 
  net                                -           -            -            -         (136.058) 
 Finance costs (net)                 -           -            -            -        (1.414.400) 
 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 plots   Total 
                          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 properties      31.463.310   6.400.000   8.373.000     7.296.877    53.533.187 
 Investment property        -            -           -             5.083.216    5.083.216 
  under development 
 Prepayments made           624.841      -           -             2.049.378    2.674.219 
  for investments 
 Goodwill                   -            43.269      -             -            43.269 
 Long-term receivables      125.909      -           -             -            125.909 
 Segment assets             32.214.060   6.443.269   8.373.000     14.429.471   61.459.800 
 Tangible and intangible 
  assets                    -            -           -             -            200.203 
 Prepayments and            -            -           -             -            4.251.489 
  other current 
  assets 
 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 other                         -           -             -            1.869.537 
  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 2015   31 Dec 
                                                      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 2015    31 Dec 
                                                                      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 2015   31 Dec 
                                           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 Vagharshak    Non-Executive Director    16.921              - 
                           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 Nomikou    Non-Executive Director    16.921              - 
                           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 -as       Principal    Principal 
                               of              as of        as of 
                               31 Dec 2015     31 Dec       31 Dec 2014 
                                               2015 
                             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 finance    -                   (648.116)   (1.296.232) 
  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 than     From one    More than 
                                  amount      Contractual    one year        to        two years 
                                              Cash Flows                  two years 
                                EUR          EUR            EUR          EUR          EUR 
 Financial assets 
 Cash at Bank                   895.422      895.422        895. 422     -            - 
 Prepayments and other          4.795.223    4.795.223 
  receivables                                               4.795.223 
 Available for sale             2.783.535    2.783.534 
  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 assets         8.827.096    8.827.096      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 than 
                                 amount       Contractual    one year    to           two years 
                                              Cash Flows                 two years 
                                EUR              EUR        EUR         EUR          EUR 
 Financial assets 
 Cash at Bank                   891.938        891.938      891.938     -            - 
 Prepayments and other          4.251.489     4.251.489     4.251.489   -            - 
  receivables 
 Total Financial assets         5.143.427     5.143.427     5.143.427   -            - 
 
 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 liabilities    33.090.995    43.025.121    9.597.578   4.005.858    29.421.685 
 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

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July 25, 2016 02:00 ET (06:00 GMT)