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Lamda Development S.A. Interim / Quarterly Report 2019
2660_ir_2019-09-10_6975ab6b-5924-426a-85cb-5dc1011f3e4c.pdf
Interim / Quarterly Report
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LAMDA Development S.A.
Semi-annual financial report
For the period from January 1, 2019 – June 30, 2019 (In accordance with Article 5 of Law 3556/2007)
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.
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. | Report on Review of Interim Financial Information | 9 |
| 4. | Condensed Interim Financial Information for the period from January 1, 2019 – June 30, 2019 |
11 |
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, 2019
(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, 2019, 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 10, 2019
The undersigned
| _____ | ____ | ___ |
|---|---|---|
| Anastasios K.Giannitsis | Odyssefs E.Athanasiou | Evgenia G.Paizi |
| Chairman of the BoD | Chief Executive Officer | Member of the BoD |
SEMI-ANNUAL BOARD OF DIRECTORS' REPORT OF "LAMDA Development S.A." FOR THE CONDENSED CONSOLIDATED AND COMPANY FINANCIAL INFORMATION FOR THE PERIOD FROM JANUARY 1, 2019 - JUNE 30, 2019
Dear Shareholders,
According to the provisions of the laws 3556/2007 and the decisions 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, 2019.
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 30.06.2019 are the following:
Consolidated results after tax amount to profits €45.230 thousands compared to profits €35.891 thousands in the comparative period of 2018.
During current period, there was an increase of €49.687 thousands in the net gains from fair value adjustment on investment property compared to €45.585 thousands in the comparative period of 2018.
Consolidated turnover reached €39.511 thousands compared to €38.481 thousands in the comparative period of 2018.
The Net Asset Value that is attributable to the Company's owner reached €486.078 thousands at 30.06.2019 compared to €438.928 thousands at 31.12.2018 showing an increase of 10.8%.
| (amounts in € thousands) | 2019 | 2018 | Variation |
|---|---|---|---|
| NET ASSET VALUE (NAV) (as exported by the internal information of the Group) |
486.078 | 438.928 | 10.7% |
| Shareholders' Equity | 391.777 | 355.117 | 10.3% |
| Earnings before valuations | 27.050 | 25.082 | 7.8% |
| Fair Value Gains from investment property | 49.687 | 45.585 | 9.0% |
| Profit before tax | 63.202 | 56.951 | 11.0% |
| Net Profit after tax & non-controlling interests | 37.179 | 25.099 | 48.1% |
| Turnover | 39.511 | 38.481 | 2.7% |
"The Mall Athens" recorded an increase in EBITDA by 0.7% reaching €14.4m. Mediterranean Cosmos" in Pylaia Thessaloniki recorded an increase in EBITDA by 23.3% reaching €9.0m which is attributed to applying IFRS 16. According to the new standard, hereinafter part of the lease for the current period is recognized as finance cost, amounting to €1.7m. Finally, "Golden Hall" remained stable at €8.6m.
The financial ratios NET DEBT / TOTAL ASSETS and NET DEBT / EQUITY reached 39.2% and 78.8% accordingly.
The Group uses certain Alternative Performance Measures (APMs) due to certain special features of the business category.
Definitions (APMs)
- 1. Net Asset Value: Group Equity adjusted by the deferred tax liability and asset attributable to the Group's shareholders
- 2. Total Group operating results (EBITDA) before valuations: Group operating results (EBITDA) without taking into account the fair value gains/losses that occur from the valuations of the shopping centers, profit or loss from acquisition/disposal of interest held in participations, result from disposal of inventories-land, as well as other losses and the impairment losses of the other assets plus the share of net profit of investments accounted for using the equity method
- 3. Retail EBITDA: Sum of each EBITDA of the shopping centers Golden Hall, Mediterranean Cosmos and The Mall Athens.
- 4. 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.
- 5. 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.
- 6. 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).
- 7. Net Debt / Equity (Debt minus Cash and cash equivalents minus Financial instruments held at fair value through profit or loss) over Equity.
SIGNIFICANT EVENTS
The Company's subsidiary LAMDA DOMI SA, continues the construction works for the development of the western part of the former International Broadcasting Center (IBC), where Golden Hall is operating, aiming to be completed before the end of 2019. The project, of a total budget of €25m, is planned to will further strengthen and supplement the existing shopping center Golden Hall.
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 a decrease in the period of 01.01.2019-30.06.2019 in customer visits by 2.4% in relation to the comparative period of 2018. On the contrary, there is an increase in the shopkeepers' turnover by 1.1%. In July 2019 the shopkeepers' turnover was increased significantly by 7.3% and the customer visits increased by 5.4%. The Company is not able to accurately predict the course of shopkeepers' turnover in the medium term period of time. The occupancy of the shopping malls in the second semester of 2019 is expected to remain stable at levels that reach 98%.
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.
However, the Group at 30.06.2019 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 2018.
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 30.06.2019 the short-term borrowings include mainly the Company's bond loan (€95.1m), date of repayment in December 2019, as well as the loan of the subsidiary LAMDA Prime Properties SA (€5.3m), date of repayment in September 2019. 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. Τhe Management expects that the procedure of refinancing will be completed successfully (note 11).
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 2018.
PENDING LITIGATION
1. THE MALL ATHENS
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 Hellenic Republic. 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 safeguard the 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') Section of 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 on 24.04.2018, 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 and 07.06.2016, 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, 07.06.2016 and 06.12.2016, and the respective decision is expected to be issued
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. Filing of an appeal on points of law is pending 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.
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. Further to the hearing of the case on 07.02.2019, the Court of Appeals issued its decision No 2776/2019, whereby the appeal filed by PYLEA S.A. was accepted and the Court ordered the carrying out of an expert opinion. The case will be heard once the experts submit their opinion. Moreover, as far as the lawsuits of "MICHANIKI SA" are concerned, following the submission to the Court of the expert's report which is favorable to "PYLAIA SA", and further to postponements, the hearing of said lawsuits took place on 10.10.2018 and the respective decision is expected to be issued.
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 13.02.2013 and was reenacted so that those lawsuits were scheduled to be heard on 18.03.2015, but the hearing was postponed for 25.01.2017 and 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 16 of the consolidated financial statements for the six-month period ended on 30 June 2019.
Maroussi, September 10, 2019
The Board of Directors
| _____ | ____ | ___ |
|---|---|---|
| Anastasios K.Giannitsis | Odyssefs E.Athanasiou | Evgenia G.Paizi |
| Chairman of the BoD | Chief Executive Officer | Member of the BoD |
Independent Auditor's Report
Translation from the original text in Greek
Report on Review of Interim Financial Information
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 2019 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, and the selected explanatory notes that comprise the interim condensed financial information and which form an integral part of the six-month financial report as required by L.3556/2007.
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"). Our responsibility is to express a conclusion on this interim condensed financial information 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 condensed interim financial information is not prepared, in all material respects, in accordance with IAS 34.
Report on other legal and regulatory requirements
Our review has not revealed any material inconsistency or misstatement in the statements of the members of the Board of Directors and the information of the six-month Board of Directors Report, as defined in articles 5 and 5a of Law 3556/2007, in relation to the accompanying condensed interim financial information.
PricewaterhouseCoopers Auditing Company S.A. 268 Kifissias Avenue Halandri 15232 Athens, Greece Despina Marinou SOEL Reg No 113 SOEL Reg No 17681
Athens, 10 September 2019
The Certified Auditor Accountant
Condensed Interim Consolidated and Company Financial Information for the period from January 1, 2019 - June 30, 2019
| Notes to the condensed consolidated and company interim financial statements | 18 | |
|---|---|---|
| 1. | General information | 18 |
| 2. | Basis of preparation and summary of significant accounting policies | 18 |
| 3. | Financial risk management and fair value estimation | 21 |
| 4. | Segment information | 22 |
| 5. | Investment property | 24 |
| 6. | Property, plant and equipment | 26 |
| 7. | Investments in subsidiaries, joint ventures and associates | 27 |
| 8. | Financial instruments held at fair value through profit or loss | 31 |
| 9. | Cash and cash equivalents | 31 |
| 10. Financial instruments by category | 32 | |
| 11. Borrowings | 32 | |
| 12. Derivative financial instruments | 34 | |
| 13. Cash generated from operations | 35 | |
| 14. Commitments | 35 | |
| 15. Contingent liabilities and contingent assets | 35 | |
| 16. Related party transactions | 37 | |
| 17. Earnings per share | 39 | |
| 18. Income tax expense | 39 | |
| 19. Changes in accounting policies | 41 | |
| 20. Number of employees | 43 | |
| 21. Events after the financial position date | 43 | |
Statement of financial position (Company and Consolidated)
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| Note | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 | ||
| all amounts in € thousands ASSETS |
||||||
| Non-current assets | ||||||
| Investment property | 5 | 988.665 | 852.115 | 1.840 | 1.840 | |
| Right-of-use assets | 19 | 200 | - | 1.221 | - | |
| Property, plant and equipment | 6 | 4.364 | 5.877 | 1.602 | 648 | |
| Investments in subsidiaries | 7 | - | - | 310.283 | 308.307 | |
| Investments in joint ventures and associates | 7 | 32.063 | 30.529 | 7.759 | 7.759 | |
| Deferred tax assets | 8.749 | 7.739 | 8.169 | 7.185 | ||
| Derivative financial instruments | 12 | 285 | 285 | - | - | |
| Receivables | 27.060 | 27.339 | 8.024 | 8.013 | ||
| 1.061.386 | 923.885 | 338.898 | 333.754 | |||
| Current assets | ||||||
| Inventories | 9.367 | 9.366 | - | - | ||
| Trade and other receivables | 35.581 | 40.574 | 22.704 | 24.424 | ||
| Current tax assets | 3.046 | 3.567 | 2.988 | 2.987 | ||
| Financial instruments held at fair value through profit or loss |
8 | 594 | 595 | - | - | |
| Cash and cash equivalents | 9 | 71.941 | 67.875 | 4.214 | 12.245 | |
| 120.528 | 121.976 | 29.905 | 39.656 | |||
| Total assets | 1.181.914 | 1.045.861 | 368.803 | 373.410 | ||
| EQUITY AND LIABILITIES | ||||||
| Equity attributable to equity holders of the parent | ||||||
| Share capital | 376.663 | 376.663 | 376.663 | 376.663 | ||
| Other reserves | 7.061 | 6.900 | 3.012 | 3.012 | ||
| Retained earnings/(Accumulated losses) | 8.052 | (28.447) | (192.057) | (187.233) | ||
| 391.776 | 355.117 | 187.618 | 192.442 | |||
| Non-controlling interests | 84.259 | 79.500 | - | - | ||
| Total equity | 476.035 | 434.616 | 187.618 | 192.442 | ||
| LIABILITIES | ||||||
| Non-current liabilities | ||||||
| Borrowings | 11 | 324.363 | 305.835 | - | - | |
| Lease liability | 19 | 78.292 | - | 428 | - | |
| Deferred tax liabilities | 119.900 | 106.683 | - | - | ||
| Derivative financial instruments | 12 | 1.014 | - | - | - | |
| Retirement benefit obligations | 1.191 | 1.202 | 812 | 812 | ||
| Other non-current liabilities | 1.531 | 1.330 | 54.440 | 53.654 | ||
| 526.291 | 415.049 | 55.680 | 54.466 | |||
| Current liabilities | ||||||
| Borrowings | 11 | 123.233 | 141.006 | 95.128 | 96.128 | |
| Lease liability | 19 | 420 | - | 801 | - | |
| Trade and other payables | 49.371 | 53.626 | 29.576 | 30.374 | ||
| Current tax liabilities | 6.564 | 1.563 | - | - | ||
| 179.588 | 196.195 | 125.505 | 126.502 | |||
| Total liabilities | 705.879 | 611.244 | 181.185 | 180.968 | ||
| Total equity and liabilities | 1.181.914 | 1.045.861 | 368.803 | 373.410 |
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 10, 2019.
Income Statement (Company and Consolidated)
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| Note | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
|
| all amounts in € thousands Revenue |
39.511 | 38.481 | 685 | 1.680 | |
| Dividends | 135 | - | 2.363 | 3.262 | |
| Net gain from fair value adjustment on investment property | 5 | 49.687 | 45.585 | - | - |
| Loss from inventory impairment | - | (170) | - | - | |
| Other direct property operating expenses | (4.721) | (6.303) | - | - | |
| Employee benefits expense | (4.629) | (3.993) | (2.740) | (3.054) | |
| Depreciation | 6,19 | (428) | (371) | (492) | (74) |
| Impairment provision relating to subsidiaries, joint ventures and associates |
7 | - | - | (100) | - |
| Other operating income / (expenses) - net | (1.979) | (2.725) | (1.799) | (1.776) | |
| Operating profit/(loss) | 77.576 | 70.504 | (2.082) | 38 | |
| Finance income | 23 | 99 | 561 | 81 | |
| Finance costs | (13.129) | (13.273) | (4.287) | (5.651) | |
| Share of net profit of investments accounted for using the equity method |
7 | (1.267) | (379) | - | - |
| Profit/(loss) before income tax | 63.202 | 56.951 | (5.808) | (5.532) | |
| Income tax expense | (17.972) | (21.060) | 984 | 1.110 | |
| Profit/(loss) for the period | 45.230 | 35.891 | (4.824) | (4.422) | |
| Profit/(loss) attributable to: | |||||
| Equity holders of the parent | 37.179 | 25.099 | (4.824) | (4.422) | |
| Non-controlling interests | 8.051 | 10.791 | - | - | |
| 45.230 | 35.891 | (4.824) | (4.422) |
holders of the parent (expressed in € per share) 17
0,48 0,32 (0,06) (0,06)
Income Statement (Company and Consolidated)
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.04.2019 to 30.06.2019 |
01.04.2018 to 30.06.2018 |
01.04.2019 to 30.06.2019 |
01.04.2018 to 30.06.2018 |
| Revenue | 19.296 | 18.797 | 338 | 836 |
| Dividends | 135 | - | 2.363 | 3.262 |
| Net gain from fair value adjustment on investment property | 49.687 | 45.585 | - | - |
| Loss from inventory impairment | - | (170) | - | - |
| Other direct property operating expenses | (2.677) | (3.683) | - | - |
| Employee benefits expense | (2.455) | (2.023) | (1.344) | (1.540) |
| Depreciation | (217) | (179) | (250) | (40) |
| Impairment provision relating to subsidiaries, joint ventures and associates |
- | - | (100) | - |
| Other operating income / (expenses) - net | (825) | (1.385) | (973) | (803) |
| Operating profit | 62.942 | 56.941 | 35 | 1.715 |
| Finance income | 12 | 92 | 282 | (196) |
| Finance costs | (6.571) | (6.602) | (2.069) | (2.695) |
| Share of net profit of investments accounted for using the equity method |
(498) | (181) | - | - |
| Profit/(loss) before income tax | 55.886 | 50.251 | (1.752) | (1.176) |
| Income tax expense | (15.040) | (17.924) | 306 | 351 |
| Profit/(loss) for the period | 40.846 | 32.326 | (1.445) | (825) |
| Profit/(loss) attributable to: | ||||
| Equity holders of the parent | 34.328 | 22.932 | (1.445) | (825) |
| Non-controlling interests | 6.517 | 9.394 | - | - |
| 40.846 | 32.326 | (1.445) | (825) | |
| Earnings/(losses) per share attributable to the equity holders of the parent (expressed in € per share) |
||||
| 0,44 | 0,29 | (0,02) | (0,01) |
Statement of comprehensive income (Company and Consolidated)
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
| Profit/(loss) for the period | 45.230 | 35.891 | (4.824) | (4.422) |
| Cash flow hedges, after tax | (761) | 160 | - | - |
| Currency translation differences | - | (3) | - | - |
| Items that may be subsequently reclassified to profit or loss | (761) | 158 | - | - |
| Total comprehensive income for the period | 44.470 | 36.048 | (4.824) | (4.422) |
| Profit/(loss) attributable to: | ||||
| Equity holders of the parent | 36.660 | 25.206 | (4.824) | (4.422) |
| Non-controlling interest | 7.810 | 10.842 | - | - |
| 44.470 | 36.048 | (4.824) | (4.422) |
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 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 | 25.205 | 10.842 | 36.048 |
| Transactions with the shareholders: | ||||||
| Formation of reserves | - | 28 | (28) | - | - | - |
| Dividends to non-controlling interest | - | - | - | - | (3.778) | (3.778) |
| Increase in share capital of subsidiaries | - | - | - | - | 3 | 3 |
| - | 28 | (28) | - | (3.775) | (3.775) | |
| 30 June 2018 | 376.800 | 6.554 | (45.307) | 338.047 | 71.604 | 409.651 |
| 1 January 2019 | 376.663 | 6.900 | (28.447) | 355.117 | 79.500 | 434.616 |
| Total Income: | ||||||
| Profit for the period | - | - | 37.179 | 37.179 | 8.051 | 45.230 |
| Other comprehensive income for the period: | ||||||
| Cash flow hedges, after tax | - | (520) | - | (520) | (241) | (761) |
| Actuarial gains/(losses), after tax | - | 3 | (3) | - | - | - |
| Total comprehensive income for the period: | - | (517) | 37.177 | 36.660 | 7.810 | 44.470 |
| Transactions with the shareholders: Formation of reserves |
- | 678 | (678) | - | - | - |
| Dividends to non-controlling interest | - | - | - | - | (3.052) | (3.052) |
| - | 678 | (678) | - | (3.052) | (3.052) | |
| 30 June 2019 | 376.663 | 7.061 | 8.052 | 391.776 | 84.259 | 476.035 |
Statement of changes in equity (Company)
| all amounts in € thousands | Share capital | Other reserves | Retained earnings / (Accumulated losses) |
Total equity |
|---|---|---|---|---|
| COMPANY | ||||
| 1 Ιανουαρίου 2018 | 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 January 2019 | 376.663 | 3.012 | (187.233) | 192.442 |
| Total Income: | ||||
| Loss for the period | - | - | (4.824) | (4.824) |
| Total comprehensive income for the period: | - | - | (4.824) | (4.824) |
| 30 June 2019 | 376.663 | 3.012 | (192.057) | 187.618 |
Cash Flow Statement (Company and Consolidated)
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| all amounts in € thousands | Note | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
|
| Cash flows from operating activities | ||||||
| Cash generated from / (used in) operations | 13 | 25.139 | 8.149 | (4.826) | (8.216) | |
| Interest paid and interest related finance cost | (10.219) | (12.281) | (3.260) | (4.454) | ||
| Interest expense on lease liabilities | 19 | (1.721) | - | (28) | - | |
| Income taxes paid | (0) | (66) | (0) | (1) | ||
| Net cash inflow/(outflow) from operating activities | 13.200 | (4.198) | (8.086) | (12.671) | ||
| Cash flows from investing activities | ||||||
| Purchase of property, plant and equipment and investment property | 5,6 | (7.228) | (1.311) | (1.030) | (81) | |
| Proceeds from sale of ppe and investment property | 5,6 | 25 | 6.500 | - | - | |
| Dividends/pre-dividends received | - | - | 2.228 | 3.082 | ||
| Loans to/from related parties | - | - | - | (618) | ||
| Interest received | 22 | 64 | - | 74 | ||
| Proceeds from repayment of loans to related parties | - | - | - | 168 | ||
| Proceeds from sale/liquidation of participation | - | 2.963 | - | 2.963 | ||
| (Purchase)/sale of financial instruments held at fair value through profit or loss | - | 5.282 | - | 5.282 | ||
| (Increase)/decrease in the share capital of participations | 7 | (2.800) | - | (2.076) | 5.801 | |
| Restricted cash | - | (1.232) | 2.500 | (5.000) | ||
| Net cash inflow (outflow) from investing activities | (9.981) | 12.266 | 1.622 | 11.671 | ||
| Cash flows from financing activities | ||||||
| Increase in share capital of subsidiaries by non-controlling interests | - | 3 | - | - | ||
| Dividends paid at non-controlling interests | (1.294) | (3.778) | - | - | ||
| Repayment of borrowings from related parties | 16 | - | - | (169) | (700) | |
| Borrowings received | 11 | 78.890 | 25.000 | - | 25.000 | |
| Repayment of borrowings | 11 | (78.285) | (47.136) | (1.000) | (40.698) | |
| Lease payments | 19 | (163) | - | (398) | - | |
| Borrowings transaction costs | 11 | (802) | (364) | - | - | |
| Restricted cash | 2.500 | (5.000) | - | - | ||
| Net cash inflow (outflow) from financing activities | 846 | (31.275) | (1.567) | (16.398) | ||
| Net increase (decrease) in cash and cash equivalents | 4.066 | (23.206) | (8.031) | (17.398) | ||
| Cash and cash equivalents at the beginning of period | 67.875 | 86.244 | 12.245 | 29.894 | ||
| Cash and cash equivalents at end of period | 71.941 | 63.038 | 4.214 | 12.496 |
Notes to the condensed consolidated and company interim financial statements
1. General information
These condensed financial statements include the company financial statements of the company LAMDA Development S.A. (the "Company") and the condensed consolidated financial statements of the Company and its subsidiaries (together "the Group") for the six month period ended June 30, 2019. 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, 2018, 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 mainly 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. ("parent" of the Company), which is domiciled in Luxembourg, is the main shareholder of the Company as at 30.06.2019 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 10, 2019.
2. Basis of preparation and summary of significant accounting policies
2.1. Basis of preparation
These condensed interim 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 condensed interim consolidated and company financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2018 which are available on the website address www.lamdadev.com.
The accounting principles that have been used in the preparation and presentation of these condensed interim financial statements are in accordance with those used for the preparation of the Company and Group annual financial statements as of December 31, 2018 apart from the adoption of the new IFRS 16 Leases, which effect is depicted in note 19.
The condensed interim consolidated and company financial statements present the financial position, results of operations and cash flows on a going concern basis which 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 €100.4m, a procedure that has not been completed until the date of these
financial statements' release, as described in note 11. In relation to the Company's syndicated bond loan, amount of €95.1m, the bond holders have approved an extension until 31.12.2019, following a respective request. The extension was regarded as necessary due to the complicity of the specific syndicate bond loan and will allow a more efficient negotiation for the rest of the programme's terms. In addition, the discussions regarding the loan of LAMDA Prime Properties S.A. (which owns the building Cecil at Kefalari), amount of €5.3m, are at an advanced stage and the Management expects that the loan will be refinanced successfully, following a respective request for an extension, until 31.10.2019. Τhe Management expects that the above mentioned loans will be refinanced successfully.
The following specific matters should be noted that may impact the operations of the Group in the foreseeable future:
The macroeconomic and financial environment in Greece is showing continuous signs of stability, following the successful completion of the third Program and the release of the third enhanced surveillance report by the European Commission on June 5, 2019. Following the elimination of the capital controls from September 1, 2019, initially imposed on June 28, 2015 and to the extent that will be no delays in the completion of key structural reforms, no material negative impact on the Group's Greek operations is anticipated.
Management continually assesses the possible impact of any changes in the macroeconomic and financial environment in Greece so as to ensure that all necessary actions and measures are taken in order to minimize any impact on the Group's Greek operations. Despite the aforementioned uncertainties, the Group's operations continue without any disruption while the Group's shopping centers show further improvement of their profitability and also, there is a positive change in the discount rates; however Management is not able to accurately predict the likely developments in the Greek economy and its impact on the Group activities.
As described in detail in note 15 "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, 2019. In this uncertain economic environment, management continually assesses the situation, in this uncertain economic environment, 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 financial statements for the period ended December 31, 2018, 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 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, 2018.
2.2. Accounting principles
Certain new standards, amendments to standards and interpretations have been issued that are mandatory for periods beginning on or after 01.01.2019. 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 16 "Leases"
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 from applying the standard to the Group is described in note 19. The adoption of the standard had no effect on leases were the Group is the lessor.
IAS 28 (Amendments) "Long term interests in associates and joint ventures"
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 amendment had no impact on the financial statements of the Group.
IFRIC 23 "Uncertainty over income tax treatments"
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 had no impact on the financial statements of the Group.
IAS 19 (Amendments) "Plan amendment, curtailment or settlement"
The amendments specify how companies determine pension expenses when changes to a defined benefit pension plan occur. The amendment had no impact on the financial statements of the Group.
Annual Improvements to IFRS (2015 – 2017 Cycle)
The amendments set out below include changes to four IFRSs.
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 clarify that 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.
Standards and Interpretations effective for subsequent periods
IFRS 3 (Amendments) "Definition of a business" (effective for annual periods beginning on or after 1 January 2020)
The amended definition emphasizes that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others. The amendments have not yet been endorsed by the EU.
IAS 1 and IAS 8 (Amendments) "Definition of a material" (effective for annual periods beginning on or after 1 January 2020)
The amendments clarify the definition of material and how it should be applied by including in the definition guidance which until now was featured elsewhere in IFRS. In addition, the explanations accompanying the definition have been improved. Finally, the amendments ensure that the definition of material is consistent across all IFRS. The amendments have not yet been endorsed by the EU.
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 2018 and so they should be read in conjunction with them. There have been no changes in the risk management policies since December 31, 2018.
Regarding the liquidity risk, at June 30, 2019 the short-term loans refer mainly to the syndicate bond loan of the Company (amount of €95.1m) date of repayment in December 2019, as well as the subsidiary LAMDA Prime Properties SA (amount of €5.3m) date of repayment in September 2019. 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. Τhe Management expects that the above mentioned loans will be refinanced 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 12) and the financial instruments held at fair value through profit or loss (note 8).
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 2019 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 | 38.525 | 1.261 | 4 | 303 - |
(582) | 39.511 |
| Net gains from fair value adjustment on investment property and inventories |
49.107 | 580 | - | - | - | 49.687 |
| Other direct property operating expenses | (6.275) | (421) | - | - | 1.975 | (4.721) |
| Other | (45) | (168) | (144) | (4.857) | (1.394) | (6.608) |
| Share of profit / (loss) from joint ventures and associates | - | (659) | (608) | - | - | (1.267) |
| EBITDΑ | 81.311 | 592 | (748) | (4.554) | - | 76.602 |
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 gains/losses from fair value adjustment on investment property and inventories |
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 three month period ended 30 June 2019 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 | 18.930 | 578 | 2 | 15 | (230) | 19.296 |
| Net gains from fair value adjustment on investment property and inventories |
49.107 | 580 | - | - | - | 49.687 |
| Other direct property operating expenses | (3.359) | (273) | - | - | 954 | (2.677) |
| Other | 80 | (67) | (63) | (2.506) | (725) | (3.281) |
| Share of profit / (loss) from joint ventures and associates | - | (269) | (229) | - | - | (498) |
| EBITDA | 64.758 | 549 | (290) | (2.491) | 62.526 |
The segment results for the three 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 | 18.683 | 211 | 2 | 313 | (412) | 18.797 |
| Net gains/losses from fair value adjustment on investment property and inventories |
45.650 | (135) | (100) | - | - | 45.415 |
| Other direct property operating expenses | (4.390) | (115) | - | - | 822 | (3.683) |
| Other | (126) | (66) | (179) | (2.627) | (410) | (3.408) |
| Share of profit / (loss) from joint ventures and associates | - | 80 | (221) | (40) | - | (181) |
| EBITDA | 59.817 | (25) | (498) | (2.354) | - | 56.941 |
As occurs from the above mentioned analysis, valuations for investment property and inventories are performed on a semi-annual basis therefore any fair value gain affects the interim quarters.
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 2019 | Shopping centers |
Other investment property |
Other investment property |
Administrative and Management Services |
|
| Assets per segment | 1.018.941 | 77.293 | 32.554 | 53.126 | 1.181.914 |
| Expenditure of non-current assets | 6.184 | 12 | - | 1.031 | 7.228 |
| Liabilities per segment | 536.631 | 49.204 | 198 | 119.846 | 705.879 |
| all amounts in € thousands | Real estate GREECE |
BALKANS | Total | ||
| Shopping centers |
Other investment |
Other investment |
Administrative and | ||
| 31 December 2018 | property | property | Management Services | ||
| Assets per segment Expenditure of non-current assets |
873.592 2.289 |
76.842 30.003 |
30.437 3 |
64.990 101 |
1.045.861 32.396 |
Certain figures for the comparative period of 2018 have been reclassified for comparability purposes.
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 | 30.06.2019 | 30.06.2018 | ||
| EBITDA | 76.602 | 70.497 | ||
| Depreciation of ppe | (428) | (371) | ||
| Dividends | 135 | - | ||
| Finance income | 23 | 99 | ||
| Finance costs | (13.129) | (13.273) | ||
| Profit before income tax | 63.202 | 56.951 | ||
| Income tax expense | (17.972) | (21.060) | ||
| Profit for the period | 45.230 | 35.891 |
B) Geographical segments
The segment information for the six month period ended 30 June 2019 was as follows:
| 30 June 2019 | ||
|---|---|---|
| all amounts in € thousands | Total revenue | Non-current assets |
| Greece | 39.507 | 1.032.149 |
| Balkans | 4 | 29.237 |
| 39.511 | 1.061.386 |
The segment information for the annual period ended 31 December 2018 was as follows:
| 31 December 2018 | ||
|---|---|---|
| all amounts in € thousands | Total revenue | Non-current assets |
| Greece | 79.253 | 896.604 |
| Balkans | 127 | 27.281 |
| 79.379 | 923.885 |
5. Investment property
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| all amounts in € thousands | Note | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Balance at 1 January | 852.115 | 768.415 | 1.840 | 1.840 | |
| Right-of-use assets | 19 | 78.615 | - | - | - |
| Net gain/(loss) from fair value adjustment on investment property | 49.687 | 56.836 | - | - | |
| Acquisition of investment property | - | 30.000 | - | - | |
| Subsequent expenditure on investment property | 6 | 8.248 | 264 | - | - |
| Additional property cost | - | 3.100 | - | - | |
| Disposals | - | (6.500) | - | - | |
| Balance at the end of period | 988.665 | 852.115 | 1.840 | 1.840 |
The investment property includes property operating lease that amounts to €182.1m and is related to the Mediterranean Cosmos Shopping Centre. The right-of-use of this property is recognized at 01.01.2019 and corresponds to the respective amount in lease liability of €78.6m (note 19).
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 of the annual financial statements as at 31 December 2018.
More precisely, at 30.06.2019, 93% of total fair value of the Group's investment property relates to Shopping Centres and 5% 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 84 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, 2019 are as follows:
| Discount rate | |||
|---|---|---|---|
| 30.06.2019 | 31.12.2018 | ||
| Malls | |||
| The Mall Athens | 8,50% | 9,00% | |
| Med.Cosmos | 9,50% | 9,75% | |
| Golden Hall | 9,25% | 9,50% | |
| Office buildings | |||
| Ilida, Maroussi | 8,75% | 9,00% | |
| Cecil, Kefalari | 8,75% | 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 1.50%.
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 € thousands | Discount rate +0,25% |
Discount rate -0,25% |
|---|---|---|
| The Mall Athens | -6,8 | 6,9 |
| Med.Cosmos | -2,8 | 2,8 |
| Golden Hall | -4,1 | 4,2 |
| Malls | -13,7 | 13,9 |
| Ilida, Maroussi | -0,5 | 0,5 |
| Cecil, Kefalari | -0,2 | 0,2 |
| Office buildings | -0,7 | 0,7 |
| Total | -14,4 | 14,6 |
The above mentioned valuations of the investment property as at 30 June 2019 have taken into account the improved current economic conditions in Greece in relation to previous years (as described in note 2.1) and therefore, based on the current conditions, 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.
There are real estate liens and pre-notices over the total investment property.
6. Property, plant and equipment
| Furniture, | ||||||
|---|---|---|---|---|---|---|
| all amounts in € thousands | Lease hold land and buildings |
Vehicles and machinery |
fittings and equipment |
Software | Assets under construction |
Total |
| GROUP - Cost | ||||||
| 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 |
| 1 January 2019 | 836 | 6.379 | 8.550 | 2.978 | 2.742 | 21.484 |
| Additions | - | 12 | 150 | 12 | 7.054 | 7.228 |
| Disposals / Write-offs | (269) | - | (43) | (9) | - | (321) |
| Transfer to investment property | - | - | - | - | (8.248) | (8.248) |
| 30 June 2019 | 567 | 6.391 | 8.657 | 2.981 | 1.548 | 20.143 |
| Accumulated depreciation | ||||||
| 1 January 2018 | (454) | (5.051) | (6.690) | (2.717) | - | (14.912) |
| Depreciation charge | (23) | (171) | (144) | (33) | - | (371) |
| Disposals / Write-offs | - | - | 1 | - | - | 1 |
| 30 June 2018 | (478) | (5.222) | (6.833) | (2.750) | - | (15.282) |
| 1 January 2019 Depreciation charge |
(501) (16) |
(5.362) (173) |
(6.963) (146) |
(2.782) (31) |
- - |
(15.608) (365) |
| Disposals / Write-offs | 143 | - | 41 | 9 | - | 194 |
| 30 June 2019 | (374) | (5.535) | (7.068) | (2.803) | - | (15.779) |
| Closing net book amount at 30 June 2018 | 358 | 1.025 | 1.330 | 202 | 2.156 | 5.071 |
| Closing net book amount at 30 June 2019 | 193 | 856 | 1.589 | 178 | 1.548 | 4.364 |
| Furniture, | ||||||
| all amounts in € thousands | Vehicles and | fittings and | Assets under | |||
| Lease hold land | machinery | equipment | Software | construction | Total | |
| COMPANY - Cost | ||||||
| 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 |
| 1 January 2019 | 367 | 190 | 1.507 | 2.774 | - | 4.838 |
| Additions | - | (0) | 32 | 11 | 987 | 1.030 |
| 30 June 2019 | 367 | 190 | 1.539 | 2.786 | 987 | 5.868 |
| Accumulated depreciation | ||||||
| 1 January 2018 | (252) | (82) | (1.117) | (2.586) | - | (4.038) |
| Depreciation charge Disposals / Write-offs |
(6) - |
(11) - |
(29) 1 |
(29) - |
- - |
(74) 1 |
| - | - | - | - | - | - | |
| 30 June 2018 | (258) | (93) | (1.146) | (2.615) | - | (4.112) |
| 1 January 2019 | (264) | (102) | (1.182) | (2.642) | - | (4.190) |
| Depreciation charge | (6) | (8) | (37) | (26) | - | (77) |
| 30 June 2019 | (269) | (110) | (1.219) | (2.668) | - | (4.266) |
| Closing net book amount at 30 June 2018 | 109 | 97 | 306 | 142 | - | 654 |
Closing net book amount at 30 June 2019 97 80 320 118 987 1.602
7. Investments in subsidiaries, joint ventures and associates
The Group's structure on June 30, 2019 is as follows:
| Country of Incorporation |
% interest held |
Country of Incorporation |
% interest held |
||||
|---|---|---|---|---|---|---|---|
| Company | Company | ||||||
| LAMDA Development SA - Parent | Greece | ||||||
| Subsidiaries | Robies Proprietati Imobiliare SRL | Romania | Indirect | 90,0% | |||
| 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% | Robies Services Ltd | Cyprus | 90,0% | ||
| LAMDA ILIDA OFFICE SA | Greece | 100,0% | Joint ventures | ||||
| MALLS MANAGEMENT SERVICES SA | Greece | 100,0% | Lamda Dogus Marina Investments SA | Greece | 50,0% | ||
| MC Property Management SA | Greece | 100,0% | LAMDA Flisvos Marina SA | Greece | Indirect | 32,2% | |
| KRONOS PARKING SA | Greece | Indirect | 100,0% | LAMDA Flisvos Holding SA | Greece | Indirect | 41,7% |
| LAMDA Erga Anaptyxis SA | Greece | 100,0% | LAMDA Akinhta SA | Greece | 50,0% | ||
| LAMDA Leisure SA | Greece | 100,0% | Singidunum-Buildings DOO | Serbia | Indirect | 74,9% | |
| GEAKAT SA | Greece | 100,0% | GLS OOD | Bulgaria | Indirect | 50,0% | |
| LAMDA Real Estate Management SA | Greece | 100,0% | Associates | ||||
| Property Development DOO | Serbia | 100,0% | ATHENS METROPOLITAN EXPO SA | Greece | 11,7% | ||
| LAMDA Development Montenegro DOO | Montenegro | 100,0% | METROPOLITAN EVENTS | Greece | Indirect | 11,7% | |
| LAMDA Development Romania SRL | Romania | 100,0% | 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 € thousands | 30.06.2019 | 31.12.2018 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Impairment | Carrying amount |
Cost | Impairment | Carrying amount |
| LAMDA OLYMPIA VILLAGE SA | Greece | 100% | 159.365 | - | 159.365 | 159.365 | - | 159.365 |
| LAMDA MALLS SA | Greece | 68,3% | 51.496 | - | 51.496 | 51.496 | - | 51.496 |
| LAMDA ESTATE DEVELOPMENT SA | Greece | 100% | 45.461 | 27.424 | 18.036 | 46.184 | 27.424 | 18.760 |
| LAMDA PRIME PROPERTIES SA | Greece | 100% | 9.272 | - | 9.272 | 9.272 | - | 9.272 |
| LAMDA ILIDA OFFICE SA | Greece | 100% | 300 | - | 300 | 100 | - | 100 |
| GEAKAT SA | Greece | 100% | 15.023 | 10.030 | 4.993 | 15.023 | 10.030 | 4.993 |
| LAMDA ERGA ANAPTYXIS SA | Greece | 100% | 9.070 | - | 9.070 | 9.070 | - | 9.070 |
| LAMDA REAL ESTATE MANAGEMENT SA | Greece | 100% | 1.210 | 1.210 | - | 1.110 | 1.110 | - |
| LAMDA LEISURE SA | Greece | 100% | 1.050 | - | 1.050 | 1.050 | - | 1.050 |
| MC PROPERTY MANAGEMENT SA | Greece | 100% | 745 | - | 745 | 745 | - | 745 |
| MALLS MANAGEMENT SERVICES SA | Greece | 100% | 1.224 | - | 1.224 | 1.224 | - | 1.224 |
| LAMDA DEVELOPMENT SOFIA E.O.O.D. | Bulgaria | 100% | 363 | 363 | - | 363 | 363 | - |
| PROPERTY DEVELOPMENT D.O.O. | Serbia | 100% | 11.685 | 11.685 | - | 11.685 | 11.685 | - |
| PROPERTY INVESTMENTS D.O.O | Serbia | 100% | - | - | - | 1 | - | 1 |
| LAMDA DEVELOPMENT ROMANIA SRL | Romania | 100% | 741 | 741 | - | 741 | 741 | - |
| ROBIES SERVICES LTD | Cyprus | 90% | 1.823 | 1.823 | - | 1.823 | 1.823 | - |
| LAMDA DEVELOPMENT (NETHERLANDS) BV | Netherlands | 100% | 81.678 | 27.200 | 54.478 | 79.178 | 27.200 | 51.978 |
| LAMDA DEVELOPMENT MONTENEGRO D.O.O. | Montenegro | 100% | 800 | 800 | - | 800 | 800 | - |
| LOV LUXEMBOURG SARL (indirectly) | Luxembourg | 100% | 218 | - | 218 | 218 | - | 218 |
| HELLINIKON GLOBAL I SA | Luxembourg | 100% | 36 | - | 36 | 36 | - | 36 |
| Investment in subsidiaries | 391.558 | 81.275 | 310.283 | 389.482 | 81.175 | 308.307 |
The movement in investment in subsidiaries is as follows:
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | |
|---|---|---|---|
| Balance at 1 January | 308.307 | 285.018 | |
| Additions | - | 100 | |
| Increase/(decrease) in share capital | 2.076 | 25.888 | |
| Provision for impairment | (100) | (2.699) | |
| Balance at the end of the period | 310.283 | 308.307 |
Increase/Decrease in share capital
The subsidiary LAMDA Estate Development S.A. decreased its share capital by €0.7m. On the contrary, the Company participated in the share capital increase of the companies Lamda Development (Netherlands) BV, LAMDA Real Estate Management SA and LAMDA ILIDA OFFICE SA by €2.5m, by €0.1m and €0.2m respectively. During the first semester of the liquidation of the company Property Investments DOO was completed.
Non-controlling interests
The Group's non-controlling interests amount to €84.3m at 30.06.2019 (31.12.2018: €79.5m) out of which €84.5m (31.12.2018: €79.7m) comes from the subsidiary LAMDA MALLS SA. Non-controlling 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 | GROUP | ||
|---|---|---|---|
| 30.06.2019 | 31.12.2018 | ||
| all amounts in € thousands | |||
| Investment property | 421.250 | 390.850 | |
| Right-of-use assets | 78.528 | - | |
| Other non-current assets | 11.263 | 14.055 | |
| Receivables | 3.742 | 10.884 | |
| Cash and cash equivalents | 39.252 | 31.079 | |
| 554.035 | 446.868 | ||
| Deferred income tax liabilities | 52.974 | 47.294 | |
| Long-term borrowings | 139.894 | 104.122 | |
| Long-term lease liability | 78.206 | - | |
| Other non-current liabilities | 1.394 | 259 | |
| Short-term borrowings | 500 | 30.882 | |
| Short-term lease liability | 322 | - | |
| Trade and other payables | 14.330 | 12.925 | |
| 287.620 | 195.482 | ||
| Total equity | 266.415 | 251.386 |
| Income statement |
|---|
| ------------------ |
GROUP
| all amounts in € thousands | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
|---|---|---|
| Revenue | 21.665 | 21.594 |
| Net gains from fair value adjustment on investment property | 22.057 | 37.100 |
| Other operating income / (expenses) - net | (5.200) | (7.149) |
| Finance costs - net | (3.673) | (2.878) |
| Profit before income tax | 34.850 | 48.666 |
| Income tax expense | (9.432) | (14.604) |
| Profit for the period | 25.418 | 34.063 |
| Comprehensive income statement | GROUP | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
||
| Profit for the period | 25.418 | 34.063 | ||
| Other | (761) | 160 | ||
| Other comprehensive income for the period | 24.657 | 34.223 | ||
| Total comprehensive income for the period | 24.657 | 34.223 | ||
| Cash flow statement all amounts in € thousands |
01.01.2019 to 30.06.2019 |
GROUP 01.01.2018 to 30.06.2018 |
||
| Cash flows from operating activities | 14.419 | 12.825 | ||
| Cash flows to investing activities | (8.174) | (1.065) | ||
| Cash flows to financing activities | 1.927 | (7.386) | ||
| Net increase in cash and cash equivalents | 8.172 | 4.374 |
(b) Investments of the Company and the Group in joint ventures
The Company's investment in joint ventures is as follows:
| COMPANY | 30.06.2019 | 31.12.2018 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Impairment | Carrying amount |
Cost | Impairment | Carrying amount |
| LAMDA AKINHTA SA | Greece | 50,00% | 4.454 | 1.883 | 2.571 | 4.454 | 1.883 | 2.571 |
| LAMDA DOGUS MARINA INVESTMENTS SA | Greece | 50,00% | 4.022 | - | 4.022 | 4.022 | - | 4.022 |
| Investment in joint-ventures | 8.476 | 1.883 | 6.593 | 8.476 | 1.883 | 6.593 |
The Group's investment in joint ventures is as follows:
| GROUP | 30.06.2019 | 31.12.2018 | ||||||
|---|---|---|---|---|---|---|---|---|
| Name | Country of incorporation |
% interest held | Cost | Share of interest held |
Carrying amount |
Cost | Share of interest held |
Carrying amount |
| LAMDA AKINHTA SA | Greece | 50,00% | 4.454 | (1.887) | 2.567 | 4.454 | (1.884) | 2.570 |
| LAMDA DOGUS MARINA INVESTMENTS SA | Greece | 50,00% | 4.022 | (2.327) | 1.695 | 4.022 | (1.671) | 2.351 |
| SINGIDUNUM-BUILDINGS DOO | Serbia | 74,85% | 43.895 | (19.704) | 24.191 | 41.095 | (19.033) | 22.062 |
| GLS OOD | Bulgaria | 50,00% | 55 | (3) | 52 | 55 | (2) | 52 |
| TOTAL | 52.426 | (23.922) | 28.505 | 49.626 | (22.591) | 27.035 |
The movement of the Company and the Group in investment in joint ventures is as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Balance at 1 January | 27.035 | 22.627 | 6.593 | 6.703 |
| Increase/(decrease) in share capital | 2.800 | 5.567 | - | - |
| Share in profit/(loss) | (1.330) | (1.159) | - | - |
| Provision for impairment | - | - | - | (110) |
| Balance at the end of the period | 28.505 | 27.035 | 6.593 | 6.593 |
Notes on the above mentioned joint ventures:
- The Group accounted 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 72.94% at 31/12/2018 to 74.85% at 30/06/2019, 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:
| 74,85% | 72,94% | |
|---|---|---|
| Statement of financial position | 30.06.2019 | 31.12.2018 |
| all amounts in € thousands | ||
| Inventories | 74.812 | 73.652 |
| Trade and other receivables | 224 | 414 |
| Cash and cash equivalents | 55 | 1.273 |
| 75.092 | 75.339 | |
| Long-term borrowings | - | 40.020 |
| Short-term borrowings | 42.520 | 5.000 |
| Trade and other payables | 252 | 73 |
| 42.772 | 45.092 | |
| Total equity | 32.320 | 30.246 |
| (Group's interest) Total equity |
74,85% 24.191 |
72,94% 22.062 |
| Income statement | ||
| 01.01.2019 έως | 01.01.2018 έως | |
| all amounts in € thousands | 30.06.2019 | 30.06.2018 |
| Revenue | - | - |
| Net gains/(loss) from fair value adjustment on investment property | - | - |
| Other operating income / (expenses) - net | (113) | (62) |
| Finance costs - net | (607) | (670) |
| Loss before income tax | (720) | (732) |
| Income tax expense | ||
| Loss for the period | (720) | (732) |
| (Group's interest) | 74,85% | 69,19% |
| Loss for the period | (539) | (506) |
| Comprehensive income statement | ||
| 01.01.2019 έως | 01.01.2018 έως | |
| all amounts in € thousands | 30.06.2019 | 30.06.2018 |
| Loss for the period | (539) | (506) |
| Currency translation differences | - | - |
| Other comprehensive income for the period | (539) | (506) |
| Total comprehensive income for the period | (539) | (506) |
| Cash flow statement | ||
| 01.01.2019 έως | 01.01.2018 έως | |
| all amounts in € thousands | 30.06.2019 | 30.06.2018 |
| Cash flows from operating activities | (530) | (932) |
| Cash flows to investing activities | (988) | - |
| Cash flows to financing activities | 300 | 1.400 |
| Net increase/(decrease) in cash and cash equivalents | (1.218) | 468 |
(c) Investments of the Group and the Company in associates
The Group participates in the following associates' equity:
| GROUP | 30.06.2019 | 31.12.2018 | ||||||
|---|---|---|---|---|---|---|---|---|
| Country of | Share of interest | Carrying | Share of interest | Carrying | ||||
| Name | incorporation | % interest held | Cost | held | amount | Cost | held | amount |
| ATHENS METROPOLITAN EXPO SA | Greece | 11,67% | 1.167 | - | 1.167 | 1.167 | - | 1.167 |
| S.C. LAMDA MED SRL (Indirect) | Romania | 40,00% | 1.133 | 1.259 | 2.392 | 1.133 | 1.195 | 2.328 |
| TOTAL | 2.300 | 1.259 | 3.558 | 2.300 | 1.195 | 3.494 |
The movement of associates is as follows:
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 | |
| Balance at 1 January | 3.494 | 3.915 | 1.166 | 1.558 | |
| Share in profit/(loss) | 199 | 170 | - | - | |
| Decrease in share capital | - | (591) | - | (392) | |
| Dividend contribution | (135) | - | - | - | |
| Balance at the end of the period | 3.558 | 3.494 | 1.166 | 1.166 |
8. Financial instruments held at fair value through profit or loss
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Money market funds | 594 | 595 | - | - |
| 594 | 595 | - | - |
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. During 2019, the Group did not made any liquidation of bonds whereas a loss of €1k has been recognized in the income statement from the above mentioned money market fund.
The above mentioned financial instruments are categorized under hierarchy 1 as described in note 3.
9. Cash and cash equivalents
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Cash at bank | 71.065 | 66.898 | 4.160 | 12.192 |
| Cash in hand | 876 | 976 | 54 | 53 |
| Total | 71.941 | 67.873 | 4.214 | 12.245 |
Taking into account the credit status of the banks that the Group keeps its current accounts, no significant credit losses are anticipated. The above comprise the cash and cash equivalents used for the purposes of the cash flow statement.
Regarding the deposits and cash of the Group and the Company, they are rated in Moody's. The credit limit in relation to cash and cash equivalents is presented as follows:
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| Moody's Rating | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 | |
| Caa1 | 47.748 | 37.184 | 4.036 | 12.069 | |
| Caa2 | 453 | 11.478 | 8 | 8 | |
| Aa3 | 21.978 | 17.448 | 116 | 115 | |
| N/A | 887 | 786 | - | - | |
| 71.065 | 66.898 | 4.160 | 12.192 |
10. Financial instruments by category
| GROUP - 30.06.2019 | Financial assets at amortized cost |
Financial instruments held at fair value through profit or loss |
GROUP - 30.06.2019 | Financial liabilities at amortized cost |
Interest rate swaps - cash flow hedges (IRS) |
|
|---|---|---|---|---|---|---|
| all amounts in € thousands | all amounts in € thousands | |||||
| Trade and other receivables Restricted cash Cash and cash equivalents Derivative financial instruments Receivables from related parties Dividends receivables Other financial receivables |
4.870 10.400 71.941 - 87 135 14.167 |
- - - 285 - - 594 |
Borrowings Trade and other payables Interest payable Other financial payables |
Derivative financial instruments | 447.596 5.724 2.381 - 32.069 |
- - - 1.014 - |
| Total | 101.600 | 880 | Total | 487.770 | 1.014 | |
| COMPANY - 30.06.2019 | Financial assets at amortized cost |
COMPANY - 30.06.2019 | Financial liabilities at amortized cost |
|||
| all amounts in € thousands Trade and other receivables Restricted cash Loans to related parties Other financial receivables Dividends receivables Receivables from related parties Total |
34 10.400 8.000 8.225 135 438 27.232 |
Borrowings Trade and other payables Loans from related parties Other financial payables Liabilities to related parties Total |
all amounts in € thousands | 95.128 1.438 54.580 25.197 3 176.346 |
||
| GROUP - 31.12.2018 | Financial assets at amortized cost |
Financial instruments held at fair value through profit or loss |
GROUP - 31.12.2018 | Financial liabilities at amortized cost |
||
| all amounts in € thousands | all amounts in € thousands | |||||
| Trade and other receivables Restricted cash Cash and cash equivalents Derivative financial instruments Other financial receivables Total |
5.166 13.038 67.875 - 13.385 99.463 |
- - - 285 595 881 |
Borrowings Trade and other payables Interest payable Other financial payables Total |
446.841 8.404 2.143 32.249 489.638 |
||
| COMPANY - 31.12.2018 | Financial assets at amortized cost |
COMPANY - 31.12.2018 | Financial liabilities at amortized cost |
|||
| all amounts in € thousands | all amounts in € thousands | |||||
| Trade and other receivables Restricted cash Loans to related parties Other financial receivables Receivables from related parties Total |
29 13.038 7.987 7.443 1.239 29.736 |
Borrowings Trade and other payables Loans from related parties Other financial payables Liabilities to related parties Total |
96.128 1.339 53.776 25.442 3 176.688 |
|||
| 11. Borrowings |
||||||
| GROUP | COMPANY | |||||
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 | ||
| Non-current | ||||||
| Bond borrowings | 324.363 | 305.835 | - | - | ||
| Total non-current | 324.363 | 305.835 | - | - | ||
| Current |
| Total borrowings | 447.597 | 446.841 | 95.128 | 96.128 |
|---|---|---|---|---|
| Total current | 123.233 | 141.006 | 95.128 | 96.128 |
| Overdraft account | - | 7.180 | - | - |
| Bond borrowings | 123.233 | 133.826 | 95.128 | 96.128 |
| 12 months ended 31 December 2018 (amounts in € thousands ) | GROUP | COMPANY | ||
|---|---|---|---|---|
| Balance at 1 January 2018 | 441.887 | 123.137 | ||
| Bond borrowings | 120.228 | 25.000 | ||
| Overdraft account | 7.180 | - | ||
| Borrowings transaction costs - amortization | 2.157 | 767 | ||
| Borrowings transaction costs | (1.265) | - | ||
| Borrowings repayments | (123.345) | (52.776) | ||
| Balance at 31 December 2018 | 446.841 | 96.128 | ||
| 6 months ended 30 June 2019 (amounts in € thousands ) | GROUP | COMPANY | ||
| Balance at 1 January 2019 | 446.841 | 96.128 | ||
| Bond borrowings | 78.890 | - | ||
| Recognition of interest at fair value | 358 | - | ||
| Borrowings transaction costs - amortization | 594 | - | ||
| Borrowings transaction costs | (802) | - | ||
| Borrowings repayments | (78.285) | (1.000) | ||
| Balance at 30 June 2019 | 447.597 | 95.128 |
The movements in borrowings are as follows:
Borrowings are secured by mortgages on the Group's land, buildings and investment property (note 5, 6), 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.
At 19.04.2019 the management competed the refinancing of the bond loan of the subsidiary PYLAIA SA amount of €72m. It has a seven-year tenor and the purpose is the repayment of a) the existing loan and b) the overdraft account.
Amortization of borrowings transaction costs of €2.5m are included in the total borrowings as at June 30, 2019, out of which €1.1m is applied to current borrowings whereas the rest €1.4m is applied to noncurrent borrowings.
The maturity of non-current borrowings is as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Between 1 and 2 years | 155.549 | 216.733 | - | - |
| Between 2 and 5 years | 50.099 | 10.763 | - | - |
| Over 5 years | 118.715 | 78.338 | - | - |
| 324.363 | 305.835 | - | - |
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).
At 30.06.2019, the average base effective interest rate of the Group is 0.05% and the average bank spread is 4.26%. Therefore, the Group total effective borrowing rate stands at 4.31% at 30.06.2019.
The Company's secured syndicated bond loan of current balance €95.1m granted by Alpha Bank, Bank of Piraeus and Eurobank Ergasias has to satisfy the following 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 and the ratio of total net debt to investment portfolio must be ≤ 75%.
At Group level, at 30.06.2019 the Company's subsidiary LAMDA DOMI SA's secured syndicated bond loan of current balance €70.0m, granted by the following banking institutions: Eurobank Ergasias, Alpha Bank, Bank of Piraeus and HSBC France has the following covenants: Loan to value <60% and Debt Service Ratio >120%. Also, the secured bond loan of the Company's subsidiary PYLAIA SA granted by Eurobank Ergasias, of current balance €72m has the following covenants: Loan to value <80% and Debt Service Ratio >120%. Whereas, LAMDA OLYMPIA VILLAGE SA's secured bond loan of current balance €176.7m (€159.8m 29.07.2019), granted by HSBC, Eurobank Ergasias and Apollo Global Management fund's participation has the following covenants: Loan to value <65% and Debt Service Cover ratio >110%. At June 30, 2019, all above mentioned ratios are satisfied at Group and Company level.
At 30.06.2019 the short-term borrowings include the following liabilities:
- The Company's bond loan, amount of approximately €95.1m granted by Alpha Bank, Bank of Piraeus and Eurobank Ergasias.
- The loan of the subsidiary LAMDA Prime Properties SA, amount of approximately €5.3m granted by Alpha Bank.
The management is undergoing negotiations with the counterparties in relation to the refinancing of the Group short-term loans, a procedure that has not been completed until the date of these financial statements' release. Specifically, in relation to the Company's syndicated bond loan, the bond holders have approved an extension until 31.12.2019, following a respective request. The extension was regarded as necessary due to the complicity of the specific syndicate bond loan and will allow a more efficient negotiation for the rest of the programme's terms.
In addition, the discussions regarding the loan of LAMDA Prime Properties S.A. (which owns the building Cecil at Kefalari), amount of €5.3m, are at an advanced stage and the Management expects that the loan will be refinanced successfully until 31.10.2019.
12. Derivative financial instruments
| GROUP | COMPANY | |||||||
|---|---|---|---|---|---|---|---|---|
| 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 | |||||
| all amounts in € thousands | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities |
| Derivatives held at fair value through profit or loss (Cap) |
285 | - | 285 | - | - | - | - | - |
| Interest rate swaps - cash flow hedges (IRS) | - | 1.014 | - | - | - | - | - | - |
| Total | 285 | 1.014 | 285 | - | - | - | - | - |
| Non-current | 285 | 1.014 | 285 | - | - | - | - | - |
| Current | - | - | - | - | - | - | - | - |
| Total | 285 | 1.014 | 285 | - | - | - | - | - |
The nominal value of interest rate swaps that are hedged (IRS) as at 30.06.2019 is €45m, for the Company's subsidiary LAMDA DOMI SA, and their maturity date is 2025. The interest rate swaps have been measured at fair value stated by the counterpart bank. As at 30.06.2019 the long-term borrowings floating rates are secured with interest risk derivatives (IRS) ranged according to 3-month Euribor plus 3.03%. In relation to derivatives at fair value through profit or loss, a Cap instrument as a hedging strategy for the Interest Rate Risk has been selected for the subsidiary' s, LAMDA Olympia Village S.A., bond loan at a notional amount of €160m. The movement of the fair value is recognized in the income statement.
The total fair value of the derivative financial instrument, which is described under hierarchy 2 in note 3, 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.
13. Cash generated from operations
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| all amounts in € thousands | Note | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
|
| Profit/(loss) for the period | 45.230 | 35.891 | (4.824) | (4.422) | ||
| Adjustments for: | ||||||
| Tax | 17.972 | 21.060 | (984) | (1.110) | ||
| Depreciation | 6,19 | 428 | 371 | 492 | 74 | |
| Impairment of receivables | (3) | - | (12) | - | ||
| Share of profit from associates | 7 | 1.267 | 379 | - | - | |
| Dividends income | (135) | - | (2.363) | (3.262) | ||
| Provision for impairment of receivables from subsidiaries | 16 | - | - | 561 | 53 | |
| Provision for impairment of investments in subsidiaries, joint ventures and associates |
7 | - | - | 100 | - | |
| Loss from sale/valuation of financial instruments/derivatives | 1 | 11 | - | 120 | ||
| Loss from disposal of ppe | 6 | 128 | - | - | - | |
| Interest income | (23) | (99) | (561) | (81) | ||
| Interest expense | 13.129 | 13.273 | 4.287 | 5.651 | ||
| Provision for inventory impairment | - | 170 | - | - | ||
| Net gain from fair value adjustment on investment property | 5 | (49.687) | (45.585) | - | - | |
| Other non cash income / (expense) | - | 344 | (8) | - | ||
| 28.308 | 25.815 | (3.312) | (2.976) | |||
| Changes in working capital: | ||||||
| Decrease in inventories | (1) | - | - | - | ||
| (Increase)/decrease in receivables | 1.124 | (15.558) | (671) | (4.264) | ||
| (Decrease)/increase in payables | (4.291) | (2.108) | (844) | (976) | ||
| (3.169) | (17.666) | (1.515) | (5.240) | |||
| Cash flows from operating activities | 25.139 | 8.149 | (4.826) | (8.216) |
14. Commitments
Capital commitments
At June 30, 2019 there is capital expenditure of €8.2m that has been contracted for but not yet incurred at the balance sheet date.
The Group has no contractual liability for investment property repair and maintenance services.
15. Contingent liabilities and contingent assets
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) | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Letters of guarantee relating to obligations | 33.513 | 40.182 | 30.004 | 30.004 |
| Total | 33.513 | 40.182 | 30.004 | 30.004 |
| Assets (all amounts in € thousands) | ||||
| Letters of guarantee relating to receivables (from tenants) | 40.798 | 40.687 | - | - |
| Total | 40.798 | 40.687 | - | - |
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. At 30.06.2019 no such provisions have been formed for the Group's and Company's unaudited, by the tax authorities, years. For a detailed reference to the unaudited, by the tax authorities, years see note 18.
- LAMDA Olympia Village (hereinafter referred to as 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).
- 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. Further to the hearing of the case case on 07.02.2019, Court of Appeals issued its decision No 2776/2019, whereby the appeal filed by PYLEA S.A. was accepted and the Court ordered the carrying out of an expert opinion. The case will be heard once the experts submit their opinion. 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 10.10.2018 (after postponements), when the case was finally heard and the respective decision is expected to be issued. 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".
Additionally, there are various legal cases of the Group's companies, which are not expected to create material additional liabilities.
16. Related party transactions
The following transactions were carried out with related parties:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| all amounts in € thousands | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
| i) Sales of goods and services | ||||
| - subsidiaries | - | - | 595 | 1.575 |
| - joint ventures | 64 | 63 | 30 | 29 |
| - associates | - | - | 34 | 34 |
| 64 | 63 | 659 | 1.638 | |
| ii) Purchases of goods and services | ||||
| - subsidiaries | - | - | 477 | 473 |
| - companies which controlling interests belong to Latsis family | 1.422 | 637 | - | - |
| 1.422 | 637 | 477 | 473 |
541 317 3 3
| iii) Dividend income | ||||
|---|---|---|---|---|
| - subsidiaries | - | - | 2.228 | 3.262 |
| - associates | 135 | - | 135 | - |
| 135 | - | 2.363 | 3.262 | |
| iv) Benefits to management | ||||
| - salaries and other short-term employment benefits | 409 | 308 | 409 | 308 |
| 409 | 308 | 409 | 308 | |
| v) Income from interest | ||||
| - subsidiaries | - | 2 | 548 | 553 |
| - | 2 | 548 | 553 | |
| vi) Cost of interest | ||||
| - subsidiaries | - | - | 1.143 | 1.025 |
| - | - | 1.143 | 1.025 | |
| vii) Period-end balances from sales-purchases of goods/servises | ||||
| GROUP | COMPANY | |||
| all amounts in € thousands | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Receivables from related parties: | ||||
| - subsidiaries | - | - | 351 | 1.190 |
| - joint ventures | 87 | 49 | 37 | 18 |
| - associates | - | - | 51 | 31 |
| 87 | 49 | 438 | 1.239 | |
| Receivables from dividends from related parties: | ||||
| - associates | 135 | - | 135 | - |
| 135 | - | 135 | - | |
| Payables to related parties: | ||||
| - subsidiaries | - | - | 3 | 3 |
| - companies which controlling interests belong to Latsis family | 541 | 317 | - | - |
Receivables and payables from/to related parties are satisfied and their carrying amounts approach their fair value.
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 | ||
| viii) Loans to associates: | |||||
| Balance at the beginning of the period | - | 657 | 7.987 | 8.342 | |
| Loans granted during the period | - | - | - | 618 | |
| Loans received/Transfer to share capital | - | (588) | - | - | |
| Interest repayments/Transfer to share capital | - | (72) | - | - | |
| Loan repayments | - | - | - | (168) | |
| Loan and interest impairment | - | - | (535) | (1.914) | |
| Interest charged | - | 2 | 548 | 1.109 | |
| Balance at the end of the period | - | - | 8.000 | 7.987 |
At Company level, the loans to associates refer to loans of initial capital €56m, less impairment €48m, 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: | 30.06.2019 | 31.12.2018 | 30.06.2019 | 31.12.2018 |
| Balance at the beginning of the period | - | - | 53.776 | 40.808 |
| Loans received during the period | - | - | - | 11.660 |
| Loan repayments | - | - | (169) | (700) |
| Borrowings transaction costs - amortization | - | - | - | 5 |
| Interest paid | - | - | (170) | (135) |
| Interest charged | - | - | 1.143 | 2.139 |
| Balance at the end of the period | - | - | 54.580 | 53.776 |
At Company level, the loans from associates refer to loans of initial capital €47.5m that the parent company has granted to the companies LAMDA Prime Properties SA, LOV Luxembourg SARL and LAMDA Ilida Office SA.
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.
17. 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 € thousands | 01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
01.01.2019 to 30.06.2019 |
01.01.2018 to 30.06.2018 |
| Profit/(loss) attributable to equity holders of the Company | 37.179 | 25.099 | (4.824) | (4.422) |
| Weighted average number of ordinary shares in issue | 77.856 | 77.856 | 77.856 | 77.856 |
| Basic earnings/(losses) per share (in € per share) | 0,48 | 0,32 | (0,06) | (0,06) |
At 30.06.2019 there is no employee share option scheme in force, therefore no diluted earnings/losses have been formed.
18. Income tax expense
The corporate income tax rate in Greece, on the basis of Article 23 of Law 4579/2018, will gradually decrease by 1% per annum as follows:
- 28% for the year 2019
- 27% for the year 2020
- 26% for the year 2021
- 25% for the year 2022 onwards
In addition, the tax rate for the subsidiaries registered in foreign countries differs from country to country as follows: Serbia 15%, Romania 16%, 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 authorities |
Fiscal years unaudited by the tax authorities |
||
|---|---|---|---|
| Company | Company | ||
| LAMDA Development SA | 2013-2018 | ||
| LAMDA Erga Anaptyxis SA | 2013-2018 | ||
| LAMDA Olympia Village SA | 2013-2018 | LAMDA Flisvos Holding SA | 2013-2018 |
| PYLAIA SA | 2013-2018 | ATHENS METROPOLITAN EXPO SA | 2013-2018 |
| LAMDA Domi SA | 2013-2018 | METROPOLITAN EVENTS | 2013-2018 |
| LAMDA Prime Properties SA | 2013-2018 | Property Development DOO | 2010-2018 |
| LAMDA ILIDA OFFICE SA | 2018 | LAMDA Development Romania SRL | 2014-2018 |
| LAMDA Flisvos Marina SA | 2013-2018 | SC LAMDA MED SRL | 2014-2018 |
| LAMDA Dogus Marina Investments SA | 2015-2018 | LAMDA Development Montenegro DOO | 2007-2018 |
| MALLS MANAGEMENT SERVICES SA | 2013-2018 | LAMDA Development (Netherlands) BV | 2008-2018 |
| MC Property Management SA | 2013-2018 | Robies Services Ltd | 2007-2018 |
| LAMDA Estate Development SA | 2013-2018 | Robies Proprietati Imobiliare SRL | 2014-2018 |
| LAMDA Leisure SA | 2013-2018 | Singidunum-Buildings DOO | 2007-2018 |
| KRONOS PARKING SA | 2013-2018 | GLS OOD | 2006-2018 |
| LAMDA Real Estate Management SA | 2013-2018 | LOV Luxembourg SARL | 2013-2018 |
| GEAKAT SA | 2013-2018 | TIHI EOOD | 2008-2018 |
| LAMDA Akinhta SA | 2013-2018 | LAMDA Development Sofia EOOD | 2006-2018 |
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).
Regarding the Company, the tax audit for the fiscal year 2013-2017 was completed by PriceWaterhouseCoopers SA and the relevant tax certificates have been issued. For fiscal years ended after 31 December 2012 and remain unaudited by the tax authorities, Management assumes that there will not be a significant effect on the financial statements. For the fiscal year 2018 tax audit is currently carried out by PriceWaterhouseCoopers SA., and the relevant tax certificate is expected to be issued in the third quarter of 2019.
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 right of the State to impose the tax for the fiscal years up to 2012 has been suspended until 31.12.2018, subject to special or exceptional provisions which may provide for a longer limitation period and under the conditions that they define. Moreover, according to standard case-law of the Council of State and Administrative Courts, in the absence of a limitation provision in the Stamp duty code, the State's claim for the imposition of stamp duty is subject to the twenty-year limitation period subjected to the Article 249 of the Civil Code. Therefore, 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. At 30.06.2019 no such provisions have been formed for the Group's and Company's unaudited, by the tax authorities, years.
19. Changes in accounting policies
(a) Adjustments recognized on adoption of IFRS 16
This note describes the effect of IFRS 16 "Leases" on the Group and Company financial statements. The Group and the Company has decided to adopt IFRS 16 from 1 January 2019 but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening statement of financial position balance sheet on 1 January 2019. On adoption of IFRS 16, the Group and the Company recognized lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 "Leases". These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 4.53% for the Group and 4% for the Company.
In applying IFRS 16 for the first time, the Group and the Company have elected to use the permitted practical expedient in the standard that allows operating leases with a remaining lease term of less than 12 months as at 1 January 2019 to be classified as short-term leases.
The Group and the Company have also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group and the Company relied on their assessment made applying IAS 17 and IFRIC 4-Determining whether an Arrangement contains a Lease.
As at 1 January 2019, the Group and the Company had not entered into a contract classified as finance lease.
The change in accounting policies affected the following items in the consolidated and individual statements of financial position on 1 January 2019:
Group:
- Investment property increase by €78.615k
- Right-of-use assets increase by €268k
- Lease liabilities increase by €78.883k
Company:
- Right-of-use assets increase by €1.636k
- Lease liabilities increase by €1.636k
The right-of-use of Mediterranean Cosmos Shopping Centre has been classified as investment property and is leased under operating lease (note 5).
The change in accounting policies had no impact on Group and Company retained earnings on 1 January 2019.
The amount of recognized right-of-use assets equals to the amount of the relating lease liabilities as of 1 January 2019. The recognized right-of-use assets for the Group and the Company relate to the following types of assets:
Group
| all amounts in € thousands | 30 June 2019 | 1 January 2019 | |
|---|---|---|---|
| Land plot | 78.520 | 78.615 | |
| Motor vehicles | 200 | 268 | |
| Total right-of-use assets | 78.720 | 78.883 |
| all amounts in € thousands | 30 June 2019 | 1 January 2019 | |
|---|---|---|---|
| Office space | 1.105 | 1.474 | |
| Motor vehicles | 116 | 162 | |
| Total right-of-use assets | 1.221 | 1.636 |
| Company | |||
|---|---|---|---|
| all amounts in € thousands | 30 June 2019 | 1 January 2019 | |
| Office space | 1.105 | 1.474 | |
| Motor vehicles | 116 | 162 | |
| Total right-of-use assets | 1.221 | 1.636 | |
| For the period starting from 01.01.2019 to 30.06.2019, the Company recognised depreciation of €415k in the statement of profit and loss whereas the Group recognised depreciation of €63k in the statement of profit and loss and €95k as net gain/(loss) from fair value adjustment on investment property. The recognized lease liabilities for the Group and the Company that relate to operating leases at 1 January 2019 and 30 June 2019 are as follows: |
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| Group | |||
| All amounts in € thousands | Land plot | Motor vehicles | Total |
| Lease liability recognised as at 1 January 2019 | 78.615 | 268 | 78.883 |
| Accrued interest expense | 1.716 | 4 | 1.721 |
| Lease payments | (1.811) | (72) | (1.884) |
| Derecognition of leases Lease liability recognised as at 30 June 2019 |
- | (8) | (8) |
| 78.520 | 191 | 78.712 | |
| Analysis of payables : | |||
| Current lease liabilities Non-current lease liabilities |
420 78.292 |
||
| Total | 78.712 | ||
| Company | |||
| All amounts in € thousands | Office space | Motor vehicles | Total |
| Lease liability recognised as at 1 January 2019 | 1.474 | 162 | 1.636 |
| Accrued interest expense | 2 6 |
3 | 2 8 |
| Lease payments | (380) | (46) | (426) |
| Lease liability recognised as at 30 June 2019 | - 1.119 |
(8) 110 |
(8) 1.230 |
| Analysis of payables : | |||
| Current lease liabilities | 801 | ||
| Non-current lease liabilities Total |
428 1.230 |
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| The recognition of right-of-use assets from operating leases and the relative Group lease liabilities affected the business segment of real estate in Greece and relate to the operating segments of Shopping Centers and Management services. The Group leases fixed assets through operating leases which mainly consist of land plots, offices and motor vehicles. The most valuable lease contract of the Group is the concession agreement until 2065 for the land plot on which the Mediterranean Cosmos shopping center was developed and operates and is leased out by Ecumenical Patriarchate, the Landlord of the plot area. The remaining rental contracts are made for a period between 2 and 5 years and may have extension options. The Company leases motor |
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| vehicles from leasing companies and office building space from a subsidiary company of the Group for a period not exceeding the 4 years. The lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. |
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| Until the 2018 financial year, payments made under operating leases were charged to profit and loss on a straight-line basis over the period of the lease. From 1 January 2019, leases are recognized as a right of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group and the Company. |
(b) Group accounting policy for leases – The Group as lessee
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
- Fixed payments, less any lease incentives receivable
- Variable lease payment that are based on an index or a rate
- Amounts expected to be payable by the lessee under residual value guarantee
- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option
- Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee`s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
- The amount of initial measurement of lease liability
- Any lease payments made at or before the commencement date less any lease incentives received
- Any initial direct costs
- Restoration costs
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the rightof-use`s useful life and the lease term on a straight-line basis. In case that the right-of-use corresponds to investment property, then the right-of-use is depreciated through the statement of profit and loss as net gain/(loss) from fair value adjustment on investment property.
Payments associated with short-term leases and leases of low-value assets are recognized on a straightline basis as an expense in profit and loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.
The adoption of the standard had no effect on leases were the Group is the lessor.
20. Number of employees
Number of employees at the end of the period: Group 208, Company 69 (six month period ended 30 June 2018: Group 231, Company 79) from which there are no seasonal (three month period ended 30 June 2018: Group 0, Company 0).
21. Events after the financial position date
There are no other events after the balance sheet date considered to be material to the financial position of the Company.