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Lamda Development S.A. — Interim / Quarterly Report 2018
Sep 6, 2018
2660_ir_2018-09-06_a6ae3dc4-2637-444a-a394-7d1df69860a8.pdf
Interim / Quarterly Report
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LAMDA Development S.A.
Condensed consolidated and company interim financial statements in accordance with International Financial Reporting Standards («IFRS»)
1 January – 30 June2018
G.E.MI.:3379701000
37A Kifissias Ave.
15123, Maroussi
These financial statements have been translated from the original statutory financial statements that have been prepared in the Greek language. In the event that differences exist between this translation and the original Greek language financial statements, the Greek language
financial statements will prevail over this document.
Condensed interim financial statements 30 June 2018
Semi-annual financial report's index
| Page | ||
|---|---|---|
| 1. | Statements of the Board of Directors' Members | 2 |
| 2. | Semi-annual Report of the Board of Directors | 3 |
| 3. | Condensed Interim Consolidated and Company Financial statements for the six month period ended June 30, 2018 |
11 |
| 4. | Auditors' Report on Review of Interim Condensed Financial Statements | 48 |
| 5. | Use of proceeds | 49 |
STATEMENT OF THE BOARD OF DIRECTORS OF
"LAMDA Development S.A." for the condensed consolidated and company financial statements for the six month period ended June 30, 2018
(according to the article 5 par.2 of the Law 3556/2007)
We state to the best of our knowledge, that the semi-annual condensed Consolidated and Company financial statements for the six month period ended June 30, 2018, which have been prepared in accordance with the international accounting standards in effect, reflect fairly the assets, liabilities, equity and the results of LAMDA Development S.A., as well as of the companies that are included in the consolidation taken as a whole.
Furthermore, we state to the best of our knowledge that the Semi-Annual Report of the Board of Directors reflects fairly the development, the performance and the status of LAMDA Development S.A., as well as of the companies that are included in the consolidation taken as a whole, and includes a description of the main risks and uncertainties they confront.
Maroussi, September 6, 2018
The undersigned
| _____ | ____ | ___ |
|---|---|---|
| Anastasios K.Giannitsis | Odyssefs E.Athanasiou | Evgenia G.Paizi |
| Chairman of the BoD | Chief Executive Officer | Member of the BoD |
30 June 2018
SEMI-ANNUAL BOARD OF DIRECTORS' REPORT OF "LAMDA Development S.A." FOR THE CONDENSED CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS FOR THE SEMI-ANNUAL PERIOD ENDED JUNE 30, 2018
Dear Shareholders,
According to the provisions of the laws 3556/2007 and 2190/1920 and the decisions 8/754/14.4.2016 of the Hellenic Capital Market Commission, we present the semi-annual Board of Directors' report of "LAMDA Development S.A." concerning the Consolidated and Company Financial Statements for the six-month period that ended on June 30, 2018.
FINANCIAL POSITION OF THE GROUP
According to the International Financial Reporting Standards, the main financial results for the Group and the Company for the six-month period that ended 30.06.2018 are the following:
Consolidated results after tax was amount to profits €35.891 thousands compared to losses €10.370 thousands in the comparative period of 2017.
The Company starting from 1/1/2014 applies IFRS 11 according to which the Group will account for joint ventures on an equity basis because it provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. The implementation of IFRS 11 had a significant effect in the Group's financial statements until the first semester of 2017 due to the equity method of consolidation for the company LAMDA Olympia Village S.A. (L.O.V.). Following the acquisition of 50% of the aforementioned company in July 2017, the Group applies the full method consolidation for LOV.
According to the new presentation method of the income statement, there have been net gains from fair value adjustment on investment property that reached €45.585 thousands compared to gains of €135 thousands in the respective period of 2017. The significant increase in the net gains from fair value adjustment on investment property compared to 31.12.2017 is due to the further improvement of the shopping malls' profitability as well as the positive flow of the discount rates. But most of all, it is due to the agreement between the subsidiary company Pylaia S.A. and the Ecumenical Patriarchate, owner of the land plot on which the Company developed and operate the Mediterranean Cosmos Shopping Centre (the Centre), to the extension of the long-term lease of the said land plot area for 30 additional years, until 2065. This agreement improved the value of the Centre by €28.8m. The Group impaired the value of the inventories by €170 thousands compared to €7.338 thousands in the comparative period of 2017.
Consolidated turnover reached €38.481 thousands compared to €22.880 thousands in the comparative period of 2017 showing an increase of 68.19% mainly due to the change of the consolidation method of the company LOV, which is now recognized as a subsidiary.
The Net Asset Value as exported from the internal information of the Group (Group Management Accounts) that is attributable to the Company's owner reached €432.644 thousands at 30.06.2017 compared to €395.141 thousands at 31.12.2017.
| (amounts in € thousands) | 2018 | 2017 | Variation |
|---|---|---|---|
| NET ASSET VALUE (NAV) (as exported by the internal information of the Group) |
432.644 | 395.141 | 9.5% |
| Shareholders' Equity | 338.047 | 312.842 | 8.1% |
| Earnings before valuations (as exported by the internal information of the Group) |
25.964 | 18.614 | 3.9% |
| Fair Value Gains from investment property | 45.585 | 135 | 33.667% |
| Profit/losses before tax | 56.951 | -2.450 | - |
|---|---|---|---|
| Net Losses after tax & non-controlling interests | 25.099 | -10.906 | - |
| Turnover | 38.481 | 22.880 | 68.2% |
"The Mall Athens" recorded an increase in EBITDA by 4.4% reaching €14.3m. Mediterranean Cosmos" in Pylaia Thessaloniki recorded an increase in EBITDA by 1.4% reaching €7.3m and "Golden Hall" increased its EBITDA by 7.5% reaching €8.6m.
Total Group debt has been reduced by €22.1m during the current period. The financial ratios NET DEBT / TOTAL ASSETS and NET DEBT / EQUITY reached 39.4% and 81.7% accordingly.
The Group uses certain Alternative Performance Measures (APMs) due to certain special features of the business category but also due to the application of IFRS 11 according to which the Group would not account on an equity basis mainly for LAMDA Olympia Village, owner of The Mall Athens, during the first semester of 2017. Following the acquisition of 50% of the above mentioned company, the Group applies the full consolidation method.
Definitions (APMs)
-
- Net Asset Value: Group Equity adjusted by the deferred tax liability and asset increased by the deferred tax liability of the joint venture Lamda Olympia Village which is accounted for on an equity basis due to IFRS 11 (note 7 of the financial statements)
-
- Total Group operating results (EBITDA) before valuations: Group operating results (EBITDA) which derive from the proportional method of consolidation without taking into account the fair value gains/losses that occur from the valuations of the investment property as well as the impairment losses of the other assets.
| Share of net profit | Pro-Forma | ||
|---|---|---|---|
| Condensed Group financial figures | 01.01.2018 to | of investments in | 01.01.2018 to |
| (All amounts in € thousands) | 30.06.2018 | joint ventures | 30.06.2018 |
| EBITDA adjusted | 25.461 | 413 | 25.874 |
| Share of net profit of associates and joint-ventures | (379) | 469 | 90 |
| EBITDA before valuations | 25.082 | 882 | 25.964 |
| Result from disposal of inventories-land | - | - | - |
| Net gain from fair value adjustment on investment property | 45.415 | (75) | 45.340 |
| EBITDA | 70.497 | 807 | 71.304 |
| Impairment provision relating to property repurchase | - | - | - |
| Loss from acquisition of additional interest in investments | - | - | - |
| Depreciation | (371) | (203) | (574) |
| Net interest | (13.175) | (603) | (13.778) |
| Taxes | (21.060) | (1) | (21.061) |
| Group | 35.891 | - | 35.891 |
-
- Pro-Forma EBITDA before valuations. It is an alternative name of the previously mentioned measure.
- 4. Retail EBITDA. Sum of each EBITDA of the shopping centers Golden Hall, Mediterranean Cosmos and The Mall Athens.
- 5. EBITDA of the shopping centers (The Mall Athens, Mediterranean Cosmos and Golden Hall). Individual EBITDA of the companies Lamda Olympia Village SA, PYLAIA SA και Lamda Domi SA, which are involved in the exploitation of the shopping centers The Mall Athens, Mediterranean Cosmos and Golden Hall respectively.
-
- Change in EBITDA of the shopping centers (The Mall Athens, Mediterranean Cosmos, Golden Hall). Percentage change of the current period vs last year's period.
-
7. Net Debt / Total Assets. (Debt minus Cash and cash equivalents minus Financial instruments held at fair value through profit or loss) over (Investment property plus Property, plant and equipment plus Investment in joint ventures and associates plus Inventories).
-
Net Debt / Equity (Debt minus Cash and cash equivalents minus Financial instruments held at fair value through profit or loss) over Equity.
SIGNIFICANT EVENTS
At 03.08.2018 the subsidiary company Pylaia S.A. agreed with the Ecumenical Patriarchate, owner of the land plot on which the Company developed and operate the Mediterranean Cosmos Shopping Centre (the Centre), to the extension of the long-term lease of the said land plot area for 30 additional years, until 2065. The terms of the prolongation had been agreed since March 2018. In the frame of the agreement, Pylaia S.A. will pay one-off consideration of €10m in September 2019. Also, the annual remuneration will be adjusted throughout the duration of the lease. In specific, the adjusted amount for the year 2018 will be approximately €850k. The impact that applies to the first semester of 2018 has been recognized in the results of the period already. The positive effect of the agreement on the value of the Centre has been quantified by independent valuer at the amount of €28.750k. This amount has been included in the results of the first semester 2018, as well.
In addition, the Group in the first semester of 2018 sold the ownership that its 100% subsidiary LAMDA Estate Development S.A. held in the office building Kronos Business Center in Maroussi, for a total consideration of €6.5m
PROSPECTS
The Company observes the performance of the shopping centers through ratios, which, according to international standards, are mainly the customer visits ratio and the ratio of the shopkeepers' turnover. According to these ratios there is an increase in the period of 01.01.2018-30.06.2018 in customer visits by 4.3% in relation to the comparative period of 2017. Also, there is a similar picture in the shopkeepers' turnover which is increased by 4.3%.The Company is not able to accurately predict the course of shopkeepers' turnover in the medium term period of time.
The positive picture of the performance ratios during the period of 01.01.2018-30.06.2018, as well as the increase in the occupancy of the shopping centers which temporarily receded during the period of 01.01.2017-30.06.2017 had a positive effect in the operating results of the shopping centers which is increased compared to the respective period of previous year. The occupancy of the shopping malls in the second semester of 2018 is expected remain stable at levels that reach 100%.
SIGNIFICANT RISKS FOR YEAR 2017
Fluctuations in property values
Fluctuations in property values are reflected in the income statement and balance sheet according to their fair value. An increase in yields would have a significant impact on the Group's profitability and assets. However, due to the successful performance of Shopping and Leisure Centers "The Mall Athens", "Golden Hall" in Maroussi and "Mediterranean Cosmos" in Pylaia Thessaloniki, their market value is less likely to be reduced. In this context, we note that despite the existing factors of increased uncertainty, the values reported provide the best estimate for the Company's investment property. The complete impact of the consequences of the economic situation may affect the value of the Group's investment property in the future.
Credit risk
The credit risk management is monitored at Group level. The credit risk derives from tenants, bonds and mutual funds, as well as cash and cash equivalents.
With regard to the Group's income, they come mainly from tenants with good reputation whereas certain terms of sales and collections are applied.
Income will be significantly affected in case the tenants are unable to fulfil their contractual obligations due to either restriction in their financial activities or instability of the local banking system.
Condensed interim financial statements
30 June 2018
However, the Group at 30.06.2018 has a well-diversified tenant mix consisting mainly of profitable companies with good reputation. The customers' financial condition is monitored on a recurring basis. The Company's management does not expect significant losses from impaired receivables except for those that have been provided for.
Foreign exchange risk
The Group operates mainly in Greece and the Balkans and is therefore exposed to foreign exchange risk arising from various currencies. The majority of the Group's transactions are carried out in Euro. Foreign exchange risk arises from future commercial transactions as well as the assets, liabilities and net asset value of investments operating in foreign countries.
The Group's standard practice is not to pre-purchase foreign exchange, not to enter into forward foreign exchange contracts with external counterparties and not to enter into currency hedging transactions.
The Group has participations in subsidiaries that operate abroad which equity is exposed to foreign exchange risk at the conversion of their financial statements for consolidation purposes. In relation to the operations outside Greece, the most significant operations take place in Serbia where the foreign exchange rate historically does not show considerable changes. Also, the Group's operations outside Greece do not include material commercial transactions and therefore there is not a significant foreign exchange risk.
Interest rate risk
The Group's interest rate risk derives mainly from bank loans with floating interest rates based on Euribor. The risk is partially hedged with cash held at floating rates.
The group analyses its interest rate exposure and manages the interest rate risk through refinancing, renewal of existing loans, alternative financing and hedging. The interest rate risk is disclosed in note 2.11 of the annual consolidated and company financial statements of 2017.
Inflation risk
The Group's exposure to inflation risk is limited as the Group enters into long term operating lease arrangements for a minimum of 6 years that are adjusted annually according to the Consumer Price Index plus margin up to 2%.
Liquidity risk
At 30.06.2018 the short-term loans refer mainly to the syndicate bond loan of the Company (amount of €108.2m) as well as the subsidiaries LAMDA Domi SA (amount of €60.3m) and Lamda Prime Properties SA (amount of €5.3m), dates of repayment from September 2018 until November 2018. The management is undergoing negotiations with the counterparties in relation to the refinancing of the above mentioned short-term loans, a procedure that has not been completed until the date of these financial statements' release. The management argues that the procedure will be completed successfully (note 12).
External factors
The Company has investments in Greece, Romania, Serbia and Montenegro. The Group can be affected by external factors such as political instability, economic uncertainty and changes in local tax regimes.
The financial risk factors are disclosed in note 3 of the annual consolidated and company financial statements of 2017.
PENDING LITIGATION
1. THE MALL ATHENS
1.1 Pending litigation
With regard to the legal issues relating to the particular investment, the following should be noted:
In total, five (5) petitions for annulment have been filed before the Council of State, relating to the area where the Olympic Press Village (or "Olympiako Chorio Typou") and the Shopping Center "The Mall Athens" were built, whose legal owner is the Company's subsidiary "LAMDA OLYMPIA VILLAGE S.A." (hereinafter, "L.O.V."). Specifically:
(a) The first petition for annulment directly contests the validity of Law 3207/2003, which is in lieu of the building permit for all the buildings constructed on this particular area. The petition aims to have the Law declared null and void, on the basis that it is allegedly not compatible with the provisions of the Constitution of the HellenicRepublic. The petition was heard on 03.05.2006 and the Fifth Section of the Council of State sent the case to the court's Plenary Session by means of its decision No 391/2008. The petition was heard before the Plenary Session on 05.03.2010, further to successive postponements of hearings previously scheduled for 05.02.2010, 09.10.2009, 08.05.2009 and 07.11.2008.
By means of decision No 4076/2010 of the Plenary Session, the hearing of the petition was postponed until the issuance of a decision by the Court of Justice of the European Union over another case, in which– according to the Council of State – similar legal issues were raised. The Court issued in decision in October of 2011, further to which the petition was heard before the Plenary Session of the Council of State on 05.04.2013, following postponements on 11.01.2013 and 01.03.2013. By virtue of its decision No 376/2014, the Plenary Session accepted the said petition and the Court annulled the silent confirmation by the competent planning authority of the Ministry of Environment, Planning & Public Works (namely, DOKK) that the studies of the project submitted to such authority were compliant with article 6 paragraphs 1 and 2 of Law 3207/2003.
The Council of State annulled the aforementioned act, because it identified irregularities of a procedural nature in the issuance of the licenses required for the project. In light of such nature of the identified irregularities, it is estimated that they may be rectified, and LOV has already initiated the procedure required further to the issuance of the said decision.The completion of the above mentioned procedure, which of course requires the effective contribution of the involved competent public services, will safeguardthe full and unhindered operation of the Shopping Center.
(b) The second petition seeks annulment of the deemed approval of the designs submitted by L.O.V. to the Ministry of Environment, Planning and Public Works, pursuant to article 6 paragraph 2 of Law 3207/2003. By means of its decision No 455/2008, the Fifth (E') Sectionof the Council of State postponed the hearing of the case, until the issuance of the decision by the Court's Plenary Session on the first petition for annulment. The petition was heard on 02.04.2014, further to a postponement of the hearing previously scheduled for 02.12.2009, 02.06.2010, 03.11.2010, 08.06.2011, 02.11.2011, 11.01.2012, 07.03.2012, 02.05.2012, 07.11.2012, 06.03.2013, 02.10.2013 and 05.02.2014. The Fifth Section issued its decision No 4932/2014, whereby the court cancelled the proceedings.
(c) The third and fourth petitions for annulment seek the annulment of a series of pre-approvals and operating licenses respectively, issued by the Municipality of Maroussi to a number of stores operating in the aforementioned Shopping Center, on the basis that the law on which said pre-approvals and licenses were issued is not compatible with the provisions of the Constitution. The said petitions were heard before the Fourth (D) Section of the Council of State on24.04.2018, further to successive postponements of hearings previously scheduled for 09.01.2007, 23.10.2007, 08.01.2008, 07.10.2008, 16.06.2009, 12.10.2010, 29.03.2011, 14.02.2012, 09.10.2012, 12.02.2013, 04.06.2013, 19.11.2013, 06.05.2014, 11.11.2014, 16.06.2015,08.12.2015 and07.06.2016, 06.12.2016, 21.03.2017,13.06.2017,28.11.2017 and 20.03.2018.
In light of the aforementioned decision of the Court's Plenary Session, the Company's legal advisors believe that the third and fourth petitions for annulment will be accepted.
(d) The fifth petition for annulment contests the validity of the decision of the Board of Directors of OEK (Worker's Housing Organization or "Organismos Ergatikis Katoikias"), which authorized the sale to L.O.V. of the plot of land where the Shopping Center was erected. Similar to the foregoing cases, the legal basis of the petition for annulment is the alleged incompatibility of Law 3207/2003 with the provisions of the Constitution. The said petition was heard on 21.03.2017, further to successive postponements of hearings previously scheduled for 09.01.2007, 23.10.2007, 08.01.2008, 07.10.2008, 16.06.2009, 12.10.2010, 29.03.2011, 14.02.2012, 09.10.2012, 12.02.2013, 04.06.2013, 19.11.2013, 06.05.2014, 11.11.2014, 16.06.2015,08.12.2015 and07.06.2016and 06.12.2016.
The fifth petition for annulment will probably be rejected on the grounds that the matter falls outside of the Court's jurisdiction (the decision under annulment not being an enforceable administrative act).
It is noted that L.O.V. has intervened in all cases as a third party in the proceedings to support the validity of the acts contested.
Finally, in the event that any of the above petitions for annulment is accepted, L.O.V. will be entitled to seek redress for any damages it may suffer against the Greek State.
Additionally, LOV had to pay for the transfer of specific real property in the past (on 2006), property transfer tax of approximately €13,7m, reserving its rights with regard to this tax and finally taking recourse to the administrative courts against the silent rejection of its reservations by the competent Tax Authority. In 2013 the said recourse was accepted in part and the re-calculation of the owed property tax was ordered, which led to the returning to LOV of an amount of approximately €9,5m. Further to appeals on points of law filed by both parties, the Council of State rejected LOV's appeal and accepted the Hellenic Republic's appeal; consequently the case was referred back to the Administrative Court of Appeals, which initially postponed the issue of a final decision and obliged the parties to adduce evidence for the determination of the market value of the property; after resuming hearing of the case, the Administrative Court of Appeals finally rejected the recourse, determined the taxable value of the property and obliged the competent Tax Authority to re-calculate the transfer tax due upon the new taxable value. Following this decision, LOV had to pay transfer tax of approximately €16,3m. An appeal on points of law has been filed and is estimated by the legal counsels of the Company to have high chances of success. In specific, grounds of appeal challenging re-calculation of transfer tax upon the market value of the property, to the extent it exceeds the objective value, are expected to succeed with very high probability.
1.2 Potential impact of pending litigation on the existing contracts
(a) L.O.V. sold the office building "ILIDA BUSINESS CENTRE" to the company "EUROBANK Leasing S.A." on 26.06.2007. "EUROBANK Leasing S.A."entered into a financial lease agreement with "Blue Land S.A."regarding the said office building. The respective deed of transfer includes a provision specifying that, if either of the first two petitions is irrevocably accepted on the grounds that Law 3207/2003 is not compatible with the provisions of the Constitution, then the transaction shall be reversed by reinstatement of the property to its original status, in which case the buyer "EUROBANK Leasing" shall be entitled to the full buying price and the ownership of the office building shall return to L.O.V. Two opposing lawsuits were filed; the first one was filed by the Company and L.O.V. and is seeking to have identified that the conditions for the said provision have not been fulfilled and the second one was filed by "EUROBANK Leasing S.A." (and "BLUE LAND S.A." intervened as a third party in the proceedings to support the validity of EUROBANK Leasing's claims) and is seeking to have identified that the conditions have been met and that the purchase price be returned to "EUROBANK Leasing S.A.". The case was heard (further to postponement) on 11.10.2016. The Multimember First Instance Court issued decision No, 1522/2017, whereby the Company's and L.O.V.'s lawsuit was rejected and the opposing lawsuit filed by Eurobank Leasing was partially accepted.
TheCompanyandLOVfiledappealΝo. 572531/504467/2017, the hearing of which had originally been set for 19.04.2018, but was postponed for a joint hearing together with the appeal filed by "EUROBANK Leasing S.A." (Νo. 573006/50450/2017), on 03.05.2018,as well as with the intervention of "BLUE LAND S.A." in favour of Eurobank Leasing,and, following further postponement, the hearing of all the above has been set for 11.10.2018 . Currently, the parties are negotiating an out-of court settlement.
Condensed interim financial statements
30 June 2018
Further, pursuant to the aforementioned deed of transfer, in the event of any other ruling of the Council of State regarding the said Law's non-compatibility to the Constitution, including the acceptance of the third, fourth or fifth petition, then the purchaser will be entitled to repudiate the contract and demand restoration of the aforementioned actual damages, following the lapse of a period of two years from the date of issuance of the decision on the annulment petitions, on condition that any defects or deficiencies resulting from said decision have not been remedied in the meantime.
(b) In any case, as already mentioned, L.O.V. is entitled to seek redress for any damages it may suffer against the Greek State as a result of the aforementioned petitions for annulment.
2. MEDITERRANEAN COSMOS
With regard to the legal issues relating to the particular investment, the following should be noted:
Contractor "MICHANIKI S.A." undertook a significant part of the construction works for the "Mediterranean Cosmos" Shopping Center in Pylaia, Thessalokini. Both "PYLAIA S.A.", a subsidiary of the Company, and "MICHANIKI S.A." have filed actions and counter-actions, which were jointly heard on 01.04.2009, following a postponement of the hearing initially set for 02.04.2008. The total claims of "PYLAIA S.A." against "MICHANIKI S.A." stand at € 18,340,931.49 (including the amount of € 2,000,000 as compensation for moral distress). On the basis of the actions it has filed, "MICHANIKI S.A." claims the amount of € 34,826,329.14 (including the amount of € 10,000,000 as compensation for moral distress).
By virtue of its decision 8172/2009, the Athens Multi-Member 1st Instance Court:
(i) Rejected the claims of "PYLAIA S.A.", adopting the false reasoning that "PYLAIA S.A." had assigned its claims under the contracts in question (with "MICHANIKI S.A.") to the bondholder agent further to a respective agreement and, therefore, was not entitled to seek redress for its pertinent claims.
(ii) Rejected certain claims of "MICHANIKI S.A." as vague or unfounded and ordered a continuance hearing, to follow the issuance of an expert opinion on certain allegations of one of the actions.
"PYLAIA S.A." had lodged an appeal against the above decision, seeking to reverse it to the extent that it rejected"PYLAIA S.A."'s actions as per point (i) above. The appeal was heard before the Athens Court of Appeal on 28.02.2013 (following a postponement of the initial hearing date which was the 27.09.2012) and rejected by virtue of the court's decision No. 3977/ 2013. The court ruled that since "PYLAIA S.A." had assigned its claims from said contracts with "MICHANIKI S.A." to the bondholder agent under respective contract, it was not legally entitled to achieve the satisfaction of those claims. The Company submitted an appeal on points of law in front of the Supreme Court, which was heard on 11.05.2015. The Court recently accepted the appeal of "PYLAIA S.A." by means of its Decision No 208/2016, despite the negative opinion issued by the Judge Rapporteur, and sent the case back to the Court of Appeals for a new hearing.That hearing in the Court of Appeals had been set for 26.10.2017, when it was postponed for 07.02.2019. Further to the aboveand following the submission to the Court of the expert's report which is favorable to "PYLAIA SA", and further to postponements, the hearing of the lawsuits of "MICHANIKI SA" hasbeen set for 10.10.2018.
In addition, "PYLAIA SA" filed a third lawsuit against "MICHANIKI SA" on 24.12.2010 claiming additional compensation of € 2,073,123.13 (which includes the amount of €500,000 for moral damages). The hearing had been scheduled for 25.02.2015, following a postponement on 21.11.2012, but it was cancelled. Given the outcome of the hearing before the Supreme Court, it is likely that a new hearing will be set for said action as well.
Moreover, on 28.12.2010 "PYLEA S.A." filed the nrs.13132, 13134 and 13129/2010 lawsuits to the Athens Multi-Member 1st Instance Court against "MICHANIKI SA", the hearing of which took place on 13.02.2013, following a postponement of the hearing of the case on 14.11.2012. Such lawsuits are identical to the previously presented lawsuits, save that they have been filed jointly with the company "EUROHYPO S.A.",to address the event where the Court rules that "PYLAIA SA" is not entitled to file these lawsuits in its name. This is the reason why the hearing of those lawsuits was cancelled on 13.02.2013and was reenacted so that those lawsuits were scheduled to be heard on 18.03.2015, but the hearing was postponed for 25.01.2017and then cancelled.A new hearing for these lawsuits had been set for 21.02.2018, when it was cancelled once again.
Finally, on 09.11.2012 "MICHANIKI S.A." filed a lawsuit before the Athens Multimember Court of First Instance, claiming additional compensation amounting to € 2,293,016.59, namely the amount that "PYLAIA S.A." collected from Alpha Bank by forfeiture of "MICHANIKI S.A."'s bank bonds, and an additional amount of € 500,000.00 as moral damages. The lawsuit was set to be heard on 28.05.2015, but was postponed for 12.10.2017, when it was cancelled.
In general, pursuant to the assessment of Company's legal counsels, the substantiated claims of "PYLAIA S.A." against "MICHANIKI S.A." significantly exceed the substantiated counterclaims of the latter against "PYLAIA S.A."
RELATED-PARTY TRANSACTIONS
The related-party transactions according to IAS 24 of the Company and the Group are disclosed in the note 17 of the consolidated financial statements for the six-month period ended on 30 June 2018. It is noted that the transactions with the related parties are intra-group transactions and there are not significant transactions with related parties outside Group.
Maroussi, September 6, 2018
The Board of Directors
| _____ | ____ | ___ |
|---|---|---|
| Anastasios K.Giannitsis | Odyssefs E.Athanasiou | Evgenia G.Paizi |
| Chairman of the BoD | Chief Executive Officer | Member of the BoD |
30 June 2018
| Condensed Interim Consolidated and Company Financial Statements for the six month period ended June 30, 2018 |
|
|---|---|
| Condensed Interim Consolidated and Company Financial Statements for the six month period ended June 30, 2018 |
11 |
| Statement of financial position | 12 |
| Income Statement | 13 |
| Income Statement | 14 |
| Total Comprehensive Income Statement | 15 |
| Statement of changes in equity (Consolidated) | 16 |
| Statement of changes in equity (Company) | 17 |
| Cash Flow Statement | 18 |
| Notes to thecondensed consolidatedand company interim financial statements 1. General information |
19 19 |
| 2. Basis of preparation and summary of significant accounting policies |
19 |
| 3. Financial risk management and fair value estimation |
26 |
| 4. Segment information |
26 |
| 5. Investment property |
29 |
| 6. Property, plant and equipment |
31 |
| 7. Investments in subsidiaries, joint ventures and associates |
32 |
| 8. Financial instruments by category |
36 |
| 9. Financial instruments held at fair value through profit or loss |
37 |
| 10. Cash and cash equivalents | 37 |
| 11. Share capital | 37 |
| 12. Borrowings | 38 |
| 13. Derivative financial instruments | 40 |
| 14. Cash generated from operations | 40 |
| 15. Commitments | 41 |
| 16. Contingent liabilities | 41 |
| 17. Related party transactions | 44 |
| 18. Earnings per share | 45 |
| 19. Income tax expense | 46 |
| 20. Number of employees | 47 |
| 21. Events after the financial position date | 47 |
Statement of financial position
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| all amounts in € thousands | Note | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| ASSETS | |||||
| Non-current assets | |||||
| Investment property | 5 | 807.500 | 768.415 | 1.840 | 1.840 |
| Property, plant and equipment | 6 | 5.071 | 4.476 | 654 | 647 |
| Investments in subsidiaries | 7 | - | - | 279.217 | 285.018 |
| Investments in joint ventures and associates | 7 | 28.000 | 26.542 | 8.261 | 8.261 |
| Deferred tax assets | 10.614 | 11.436 | 9.457 | 8.348 | |
| Derivative financial instruments | 13 | 155 | 45 | - | - |
| Receivables | 18.091 869.431 |
4.070 814.983 |
8.782 308.212 |
18.576 322.692 |
|
| Current assets | |||||
| Inventories | 10.056 | 10.226 | - | - | |
| Trade and other receivables | 35.868 | 33.984 | 23.225 | 27.130 | |
| Current tax assets | 3.154 | 3.120 | 2.980 | 2.972 | |
| Financial instruments held at fair value through profit | 9 | 22.777 | 28.155 | 22.180 | 27.557 |
| or loss | |||||
| Cash and cash equivalents | 10 | 63.037 | 86.244 | 12.496 | 29.894 |
| 134.892 | 161.729 | 60.882 | 87.554 | ||
| Total assets | 1.004.323 | 976.713 | 369.094 | 410.245 | |
| EQUITY AND LIABILITIES | |||||
| Equity | |||||
| Share capital and share premium | 11 | 376.800 | 376.800 | 376.800 | 376.800 |
| Other reserves | 6.554 | 6.419 | 3.007 | 3.007 | |
| Retained earnings/(Accumulated losses) | (45.307) | (70.377) | (173.225) | (148.218) | |
| 338.047 | 312.842 | 206.582 | 231.589 | ||
| Non-controlling interest | 71.604 | 64.536 | - | - | |
| Total equity | 409.651 | 377.377 | 206.582 | 231.589 | |
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Borrowings | 12 | 217.425 | 236.125 | - | - |
| Deferred tax liabilities | 120.991 | 105.858 | - | - | |
| Employee benefit obligations | 1.120 | 1.120 | 775 | 775 | |
| Other non-current liabilities | 969 | 1.066 | 41.024 | 40.765 | |
| 340.504 | 344.169 | 41.799 | 41.540 | ||
| Current liabilities | |||||
| Trade and other payables | 44.532 | 47.787 | 12.890 | 13.980 | |
| Current tax liabilities | 6.509 | 1.392 | - | - | |
| Derivative financial instruments | 13 | - | 225 | - | - |
| Borrowings | 12 | 203.127 | 205.762 | 107.823 | 123.137 |
| 254.169 | 255.167 | 120.714 | 137.117 | ||
| Total liabilities | 594.673 | 599.335 | 162.512 | 178.657 | |
| Total equity and liabilities | 1.004.323 | 976.713 | 369.094 | 410.245 |
These condensed consolidated and Company interim financial statements of LAMDA Development SA have been approved for issue by the Company's Board of Directors on September 6, 2018.
Condensed interim financial statements 30 June 2018
Income Statement
| all amounts in € thousands | GROUP | COMPANY | ||||
|---|---|---|---|---|---|---|
| 01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
|||
| Revenue | 38.481 | 22.880 | 1.680 | 847 | ||
| Dividends | - | - | 3.262 | 420 | ||
| Net gain/(loss) from fair value adjustment on investment property5 | 45.585 | 135 | - | - | ||
| Loss from inventory impairment | (170) | (7.338) | - | - | ||
| Other direct property operating expenses | (6.303) | (4.795) | - | - | ||
| Employee benefits expense | (3.993) | (4.355) | (3.054) | (2.947) | ||
| Depreciation of property, plant and equipment | 6 | (371) | (384) | (74) | (61) | |
| Operating lease payments | (148) | (346) | (479) | (478) | ||
| Profit from sale of interest held in investments Other operating income / (expenses) - net |
- (2.577) |
- (3.581) |
- (1.297) |
33.831 (2.634) |
||
| Operating profit/(loss) | 70.504 | 2.215 | 38 | 28.977 | ||
| Finance income | 99 | 45 | 81 | 594 | ||
| Finance costs | (13.273) | (8.228) | (5.651) | (5.406) | ||
| Share of net profit of investments accounted for using the equity method |
7 | (379) | 3.517 | - | - | |
| Profit/(loss) before income tax | 56.951 | (2.450) | (5.532) | 24.165 | ||
| Income tax expense | (21.060) | (7.920) | 1.110 | (4.067) | ||
| Profit/(loss) for the period | 35.891 | (10.370) | (4.422) | 20.098 | ||
| Profit/(loss) attributable to: | ||||||
| Equity holders of the parent | 25.099 | (10.906) | (4.422) | 20.098 | ||
| Non-controlling interest | 10.791 | 536 | - | - | ||
| 35.891 | (10.370) | (4.422) | 20.098 | |||
| Earnings/(losses) per share from continuing operations attributable to the equity holders of the Parent during the period (expressed in € per share) |
||||||
| Basic | 18 | 0,32 | (0,14) | (0,06) | 0,26 | |
| Diluted | 18 | 0,32 | (0,14) | (0,06) | 0,26 |
Condensed interim financial statements 30 June 2018
Income Statement
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| all amounts in € thousands | 01.04.2018 to 30.06.2018 |
01.04.2017 to 30.06.2017 |
01.04.2018 to 30.06.2018 |
01.04.2017 to 30.06.2017 |
|
| Revenue | 18.797 | 11.498 | 836 | 507 | |
| Dividends | - | - | 3.262 | 420 | |
| Net gain/(loss) from fair value adjustment on investment property | 45.585 | 135 | - | - | |
| Loss from inventory impairment | (170) | (7.338) | - | - | |
| Other direct property operating expenses | (3.683) | (2.809) | - | - | |
| Employee benefits expense | (2.023) | (2.309) | (1.540) | (1.520) | |
| Depreciation of property, plant and equipment | (179) | (200) | (40) | (38) | |
| Operating lease payments | (59) | (175) | (239) | (238) | |
| Profit from sale of interest held in investments Other operating income / (expenses) - net |
- (1.326) |
- (2.439) |
- (563) |
33.831 (2.010) |
|
| Operating profit/(loss) Finance income |
56.941 92 |
(3.636) 33 |
1.715 (196) |
30.953 299 |
|
| Finance costs | (6.602) | (4.111) | (2.695) | (2.692) | |
| Share of net profit of investments accounted for using the equity method |
(181) | 2.275 | - | - | |
| Profit/(loss) before income tax | 50.251 | (5.440) | (1.176) | 28.561 | |
| Income tax expense Profit/(loss) for the period |
(17.924) 32.326 |
(6.638) (12.077) |
351 (825) |
(4.803) 23.758 |
|
| Profit/(loss) attributable to: | |||||
| Equity holders of the parent | 22.932 | (12.617) | (825) | 23.758 | |
| Non-controlling interest | 9.394 32.326 |
540 (12.078) |
- (825) |
- 23.758 |
|
| Earnings/(losses) per share from continuing operations attributable to the equity holders of the Parent during the period (expressed in € per share) |
|||||
| Basic Diluted |
0,29 0,29 |
(0,16) (0,16) |
(0,01) (0,01) |
0,31 0,31 |
The notes on pages 19 to 47 form an integral part of this condensed interim financial information.
- 14 -
Total Comprehensive Income Statement
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
| Profit/(loss) for the period | 35.891 | (10.370) | (4.422) | 20.098 |
| Cash flow hedges, after tax | 160 | 149 | - | - |
| Currency translation differences | (3) | 66 | - | - |
| Items that may be subsequently reclassified to profit or loss | 158 | 215 | - | - |
| Total comprehensive income for the period | 36.048 | (10.155) | (4.422) | 20.098 |
| Profit/(loss) attributable to: | ||||
| Equity holders of the parent | 25.206 | (10.691) | (4.422) | 20.098 |
| Non-controlling interest | 10.842 | 536 | - | - |
| 36.048 | (10.155) | (4.422) | 20.098 |
Statement of changes in equity (Consolidated)
| Attributable to equity holders of the parent | ||||||
|---|---|---|---|---|---|---|
| all amounts in € thousands | Share capital | Other reserves | Retained earnings / (Accumulated losses) |
Total | Non-controlling interests |
Total equity |
| GROUP | ||||||
| 1 January 2017 | 374.863 | 6.545 | (26.147) | 355.262 | (191) | 355.071 |
| Total Income: | ||||||
| Profit/(loss) for the period | - | - | (10.906) | (10.906) | 536 | (10.370) |
| Other comprehensive income for the period: | - | - | ||||
| Cash flow hedges, after tax | - | 122 | - | 122 | 27 | 149 |
| Currency translation differences | - | 66 | - | 66 | - | 66 |
| Total comprehensive income for the period | - | 188 | (10.906) | (10.718) | 563 | (10.155) |
| Transactions with the shareholders: | - | - | ||||
| Transfer of interest held in participations | - | (865) | 4.587 | 3.722 | 60.023 | 63.745 |
| - | (865) | 4.587 | 3.722 | 60.023 | 63.745 | |
| 30 June 2017 | 374.863 | 5.868 | (32.466) | - 348.266 |
60.395 | 408.660 |
| 1 January 2018 | 376.800 | 6.419 | (70.377) | 312.842 | 64.536 | 377.377 |
| Total Income: | ||||||
| Profit for the period | - | - | 25.099 | 25.099 | 10.791 | 35.891 |
| Other comprehensive income for the period: | ||||||
| Cash flow hedges, after tax | - | 109 | - | 109 | 51 | 160 |
| Currency translation differences | - | (3) | - | (3) | - | (3) |
| Total comprehensive income for the period | - | 107 | 25.099 | 25.206 | 10.842 | 36.048 |
| Transactions with the shareholders: | ||||||
| Reserves | - | 28 | (28) | - - |
- | |
| Dividends of non-controlling interest | - | - | - | - (3.778) |
(3.778) | |
| Share capital increase in subsidiaries | - | - | - | - 3 |
3 | |
| - | 28 | (28) | - (3.775) |
(3.775) | ||
| 30 June 2018 | 376.800 | 6.554 | (45.307) | 338.047 | 71.604 | 409.651 |
Statement of changes in equity (Company)
| all amounts in € thousands | Share capital | Other reserves | Retained earnings / (Accumulated losses) (1) |
Total equity |
|---|---|---|---|---|
| COMPANY | ||||
| 1 January 2017 | 374.863 | 2.999 | (120.667) | 257.195 |
| Total Income: | ||||
| Loss for the period | - | - | 20.098 | 20.098 |
| Total comprehensive income for the period | - | - | 20.098 | 20.098 |
| Transactions with the shareholders: | ||||
| Purchase of treasury shares | - | - | - | - |
| - | - | - | - | |
| 30 June 2017 | 374.863 | 2.999 | (100.569) | 277.293 |
| 1 January 2018 (released) | 376.800 | 3.007 | (148.218) | 231.589 |
| Adjustment IFRS 9 | - | - | (20.585) | (20.585) |
| 1 January 2018 (adjusted) | 376.800 | 3.007 | (168.803) | 211.004 |
| Total Income: | ||||
| Loss for the period | - | - | (4.422) | (4.422) |
| Total comprehensive income for the period | - | - | (4.422) | (4.422) |
| 30 June 2018 | 376.800 | 3.007 | (173.225) | 206.582 |
(1) At company level "Retained earnings/(Accumulated losses)"has been adjusted according to the amendments of IFRS 9, as mentioned in note 2.2 of the condensed interim financial statements for the period that ended 30.06.2018.
Cash Flow Statement
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| all amounts in € thousands | Note | 01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
01.01.2018 to 30.06.2018 | 01.01.2017 to 30.06.2017 |
| Cash flows from operating activities | |||||
| Cash generated from / (used in) operations | 14 | 8.149 | 5.169 | (8.216) | (7.786) |
| Interest paid | (12.281) | (7.045) | (4.454) | (4.464) | |
| Income taxes paid | (66) | (232) | (1) | (116) | |
| Net cash inflow/(outflow) from operating activities | (4.198) | (2.109) | (12.671) | (12.366) | |
| Cash flows from investing activities | |||||
| Purchase of property, plant and equipment | 6 | (1.311) | (140) | (81) | (100) |
| Proceeds from sale of investment property | 5 | 6.500 | - - |
- | |
| Dividends received | - | - 3.082 |
- | ||
| Loans to/from related parties | 17 | - | (360) | (618) | - |
| Interest received | 64 | 49 | 74 | 84 | |
| Proceeds from repayment of loans to related parties | - | - 168 |
- | ||
| Proceeds from sale/liquidation of participation | 2.963 | 430 | 2.963 | 430 | |
| (Purchase)/sale of financial instruments held at fair value through profit or loss | 5.282 | (33.728) | 5.282 | (33.728) | |
| Disposal in interest held in investments | 7 | - | 61.300 | - | 61.300 |
| (Increase)/decrease in the share capital of participations | 7 | (1.232) | (247) | 5.801 | (700) |
| Restricted cash | - | 2.113 | (5.000) | 2.113 | |
| Net cash inflow (outflow) from investing activities | 12.266 | 29.418 | 11.671 | 29.399 | |
| Cash flows from financing activities | |||||
| Increase in share capital of subsidiaries from non-controlling interest | 3 | - - |
- | ||
| Dividends paid at non-controlling interests | (3.778) | - - |
- | ||
| Loans granted from related parties | 25.000 | - 25.000 |
- | ||
| Repayment of borrowings from related parties | 17 | - | - (700) |
(350) | |
| Repayment of borrowings | 12 | (47.136) | (6.556) | (40.698) | (3.349) |
| Borrowings transaction costs | 12 | (364) | (239) | - | - |
| Restricted cash | (5.000) | - - |
- | ||
| Net cash inflow (outflow) from financing activities | (31.275) | (6.795) | (16.398) | (3.699) | |
| Net increase (decrease) in cash and cash equivalents | (23.206) | 20.515 | (17.398) | 13.334 | |
| Cash and cash equivalents at the beginning of the period | 10 | 86.244 | 98.644 | 29.894 | 71.703 |
| Cash and cash equivalents at end of the period | 10 | 63.038 | 119.159 | 12.496 | 85.037 |
Notes to thecondensed consolidatedand company interim financial statements
1. General information
These financial statements include the company financial statements of the company LAMDA Development S.A. (the "Company") and the consolidated financial statements of the Company and its subsidiaries (together "the Group") for the six month period ended June 30, 2018. The names of the subsidiaries are presented in note 7 of these financial statements. The annual financial statements of the Group's subsidiaries for the year that ended at December 30, 2017, have been uploaded at www.lamdadev.com.
The main activities of the Group comprise investment, development, leasing and maintenance of innovative real estate projects.
The Group operates in Greece, as well as in other neighbouring Balkan countries mainly Romania, Serbia, Montenegro and the Company's shares are listed on the Athens Stock Exchange.
The Company is incorporated and domiciled in Greece. The address of its registered office is 37A Kifissias Ave., 15123, Maroussi with the Number in the General Electronic Commercial Registry: 3379701000 and its website address is www.lamdadev.com. The Company Consolidated Lamda Holdings S.A., which is domiciled in Luxembourg, is the main shareholder of the Company as at 30.06.2018 with interest held at 53.82% of the share capital and therefore the Group's financial statements are included in its consolidated financial statements.
The Group activities, and consequently its revenues are not expected to be substantially impacted by seasonal fluctuations.
These condensed consolidated and Company interim financial statements of LAMDA Development SA have been approved for issue by the Company's Board of Directors on September 6, 2018.
2. Basis of preparation and summary of significant accounting policies
2.1. Basis of preparation
These consolidated and company financial statements have been prepared by Management in accordance with International Financial Reporting Standards (IFRS) and Interpretations by the International Financial Reporting Interpretations Committee (IFRIC), as they have been adopted by the European Union, and specifically in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting". These consolidated and company financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2017 which are available on the website address www.lamdadev.com.
The accounting principles that have been used in the preparation and presentation of these interim financial statements are in accordance with those used for the preparation of the Company and Group annual financial statements as of December 31, 2017.
The individual figures of the income statement for the period of 01.01.2018-30.06.2018, at Group level, is not comparable to the ones of the respective period of 2017, due to the acquisition of 50% of LAMDA Olympia Village SA in July 2017. Following this acquisition, the Group applies the full method consolidation for LAMDA Olympia Village SA whereas in the first semester of 2017, the consolidation method used was the equity method.
These consolidated and company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and Interpretations by the International Financial Reporting Interpretations Committee (IFRIC), as they have been adopted by the European Union, and present the financial position, results of operations and cash flows on a going concern basis which
Condensed interim financial statements
30 June 2018
assumes that the Company has plans in place to avoid material disruptions to its operations and available financial resources to meet its operating requirements. In this respect Management has concluded that (a) the going concern basis of preparation of these financial statements is appropriate, and (b) all assets and liabilities are appropriately presented in accordance with the Company's accounting policies. The management is undergoing negotiations with the counterparties in relation to the refinancing of the Group short-term loans of €173.8m, a procedure that has not been completed until the date of these financial statements' release. The management argues that the procedure will be completed successfully (note 12).
On that basis, the following specific matters may impact the operations of the Group in the foreseeable future:
Macroeconomic conditions in Greece
The macroeconomic and financial environment in Greece shows continuous signs of stability. However, there is still uncertainty as the economy remains vulnerable at external factors. The capital controls that were initially imposed on the country at June 28, 2015, are still in force, but have been loosen. The latest related amendment was put in force at May 30, 2018.
The Group's operations in Greece are significant and the current macroeconomic conditions may affect the Group as follows:
- Decrease in consumption may impact the amount of shop sales in the shopping centers.
- Possible failure of tenants to fulfil their obligations due to either a reduction in their operating activities or instability of the local banking system.
- Possible further decrease in the fair value of the Group's investment property.
Despite the aforementioned uncertainties, the Group's operations continue without any disruption; however Management is not able to accurately predict the likely developments in the Greek economy and its impact on the Group activities.
"The Mall Athens" - Lamda Olympia Village S.A.
As described in detail in note 16"Contingent liabilities and assets", in January 2014, the Hellenic Council of State approved the petition for annulment of Codified Law 3207/2003, according to the provisions of which the Olympic Press Village (or "Olympiako Chorio Typou") and the Commercial and Leisure Centre "The Mall Athens" were constructed. This decision by the Hellenic Council of State has no direct impact on the operations of "The Mall Athens" and it is anticipated that the operations will continue unhindered for the foreseeable future. Management has assessed the required actions that have been indicated by the Group's legal advisors as imposed following the decision in order to cope with this situation and therefore has undertaken already all necessary actions to this direction. The completion of the above mentioned procedure, which of course requires the effective contribution of the involved competent public services, will safeguard the full and unhindered operation of the Shopping Center.
The factors above have been taken into account by Management when preparing the financial statements for the period ended June 30, 2018. In this uncertain economic environment, management continually assesses the situation and its possible future impact to ensure that all necessary actions and measures are taken in order to minimize any impact on the Group's Greek operations. In note 3 "Financial risk management" of the annual financial statements as of December 31, 2017, there is information on the approach of the total risk management of the Group, as well as on the general financial risk that the Group faces on an ongoing basis.
These consolidated and Company condensed interim financial statements have been prepared under the historical cost convention, except for the investment property, the financial instruments held at fair value through profit or loss and the derivative financial instruments which are presented at fair value.
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the group's accounting policies. In addition, the use of certain estimates and assumptions is required that affect the balances of the assets and liabilities, the disclosure of contingent assets and liabilities as at date of preparation of the financial statements and the amounts of income and expense during the reporting
Condensed interim financial statements
30 June 2018
period. Although these estimates are based on the best knowledge of management in relation to the current conditions and actions, the actual results can eventually differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 4 of the annual financial statements as of December 31, 2017.
Certain figures of the cash flow statement for the comparative period of 01.01.2017-30.06.2017 have been reclassified for comparative purposes at Group and Company level. Specifically, "Restricted cash" has been transferred to "Cash and cash equivalents" in "Cash flow from investing activities".
2.2. Accounting principles
Certain new standards, amendments to standards and interpretations have been issued that are mandatory for periods beginning on 01.01.2018 and subsequent periods. The Group's evaluation of the effect of these new standards, amendments to standards and interpretations is as follows:
Standards and Interpretations effective for the current financial year
IFRS 9 (Amendments) "Prepayment Features with Negative Compensation"
IFRS 9 replaces the guidance in IAS 39 which deals with the classification and measurement of financial assets and financial liabilities and it also includes an expected credit losses model that replaces the incurred loss impairment model that was applied under IAS 39. IFRS 9 introduces an expected credit loss approach based on information concerning the future that aims at prior credit loss recognition in relation to the approach of the realized impairment loss in accordance according to IAS 39. IFRS 9 includes the choice of an accounting policy continuing the hedge accounting in accordance with IAS 39.
On January 1, 2018, the Group adopted IFRS 9 Financial Instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement, and changes the requirements for the impairment of the Group's financial assets.
As permitted by IFRS 9, the Group has chosen not to restate the information for the prior period and the accounting policies as presented in Note 2 on the Company's Financial Statements for the period ended December 31 2017 apply for the comparative periods.
The application of the above standard did not have a significant impact on the Interim Financial Statements of the Group affecting the book value of the Company's receivables from loans to subsidiaries. All assumptions, accounting policies and calculation techniques that have been applied since 01.01.2018 to assess the impact of the initial application of IFRS 9 will continue to be subject to review and improvements.
As IAS 34 requires, the nature and the effectiveness of these changes are presented below.
Changes in significant accounting policies from the application of IFRS 9
As a result of the transition to IFRS 9, from 01.01.2018 the following significant accounting policy replaces the relevant accounting policy 2.9 and 2.13 at Note 2 of the Consolidated and Separate Financial Statements for the year ended 31 December 2017.
Financial assets
(a) Classification and measurement
IFRS 9 keeps to a large extent the existing requirements of IAS 39 for the classification and measurement of Financial Liabilities. However, it eliminates the previous categories of IAS 39 for financial assets: held to maturity, loans and receivables and available-for-sale. In accordance with IFRS 9, financial instruments are subsequently measured at fair value through profit or loss, at amortized cost, or at fair value through other comprehensive income.
The classification is based on two criteria:
- the business model in which the financial asset is held, either the objective is to hold for the purpose of collecting contractual cash flows or the collection of contractual cash flows as well as the sale of financial assets and
- whether the contractual cash flows of the financial asset exclusively consists of a capital and interest repayment on the outstanding balance ("SPPI" criterion).
The Company uses the following categories for measuring financial assets:
Financial assets measured at amortized cost. At this category are classified the financial assets that are retained under the business model with the aim to be held and the collection of contractual cash flows that meet the "SPPI" criterion. This category includes all the Group's financial assets, except for investments in mutual funds and bonds that are measured at fair value through profit or loss.
Financial assets classified in this category mainly include the following assets:
- Cash and cash equivalents
- Trade receivables
Trade receivables are amounts owned to customers for the sale of products or the provision of services within the ordinary course of business. If the receivables are collected inside the normal business cycle of the business, which is not more than one year, they are recorded as current assets, if not, they are presented as non-current assets. Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less the provision for impairment.
Loans to subsidiaries that are included in "Trade and other receivables"
It includes non-derivative financial assets with fixed or determinable payments that are not traded on active markets and are not intended to be sold. They are included in current assets, except for those with a maturity of more than 12 months from the Statement of Financial Position date that are included in non-current assets.
Purchases and sales of financial investment assets are recognized at the date of the transaction which is the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at their fair value including transaction costs and cease to be recognized when the rights to receive cash flows from investments expire or are transferred and the Group has transferred substantially all the risks and rewards of ownership. Loans and receivables are measured subsequent to their initial recognition at amortized cost using the effective interest method.
Financial assets measured at fair value through profit or loss. Investments in mutual funds and bonds are included. These investments do not meet the criteria to be classified at amortized cost as the business model in which they are held aims to sell them within a short period of time. Under IAS 39, the Group's investments in mutual funds were classified as financial assets at fair value through profit or loss.
Following initial recognition, financial assets classified at fair value through profit or loss are measured at fair value including sale or disposal costs. Gains or losses arising from the revaluation of fair value are recognized in total at the income statement at the "Other operating income / expenses (net)" item.
Expected credit losses
The Group has trade and other receivables (including operating leases) as well as other financial assets that are measured at amortized cost and are subject to the new model of expected credit losses in accordance with IFRS 9.
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the recognized impairment loss was immaterial.
IFRS 9 requires the Group to adopt the model of expected credit losses for each of the above asset classes.
The adoption of IFRS 9 led to a change in the accounting treatment of impairment losses for financial assets, as it replaced the treatment of IAS 39 for recognition of realized losses by recognizing the expected credit losses.
Trade and Other receivables
The Group applies the simplified approach of IFRS 9 for the calculation of expected credit losses. The provision for impairment is always measured in an amount equal to the expected credit losses over the life of the receivable. For the purposes of determining the expected credit losses in relation to trade and other receivables, the Group uses a credit loss provisioning table based on the maturity of the outstanding claims. Credit loss projections are based on historical data taking into account future factors in relation to debtor and the economic environment. The adoption of the above standard did not have a significant impact on the interim financial statements of the Company and the Group due to the guarantees received, the strict policy forecasts and the historically low losses incurred. All assumptions, accounting policies and calculation techniques applied for the calculation of expected credit losses will continue to be subject of review and improvement.
Loans to subsidiaries
Expected credit losses are recognized on the basis of the following:
-
expected 12-month credit losses are recognized on initial recognition, reflecting part of the cash flow losses, during the lifetime, that will arise if there is a breach within 12 months after the reporting date weighted by the probability of default. The requirements of this category are referred to as in step 1.
-
expected credit losses, over the lifetime, are recognized in the event of a significant increase in credit risk detected subsequent to the initial recognition of the financial instrument, reflecting cash flow deficiencies arising from all probable default events over the lifetime of a financial instrument, weighted with the probability of default. The requirements of this category are referred to as in step 2.
-
expected credit losses, over the lifetime, are always recognized for receivables with impaired credit value and are reported as in step 3. A financial asset is considered impaired when one or more events have occurred that have a detrimental effect on its estimated future cash flows financial asset.
The impact of IFRS 9 on credit losses of loans to subsidiaries in the statement of financial position as at 1 January 2018 was a decrease of €20.6m in the "Retained earnings" account, a decrease of €10.2m in "Other receivables" account and a decrease of €10.4m in the "Trade and Other receivables" account.
Other financial assets measured at amortized cost
For the other financial assets of the Group measured at amortized cost, the general approach is used. These financial assets are considered to be low credit risk and any provision for impairment is limited to the expected credit losses over the next 12 months. The adoption of IFRS 9 had no significant impact on the interim financial statements of the Company and the Group.
Effect of the adoption of IFRS 9 on Statements of Financial Position
The adoption of IFRS 9 on 1 January 2018 had a negative impact on the Company's equity due to changes of impairment receivables of € 20,585k and at the same time did not have any material effect on the Group's equity. The Company chose not to adjust the comparative figures and recognize any differences between the previous carrying amount and the new carrying amount at the opening balance of retained earnings as at 1 January 2018. Therefore, the adjustments arising from the new provisions for impairment are not included in the revised statement of financial position at 31 December 2017 and are recognized in the opening balance sheet as of 1 January 2018.
The table below presents the adjustments identified separately at each item on 1 January 2018. Items not affected by the impairment requirements of IFRS 9 are not included. As a result, the totals and sub-totals presented cannot be recalculated on the basis of the amounts provided.
30 June 2018
| COMPANY | ||||||
|---|---|---|---|---|---|---|
| 31.12.2017 | 01.01.2018 | 01.01.2018 | ||||
| all amounts in € thousands | As released (IAS 39) |
Impact (IFRS 9) |
As adjusted (IFRS 9) |
|||
| ASSETS | ||||||
| Non-current assets | ||||||
| Other receivables | 18.576 | -10.200 | 8.376 | |||
| Total non-current assets | 322.692 | -10.200 | 312.492 | |||
| Current assets | ||||||
| Trade and other receivables | 27.130 | -10.385 | 16.745 | |||
| Financial instruments held at fair value through profit or loss |
27.557 | - | 27.557 | |||
| Cash and cash equivalents | 29.894 | - | 29.894 | |||
| Total current assets | 87.554 | -10.385 | 74.196 | |||
| Total assets | 410.245 | -20.585 | 389.661 | |||
| EQUITY | ||||||
| Retained earnings/(Accumulated losses) | -148.218 | -20.585 | -168.803 | |||
| Total equity | 231.589 | -20.585 | 211.004 | |||
| Total equity and liabilities | 410.245 | -20.585 | 389.661 |
IFRS 15 "Revenue from Contracts with Customers"
IFRS 15 has been issued in May 2014. The objective of the standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. It contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity recognizes revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.
IFRS 15 applies to all revenue arising from contracts with customers, unless such contracts fall within the scope of other standards. The new standard establishes a five-step model to measure revenue from customer contracts. These steps are the following:
a) Definition of the contract. b) Definition of the contract's performance obligations. c) Definition of the transaction price. d) Allocation of the transaction price to the contract's performance obligations. e) Revenue recognition when the entity fulfills the contract's performance obligations.
The underlying principle is that an entity recognizes revenue in order to reflect the transfer of the goods or services to customers to the amount it is entitled to in exchange for those goods or services. It also includes the principles for defining and measuring revenue. In addition, according to the new standard, revenue is recognized when the customer acquires control of the goods or services transferred, by determining the time of the transfer of the control at a particular time or in a future time horizon.
The adoption of the standard did not have any significant impact on the Group's Interim Financial Information, as the recognition of the main sources of revenue, (relating to rental income, parking income and property management income), is not affected by the adoption of IFRS 15.
IAS 40 (Amendments) "Transfers of Investment Property"
The amendments clarified that to transfer to, or from, investment properties there must be a change in use. To conclude if a property has changed use there should be an assessment of whether the property meets the definition and the change must be supported by evidence.
Annual Improvements to IFRSs 2014 (2014 – 2016 Cycle)
IAS 28 "Investments in associates and Joint ventures"
The amendments clarified that when venture capital organisations, mutual funds, unit trusts and similar entities use the election to measure their investments in associates or joint ventures at fair value through profit or loss (FVTPL), this election should be made separately for each associate or joint venture at initial recognition.
Standards and Interpretations effective for subsequent periods
IFRS 16 "Leases" (effective for annual periods beginning on or after 1 January 2019)
IFRS 16 has been issued in January 2016 and supersedes IAS 17. The objective of the standard is to ensure the lessees and lessors provide relevant information in a manner that faithfully represents those transactions. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. The effect of this standard on the Group is been investigated.
IAS 28 (Amendments) "Long term interests in associates and joint ventures" (effective for annual periods beginning on or after 1 January 2019)
The amendments clarify that companies account for long-term interests in an associate or joint venture to which the equity method is not applied—using IFRS 9. The amendments have not yet been endorsed by the EU.
IFRIC 23 "Uncertainty over income tax treatments" (effective for annual periods beginning on or after 1 January 2019)
The interpretation explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. IFRIC 23 applies to all aspects of income tax accounting where there is such uncertainty, including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates. The interpretation has not yet been endorsed by the EU.
IAS 19 (Amendments) "Plan amendment, curtailment or settlement" (effective for annual periods beginning on or after 1 January 2019)
The amendments specify how companies determine pension expenses when changes to a defined benefit pension plan occur. The amendments have not yet been endorsed by the EU.
Annual Improvements to IFRS (2015 – 2017 Cycle)(effective for annual periods beginning on or after 1 January 2019)
The amendments set out below include changes to fourIFRSs. The amendments have not yet been endorsed by the EU.
IFRS 3 "Business combinations"
The amendments clarify that a company remeasures its previously held interest in a joint operation when it obtains control of the business.
IFRS 11 "Joint arrangements"
The amendments clarify that a company does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.
IAS 12 "Income taxes"
The amendments clarify that a company accounts for all income tax consequences of dividend payments in the same way.
IAS 23 "Borrowing costs"
The amendments clarifythat a company treats as part of general borrowings any borrowing originally made to develop an asset when the asset is ready for its intended use or sale
Condensed interim financial statements
30 June 2018
There are no other new standards or amendments to standards, which are mandatory for periods beginning during the current period and subsequent periods that may have significant impact on the Group's financial statements.
3. Financial risk management and fair value estimation
A) Financial risk management
The Group's activities expose it to a variety of financial risks such as market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.
The condensed interim financial information does not include all financial risk management information and disclosures required in the annual financial statements as at 31 December 2017 and so they should be read in conjunction with them. There have been no changes in the risk management policies since December 31, 2017.
Liquidity Risk
As described in note 12 as at 30.06.2018 the short-term loans refer mainly to the syndicate bond loan of the Company (amount of €108.2m) as well as the subsidiaries LAMDA Domi SA (amount of €60.3m) and Lamda Prime Properties SA (amount of €5.3m), dates of repayment from September 2018 until November 2018. The management is undergoing negotiations with the counterparties in relation to the refinancing of the above mentioned short-term loans, a procedure that has not been completed until the date of these financial statements' release. The management argues that the procedure will be completed successfully.
B) Fair value estimation
The Group and the Company use the following hierarchy for determining and disclosing the fair value of the assets and liabilities by valuation method.
Level 1: based on quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: based on valuation techniques whereby all inputs having a significant effect on the fair value are observable, either directly or indirectly and includes quoted prices for identical or similar assets or liabilities.
Level 3: based on valuation techniques whereby all inputs having a significant effect on the fair value are not observable market data.
The financial instruments that are measured at fair value are the investment property (note 5),the derivative financial instruments (note 13) and the financial instruments held at fair value through profit or loss (note 9).
4. Segment information
The Group is operating into the business segment of real estate in Greece and in other neighbouring Balkan countries. The BoD (which is responsible for the decision making) defines the segments according to the use and of the investment property and their geographical location.
Management monitors the operating results of each segment separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on revenue and EBITDA (Earnings before interest, tax, depreciation and amortization). It is noted that the Group applies the same accounting policies as those in the financial statements in order to measure the performance of the operating segment. Group financing, including finance costs and finance income, as well as income taxes are monitored on a group basis and are included within the administration segment without being allocated to the profit generating segments.
A) Group's operating segments
The segment results for the six month period ended 30 June 2018 were as follows:
| Real estate | ||||||||
|---|---|---|---|---|---|---|---|---|
| all amounts in € thousands | GREECE | BALKANS | Administrative and Management Services |
Eliminations among segments |
Total | |||
| Shopping centers |
Other investment property |
Other investment property |
||||||
| Revenue from third parties | 38.121 | 479 | 3 | 700 - |
(822) | 38.481 | ||
| Net gain/(loss) from fair value adjustment on investment property |
45.650 | (135) | (100) | - | 45.415 | |||
| Other direct property operating expenses | (7.731) | (243) | - | - | 1.672 | (6.303) | ||
| Other | (197) | (142) | (250) | (5.279) | (850) | (6.718) | ||
| Share of profit / (loss) from joint ventures and associates | - | 186 | (525) | (40) | - | (379) | ||
| EBITDA | 75.842 | 145 | (871) | (4.619) | - | 70.497 |
The segment results for the six month period ended 30 June 2017 were as follows:
| Real estate | ||||||||
|---|---|---|---|---|---|---|---|---|
| all amounts in € thousands | GREECE | BALKANS | Administrative and Management Services |
Eliminations among segments |
Total | |||
| Shopping centers |
Other investment property |
Other investment property |
||||||
| Revenue from third parties | 20.915 | 762 | 4 | 1.833 - |
(635) | 22.880 | ||
| Net gain/(loss) from fair value adjustment on investment property |
1.320 | (985) | (7.538) | (7.203) | ||||
| Other direct property operating expenses | (5.609) | (229) | - | - | 1.042 | (4.795) | ||
| Other | (95) | (163) | (124) | (7.494) | (407) | (8.283) | ||
| Share of profit / (loss) from joint ventures and associates | 3.661 | 797 | (951) | 10 | - | 3.517 | ||
| EBITDA | 20.194 | 183 | (8.609) | (5.651) | - | 6.117 |
The segment results for the three month period ended 30 June 2018 were as follows:
| GREECE | BALKANS | Administrative and Management Services |
Eliminations among segments |
Total | |||
|---|---|---|---|---|---|---|---|
| Shopping centers |
Other investment property |
Other investment property |
|||||
| 18.683 | 211 | 2 | 313 | (412) | 18.797 | ||
| 45.650 | (135) | (100) | - | - | 45.415 | ||
| (4.390) | (115) | - | - | 822 | (3.683) | ||
| (126) | (66) | (179) | (2.627) | (410) | (3.408) | ||
| - | 80 | (221) | (40) | - | (181) | ||
| 59.817 | (25) | (498) | (2.354) | - | 56.941 | ||
| Real estate |
| Real estate | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| all amounts in € thousands | GREECE | BALKANS | Administrative and Management Services |
Eliminations among segments |
Total | |||||||
| Shopping centers |
Other investment property |
Other investment property |
||||||||||
| Revenue from third parties | 10.469 | 369 | 2 | 976 | (318) | 11.498 | ||||||
| Net gain/(loss) from fair value adjustment on investment property |
1.320 | (985) | (7.538) | - | - | (7.203) | ||||||
| Other direct property operating expenses | (3.212) | (135) | - | - | 538 | (2.809) | ||||||
| Other | (73) | (73) | 615 | (5.171) | (221) | (4.922) | ||||||
| Share of profit / (loss) from joint ventures and associates | 2.133 | 892 | (756) | 6 | - | 2.275 | ||||||
| EBITDA | 10.637 | 68 | (7.677) | (4.189) | - | (1.161) |
The segment results for the three month period ended 30 June 2017 were as follows:
It is noted that the analysis of the operating results per segment has been enriched with additional information with regard to administrative and management services which are not related to the motoring of the operating segments in Greece and Balkans.
Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.
| Real estate | |||||
|---|---|---|---|---|---|
| all amounts in € thousands | GREECE | BALKANS | Total | ||
| 30 June 2018 | Shopping centers |
Other investment property |
Other investment property |
Administrative and Management Services |
|
| Assets per segment | 846.694 | 39.720 | 30.038 | 87.870 | 1.004.323 |
| Expenditure of non-current assets | 1.218 | 1 | 1 | 80 | 1.300 |
| Liabilities per segment | 463.987 | 7.632 | 277 | 122.778 | 594.673 |
| all amounts in € thousands | Real estate GREECE |
BALKANS | Total | ||
| Shopping | Other investment |
Other investment |
Administrative and Management | ||
| 31 December 2017 | centers | property | property | Services | |
| Assets per segment | 786.281 | 47.832 | - 26.972 |
115.629 | 976.713 |
| Expenditure of non-current assets | 555 | 4 | - 3 |
331 | 893 |
The reconciliation of the segments' EBITDA to total profit after tax for the Group is as follows:
| all amounts in € thousands | ||
|---|---|---|
| Adjusted EBITDA for reportable segments | 30.06.2018 | 30.06.2017 |
| EBITDA | 70.497 | 6.117 |
| Depreciation | (371) | (384) |
| Finance income | 99 | 45 |
| Finance costs | (13.273) | (8.228) |
| Profit/(loss) before income tax | 56.951 | (2.451) |
| Income tax expense | (21.060) | (7.920) |
| Profit/(loss) for the period | 35.891 | (10.371) |
B) Geographical segments
The segment information for the six month period ended 30 June 2018 was as follows:
| 30 June 2018 | ||
|---|---|---|
| all amounts in € thousands | Total revenue | Non-current assets |
| Greece | 38.478 | 845.902 |
| Balkans | 3 | 23.529 |
| 38.481 | 869.431 |
The segment information for the annual period ended 31 December 2017 was as follows:
| 31 December 2017 all amounts in € thousands |
Total revenue | Non-current assets |
|---|---|---|
| Greece | 62.172 | 793.347 |
| Balkans | 25.007 | 21.637 |
| 87.179 | 814.983 |
5. Investment property
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Balance at 1 January | 768.415 | 379.955 | 1.840 | 1.840 |
| Acquisition of interest held in participations | - | 381.900 | - | - |
| Disposals | (6.500) | (5.150) | - | - |
| Net gain/(loss) from fair value adjustment on investment property | 45.585 | 11.710 | - | - |
| Balance at the end of the period | 807.500 | 768.415 | 1.840 | 1.840 |
The investment property includes property operating lease that amounts to €181.3m and is related to the Mediterranean Cosmos Shopping Centre.
The significant increase in the fair value of the investment property by 45.6m in relation to 31.12.2017 is attributed to the further improvement of the Group's shopping centers' profitability, as well as the positive change in the discount rates. But above all, the material increase is due to the positive effect of the agreement that the subsidiary company Pylaia S.A. signed with the Ecumenical Patriarchate, owner of the land plot on which the Company developed and operate the Mediterranean Cosmos Shopping Centre (the Centre), to the extension of the long-term lease of the said land plot area for 30 additional years, until 2065. The above mentioned agreement improved the value of the shopping center by €28.8m.
In the first quarter of 2018, the Group announces the sale of the ownership that its 100% subsidiary LAMDA Estate Development S.A. held in the office building Kronos Business Center in Maroussi, for a total consideration of €6.5m.
The fair value for all investment property was determined on the basis of its highest and best use by the Group taking into account each property's use which is physically possible, legally permissible and financially feasible. This estimate is based on the physical characteristics, the permitted use and the opportunity cost for each investment of the Group.
Investment property is valued each semester by independent qualified valuers using the Discounted Cash Flows (DCF) method. The cash flows are based on reliable estimates of future cash flows, supported by the terms of any existing lease and other contracts and (where possible) external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect each tenant's sector (food and restaurants, electronic appliances, apparel etc.) as well as the current market assessments of the uncertainty in the amount and timing of the cash flows. In some cases, where necessary, the valuation is based on the Comparative Method. The aforementioned valuation methods come under hierarchy level 3 as described in note 3.
Condensed interim financial statements
30 June 2018
More precisely, at 30.06.2018, 96% of total fair value of the Group's investment property relates to Shopping Centres and 2% to Office Buildings. For both type of property, the valuation was determined using the DCF approach with the following significant assumptions:
- With regards to the Shopping Centres, The Mall Athens has a freehold status, Mediterranean Cosmos is held under a lease that expires in 2065 and Golden Hall has an 86 year exploitation period. As far as the office buildings are concerned, they are owned by the Group.
- In short, the yields according to the latest valuations at June 30, 2018 are as follows:
| Discount rate | Discount rate | |
|---|---|---|
| 30.06.2018 | 31.12.2017 | |
| Malls | ||
| The Mall Athens | 9,00% | 9,50% |
| Med.Cosmos | 9,75% | 10,75% |
| Golden Hall | 9,50% | 9,75% |
| Office buildings | ||
| Cecil, Kefalari | 9,25% | 9,25% |
In relation to the annual consideration that every tenant of the Malls pays (Base Consideration – fixed consideration that is set in the contract), it is adjusted annually according to the CPI plus a slight indexation which is differentiated between the tenants. The average CPI that has been used over the period is 1.75%.
The most significant valuation assumptions of the investment property are the assumption regarding the future EBITDA (including the estimations related to the future monthly lease) of each investment property as well as the estimated yields that are applied for the investment property's valuation. As a result, the table below presents two basic scenarios in relation to the impact on the valuations of the following investment properties of an increase or a decrease in the yields by 25 basis points (+ 0,25%) per Shopping Mall and office building.
| (all amounts in € millions) | Discount rate +0,25% |
Discount rate -0,25% |
|---|---|---|
| The Mall Athens | -6,2 | 6,3 |
| Med.Cosmos | -2,8 | 2,8 |
| Golden Hall | -3,4 | 3,5 |
| Malls | -12,3 | 12,5 |
| Cecil, Κεφαλάρι | -0,2 | 0,2 |
| Office buildings | -0,2 | 0,2 |
| Total | -12,5 | 12,7 |
The above mentioned valuations of the investment property as at 30 June 2018 have taken into account the uncertainty of the current economic conditions in Greece (as described in note 2.1). It has to be noted that this situation is unprecedented and therefore the consequences cannot be accurately assessed at this point. In this context, we note that despite the existence of an increased level of valuation uncertainty, the values reported provide the best estimate for the Group's investment property. Management will observe the trends that will be formed in the investment property market in the next few months since the complete impact of the consequences of the economic situation in Greece may affect the value of the Group's investment property in the future.
On the amount of €807.5m of the total investment property, there are real estate liens and pre-notices over these assets.
6. Property, plant and equipment
| all amounts in € thousands | Lease hold land and buildings |
Vehicles and machinery |
Furniture, fittings and equipment |
Software | Assets under construction |
Total |
|---|---|---|---|---|---|---|
| GROUP - Cost | ||||||
| 1 January 2017 | 705 | 5.287 | 4.449 | 2.780 | 1.557 | 14.778 |
| Additions | - | 6 | 116 8 |
9 | 140 | |
| Disposals / Write-offs | - | (4) | (12) | - | - | (17) |
| 30 June 2017 | 705 | 5.289 | 4.553 | 2.788 | 1.566 | 14.901 |
| 1 January 2018 | 798 | 6.196 | 7.887 | 2.931 | 1.575 | 19.387 |
| Additions | 38 | 50 | 277 21 |
925 | 1.311 | |
| Disposals / Write-offs | - | - | (1) - |
- | (1) | |
| Transfer to income statement | - | - | - - |
(344) | (344) | |
| 30 June 2018 | 836 | 6.246 | 8.163 | 2.952 | 2.156 | 20.354 |
| Accumulated depreciation | ||||||
| 1 January 2017 | (374) | (3.958) | (4.087) | (2.598) | - | (11.017) |
| Depreciation charge Disposals / Write-offs |
(20) - |
(161) 4 |
(180) | (22) 12 - |
- - |
(384) 17 |
| 30 June 2017 | (394) | (4.115) | (4.255) | (2.619) | - | (11.384) |
| 1 January 2018 | (454) | (5.051) | (6.690) | (2.717) | - | (14.912) |
| Depreciation charge Disposals / Write-offs |
(23) - |
(171) - |
(144) | (33) 1 - |
- - |
(371) 1 |
| 30 June 2018 | (478) | (5.222) | (6.833) | (2.750) | - | (15.282) |
| Closing net book amount at 30 June 2017 | 311 | 1.174 | 298 168 |
1.566 | 3.516 | |
| Closing net book amount at 30 June 2018 | 358 | 1.025 | 1.330 | 202 | 2.156 | 5.071 |
| all amounts in € thousands | Lease hold land and buildings |
Vehicles and machinery |
Furniture, fittings and equipment |
Software | Total | |
| COMPANY - Cost | ||||||
| 1 January 2017 | 367 | 93 | 1.181 | 2.675 | 4.316 | |
| Additions | - | 6 | 87 | 7 | 100 | |
| Disposals / Write-offs | - | (4) | (2) | - | (6) - |
|
| 30 June 2017 | 367 | 95 | 1.266 | 2.682 | 4.410 | |
| 1 January 2018 | 367 | 190 | 1.392 | 2.736 | 4.685 | |
| Additions | - | (0) | 61 | 21 | 81 | |
| Disposals / Write-offs | - | - | (1) | - | (1) | |
| 30 June 2018 | 367 | 190 | 1.452 | 2.757 | 4.765 | |
| Accumulated depreciation | ||||||
| 1 January 2017 | (240) | (75) | (1.080) | (2.550) | (3.945) | |
| Depreciation charge Disposals / Write-offs |
(6) - |
(4) 4 |
(35) 2 |
(17) - |
(61) 6 |
|
| 30 June 2017 | (246) | (75) | (1.112) | (2.567) | (4.000) | |
| 1 January 2018 | (252) | (82) | (1.117) | (2.586) | (4.038) | |
| Depreciation charge | (6) | (11) | (29) | (29) | (74) | |
| Disposals / Write-offs | - | - | 1 | - | 1 | |
| 30 June 2018 | (258) | (93) | (1.146) | (2.615) | (4.112) | |
| Closing net book amount at 30 June 2017 | 121 | 21 | 153 | 115 | 410 |
7. Investments in subsidiaries, joint ventures and associates
The Group's structure on June 30, 2018 is as follows:
| Country of Incorporation |
% interest held |
Country of Incorporation |
% interest held |
||||
|---|---|---|---|---|---|---|---|
| Company | Company | ||||||
| LAMDA Development SA - Parent | Greece | ||||||
| Subsidiaries | |||||||
| PYLAIA SA | Greece | Indirect | 68,3% | LAMDA Development Sofia EOOD | Bulgaria | 100,0% | |
| LAMDA Domi SA | Greece | Indirect | 68,3% | TIHI EOOD | Bulgaria | Indirect | 100,0% |
| LAMDA Malls SA | Greece | 68,3% | LOV Luxembourg SARL | Luxembourg | Indirect | 100,0% | |
| LAMDA Olympia Village SA | Greece | 100,0% | Hellinikon Global I SA | Luxembourg | 100,0% | ||
| LAMDA Estate Development SA | Greece | 100,0% | LAMDA Development (Netherlands) BV | Netherlands | 100,0% | ||
| LAMDA Prime Properties SA | Greece | 100,0% | Lamda Singidunum Netherlands BV | Netherlands | Indirect | 100,0% | |
| MALLS MANAGEMENT SERVICES SA | Greece | 100,0% | Robies Services Ltd | Cyprus | 90,0% | ||
| MC Property Management SA | Greece | 100,0% | Joint ventures | ||||
| KRONOS PARKING SA | Greece | Indirect | 100,0% | Lamda Dogus Marina Investments SA | Greece | 50,0% | |
| LAMDA Erga Anaptyxis SA | Greece | 100,0% | LAMDA Flisvos Marina SA | Greece | Indirect | 32,2% | |
| LAMDA Leisure SA | Greece | 100,0% | LAMDA Flisvos Holding SA | Greece | Indirect | 41,7% | |
| GEAKAT SA | Greece | 100,0% | LAMDA Akinhta SA | Greece | 50,0% | ||
| LD Trading SA | Greece | 100,0% | Singidunum-Buildings DOO | Serbia | Indirect | 69,2% | |
| Property Development DOO | Serbia | 100,0% | GLS OOD | Bulgaria | Indirect | 50,0% | |
| Property Investments DOO | Serbia | 100,0% | Associates | ||||
| LAMDA Development Montenegro DOO | Montenegro | 100,0% | ATHENS METROPOLITAN EXPO SA | Greece | 11,7% | ||
| LAMDA Development Romania SRL | Romania | 100,0% | METROPOLITAN EVENTS | Greece | Indirect | 11,7% | |
| Robies Proprietati Imobiliare SRL | Romania | Indirect | 90,0% | SC LAMDA MED SRL | Romania | Indirect | 40,0% |
Notes on the above mentioned participations:
- The country of the establishment is the same with the country of operating.
- The interest held corresponds to equal voting rights.
- The investments in joint ventures correspond to the Group's strategic investments mainly due to the exploitation of investment property inside Greece and abroad.
- The investments in associates do not have significant impact to the Group's operations and results however they are consolidated with the equity method since the Group has control over their operations.
- The Group has contingencies in respect of bank guarantees as well as pledged shares deriving from its borrowings.
(a) Investments of the Company in subsidiaries
The Company's investment in subsidiaries is as follows:
| all amounts in $\epsilon$ thousands | 30.06.2018 | 31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Impairment | Carrying amount |
Cost | Impairment | Carrying amount |
| LAMDA OLYMPIA VILLAGE SA | Greece | 100% | 131 839 | $\sim$ | 131839 | 131839 | $\sim$ | 131839 |
| LAMDA MALLS SA | Greece | 68.3% | 51.496 | 51.496 | 51.496 | ٠ | 51.496 | |
| LAMDA ESTATE DEVELOPMENT SA | Greece | 100% | 46.184 | 25.024 | 21.160 | 52.047 | 25.024 | 27.022 |
| LAMDA PRIME PROPERTIES SA | Greece | 100% | 9.272 | ٠ | 9.272 | 9.272 | ٠ | 9.272 |
| GEAKAT SA | Greece | 100% | 14.923 | 10.030 | 4.893 | 14.923 | 10.030 | 4.893 |
| LAMDA ERGA ANAPTYXIS SA | Greece | 100% | 9.070 | ٠ | 9 0 7 0 | 9.070 | ٠ | 9.070 |
| LD TRADING SA | Greece | 100% | 1.110 | 910 | 200 | 1.110 | 910 | 200 |
| LAMDA LEISURE SA | Greece | 100% | 1.050 | 1.050 | 1.050 | $\overline{a}$ | 1.050 | |
| MC PROPERTY MANAGEMENT SA | Greece | 100% | 745 | $\overline{a}$ | 745 | 745 | $\overline{a}$ | 745 |
| MALLS MANAGEMENT SERVICES SA | Greece | 100% | 1.224 | $\overline{a}$ | 1.224 | 1.224 | $\sim$ | 1.224 |
| LAMDA DEVELOPMENT SOFIA E.O.O.D. | Bulgaria | 100% | 363 | 363 | $\sim$ | 363 | 363 | $\sim$ |
| LAMDA DEVELOPMENT D.O.O. (BEOGRAD) | Serbia | 100% | ÷ | $\sim$ | 992 | 992 | ÷. | |
| PROPERTY DEVELOPMENT DOO | Serbia | 100% | 11.685 | 11.685 | ÷. | 11.685 | 11 685 | ÷. |
| PROPERTY INVESTMENTS LTD | Serbia | 100% | 1 | ٠ | $\mathbf{1}$ | $\mathbf{1}$ | 1. | |
| LAMDA DEVELOPMENT ROMANIA SRL | Romania | 100% | 741 | 741 | ÷ | 741 | 741 | ä, |
| ROBIES SERVICES LTD | Cyprus | 90% | 1.760 | 1.724 | 36 | 1.724 | 1.724 | $\sim$ |
| LAMDA DEVELOPMENT (NETHERLANDS) BV | Netherlands | 100% | 75.178 | 27.200 | 47.978 | 75 178 | 27,200 | 47.978 |
| LAMDA DEVELOPMENT MONTENEGRO D.O.O. | Montenegro | 100% | 800 | 800 | $\overline{\phantom{a}}$ | 800 | 800 | |
| LOV LUXEMBOURG SARL (indirect) | Luxembourg | 100% | 218 | ٠ | 218 | 193 | ٠ | 193 |
| HELLINIKON GLOBAL I SA | Luxembourg | 100% | 36 | ٠ | 36 | 36 | ٠ | 36 |
| Investment in subsidiaries | 357.693 | 78.476 | 279.217 | 364.487 | 79.468 | 285.018 |
The movement in investment in subsidiaries is as follows:
| 31.12.2017 |
|---|
| 190.500 |
| 300 |
| 400 |
| (8.300) |
| 131.839 |
| (29.914) |
| 193 |
| 285.018 |
Decrease/Increase in share capital
The subsidiary LAMDA Estate Development S.A. decreased its share capital by €5.9m whereas the Company increased the share capital in the companies LOV Luxembourg SARL and ROBIES SERVICES LTD by €25k and €36k respectively. In addition, the liquidation of the company LAMDA Development D.O.O. (Beograd), a fully impaired participation of the Company, was completed.
Non-controlling interests
The Group's non-controlling interests amount to €71.6m at 30.06.2018 (31.12.2017: €64.5m) out of which €71.8m comes from the subsidiary LAMDA MALLS SA which was incorporated in 2017. Noncontrolling interests represent 31,7% on the LAMDA MALLS SA Group's equity, which subsidiaries by 100% are LAMDA DOMI SA and PYLAIA SA.
The main financial statements of LAMDA MALLS SA's sub-Group are presented below:
| Statement of financial position | ||
|---|---|---|
| 30.06.2018 | 31.12.2017 | |
| all amounts in € thousands | ||
| Investment property | 376.850 | 339.750 |
| Other non-current assets | 3.801 | 3.048 |
| Receivables | 15.313 | 9.881 |
| Cash and cash equivalents | 30.127 | 25.753 |
| 426.090 | 378.433 | |
| Deferred income tax liabilities | 49.340 | 37.750 |
| Long-term borrowings | 41.631 | 56.943 |
| Other non-current liabilities | 128 | 358 |
| Short-term borrowings | 83.235 | 69.657 |
| Trade and other payables | 25.251 | 9.525 |
| 199.584 | 174.232 | |
| Income statement | 01.01.2018 to | 31.05.2017 to |
| all amounts in € thousands | 30.06.2018 | 30.06.2017 |
| Revenue | 21.594 | 3.526 |
| Net gains from fair value adjustment on investment property | 37.100 | 1.320 |
| Other operating income / (expenses) - net | (7.149) | (1.890) |
| Finance costs - net | (2.878) | (551) |
| Profit before income tax | 48.666 | 2.405 |
| Income tax expense | (14.604) | (689) |
| Profit for the period | 34.063 | 1.716 |
30 June 2018
| Comprehensive income statement | ||
|---|---|---|
| 01.01.2018 to | 31.05.2017 to | |
| all amounts in € thousands | 30.06.2018 | 30.06.2017 |
| Profit for the period | 34.063 | 1.716 |
| Currency translation differences | - | - |
| Other comprehensive income for the period | 34.063 | 1.716 |
| Total comprehensive income for the period | 34.063 | 1.716 |
| Cash flow statement all amounts in € thousands Cash flows from operating activities |
01.01.2018 to 30.06.2018 12.825 |
31.05.2017 to 30.06.2017 1.473 |
| Cash flows to investing activities | (1.065) | (2) |
| Cash flows to financing activities | (7.386) | (1.304) |
| Net increase in cash and cash equivalents | 4.374 | 167 |
(b) Investments of the Company and the Group in joint ventures
The Company's investment in joint ventures is as follows:
| COMPANY | 30.06.2018 | 31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Impairment | Carrying amount |
Cost | Impairment | Carrying amount |
| LAMDA AKINHTA SA | Greece | 50.00% | 4.454 | 1.773 | 2.681 | 4.454 | 1.773 | 2.681 |
| LAMDA DOGUS MARINA INVESTMENTS SA | Greece | 50.00% | 4.022 | ٠ | 4.022 | 4.022 | - | 4.022 |
| Investment in joint-ventures | 8.476 | 1.773 | 6.703 | 8.476 | 1.773 | 6.703 |
The Group's investment in joint ventures is as follows:
| GROUP | 30.06.2018 | 31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Impairment | Carrying amount |
Cost | Impairment | Carrying amount |
| LAMDA AKINHTASA | Greece | 50.00% | 4.454 | (1.833) | 2.621 | 4.454 | (1.787) | 2.668 |
| LAMDA DOGUS MARINA INVESTMENTS SA | Greece | 50,00% | 4.022 | (1.764) | 2.259 | 4.022 | (1.995) | 2.027 |
| SINGIDUNUM-BUILDINGS DOO | Serbia | 69.19% | 36.595 | (18.265) | 18.330 | 34.590 | (17.651) | 16.939 |
| GLS OOD TOTAL |
Bulgaria | 50.00% | 3.631 48.703 |
(2.638) (24.500) |
993 24.203 |
3.631 46.698 |
(2.638) (24.071) |
993 22.627 |
The movement of the Company and the Group in investment in joint ventures is as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in $\epsilon$ thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Balance at 1 January | 22.627 | 105.394 | 6.703 | 35.484 |
| Increase in share capital | 2.005 | 7.299 | ||
| Share in $profit/(loss)$ | (429) | 2.365 | - | |
| Provision for impairment | (100) | |||
| Acquisition / change in consolidation method | (92.432) | ٠ | (28.681) | |
| Balance at the end of the period | 24.203 | 22.627 | 6.703 | 6.703 |
Notes on the above mentioned joint ventures:
- The Company starting from 1/1/2014 applies IFRS 11 according to which the Group will account for joint ventures on an equity basis because it provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form
- The Group increased its participation in the joint-venture Singidunum Buildings DOO from 67.16% to 69.19%, however the control remains 50%-50% between the two shareholders according to the terms of the current shareholders agreement
The Group's most significant joint-venture is Singidunum Buildings DOO as follows:
| Statement of financial position | 69,19% | 67,16% |
|---|---|---|
| 30.06.2018 | 31.12.2017 | |
| all amounts in € thousands | ||
| Inventories - land | 73.267 | 73.267 |
| Receivables | 205 | 14 |
| Cash and cash equivalents | 581 | 113 |
| 74.053 | 73.395 | |
| Long-term borrowings | 42.520 | 42.520 |
| Short-term borrowings | 5.000 | 5.000 |
| Trade and other payables | 40 | 652 |
| 47.559 | 48.172 | |
| Total equity | 26.493 | 25.223 |
| (Group's interest) Total equity |
69,19% 18.331 |
67,16% 16.940 |
| Income statement | ||
| 01.01.2018 to | 01.01.2017 to | |
| all amounts in € thousands Net loss from fair value adjustment on investment property |
30.06.2018 - |
30.06.2017 (743) |
| Other operating income / (expenses) - net | (62) | (102) |
| Finance costs - net Loss before income tax |
(670) (732) |
(800) (1.645) |
| Income tax expense | ||
| Loss for the period | (732) | (1.645) |
| (Group's interest) | 69,19% | 57,63% |
| Loss for the period | (506) | (948) |
| Comprehensive income statement | ||
| 01.01.2018 έως | 01.01.2017 to | |
| all amounts in € thousands | 30.06.2018 | 30.06.2017 |
| Loss for the period | (506) | (948) |
| Currency translation differences | - | - |
| Other comprehensive income for the period | (506) | (948) |
| Total comprehensive income for the period | (506) | (948) |
| Cash flow statement | ||
| 01.01.2018 to | 01.01.2017 to | |
| all amounts in € thousands | 30.06.2018 | 30.06.2017 |
| Cash flows from operating activities | (932) | (651) |
| Cash flows to investing activities | - | - |
| Cash flows to financing activities | 1.400 | 360 |
| Net increase/(decrease) in cash and cash equivalents | 468 | (291) |
(c) Investments of the Group and the Company in associates
The Group participates in the following associates' equity:
| GROUP | 30.06.2018 | 31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Share in profit/(loss) |
Carrying amount |
Cost | Share in profit/(loss) |
Carrying am ount |
| ATHENS METROPOLITAN EXPO SA | Greece | 11.67% | 559ء | 1.559 | 1.559 | 1.559 | ||
| S.C. LAMDA MED SRL (Indirect) | Romania | 40.00% | 1.164 | 1.075 | 2.238 | 1.332 | 1.025 | 2.356 |
| TOTAL | 2.723 | 1.075 | 3.797 | 2.890 | 1.025 | 3.915 |
The movement of associates is as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in $\epsilon$ thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Balance at 1 January | 3.915 | 4.063 | 1.558 | 1.651 |
| Share in $profit/(loss)$ | 50 | 145 | ||
| Decrease in share capital | (168) | (200) | ||
| Change in interest held in participations | (93) | (93) | ||
| Balance at the end of the period | 3.797 | 3.915 | 1.558 | 1.558 |
Notes on the above mentioned associates:
- Although the associates do not have a significant impact in the Group's operations and results, they are consolidated with equity method because the Group exercises control over their operations.
- The decrease of €168k in share capital in the first semester of 2018 refers to the company SC LAMDA MED SRL.
- At Company level, the change in interest held in participations refers to LOV Luxembourg SARL which following the purchase of 25% is categorized as a subsidiary.
8. Financial instruments by category
| GROUP - 31.12.2017 Financial assets all amounts in € thousands |
Loans and receivables |
Financial instruments held at fair value through profit or loss |
GROUP - 31.12.2017 Financial liabilities all amounts in € thousands |
Derivatives used for hedging |
Liabilities at amortized cost |
|---|---|---|---|---|---|
| Trade and other receivables | 4.074 | - | Borrowings | - | 441.887 |
| Restricted cash | 10.538 | - | Derivative financial instruments | 225 | - |
Loans to related parties 657 - Trade and other payables - 6.696 Cash and cash equivalents 86.244 - Interest payable - 2.585
Derivative financial instruments - 45 Other financial receivables - 15.340 Other financial receivables 7.001 28.155 Total 225 466.509 Receivables from disposal of participation 2.956 - Total 111.469 28.200
Condensed interim financial statements 30 June 2018
| COMPANY - 31.12.2017 | COMPANY - 31.12.2017 | |||
|---|---|---|---|---|
| Financial assets | Loans and receivables |
Financial instruments held at fair value through profit or loss |
Financial liabilities | Liabilities at amortized cost |
| all amounts in € thousands | all amounts in € thousands | |||
| Trade and other receivables | 66 | - | Borrowings | 123.137 |
| Restricted cash | 10.538 | 0 | Trade and other payables | 349 |
| Loans to related parties | 28.926 | 0 | Loans from related parties | 40.808 |
| Other financial receivables | 1.059 | 27.557 | Interest payable | 701 |
| Receivables from disposal of participation | 2.956 | 0 | Other financial receivables | 9.110 |
| Total | 43.545 | 27.557 | Liabilities to related parties | 70 |
| Total | 174.175 |
9. Financial instruments held at fair value through profit or loss
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Bonds - Euro | 22.180 | 27.557 | 22.180 | 27.557 |
| Money market funds | 597 | 598 | - | - |
| 22.777 | 28.155 | 22.180 | 27.557 |
Above financial instruments relate to the placement of the Company's cash in various financial counterparties with high ratings and are measured at fair value through income statement. The Company during 2018 liquidated bonds an amount of €5m. The Company has recognized a loss from the above mentioned liquidation/valuation of €120k in the income statement.
The above mentioned financial instruments are categorized under hierarchy 1 as described in note 3.
10. Cash and cash equivalents
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Cash at bank | 62.322 | 85.220 | 12.427 | 29.835 |
| Cash in hand | 715 | 1.024 | 69 | 59 |
| Total | 63.037 | 86.244 | 12.496 | 29.894 |
No significant credit losses are anticipated in view of the credit status of the banks that the Group keeps current accounts. The above comprise the cash and cash equivalents used for the purposes of the cash flow statement.
11. Share capital
| all amounts in € thousands | Number of shares (thousands) |
Ordinary shares Share premium | Treasury shares |
Total | |
|---|---|---|---|---|---|
| 1 January 2017 | 77.356 | 23.917 | 360.110 | (9.163) | 374.863 |
| Sale of treasury shares | 500 | - | - | 1.937 | 1.937 |
| 31 December 2017 | 77.856 | 23.917 | 360.110 | (7.227) | 376.800 |
| 1 January 2018 | 77.856 | 23.917 | 360.110 | (7.227) | 376.800 |
| Movement of the period | - | - | - | - | - |
| 30 June 2018 | 77.856 | 23.917 | 360.110 | (7.227) | 376.800 |
The share capital of the Company amounts to €23,916,532.50 divided by 79,721,775 shares of nominal value €0.30 each. All the Company's shares are listed on the Athens Stock Exchange. At 30.06.2018 the Company's treasury shares amount to 1.866.007 shares and represents 2.34% of the Company's issued share capital with average price (after expenses and other commissions) €3.87 per share.
12. Borrowings
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Non-current | ||||
| Bond borrowings | 217.425 | 236.125 | - | - |
| Total non-current | 217.425 | 236.125 | - | - |
| Current | ||||
| Bond borrowings | 203.127 | 205.762 | 107.823 | 123.137 |
| Total current | 203.127 | 205.762 | 107.823 | 123.137 |
| Total borrowings | 420.552 | 441.887 | 107.823 | 123.137 |
The movements in borrowings are as follows:
| 12 months ended 31 December 2017 (amounts in € thousands) | GROUP | COMPANY |
|---|---|---|
| Balance at 1 January 2017 | 268.607 | 128.714 |
| Acquisition of additional interest in investments | 193.000 | - |
| Borrowings transaction costs - amortization | 2.254 | 1.204 |
| Borrowings transaction costs | (3.093) | (83) |
| Borrowings repayments | (18.882) | (6.698) |
| Balance at 31 December 2017 | 441.887 | 123.137 |
| 6 months ended 30 June 2018 (amounts in € thousands) | GROUP | COMPANY |
| Υπόλοιπο 1 Ιανουαρίου 2018 | 441.887 | 123.137 |
| Bond borrowings | 25.000 | 25.000 |
| Borrowings transaction costs - amortization | 1.165 | 384 |
| Borrowings transaction costs | (364) | - |
| Borrowings repayments | (47.136) | (40.698) |
| Balance at 30 June 2018 | 420.552 | 107.823 |
Borrowings are secured by mortgages on the Group's land and buildings (note 5), and in some cases by additional pledges of parent company's shares as well as and/or by assignment of subsidiaries' receivables (note 7) and insurance compensations. Regarding the Syndicated Bond Loan of the Company, pledges over certain assets and shares of Group companies incur. The Bond Loan Facility has a three-year tenor and is comprised of two Tranches. Tranche A of €133.95m, drawn-down on 30th November 2015 and Tranche B of €25m, drawn-down on 27th June 2018. From Tranche B an amount of €15m utilized for repayment of Tranche A while an amount of €5m has been credited at a pledged account for the purpose of serving the principal repayment schedule of the company's Singidunum Buildings DOO Bond Loan.
Amortization of borrowings transaction costs of €2.4m are included in the total borrowings as at June 30, 2018, out of which €1.5m is applied to current borrowings whereas the rest €0.9m is applied to noncurrent borrowings.
The maturity of non-current borrowings is as follows:
| COMPANY | |||
|---|---|---|---|
| 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| 48.390 | 22.070 | - | - |
| 169.035 | 214.055 | - | - |
| - | |||
| 217.425 | 236.125 | - | - |
| - | GROUP - |
- |
The carrying amount of the loans with floating rate approaches their fair value as it is presented in the statement of financial position.
The fair value estimation of the total borrowings is based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The effective weighted average interest rates at 30.06.2018 are as follows:
| GROUP | COMPANY | |
|---|---|---|
| Current bond borrowings | 5,38% | 6,00% |
| Non-current bond borrowings | 4,59% | - |
At 30.06.2018, the average base effective interest rate of the Group is 0.05% and the average bank spread is 5.02%. Therefore, the Group total effective borrowing rate stands at 4.97% at 30.06.2018.
Within current reporting period of 2018, regarding the subsidiaries, they proceeded to total payments of €47.1m as described in their bond loan contracts, out of which €15m were from the drawn-down of Tranche B of the Company's Syndicated Bond Loan.
The Company's bond loans have the following financial covenants: at Company level (Issuer) the total borrowings (current and non-current) to total equity should not exceed 1.2 and at Group level the total borrowings to total equity should not exceed 2.5 and the ratio of total net debt to investment portfolio must be ≤ 75%.
At Group level, the Company's subsidiary LAMDA DOMI SA's syndicated loan of current balance €60.3m, granted by the following banking institutions: Eurobank Ergasias, Alpha Bank, National Bank of Greece and HSBC has the following covenants: Loan to value <60% and Debt Service Ratio >120%. Also, the bond loan of the Company's subsidiary PYLAIA SA granted by Eurobank Ergasias, of current balance €64.8m has the following covenants: Loan to value <80% and Debt Service Ratio >120%. Moreover, LAMDA OLYMPIA VILLAGE SA's bond loan of current balance €184.3m, granted by HSBC and Eurobank Ergasias has the following covenants: Loan to value <65% and Debt Service Cover ratio >110%.At June 30, 2018, all above mentioned ratios are satisfied at Group and Company level.
At 30.06.2018 the short-term borrowings include the following liabilities that expire in 2018:
- The Company's bond loan, amount of approximately €108.2m, repayment date November 2018.
- The bond loan of the subsidiary LAMDA DOMI S.A, amount of approximately €60.3m, repayment date October 2018.
- The loan of the subsidiary LAMDA Prime Properties S.A., amount of approximately €5.3m, repayment date September 2018.
The Management is undergoing negotiations with the counterparties in relation to the refinancing of the above mentioned short-term loans, a procedure that has not been completed until the date of these financial statements' release.
More specific, the course of the refinancing procedures at the date of these financial statements' approval is the following:
- In relation to the syndicate bond loan the Company, is undergoing negotiations for the conclusion of the medium-term loan re-financing. The major part of the Programme amendment and the security documents has been agreed as well as the highly important security of the bondholders with the shares that the Company owns in the subsidiary LAMDA MALLS SA. The Management is expecting that the whole negotiations for the medium-term loan re-financing of the bond loan will be concluded within the third quarter of 2018.
- The discussions regarding the loan refinancing of LAMDA DOMI SA are at an advanced stage of finalization following binding offers that the company received from various financial institutions. The Management expects the process to be finalized by October 2018. A two-month maturity extension has been granted already via a waiver so that the loan documentation to be completed.
- The discussions regarding the loan of LAMDA Prime Properties S.A. (which owns the building Cecil at Kefalari) are at an early stage. However, the Management expects that the loan will be refinanced successfully before its expiration.
13. Derivative financial instruments
| GROUP | COMPANY | |||||||
|---|---|---|---|---|---|---|---|---|
| 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 | |||||
| all amounts in € thousands | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities |
| Derivatives held at fair value through profit or loss (Cap) |
155 | - | 45 | - | - | - | - | - |
| Interest rate swaps - cash flow hedges (IRS) |
- | - | - | 225 | - | - | - | - |
| Total | 155 | - | 45 | 225 | - | - | - | - |
| Non-current | 155 | - | 45 | 225 | - | - | - | - |
| Current | - | - | - | - | - | - | - | - |
| Total | 155 | - | 45 | 225 | - | - | - | - |
The above mentioned derivative financial instruments refer to interest rate swaps.
As at 30.06.2018 the Interest Rate Swaps of LAMDA DOMI S.A. have matured. With respect to derivatives at fair value those are Interest Rate Caps for the purpose of hedging the interest rate risk of the Bond Loan of the subsidiary Company Lamda Olympia Village S.A. at a nominal value of €160 m. The change in the fair value has been recognized in the income statement.
The total fair value of the derivative financial instrument, which is described under hierarchy 2 in note3, is presented in the statement of financial position as long-term liability since the remaining duration of the loan agreement which is hedged, exceeds 12 months.
The movement in fair value is related to the effective portion of the cash flow hedge and is recognised in special reserves in equity. The effectiveness test of the cash flow hedges is based on discounted cash flows according to the forward rates (3-month Euribor) and their volatility rating.
14. Cash generated from operations
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| all amounts in € thousands | Note | 01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
|
| Profit/(loss) for the period | 35.891 | (10.370) | (4.422) | 20.098 | ||
| Adjustments for: | - | - | - | - | ||
| Tax | 21.060 | 7.920 | (1.110) | 4.067 | ||
| Depreciation of property, plant and equipment | 6 | 371 | 384 | 74 | 61 | |
| Share of profit from associates | 7 | 379 | (3.517) | - | - | |
| Dividends income | - | - | (3.262) | (420) | ||
| Provision for impairment of receivables from subsidiaries | 17 | - | - | 53 | - | |
| Profit from sale of interest held in investments | - | - | - | (33.831) | ||
| Loss from sale/valuation of financial instruments/derivatives | 11 | 171 | 120 | 171 | ||
| Interest income | (99) | (45) | (81) | (594) | ||
| Interest expense | 13.273 | 8.228 | 5.651 | 5.406 | ||
| Provision for inventory impairment | 170 | 7.338 | - | - | ||
| Net gains/(losses) from fair value adjustment on investment property |
5 | (45.585) | (135) | - | - | |
| Other non cash income / (expense) | 344 | - | - | (58) | ||
| 25.815 | 9.974 | (2.976) | (5.100) | |||
| Changes in working capital: | ||||||
| Increase in inventories | - | (13) | - | - | ||
| (Increase)/decrease in receivables | (15.558) | (101) | (4.264) | 84 | ||
| Decrease in payables | (2.108) | (4.691) | (976) | (2.771) | ||
| (17.666) | (4.805) | (5.240) | (2.686) | |||
| Cash flows from operating activities | 8.149 | 5.169 | (8.216) | (7.786) |
15. Commitments
Capital commitments
There is no capital expenditure that has been contracted for but not yet incurred at the balance sheet date.
Operating lease commitments
The Group leases tangible assets mainly land, buildings, vehicles and mechanical equipment under operating leases. Total future lease payments under operating leases are as follows:
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| all amounts in € thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 | |
| No later than 1 year | 3.690 | 3.395 | 942 | 944 | |
| Later than 1 year and not later than 5 years | 15.119 | 13.889 | 1.443 | 1.919 | |
| Later than 5 years | 274.441 | 53.408 | - | - | |
| Total | 293.250 | 70.692 | 2.385 | 2.863 |
The significant change at the total operating lease commitments is the prolongation of the agreement with the Ecumenical Patriarchate, owner of the land plot on which the Company developed and operates the Mediterranean Cosmos Shopping Centre, for the extension of the long-term lease of the said land plot area for 30 additional years, until 2065.
The Group has no contractual liability for investment property repair and maintenance services.
16. Contingent liabilities
The Group and the Company have contingencies in respect of bank guarantees, other guarantees and other matters arising in the ordinary course of business, for which no significant additional liabilities are expected to arise as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| Liabilities (all amounts in € thousands) | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Letters of guarantee relating to obligations | 36.255 | 36.258 | 30.004 | 30.004 |
| Total | 36.255 | 36.258 | 30.004 | 30.004 |
| Letters of guarantee relating to receivables from tenants | 40.238 | 39.929 | - | - |
| Total | 40.238 | 39.929 | - | - |
In addition to the issues mentioned above there are also the following particular issues:
- The Group provides, when considered appropriate, and on a company by company basis for possible additional taxes that may be imposed by the tax authorities. As a result, the Group's tax obligations have not been defined permanently (note 19).
- A property transfer tax of €10,1m approximately has been imposed on the societe anonyme LAMDA Olympia Village (former DIMEPA, hereinafter referred to as LOV); Out of the forty (40) recourses which have been filed respectively, thirty one (31), amounting to €9.6m, have been irrevocably accepted either by the Council of State (six of them) or by the Administrative Court of Appeals, as either the corresponding to them appeals on points of law of the Hellenic Republic have been rejected (for eight of them) or the Hellenic Republic did not even file an appeal on points of law (for the remaining seventeen); the remaining nine (9) recourses have been irrevocably rejected in favor of the Hellenic Republic, since due to the amount of the litigation either an appeal (one case) or an appeal on points of law (six cases) could not be filed or because the filed appeal on points of law was rejected (two cases).
During the whole term of this litigation, LOV has been obliged to pay to the Hellenic Republic the amount of approximately €836k during 2005, €146k during 2006, €27k during 2007, €2.9m in 2012, €2.2m in 2013, €983k in 2014 and €235k in 2015 (which remained as a claim against the Hellenic Republic). Until 30.06.2018 the total amount of €4.8m has been returned to the Company on the
Condensed interim financial statements
30 June 2018
basis of the appeals which have been irrevocably accepted. If the outcome of the case is negative, according to the share sale agreement between the Municipality of Amaroussion and the Company, the total obligation will be on the Municipality, as it relates to transfers of properties before the acquisition of LOV's shares
Additionally, LOV had to pay for the transfer of specific real property in the past (on 2006), property transfer tax of approximately €13,7m, reserving its rights with regard to this tax and finally taking recourse to the administrative courts against the silent rejection of its reservations by the competent Tax Authority. In 2013 the said recourse was accepted in part and the re-calculation of the owed property tax was ordered, which led to the returning to LOV of an amount of approximately €9,5m. Further to appeals on points of law filed by both parties, the Council of State rejected LOV's appeal and accepted the Hellenic Republic's appeal; consequently the case was referred back to the Administrative Court of Appeals, which initially postponed the issue of a final decision and obliged the parties to adduce evidence for the determination of the market value of the property; after resuming hearing of the case, the Administrative Court of Appeals finally rejected the recourse, determined the taxable value of the property and obliged the competent Tax Authority to re-calculate the transfer tax due upon the new taxable value. Following this decision, LOV had to pay transfer tax of approximately €16,3m. An appeal on points of law has been filed and is estimated by the legal counsels of the Company to have high chances of success. In specific, grounds of appeal challenging re-calculation of transfer tax upon the market value of the property, to the extent it exceeds the objective value, are expected to succeed with very high probability.
- Five (5) petitions for annulment have been filed and were pending before the Council of State related to LOV, regarding the plot of land where the Maroussi Media Village (or "Olympiako Chorio Typou") and the Commercial and Leisure Centre "The Mall Athens" were built. More specifically: the first of these petitions was heard on 3.5.2006 and the decision no 391/2008 of the Fifth Chamber of the Council of State was issued committing for the Plenary Session of the Council of State. Further to successive postponements the case was heard on 05.04.2013. By virtue of its decision No 376/2014, the Plenary Session accepted the said petition and the Court annulled the silent confirmation by the competent planning authority of the Ministry of Environment, Planning & Public Works (namely, DOKK) that the studies of the project submitted to such authority were compliant with article 6 paragraphs 1 and 2 of Law 3207/2003. The Council of State annulled the aforementioned act, because it identified irregularities of a procedural nature in the issuance of the licenses required for the project. In light of such nature of the identified irregularities, it is estimated that they may be rectified, and LOV has already initiated the procedure required further to the issuance of the said decision. The completion of the above mentioned procedure, which of course requires the effective contribution of the involved competent public services, will safeguard the full and unhindered operation of the Shopping Center.
- The second petition was heard on 02.04.2014, further to successive postponements, and the Fifth Section issued its Decision No. 4932/2014, whereby the Court cancelled the proceedings. The hearing for the third and fourth petitions took place on 24.04.2018 (again, further to successive postponements). The third and fourth petitions for annulment seek the annulment of a series of preapprovals and operating licenses respectively, issued by the Municipality of Maroussi to a number of stores operating in the aforementioned Shopping Center, on the basis that the law on which said pre-approvals and licenses were issued is not compatible with the provisions of the Constitution. In light of the aforementioned decision of the Court's Plenary Session, the Company's legal advisors believe that the third and fourth petitions for annulment will be accepted. The fifth petition for annulment, which was heard on 21.03.2017, will probably be rejected on the grounds that the matter falls outside of the Court's jurisdiction (since the decision under annulment is the decision of the Board of Directors of OEK (Worker's Housing Organization or "Organismos Ergatikis Katoikias") which is not an enforceable administrative act).
- In addition to the above, LOVsold the office building "ILIDA BUSINESS CENTRE" to the company"EUROBANK Leasing S.A." on 26.06.2007. "EUROBANK Leasing S.A." entered into a financial lease agreement with "Blue Land S.A." regarding the said office building. The respective deed of transfer includes a provision specifying that, if either of the first two petitions is irrevocably accepted on the grounds that Law 3207/2003 is not compatible with the provisions of the Constitution, then the transaction shall be reversed by reinstatement of the property to its original status, in which case the buyer "EUROBANK Leasing" shall be entitled to the full buying price and
Condensed interim financial statements
30 June 2018
the ownership of the office building shall return to LOV. Two opposing lawsuits have been filed; the first one was filed by the Company and LOV and is seeking to have identified that the conditions for the said provision have not been fulfilled and the second one was filed by "EUROBANK Leasing S.A." (and "BLUE LAND S.A." intervened as a third party in the proceedings to support the validity of EUROBANK's claims) and is seeking to have identified that the conditions have been met and that the purchase price be returned to "EUROBANK Leasing S.A.". The case was heard (further to postponement) on 11.10.2016. The Multimember First Instance Court issued decision No, 1522/2017, whereby the Company's and the LOV's lawsuit was rejected and the opposing lawsuit filed by Eurobank Leasing was partially accepted.
The Company and LOV filed appeal Νo. 572531/504467/2017, the hearing of which had originally been set for 19.04.2018, but was postponed for a joint hearing together with the appeal filed by "EUROBANK Leasing S.A." (Νo. 573006/50450/2017), as well as with the intervention of "BLUE LAND S.A." in favour of Eurobank Leasing on 03.05.2018, and, following further postponement, the hearing of all the above has been set for 11.10.2018 . Currently, the parties are negotiating an outof court settlement.
Further, pursuant to the aforementioned deed of transfer, in the event of any other ruling of the Council of State regarding the said Law's non-compatibility to the Constitution, including the acceptance of the third, fourth or fifth petition, then the purchaser will be entitled to repudiate the contract and demand restoration of the aforementioned actual damages, following the lapse of a period of two years from the date of issuance of the decision on the annulment petitions, on condition that any defects or deficiencies resulting from said decision have not been remedied in the meantime.
- Contractor "MICHANIKI SA" undertook a significant part of the construction works for the "Mediterranean Cosmos" shopping centre in Pylaia, Thessaloniki. Both "PYLAIA SA", a subsidiary of the Company, and "MICHANIKI SA" have filed actions and counter-actions against each other, which were jointly heard on 1.4.2009. The Athens Multimember Court of 1st Instance issued decision 8172/2009 according to which the actions of "PYLAIA SA" were rejected whereas an expert was appointed in relation to the actions of "MICHANIKI SA". "PYLAIA SA" appealed against that decision and the hearing of the appeal took place, following postponements, on 28.02.2013 before the Athens Court of Appeal. The Athens Court of Appeal issued decision No. 3977/2013 which rejected the appeal of "PYLAIA S.A.". The Company submitted an appeal on points of law before the Supreme Court, which was heard on 11.05.2015. The Court accepted the appeal of "PYLAIA S.A." by means of its Decision No 208/2016, despite the negative opinion issued by the Judge Rapporteur, and sent the case back to the Court of Appeals for a new hearing. That hearing in the Court of Appeals has been set for 26.10.2017, when it was postponed for 07.02.2019. Moreover, on 28.12.2010 the "PYLEA SA" filed lawsuits No 13132, 13134 and 13129/2010 before the Athens Multi-Member 1st Instance Court against "MICHANIKI SA", the hearing of which took place on 13.02.2013, following a postponement on 14.11.2012. Such lawsuits are identical to the previously presented lawsuits, save that they have been filed jointly with the company "EUROHYPO S.A." to address the event where the Court rules that "PYLAIA SA" is not entitled to file these lawsuits in its name. For this reason, the hearing of such lawsuits was cancelled on 13.02.2013 and had been reenacted so that those lawsuits were scheduled to be heard on 18.03.2015, when hearing was postponed for 25.01.2017 and then again cancelled. A new hearing for these lawsuits was set for 21.02.2018 and then again cancelled.
Additionally, further to the submission before the Court of the expert's report, which is favorable to "PYLAIA SA", the hearing of the actions of "MICHANIKI SA" had been set for 27.05.2015 (after postponement of 13.03.2013), but it was cancelled. Anewhearinghasbeensetfor10.10.2018.Moreover, "PYLAIA SA" filed an action against "MICHANIKI SA" on 24.12.2010 for additional compensation from the above causes, the hearing of which had been set, following postponements, on 25.02.2015, but it was cancelled. Given the outcome of the hearing before the Supreme Court, it is likely that a new hearing will be set for said action as well. Finally, "MICHANIKI S.A." filed a new lawsuit seeking compensation for amounts that "PYLAIA S.A." had collected from Alpha Bank by forfeiture of "MICHANIKI S.A." bank bonds. The lawsuit was set to be heard on 28.05.2015, but was postponed for 12.10.2017, when it was cancelled. The amount of total claims of "PYLAIA SA" against "MICHANIKI SA" is €20m (which includes the amount of €2,5m for moral damages), while "MICHANIKI SA" with said actions claims the amount of €37m (including the amount of €10.5m in compensation for moral damages). In any case, the Company's legal advisors believe that the legitimate claims of "PYLAIA SA" against "MICHANIKI SA" significantly exceed the legitimate claims of the latter against "PYLAIA SA".
In relation to the above mentioned cases the Management estimates that apart from the case of "Ilida Business Center", there is no need for further provision for future cash outflow. In relation to the "Ilida Business Center", a provision of €12.977 thousand has been formed in 2017, corresponding to the return of the ownership of an office building owned by the subsidiary Lamda Olympia Village SA as an estimation by the Management, taking into consideration the today's valuation of this certain property as well as the potential benefits from the favorable conditions of the transaction's financing. The transaction is anticipated to be completed during the third quarter of 2018.
Additionally, there are various legal cases of the Group's companies, which are not expected to create material additional liabilities.
17. Related party transactions
The following transactions were carried out with related parties:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
| i) Sales of goods and services | ||||
| - subsidiaries | - | - | 1.575 | 653 |
| - joint ventures | 63 | 1.305 | 29 | 109 |
| - associates | - | - | 34 | 34 |
| 63 | 1.305 | 1.638 | 797 | |
| iii) Dividend income | ||||
| - subsidiaries | - | - | 3.262 | 420 |
| - | - | 3.262 | 420 | |
| v) Income from interest | ||||
| - subsidiaries | 2 | 18 | 553 | 553 |
| 2 | 18 | 553 | 553 | |
| vi) Cost of interest | ||||
| - subsidiaries | - | 355 | 1.025 | 734 |
| - | 355 | 1.025 | 734 | |
| vii) Period-end balances from sales-purchases of goods/servises | ||||
| GROUP | COMPANY | |||
| all amounts in € thousands | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 |
| Receivables from related parties: | ||||
| - subsidiaries | - | - | 949 | - |
| - joint ventures | 39 | - | 18 | - |
| - associates | - | - | 21 | - |
| 39 | - | 988 | - | |
| Dividends receivables from related parties: | ||||
| - subsidiaries | - | - | 180 | - |
| - | - | 180 | - | |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 | |
| viii) Loans to associates: | ||||
| Balance at the beginning of the period (released) | 657 | 1.111 | 28.926 | 86.414 |
| Adjustment IFRS 9 | - | - | (20.585) | - |
| Balance at the beginning of the period (adjusted) (1) | 657 | 1.111 | 8.342 | 86.414 |
| Loans granted during the period | - | 360 | 618 | - |
| Loan repayments/Transfer to share capital | (588) | (825) | - | - |
| Interest repayments/Transfer to share capital | (72) | (17) | - | - |
| Loan repayments | - | - | (168) | (24.300) |
| Loan and interest impairment | - | - | (656) | (34.318) |
| Interest charged | 2 | 28 | 553 | 1.130 |
| Balance at the end of the period | - | 657 | 8.689 | 28.926 |
(1) At company level "Loans to associates"of 31.12.2017 has been adjusted according to the amendments of IFRS 9, as mentioned in note 2.2 of the condensed interim financial statements for the period that ended 30.06.2018.
At Company level, the loans to associates refer to loans of initial capital €57.4m, less impairment €49.3m, that the parent company has granted to its subsidiaries LAMDA Development Romania SRL, LAMDA Development Sofia EOOD, Robies Services Ltd, LAMDA Development Montenegro DOO and Property Development DOO.
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| ix) Loans from associates: | 30.06.2018 | 31.12.2017 | 30.06.2018 | 31.12.2017 | |
| Balance at the beginning of the period | - | 17.947 | 40.808 | 21.974 | |
| Loans received during the year | - | - | - | 18.243 | |
| Loan repayments | - | - | (700) | (700) | |
| Acquisition of participations | - | (18.302) | - | - | |
| Borrowings transaction costs - amortization | - | - | 5 | 18 | |
| Interest paid | - | - | (68) | (141) | |
| Interest charged | - | 355 | 1.025 | 1.414 | |
| Balance at the end of the period | - | - | 41.070 | 40.808 |
At Company level, the loans from associates refer to loans of initial capital €36m that the parent company has granted to its subsidiary LAMDA Prime Properties SA and the joint venture LOV Luxembourg SARL. In 2018, the Company repaid the amount of €700k to its subsidiary LAMDA Prime Properties SA. At Group level, following the acquisition of 25% of LOV Luxembourg SARL and 50% of LAMDA OLYMPIA VILLAGE SA, there are no more loans from associates.
Services from and to related parties, as well as sales and purchases of goods, take place based on the price lists in force with non-related parties.
18. Earnings per share
Basic
Basic earnings per share are calculated by dividing profit attributable to ordinary equity holders of the parent entity, by the weighted average number of ordinary shares outstanding during the period
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in $\epsilon$ thousands | 01.01.2018 to 30.06.2018 |
$01.01.2017$ to 30.06.2017 |
01.01.2018 to 30.06.2018 |
$01.01.2017$ to 30.06.2017 |
| Loss attributable to equity holders of the Company | 25.099 | (10.906) | (4.422) | 20.098 |
| Weighted average number of ordinary shares in issue | 77.856 | 77.356 | 77.856 | 77.356 |
| Basic earnings/(losses) per share (in \epsilon per share) | 0.32 | (0,14) | (0.06) | 0,26 |
Condensed interim financial statements
30 June 2018
We note that the increase of share capital that emanates from the employee share option scheme takes place on 31 December of each year and consequently does not influence the weighted average number of shares.
Diluted
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
01.01.2018 to 30.06.2018 |
01.01.2017 to 30.06.2017 |
| Profit/(loss) used to determine dilluted earnings/(losses) per share | 25.099 | (10.906) | (4.422) | 20.098 |
| Weighted average number of ordinary shares in issue | 77.856 | 77.356 | 77.856 | 77.356 |
| Adjustment for share options: | ||||
| Employees share option scheme | - | - | - | - |
| Weighted average number of ordinary shares for dilluted earnings | ||||
| per share | 77.856 | 77.356 | 77.856 | 77.356 |
| Diluted earnings/(losses) per share (in € per share) | 0,32 | (0,14) | (0,06) | 0,26 |
Diluted earnings / (losses) per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares i.e. share options. For these share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. The difference that arises is added to the denominator as issuance of common shares with no exchange value. Finally, no adjustment is made in the earnings (nominator).
19. Income tax expense
According to tax law, the corporate income tax rate of legal entities in Greece is set at 29% and intragroup dividends are exempt from both income tax, as well as withholding tax provided that the parent entity holds a minimum participation of 10% for two consecutive years.
In addition, the tax rate for the subsidiaries registered in foreign countries differs from country to country as follows: Greece 29%, Romania 16%, Serbia 15%, Bulgaria 10%, Montenegro 9% and Netherlands 25.5%.
Under Greek tax regulations, an income tax advance calculation on each year's current income tax liability is paid to the tax authorities. Net operating losses which are tax deductible, can be carried forward against taxable profits for a period of five years from the year they are generated.
Tax certificate and unaudited tax years
The unaudited tax years for the Company and the Group's companies are as follows:
| Fiscal years unaudited by the tax |
Fiscal years unaudited by the tax |
||
|---|---|---|---|
| authorities | authorities | ||
| Company | Company | ||
| LAMDA Development SA | 2012-2017 | ||
| LAMDA Olympia Village SA | 2012-2017 | ATHENS METROPOLITAN EXPO SA | 2012-2017 |
| PYLAIA SA | 2012-2017 | METROPOLITAN EVENTS | 2012-2017 |
| LAMDA Domi SA | 2012-2017 | Property Development DOO | 2010-2017 |
| LAMDA Flisvos Marina SA | 2012-2017 | Property Investments DOO | 2008-2017 |
| LAMDA Prime Properties SA | 2012-2017 | LAMDA Development Romania SRL | 2010-2017 |
| LAMDA Estate Development SA | 2012-2017 | LAMDA Development Sofia EOOD | 2006-2017 |
| LD Trading SA | 2012-2017 | SC LAMDA MED SRL | 2005-2017 |
| KRONOS PARKING SA | 2012-2017 | LAMDA Development Montenegro DOO | 2007-2017 |
| LAMDA Erga Anaptyxis SA | 2012-2017 | LAMDA Development (Netherlands) BV | 2008-2017 |
| LAMDA Flisvos Holding SA | 2012-2017 | Robies Services Ltd | 2007-2017 |
| LAMDA Leisure SA | 2012-2017 | Robies Proprietati Imobiliare SRL | 2007-2017 |
| GEAKAT SA | 2012-2017 | Singidunum-Buildings DOO | 2007-2017 |
| MALLS MANAGEMENT SERVICES SA | 2012-2017 | GLS OOD | 2006-2017 |
| MC Property Management SA | 2012-2017 | LOV Luxembourg SARL | 2013-2017 |
| LAMDA Akinhta SA | 2012-2017 | TIHI EOOD | 2008-2017 |
| LAMDA Dogus Marina Investments SA | 2012-2017 |
30 June 2018
For the year ended 31 December 2011 and onwards as the Law 4174/2013 (article 65A) currently stands (and as Law 2238/1994 previously provided in article 82), up to and including fiscal years starting before 1 January 2016, the Greek societes anonymes and limited liability companies whose annual financial statements are audited compulsorily, were required to obtain an 'Annual Tax Certificate', which is issued after a tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. For fiscal years starting from 1 January 2016 and onwards, the 'Annual Tax Certificate' is optional, however the Group will obtain such certificate. In accordance with the Greek tax legislation and the respective Ministerial Decisions issued, additional taxes and penalties may be imposed by the Greek tax authorities following a tax audit within the applicable statute of limitations (i.e. in principle five years as from the end of the fiscal year within which the relevant tax return should have been submitted), irrespective of whether an unqualified tax certificate has been obtained from the tax paying company.
For the fiscal year 2017 tax audit is currently carried out by PriceWaterhouseCoopers SA, and the relevant tax certificate is expected to be issued after the publication of the semi-annual financial statements for 2018.
Up to 31.12.2016 the Company and PYLEA SA have been officially served with audit mandate by the competent Greek tax authorities for the year 2010. Consequently, the State is not anymore entitled, due to the lapse of the statute of limitation, to issue assessment sheets and assessment acts for taxes, duties, contributions and surcharges for the years up to 2010, pursuant to the following provisions: (a) para. 1 art. 84 of Law 2238/1994 (unaudited cases of Income taxation), (b) para. 1 art. 57 of Law 2859/2000 (unaudited cases of Value Added Tax), and, (c) para. 5 art. 9 of Law 2523/1997 (imposition of penalties for income tax cases).
The Group provides, when considered appropriate, and on a company by company basis for possible additional taxes that may be imposed by the tax authorities. As a result, the Group's tax obligations have not been defined permanently. The total amount of the cumulative provision made for the Group's and Company's unaudited, by the tax authorities, years amount to €0.2m and €0m respectively.
20. Number of employees
Number of employees at the end of the period: Group 231, Company 79 (sixmonth period ended 30 June 2017: Group 224, Company 74) from which there are no seasonal (three month period ended 30 June 2017: Group 0, Company 0).
21. Events after the financial position date
At 03.08.2018 the subsidiary company Pylaia S.A. signed an agreement with the Ecumenical Patriarchate, owner of the land plot on which the Company developed and operate the Mediterranean Cosmos Shopping Centre (the Centre), to the extension of the long-term lease of the said land plot area for 30 additional years, until 2065. The terms of the prolongation had been agreed since March 2018. The positive effect of the agreement on the value of the Centre has been quantified by independent valuer and will be included in the results of the first semester 2018.
There are no other events after the balance sheet date considered to be material to the financial position of the Company.
Report on Review of six-month financial report
Translation from the original text in Greek
Report on Review of six-month financial report
To the Board of Directors of "LAMDA Development S.A."
Introduction
We have reviewed the accompanying condensed company and consolidated statement of financial position of "LAMDA Development S.A." (the "Company"), as of 30 June 2018 and the related condensed company and consolidated statements of profit or loss, comprehensive income, changes in equity and cash flow statements for the six-month period then ended, with the selected explanatory notes that comprise the interim condensed financial information and the other data of the six-month financial report. Management is responsible for the preparation and presentation of this [condensed] interim financial information in accordance with International Financial Reporting Standards as they have been adopted by the European Union and applied to interim financial reporting (International Accounting Standard "IAS 34") and of the other data of the six-month financial report. Our responsibility is to express a conclusion on this six-month financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, as they have been transposed into Greek Law and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with IAS 34, and the other data of the six-month financial report in accordance with article 5 of Law 3556/2007.
30 June 2018
USE OF PROCEEDS
| LAMDA DEVELOPMENT S.A. HOLDING AND REAL ESTATE DEVELOPMENT COMPANY S.A. General Electronic Commercial Registry Number: 3379701000 Registered office: 37A Kifissias Ave., Maroussi, 151 23 |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Pursuant to the provisions of paragraph 4.1.2. (2), 4.1.4.1.2., 4.2. and 4.3. of the Athens Stock Exchange Regulation, the part A' of the decision No25/17.07.2008 of the Athens Stock Exchange BoD and the decision No8/754/14.04.2016 of the Capital Market Commission BoD, it is disclosed that from the share capital increase of the Company by payment in cash and with preemptive rights to the existing shareholders of the Company, acquiring new shares at a ratio of 0,794691552779231 new shares for every one (1) existing share, based on the decision of the Extraordinary General Meeting of shareholders of the Company that took place at 29.04.2014, fund up to €146.1m were raised (total amount of €150m minus the issuance expenses of €3.9m (initial estimation of expenses €3,5m)). From the share capital increase, 35.294.117 new common registered shares of subscription price €4,25 each and nominal value €0,30 each, which were listed for trading on the Main Market of the Athens Stock Exchange on 22.07.2014. The Board of Directors held a meeting on 17.07.2014 and certified the payment of the total amount of the share capital increase. Until 30.06.2018 the raised capital, was allocated according to the use as described in the Prospectus, as was ammended with the Company's BoD Resolutions dated 22.05.2015, 24.05.2016 and 23.05.2018 in conjunction with the respective decisions of the Ordinary General Meeting of the shareholders of the Company dated 16.06.2015, 15.06.2016 and 14.06.2018, as following: |
||||||||||||
| TIME SCHEDULE FOR THE USE OF PROCEEDS FROM THE SHARE CAPITAL INCREASE | ||||||||||||
| ALLOCATION OF RAISED CAPITAL AS PROVIDED FOR IN THE INFORMATIVE BULLETIN (timeschedule of allocation of raised capital within 36 months from the certification of the payment) |
ALLOCATION OF RAISED CAPITAL AS PROVIDED FOR IN THE INFORMATIVE BULLETIN AFTER ITS AMENDMENT IN ACCORDANCE TO THE BOARD OF DIRECTORS DECISION DATED 22.05.2015 (notification of the decision 22.05.2015) IN COMBINATION WITH DECISION OF ORDINARY GENERAL ASSEMBLY DATED 16.06.15 (notification of the decision 16.06.2015) (1) |
ALLOCATION OF RAISED CAPITAL AS PROVIDED FOR IN THE INFORMATIVE BULLETIN AFTER ITS AMENDMENT IN ACCORDANCE TO THE BOARD OF DIRECTORS DECISION DATED 24.05.2016 (notification of the decision 24.05.2016) IN COMBINATION WITH DECISION OF ORDINARY GENERAL ASSEMBLY DATED 15.06.16 (notification of the decision 15.06.2016) (2) |
ALLOCATION OF RAISED CAPITAL AS PROVIDED FOR IN THE INFORMATIVE BULLETIN AFTER ITS AMENDMENT IN ACCORDANCE TO THE BOARD OF DIRECTORS DECISION DATED 23.05.2018 (notification of the decision 23.05.2018) IN COMBINATION WITH DECISION OF ORDINARY GENERAL ASSEMBLY DATED 14.06.18 (notification of the decision 14.06.2018) (3) |
ALLOCATED CAPITAL | ||||||||
| (Amounts in € thousands) | TOTAL | TOTAL | TOTAL | TOTAL | USE UNTIL 31.12.2014 |
USE UNTIL 31.12.2015 |
USE UNTIL 31.12.2016 |
USE UNTIL 31.12.2017 |
PERIOD FROM 01.01.2018 TO 30.06.2018 |
UNALLOCATED CAPITAL BASED ON THE BoD DECISION 23.05.2018 |
||
| Α. Development of the western part of IBC building | 25.000 | 25.000 | 25.000 | 3.875 | 3.875(4) | 0 | ||||||
| Β. Payment of operating expenses, interest expense, loan repayments and subsidiaries overheads through share capital increase |
25.000 | 25.000 | 25.000 | 25.000 | 6.700 17.150 1.150 | 0 | ||||||
| C. Investment property | ||||||||||||
| Investments in real estate and in the assets and liabilities of real estate exploitation LAMDA Development SA's Group companies and Investments in credit claims offered on the secondary market against LAMDA Development SA's Group companies |
96.083 | 96.083 | 89.083 | 89.083 | 1.000(5) 2.000(5) 2.500(5) 83.583(6) | 0 | ||||||
| D. Acquisition of own shares | 7.000 | 2.426 | 2.426(7) | 0 | ||||||||
| Ε. Repayment of bond loans Total |
146.083 | 146.083 | 146.083 | 25.699 146.083 |
7.700 23.025 6.076 83.583 | 15.000(8) 15.000 |
10.699 10.699 |
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| Σημειώσεις: 1. According to the Company's BoD resolution dated 22.05.2015, partial change to the use of the funds raised from the share capital increase was decided. More specifically, the Board of Directors decided the widening of the third (c) category of intended uses of the raised funds in the provisions of section 4.2 (Use of Raised Funds) of the Prospectus, as approved by the Hellenic Capital Market Commission, and the renaming of said category from "investments in real estate" to "investments in real estate and in the assets and liabilities of real estate exploitation Group companies" and "Investment in credit claims offered on the secondary market against Group companies". 2. According to the Company's BoD resolution dated 24.05.2016, partial change to the use of the funds raised from the share capital increase was decided. With a view to continuing the implementation of the Shareholders' General Meeting resolution dated 16.06.2015 of the purchase of own shares until 16.06.2017 and up to one-tenth (1/10) of the each time total paid-up share capital, for a minimum purchase price equal to the par value of the share, to wit, €0,30, and a maximum purchase price equal to €10,00 per share, the Board of Directors decided at the meeting of 24.05.2016: to include a new forth (d) category of intended uses of raised funds, entitled "Acquisition of Own Shares", in the provisions of section 4.2 (Use of Raised Funds) of the Prospectus, as approved by the Hellenic Capital Market Commission, with an aggregate expense amount of up to €7.000k and with an equal reduction of the third (c) category of raised funds intended issues. 3. The Board of Directors, aiming to the reduction of corporate debt, with the scope to facilitate the corporate interests of the Company, decided on the 23.5.2018 to add a new fifth (e) category of intended uses of raised funds, entitled "Repayment of Bond Loans", in the provisions of section 4.2 (Use of Raised Funds) of the Prospectus, as approved by the Hellenic Capital Market Commission, with an aggregate expense amounting up to €25.699k. The unallocated funds came from the categories (a) "Development of the western part of IBC building" amount of €21.125k and (d) «Acquisition of own shares» amount of €4.574k of the Use of Raised Funds. The above mentioned decision was made in the frame of servicing the company scope due to a) the capability to finance the development of the IBC building through bank loan, b) the indirect participation of the company Wert Blue SARL in the share capital of the company LAMDA DOMI SA owner of the concession right on the IBC building and the jointly made decision for the development of the IBC building and c) the passage of the period of 36 months from the share capital increase as an indicative period for the completion of the allocation of the raised funds. 4. The Company, in the aforementioned period, increased the share capital of its subsidiaries LAMDA DOMI SA and LAMDA LEISURE SA by €3.875k in total, aiming to the studies related to the development of the western part of IBC building. 5. The Company, in the aforementioned period, increased the share capital of its subsidiary LAMDA ERGA ANAPTYXIS SA by €5.500k aiming to studies related to the investment of the former Hellinikon airport and specifically for design and architectural studies and the preparational works related to the investment. 6. The Company, in the aforementioned period, acquired the 50% ofthe shares of the subsidiary LAMDA OLYMPIA VILLAGE SA using the remaining raised capital of the category "investments in real estate and in the assets and liabilities of real estate exploitation Group companies" amount of €83.583k. The purpose of the acquisition is the acquisition of the total 100% and the control of the subsidiary LAMDA OLYMPIA VILLAGE SA, owner of the shopping mall "THE MALL ATHENS". 7. The Company, in the aforementioned period, acquired 620.413 own shares in the amount of €2.426k at an average price per share €3,90, that represent the 0.8% of the issued total shares. 8. The Company, in the aforementioned period, repaid bond loans, an amount of €15.000k by using raised capital of the category "Repayment of bond loans". 9. The Company in the second semester of 2016, used temporarily for working capital the amount of €1.6m. 10. The remaining amount of €10.699k at 30.06.2018 was placed at short-term bank deposits as well as in supranational bonds. |
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| Maroussι, September 6, 2018 | ||||||||||||
| The Chairman of the Board of Directors | The Chie Executive Officer | The Financial Director | ||||||||||
| ANASTASIOS K.GIANNITSIS ID Η865601 |
ODYSSEFS E.ATHANASIOU VASILEIOS A.BALOUMIS ID AB510661 ID ΑΚ130062 |