Aisi Realty Public Limited Half Yearly Report -11-

 position if, and only if, there is a currently enforceable legal 
 right to offset the recognized amounts and there is an intention 
 to settle on a net basis, or to realise the asset and settle 
 the liability simultaneously. This is not generally the case 
 with master netting agreements, and the related assets and liabilities 
 are presented gross in the consolidated statement of financial 
 position. 
3.24 Earnings and Net Assets Value per share 
The Group presents basic and diluted earnings per share (EPS) 
 and net asset value per share (NAV) for its ordinary shares. 
 
 Basic EPS amounts are calculated by dividing net profit for the 
 year, attributable to ordinary equity holders of the Company 
 by the weighted average number of ordinary shares outstanding 
 during the year. Basic NAV amounts are calculated by dividing 
 net asset value as at year end, attributable to ordinary equity 
 holders of the Company by the number of ordinary shares outstanding 
 at the end of the year. 
 
 Diluted EPS is calculated by dividing net profit for the year, 
 attributable to ordinary equity holders of the parent, by the 
 weighted average number of ordinary shares outstanding during 
 the year plus the weighted average number of ordinary shares 
 that would be issued on conversion of all the potentially dilutive 
 ordinary shares into ordinary shares. Diluted NAV is calculated 
 by dividing net asset value as at year end, attributable to ordinary 
 equity holders of the parent with the number of ordinary shares 
 outstanding at year end plus the number of ordinary shares that 
 would be issued on conversion of all the potentially dilutive 
 ordinary shares into ordinary shares. 
3.25 Comparative amounts 
Where necessary, comparative amounts have been reclassified to 
 conform to changes in presentation adopted in the current year. 
 
   4. Risk management 
 4.1 Financial risk factors 
 The Group is exposed to 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 27 
  of the financial statements. 
 4.1.1 Operating Country Risks 
 The Group is exposed to country risk, stemming from the political 
  and economic environment of every country in which it operates. 
 
   4.1.1.1 Ukraine 
 In recent years, the Ukrainian economy has been characterised 
  by a number of features that contribute to economic instability, 
  including a relatively weak banking system providing limited 
  liquidity to Ukrainian enterprises, significant capital outflows, 
  and low wages for a large portion of the Ukrainian population. 
 
  The implementation of reforms has been partially impeded by lack 
  of political consensus, controversies over privatisation, 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. 
 
  Although Ukraine has made significant progress in increasing 
  its gross domestic product, decreasing inflation, stabilising 
  its currency, increasing real wages and improving its trade balance, 
  these gains may not be sustainable over the longer term and may 
  be reversed unless Ukraine undertakes certain important structural 
  reforms in the near future while continuing to exercise restrictive 
  monetary policies. 
 
  Ukraine's internal debt market remains illiquid and underdeveloped 
  as compared to markets in most western countries. Unless the 
  international capital markets or syndicated loan markets open 
  up to Ukraine, the Government will have to continue to rely to 
  a significant extent on official or multilateral borrowings to 
  finance part of the budget deficit, fund its payment obligations 
  under domestic and international borrowings and support foreign 
  exchange reserves. These borrowings may be conditioned on Ukraine 
  satisfying certain requirements, which may include, among other 
  things, implementation of strategic, institutional and structural 
  reforms; reduction of overdue tax arrears; absence of increase 
  of budgetary arrears; improvement of sovereign debt credit ratings; 
  and reduction of overdue indebtedness for electricity and gas. 
  Negative developments on these may result in Ukraine not finding 
  adequate financing which could, in its turn put pressure on Ukraine's 
  budget and foreign exchange reserves and have a material adverse 
  effect on the Ukrainian economy as a whole, and thus, on the 
  Group's business prospects. 
 
  Any major adverse changes in Ukraine's relations with Russia, 
  in particular any such changes adversely affecting supplies of 
  energy resources from Russia to Ukraine and/or Ukraine's revenues 
  derived from transit charges for Russian oil and gas, would likely 
  have negative effects on certain sectors of the Ukrainian economy 
  which could under certain conditions affect the Group's business. 
 
  The Ukrainian legal system has also been developing to support 
  this market-based economy. Ukraine's legal system is, however, 
  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 organised form. 
 
  Furthermore, several fundamental Ukrainian laws either have only 
  relatively recently become effective or are still pending hearing 
  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 affects 
  negatively the ability of the Group to recuperate VAT paid and/or 
  to utilize operating losses as a carry forward tax shield. 
 
  Emerging economies such as Ukraine's are subject to rapid change 
  and the information set out in these financial statements may 
  become outdated relatively quickly. 
 
 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; 
 
 
        *    the amount of rent and the terms on which lease 
             renewals and new leases are agreed being less 
             favourable 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 
 
 
        *    terrorism and acts of nature, such as earthquakes and 
             floods that may damage the properties.