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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Aisi | LSE:AISI | London | Ordinary Share | CY0102102213 | ORD EUR0.01 (DI) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 65.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMSPDI
RNS Number : 6185A
Secure Property Dev & Inv PLC
30 September 2015
Secure Property Development & Invest PLC/ Index: AIM / Epic: SPDI / Sector: Real Estate
30 September 2015
Secure Property Development & Investment PLC ('SPDI' or 'the Company')
Interim Results
Secure Property Development & Investment PLC, the AIM quoted South Eastern European focused property and investment company, is pleased to announce its interim results for the period ended 30 June 2015.
Financial Highlights
-- 103% increase in total asset value to EUR134 million (31 December 2014: EUR66million) reflecting the transformational property acquisitions made during the period across the region
-- 77% increase in rental income to EUR2.3 million (H12014: EUR1.3million) -- EBITDA turned positive to EUR1.5 million compared to a loss of EUR0.4million for H12014 -- EUR8 million cash raised via Open Offer in March 2015
-- 84% increase in Net Asset Value to EUR59 million (31 December 2014: EUR32 million) due to share capital increase via Open Offer and issue of shares in settlement of asset acquisitions
-- The loan to value ratio as at 30 June 2015 stands at 53% (31 December 2014: 48%) demonstrating strong asset backing behind the Company
Operational Highlights
-- Successfully implemented strategy to expand the geographic spread of the portfolio to encompass fast growing South Eastern European countries which offer high yields and capital growth
-- Acquired three income producing assets in Romania, Greece and Bulgaria that, combined, generate EUR3 million of Net Operating Income ('NOI') annually, increasing the Company's annualised NOI by 73% to EUR7 million by the end of H12015;
o NOI now stands at c. EUR8 million following the completion of the acquisition in Craiova post period end
-- Blue chip tenants on long leases in acquired properties including: multinational logistics company Kuehne and Nagel; Pratiker; and the Romanian Telecoms Regulator - long lease terms provide revenue visibility
-- Acquisitions add a combined EUR64.5 million of gross asset value since year end, increasing total Assets under Management ('AuM') to EUR126 million
-- Provides further geographic diversification of portfolio, and ensures SPDI's position as a South Eastern Europe regional property company
-- Cash generative and asset backed platform in place to take advantage of highly positive South Eastern European property market fundamentals and the ongoing European yield compression play
Lambros G. Anagnostopoulos, Chief Executive Officer, said, "Thanks to the acquisition of a further five properties, the six months under review has seen excellent progress made towards delivering on our objective to build a diversified portfolio of prime properties in South Eastern Europe with visible income streams and significant capital growth potential. The numbers speak for themselves: we now have a portfolio of six income producing property assets in four countries in the region as well as residential and land non-core assets; our AuM now stands at EUR126 million; while our annualised NOI totals c. EUR8m. As a result we now have a cash generative, asset backed platform in place which will allow us to accelerate the roll-out of our strategy through the acquisition of additional properties that fit our investment criteria: prime locations; strong covenants with blue chip tenants on long term rental contracts; secured at attractive high yields.
"We believe we are in the right market at the right time. The supply and demand dynamics of the region's commercial property markets remain favourable in terms of future rental growth and potential capital uplift. Meanwhile the commencement of the ECB's quantitative easing programme earlier in the year provides a significant tailwind to the ongoing European yield compression play which in our view has a long way to run further, particularly in our core area of focus. Backed by a strong team of non-executive directors, seasoned executives and experienced staff and advisers, which has proven its ability to identify and secure prime properties at attractive prices, Secure is ideally placed to deliver on its goal to create the leading institutional South Eastern European income producing and dividend yielding property company."
* * ENDS * *
For further information please visit www.secure-property.eu or contact:
Lambros Anagnostopoulos SPDI Tel: +30-210-7226470 Constantinos Bitros SPDI Tel: +30-210-7226470 Tercel Moore SP Angel Corporate Finance Tel: +44 (0) 20 3463 LLP 2260 Jeff Keating SP Angel Corporate Finance Tel: +44 (0) 20 3463 LLP 2260 Lottie Brocklehurst St Brides Partners Ltd Tel: +44 (0) 20 7236 1177 Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236 1177 1. Management Report In summary The first half of 2015 saw SPDI complete the first phase of its expansion and diversification plan. By the end of June 2015, the Company owned assets in Romania, Bulgaria, Greece and Ukraine, the four largest (by population) countries of South East Europe, attaining three distinct stated goals: a) diversifying its asset base with no-one country presenting more than 50% of its AUM. b) growing to more than EUR 100m of Assets under Management, and c) building up a strong Operating Revenue stream that would facilitate both return to its shareholders as well as further asset growth. To achieve these goals, management's efforts in the first months of 2015 were focused on both the efficient raising of capital and the acquisition of assets, which meet our investment criteria. SPDI raised more than EUR 10m of new capital through an open offer to its shareholders in March 2015 and through the execution of warrants in July 2015. In parallel SPDI concluded or signed the agreement for the acquisition of the following assets: 1. A fully let 17.000 sqm logistics park west of Athens, the majority of which is let to the German logistics operator Kuehne + Nagel, generating EUR 1,5 net operating income. The logistics centre also has a 1MW photovoltaic park installation on its roof generating and selling electricity to the grid, 2. A fully let 19.000 sqm office building in Sofia (20% ownership) let to one of Bulgaria's largest insurance companies, generating EUR 2,9m net operating income, 3. A fully let 9.000 sqm retail property in Craiova, Romania, rented to Praktiker, a leading European DIY retailer, generating EUR 1m of net operating income, 4. A fully let 10.000 sqm office building in Bucharest (24,35% ownership) mostly let to Romania's Telecom Regulatory Authority generating EUR 1,75m net operating income, and 5. A portfolio of residential properties in Bucharest and Sofia, the majority of which are currently let, generating more than EUR 0,3m annual rental revenues. These properties are for sale. True to our strategy to grow the Company with the lowest possible cash outlay, the last three assets were acquired by SPDI in exchange for newly issued shares in the Company. This has not only facilitated the task of surpassing the EUR 100m AUM mark and ending the period with EUR 126m AUM, but has also brought onto the Company's shareholder register a number of highly respected institutional investors in the region who share the Company's vision and strategy to build the prime professional real estate company in the region. In addition, the acquisitions increased the Company's annualized Net Operating Income by EUR 3m. While the economic climate in Europe improved further in the first half of 2015, Greece lapsed back into political turmoil with the new Government elected in January 2015 abandoning the path prescribed by the agreements between the old government and its EU creditors. By August 2015, and after various failed attempts to change course and a July referendum, a new agreement with the creditors had been signed, indicating signs of stabilization, needed for the country to return to a growth path following six years of harsh recession. At the same time, Ukraine continued its path towards taking political stabilization measures, even though the economic recession that has followed the 2014 war with Russia and the ensuing large devaluation of the local currency has taken a bigger bite of the economy than the semester before hand. Even though the IMF and other international bodies are working with the Ukrainian government to minimize the effects of such recession, the country's economy is not expected to pick up within 2015. On the contrary, Romania's economy continues its fast ascent, with GDP growth above 3,4%, low unemployment and FDI picking up, making Romania a high growth economy target for the next few years. It is this fundamental macroeconomic environment that guided SPDI's growth pattern that has left the Company at
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the end of the period with its highest property exposure in Romania (58%) and much lower in Greece (16%), Ukraine (35%) or Bulgaria (17%). The global macroeconomic picture has also provided a positive tailwind over the review period. In March 2015, Europe entered a period of Quantitative Easing which signals the continuation of the low interest rate environment while the US is expected to turn the corner with interest rates picking up. As a result, European Real Estate is becoming more and more attractive for global investors, particularly South East Europe where asset prices are low. This is the macro environment in which the Company expects to prevail for the next 12 months and plans to take advantage of for the benefit of its shareholders. As a result, and following the success of the Open Offer to shareholders and the ensuing property asset acquisitions, the Company engaged a small number of advisers - brokers on both sides of the Atlantic to facilitate further growth, as per its vision guided strategy. As at period end, all our income generating properties have prime locations, generate substantial income from blue chip tenants, provide immediate stable cash flows with long term visibility, and offer scope for significant capital uplift over the short to medium term, as the on-going European yield compression play gathers momentum across the continent. Thanks to the progress made during the six months, Secure has a highly cash generative platform from which to accelerate the roll-out of its strategy to grow its portfolio of prime real estate, and in the process build the leading institutional South Eastern European income producing and dividend yielding property company. P&L The table below presents the operating performance in the last 3 years: 2015 1H 2014 1H 2013 1H EUR Rental Income 2.319.351 1.272.609 1.371.162 Sevice charges and utilities Income 279.901 133.520 - Income from sale of electricity 135.140 - - Property Operating expenses (287.584) (254.857) (291.190) Share of profits from associates 354.949 Net Income from Investment 2.801.757 1.151.272 1.079.972 properties Sales of assets 671.368 - Cost of sale of assets (469.850) - - Net Income from sale of 201.518 - - assets Income from operations 3.003.275 1.151.272 1.079.972 Administration expenses (1.599.125) (1.543.497) (1.070.535) Other income/ (expenses), net 42.270 (16.624) 174.325 Operating profit 1.446.420 (408.849) 183.762 Gains on acquisitions 5.237.790 391.205 - Finance costs, net (1.643.882) (565.132) (602.250) Profit/(loss) before tax 5.040.328 (582.776) (418.488) Income tax expense (2.894) (12.931) - Profit /(Loss) for the year 5.037.434 (595.707) (418.488) Investment property related 4.737.805 13.225.535 - gains (Note1) Foreign exchange losses, net (Note 2) (4.976.537) (14.590.388) (19.518) Profit / (Loss) for the year 4.798.702 (1.960.560) (438.006) Note 1: this includes a) the upward revaluation of Ukrainian assets caused by the foreign exchange difference between the US$ and the EUR (in itself mostly negated by the devaluation of the UAH) minus b) a precautionary provision that management has taken on the recently acquired assets. Note 2: these relate to the EBRD loan towards Terminal Brovary (mostly hedged due to the USD denominated income) and to various intercompany loans for which any associated losses, (predominately paper), are caused by the devaluation of the UAH from 8 at the beginning of the year to 23 to the US$ by the end of the reporting period (a drop of 65%). 2. Regional Economic Developments (1) Romania Romania's GDP expanded by a real 3,7% yoy in H1 2015, as per the indication provided by the country's statistics office. In Q2 2015, GDP grew by 3,2% yoy, one of the highest in EU-28. According to recent reports, this growing trend is expected to continue throughout the rest of 2015, forecasting a yoy GDP growth of 3,4% overall. CPI is negative at 1,7% so far for the year while the recent VAT rate decreasing for all food products from 24% to 9% has contributed another -0,2% for June. The unemployment rate was 6,8% at the end of June, remaining stable compared with a year ago, while the industrial output index for the first seven months of 2015 registered a 2,6% increase yoy. In May, the National Bank of Romania decreased the monetary policy rate to a record low of 1,75%. Exchange rates remained stable over the first 6 months, fluctuating between RON 4,40 to RON 4,48 to the EUR. Government debt decreased below 38,5% of GDP, the third lowest in the EU, while foreign direct investments in H1 2015 totaled EUR 1,66 billion, 39% higher than last year. Macroeconomic data and forecasts ---------------------------------------------------------------- 2011 2012 2013 2014 2015f ----------------------- ------- ------ ------ ------ GDP (EUR bn) 131,4 131,8 142,2 149,3 156,0 ----------------------- ------- ------ ------ ------ ------ Population (mn) 20,1 20,0 19,9 19,9 19,9 ----------------------- ------- ------ ------ ------ ------ GDP (constant prices y-o-y %) 2,2 0,7 3,4 2,9 3,4 ----------------------- ------- ------ ------ ------ ------ CPI (average, y-o-y %) 5,8 3,4 4,0 1,1 -0,5 ----------------------- ------- ------ ------ ------ ------ Unemployment rate (%) 7,4 7,0 7,1 6,8 6,5 ----------------------- ------- ------ ------ ------ ------ Net FDI (EUR bn) 1,8 2,2 2,6 2,5 3,1 ----------------------- ------- ------ ------ ------ ------ Sources : IMF, National Sources, Eurobank EFG, European Comission Bulgaria The pace of growth in Q1 2015 (2% yoy) was the strongest since Q2 2011 increasing by 2,2% year-on-year with the strongest contribution coming from net exports. Bulgaria posted a consolidated budget surplus of EUR 455 million for H1 2015 or 1,1% of the country's projected GDP, compared to a deficit of EUR 509 million for the same period last year. CPI in June 2015 stood at -0,6% yoy. Foreign direct investment for the period January-May 2015 amounted to EUR 617 million, compared to the EUR 622 million for the same period in 2014. The unemployment rate was 9,6% in June, matching EU's average rate, while the country's industrial output rose by 5,7% yoy. Exchange rates remained stable over the first 6 months at BGN 1,96 to the EUR. Macroeconomic data and forecasts ---------------------------------------------------------------- 2011 2012 2013 2014 2015f ---------------------------- ----- ----- ----- ----- GDP (EUR bn) 38,5 39,7 39,9 40,4 40,9 ---------------------------- ----- ----- ----- ----- ------ Population (mn) 7,3 7,3 7,3 7,2 7,2 ---------------------------- ----- ----- ----- ----- ------ GDP (constant prices y-o-y %) 1,8 0,8 0,9 1,7 1,8 ---------------------------- ----- ----- ----- ----- ------ CPI (average, y-o-y %) 4,2 3,0 1,4 -1,6 0,2 ---------------------------- ----- ----- ----- ----- ------ Unemployment rate (%) 11,2 12,3 12,9 11,7 9,8 ---------------------------- ----- ----- ----- ----- ------ Net FDI (EUR bn) 1,2 1,2 1,1 1,2 1,5 ---------------------------- ----- ----- ----- ----- ------ Sources : IMF, National Sources, Eurobank EFG, European Comission Ukraine The ongoing conflict in the Eastern border and sharp depreciation of the hryvnya in Q1 2015, have led the economy into a deep recession without signs of clear stabilization as of yet. In accordance with the preliminary estimates of the Ministry of Economic Development and Trade of Ukraine, in the first half of 2015 real GDP contracted by -16,3% yoy. If this is sustained through the year the aggregate recession in Ukraine since late 2013 is expected to exceed 50% in USD terms. The official exchange rate was 15,78 UAH / USD at the start of 2015 and reached its record of 30 UAH/USD in February 2015. By the end of the first quarter of 2015 the official exchange rate stabilized at around 23 UAH/USD and during the second quarter of 2015 it was largely stable, varying in the range of 20,5-22 UAH/USD. In January-June 2015, consumer price inflation reached 48,1% year-on-year, compared to 5,8% in the first half of 2014, with the main contributor
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being the sharp depreciation of the UAH and the resultant increase in prices for imported goods, increase of the state-regulated tariffs and high inflation expectations. Currently Ukraine remains dependant on the USD 17,5 billion IMF loan. After the review of the authorities' performance under the programme, IMF allocated the second tranche amounting to USD 1,7 billion in early August 2015 and discussions for a restructuring of the debt including a write off are fully fledged at the moment. Macroeconomic data and forecasts ---------------------------------------------------------------------- 2011 2012 2013 2014 2015f ------------------------------ ------ ------ ------ ------ GDP (USD bn) 163,4 176,2 177,4 127,6 115,8 ------------------------------ ------ ------ ------ ------ ------ Population (mn) 45,6 45,6 45,5 42,7 42,5 ------------------------------ ------ ------ ------ ------ ------ GDP (constant prices y-o-y %) 5,2 0,2 0,0 -6,0 -9,2 ------------------------------ ------ ------ ------ ------ ------ CPI (average, y-o-y %) 8,0 0,6 -0,2 12,1 51,0 ------------------------------ ------ ------ ------ ------ ------ ILO Unemployment rate (%) 7,9 7,5 7,4 10,5 11,0 ------------------------------ ------ ------ ------ ------ ------ Net FDI (USD bn) 7,0 6,6 3,3 0,2 0,5 ------------------------------ ------ ------ ------ ------ ------ Sources : IMF, National Sources, European Comission, Oxford Economics Greece After bailout talks between the Greek government and foreign lenders broke down during the last weekend of June, the European Central Bank froze vital ELA funding support to Greek banks, leaving Athens with little choice but to shut down the system to keep the banks from collapsing by imposing capital controls. As a result of these actions the Athens Stock Exchange closed from June 26 to August 3. On July 13, Eurozone leaders reached a unanimous agreement over a third Greek bailout. The Greek government managed to pass the measures by parliamentary majority on August 14, so Greece will be able to benefit from the EUR 86 bln of bailout loans. Following that, the government resigned and announced early elections for September 20, which resulted in the same government coalition. Amidst a very negative environment Greece's GDP grew 0,8% in Q2 2015, mainly driven by the ongoing tourist season and higher private consumption during the days of capital controls as people feared losing their money and preferred to spend it! Assuming that the elections will facilitate the formation of a coalition government that will actively pursue fulfilling the prerequisites of the bailout program the Greek economy is expected to be slowly back on track within 2016. Macroeconomic data and forecasts -------------------------------------------------------------------- 2011 2012 2013 2014e 2015f ---------------------------- ------ ------ ------ ------ GDP (EUR bn) 208,5 193,4 182,1 179,1 175,2 ---------------------------- ------ ------ ------ ------ ------ Population (mn) 10,8 11,1 11,0 11,0 10,9 ---------------------------- ------ ------ ------ ------ ------ GDP (constant prices y-o-y %) -1,1 -6,6 -3,9 -0,9 -0,8 ---------------------------- ------ ------ ------ ------ ------ CPI (average, y-o-y %) 4,2 3,0 0,9 -1,4 -0,3 ---------------------------- ------ ------ ------ ------ ------ Unemployment rate (%) 17,9 24,5 27,5 26,6 25,0 ---------------------------- ------ ------ ------ ------ ------ Net FDI (EUR bn) 0,8 1,4 1,6 1,0 0,0 ---------------------------- ------ ------ ------ ------ ------ Sources : IMF, National Sources, Eurobank EFG, European Comission
[1] Sources : World Bank Group, Eurostat, National Bank of Greece, Elstat, Eurobank Research, and Economic Research Division, National Institute of Statistics- Romania, National Statistical Institute -Republic of Bulgaria, National Institute of Statistics - Ukraine, Bank of Serbia.
3. Real Estate Market Developments(2) 3.1 Romania General The total investment volume registered in Romania in the first six months of 2015 was modest compared to H1 2015, recording a 78% decrease, but the low level of investment volume can be explained by the effervescence registered at the end of 2014. Logistics Market In H1 2015, the industrial property stock increased by 100.000 sqm to approximately 2.000.000 sqm., of which half is in Bucharest with another 160.000sqm yet to be added by year end. But still take up is very high levels with vacancy in Bucharest being less than 9% (outside Bucharest 10-12%) while prime rents remained relatively stable at EUR 3,5-4 per sqm. Office Market Total stock of office space reached 2,25 million sqm in H1 2015, with new deliveries accounting for approx. 50.000 sqm. In Q1 2015, 37% from total leasing activity (56.000 sqm) was dominated by transactions performed by tenants from the IT&C sector. This trend continued even stronger in the second quarter, reaching 72% of TLA (75.000 sqm). Vacancy rates continue to be uneven between sub-markets, which is also reflected in the evolution of the rental levels. While in South, Baneasa and Pipera North vacancy rates are above 30%, the vacancy rate in Dimitrie Pompeiu, Floreasca Barbu Vacarescu, North, Central-North, CBD and West is below 10%. Overall vacancy stands at 13%, slightly decreased from 14% at the end of 2014. Headline rent remains at EUR 18,5 per sqm. Retail Market Modern retail stock reached the 3 million sqm mark with some 120.000 sqm GLA delivered in H1 2015. Two important shopping centers opened so far this year: Coresi Shopping Resort in Brasov and Mega Mall in Bucharest. During the first six months of 2015, at least 30 new retailers have entered the local market targeting mainly Bucharest. Prime rent in Bucharest for retail parks is EUR 8,5 per sqm and 60-70 per sqm for shopping centres. Residential Market During H1 2015, prices for residential projects remained relatively stable as in 2014 but demand has picked up as the spending capacity of Romanians improves. Some new projects targeted more affluent purchasers, in contrast with previous years' focus on low income products. Both local and international developers sought to finalize one and two bedroom apartments in semi-central locations, or in the vicinity of popular office districts. Romanian authorities issued 18.229 building permits for residential projects in H1 2015, up 3,1% year-on-year, according to the national statistics office. 3.2 Bulgaria General The total value of closed transactions on the investment market in Bulgaria in the first half of 2015 was slightly above EUR 90 mln. It is expected by the end of the year the total sales transactions volume will be similar or higher than in 2014 (EUR 220 mln). Office Market Office stock in Sofia has increased to 1,64 million sqm, as new deliveries for H1 2015 amounted to 14.000 sqm. Development of several projects have commenced, increasing the active construction to 198.600 sqm. Overall office market vacancy rates continued to decline to 14,2% in H1 2015 from 15,4% in Q4 2014, a new 4 year low. Market demand continues to be driven primarily by the IT sector. Rental rates for class A offices have increased to EUR 11,5 per sqm, while in CBD (Central Business District) properties the average rate is EUR 13,7 per sqm. Retail Market Total modern retail stock in Bulgaria is 844.000 sqm with shopping centers accounting for 95%. The vacancy rate in Sofia dropped to 11% (from 12% in 2014). No new project openings are expected by the end of the year. Retail activity will be concentrated on the repositioning of existing shopping centers and unfreezing projects at the development stage. Residential Market A total of 2.100 residential building permits were issued in H1 2015. Sofia represents the major part of approved projects with 37% of the total. The market appears to be absorbing the new supply with developers reporting a significant amount of sales, increased by 8% compared to last year. Average sales prices in Sofia are around EUR 770 per sqm almost 50% lower than the pre-crisis pricing level. 3.3 Ukraine General Due to the deepening of the economic recession in Ukraine, many businesses were adopting a wait-and-see attitude in relation to further activity in the country, whilst the purchasing power of the country's population further decreased. Logistics Market In late June 2015, total stock of modern warehousing and logistics space in the Greater Kiev area amounted to 1.778.000 sqm. Overall development activity in the Greater Kiev area remains very low. During H1 2015 vacancy in the sector increased, reaching 12% in late June 2015 with asking rents dropping to the range of USD 2,5-5 per sqm for prime warehousing space in the Greater Kiev area, while for B-class properties average monthly rent was at around USD 2 per sqm. Office Market The total office stock in Kiev reached over 1,7 million sqm at the end of June 2015. In the first half of 2015 a majority of tenants decided to stay in their current properties and as a result, lease
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renewals and renegotiations accounted for almost 77% of total office take-up during the first six months of 2015. During the first half of 2015, vacancy in the office property sector in Kiev hovered at 23%. The indicative prime rent declined by 8% on average from USD 25 to USD 23 per sqm per month. Retail Market Total modern retail stock in Kiev amounted to around 1,55 million sqm in late June 2015. As of August 2015, DTZ estimates that presently around 560.000 sqm (GLA) of new 'modern' retail space in Kiev are actively in either the planning or construction stages. In late June 2015, average monthly rents in quality retail schemes in Kiev varied in the range of USD 45-65 per sqm for premises of 100-250 sqm. The retail premises in high street locations in Kiev commanded monthly rents of USD 30-50 per sqm. 3.4 Greece General The property market is expected to recover gradually, assuming Greece will emerge from the recession cycle. In terms of investment interest, the most dynamic sectors appear to be that of hospitality, as a result of a projected substantial growth in tourism. Logistics Market The market is characterised by the absence of activity with very few leasing deals occurring, linked to the economic uncertainty shrouding the Greek market. Deals that are closing stem from existing occupiers taking advantage of the weak fundamentals and either moving to secure better price space or indeed renegotiating their existing leases to be more flexible and at a lower rent. Prime rents are EUR 3-4 per sqm for logistic space, stable for the last 12 months. Office Market Prime supply levels in the office sector have stabilized as weaker demand and the lack of new developments balance each other out. There is no pipeline of new or refurbished projects in most markets and this is not expected to change over the short to medium term, with most developers unwilling to commit to new construction. In prime office locations, rental rates have been stable between EUR 8- 15 per sqm.
(2) Sources : National Bank of Greece, Bank of Greece, Eurobank, Jones Lang LaSalle, DTZ Research, CBRE Research, Colliers International, Cushman & Wakefield, MBL Research.
4. Property Assets 4.1 Aisi Brovary - Terminal Brovary Logistic Park , Ukraine Project description The Brovary Logistic Park consists of a 49.180 sqm GLA Class A warehouse and associated office space. The building has large facades to Brovary ring road, at the intersection of the Brovary ( -95/ -01 highway) and Borispil ring roads. It is located 10 km from Kiev city border and 5 km from Borispol international airport. The building is divided into six independent sections (each at least 6.400 sqm), with internal clear ceiling of 12m height and industrial flooring constructed with an anti-dust overlay quartz finish. The terminal accommodates 90 parking spaces for cars and trucks, as well as 24 hour security and municipal provided sewage, water and garbage collection. Current status As of the end of June, the park remained 72% leased, with 79% of its warehouse capacity leased. 4.2 Innovations Logistics Park, Romania Project description The Park incorporates approximately 8.470 sqm of multipurpose warehousing space, 6.395 sqm of cold storage and 1.705 sqm of office space. It is located in the area of Clinceni, south west of Bucharest center, 200m from the city's ring road and 6km from Bucharest-Pitesti (A1) highway. Its construction was tenant specific, was completed in 2008 and it comprises four separate warehouses, two of which offer cold storage. Current status As of the end of June the warehouse was 87% leased with Nestle Ice Cream Romania being the anchor tenant (100% of cold space and 79% of total NOI). 4.3 EOS Business Park - Danone headquarters, Romania Project description The park consists of 5.000 sqm of land including a class "A" office building of 3.386 sqm GLA and 90 parking places. It is located next to the Danone factory, in the North-Eastern part of Bucharest with access to the Colentina Road and the Fundeni Road. The Park is very close to Bucharest's ring road and the DN 2 national road (E60 and E85) and is also serviced by public transportation. The park is highly energy efficient. Current status The Company acquired the asset in November 2014. The complex at the end of June is fully let to Danone Romania, the French multinational food company, until 2026. 4.4 Praktiker Retail Center, Romania Project description The retail park consists of 21.860 sqm of land including a retail BigBox of 9.385 sqm GLA and 280 parking places. It is located in Craiova, on one of the main arteries of the city, along with most of the DIY companies. Current status The Company has reached a binding agreement in May 2015 for the acquisition of the asset which was finalised in July 2015. The complex at the end of June is fully let to Praktiker Romania, a leading DIY retailer, until 2020. 4.5 Delenco office building, Romania Project description The property is a 10.280 sqm office building, which consists of two underground levels, a ground floor and ten above-ground floors. The building is strategically located in the very center of Bucharest, close to three main squares of the city: Unirii, Alba Iulia and Muncii, only 300m from the metro station. Current status The Company acquired 24,35% of the property in May 2015. As of the end of June, the building is 100% let, with ANCOM (the Romanian Telecommunications Regulator) being the anchor tenant (70% of GLA). 4.6 Autounion office building, Bulgaria Project description A 19.476 sqm Class A office building which is located in a prime business area of Sofia, very close to the international airport and close to the city center. The building is BREEAM certified. Current status The Company acquired 20% of the property in April 2015. Autounion at the end of H1 2015 is fully let to Eurohold Bulgaria, a leading Bulgarian insurance company, on long lease extending to 2027. 4.7 GED Logistics Park and Photovoltaic Park, Greece Project description The 17.756 sqm complex that consists of industrial and office space is situated on a 44.268 sqm land plot in the West Attica Industrial Area (Aspropyrgos). It is located at exit 4 of Attiki Odos (the Athens ring road) and is 10 minutes from the port of Piraeus (where COSCO runs two of the three piers of one of the biggest container port in the Mediterranean Sea) and the National Road connecting Athens to the north of the country. The roofs of the warehouse buildings house a photovoltaic park of 1.000KWp. The buildings are characterized by high construction quality and state-of-the-art security measures. The complex includes 100 car parking spaces, as well as two central gateways (south and west). Current status The complex at the end of June is 100% occupied, while the major tenant (approximately 70%) being the German transportation and logistics company Kuehne + Nagel. 4.8 Residential portfolio -- Romfelt Plaza (Doamna Ghica), Bucharest, Romania Project description Romfelt Plaza is a residential complex located in Bucharest, Sector 2, relatively close to the city center, easily accessible by public transport and nearby supporting facilities and green areas. The residential unit portfolio acquired by the Company comprised 2.990 sqm across nine studios, six two bed apartments and thirteen three bed apartments, all located in buildings A, D, E, F, and I. Current status During the period, 2 apartments were sold while as of the end of June total existing leases stood at 16 indicating an occupancy rate of 64%. -- Linda Residence, Bucharest, Romania Project description Linda Residence is a residential complex located in Bucharest, Sector 3, close to subway transportation which connects the project to all areas in Bucharest in less than 30 minutes. The 2.642 sqm residential portfolio acquired by the Company comprised twenty seven apartments including two studios, fifteen two bed, eight three bed and two four bed apartments, as well as 27 storage spaces, and 20 surface parking spaces. Current status During the period, 2 apartments were sold while as of the end of June there are a total of 2 existing leases indicating an occupancy rate of approximately 8%. -- Monaco Towers, Bucharest, Romania Project description Monaco Towers is a residential complex located in South Bucharest, Sector 4, enjoying good car access due to the large boulevards, public transportation, and a shopping mall (Sun Plaza) reachable within a short driving distance or easily accessible by subway. The residential portfolio acquired by the Company comprised forty apartments, twenty five two-room apartments and fifteen three-room apartments, totaling 3.609 sqm. Current status During the period, 5 apartments were sold while as of the end of June the total existing leases stood at 22 indicating an occupancy rate of 63%. -- Blooming House, Bucharest, Romania Project description Blooming House is a residential development project located in Bucharest, Sector 3, a residential area with the biggest development and property value growth in Bucharest, offering a number of supporting facilities such as access to Vitan Mall, kindergartens, café, schools and public transportation (both bus and tram). The residential unit portfolio acquired by the Company comprised twenty seven apartments, comprising twelve two bed, fourteen three
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bed, and one five bed, totaling 2.387 sqm, plus 28 parking spaces, 13 above ground, 15 underground. Current status During the period, 2 apartments were sold while at the end of June the total existing leases stood at 13 indicating an occupancy rate of approximately 52%. -- Green Lake, Bucharest, Romania Project description A residential compound of 40.500 sqm GBA, which at the end of June consisted of 35 unsold apartments plus 23 unsold villas, situated on the banks of Grivita Lake, in the northern part of the Romanian capital. The compound also includes facilities such as Bucharest's leading private kindergarten, outdoor sport courts and restaurants. Additionally the plot includes a 48.360 sqm land area with a Gross Buildable Area of 82.250 sqm (63.400 sqm above ground). SPDI owns 40% of this property asset portfolio. Current status During the period, 4 apartments and villas were sold while at the end of June, 82 units were unsold with the occupancy rate being 41% (64% for apartments and 16% for villas). -- Boyana Residence, Sofia, Bulgaria Project description A residential compound, which consists of 67 apartments plus 83 underground parking slots developed on a land surface of 5.700 sqm, situated in the Boyana high end suburb of Sofia, at the foot of Vitosha mountain with GBA totaling to 11.400 sqm. The complex includes adjacent land plots with surface of 17.000 sqm with building permits to develop GBA of 21.851 sqm. Current status During the period, 6 apartments were sold while at the end of June 61 units remained unsold. 4.9 Land Bank -- Aisi Bela - Bela Logistic Center , Odessa, Ukraine Project description The site consists of a 22,4 ha plot of land with zoning allowance to construct up to 103.000 sqm GBA industrial properties and is situated on the main Kiev - Odessa highway, 20km from Odessa port, in an area of high demand for logistics and distribution warehousing. Current status Following the completion of planning and issuance of permits in 2008, construction commenced, with column foundation and peripheral walls for 100.000 sqm completed in 2009. Development was then put on hold, due to lack of funding and deteriorating market conditions. -- Kiyanovskiy Lane - Kiev, Ukraine Project description The project consists of 0,55 ha of land located at Kiyanovskiy Lane, near Kiev city centre. It is destined for the development of business to luxury residences with beautiful protected views overlooking the scenic Dnipro River, St. Michaels' Spires and historic Podil. Current status The concept design of the project is under review with the proposed development to include residential apartments (GBA of circa 21.000 sqm) and 100 parking spaces across two basement levels. -- Tsymlyanskiy Lane - Kiev, Ukraine Project description The 0,36 ha plot is located in the historic and rapidly developing Podil District in Kiev. The Company owns 55% of the plot, with one local co-investor owning the remaining 45%. Current status In 2009, all necessary documents were submitted to relevant authorities for approval and issuance of a construction permit. The plan was to develop approximately 10.000 sqm GBA of 40 high end residential units and office spaces on lower floors, as well as 41 parking spaces over three underground levels. Since then, the project has been on hold. In 2014 the company renewed its holding permit. -- Balabino- Zaporozhye, Ukraine Project description The 26,38 site is situated on the south entrance of Zaporozhye city, three km away from the administrative border of Zaporozhye. It borders the Kharkov-Simferopol Highway (which connects eastern Ukraine and Crimea and runs through the two largest residential districts of the city) as well as another major artery accessing the city centre. Current status The site is zoned for retail and entertainment and various development options are being evaluated as per the market's needs. -- Delia Lebada, Romania Project description The site consists of a 40.000 sqm plot of land in east Bucharest situated on the shore of Pantelimon Lake, opposite to a famous Romanian hotel, the Lebada Hotel. The lake itself, having a 360 hectare surface, is the largest lake of Bucharest and provides for many leisure activities like fishing, cycling, walking, etc. At the back of the property there is a forest which transforms the area into a very attractive habitat for families and adds value to the residential units to be developed. Current status The construction permit, which allows for 54.000 sqm to be built, was renewed in April 2014 and since then, the project has been on hold.
For the six months ended 30 June 2015
Note Six month ended --------------------------- 30 June 30 June 2014 2015 Restated(*) EUR EUR Operational income 8 2.935.910 1.406.129 Investment Property related gains 15 d 4.737.805 13.225.535 Administration expenses 9 (1.599.125) (1.543.497) Investment property operating expenses 10 (287.584) (254.857) Other operating income/(expenses), net 11 42.270 (16.624) Gain realized on acquisition 16 5.237.790 391.205 Share of profits from associates 17 354.949 - Operating profit 11.422.015 13.207.891 Finance income 12 13.199 52.915 Finance costs 12 (1.657.081) (618.047) Foreign exchange loss 13 a (4.976.537) (3.966.512) Income/(loss) before tax 4.801.596 8.676.247 Income tax expense 14 (2.894) (12.931) Profit/(loss) for the period 4.798.702 8.663.316 Other comprehensive (loss)/income Exchange difference on intercompany 13 b, loans to foreign holdings 28.3 (7.323.715) (10.623.876) Exchange difference on translation of foreign operations 21 5.022.908 1.358.894 Total comprehensive Profit/ (loss) for the period 2.497.895 (601.666) Profit/(loss) attributable to: Owners of the parent 4.706.590 8.690.773 Non-controlling interests 92.112 (27.457) ------------ ------------- 4.798.702 8.663.316 ------------ ------------- Total comprehensive Profit/(loss) attributable to: Owners of the parent 2.496.590 (574.209) Non-controlling interests 1.305 (27.457) ------------ ------------- 2.497.895 (601.666) ------------ ------------- Profit/(loss) per share (EUR per share): 6 Basic Profit/(loss) for the period attributable to ordinary equity owners of the parent 0,09 0,31 Diluted Profit/(loss) for the period attributable to ordinary equity owners of the parent 0,07 0,27
(*) Note 13
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
30 June 31 December 30 June Note 2015 2014 2014 EUR EUR EUR ASSETS Non-current assets Investment properties 15b 105.779.543 53.533.187 42.296.658 Investment property under 15a construction 5.541.156 5.083.216 6.634.330 Prepayments made for investments 15c 2.334.337 2.674.219 3.685.739 Tangible and intangible assets 201.318 200.203 64.684 Goodwill 43.269 43.269 - Long-term receivables 253.027 125.909 126.437 Investments in associates 17 12.007.807 - - 126.160.457 61.660.003 52.807.848 Current assets Prepayments and other 18 current assets 5.325.967 4.251.489 3.082.991 Cash and cash equivalents 19 2.832.054 891.938 3.100.367 8.158.021 5.143.427 6.183.358 Total assets 134.318.478 66.803.430 58.991.206 EQUITY AND LIABILITIES 72.035.042 Issued share capital 20 756.899 338.839 4.389.185 Share premium 121.227.562 97.444.044 92.815.992 Translation difference 21 reserve 3.701.890 (1.411.825) (8.957.084)
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Exchange difference on intercompany loans to foreign holdings (27.069.826) (19.746.111) (10.623.876) Accumulated losses (39.357.885) (44.064.475) (40.402.340) ------------- ------------- ------------- Equity attributable to equity holders of the parent 59.258.640 32.560.472 37.221.877 Non-controlling interests 22 1.349.250 651.882 921.174 Total equity 60.607.890 33.212.354 38.143.051 Non-current liabilities Interest bearing borrowings 23 44.750.322 12.255.716 - Finance lease liabilities 27 11.340.099 11.463.253 7.362.229 Redeemable preference shares 20 - 349.325 - Trade and other payables 24 428.553 214.685 326.626 Deposits from tenants 25 638.519 499.831 434.067 ------------- ------------- ------------- 57.157.493 24.782.810 8.122.922 Current liabilities Interest bearing borrowings 23 10.343.906 5.960.706 10.930.710 Trade and other payables 24 4.702.110 1.654.852 933.863 Taxes payable 26 862.229 431.828 206.361 Redeemable preference shares 20 349.325 349.325 - Provisions 26 - 68.253 81.800 Deposits from tenants 25 117.387 161.579 119.781 Finance lease liabilities 27 178.138 181.723 452.718 ------------- ------------- ------------- 16.553.095 8.808.266 12.725.233 Total liabilities 73.710.588 33.591.076 20.848.155 Total equity and liabilities 134.318.478 66.803.430 58.991.206 EUR EUR Net Asset Value (NAV) per share: 6 Basic NAV attributable to equity holders of the parent 0,78 0,96 1,30 Diluted NAV attributable to equity holders of the parent 0,48 0,84 1,14
On 25(th) September 2015 the Board of Directors of SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC authorised these financial statements for issue.
Lambros Anagnostopoulos Paul Ensor Constantinos Bitros Director & Chief Executive Director & Chairman Chief Financial Officer Officer of the Board
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2015
Attributable to owners of the Company Share Share Accumulated Exchange Foreign Total Non- Total capital premium, losses, difference currency controlling net(1) net of on translation interests non-controlling intercompany reserve(4) interest(2) loans to foreign holdings(3) EUR EUR EUR EUR EUR EUR EUR EUR Balance - 31 4.383.018 92.704.841 (49.093.113) - (10.315.978) 37.678.768 948.631 38.627.399 December 2013 Profit/(loss) for - - 8.690.773 - - 8.690.773 (27.457) 8.663.316 the period Issue of share capital 6.167 111.151 - - - 117.318 - 117.318 Exchange - - - (10.623.876) - (10.623.876) - (10.623.876) difference on intercompany loans to foreign holdings Foreign currency - - - - 1.358.894 1.358.894 - 1.358.894 translation reserve ------------ ------------ ---------------- ------------- ------------- ------------- ------------- ------------- Balance - 30 June 4.389.185 92.815.992 (40.402.340) (10.623.876) (8.957.084) 37.221.877 921.174 38.143.051 2014 Profit/(loss) for - - (7.763.436) - - (7.763.436) 68.209 (7.695.227) the period Issue of share 50.955 4.628.052 - - - 4.679.007 - 4.679.007 capital Reduction of (4.101.301) - 4.101.301 - - - - - share capital Exchange - - - (9.122.235) - (9.122.235) - (9.122.235) difference on intercompany loans to foreign holdings Foreign currency - - - - 7.545.259 7.545.259 (337.501) 7.207.758 translation reserve ------------ ------------ ---------------- ------------- ------------- ------------- ------------- ------------- Balance - 31 December 2014 338.839 97.444.044 (44.064.475) (19.746.111) (1.411.825) 32.560.472 651.882 33.212.354 Profit/(loss) for - - 4.706.590 - - 4.706.590 92.112 4.798.702 the period Issue of share 418.060 23.783.518 - - - 24.201.578 - 24.201.578 capital, net (note 20) Exchange - - - (7.323.715) - (7.323.715) - (7.323.715) difference on intercompany loans to foreign holdings Foreign currency - - - - 5.113.715 5.113.715 (90.807) 5.022.908 translation reserve Acquisition of subsidiary including Non-Controlling Interest - - - - - - 696.063 696.063 Balance - 30 June 756.899 121.227.562 (39.357.885) (27.069.826) 3.701.890 59.258.640 1.349.250 60.607.890 2015
(1) Share premium is not available for distribution
(2) Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution for defense at 20% will be payable on such deemed dividends to the extent that the shareholders (companies and individuals) are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defense is payable on account of the shareholders.
(3) Exchange differences on intercompany loans to foreign holdings arose as a result of devaluation of the Ukrainian Hryvnia. The Group treats the mentioned loans as a part of the net investment in foreign operations.
(4) Exchange differences related to the translation from the functional currency of the Group's subsidiaries are accounted for directly to the foreign currency translation reserve. The foreign currency translation reserve represents unrealized profits or losses related to the appreciation or depreciation of the local currencies against the EUR in the countries where the Company's subsidiaries own property assets.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2015
Note 30 June 2015 30 June 2014 EUR EUR CASH FLOWS FROM OPERATING ACTIVITIES Profit/(Loss) before tax and non-controlling 4.801.596 8.676.247 interest Adjustments for: Depreciation of property, plant and equipment 9 6.979 5.940 Other expenses/(income) (108.550) (5.926) Interest expense 12 1.435.894 579.501 Interest income 12 (13.199) (52.915) Change in tax provisions (68.253) (38.806) Foreign exchange loss/(gain) 13 4.976.537 3.966.512 Investment property related loss/ 15 (4.737.805) (13.225.535) (gain) d Loss/ (Gain) realized on acquisition 16 (5.237.790) (391.205) Share of loss / (profit) from associates 17 (354.949) - Cash flows used in operations before working capital changes 700.460 (486.187) Decrease/(increase) in prepayments
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and other current assets 18 1.718.119 (560.644) Increase in VAT recoverable 18 (6.059) 121.773 Decrease in trade and other payables 24 (267.057) (345.682) Change in other taxes and duties 338.734 27.233 Decrease in deposit from tenants (112.731) 151.984 Increase in long-term receivables (127.118) - Income tax paid (198.353) (262.128) ----------------- ------------- Net Working Capital Changes 1.345.535 (867.464) Net cash flows used in operating activities 2.045.995 (1.353.651) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investment in associates 17 (4.059.839) - Capital expenditures on investment property and prepayment on acquisition (110.539) (422) Interest received 13.199 52.915 Payment for the acquisition of subsidiary (1.786.934) (4.332.624) Net cash flows used in investing activities (5.944.113) (4.280.131) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital 20 8.001.212 - Repayment of preference shares (349.325) - Repayment of borrowings (313.676) (218.948) Repayment of finance leases (126.739) (8.169) Interest and financial charges paid (1.373.238) (695.146) Net cash flow from financing activities 5.838.234 (922.263) Effect of foreign exchange rates on cash (34.130) (11.848) Net increase/(decrease) in cash at 1.905.986 (6.556.045) banks Cash: At beginning of the period 19 891.938 9.668.260 At end of the period 2.832.054 3.100.367
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the six months ended 30 June 2015
1. General Information
Country of incorporation
SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC (the "Company") was incorporated in Cyprus on 23 June 2005 and is a public limited liability company, listed on the London Stock Exchange (AIM): ISIN CY0102102213. Its registered office is at Kyriacou Matsi 16, Eagle House, 10(th) floor, Agioi Omologites, 1082 Nicosia, Cyprus.
Principal activities
The principal activities of the Group, which are unchanged from last year, are directly or indirectly to invest in and/or manage real estate properties as well as real estate development projects in Central, East and South East Europe (the "Region"). These include the acquisition, development, operation and selling of property assets, in the Region.
The Group maintains offices in Nicosia, Cyprus; Kiev, Ukraine; and Bucharest, Romania.
As at the reporting date, the Group had 24 Full Time Equivalent (FTEs: 9 in Ukraine and 10 in Romania, 5 in Cyprus) employed persons, including the CEO and the CFO (December 2014 à 19).
2. Adoption of new and revised Standards and Interpretations
The accounting policies adopted for the preparation of these condensed consolidated interim financial statements for the six months ended 30 June 2015 are consistent with those followed for the preparation of the annual financial statements for the year ended 31 December 2014.
3. Significant accounting policies
Basis of preparation
The condensed consolidated interim financial statements for the six months ended 30 June 2015 have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".
Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with the International Financial Reporting Standards ("IFRS") have been condensed or omitted. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of the Group's Management, necessary to fairly state the results of interim periods.
Interim results are not necessarily indicative of the results to be expected for the full year.
The 31 December 2014 statement of financial position was derived from the audited consolidated financial statements.
Basis of consolidation
The condensed consolidated interim financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries).
The Group's condensed consolidated interim financial statements comprise the financial statements of the parent company, SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC and the financial statements of the following subsidiaries:
Holding % ------------------------------ ---------------- ---------------- --------------------------------------------- Name Country of Related as at as at as at 30.06.2014 incorporation Asset 30.06.2015 31.12.2014 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- SC SECURE Capital Limited Cyprus 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- Brovary SL SECURE Logistics Logistics Limited Cyprus Park 100 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Brovary Ukraine 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- LLC Terminal Brovary Ukraine 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- Kiyanovskiy LLC Aisi Ukraine Ukraine Residence 100 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Retail Development Balabyno Ukraine 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- LLC Trade Center Ukraine 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- Tsymlianskiy LLC Almaz--press--Ukrayina Ukraine Residence 55 55 55 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Bela Logistic LLC Aisi Bela Ukraine Park 100 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Merelium Investments Ukraine Merged - 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Zaporizhia LLC Interterminal Ukraine Retail Center 100 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Outdoor Ukraine Merged - 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Vida Ukraine Merged - - 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Val Ukraine Merged - - 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Ilvo Ukraine 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- LLC Aisi Consta Ukraine Merged - - 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Roslav Ukraine Merged - - 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- LLC Aisi Donetsk Ukraine Merged - 100 100
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------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Innovations Myrnes Innovations Logistics Park Limited Cyprus Park 100 100 100 ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Best Day Real Estate SRL Romania 100 100 100 ------------------------------ ---------------------------------- ------------ ------------ ----------------- EOS Business Yamano Holdings Limited Cyprus Park 100 100 - ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Secure Property Development and Investment Srl Romania 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- N-E Real Estate Park First Phase Srl Romania 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- SEC South East Continent Unique Real Estate Residential Investments II Limited Cyprus Portfolio 100 100 - ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Diforio Holdings Limited Cyprus 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Demetiva Holdings Limited Cyprus 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Ketiza Holdings Limited Cyprus 45 45 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Frizomo Holdings Limited Cyprus 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- SecMon Real Estate SRL Romania 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- SecVista Real Estate SRL Romania 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- SecRom Real Estate SRL Romania 100 100 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Ketiza Real Estate SRL Romania 90 45 - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Victini Holdings Limited Cyprus GED Warehouse 100 - - ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- GED Logistics S.A. Greece 100 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- SEC South East Continent Cyprus 100 - - Unique Real Estate (Secured) Investments Limited ------------------------------ ---------------------------------- ------------ ------------ ----------------- Edetrio Holdings Limited Cyprus 100 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Emakei Holdings Limited Cyprus 100 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- RAM Real Estate Management Cyprus 50 - - Limited ------------------------------ ---------------------------------- ------------ ------------ ----------------- Iuliu Maniu Limited Cyprus 45 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Moselin Investments Romania 45 - - srl ------------------------------ ---------------------------------- ------------ ------------ ----------------- Rimasol Enterprises Cyprus 44,24 - - Limited ------------------------------ ---------------------------------- ------------ ------------ ----------------- Rimasol Real Estate Romania 44,24 - - Srl ------------------------------ ---------------------------------- ------------ ------------ ----------------- Ashor Ventures Limited Cyprus 44,24 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Ashor Development Romania 44,24 - - Srl ------------------------------ ---------------------------------- ------------ ------------ ----------------- Jenby Ventures Limited Cyprus 44,24 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Jenby Investments Romania 44,24 - - Srl ------------------------------ ---------------------------------- ------------ ------------ ----------------- Ebenem Limited Cyprus 44,24 - - ------------------------------ ---------------------------------- ------------ ------------ ----------------- Ebenem Investments Romania 44,24 - - Srl ------------------------------ ---------------------------------- ------------ ------------ ----------------- Sertland Properties Cyprus 100 - - Limited ------------------------------ ---------------------------------- ------------ ------------ ----------------- Boyana Residence ood Bulgaria Residential 100 - - Portfolio and Land ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Mofben Investments Cyprus Pantelimon 100 - - Limited Lake ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Delia Lebada Invest Romania 65 - - srl ------------------------------ ---------------------------------- ------------ ------------ ----------------- Zirimon Properties Cyprus Delea Nuova 100 - - Limited ------------------------------ ---------------- ---------------- ------------ ------------ ----------------- Within the reporting period the subsidiaries LLC Aisi Outdoor, LLC Merelium Investments and LLC Aisi Donetsk were under merged to LLC Aisi Ilvo. The reorganization (merger) process was finished in June 2015. During the reporting period the Company realized a number of acquisitions namely of GED Warehouse and a mixed portfolio including commercial, residential properties and land (notes 15 & 16). Functional and presentation currencies Items included in the Group's financial statements are measured applying the currency of the primary economic environment in which the entities operate ("the functional currency"). The national currency of Ukraine, the Ukrainian Hryvnia, is the functional currency for all the Group's entities located in Ukraine, the Euro for all the Romanian, Bulgarian and Greek subsidiaries, while the parent company and its Cyprus based subsidiaries use either the Euro or the US dollar as the functional currency. The condensed consolidated interim financial statements are presented in Euro which is the Group's presentation currency. As Management records the condensed consolidated interim financial information of the entities domiciled in Cyprus, Romania and Ukraine in their functional currencies, in translating financial information
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of the entities domiciled in these countries into Euro for inclusion in the condensed consolidated interim financial statements, the Group follows a translation policy in accordance with International Accounting Standard No. 21, "The Effects of Changes in Foreign Exchange Rates", and the following procedures are performed: * All assets and liabilities are translated at closing rate; * Income and expense items are translated using exchange rates at the dates of the transactions, or where this is not practicable the average rate has been used; * All resulting exchange differences are recognized as a separate component of equity; * When a foreign operation is disposed of through sale, liquidation, repayment of share capital or abandonment of all, or part of that entity, the exchange differences deferred in equity are reclassified to the consolidated statement of comprehensive income as part of the gain or loss on sale. The relevant exchange rates for the entities domiciled in countries where the Group operates into Euro are as follows: Average As at ---------- ------------------------------------- ------------------------------------- Currency 01/01/2015 2014 01/01/2014 30/06/2015 31/12/2014 30/06/2014 -30/06/2015 -30/06/2014 ---------- ------------ -------- ------------- ----------- ----------- ----------- USD 1,1115 1,3285 1,3703 1,1189 1,2141 1,3566 ---------- ------------ -------- ------------- ----------- ----------- ----------- UAH 23,8303 15,6833 14,0973 23,5414 19,2329 16,0868 ---------- ------------ -------- ------------- ----------- ----------- ----------- RON 4,4479 4,4446 4,4643 4,4725 4,4821 4,3830 ---------- ------------ -------- ------------- ----------- ----------- ----------- BGN 1,9558 - 1,9558 1,9558 - 1,9558 ---------- ------------ -------- ------------- ----------- ----------- ----------- 4. Financial risk Management 4.1 Financial risk factors The Group is exposed to operating country risk, real estate holding and development associated risks, market price risk, interest rate risk, credit risk, liquidity risk, currency risk, other market price risk, operational risk, compliance risk, litigation risk, reputation risk, capital risk management and other risks arising from the financial instruments it holds. The risk management policies employed by the Group to manage these risks are discussed below. Financial Risk Management is also described in note 31 of the condensed consolidated interim financial statements. 4.1.1 Operating Country Risks The Group is exposed to country risk, stemming from the political and economic environment of countries in which it operates. Notably: 4.1.1.1 Cyprus During the past 10 years Cyprus has become an established financial center taking advantage of favorable double tax treaties with various countries around the world, most importantly with Eastern European countries where the Group operates. Due to the world financial crisis erupting in 2008 and the ensuing debt crisis which had a liquidity effect of the Cypriot banking system as in all of the south and east European countries, following the restructuring of the Greek public debt certain of the Cypriot banks have taken a blow to their solvency (write off of EUR4,5bn of Greek debt) and have requested the support of the ECB through the ELA mechanism. Thus, the indebtedness of the Cypriot Republic and its two main banks Bank of Cyprus and Cyprus Popular Bank (Laiki) created the basis for the country to be part of a financial rescue plan under the supervision of the IMF, the ECB and the European Union in early 2013, a moment when the Cypriot State stopped being able to borrow from the international debt markets. At the same time, the recent discovery of potentially significant natural gas and oil deposits within the boundaries of the Cypriot exclusive economic zone perplexes the geographic and political relationships and developments as Cyprus is in the crossroad of 3 continents. Any failure to effect and implement an economic restructuring plan, may have a significant negative effect on the financials of the Cypriot economy that could lead to a default and the abandonment of the Euro currency. Such result would have a destabilizing effect on the operations of the Company at the corporate level. Cyprus has achieved within the first half of 2015 to return to the international debt markets which signifies a return to normality. On that note, the Company had proactively evaluated the probable effect of the measures in relation to the levy on deposits and the restrictions on capital movement applied to Cyprus based financial institutions. The Company held most of its liquidity with non-Cypriot owned banking institutions, partly in Cyprus and partly outside Cyprus and to this date all operations of the Group's throughout Ukraine continued to be carried out normally. 4.1.1.2 Ukraine Nearly two years after the clashes that resulted in the fall of the incumbent government in November 2013, the deterioration and finally breaking off of Russia-Ukraine relations and the loss of part of Ukraine's geographic area, the situation remains particularly volatile. The social and geopolitical instability continues to affect not only Ukraine's economic and political well-being, but also relations between Russia and the rest of the world, as the international financial markets remain volatile. Although Ukraine had made significant progress in increasing its gross domestic product, decreasing inflation, stabilizing its currency, increasing real wages and improving its trade balance between 2011 and 2013 these gains have already being reversed as a result of the current tough relations with Russia which has plunged the country into a state of war and separatism. The implementation of reforms has been impeded by lack of political consensus, controversies over privatization, the restructuring of the energy sector, the removal of exemptions and privileges for certain state-owned enterprises or for certain industry sectors, the limited extent of cooperation with international financial institutions and non-stable taxing environment. Ukraine has engaged in broad discussion with its lender including IMF, for a restructuring of its foreign debt. Such discussions are crucial for the future economic development of the country. Overall, the future remains uncertain for the country, even though steps have been made towards European integration Should the IMF reforms are implemented and the foreign debt is restructured as well as political stability reemerges the country's economy has the potential to boom. As Ukraine's government relies to a significant extent on official or multilateral borrowings to avoid bankruptcy, finance its budget deficit, fund its payment obligations under domestic and international borrowings and support foreign exchange reserves on the current debt discussions are critical for Ukraine's ability to achieve a stable political environment to implement strategic, institutional and structural reforms but seems to be mainly depending on how long and how severe the current geopolitical conflict will last. In the first quarter of 2015, real GDP decreased by (-17,2%) year-on-year. In January-June 2015, consumer price inflation reached 48,1% year-on-year, compared to 5,8% inflation in the first half of 2014. Major sources of price inflation during the first six months of 2015 were sharp depreciation of the hryvnya and the resultant increase in prices for imported goods, growth of the state-regulated tariffs and high inflation expectations. The basic consumer price index, which reflects demand pressure, increased by 40,6% in January-June 2015, compared to the 4% growth in the first half of 2014. Apart from the international and internal political turmoil, Ukraine's legal system continuous to be in transition and is, therefore, subject to greater risks and uncertainties than a more mature legal system. In particular, risks associated with the Ukrainian legal system include, but are not limited to: (i) inconsistencies between and among the Constitution of Ukraine and various laws, presidential decrees, governmental, ministerial and local orders, decisions, resolutions and other acts; (ii) provisions in the laws and regulations that are ambiguously worded or lack specificity and thereby raise difficulties when implemented or interpreted; (iii) difficulty in predicting the outcome of judicial application of Ukrainian legislation; and (iv) the fact that not all Ukrainian resolutions, orders and decrees and other similar acts are readily available to the public or available in understandably organized form. Furthermore, several fundamental Ukrainian laws either have only relatively recently become effective or are still pending hearing
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or adoption by the Parliament. The recent origin of much of Ukrainian legislation, the lack of consensus about the scope, content and pace of economic and political reform and the rapid evolution of the Ukrainian legal system in ways that may not always coincide with market developments, place the enforceability and underlying constitutionality of laws in doubt, and result in ambiguities, inconsistencies and anomalies. In addition, Ukrainian legislation often contemplates implementing regulations. Often such implementing regulations have either not yet been promulgated, leaving substantial gaps in the regulatory infrastructure, or have been promulgated with substantial deviation from the principal rules and conditions imposed by the respective legislation, which results in a lack of clarity and growing conflicts between companies and regulatory authorities. Tax laws are changing and compared to more developed market economies are in a non-mature level thus creating often an unclear tax environment of unusual complexity. This particularly may affect negatively the ability of the Group to recuperate VAT paid and/or to utilize operating losses as a carry forward tax shield. During the year from the first quarter of 2014, the Ukrainian hryvnya was subject to significant devaluation. Starting from 7,99 UAH / USD in February 2014, the official exchange rate depreciated to 15,78 UAH / USD at the end of 2014 and reached its record low of 30 UAH/USD in February 2015. By the end of the first quarter of 2015 the official exchange rate stabilized at around 23 UAH/USD. As a result the National Bank of Ukraine, among other measures, imposed certain temporary restrictions to the Banks on processing client payments and on purchasing foreign currencies on the inter-banking market as well as certain capital controls towards foreign payments. The final resolution and impact of the political crisis are difficult to predict and the ongoing crisis may further adversely affect Ukrainian economy. Subsequent to 30th of June 2015 the Group has been operating in the normal course of business and the Management of the Group believes that it has undertaken all necessary measures to maintain the economic stability of the Group under these circumstances. 4.1.1.3 Greece During the period the Hellenic Republic continued discussions with the creditor institutions (EU/ECB/IMF/ESM) resulting in retaining the risk of political and economic instability of the country. Failure to reach agreement at the end of June led to the implementation of capital controls in the banking sector, a 3-week bank holiday on 27 June, as well as the lapse of the existing economic support program for the country which led to the failure of the Hellenic Republic to repay an instalment to the IMF on 30 June. Following a referendum on a deal proposed by international institutions and further negotiations, a preliminary agreement was reached on 12 July for a 3-year EUR86 billion support package, which was followed in August by the signing of a related agreement and the ratifications by Greek and a number of EU member country parliaments of this agreement in August, signaling the commitment of Greece to remain in the Eurozone and effect any necessary reforms requested by the creditor institutions as a prerequisite to capital deployment. As such and following elections in September which secured another tenure for the government that reached this agreement, political and economic instability seems to be withdrawing. Overall, the program has an aim to reduce the risk of economic instability in Greece; however there is still risk around implementation of the program. The implementation of the program and its effects on the economy are beyond the Group's control. Various risks emerge should the program not be implemented as planned, including restrictions on use of local bank deposits, liquidity of the financial sector and businesses, recoverability of receivables, impairment of assets, sufficiency of financing by the lending banks, serving of existing financing arrangements and/or compliance with existing terms and financial covenants of such arrangements. These and any possible further negative developments in Greece could impact the results and financial position of the Group s Greek operations to some extent, in a manner not currently determinable. The Group has been closely assessing developments in Greece and preparing for a number of eventualities around the Greek crisis, in line with its established risk management policy in order to ensure that timely actions and response are undertaken so as to minimize any impact on the Group's business and operations. 4.1.2 Risks associated with property holding Several factors may affect the economic performance and value of the Group's properties, including: * risks associated with construction activity at the properties, including delays, the imposition of liens and defects in workmanship; * the ability to collect rent from tenants , on a timely basis or at all, taking also into account the UAH rapid devaluation; * the amount of rent and the terms on which lease renewals and new leases are agreed being less favorable than current leases; * cyclical fluctuations in the property market generally; * local conditions such as an oversupply of similar properties or a reduction in demand for the properties; * the attractiveness of the property to tenants or residential purchasers; * decreases in capital valuations of property; * changes in availability and costs of financing, which may affect the sale or refinancing of properties; * covenants, conditions, restrictions and easements relating to the properties; * changes in governmental legislation and regulations, including but not limited to designated use, allocation, environmental usage, taxation and insurance; * the risk of bad or unmarketable title due to failure to register or perfect our interests or the existence of prior claims, encumbrances or charges of which we may be unaware at the time of purchase; * the possibility of occupants in the properties, whether squatters or those with legitimate claims to take possession; * the ability to pay for adequate maintenance, insurance and other operating costs, including taxes, which could increase over time; and * political uncertainty, acts of terrorism and acts of nature, such as earthquakes and floods that may damage the properties. 4.1.3 Property Market price risk Market price risk is the risk that the value of the Company's portfolio investments will fluctuate as a result of changes in market prices. The Group's assets are susceptible to market price risk arising from uncertainties about future prices of the investments. The Group's market price risk is managed through diversification of the investment portfolio, continuous elaboration of the market conditions and active asset management. To quantify the value of its assets and/or indicate the possibility of impairment losses, the Company commissioned internationally acclaimed valuers. Valuations reported as at 31 December 2014 take into account recent political developments in Ukraine. Given the nature of the Group's assets the most immediate effect would be the prolongation of the period needed to market and effectively sell an asset under such duress conditions. The BoD is monitoring the situation to ensure that assets value is preserved while at the same time through diversification according to the strategic plan of the Company, Ukrainian operations are gradually becoming part of a larger structure. 4.1.4 Interest rate risk Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no significant interest--bearing assets apart from its cash balances that are mainly kept for liquidity purposes. The Group is exposed to interest rate risk in relation to its borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. All of the Group's borrowings are issued at a variable interest rate. Management monitors the interest rate fluctuations on a continuous basis and acts accordingly. 4.1.5 Credit risk Credit risk arises when a failure by counter parties to discharge their obligations could reduce the amount of future cash inflows from financial assets at hand at the end of the reporting period.
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Cash balances are held with high credit quality financial institutions and the Group has policies to limit the amount of credit exposure to any financial institution. Management has been in continuous discussions with banking institutions monitoring their ability to extend financing as per the Group's needs. The sovereign debt crisis has affected the pan-European banking system during 2011 and 2012 imposing financing uncertainties for new development projects. The financial crisis in the European Union periphery has strained any remaining liquidity and the financial institutions in the region (including those that have Italian, Greek or Austrian parent) have entered into deleveraging programs. 4.1.6 Currency risk Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Group's functional currency. Most of the Group's transactions, including the rental proceeds are denominated in EUR or pegged to EUR or USD (the latter being the case of Ukraine). For the rest of the foreign exchange exposure Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly, by limiting net exposures to a few days to 2 months. Apart from liquidity maintained in local currency for operating reasons the Group's liquid assets are held in EUR denominated deposit accounts while most of the inflows of the company are pegged to the EUR/USD It should be noted that the current political uncertainty in Ukraine, and the currency devaluation may affect the Group's income streams indirectly through affecting the financial condition of the tenants of the Group's properties their solvency and their income generating capacity. Management is monitoring the situation closely and acts accordingly. 4.1.7 Capital risk management The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group's core strategy is described in note 31 of the condensed consolidated interim financial statements. 4.1.8 Compliance risk Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non--compliance with laws and regulations of the state. Although the Group is trying to limit such risk, the uncertain environment in which it operates in various countries increases the complexities handled by Management. 4.1.9 Litigation risk Litigation risk is the risk of financial loss, interruption of the Group's operations or any other undesirable situation that arises from the possibility of non--execution or violation of legal contracts and consequentially of lawsuits. The risk is restricted through the contracts used by the Group to execute its operations and is discussed in note 29. 4.2. Operational risk Operational risk is the risk that derives from the deficiencies relating to the Group's information technology and control systems as well as the risk of human error and natural disasters. The Group's systems are evaluated, maintained and upgraded continuously. 4.3. Fair value estimation The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the end of the reporting period. Valuations reported as at 31 December 2014 take into account past political developments in Ukraine which given the nature of the Group's assets the most immediate effect would be the prolongation of the period needed to market and effectively sell an asset under such duress conditions. 5. Critical accounting estimates and judgments The accounting estimates and judgments used in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2014.
6. Earnings and net assets per share attributable to equity holders of the parent
a. Weighted average number of ordinary shares 30 June 2015 30 June 2014 --------------------------------------------------- ------------- ------------- Issued ordinary shares 75.690.096 28.788.559 --------------------------------------------------- ------------- ------------- Weighted average number of ordinary shares (Basic) 51.191.365 28.192.277 --------------------------------------------------- ------------- ------------- Diluted weighted average number of ordinary shares 64.480.647 32.304.928 --------------------------------------------------- ------------- ------------- b. Basic diluted and adjusted earnings per share 30 June 2015 30 June 2014 -------------------------------------------------------------- ------------- ------------- EUR EUR -------------------------------------------------------------- ------------- ------------- Profit/(loss) after tax attributable to owners of the parent 4.706.590 8.690.773 -------------------------------------------------------------- ------------- ------------- Basic 0,09 0,31 -------------------------------------------------------------- ------------- ------------- Diluted 0,07 0,27 -------------------------------------------------------------- ------------- ------------- c. Net assets per share 30 June 2015 31 December 2014 --------------------------------------------------------- ------------- ----------------- EUR EUR --------------------------------------------------------- ------------- ----------------- Net assets attributable to equity holders of the parent 59.258.640 32.560.472 --------------------------------------------------------- ------------- ----------------- Number of ordinary shares 75.690.096 33.884.054 --------------------------------------------------------- ------------- ----------------- Diluted number of ordinary shares 122.559.555 38.866.775 --------------------------------------------------------- ------------- ----------------- Basic 0,78 0,96 --------------------------------------------------------- ------------- ----------------- Diluted 0,48 0,84 --------------------------------------------------------- ------------- -----------------
7. Segment information
All commercial and financial information related to the properties held directly or indirectly by the Group is being provided to members of executive Management who report to the Board of Directors. Such information relates to rentals, valuations, income, costs and capital expenditures. The individual properties are aggregated into segments based on the economic nature of the property. For the reporting period the Group has identified the following material reportable segments:
Industrial
-- Warehouse segment - the Group acquires, develops, operates and disposes warehouses
Commercial
-- Office segment - the Group acquires, develops, operates and disposes offices
Residential
-- Residential segment - the Group is in the process of disposing residential properties
Land Assets
-- Land assets - the Group owns a number of land assets which are either available for sale or for potential development
There are no sales between the segments.
Segment assets for the investment properties segments represent investment property (including investment properties under construction and prepayments made for the investment properties). Segment liabilities represent interest bearing borrowings, finance lease liabilities and deposits from tenants.
For the six months 30 Warehouse Office Residential Land Assets Total June 2015 (EUR) ------------------------------- ---------- --------- ------------ ------------ ------------ Segment profit ------------------------------- ---------- --------- ------------ ------------ ------------ Sales income - - 671.368 - 671.368 ------------------------------- ---------- --------- ------------ ------------ ------------ Cost of sales - - (469.850) - (469.850) ------------------------------- ---------- --------- ------------ ------------ ------------ Rental income 1.976.449 233.594 109.308 - 2.319.351 ------------------------------- ---------- --------- ------------ ------------ ------------ Service charges and utilities income 241.788 38.113 - - 279.901 ------------------------------- ---------- --------- ------------ ------------ ------------ Income from electricity
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production 135.140 - - - 135.140 ------------------------------- ---------- --------- ------------ ------------ ------------ Investment properties operating expenses (237.698) (33.480) (16.406) (287.584) ------------------------------- ---------- --------- ------------ ------------ ------------ Investment property related gains FX related 4.711.511 - - 3.340.085 8.051.596 ------------------------------- ---------- --------- ------------ ------------ ------------ Gain realized on acquisition of subsidiaries (note 16) 1.552.134 - - - 1.552.134 ------------------------------- ---------- --------- ------------ ------------ ------------ Share of profits from associates (note 17) - 43.390 - 311.559 354.949 ------------------------------- ---------- --------- ------------ ------------ ------------ Segment profit 8.379.324 281.617 294.420 3.651.644 12.607.005 ------------------------------- ---------- --------- ------------ ------------ ------------ Management provision (3.313.791) on Investment Property acquired (note 15 d) ------------------------------- ---------- --------- ------------ ------------ ------------ Gain realized on acquisition of subsidiaries 3.685.656 ------------------------------- ---------- --------- ------------ ------------ ------------ Administration expenses (1.599.125) ------------------------------- ---------- --------- ------------ ------------ ------------ Other income/(expenses), net 42.270 ------------------------------- ---------- --------- ------------ ------------ ------------ Finance income 13.199 ------------------------------- ---------- --------- ------------ ------------ ------------ Finance costs (1.657.081) ------------------------------- ---------- --------- ------------ ------------ ------------ Foreign exchange losses, net (4.976.537) ------------------------------- ---------- --------- ------------ ------------ ------------ Profit before tax 4.801.596 ------------------------------- ---------- --------- ------------ ------------ ------------
For the period 1 January 2014 to 30 June 2014, the Group had income only from the warehouse segment.
30 June 2015 Warehouse Office Residential Land Assets Provision Total (EUR) on Acquired Assets (note 15 d) ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Assets ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Investment 49.447.093 6.400.000 20.889.348 32.356.893 (3.313.791) 105.779.543 properties ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Investment - - - 5.541.156 5.541.156 property under construction ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Prepayments 100.000 - - 2.234.337 2.334.337 made for investments ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Goodwill - 43.269 - - 43.269 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Long-term receivables 250.104 - 1.193 1.730 253.027 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Investments - 7.033.963 - 4.973.844 12.007.807 in associates ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Segment assets 49.797.197 13.477.232 20.890.541 45.107.960 (3.313.791) 125.959.139 ----------------------- ------------- ------------ Tangible and intangible assets 201.318 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Prepayments 5.325.967 and other current assets ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Cash and cash 2.832.054 equivalents ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Total assets 134.318.478 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Liabilities ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Interest bearing - 11.506.239 18.473.095 55.094.228 borrowings 25.114.894 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Finance lease 3.934.972 - 54.597 11.518.237 liabilities 7.528.668 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Deposits from tenants 717.898 - 38.008 - 755.906 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Redeemable preference shares 349.325 - - - 349.325 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Segment liabilities 33.710.785 3.934.972 11.544.247 18.527.692 67.717.696 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Trade and 5.130.663 other payables ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Taxes payable 862.229 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ Total liabilities 73.710.588 ----------------------- ----------- ----------- ------------ ------------ ------------- ------------ 31 December 2014 Warehouse Office Residential Land Assets Total (EUR) ------------------------- ----------- ---------- ------------ ------------ ----------- Assets ------------------------- ----------- ---------- ------------ ------------ ----------- Investment properties 31.463.310 6.400.000 8.373.000 7.296.877 53.533.187 ------------------------- ----------- ---------- ------------ ------------ ----------- Investment property - - 5.083.216 5.083.216 under construction ------------------------- ----------- ---------- ------------ ------------ ----------- Prepayments made 624.841 - - 2.049.378 2.674.219 for investments ------------------------- ----------- ---------- ------------ ------------ ----------- Goodwill 43.269 43.269 ------------------------- ----------- ---------- ------------ ------------ ----------- Long-term receivables 125.909 125.909 ------------------------- ----------- ---------- ------------ ------------ ----------- Segment assets 32.214.060 6.443.269 8.373.000 14.429.471 61.459.800 ------------------------- ----------- ---------- ------------ ------------ ----------- Tangible and intangible assets 200.203 ------------------------- ----------- ---------- ------------ ------------ ----------- Prepayments and 4.251.489 other current assets
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------------------------- ----------- ---------- ------------ ------------ ----------- Cash and cash equivalents 891.938 ------------------------- ----------- ---------- ------------ ------------ ----------- Total assets 66.803.430 ------------------------- ----------- ---------- ------------ ------------ ----------- Liabilities ----------------------- ----------- ---------- ---------- -------- ----------- Interest bearing - 6.459.810 - 18.216.422 borrowings 11.756.612 ----------------------- ----------- ---------- ---------- -------- ----------- Finance lease 3.981.252 - 68.861 11.644.976 liabilities 7.594.863 ----------------------- ----------- ---------- ---------- -------- ----------- Deposits from tenants 621.129 - 40.281 - 661.410 ----------------------- ----------- ---------- ---------- -------- ----------- Redeemable preference shares 698.650 - - - 698.650 ----------------------- ----------- ---------- ---------- -------- ----------- Provision - - - 68.253 68.253 ----------------------- ----------- ---------- ---------- -------- ----------- Segment liabilities 20.671.254 3.981.252 6.500.091 137.114 31.289.711 ----------------------- ----------- ---------- ---------- -------- ----------- Trade and other 1.869.537 payables ----------------------- ----------- ---------- ---------- -------- ----------- Taxes payable 431.828 ----------------------- ----------- ---------- ---------- -------- ----------- Total liabilities 33.591.076 ----------------------- ----------- ---------- ---------- -------- -----------
Geographical information
Revenue (EUR) 30 June 2015 30 June 2014 --------------- -------------- ---------- Ukraine 1.191.853 1.241.528 --------------- -------------- ---------- Romania 1.310.316 164.601 --------------- -------------- ---------- Greece 432.185 - --------------- -------------- ---------- Bulgaria 1.556 - --------------- -------------- ---------- Total 2.935.910 1.406.129 --------------- -------------- ---------- 30 June 2015 31 December 2014 ----------------------------------------------- -------------- ------------ Carrying amount of investment property, including under construction and prepayments made for investments (EUR) ----------------------------------------------- -------------- ------------ Ukraine 34.766.288 31.892.781 ----------------------------------------------- -------------- ------------ Romania 53.392.000 28.773.000 ----------------------------------------------- -------------- ------------ Greece 16.510.539 624.841 ----------------------------------------------- -------------- ------------ Bulgaria 12.300.000 - ----------------------------------------------- -------------- ------------ Provision on Acquired Assets (note 15 d) (3.313.791) ----------------------------------------------- -------------- ------------ Total 113.655.036 61.290.622 ----------------------------------------------- -------------- ------------
The increase in value of investment properties, including under construction in Ukraine is due to the foreign currency exchange rates fluctuations. While for the purpose of these condensed consolidated interim financial statements the valuation results are expressed in USD (and are the same as of 31/12/2014) the resulting increase presented in the above table is derived from the devaluation of the EUR against the USD.
8. Operational income
Operational income in the amount of EUR2.935.910 for the period ended 30 June 2015 represents rental income as well as service charges and utilities income collected from tenants generated during the reporting periods as a result of the rental agreements concluded with tenants of the Terminal Brovary Logistic Park, Innovations Logistics Park, EOS Business Park, GED Logistics and sales or rental agreements for Residential Portfolio while for the period ended 30 June 2014 it was only generated by Terminal Brovary and Innovations Logistics Park.
30 June 2015 30 June 2014 -------------------------------------- ------------- ------------- EUR EUR -------------------------------------- ------------- ------------- Income from sales of assets 671.368 - -------------------------------------- ------------- ------------- Cost of assets sold (469.850) - -------------------------------------- ------------- ------------- Rental income 2.319.351 1.272.609 -------------------------------------- ------------- ------------- Service charges and utilities income 279.901 133.520 -------------------------------------- ------------- ------------- Sales of electricity 135.140 - -------------------------------------- ------------- ------------- Total Revenues 2.935.910 1.406.129 -------------------------------------- ------------- -------------
Income and Cost from sales of assets reflects figures associated with the sales of residential units.
Rental income and service charges and utilities income represent inflows for the rental agreements that the Company has with various tenants that rent space in its properties (mainly commercial and industrial). Vacancy rates in the various income producing assets of the company as at 30 June 2015 are as follows:
Income producing assets ------------------------------------------------------ % 30 June 30 June 2015 2014 EOS Business Park Romania 0 n/a Innovations Logistics Park Romania 13 0 GED Logistics Greece 0 n/a Terminal Brovary Ukraine 28 0
Income from sales of assets represents several apartments and parking spaces sold in Residential Portfolio while Cost of assets sold represents the acquisition value of the apartment and parking space reduced by the related depreciation amount until the finalisation of the sale.
The income from electricity is generated at GED Logistics using the alternative energy sources and sold to the Greek Electric Grid.
9. Administration Expenses
30 June 2015 30 June 2014 -------------------------------------- ------------- ---------- EUR EUR -------------------------------------- ------------- ---------- Salaries and Wages 573.350 365.513 -------------------------------------- ------------- ---------- Advisory fees 243.398 636.877 -------------------------------------- ------------- ---------- Legal fees 201.548 133.271 -------------------------------------- ------------- ---------- Travelling and other office expenses 129.606 142.219 -------------------------------------- ------------- ---------- Property Taxes and duties 125.505 12.380 -------------------------------------- ------------- ---------- Directors' remuneration 119.628 84.395 -------------------------------------- ------------- ---------- Public group expenses 71.970 52.450 -------------------------------------- ------------- ---------- Audit and accounting fees 62.159 54.375 -------------------------------------- ------------- ---------- Depreciation 6.979 5.940 -------------------------------------- ------------- ---------- Sundry expenses 64.982 56.077 -------------------------------------- ------------- ---------- Total Administration Expenses 1.599.125 1.543.497 -------------------------------------- ------------- ----------
Salaries and wages include the remuneration:
a) of the CEO, the CFO, the Group Commercial Director and the Managing Directors Ukraine and Romania
b) of personnel employed in Ukraine, Romania and Cyprus
Legal and advisory fees mainly represent expenses of the Company regarding the various legal and tax cases it has in Ukraine as well as fees for the normal operation of the Group.
Property taxes and duties reflect mainly property taxes and fees paid for Ukrainian and Romanian land plots and residential assets.
Directors' remuneration represents the remuneration of all non-executive Directors and committee members (note 28).
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Public group expenses include among others fees paid to the AIM: LSE stock exchange and the Nominated Advisor of the Company related to the listing of the Company.
10. Investment property operating expenses
30 June 2015 30 June 2014 ------------------------------------------- ------------- ------------- EUR EUR ------------------------------------------- ------------- ------------- Property management, utility expenses and other property costs 287.584 254.857 ------------------------------------------- ------------- -------------
The Group has Maintenance and Property Management Agreements in respect of the servicing of Terminal Brovary Logistics Park, Innovation Logistics Park and GED Logistics Park. The Group is also incurring property operating expenses including utility expenses, insurance premiums, land and building taxes as well as various other expenses needed for the proper operation of the income generating properties in Kiev and in Bucharest. Part of these expenses are recovered from the tenants through the rental agreements.
11. Other operating income/ (expenses), net
30 June 2015 30 June 2014 --------------------------------------- ------------- ------------- EUR EUR --------------------------------------- ------------- ------------- Income from enforcement of guarantees 122.867 - --------------------------------------- ------------- ------------- Penalties (1.559) (8.241) --------------------------------------- ------------- ------------- Other expenses, net (79.038) (8.383) --------------------------------------- ------------- ------------- Total 42.270 (16.624) --------------------------------------- ------------- -------------
Income from enforcement of guarantees relates to the income from the tenants of Terminal Brovary LLC for the early termination of the lease agreements.
Penalties recognized in the period ended 30 June 2015 and 30 June 2014 relate to Terminal Brovary LLC which were accrued by the tax authority on the land leased in Brovary.
Other expenses for the period ended 30 June 2015 mainly consist of maintenance and repair expenses at the operating companies of the Group representing residential, warehouse and office segments, as well as other operating expenses concerning the functioning of the Group.
12. Finance costs and income
Finance income 30 June 2015 30 June 2014 ---------------------- ------------- ------------- EUR EUR ---------------------- ------------- ------------- Bank interest income 13.199 52.915 ---------------------- ------------- ------------- Net finance result 13.199 52.915 ---------------------- ------------- ------------- Finance costs 30 June 2015 30 June 2014 ----------------------------------------- ------------- ------------- EUR EUR ----------------------------------------- ------------- ------------- Borrowing interest expenses (note 23) 1.104.169 529.384 ----------------------------------------- ------------- ------------- Finance leasing interest expenses (note 27) 331.725 50.117 ----------------------------------------- ------------- ------------- Finance charges and commissions 221.187 38.546 ----------------------------------------- ------------- ------------- Net finance result 1.657.081 618.047 ----------------------------------------- ------------- -------------
Borrowing interest represents interest expense charged on bank borrowings (note 23) as well as on loans granted to associate companies (note 17).
Finance leasing interest expenses relate to the sales and lease back agreements of the Group with Piraeus Leasing Romania for Innovations Logistics Park and with Alpha Bank for EOS Business Park as well as to the land lease agreements of Ukrainian entities of the Group signed with the municipal authorities in Kiev (note 27).
Finance charges and commissions include fees paid to the banks, including a fee payable to EBRD for the restructuring of the Terminal Brovary loan.
13. Foreign exchange profit/ (losses)
a. Foreign exchange loss
Foreign exchange losses (non-realised) resulted from the loans and /or payables denominated in non EUR currencies when translated in EUR, mainly the EBRD loan (note 23) The exchange loss for the period end 30 June 2015 amounted to EUR4.976.537.
b. Exchange difference on intercompany loans to foreign holdings
The intercompany loans provided by SC Secure Capital Limited to Ukrainian subsidiaries (note 28.3) incurred an exchange loss (non-realised) of EUR7.323.715, due to the UAH devaluation which took place during the reporting period.
The foreign exchange loss for the period as reported in the financial statements of June 2014 amounting to EUR14.590.388 have been restated in order to reflect the split between the foreign exchange loss and the exchange difference on intercompany loans to foreign holdings. As a result the foreign exchange loss for the reporting period ending 30th June 2016 are presented as EUR3.966.512 and the remaining EUR10.623.876 are presented under exchange difference on intercompany loans to foreign holdings. The restatement was made in order to better reflect the devaluation of UAH during 2014 which is took place at 31 December 2014 on and had an effective date 1 January 2014 (note 28.3).
14. Income Tax expense
The corporate income tax rate for the Company's Ukrainian subsidiaries is 19%, for the Romanian subsidiaries is 16% , for the Greek subsidiary 26% and for the Bulgarian subsidiaries 20% for the six months ended 30 June 2015. The corporate tax that is applied to the qualifying income of the Company and its Cypriot subsidiaries is 12.5% for the six months ended 30 June 2015.
15. Investment Property (all)
Investment Property consists of the following assets:
-- Terminal Brovary Logistic Park consists of a 49.180 sqm Class A warehouse and associated office space, situated on the junction of the main Kiev - Moscow highway and the Borispil road. The facility is in operation since Q1 2010 and as at the end of the reporting period is 72% leased.
-- Innovations Logistic Park is a 16.570 sqm gross leasable area logistics park located in Clinceni in Bucharest, which benefits from being on the Bucharest ring road. Its construction was tenant specific, was completed in 2008 and is separated in four warehouses, two of which offer cold storage, the total area of which being 6.395 sqm. Innovations was acquired by the Company in May 2014 and as of the end of the reporting period is 87% leased.
-- EOS Business Park is a 3.386 sqm gross leasable area and includes a Class A office Building in Bucharest, which is currently fully let to Danone Romania, the French multinational food company. EOS Business Park was acquired by the Group in October 2014.
-- GED Logistics is a logistics park comprising 17.756 leasable sq m and has a net operating income ("NOI") of approximately EUR1.5 million. It is fully let 70% to the German multinational transportation and logistics company, Kuehne + Nagel and 30% to a Greek commercial company trading electrical appliances GE Dimitriou SA. The NOI also includes income from selling electric energy produced by the 1MW photovoltaic park installed on the roof of the warehouse property to the Greek Electric Grid.
-- Residential portfolio is an income producing residential portfolio in Bucharest, Romania consisting as of end of June of 184 apartments and villas across six separate complexes (Romfelt, Linda, Monaco, Blooming House, Moselin - Green Lake Parcel K and Boyana) located in different residential areas of Bucharest and Sofia. The Group acquired it partly in August 2014 and partly May 2015. The aggregate residential portfolio is 30% let at the end of June.
-- Bela Logistic Center is a 22,4 ha plot in Odessa situated on the main highway to Kiev. Following the issuance of permits in 2008, below ground construction for the development of a 103.000 sq m GBA logistic center commenced. Construction was put on hold in 2009 following adverse macro-economic developments at the time.
-- Kiyanovsky Lane consists of four adjacent plots of land, totaling 0,55 Ha earmarked for a residential development, overlooking the scenic Dnipro River, St. Michael's Spires and historic Podil neighbourhood.
-- Tsymlianskiy Lane, is a 0,36 ha plot of land located in the historic Podil District of Kiev and is destined for the development of a residential complex.
-- Balabino project is a 26,38 ha plot of land situated on the south entrance of Zaporizhia, a city in the south of Ukraine with a population of 800.000 people. Balabino is zoned for retail and entertainment development.
-- Pantelimon Lake consists of a 40.000 sq m plot of land in east Bucharest situated on the shore of Pantelimon Lake, opposite to a very famous Romanian hotel, the Lebada Hotel. The construction permit, which allows for 54.000 sqm residential space to be built, was renewed in April 2014.
-- Boyana Land The complex of Boyana Residence includes adjacent land plots with surface of 17.000 sqm with building permits to develop GBA of 21.851 sqm.
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-- Green Lake land Green Lake land plot includes a 48.360m(2) land area with a Gross Buildable Area of 82.250 sqm (63.400 sqm above ground). The Green Lake project is situated in the northern part of Bucharest on the bank of Grivita Lake in Bucharest. SPDI owns 44,24% of these plots.
Asset Name Description/ Principal Related Companies Carrying amount (EUR) Location Operation as at --------------- ------------- -------------------- ---------------------- -------------------------- 30 June 31 December 2015 2014 --------------- ------------- -------------------- ---------------------- ------------ ------------ Terminal Brovary, Warehouse LLC TERMINAL BROVARY 19.036.554 17.463.310 Brovary Kiev oblast LLC AISI BROVARY Logistics SL LOGISTICS LIMITED Park --------------- ------------- -------------------- ---------------------- ------------ ------------ Bela Logistic Odesa Land and LLC AISI BELA 5.541.156 5.083.216 Center Development Works for Warehouse --------------- ------------- -------------------- ---------------------- ------------ ------------ Kiyanovskiy Podil, Land for LLC AISI UKRAINE 4.379.301 4.017.381 Lane Kiev City residential LLC TORGOVIY CENTR Center development RETAIL DEVELOPMENT BALABYNO --------------- ------------- -------------------- ---------------------- ------------ ------------ Tsymlianskiy Podil, Land for LLC ALMAZ PRES 1.251.229 1.147.823 Lane Kiev City residential UKRAINE Center development --------------- ------------- -------------------- ---------------------- ------------ ------------ Balabino Zaporizhia Land for LLC INTERTERMINAL 2.323.711 2.131.673 retail development --------------- ------------- -------------------- ---------------------- ------------ ------------ Total Ukraine 32.531.951 29.843.403 --------------- ------------- -------------------- ---------------------- ------------ ------------ Innovations Clinceni, Warehouse MYRNES INNOVATIONS 14.000.000 14.000.000 Logistic Bucharest PARK LIMITED Park BEST DAY REAL ESTATE SRL --------------- ------------- -------------------- ---------------------- ------------ ------------ EOS Business Bucharest Office building YAMANO LIMITED 6.400.000 6.400.000 Park SPDI SRL, N-E Real Estate Park First Phase Srl --------------- ------------- -------------------- ---------------------- ------------ ------------ Residential Bucharest Residential Secure Investment 8.373.000 8.373.000 Portfolio apartments II Demetiva Ltd Diforio Limited Frizomo Limited Ketiza Limited Sec Rom Srl Sec Vista Srl Sec Mon Srl Ketiza Srl --------------- ------------- -------------------- ---------------------- ------------ ------------ Green Lake Bucharest Residential Edetrio Holdings 18.797.000 - apartments Limited land for Emakei Holdings residential Limited development Iuliu Maniu Limited Moselin Investments srl Rimasol Limited Rimasol Real Estate Srl Ashor Ventures Limited Ashor Develpoment Srl Jenby Ventures Limited Jenby Investments Srl Ebenem Limited Ebenem Investments Srl --------------- ------------- -------------------- ---------------------- ------------ ------------ Pantelimon Bucharest Land for Mofben Investments 5.822.000 - Lake residential Limited development Delia Lebada Invest srl --------------- ------------- -------------------- ---------------------- ------------ ------------ Total Romania 53.392.000 28.773.000 --------------- ------------- -------------------- ---------------------- ------------ ------------ Boyana Sofia Residential Sertland Properties 12.300.000 - Project apartments Limited and Boyana Residence land for ood residential development --------------- ------------- -------------------- ---------------------- ------------ ------------ Total Bulgaria 12.300.000 - --------------- ------------- -------------------- ---------------------- ------------ ------------ GED Logistics Athens Warehouse Victini Holdings 16.410.539 - Limited. GED Logistics S.A. --------------- ------------- -------------------- ---------------------- ------------ ------------ Total Greece 16.410.539 - --------------- ------------- -------------------- ---------------------- ------------ ------------ Provision on acquired Investment Properties (3.313.791) ---------------------------------------------------------------------------- ------------ ------------ TOTAL 111.320.699 58.616.403 --------------- ------------- -------------------- ---------------------- ------------ ------------
Carrying amounts of the properties owned as of 30 June 2015 stated in these condensed consolidated interim financial statements remain the same as were presented in the Group's audited consolidated financial statements as of 31 December 2014 for the assets the Company owned at the time and at the fair value at acquisition for assets acquired during the period; the carrying amounts of Ukrainian properties remain the same in terms of their value in US$ as provided by CBRE an external valuer. The exchange gains related to the Ukrainian assets of EUR8.051.596 presented in these condensed consolidated interim financial statements arose from UAH devaluation as well as the translation from the valuation currency (US$) to the reporting currency (EUR) which took place during the reporting period.
c. Investment Property Under Construction
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As at 30 June 2015 investment property under construction represents the carrying value of Bela Logistic Center project, which has reached the +10% construction in late 2008 but it is stopped since then. The Company's external valuer has appraised the property's value at US$6.200.000 as at 31 December 2014.
d. Investment Property 30 June 2015 ------------------------------------------------ ------------ EUR ------------------------------------------------ ------------ At 1 January 53.533.187 ------------------------------------------------ ------------ Capital expenditure on investment property 10.539 ------------------------------------------------ ------------ Revaluation gain/(loss) on investment property 3.366.380 ------------------------------------------------ ------------ Acquisition of investment property 53.329.539 ------------------------------------------------ ------------ Translation difference (4.460.102) ------------------------------------------------ ------------ At 30 June 105.779.543 ------------------------------------------------ ------------
Terminal Brovary, Kiyanovskiy Lane, Tsymlyanskiy Lane, Balabino, Innovations, EOS Business Park, Residential Portfolio, (note 15 above), Pantelimon Lake land, Green Lake land, Boyana land and GED Logistics S.A. are included in the Investment Property category.
e. Prepayment made for Investments
The Group has made an advance payment of US$12mil. (representing principal plus interest) for the acquisition of a project in Podil (Kiev) in 2007. As of the end of the reporting period the Management does not expect such acquisition to proceed while the seller has already defaulted on his credit to the Group.
As a consequence, the Group has progressed the legal proceedings initiated in 2013, for the transfer of the collateral (land plot of 42 ha in Kiev Oblast) in the Group's name as well as legal proceeding against the company which collected the original US$12mil. payment. As the collateral's value, as valued by CBRE, has been reduced the Group has reduced the amount of the receivable to the value of the collateral having a carrying value of EUR 2.049.378.
f. Investment property related gains 30 June 2015 30 June 2014 -------------------------------------------- ------------- ------------- EUR EUR -------------------------------------------- ------------- ------------- Gain as a result of functional currency 8.051.596 13.225.535 devaluation -------------------------------------------- ------------- ------------- Provision on acquired Investment Properties (3.313.791) - -------------------------------------------- ------------- ------------- Investment Property related gains 4.737.805 13.225.535 -------------------------------------------- ------------- -------------
Gain as a result of functional currency devaluation is the revaluation of Ukrainian assets attributable to the foreign exchange difference between the US$ and the EUR (to a great extent negated by the devaluation of the UAH).
Management has taken a provision of EUR3.313.791 in relation to the non-core (residential and adjacent land plots) property assets included in the portfolio acquired during the period, so as to reflect the consideration paid rather than the Fair Value of the assets acquired. Such provision is to be reviewed at year end by taking into account the valuations then as well as the operational performance of the assets under the SPDI management.
16. Investment Property Acquisitions
During the reporting period the Group completed the acquisition of an income producing logistics park (the "Park"), located in the West Attica Industrial Area of Athens, Greece. The Park comprises a fully let 17.756 leasable sqm warehouse property which has a photovoltaic alternative energy production facility installed on its roof. 70% of the space is let to the multinational transportation and logistics Company Kuehne + Nagel, with the remaining 30% let to GE Dimitriou SA, a Greek company which trades electrical appliances.
During the reporting period the Group acquired a number of prime property assets in Romania and Bulgaria. The acquisition is in line with the Company's strategy to build a diversified portfolio of prime commercial real estate in East and Southeast Europe, which generates cash flow from blue chip tenants and offers substantial potential for capital growth. The acquired investment properties include Green Lake (residential and land), Pantelimon Lake (land) and Boyana (residential and land) projects.
The fair value of identifiable assets and liabilities of acquired projects as of the date of their acquisition was as follows:
EUR GED Logistics SEC South Total East ASSETS Non-current assets Investment property 16.400.000 36.919.000 53.319.000 Investments in associates - 7.958.336 7.958.336 Other non-current assets 29.911 69.536 99.447 -------------- ----------- Current assets Prepayments and other current 353.366 2.433.172 2.786.538 assets Cash and cash equivalents 160 777.247 777.407 Total assets 16.783.437 48.157.291 64.940.728 Non-current liabilities Interest bearing borrowings 12.549.180 23.865.253 36.414.433 Deposits from tenants 211.243 - 211.243 Current liabilities Interest bearing borrowings 135.110 1.431.464 1.566.574 Trade and other payables 492.060 3.074.332 3.566.392 Taxes payable 56.776 252.033 308.809 -------------- ----------- ----------- Total liabilities 13.444.369 28.623.082 42.067.451 Net assets acquired (net of non-controlling 3.339.068 18.838.146 22.177.214 interest) Non-controlling interest - 696.063 696.063 Gain realized on acquisition 1.552.134 3.685.656 5.237.790 (Net Assets - Total consideration) Financed by Cash consideration paid 1.786.934 - 1.786.934 Issue of shares - 15.152.490 15.152.490 ----------- Total consideration 1.786.934 15.152.490 16.939.424
During the reporting period the Company acquired the mixed Portfolio of Sec South, which includes investment properties and investment in associates, (notes 15, 16, 17) via in kind contribution to the vendors by issuing 18.028.294 ordinary shares of EUR0,01 and 2 equivalent set of warrants as described below (note 20).The shares were issued at a price of 0.65 GBP per share while the first set of warrants had an exercise price of GBP0,10 and the second GBP0,45. In parallel the Company in exchange of these shares wrote off a past liability of the portfolio of EUR0,2m and took over via assignment a loan that had been contributed by a partner of a project amounting to EUR838.561.
17. Investments in associates
In April 2015 the Company completed the acquisition of an interest in a fully let and income generating office building in Sofia. The Company has acquired 20% of the corporate entity owning the building for a cash consideration of EUR4.059.839. Autounion is a Class A BREEAM certified office building, located to close to Sofia Airport. The building has a Gross Lettable Area of 19.476 square sqm over ten floors, includes underground parking and is fully let to a leading Bulgarian insurance company on a long lease extending to 2027.
In May 2015 the Group acquired a number of prime property assets in Romania and Bulgaria (in exchange of shares - note 20) some of them being investment properties (notes 15, 16) and some of them being associates. The associates acquired are as follows:
a) Green Lake Development is residential compound which consists as of end of June of 44 apartments plus 24 villas as well as 4 commercial designated buildings, situated on the banks of Grivita Lake, in the northern part of the Romanian capital. The compound includes also facilities such as private kindergarten, nautical club, outdoor sport courts, and restaurants. The Company has a 40,35% participation in this asset. The project as of the end of June was 50% let.
b) The Company acquired a 24,35% participation in the Delea Nuova Project in Bucharest. The project is a 10.280 sqm office building, which consists of two underground levels, a ground floor and ten above-ground floors. As of the end of June, the building is 100% let, with ANCOM (the Romanian Telecommunications Regulator) being the anchor tenant (70% of GLA).
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The table below summarizes the movements in the carrying amount of the Group's investment in associates.
EUR 30 June 2015 --------------------------------------- ------------- At 1 January - --------------------------------------- ------------- Acquisition of participation interest 12.018.175 --------------------------------------- ------------- Share of profits from associates 354.949 --------------------------------------- ------------- Dividend Received (365.317) At 30 June 12.007.807 --------------------------------------- -------------
Share of profits from associates reflects the post aquisition after tax proifts of each associate derived from rental income minus operational and financial expenses for the period ended 30 June 2015.
As at 30 June 2015, the Group's interests in its associates and their summarised financial information, including total assets, liabilities, revenues and profit or loss, were as follows:
Project Associates Total Total Profit/ Holding Share Country Asset Name assets liabilities (loss) of profits type from associates ----------- -------------- ------------ -------------- -------- -------- ------------- --------- ------------- EUR EUR EUR % EUR ----------- -------------- ------------ -------------- -------- -------- ------------- --------- ------------- Bluehouse Accession Autounion Project Office Project V 24.090.574 23.401.587 197.241 20,00 39.448 Bulgaria building ----------- -------------- ------------ -------------- -------- -------- ------------- --------- ------------- Delea Lelar Nuova Holdings Office Project Limited 8.628.492 3.637.013 16.186 24,35 3.942 Romania building ----------- -------------- ------------ -------------- -------- -------- ------------- --------- ------------- Green Residential Lake assets Project GreenLake and land - Phase Development for A Srl 14.414.863 16.503.089 772.140 40,35 311.559 Romania development ----------- -------------- ------------ -------------- -------- -------- ------------- --------- ------------- Total 47.133.929 43.541.689 985.567 354.949 --------------------------- ------------ ------------- -------- -------- ------------- --------- -------------
18. Prepayments and other current assets
30 June 2015 31 December 2014 ----------------------------------- -------------- ------------ EUR EUR ----------------------------------- -------------- ------------ Prepayments and other receivables 3.060.078 922.115 ----------------------------------- -------------- ------------ VAT and other tax receivable 1.235.116 1.229.057 ----------------------------------- -------------- ------------ Deferred expenses 1.024.490 2.100.317 ----------------------------------- -------------- ------------ Receivables from related parties 6.283 - ----------------------------------- -------------- ------------ Total 5.325.967 4.251.489 ----------------------------------- -------------- ------------
Prepayments and other receivables reflect prepayments of clients (EUR743.000),receivables from associate companies (EUR1.458.000) and pre-payments made for the acquisition of assets and/or share capital increases (EUR458.000).
VAT and other tax receivable mainly represents the current portion of the Terminal Brovary VAT receivable (EUR 745.944), to be offset from VAT charged over rental income during the next years. The remaining is VAT income to be collected from tenant and residential unit buyers.
Deferred expenses include legal, advisory, consulting and marketing expenses related to the ongoing share capital increases and due diligence expenses related to the possible acquisition of investment.
19. Cash and cash equivalents
Cash and cash equivalents represent liquidity held at banks.
30 June 2015 31 December 2014 ---------------------- ------------- ------------ EUR EUR ---------------------- ------------- ------------ Cash at banks in USD 84.812 43.612 ---------------------- ------------- ------------ Cash at banks in EUR 1.867.993 495.052 ---------------------- ------------- ------------ Cash at banks in UAH 81.095 150.029 ---------------------- ------------- ------------ Cash at banks in RON 497.716 201.984 ---------------------- ------------- ------------ Cash at banks in BGN 201.562 - ---------------------- ------------- ------------ Cash equivalents 98.876 1.261 ---------------------- ------------- ------------ Total 2.832.054 891.938 ---------------------- ------------- ------------
20. Share capital
Number of Shares 31 December 2014 13 March 2015 31 May 2015 29 June 2015 30 June 2015 (as at) -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Increase of Share Increase of Share Repayment of Capital Capital redeemable preference shares -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Authorised -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Ordinary shares of EUR0,01 989.869.935 - - - 989.869.935 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Total equity 989.869.935 - - - 989.869.935 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Redeemable preference shares of EUR0,01 785.000 - - - 785.500 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Total 990.654.935 - - - 990.654.935 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Issued and fully paid -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Ordinary shares of EUR0,01 each 33.884.054 23.777.748 18.028.294 - 75.690.096 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Total equity 33.884.054 23.777.748 18.028.294 - 75.690.096 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Redeemable preference shares of EUR0,01 785.000 - - (392.500) 392.500 -------------------- ----------------- ------------------- -------------------- ------------------- ------------- Total 34.669.054 23.777.748 18.028.294 (392.500) 76.082.596 ==================== ================= =================== ==================== =================== ============= Value (as at) 31 December 13 March 31 May 2015 29 June 30 June 2014 2015 2015 2015 (EUR) ----------------------- ------------ ---------- ------------ --------------- ---------- Increase Increase Repayment of Share of Share of redeemable Capital Capital preference shares ----------------------- ------------ ---------- ------------ --------------- ---------- Authorised
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----------------------- ------------ ---------- ------------ --------------- ---------- Ordinary shares of EUR0,01 9.898.699 - - - 9.898.699 ----------------------- ------------ ---------- ------------ --------------- ---------- Total equity 9.898.699 - - - 9.898.699 ----------------------- ------------ ---------- ------------ --------------- ---------- Redeemable preference shares of EUR0,01 7.850 - - - 7.850 ----------------------- ------------ ---------- ------------ --------------- ---------- Total 9.906.549 - - - 9.906.549 ----------------------- ------------ ---------- ------------ --------------- ---------- Issued and fully paid ----------------------- ------------ ---------- ------------ --------------- ---------- Ordinary shares of EUR0,01 338.839 237.777 180.283 - 756.899 ----------------------- ------------ ---------- ------------ --------------- ---------- Total equity 338.839 237.777 180.283 - 756.899 ----------------------- ------------ ---------- ------------ --------------- ---------- Redeemable preference shares of EUR0,01 7.850 - - (3.925) 3.925 ----------------------- ------------ ---------- ------------ --------------- ---------- Total 346.689 237.777 180.283 (3.925) 760.824 ----------------------- ------------ ---------- ------------ --------------- ----------
20.1 Authorised Share Capital
As at the end of 2014 the authorized share capital of the Company was 989.869.935 Ordinary Shares of EUR0,01 nominal value each and 785.000 Preference Shares of EUR0,01 nominal value each.
As at the end of the reporting period the authorized share capital of the Company is 989.869.935 Ordinary Shares of EUR0,01 nominal value each and 785.000 Preference Shares of EUR0,01 nominal value each.
During the EGM dated 24 June 2015, it was approved by the shareholders of the Company that the authorized share capital of the Company will be increased to EUR9.992.739,35 divided into: (a) 989.869.935 ordinary shares of EUR 0,01 each; (b) 785.000 Redeemable Preference Shares Class A of EUR0,01 each; and (c) 8.618.997 Redeemable Preference Shares Class B of EUR0,01 each by the creation of 8.618.997 Redeemable Preference Shares Class B of EUR0,01 each. The above approval has effective date 1 July 2015. The reorganization of the capital was mandated by the acquisition growth plan of the Company since the creation of the Redeemable Preference Shares Class B was necessary to be issued to BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L which was the seller of the income producing real estate asset in Craiova, Romania, which the Company acquired in July 2015 (note 32).
20.2 Issued Share Capital
As at the end of 2014 the issued share capital of the Company was 33.884.054 Ordinary Shares of EUR0,01 nominal value each, and 785.000 Preference Shares of EUR0,01 nominal value each.
Further to the resolutions approved at the AGM of 31 December 2014 the Board has proceeded in allocating shares as follows:
1. On 13/3/2015, the allotment of 23.777.748 ordinary shares of EUR0,01 each for the purpose of capital raising of EUR8.000.000 in the Company by its existing shareholders.
2. On 31/5/2015, the allotment of 18.028.294 ordinary shares of EUR0,01 each for the purpose of an in kind contribution of mixed Portfolio acquisition and (notes 15,16,17).
Furthermore the Company proceeded on 29/6/2015 with payment of half of the issued convertible shares (392.500) but the cancellation of these shares within the appropriate authorities will be completed in second semester of 2015.
As at the end of the reporting period the issued share capital of the Company is as follows:
a) 75.690.096 Ordinary Shares of EUR0, 01 nominal value each and
b) 392.500 Convertible Shares of EUR0, 01 nominal value each, following the above described redemption which shall be officially finalized in second semester of 2015.
20.3 Director's Option scheme
Under the said scheme each of the directors serving at the time, which is remain a Director of the Company is entitled to subscribe for 2.631 Ordinary Shares exercisable as set out below:
Exercise Price Number of -------------------------------- --------------- ---------- US$ Shares -------------------------------- --------------- ---------- Exercisable till 1 August 2017 57 1.754 -------------------------------- --------------- ---------- Exercisable till 1 August 2017 83 877 -------------------------------- --------------- ----------
The Company considers the said options well out of the money (as the share price at the reporting date is USD 0,46), thus the possibility of exercising them is remote and therefore no provision has been made in respect of this.
Director Franz M. Hoerhager Option scheme, 12 October 2007
Under the said scheme, director Franz M. Hoerhager is entitled to subscribe for 1.829 ordinary shares exercisable as set out below:
Exercise Price Number of -------------------------------- --------------- ---------- GBP Shares -------------------------------- --------------- ---------- Exercisable till 1 August 2017 40 1.219 -------------------------------- --------------- ---------- Exercisable till 1 August 2017 50 610 -------------------------------- --------------- ----------
The Company considers the said options well out of the money (as the share price at the reporting date is GBP 0, 30), thus the possibility of exercising them is remote and therefore no provision has been made in respect of this.
20.4 Class A Warrants issued
During the period ended 30 June 2015 the Company acquired the Sec South portfolio (notes 16,17) in exchange of Ordinary shares (issued at GBP0.65 each ) and of Class A Warrants giving the right to the Warrant holders to subscribe in cash at the Exercise Amount for the Ordinary Shares. The Company issued two sets of Warrants as follows:
1) 18.028.294 warrants corresponding to 18.028.294 ordinary shares, exercisable within 45 days from signing at an exercise amount of GBP0.10 per ordinary share. These warrants were exercised (in part) by August 2015 (14.324.627 out of a total of 18.028.294 warrants) (note 32), indicating an effective share issuing price for the sellers of 41p. Following their exercise these have lapsed. Out of these exercised warrants Ionian Equity Participations Limited, a substantial shareholder in the Company, exercised 2.995.360 warrants; an entity in which Lambros Anagnostopoulos (the CEO and a director of the Company) has a majority stake exercised 716.014 warrants; and, Constantinos Bitros (the CFO of the Company) exercised 98.010 warrants. (note 32)
2) warrants corresponding to 18.028.294 ordinary shares, exercisable by 31 December 2016 at an exercise amount of GBP0.45 per ordinary share.
The shares that will be received under the above warrants bear a lock-in period of 12 months.
20.5 Class B Warrants issued
On 8 August 2011 the Company issued an amount of Class B Warrants for an aggregate equivalent to 12,5% of the issued share capital of the Company at the exercise date. Each Class B Warrant entitles the holder to receive one Ordinary Share. The Class B Warrants may be exercised at any time until 31st December 2016, pursuant to a decision by the AGM of 30/12/2013. The exercise price of the Class B Warrants will be the nominal value per Ordinary Share as at the date of exercise. The Class B Warrant Instruments have anti-dilution protection so that, in the event of further share issuances by the Company, the number of Ordinary Shares to which the holder of a Class B Warrant is entitled will be adjusted so that he receives the same percentage of the issued share capital of the Company (as nearly as practicable), as would have been the case had the issuances not occurred. This anti-dilution protection will lapse on the earlier of (i) the expiration of the Class B Warrants; and (ii) capital increase(s) undertaken by the Company generating cumulative gross proceeds in excess of US$100.000.000. As of the reporting date, the aggregate amount of class B warrant is 10.812.871.
20.6 Capital Structure as at the end of the reporting period
As at the reporting date the Company's share capital is as follows:
Number of (as at) 30 June 2015 (as at) 31 December 2014 ---------------------------- -------------------------- --------------------- ------------------------- Ordinary shares of EUR0,01 Issued and Listed in AIM 75.690.096 33.884.054 ---------------------------- -------------------------- --------------------- ------------------------- Class A Warrants 36.056.588 - ---------------------------- -------------------------- --------------------- ------------------------- Class B Warrants 10.812.871 4.840.579 ---------------------------- -------------------------- --------------------- ------------------------- Total number of Shares Non-Dilutive Basis 75.690.096 33.884.054 ---------------------------- -------------------------- --------------------- -------------------------
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Total number of Shares Full Dilutive Basis 122.559.555 38.724.633 ---------------------------- -------------------------- --------------------- ------------------------- Options 4.460 4.460 -------------------------------------------------------- --------------------- -------------------------
20.7 Redeemable Preference Shares
During the reporting period the Company repaid half of 785.000 preference SPDI shares of nominal value EUR0, 01 each, pending finalization of the process in the second semester of 2015. The Preference Shares have no voting powers or rights to dividend. The remaining 392.500 of the Preference Shares may be redeemed by 31 January 2016 (the "Redemption Date 2") at the price of EUR0, 89. At any time prior to the Redemption Dates the holders shall have the option to unilaterally reconvert the Preference Shares into ordinary shares of EUR0, 01 each.
During the EGM dated 24 June 2015,the shareholders approved the reorganization of the Capital of the company (note 20.1) via the reclassification of the old Redeemable shares as Redeemable Preference Shares Class A and via the issuance of 8.618.997 Redeemable Preference Shares Class B of EUR0.01 for the purpose of acquiring Craiova asset in Romania (note 32). The above approval has effective date 1 July 2015.
Redeemable Preference Shares Class A
The Redeemable Preference Shares Class A do not have voting or dividend rights. The 392.500 of the Redeemable Preference Shares Class A were redeemed on 31 January 2015 ("Redemption Date 1") at a price of EUR0,89 each and the remaining 392.500 of the Redeemable Shares Class A may be redeemed by the Company on 31 January 2016 at a price of EUR0,89 each or the holders of the Redeemable Preference Shares Class A shall have the option to immediately convert the Redeemable Preference Shares Class A into ordinary Shares of EUR0,01 each.
Redeemable Preference Shares Class B
The Redeemable Preference Shares Class B shall not have voting rights and shall have economic rights at par with ordinary shares. The Redeemable Preference Shares Class B, if not converted into ordinary Shares, may be redeemed at the sole discretion of the holder of the Redeemable Preference Shares Class B on the expiration of the 12th month following the date of issue of the Redeemable Preference Shares Class B (the "Redemption Date"); the redemption price shall be EUR0,7056 per Redeemable Preference Share Class B. The Redeemable Preference Shares Class B shall have priority on the winding-up of the Company, over any other shares or class of shares issued by the Company from time to time including without limitation the Redeemable Preference Shares Class A but otherwise rank pari passu with the ordinary shares in all respects.
21. Foreign Currency Translation Reserve
Exchange differences related to the translation from the functional currency of the Group's subsidiaries are accounted by entries made directly to the foreign currency translation reserve. The foreign exchange translation reserve represents unrealized profits or losses related to the appreciation or depreciation of the local currencies against the EUR in the countries where the Company's subsidiaries' functional currencies are not EUR.
22. Non-Controlling Interests
Non-controlling interests represent the equity value of shareholdings not owned by the Group:
% Non-controlling interest portion ------------------------------------ --------------------------- Group Company 30 June 2015 31 December 2014 ------------------------------------ ------------- ------------ LLC Almaz-Press-Ukraine 45,00 45,00 ------------------------------------ ------------- ------------ Ketiza Limited 10,00 55,00 ------------------------------------ ------------- ------------ Ketiza srl 10,00 55,00 ------------------------------------ ------------- ------------ Ram Real Estate Management Limited 50,00 - ------------------------------------ ------------- ------------ Iuliu Maniu Limited 55,00 - ------------------------------------ ------------- ------------ Moselin Investments Srl 55,00 - ------------------------------------ ------------- ------------ Rimasol Enterprises Limited 55,76 - ------------------------------------ ------------- ------------ Rimasol Real Estate Srl 55,76 - ------------------------------------ ------------- ------------ Ashor Ventures Limited 55,76 - ------------------------------------ ------------- ------------ Ashor Development Srl 55,76 - ------------------------------------ ------------- ------------ Jenby Ventures Limited 55,76 - ------------------------------------ ------------- ------------ Jenby Investments Srl 55,76 - ------------------------------------ ------------- ------------ Ebenem Limited 55,76 - ------------------------------------ ------------- ------------ Ebenem Investments Srl 55,76 - ------------------------------------ ------------- ------------
23. Interest bearing borrowings
30 June 2015 31 December 2014 ----------------------------------------------- ------------- ------------ EUR EUR ----------------------------------------------- ------------- ------------ Principal of bank Loans ----------------------------------------------- ------------- ------------ Principal EBRD loan 12.559.955 11.808.915 ----------------------------------------------- ------------- ------------ Banca Comerciala Romana 1.615.529 1.783.826 ----------------------------------------------- ------------- ------------ Bancpost SA 2.088.583 2.157.501 ----------------------------------------------- ------------- ------------ Alpha Bank Romania 1.103.753 1.184.688 ----------------------------------------------- ------------- ------------ Raiffeisen Bank Romania 1.004.819 1.093.176 ----------------------------------------------- ------------- ------------ Bancpost SA 3.091.754 - ----------------------------------------------- ------------- ------------ Alpha Bank Bulgaria 1.781.266 - ----------------------------------------------- ------------- ------------ Alpha Bank Bulgaria 3.720.418 ----------------------------------------------- ------------- ------------ Bank of Cyprus 4.569.725 - ----------------------------------------------- ------------- ------------ Eurobank Ergasias SA 12.522.728 - ----------------------------------------------- ------------- ------------ Piraeus Bank SA 2.800.000 - ----------------------------------------------- ------------- ------------ Loans by non-controlling shareholders 6.063.693 - ----------------------------------------------- ------------- ------------ Total Principal of Bank Loans 52.922.223 18.028.106 ----------------------------------------------- ------------- ------------ Restructuring fees and interest payable to EBRD 32.211 29.685 ----------------------------------------------- ------------- ------------ Interest accrued on bank loans 1.482.011 240.619 ----------------------------------------------- ------------- ------------ Interests accrued on non-bank loans 657.783 - ----------------------------------------------- ------------- ------------ Prepaid fees to EBRD - (81.988) ----------------------------------------------- ------------- ------------ Total 55.094.228 18.216.422 ----------------------------------------------- ------------- ------------ 30 June 2015 31 December 2014 -------------------- ------------- ------------ EUR EUR -------------------- ------------- ------------ Current portion 10.343.906 5.960.706 -------------------- ------------- ------------ Non-current portion 44.750.322 12.255.716 -------------------- ------------- ------------ Total 55.094.228 18.216.422 -------------------- ------------- ------------
EBRD loan related to Terminal Brovary
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In February 2015 the restructuring of the Brovary construction loan with the EBRD which was signed in December 2014 was effected. According to the agreement the loan repayment is being extended to 2022, with a balloon payment of US$3.633.333. The loan has an interest of 3 M LIBOR + 6.75% and the capital repayments are scheduled as follows: 2015-$900.000 2016-$1.000.000 2017-$1.220.000 2018-$1.350.000 2019-$1.500.000 2020-$1.650.000 2021-$1.800.000 2022-$4.983.333, 32.
Under the current agreement the collaterals accompanying the existing loan facility are as follows:
1. LLC Terminal Brovary pledged all movable property with the carrying value more than US$25.000.
2. LLC Terminal Brovary pledged its Investment property, Brovary Logistics Centre the construction of which was finished in 2010 (note 15), and all property rights on the center.
3. SPDI PLC pledged 100% corporate rights in SL SECURE Logistics Ltd, a Cyprus Holding Company which is the Shareholder of LLC Terminal Brovary, LLC Aisi Brovary.
4. SL SECURE Logistics Ltd pledged 99% corporate rights in LLC Aisi Brovary. 5. LLC Aisi Brovary pledged 100% corporate rights in LLC Terminal Brovary.
6. LLC Terminal Brovary pledged all current and reserved accounts opened by LLC Terminal Brovary in Unicreditbank Ukraine.
7. LLC Aisi Brovary entered into a call and put option agreement with EBRD, pursuant to which following an Event of Default (as described in the Agreement) EBRD has the right (Call option) to purchase at the Call Price from LLC Aisi Brovary, 20% of the Participatory Interest of LLC Terminal Brovary on the relevant Settlement Date.
8. LLC Terminal Brovary has granted EBRD a second ranking mortgage in relation to its own and LLC Aisi Brovary's obligations under the call and put option agreement.
9. LLC Terminal Brovary has pledged its rights arising in connection with the existing Lease agreements with Tenants.
10. LLC Aisi Brovary has entered with EBRD into a conditional assignment agreement of 20% and 80% corporate rights in LLC Terminal Brovary.
11. SL Secure Logistics Limited has entered with EBRD into a conditional assignment agreement of 99% corporate rights in LLC Aisi Brovary.
The issued corporate guarantee dated 12 January 2009 guaranteeing all liabilities and fulfilment of conditions under the existing loan agreement remains in force. The maturity of the guarantee is equal to the maturity of the loan.
The existing credit agreement with EBRD includes among others the following requirements for LLC Terminal Brovary and the Group as a whole:
1. At all times LLC Brovary Logistics shall maintain a balance in the Debt Service Reserve Amount (DSRA) account equal to not less than the sum of all payments of principal and interest on the Loan which will be due and payable during the next six months.
2. LLC Terminal Brovary shall achieve a "CNRI"(Contract Net Rental Income is the aggregate of monthly lease payments, net of value added tax, contracted by the Borrower pursuant to the Lease Agreements as of the relevant testing date and converted into Dollars at the official exchange rate established by the National Bank of Ukraine as of such testing date) according to the following schedule:
(1) on 31 December 2014, CNRI of USD 200,000 or more;
(2) on 30 June 2015, CNRI of USD 220,000 or more;
(3) on 31 December 2015, CNRI of USD 230,000 or more; and
(4) on 30 June and 31 December in each year commencing on the date of 30 June 2016, CNRI of USD 250,000 or more, in respect of the six month period commencing on any such date.
3. LLC Terminal Brovary shall achieve a "DSCR"(Debt Service Coverage Ratio is the sum of net income minus operating expenses plus amortization, divided with the sum of paid principal & interest) according to the following schedule:
i. in respect of the 6 months period ending on 31 December 2014, the DSCR of more than 1,10x.
ii. in respect of the 6 months period ending on 30 June 2015 and 31 December 2015, the DSCR of more than 1,15x.
iii. in respect of the 6 months period ending on 30 June or 31 December in any year commencing on the date of 30 June 2016, the DSCR of more than 1,2x.
Other bank Borrowings (related to residential projects)
SecRom Real Estate Srl entered (2009) into a loan agreement with Alpha Bank- Romania for a credit facility for financing part of the acquisition of the Doamna Ghica Project apartments. As of the end of the reporting period, the balance of the loan is EUR1.103.753, bears interest of EURIBOR 3M+5,25% and is repaid on the basis of investment property sales. The loan matures in October 2016 and is secured by all assets of SecRom Real Estate Srl as well as its shares.
Ketiza Real Estate Srl entered (2012) into a loan agreement with Bancpost S.A. for a credit facility for financing the acquisition of the Blooming House Project and 100% of the remaining (without VAT) construction works Blooming House project. As of the end of the reporting period the balance of the loan is EUR2.088.583. The loan bears interest of EURIBOR 3M plus 3,5% and matures in May 2017. The bank loan is secured by all assets of Ketiza Real Estate Srl as well as its shares.
SecVista Real Estate Srl entered (2011) into a loan agreement with Raiffeisen Bank- Romania for a credit facility for financing part of the acquisition of the Linda Residence Project apartments. As of the end of the reporting period the balance of the loan is EUR1.004.819. The loan bears interest of EURIBOR 1M+5,2% and is currently under restructuring negotiation. The loan is secured by all assets of SecVista Real Estate Srl as well as its shares.
SecMon Real Estate Srl (2011) entered into a loan agreement with Banca Comerciala Romana for a credit facility for financing part of the acquisition of the Monaco Towers Project apartments. As of the end of the reporting period the balance of the loan is EUR1.615.529 and bears interest of EURIBOR 3M plus 5%. The loan is repayable in October 2015 and is secured by all assets of SecMon Real Estate Srl as well as its shares.
GED Logistics SA entered (April 2015) into a loan agreement with EUROBANK SA to refinance the existing debt facility. As of the end of the reporting period the balance of the loan is EUR12.522.728 and bears interest of EURIBOR 6M plus 3,2%. The loan is repayable by 2022, has a balloon payment of EUR8.660.000 and is secured by all assets of GED Logistics SA as well as its shares.
SEC South East Continent Unique Real Estate (Secured) Investments Limited has a debt facility with Piraeus Bank (since 2007) for the acquisition of the Green Lake project land in Bucharest Romania. As of the end of the reporting period the balance of the loan is EUR2.800.000 and bears interest of EURIBOR 3M plus 4% plus the Greek law 128/78 0, 6% contribution. The term of the loan facility has expired but the Company has agreed with the Bank a prolongation of the maturity until 2017 to be implemented in Q3-2015.
Moselin Investments Srl (2010) entered into a construction loan agreement with Bancpost SA covering the construction works of Parcel K -Green Lake project. As of the end of the reporting period the balance of the loan is EUR3.091.754 and bears interest of EURIBOR 3M plus 5%. The loan is repayable from the sales proceeds while it matures in 2017. The loan is secured as follows with the property itself and the shares of Moselin Investments Srl.
Other Borrowings from acquisitions
Delia Lebada Invest Srl, a subsidiary, entered into a loan agreement with the Bank of Cyprus Limited to effectively finance a leveraged buy-out of the subsidiary by the Company. The bank loan amounting to EUR4.830.000 is secured with a mortgage at 120% of the loan value and with a corporate guarantee. The loan bears 7% fixed interest while interest is payable quarterly. The balance of the loan as of end of the period ended 30 June 2015 is EUR4.569.725. The Company is currently in discussion with its partner to sell the asset and with the bank for the loan restructuring at the same time. In the meantime Delia Lebada Invest Srl has entered into protection from creditor's procedure.
Sertland Properties Limited entered (2008) into a loan agreement with Alpha Bank- Bulgaria for an acquisition loan related to the acquisition of 70% of Boyana Residence ood. As of the end of the reporting period the balance of the loan is EUR1.781.266 and bears interest of EURIBOR 3M plus 5,75%. The loan matures in 2017 and discussions have been initiated with the bank for a prolongation. The loan is secured with a pledge on company's shares, and a corporate guarantee by SEC South East Continent Unique Real Estate (Secured) Investments Limited.
Boyana Residence ood entered (2011) into a loan agreement with Alpha Bank- Bulgaria for a construction loan related to the constructions of the Boyana Residence projects (finished in 2014). As of the end of the reporting period the balance of the loan is EUR3.720.418 and bears interest of EURIBOR 3M plus 5,75%. The loan matures in 2017 and discussions have been initiated with the bank for a prolongation. The loan currently is being repaid through sales proceeds. The facility is secured through a mortgage over the property and a pledge over the company shares as well as those of Sertland Properties Limited.
Other bank borrowing include as well borrowing from non-controlling interests. During the last five years and in order to support of Parcel K of Green Lake project and Boyana project the shareholders of Moselin and Boyana (other than the Company) have contributed their share by means of shareholder loans. The loans bear interest at 7% annually and are repayable in 2016.
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24. Trade and other payables
30 June 2015 31 December 2014 ------------------------------------------- ------------- ------------ EUR EUR ------------------------------------------- ------------- ------------ Payables to related parties (note 28.2) 1.789.720 335.004 ------------------------------------------- ------------- ------------ Payables for construction, non-current 406.150 202.200 ------------------------------------------- ------------- ------------ Other payables 2.829.685 916.827 ------------------------------------------- ------------- ------------ Deferred income from tenants, non-current 22.403 12.485 ------------------------------------------- ------------- ------------ Deferred income from tenants, current 34.402 132.782 ------------------------------------------- ------------- ------------ Accruals 48.303 270.239 ------------------------------------------- ------------- ------------ Total 5.130.663 1.869.537 ------------------------------------------- ------------- ------------ 30 June 2015 31 December 2014 ----------------------- ------------- ------------ EUR EUR ----------------------- ------------- ------------ Current portion 4.702.110 1.654.852 ----------------------- ------------- ------------ Non - current portion 428.553 214.685 ----------------------- ------------- ------------ Total 5.130.663 1.869.537 ----------------------- ------------- ------------
The fair values of trade and other payables due within one year approximate their carrying amounts as presented above.
Payables to related parties represent the balances with Secure Management Ltd and Grafton Properties as well as amounts due to board of directors and committee members and accrued management remuneration (note 28.2).
Payables for construction represent amounts payable to the contractor of Bela Logistic Center in Odessa. The settlement was reached in late 2011 on the basis of maintaining the construction contract in an inactive state (to be reactivated at the option of the Group), while upon reactivation of the contract or termination of it (because of the sale of the asset) the Group would have to pay an additional UAH5.400.000 (US$ 450.000) payable upon such event occurring. Since it is uncertain when the latter amount is to be paid it has been discounted at the current discount rates in Ukraine and is presented as a non-current liability. Payables for construction includes as well EUR245.000 amount payable to Boyana's constructor which has been withheld as Good Performance Guarantee.
Other payables mainly represent shareholder loan balances owned to minority partners of the property assets acquired within the period.
Deferred income from tenants represents advances from tenants which will be used as future rental income and utilities charges.
Payables for services include payables to non-controlling shareholders in the amount of EUR1.003.168. The rest of payables and accruals for services represent amounts payable to various service providers including auditors, legal advisors, consultants and third party accountants related to the current operations of the Group as well as with due diligence related expenses incurred in preparation of new acquisitions.
25. Deposits from Tenants
Deposits from tenants appearing under current and non-current liabilities include the amounts received from the tenants of LLC Terminal Brovary, Best Day SRL, GED Logistics S.A. and companies representing residential segment as advances/guarantees and are to be reimbursed to these clients at the expiration of the leases agreements.
26. Taxes payable & Provisions for taxes
30 June 2015 31 December 2014 ----------------------------------- ------------- ------------ EUR EUR ----------------------------------- ------------- ------------ Corporate income and defense tax 379.568 356.929 ----------------------------------- ------------- ------------ Other taxes including VAT payable 482.661 74.899 ----------------------------------- ------------- ------------ Provisions for taxes in Ukraine - 68.253 ----------------------------------- ------------- ------------ Total Tax Liability 862.229 500.081 ----------------------------------- ------------- ------------
Corporate income tax represents taxes payable in Cyprus and Romania.
Other taxes represent local property taxes and VAT payable in Ukraine, Romania, Greece, Bulgaria and Cyprus.
27. Finance lease liabilities
As at the reporting date the finance lease liabilities consist of the non-current portion of EUR11.340.099 and the current portion of EUR 178.138 (31 December 2014: EUR 11.463.253 and EUR 181.723, accordingly).
30 June 2015 Minimum lease payments (EUR) Interest Principal ---------------------------- -------------- ---------- ----------- Less than one year 760.565 592.214 168.351 ---------------------------- -------------- ---------- ----------- Between two and five years 3.461.289 2.155.663 1.305.626 ---------------------------- -------------- ---------- ----------- More than five years 12.709.921 2.723.358 9.986.563 ---------------------------- -------------- ---------- ----------- 16.931.775 5.471.235 11.460.540 ---------------------------- -------------- ---------- ----------- Accrued Interest 57.697 11.518.237 ---------------------------- -------------- ---------- ----------- 31 December 2014 Minimum lease payments (EUR) Interest Principal ---------------------------- -------------- ---------- ----------- Less than one year 766.289 584.677 181.612 ---------------------------- -------------- ---------- ----------- Between two and five years 3.424.203 2.205.329 1.218.874 ---------------------------- -------------- ---------- ----------- More than five years 13.285.643 3.094.876 10.190.767 ---------------------------- -------------- ---------- ----------- 17.476.135 5.884.882 11.591.253 ---------------------------- -------------- ---------- ----------- Accrued Interest 53.723 ---------------------------- -------------- ---------- ----------- 11.644.976 ---------------------------- -------------- ---------- -----------
27.1 Land Plot Financial Leasing
The Group rents land plots classified as finance lease. Lease obligations are denominated in UAH. The fair value of lease obligations approximate to their carrying amounts as presented above. Following the appropriate discounting finance lease liabilities are carried at EUR 152.479 under current and non-current portion. The Group's obligations under finance leases are secured by the lessor's title to the leased assets.
27.2 Sale and Lease Back Agreement
A. Innovations Logistic Park
In May 2014 the Group concluded the acquisition of Innovations Logistics Park in Bucharest, owned by Best Day Srl, through a lease back agreement with Piraeus Leasing Romania SA. As of the end of the reporting period the balance is EUR7.400.470 bearing interest rate at 3M Euribor plus 4,45% margin, being repayable in monthly tranches until 2026. At the maturity of the lease agreement Best Day will become owner of the asset.
Under the current finance lease agreement the collaterals for the facility are as follows:
1. Best Day pledged its future receivables from its tenants. 2. Best Day pledged its shares. 3. Best Day pledged all current and reserved accounts opened in Piraeus Leasing, Romania.
4. Best Day is obliged to provide cash collateral in the amount of EUR250.000 in Piraeus Leasing Romania, which had been be deposited as follows, half in May 2014 and half in May 2015.
5. SPDI provided a corporate guarantee in favor of the bank towards the liabilities of Best Day arising from the sales and lease back agreement.
B. EOS Business Park
In October 2014 the Group concluded the acquisition of EOS Business Park in Bucharest, owned by First Phase Srl, through receiving debt from Alpha Bank Romania SA in the form of a sale and lease back agreement. As of the end of the reporting period the balance is EUR3.934.972 bearing interest rate at 3M Euribor plus 5,25% margin, being repayable in monthly tranches until 2024. At the maturity of the lease agreement First Phase will become owner of the asset.
Under the current finance lease agreement the collaterals for the facility are as follows:
1. First Phase pledged its future receivables from its tenants. 2. First Phase pledged Bank Guarantee receivables from its tenants. 3. Best Day pledged its shares. 4. First Phase pledged all current and reserved accounts opened in Alpha Bank Romania SA.
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5. First Phase is obliged to provide cash collateral in the amount of EUR300.000 in Alpha Bank Romania SA, starting from October 2019.
6. SPDI provided a corporate guarantee in favor of the bank towards the liabilities of First Phase arising from the sales and lease back agreement.
28. Related Party Transactions
The following represent transactions with related parties:
28.1 Expenses
The below expenses were recognized during the reporting period:
30 June 2015 30 June 2014 --------------------------------- ------------- ------------- EUR EUR --------------------------------- ------------- ------------- Management Remuneration 467.030 174.714 --------------------------------- ------------- ------------- Board of Directors & Committees 119.628 84.395 --------------------------------- ------------- ------------- SECURE Management Ltd - 35.176 --------------------------------- ------------- ------------- Total 586.658 294.285 --------------------------------- ------------- -------------
Management remuneration includes the remuneration of the CEO, CFO the Commercial Director and that of the country directors of Ukraine and Romania pursuant the decisions of the remuneration committee.
Board of Directors expense represents the remuneration of all the non-executive members of the Board pursuant to the decision of the Remuneration Committee.
28.2 Payables to related parties
The amounts below were payables as at the end of the reporting period:
30 June 2015 31 December 2014 --------------------------------- ------------- ------------ EUR EUR --------------------------------- ------------- ------------ Grafton Properties 123.548 123.548 --------------------------------- ------------- ------------ Secure Management Ltd 1.189.966 18.244 --------------------------------- ------------- ------------ Board of Directors & Committees 316.204 193.212 --------------------------------- ------------- ------------ Management Remuneration 160.002 - --------------------------------- ------------- ------------ Total 1.789.720 335.004 --------------------------------- ------------- ------------
28.2.1 Board of Directors & Committees
The amount payable represents remuneration payable to non-Executive Directors and members of Committees covering the period ended 30 June 2015 remuneration. The members of the Board of Directors have agreed in order to facilitate the Company's cash flow, to exchange part of their fees related to prior years for shares in the Company's capital. This was approved by the Annual General Meeting of the Company's shareholders.
28.2.2 Loan payable to Grafton Properties
Under the Settlement Agreement of July 2011, the Company undertook the obligation to repay to certain lenders who had contributed funds for the operating needs of the Company between 2009-2011, by lending to AISI Realty Capital LLC, the total amount of US$450.000. As of the reporting date the liability towards Grafton Properties, representing the Lenders, was US$150.000, which is contingent to the Company raising US $50m of capital in the markets.
28.2.3 Payable to Secure Management
Payable to Secure Management represents a liability existing at the time of acquisition of the mixed portfolio of Sec South related to accrued management fee, which is under negotiation for eventual write down or off.
28.2.4 Management Remuneration
Management Remuneration represents deferred amounts payable to the CEO and CFO of the Company, as well as the Commercial Director and the Country Managers for Romania and Ukraine.
28.3 Loans from SC Secure Capital Ltd to the Company's subsidiaries
SC Secure Capital Ltd, the finance subsidiary of the Company has proceeded to provide capital in the form of loans to the Ukrainian subsidiaries of the Company so as to support the acquisition of assets, development expenses of the projects, as well as various operational costs.
Borrower (EUR) Limit Principal Principal as of as of 30 June 2015 31 December 2014 -------------------------- ------------ -------------- ------------- LLC "TERMINAL BROVARY" 28.827.932 26.882.801 27.578.265 -------------------------- ------------ -------------- ------------- LLC "AISI UKRAINE" 23.062.351 12.275 12.275 -------------------------- ------------ -------------- ------------- LLC "ALMAZ PRES UKRAINE" 8.236.554 140.021 140.021 -------------------------- ------------ -------------- ------------- Total 27.035.097 27.730.561 ---------------------------------------- -------------- -------------
All loans from SC Secure Capital Limited to the Company's subsidiaries are USD denominated and in 2014 they generated a forex loss totaling EUR19.746.111 as a result of devaluation of the Ukrainian Hryvnia during the reporting period.
29. Contingent liabilities
The Group is involved in various legal proceedings in the ordinary course of its business.
29.1 Tax litigation
The Group performed during the reporting period a part of its operations in the Ukraine and therefore within the jurisdiction of the Ukrainian tax authorities. The Ukrainian tax system can be characterized by numerous taxes and frequently changing legislation, which may be applied retroactively, open to wide interpretation and in some cases, conflicting. Instances of inconsistent opinions between local, regional, and national tax authorities and between the National Bank of Ukraine and the Ministry of Finance are not unusual. Tax declarations are subject to review and investigation by a number of authorities, which are authorised by law to impose severe fines and penalties and interest charges.
Any tax year remains open for review by the tax authorities during the three subsequent calendar years; however, under certain circumstances a tax year may remain open for longer. These facts create tax risks which are substantially more significant than those typically found in countries with more developed tax systems. Management believes that it has adequately provided for tax liabilities, based on its interpretation of tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant.
At the same time the Group's entities are involved in court proceedings with tax authorities; Management believes that the estimates provided within the financial statements present a reasonable estimate of the outcome of these court cases.
29.2 Construction related litigation
There are no material claims from contractors due to the postponement of projects or delayed delivery other than those disclosed in the financial statements.
29.3 Other Litigation
The Company has a number of legal cases pending. Management does not believe that the result of these will have a substantial overall effect (in excess of EUR0,5m) on the Group's financial position. Consequently no such provision is included in the current financial statements.
29.4 Other Contingent Liabilities
The Group had no other contingent liabilities as at 30 June 2015.
30. Commitments
The Group had no commitments as at 30 June 2015.
31. Financial Risk Management
31.1 Capital Risk Management
The Group manages its capital to ensure that it will be able to implement its stated growth strategy in order to maximize the return to stakeholders through the optimization of the debt-equity structure and value enhancing actions in respect of its portfolio of investments. The capital structure of the Group consists of borrowings (note 23), trade and other payables (note 24) deposits from tenants (note 25), taxes payable (note 26) and equity attributable to ordinary shareholders (note 20, issued capital, reserves and retained earnings) as well as to preferred shareholders (note 20.7).
The Group is not subject to any externally imposed capital requirements.
Management reviews the capital structure on an on-going basis. As part of the review Management considers the differential capital costs in the debt and equity markets, the timing at which each investment project requires funding and the operating requirements so as to proactively provide for capital either in the form of equity (issuance of shares to the Group's shareholders) or in the form of debt. Management balances the capital structure of the Group with a view of maximizing the shareholder's Return on Equity (ROE) while adhering to the operational requirements of the property assets and exercising prudent judgment as to the extent of gearing.
31.2 Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liabilities and equity instruments are disclosed in note 3 of the condensed consolidated interim financial statements.
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31.3 Categories of Financial Instruments
Note 30 June 2015 31 December 2014 ------------------------------ ----- ------------- ------------ EUR EUR ------------------------------ ----- ------------- ------------ Financial Assets ------------------------------ ----- ------------- ------------ Cash at Bank 19 2.832.054 891.938 ------------------------------ ----- ------------- ------------ Total 2.832.054 891.938 ------------------------------ ----- ------------- ------------ Financial Liabilities ------------------------------ ----- ------------- ------------ Interest bearing borrowings 23 55.094.228 18.216.422 ------------------------------ ----- ------------- ------------ Trade and other payables 24 5.130.663 1.869.537 ------------------------------ ----- ------------- ------------ Deposits from tenants 25 755.906 661.410 ------------------------------ ----- ------------- ------------ Finance lease liabilities 27 11.518.237 11.644.976 ------------------------------ ----- ------------- ------------ Taxes payable 26 862.229 431.828 ------------------------------ ----- ------------- ------------ Redeemable preference shares 20 349.325 698.650 ------------------------------ ----- ------------- ------------ Total 73.710.588 33.522.823 ------------------------------ ----- ------------- ------------
31.4 Financial Risk Management Objectives
The Group's Treasury function provides services to its various corporate entities, coordinates access to local and international financial markets, monitors and manages the financial risks relating to the operations of the Group, mainly the investing and development functions. Its primary goal is to secure the Group's liquidity and to minimize the effect of the financial asset price variability on the cash flow of the Group. These risks cover market risks including foreign exchange risks and interest rate risk as well as credit risk and liquidity risk.
The above mentioned risk exposures may be hedged using derivative instruments whenever appropriate. The use of financial derivatives is governed by the Group's approved policies which indicate that the use of derivatives is for hedging purposes only. The Group does not enter into speculative derivative trading positions. The same policies provide for the investment of excess liquidity. As at 30 June 2015, the Group had not entered into any derivative contracts.
31.5 Economic Market Risk Management
The Group operates in Romania, Bulgaria Greece and Ukraine. The Group's activities expose it primarily to financial risks of changes in currency exchange rates and interest rates. The exposures and the management of the associated risks are described below. There has been no change to the Group's manner in which it measures and manages risks.
Foreign Exchange Risk
Currency risk arises when commercial transactions and recognized financial assets and liabilities are denominated in a currency that is not the Group's functional currency. Most of the Group's financial assets are denominated in the functional currency. Management is monitoring the net exposures and enacts policies to contain them so that the net effect of devaluation is minimized.
Interest Rate Risk
The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no significant interest-bearing assets. On June 30th, 2015, cash and cash equivalent financial assets amounted to EUR2.832.054 (31 December 2014: EUR 891.938).
The Group is exposed to interest rate risk in relation to its borrowings amounting to EUR55.094.228 (31 December 2014: EUR18.216.422) as they are issued at variable rates tied to the Libor or Euribor. Management monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group's strategy with the interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may take place in the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.
The Group's exposures to financial risk are discussed also in note 4.
31.6 Credit Risk Management
The Group has no significant credit risk exposure. The credit risk emanating from the liquid funds is limited because the Group's counterparties are banks with high credit-ratings assigned by international credit rating agencies. The Credit risk of receivables is reduced as the majority of the receivables represent VAT to be offset through VAT income in the future.
31.7 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which applies a framework for the Group's short, medium and long term funding and liquidity management requirements. The Treasury function of the Group manages liquidity risk by preparing and monitoring forecasted cash flow plans and budgets while maintaining adequate reserves. The following table details the Group's contractual maturity of its financial liabilities. The tables below have been drawn up based on the undiscounted contractual maturities including interest that will be accrued.
30 June 2015 Carrying Total Less than From one More than EUR amount one year to two years two years ----------------------- ----------- ----------- ----------- ----------- ----------- Financial assets ----------------------- ----------- ----------- ----------- ----------- ----------- Cash at Bank 2.832.054 2.832.054 2.832.054 - - ----------------------- ----------- ----------- ----------- ----------- ----------- Financial liabilities ----------------------- ----------- ----------- ----------- ----------- ----------- Interest bearing 55.094.228 62.870.420 14.873.728 16.671.853 31.324.839 borrowings ----------------------- ----------- ----------- ----------- ----------- ----------- Trade and other payables 5.130.663 5.130.663 4.702.110 188.759 239.794 ----------------------- ----------- ----------- ----------- ----------- ----------- Deposits from tenants 755.906 755.906 117.387 80.346 558.173 ----------------------- ----------- ----------- ----------- ----------- ----------- Finance lease liabilities 11.518.237 16.931.775 760.565 768.414 15.402.796 ----------------------- ----------- ----------- ----------- ----------- ----------- Redeemable preference shares 349.325 349.325 349.325 - - ----------------------- ----------- ----------- ----------- ----------- ----------- Taxes payable 862.229 862.229 862.229 - - ----------------------- ----------- ----------- ----------- ----------- ----------- Total 73.710.588 86.900.318 21.665.344 17.709.372 47.525.602 ----------------------- ----------- ----------- ----------- ----------- ----------- Total net liabilities 70.878.534 84.068.264 18.833.290 17.709.372 47.525.602 ----------------------- ----------- ----------- ----------- ----------- ----------- 31 December 2014 Carrying Total Less than From one More than EUR amount one year to two years two years ----------------------- ----------- ----------- ----------- ----------- ----------- Financial assets ----------------------- ----------- ----------- ----------- ----------- ----------- Cash at Bank 891.938 891.938 891.938 - - ----------------------- ----------- ----------- ----------- ----------- ----------- Financial liabilities ----------------------- ----------- ----------- ----------- ----------- ----------- Interest bearing borrowings 18.216.422 22.319.389 6.665.533 2.743.797 12.910.059 ----------------------- ----------- ----------- ----------- ----------- ----------- Trade and other payables 1.869.537 1.869.537 1.654.852 73.841 140.844 ----------------------- ----------- ----------- ----------- ----------- ----------- Deposits from tenants 661.410 661.410 161.579 68.973 430.858 ----------------------- ----------- ----------- ----------- ----------- ----------- Finance lease liabilities 11.644.976 17.476.135 766.289 769.922 15.939.924 ----------------------- ----------- ----------- ----------- ----------- ----------- Redeemable preference shares 698.650 698.650 349.325 349.325 - ----------------------- ----------- ----------- ----------- ----------- ----------- Taxes payable 431.828 431.828 431.828 - - ----------------------- ----------- ----------- ----------- ----------- ----------- Total 33.522.823 43.456.949 10.029.406 4.005.858 29.421.685 ----------------------- ----------- ----------- ----------- ----------- ----------- Total net liabilities 32.630.885 42.565.011 9.137.468 4.005.858 29.421.685
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