Quarterly Report • Sep 27, 2022
Quarterly Report
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UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JANUARY 2022 TO 30 JUNE 2022
| Board of Directors and other officers | 1 |
|---|---|
| Management Report | 2 - 5 |
| Declaration of the members of the Board of Directors and the Company officials responsible for the preparation of the financial statements |
6 |
| Condensed interim statement of comprehensive income | 7 |
| Condensed interim statement of financial position | 8 |
| Condensed interim statement of changes in equity | 9 |
| Condensed interim statement of cash flows | 10 |
| Notes to the condensed interim financial statements | 11-27 |
| Board of Directors: | Martin Olivier George Mouskides Takis Christodoulou John George Mavrokordatos |
|---|---|
| Company Secretary: | Montrago Services Limited |
| Legal Advisers: | Tassos Papadopoulos & Associates LLC Panayiotis Demetriou & Associates LLC Elias Neocleous & Co LLC loannides Demetriou LLC Nicos M. Elia LLC |
| Registered office: | 3 Verginas Street The Mall of Cyprus Strovolos 2025, Nicosia Cyprus |
| Bankers: | Bank of Cyprus Public Company Ltd Eurobank Cyprus Ltd |
| Registration number: | HE3941 |
The Board of Directors of The Mall of Cyprus (MC) Plc (the "Company") presents its Management Report together with the unaudited condensed interim financial statements of the Company for the period from 1 January 2022 to 30 June 2022.
r The principal activity of the Company, which is unchanged from last period, is the leasing/granting of rights of use of space of its property, the Shacolas Emporium Park which includes a Shopping Mall, an IKEA store and other building developments for retail/commercial purposes.
The Company's revenue for the period from 1 January 2022 to 30 June 2022 was €8.931.713 compared to €7.460.600 for the corresponding period ended 30 June 2021. The operating profit of the period ended 30 June 2022 was €5.652.527 (period ended 30 June 2021: €5.729.889).
The profit after tax of the Company for the period ended 30 June 2022 amounted to €4.869.336 (30 June 2021: €4.386.230).
On 30 June 2022 the total assets of the Company were €216.231.944 (31 December 2021: €217.147.948) and the net assets of the Company were €106.038.925 (31 December 2021: €104.569.589). The financial position, development and performance of the Company as presented in these financial statements are considered satisfactory.
The principal risks and uncertainties faced by the Company are disclosed in note 1 of the condensed interim financial statements.
The Board of Directors does not expect any significant changes or developments in the operations, financial position and performance of the Company in the foreseeable future
The Company does not maintain any branches.
The Company is primarily exposed to interest rate risk, liquidity risk and capital risk.
Risk management is carried out by Management and approved by the Board of Directors. Management identifies, evaluates and hedges financial risks in close cooperation with the Company's operating units. The Board provides written principles and / or oral for overall risk management, as well as written and /or oral policies covering specific areas, such as interest rate risk, credit risk, and investment of excess liquidity.
The Company's interest rate risk arises from long-term borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings at fixed rates expose the Company to fair value interest rate risk. All borrowings as at 30 June 2022 are at variable rates.
As at 30 June 2022, the Company's liabilities which bore variable interest rates amounted to €86.578.464. The Company's management monitors the interest rate fluctuations on a continuous basis and acts accordingly. The Company does not apply hedge accounting for cash flow interest rate risk.
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, contractual cash flows of debt instruments carried at amortised cost, as well as credit exposures to tenants, including outstanding receivables and committed transactions. Credit risk also arises from intragroup guarantee arrangements that the Company participates in.
Credit risk is managed on a group basis. For banks and financial institutions, only those that are highly rated by the Board of Directors are accepted as counterparties. If lessees / users are independently rated, these ratings are used. Otherwise, if there is no independent rating, management assesses the credit quality of the lessees / users, taking into account its financial position, past experience and other factors. Individual credit terms are set based on the credit quality of the lessee / user in accordance with limits set by the utilisation of credit limits is regularly monitored. No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties. Sales to lessees / users are settled in cash or using major credit cards.
As at 30 June 2022 the Company's credit risk arises from trade and other receivables amounting to €2.157.091 (net, after cumulative expected credit losses of €616.914) and bank balances amounting to €4.268.622 (excluding petty cash).
Management monitors the current liquidity position of the Company based on expected cash flows and expected revenue receipts. On a long-term basis, liquidity risk is defined based on the expected future cash flows at the time of entering into new credit facilities or loans and based on budgeted forecasts. Management believes that it is successful in managing the Company's liquidity risk.
The Company's objectives in managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.
The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings minus cash equivalents. Total capital is calculated as "equity" as shown in the statement of financial position plus net debt. As at 30 June 2022 the Company's net debt amounted to €83.509.802 (31 December 2021: €82.735.695) and total equity of €106.038.925 (31 December 2021: €104.569.589) leading to a gearing ratio of 44,06% (31 December 2021: 44,17%).
The Company's results for the period are set out on page 7.
On 2 March 2022 the Board of Directors approved the payment of an interim dividend amounting to €3.400.000 to its shareholders from the net profit of the year ended 31 December 2021.
There were no changes in the share capital of the Company during the period under review.
The geopolitical situation in Eastern Europe intensified on 24 February 2022 with the commencement of the conflict between Russia and Ukraine. As at the date of authorising these financial statements for issue, the conflict continues to evolve as military activity proceeds. In addition to the events on entities that have operations in Russia, Ukraine, or Belarus or that conduct business with their counterparties, the conflict is increasingly affecting economies and financial markets globally and exacerbating ongoing economic challenges.
Emerging uncertainty regarding global supply of commodities due to the conflict between Russia and Ukraine conflict may also disrupt certain global trade flows and place significant upwards pressure on commodity prices and input costs as seen through early March 2022. Challenges for companies may include availability of funding to ensure access to raw materials, ability to finance margin payments and heightened risk of contractual nonperformance.
The financial effect of the current crisis on the global economy and overall business activities cannot be estimated with reasonable certainty at this stage, due to the pace at which the conflict prevails and the high level of uncertainties arising from the inability to reliably predict the outcome.
The Company has no direct exposure to Russia, Ukraine, and as such does not expect significant impact from direct exposures to these countries.
Despite the absence of any direct exposure, the conflict is expected to negatively impact the tourism and services industries in Cyprus. Furthermore, the increasing energy prices, fluctuations in foreign exchange rates, unease in stock market trading, rises in interest rates, supply chain disruptions and intensified inflationary pressures may indirectly impact the operations of the indirect implications will depend on the extent and duration of the crisis and remain uncertain.
Management has considered the unique circumstances and the risk exposures of the Company and has concluded that there is no significant impact in the Company's profitability position. The event is not expected to have an immediate material impact on the business operations. Management will continue to monitor the situation closely and will assess the need for any remedial action in case the crisis becomes prolonged.
The members of the Company's Board of Directors as at 30 June 2022 and at the date of this report are presented on page 1. All of them were members of the Board of Directors throughout the period from 1 January 2022 to 30 June 2022
In accordance with the Company's Articles of Association all Directors presently members of the Board continue in office.
There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors.
The following shareholders of the Company held directly over 5% of the Company's issued share capital: 1 ......
| 30 June 2022 Percentage of shareholding 00 |
27 September 2022 Percentage of shareholding 0% |
|
|---|---|---|
| Direct shareholder: | ||
| Atterbury Cyprus Limited | 99,67 | 99,67 |
| Indirect shareholders (through their Indirect holdings in Attarbury Cyprus Limited): |
||
| RMB Property Holdco 2 (Pty) Ltd (South Africa) |
36,43 | |
| Business Venture Investments No 1380 (Pty) Ltd (South Africa) |
24.30 | 24.30 |
| Brightbridge Real Estate Ltd | 36.43 | 48,59 |
| Pareto Limited | 24,30 |
By order of the Board of Directors,
Montrago Services Limited Secretary
Nicosia, 27 September 2022
0311111152
In accordance with Article 9 sections (3c) and (7) of the Transparency Requirements (Traded Securities in Regulated Markets) Law 2007 (N 190 (I)/2007) ("the Law") we, the members of the Board of Directors and the Company official responsible for the financial statements of The Mall of Cyprus (MC) Plc (the "Company") for the period from 1 January 2022 to 30 June 2022, on the basis of our knowledge, declare that:
(a) The financial statements of the Company which are presented on pages 7 to 27:
(i) have been prepared in accordance with the applicable International Financial Reporting Standards as adopted by the European Union and the provisions of Article 9, section (4) of the law, and
(ii) provide a true and fair view of the particulars of assets and liabilities, the financial position and profit or loss of the Company included in the financial statements as a whole and
b) The Management Report provides a fair view of the developments and the performance as well as the financial position of the Company as a whole, together with a description of the main risks and uncertainties which it faces.
Martin Olivier - Director
George Mouskides - Director
Takis Christodoulou - Director
John George Mavrokordatos - Director
Responsible for drafting the financial statements
Antonia Constantinou (Financial Controller)
Nicosia, 27 September 2022
| A | ff |
|---|---|
| 11.1. | |
1 . |
|
| Note | Six months June 2022 ਵ |
Six months ended 30 ended 30 June 2021 ਵ |
|
|---|---|---|---|
| Rights for use of space and other revenue | 5 | 8.931.713 | 7.460.600 |
| Other operating income Fair value losses on investment property Impairment gain on trade and other receivables Administration and other operating expenses |
6 7 15 8 |
131.895 (78.170) 115.507 (3.448.418) |
464.705 (1.152.746) 1,349.604 (2.392.274) |
| Operating profit | 5.652.527 | 5.729.889 | |
| Finance income Finance costs Other losses Profit before tax |
9 9 19 |
24.170 (1.701.588) (883.665) 3.091.444 |
9.024 (1.388.042) 4.350.871 |
| Tax Profit for the period |
10 | 1.777.892 4.869.336 |
35.359 4.386.230 |
| Other comprehensive income | |||
| Total comprehensive income for the period | 4.869.336 | 4.386.230 | |
| Earnings per share attributable to equity holders (cent) | 11 | 4.87 | 4.39 |
The notes on pages 11 to 27 form an integral part of these condensed interim financial statements.
| ASSETS | Note | ਵ | 31 December 30 June 2022 2021 (audited) ਵ |
|---|---|---|---|
| Non-current assets Property and equipment Investment property Prepayments and other assets |
12 13 16 |
339.537 207.800.000 33.105 |
361.741 207.800.000 66.210 |
| 208.172.642 | 208.227.951 | ||
| Current assets Trade and other receivables Loans receivable Prepayments and other assets Refundable taxes Cash at bank and in hand |
15 14 16 23 17 |
2.157.091 1.209.458 157.925 266.166 4.268.662 |
1.815.935 883.144 502.313 266.166 5.452.439 |
| 8.059.302 | 8.919.997 | ||
| TOTAL ASSETS | 216.231.944 | 217.147.948 | |
| EQUITY AND LIABILITIES | |||
| Equity Share capital Retained earnings |
18 | 50.000.000 56.038.925 |
50.000.000 54.569.589 |
| Total equity | 106.038.925 | 104.569.589 | |
| Non-current liabilities | 19 | 82.922.149 | 83.831.487 |
| Borrowings Trade and other payables |
22 | 1.845.597 | 1.836.045 |
| Deferred tax liabilities | 20 | 17.152.435 | 19.206.034 |
| 101.920.181 | 104.873.566 | ||
| Current liabilities | |||
| Trade and other payables | 22 19 |
3.104.575 4.856.315 |
3.301.698 4.356.647 |
| Borrowings Current tax liabilities |
23 | 265.500 | |
| Provisions for other liabilities and charges | 21 | 46.448 | 46.448 |
| 8.272.838 | 7.704.793 | ||
| Total liabilities | 110.193.019 | 112.578.359 | |
| TOTAL FOUITY AND IARI ITIES | 216.231.944 | 217 147 948 |
On 27 September 2022 the Board of Directors of The Mall of Cyprus (MC) Plc authorised these financial statements for issue.
John George Mavrokordatos Director
C . . George Mouskides Director
The notes on pages 11 to 27 form an integral part of these condensed interim financial statements.
| Note | Share capital ਵ |
Retained earnings ਵ |
Total ਵ |
|
|---|---|---|---|---|
| Balance at 1 January 2021 | 50.000.000 | 39.703.678 | 89.703.678 | |
| Comprehensive income Net profit for the period |
4.386.230 | 4.386.230 | ||
| Balance at 30 June 2021 | 50.000.000 | 44.089.908 | 94.089.908 | |
| Balance at 1 January 2022 | 50.000.000 | 54.569.589 | 104.569.589 | |
| Comprehensive income Net profit for the period |
4.869.336 | 4.869.336 | ||
| Transactions with owners Dividends |
24.7 | (3.400.000) | (3.400.000) | |
| Balance at 30 June 2022 | 50.000.000 | 56.038.925 | 106.038.925 |
Companies, which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Ochmannes, while Republic Law, within two years after the end of the relevant tax year, will be deemed to have distributed this amount as dividend on the 31 of December of the second year. The amount of the deemed dividend distribution is reduced by any actual dividend already distributed by 31 December of the year the profits relate. The Company pays special defence contribution on behalf of the shareholders over the amount of the prome follow the Ormpany pay special 17% (applicable since 2014) when the entitled shareholders are natural persons tax residents of Cyprus and have their domicile in Cyprus. In addition, from 2019 (deemed dividend persons tax residents of Opfrao and have their and in behalf of the shareholders General Healthcare System (GHS) contribution at a rate of 2,65% (2021: 2,65%), when the entitled shareholders are natural persons tax residents of Cyprus, regardless of their domicile.
The notes on pages 11 to 27 form an integral part of these condensed interim financial statements.
| Note | Six months ended 30 June ended 30 June 2022 € |
Six months 2021 € |
|
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Profit before tax | 3.091.444 | 4.350.871 | |
| Adjustments for: | |||
| Depreciation of property and equipment | 12 | 32.525 | 46.140 |
| Fair value losses on investment property | 13 | 78.170 | 1.152.746 |
| Impairment gain on trade and other receivables | 15 | (115.507) | (1.349.604) |
| Movement in provisions for other liabilities | (102.600) | ||
| Fair value loss on modification of loans payable | 19 | 883.665 | |
| Interest income | த | (24.170) | (9.024) |
| Interest expense and adjustments on financial liabilities | 9 | 1.701.563 | 1.388.042 |
| 5.647.690 | 5.476.571 | ||
| Changes in working capital: | |||
| Changes in working capital | 718.132 | (692.311) | |
| Cash generated from operations | 6.365.822 | 4.784.260 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Payment for purchase of property and equipment | 12 | (9.623) | (9.252) |
| Payment for construction of investment property (excluding capitalised | |||
| interest paid) | 13 | (228.174) | (250.000) |
| Loans granted to parent | (301.722) | 100.000 | |
| Loans repayment received from parent | |||
| Net cash used in investing activities | (539.519) | (159.252) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Repayments of borrowings | (2.058.477) | (3.156.147) | |
| Interest paid (including capitalised interest paid) | (1.548.979) | (1.733.238) | |
| Dividends paid | 24.7 | (3.400.000) | |
| Defence tax paid on deemed distribution | (2.624) | (2.970) | |
| Net cash used in financing activities | (7.010.080) | (4.892.355) | |
| Net decrease in cash and cash equivalents | (1.183.777) | (267.347) | |
| Cash and cash equivalents at beginning of the period | 5.452.439 | 8.120.783 | |
| 4.268.662 | 7.853.436 | ||
| Cash and cash equivalents at end of the period | 17 |
Significant non-cash transactions are disclosed in the notes to the unaudited financial statements.
The notes on pages 11 to 27 form an integral part of these condensed interim financial statements.
The Mall of Cyprus (MC) Plc (the "Company") was incorporated in Cyprus on 27 November 1971 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. Since 6 August 2010 the Company is listed on the (unregulated) Emerging Companies Market of the Cyprus Stock Exchange. Its registered office is at 3 Verginas Street, The Mall of Cyprus, Strovolos, 2025, Nicosia, Cyprus.
The financial statements for the six months ended on 30 June 2022, have not been auditors of the Company. The unaudited condensed interim financial statements of the Company for the six months ended on 30 June 2022, should be read in conjunction with the audited financial statements for the year ended 31 December 2021.
The geopolitical situation in Eastern Europe intensified on 24 February 2022 with the commencement of the conflict between Russia and Ukraine. As at the date of authorising these financial statements for issue, the conflict continues to evolve as military activity proceeds. In addition to the events on entities that have operations in Russia, Ukraine, or Belarus or that conduct business with their counterparties, the conflict is increasingly affecting economies and financial markets globally and exacerbating ongoing economic challenges.
Emerging uncertainty regarding global supply of commodities due to the conflict between Russia and Ukraine conflict may also disrupt certain global trade flows and place significant upwards pressure on commodity prices and input costs as seen through early March 2022. Challenges for companies may include availability of funding to ensure access to raw materials, ability to finance margin payments and heightened risk of contractual nonperformance.
The financial effect of the current crisis on the global economy and overall business activities cannot be estimated with reasonable certainty at this stage, due to the pace at which the conflict prevails and the high level of uncertainties arising from the inability to reliably predict the outcome.
The Company has no direct exposure to Russia, Ukraine, and as such does not expect significant impact from direct exposures to these countries.
Despite the absence of any direct exposure, the conflict is expected to negatively impact the tourism and services industries in Cyprus. Furthermore, the increasing energy prices, fluctuations in foreign exchange in stock market trading, rises in interest rates, supply chain disruptions and intensified inflationary pressures may indirectly impact the operations of the Company. The indirect implications will depend on the extent and duration of the crisis and remain uncertain.
Management has considered the unique circumstances and the risk exposures of the Company and has concluded that there is no significant impact in the Company's profitability position. The event is not expected to have an immediate material impact on the business operations. Management will continue to monitor the situation closely and will assess the need for any measures, in case the crisis becomes prolonged.
Management is of the opinion that the Company's going concern status and outlook is not compromised. Principal factors in support of this conclusion include, but are not limited to:
The potential scenarios which could lead to the Company not being a going concern, along with Management's evaluation, are considered to be:
With respect to this scenario, the Company maintains a positive capital position (excluding short-term loan obligations to related entities) and based on its cashflow forecasts extended to year 2022 such are expected to remain. In the event however of any temporary shortfall, Group financial support may be available by delaying/deferring settlements of amounts due to other Atterbury group companies, for easing cash flow pressures.
These covenants are applicable to the Company, its fellow subsidiary the Mall of Engomi (ME) Plc and the parent entity Atterbury Cyprus Limited, and are as follows:
The Company is currently in full compliance with such covenants and expects to remain so. The Company also expects that there should not be any issue concerning the Company's cross guarantee position in favour of its fellow subsidiary, as the latter's position and performance is expected to be sufficient to avoid any unfavourable developments that may burden the entity. Based on the Company's assessment, the main covenants are the debt service cover ratio and the loan to value ratio requirements. Based on the forecasts by Management, there is significant headroom before being at risk of any such breach.
Management acknowledges the possibility that tenants, who have already suffered financial losses and reduced performance, may in future continue to face such risks. This is an issue that is being appropriately managed withcontinuous monitoring of the tenants' ongoing situation, and by considering options such as special repaymentterms and temporary concessions.
During the current period the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2022. This adoption did not have a material effect on the accounting policies of the Company.
The principal accounting policies applied in the preparation of these condensed interim financial statements are consistent to those used in the audited financial statements for the period ended 31 December 2021, unless otherwise stated in relation to the application of the new IFRSs as from 1 January 2022.
The condensed interim financial statements of the Company have been prepared in accordance with th International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), including International Accounting Standards (IAS) 34 "Interim Financial Reporting" and the requirements of the Cyprus Companies Law, Cap. 113 and the Cyprus Stock Exchange Laws and Regulations.
Dividend distribution to the Company's shareholders is recognised as a liability in the Company's financial statements in the year in which the dividends are appropriately authorised and are no longer at the discretion of the Company. More specifically, interim dividends are recognised as a liability in the period in which these are authorised by the Board of Directors and in the case of final dividends, these are recognised in the period in which these are approved by the Company's shareholders.
Up to the date of approval of the financial statements, certain new standards, interpretations and amendments to Op to the date of approvation of the manufact states for the current reporting period and which the Company has not early adopted, as follows:
• New standard: IFRS 17 Insurance Contracts (Effective for annual reporting periods beginning on or after 1 January 2023)
IFRS Interpretations Committee
The above are expected to have no significant impact on the Company's financial statements when they become effective.
| Disaggregation of revenue | Six months | Six months |
|---|---|---|
| ended 30 June ended 30 June | ||
| 2022 | 2021 | |
| ਵ | ਵ | |
| Rights for use of space - Minimum licence fees | 6.765.079 | 5.960.105 |
| Rights for use of space - Additonal licence fees Lease income from advertising space Lease related income from tenant contributions Lease related expenses from relocation incentives granted Lease related expenses from discounts granted |
24.157 | 98.285 |
| 49.470 | ||
| 46.140 | 100.552 | |
| (46.189) | (128.734) | |
| (314.202) | (559.828) | |
| Lease income from land lease | 337.037 | 337.037 |
| Total lease income | 6.812.022 | 5.856.887 |
| Revenue from service charge, utilities and other recoveries | 2.119.691 | 1.603.713 |
| Total revenue from contracts with tenants | 8.931.713 | 7.460.600 |
Income from the "Rights of use of space" relates to licensellease agreements that were in effect during the period to moone from the Tights of aco or opace Telace the finance of tenants is separately presented under "Additional licence fees" and is determined as a percentage of the tenants' revenue; as stipulated in their license/lease agreements.
"Lease related income from tenant contributions" refers to the amortised portion of capital expenditure incurred by Loade folded intonine from tenants, in transforming/enhancing the space occupied in the Mall of the otherny of bending and improvements. The capital improvement is released/amortised to profit or loss over the lease terms of the applicable tenants, arriving at reported income.
"Relocation incentives" refer to incentives the Company has granted to tenants. The incentives are released/amortised to profit or loss over the lease terms of the applicable tenants, arriving at revenue (essentially treated as "discounts"). Income from the leasing of land relates solely to the rental income earned by the Company from IKEA for the period.
"Lease related expenses from discounts granted" relate to the discounts given to tenants by the Company. The Essounts were predominantly given as a result of the global pandemic COVID-19 and the "strict" lockdown period in alooount when all malls and retail centres were closed. For the tenants to have qualified for this discount they had to comply with certain set conditions. The discounts are amortised to profit or loss over the remaining lease term of bomply will contracts from the discount was given in accordance with IFRS 16 (i.e. treated as a lease modification). The unamortised amount is presented as a lease receivable in the financial statements, prior to its reclassification in investment property (note 13).
| Six months | Six months | |
|---|---|---|
| ended 30 June ended 30 June | ||
| 2022 | 2021 | |
| 는 | € | |
| Indemnity income | 120.000 | |
| Government subsidies (Covid-19) | 300.000 | |
| Release of provision of other liabilities (note 21) | 102 600 | |
| Promotional and other income | 11.895 | 62.105 |
| 131.895 | 464.705 |
Indemnity income relates to a Court decision during the period of six months ended 30 June 2022, for an museumly inome Tolator to a San docular, the Company was indemnified from any losses in connection to this case, by its former owners, who have undertaken the responsibility to cover claims against the Company. A corresponding charge, of €120.000, is included in "Administration and other operating expenses" (note 8).
| Six months | Six months | |
|---|---|---|
| ended 30 June ended 30 June | ||
| 2022 | 2021 | |
| ಕ | ||
| Fair value losses on investment property (note 13) | (78.170) (1.152.746) | |
| (78.170) (1.152.746) |
| Six months | Six months | |
|---|---|---|
| ended 30 June ended 30 June | ||
| 2022 | 2021 | |
| ਵ | ਵ | |
| Common expenses | 226.400 | 204.482 |
| Licenses and taxes | 21.392 | |
| Insurance | 738 | 1.007 |
| Repairs and maintenance | 13.422 | |
| Auditor's remuneration | 13.500 | 13.500 |
| Directors' fees | 1.250 | 1.250 |
| Other professional fees | 589.252 | 490.088 |
| Other expenses | 304.492 | 27.609 |
| Legal case compensation (note 6) | 120.000 | |
| Bank charges | 5.756 | 4.485 |
| Property management, maintenance and utility costs | 2.119.691 | 1.603.713 |
| Depreciation | 32.525 | 46.140 |
| 3.448.418 | 2.392.274 |
| Six months ended 30 June ended 30 June 2022 ਵ |
Six months 2021 ਵ |
|
|---|---|---|
| Finance income Bank interest Interest on loans from related parties |
24.170 | 9.024 |
| 24.170 | 9.024 | |
| Finance costs Loan interest and adjustments on financial liabilities Other |
(1.701.563) (25) |
(1.388.042) |
| (1.701.588) | (1.388.042 | |
| Net finance costs | (1.677.418) | (1.379.018) |
| Six months | Six months ended 30 June ended 30 June |
|
|---|---|---|
| 2022 ਵ |
2021 € |
|
| Corporation tax Defence contribution |
265.500 10.207 |
9.289 |
| Deferred tax - credit (Note 20) Credit for the period |
(2.053.599) (1.777.892) |
(44.648) (35.359) |
The corporation tax rate is 12,5%.
Under certain conditions interest income may be subject to defence contribution at the rate of 30%. In such cases in contri this interest will be exempt from corporation tax. In certain cases, dividends received from abroad may be subject to defence contribution at the rate of 17%.
| Six months ended 30 June ended 30 June 2022 |
Six months 2021 |
|
|---|---|---|
| Profit attributable to equity holders (€) | 4.869.336 | 4.386.230 |
| Weighted average number of ordinary shares in issue during the period | 100.000.000 100.000.000 | |
| Earnings per share attributable to equity holders (cent) | 4.87 | 4.39 |
| Artworks | Leasehold property improv. |
Plant and machinery |
Signs | fixtures and hardware office equipment |
Furniture, Computer | Total | |
|---|---|---|---|---|---|---|---|
| € | € | € | € | € | € | € | |
| Cost Balance at 1 January 2021 Additions |
140.490 | 58.500 | 1.346.099 27.305 |
414.458 | 649.573 9.267 |
155.651 | 2.764.771 36.572 |
| Balance at 31 December 2021/ 1 January 2022 Additions |
140.490 | 58.500 | 1.373.404 9.623 |
414.458 | 658.840 | 155.651 | 2.801.343 9.623 |
| Balance at 30 June 2022 |
140.490 | 58.500 | 1.383.027 | 414.458 | 658.840 | 155.651 | 2,810.966 |
| Depreciation Balance at 1 January 2021 Charge for the period |
58.500 | 1.225.240 33.376 |
360.686 11.292 |
587.458 12.214 |
36.633 | 114.203 2.346.087 93.515 |
|
| Balance at 31 December 2021/ 1 January 2022 |
58.500 | 1.258.616 17.050 |
371.978 5.646 |
599.672 7.250 |
150.836 2.579 |
2.439.602 32.525 |
|
| Charge for the period On disposals |
(698) | (698) | |||||
| Balance at 30 June 2022 |
58.500 | 1.275.666 | 377.624 | 606.224 | 153.415 2.471.429 | ||
| Net book amount | |||||||
| Balance at 30 June 2022 |
140.490 | 107.361 | 36.834 | 52.616 | 2.236 | 339.537 | |
| Balance at 31 December 2021 |
140.490 | 114.788 | 42.480 | 59.168 | 4.815 | 361.741 |
| 30 June 2022 ਵ |
31 December 2021 |
|
|---|---|---|
| Balance at 1 January | 207.800.000 | 198.450.000 |
| Additions | 228-174 | 676.340 |
| Lease incentives, concessions and def. income adjustment | (150.004) | 479.030 |
| Fair value adjustment (note 7) | (78.170) | 8.194.630 |
| Balance at 30 June/31 December | 207.800.000 207.800.000 |
The investment properties are valued annually at fair value, comprising open market value based on valuations by The invocant professionally qualified valuer. Interim valuations may be conducted if Management considers necessary, for instance, in the event of pervasive events that may have a significant impact on the most recent annual appraisal exercise. Fair value is based on an active market process, adjusted if necessary, for any diffical upplated on the nature, location of the specific asset. If the information is not available, the Company uses alternative valuation methods such as recent prices or discounted cash flow projections. Changes in fair value are recorded in profit or loss and are included in "fair value gains((losses) on investment property". In arriving at open market value, Management takes into account any significant impact of lease property . In anning at open manier face, conditional discounts to tenants qualifying as rent concessions and any deferred income associated with future benefits accruing to the Company in relation to the value of investment property) in order to avoid double-counting in the Company's assets and liabilities. The adjustment as of 30 June 2022 for the aforementioned incentives, was derived from relocation incentives and unamortised discounts granted to tenants both classified under "other assets" as well as from deferred income, classified under "trade and other payables".
The Company's investment property is measured at fair value. The Company holds one class of investment property being the Shacolas Emporium Park which includes a Shopping Mall, an IKEA store, Annex 4.
The Company's investment properties were most recently valued as at 31 December 2021 by independent professionally qualified valuers Landtourist Valuations LLC, who possess a recognised relevant professional probobionally qualification values in the locations and segments of the Investment properties valued. For all investment properties, their current use equates to the highest and best use. The Company's finance department invostman proportion new carrer reluers for financial reporting purposes. Discussions of valuation processes and results are held between the CFO, Management, and the independent valuers at least once every year. At each financial year end the finance department:
Bank borrowings are secured on the Company's investment property for €103.000.000 (31 December 2021: €103.000.000).
The following table analyses investment property carried at fair value, by valuation method. The different levels have been defined as follows:
· Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
· Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
The fair value measurement for all of the investment properties has been categorised as a Level 3 fair value The fall "Pate" measurement the valuation technique used at 31 December 2021.
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment property, as well as the significant unobservable inputs used.
Year end 31 December 2021:
| Property | Valuation ਦੇ |
Valuation technique |
Discount rate ర్థ |
Terminal capitalisation rate % |
Revenue in vear 1 ਵ |
Revenue growth % |
|---|---|---|---|---|---|---|
| Cyprus | 207,800,000 Income | approach Discounted cash flows |
4.25 - 10.00 | 4.25 - 8.00 | 13.974.261 | 2,00 - 3,00 |
The valuation was determined using discounted cash flow projections based on significant unobservable inputs. These inputs include:
| Future rental cash inflows | Based on the actual location, type and quality of the properties and supported by the terms of any existing lease, other contracts or external evidence such as current market rents for similar properties; |
|---|---|
| Discount rates | Reflecting current market assessments of the uncertainty in the amount and timing of cash flows; |
| Estimated vacancy rates | Based on current and expected future market conditions atter expiry of any current lease |
| Capitalisation rates | Based on actual location, size and quality of the properties and taking into account market data at the valuation date; |
For land and buildings the valuation was determined using discounted cash flow projections, as ubsequently r or financial reporting purposes. Properties valued using the discounted cash flows model take into account adjusted for mandal reporting parpoose. I roperties to the present value using an estimated fidial These values are adjusted for differences in the market conditions such as demand and finance disount rate. The most significant input into this valuation approach is license fees and discount rates. The anecing manice as a cross check to the DCF method, the Income Capitalisation approach, through which the external value upplies as a reso environment is estimated and capitalised with the appropriate rate of return. Both the primary and the secondary methods yield similar outcomes.
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| ਵ | E | |
| Loans to parent (Note 24.4) | 1.209.458 | 883.144 |
| 1,209.458 | 883.144 | |
The loans are repayable as follows:
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| ਵ | ||
| Within one year | 1.209.458 | 883.144 |
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| ਵ | € | |
| Trade receivables - gross | 2.030.782 | 1.868.677 |
| Other receivables - gross | 268-003 | 269.795 |
| Less: provision for impairment of receivables | (616.914) | (851.650) |
| Trade receivables - net | 1.681.871 | 1.286.822 |
| Receivables from related parties (Note 24.3) | 29.628 | 231.025 |
| Unbilled service charges and additional licence fees to tenants | 445.592 | 298.088 |
| 2 157 091 | 1 815 935 |
Movement in provision for impairment of receivables:
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| દ | ||
| Balance at 1 January | 851.650 | 1.928.627 |
| Net impairment gains recognised on receivables, in profit or loss | (115.507) | (415.354) |
| Set offs against gross trade receivables | (119.229) | (661.623) |
| Balance at 30 June/ 31 December | 616.914 | 851.650 |
| 30 June 2022 ਵ |
31 December 2021 ਵ |
|
|---|---|---|
| Prepayments | 191.030 | 568.523 |
| Other assets - relocation incentives granted to tenants (amount prior to transfer to "investment property") |
218.461 | 154.681 |
| Other assets - unamortised discounts granted to tenants (amount prior to transfer to "investment property") |
1.102.888 | 1.371.565 |
| Less: reclassification of incentives and discounts to tenants to investment property (note 13) |
(1.321.349) | (1.526.246) |
| Balance at 30 June | 191.030 | 568.523 |
| Less non-current portion | (33.105) | (66.210) |
| Current portion | 157.925 | 502.313 |
Cash balances are analysed as follows:
| 31 December | |
|---|---|
| 30 June 2022 | 2021 |
| ਵ | |
| 343.796 | |
| 2.263.277 | 5.108.643 |
| 5.452.439 | |
| 2.005.385 4.268.662 |
Management considers the deposits to fully meet the definitions of "cash equivalent", based on the agreed terms , Internal with Bank of Cyprus . Bank of Cyprus is the sole credit institution with which cash is held by the Company. Interest with Bank of Oyprast accrues at the annual rate between 0% and 4,20%.
| 2022 Number of shares |
2022 ਵ |
2021 Number of shares |
2021 E |
|
|---|---|---|---|---|
| Authorised Ordinary shares of €0,50 each |
171.000.000 | 85.500.000 | 85.500.000 | |
| Issued and fully paid Balance at 1 January |
100.000.000 | 50.000.000 100.000.000 | 50.000.000 | |
| Balance at 30 June/ 31 December | 100.000.000 | 50.000.000 100.000.000 | 50.000.000 |
| 30 June 2022 ਵ |
31 December 2021 દ |
|
|---|---|---|
| Current borrowings Bank loans Loan from parent company (Note 24.6) |
3.656.315 1.200.000 |
3.756.647 600.000 |
| 4.856.315 | 4.356.647 | |
| Non-current borrowings Bank loans |
82.922.149 | 83.831.487 |
| Total | 87.778.464 | 88.188.134 |
The loan agreement, most recently renewed on 9 February 2022, comprises four distinct borrowing facilities as shown in the table below:
| Facility | Commitment | Interest rate | Maturity |
|---|---|---|---|
| Facility A | €20.000.000 | 13m Euribor + 3,50% | 15/06/2027 |
| lFacility B | €90.000.000 | 13m Euribor + 3,50% | 15/10/2033 |
| Facility C | €18.900.000 | l 3m Euribor + 3.50% | 15/05/2031 |
| Ancillary Facility | €3.000.000 | I 3m Euribor + 4,20% | N/A |
The ancillary facility represents the aggregated amount of overdrafts of the Company and its fellow subsidiary, amounting to €2,000.000 and €1.000.000 respectively.
On 10 October 2019, the Bank of Cyprus Public Company Limited syndicated a portion of Facility B (a principal amount of €27 million) to Eurobank Cyprus Ltd, as permitted by the agreement, on the same terms and conditions as set out in the facility agreement.
The bank has imposed the following covenants, in respect of the Group (defined as the Company, its parent and fellow subsidiary) on the agreement:
·Debt Service Cover Ratio: no less than or equal to 1.1 times
•Debt to Equity Ratio: shall not exceed 1.4 times
•1 oan to Value Ratio: shall not exceed 60%
The bank loans are secured as follows:
a) Atterbury Cyprus Limited guaranteed the loans of the Company up to an amount of €134.400.000.
b) The Mall of Engomi (ME) Plc guaranteed the loans of the Company up to an amount of €134.400.000.
c) By floating charge of €86.000.000 on the assets of the Mall of Cyprus (MC) Plc.
d) By the assignment of €86.000.000 from the rights of use of space in the Shacolas Emporium Park.
On 9 February 2022, upon the sign off of the latest amendment agreement, the interest rate for Facilities A, B and C On o 1 abouty 2022, apon the org. 10% to 3m Euribor + 3,50%, while at the same time monthly installments were decreased, thus increasing the final repayment amounts at maturity. As a result, a fair value (modification) loss was doordado, that mordaing the marropaymenting to €883.665, recognised in "other losses" in profit or loss.
The outstanding amount is interest free. The balance at period end, of €1.200.000, corresponds to the repayment by the parent of the payable in relation to the "Loizos" case (refer to note 21).
Maturity of non-current borrowings:
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| € | ||
| Between one to two years | 6.672.000 | 3.615.157 |
| Between two and five years | 38.732.941 | 11.635.406 |
| After five years | 37.517.208 | 68.580.924 |
| 82.922.149 | 83.831.487 |
The weighted average effective interest rates at the reporting date were as follows:
| 31 December | |
|---|---|
| 30 June 2022 | 2021 |
| 0/0 | 0/0 |
| 3,50 Bank loans |
3,40 |
The carrying amount of borrowings approximate their fair value.
Deferred tax is calculated in full on all temporary differences under the liability method using the applicable tax rates Deleriod tax to online in fan orian tax rate in the case of tax losses is 12,5% (there are no tax losses available for for offset at 30 June 2022 and 31 December 2021).
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| ਵ | ||
| Balance at 1 January | 19.206.034 | 18.354.879 |
| Fair value gains/(losses) on investment property | (2.048.170) | 376.900 |
| Difference between depreciation and wear & tear allowances | 28.156 | 409.944 |
| Accelerated tax benefit - discounts granted to tenants | (33.585) | 64.311 |
| Balance at 30 June/ 31 December | 17.152.435 | 19.206.034 |
Deferred taxation liability arises as follows:
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| ਵ | ||
| Accelerated tax depreciation - discounts granted to tenants | 137.861 | 171.446 |
| Fair value gains on investment property Difference between depreciation and wear & tear allowances |
9.828.952 | 11.877.122 |
| 7.185.622 | 7.157.466 | |
| 17.152.435 | 19.206.034 |
The Company recognises deferred tax attributed to the following:
· Differences between wear & tear allowances and depreciation: The Company recognises deferred tax liabilities and • Differences between the assessed disposal value of eligible assets used in the business (property each reporting penod one between the atsent property) and their tax written down values, taking into account the and equipment and buildings undor invocinent property and over of the applicable rate is 12.5%.
• Differences on revaluation of investment property: Land and Buildings classified as investment property, upon disposal would be taxed under the capital gains regime, at the rate of 20%.
· Differences due to discounts to tenants: Deferred tax liability arises based on the full claim curing the periods · Dinerences due to discounts to tonants and name and the entire disounts granted to tenants.
ended 30 June 2022 and 31 December 2021 of the corporation tax effect for the re ended outle 2022 and 51 December 2021 of the Solents will be over the remaining duration of The arroritsation of the capitalised and response and associate future taxable profits, as such a timing difference arises.
| Financial guarantee contracts ਵ |
Legal claims ਵ |
Total € |
|
|---|---|---|---|
| Balance at 1 January 2021 Adjustment to cost of investment property (note 13) |
26.640 | 2.602.600 | 2.629.240 |
| (2.500.000) | (2.500.000) | ||
| Utilised during the year | (102.600) | (102.600) | |
| Charged to profit or loss | 19.808 | 19.808 | |
| Balance at 31 December 2021/ 1 January 2022 | 46.448 | 46.448 | |
| Balance at 30 June 2022 | 46.448 | 46.448 |
Provisions for other liabilities-legal claims:
On 31 August 2020, an arbitration ruling was issued for a legal case facing the Company, for a total anount of Off ST August 2020, an abination fully Was Not on the Company entered into a settlement agreement, which revised the final obligation to €2,5 million. As such, €102.600 had been released in profit or loss as "other income", with the remainder reclassified to trade and other payables.
Provision on financial guarantee contracts:
This relates to the Company's estimated provisions in respect of the financial guarantees provided for pank of the park of This Features to the Collinated provision in responsible in the 12-month ECL, taking into account the probablity of its parent and lenow adostaliary. The exposure at default and the loss given default. The Company acts as pint delault of the guaranteed parties, the Exposure at doint of the guarantees at €38,000.000.
guarantor for bank loans of its parent and fellow subsidiary, with Mall of Engani ( guaranton for bank bans of to paront and believe dabitaly) million balances of The Mall of Engomi (ME) plc of €29.420.688 (31 December 2021: €29.966.041).
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| ਵ | ਵ | |
| Trade payables | 1.974.006 | 2.390.994 |
| Retentions for construction work on investment property | 5.123 | 3.673 |
| Cash quarantee | 198.018 | 198.018 |
| VAT and other payables | 875.677 | 677.502 |
| Deposits by tenants | 1.875.572 | 1.867.556 |
| Deferred income (amount prior to transfer to "investment property") | 82.323 | 137.216 |
| Less: deferred income transferred to "investment property" | (82.323) | (137.216) |
| Payables to fellow subsidiaries (Note 24.5) | 21.776 | |
| 4.950.172 | 5.137.743 | |
| Less non-current payables | (1.845.597) | (1.836.045) |
| Current portion | 3.104.575 | 3.301.698 |
"Deposits by tenants" relate to security deposits made by tenants upon the inception of their licensellease Boyonto by tonants "Total" to ending the Company to the tenants upon the temination of their agrioms. These boounty doposite mill be the Company accounts for these security deposits as a financial liability load come, it all of requirements do not stipulate any interest accruing to the tenants' at anontious oot. The Company applies a market related effective interest rate to account for the finance income and expense element, if evaluated as significant.
"Deferred income" relates to capital expenditure incurred by the Company on behalf of certain tenants, in transforming/enhancing the space occupid in the Mall of Cyprus with individualised features and improvements, transforming the promancements in the fair value of the investment property. For the Company to and which Trave Teadled in 'Unchements in 'the rentractually provisioned to remain within the Company's roughlie any oblemed fineship any claims for any contributions made. Amounts recognised in profit or ownership. Ticher the tonal not observing attion of each individual corresponding licensellease contract (rote 5). loss under "Revenue", are based on the daransation purposes, to investment property, prior to the remeasurement of the latter to its fair value (note 13).
"Retentions for construction works on investment property" concern amounts payable to the primary suppliers of Trecentions for bonoration works on the Mall of Cyprus, which are temporarily withheld on the basis of a predetermined period after conclusion of the works.
The fair values of trade and other payables (excluding accruals and deferred income) due within one year approximate to their carrying amounts as presented above.
| 30 June 2022 | 31 December 2021 |
|
|---|---|---|
| ਵ | ||
| Refundable corporate income taxes (presented under current assets) | 266.166 | 266.166 |
| Taxable liabilities (presented under current liabilites) | (265.500) | |
| 666 | 266.166 |
At 30 June 2022 the Company has, refundable corporate income taxes of €266.166 (31 December 2021: €66.166) At of our 2022 the Ochpany has 2021, and an estimated payable corporate tax for the six months ended 30 June 2022, of €265.500.
In accordance with IAS 24 "Related Party Disclosures", parties are considered to be related if one party has the ability to control the other party, is under common control, or exercise significant influence over the other party in ablity to obtitler the other party, is and Parties also include members of the Board and key members of making internal and operationship, attention hip, attention is directed to the substance of the management. In concluding gaties may enter into transactions which unrelated parties might the readonionip, no morely the logal lemmers may not be effected on the same terms, conditions and amounts as transactions between unrelated parties.
The Company is controlled by Atterbury Cyprus Limited, incorporated in Cyprus, which owns 99,67% of the Company's shares at the reporting date and at the date of approval of these financial statements.
Atterbury Cyprus Limited is controlled by Atterbury Europe B.V., incorporated in Netherlands, which owns 97,50% of the former.
The main shareholders of the Company as at 30 June 2022 and 31 December 2021 are (i) Brightbridge Real Estate The hall cours) through its indirect 36,43% shareholding in Atterbury Cyprus Limited (the parent company), (ii) Ellinked (Gypros) through to marroof of to indirect 36,43% shareholding in Atterbury Cyprus Limited and (iii) River Northge Investments No 1360 (Pty) Ltd (South Africa) through its indirect 24,30% shareholding in Atterbury Cyprus Limited.
The following transactions were carried out with related parties (refer also to notes 14 and 19 for further information on borrowings with related parties):
The remuneration of Directors was as follows:
| Six months | Six months | |
|---|---|---|
| ended 30 June ended 30 June | ||
| 2022 | 2021 | |
| ਵ | ||
| Directors' fees | 1.250 | 1.250 |
| 1,250 | 1.250 |
| Six months | Six months |
|---|---|
| ended 30 June ended 30 June | |
| 2022 | 2021 |
| ਵ | |
| 36.600 | |
| 489.766 | 431.232 |
| 489.766 | 467.832 |
Management fees, commissions, and corporate service charges are recognised in "Administration and other warragement lood, ourmmooring and of these fees is rechargeable to tenants as an agreed property operating "oxpenses" + the "growner "service charges, common use expenses and property management fees".
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| Name and relationship | ||
| The Mall of Engomi (ME) Plc - fellow subsidiary | 29.628 | 231.025 |
| 29.628 | 231.025 |
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| Name and relationship | 11 | |
| Atterbury Cyprus Limited - parent | 1.209.458 | 883.144 |
| 1.209.458 | 883.144 |
The above is unsecured, carries interest of 4,20% and has no specified repayment date.
| 31 December | ||
|---|---|---|
| 30 June 2022 | 2021 | |
| Name | ||
| Atterbury Cyprus Limited | 21.776 | |
| 21.776 |
The current account balances with related parties do not bear any interest and have no specified repayment terms.
| 30 June 2022 | 31 December 2021 |
|
|---|---|---|
| Atterbury Cyprus Limited - parent entity | ਵ 1.200.000 |
600.000 |
| 1.200.000 | 600.000 |
The loan from the parent was provided interest free, and there was no specified repayment date.
| Six months | Six months | |
|---|---|---|
| ended 30 June ended 30 June | ||
| 2022 | 2021 | |
| 은 | 는 | |
| Atterbury Cyprus Limited | 3.388.947 | |
| Minority shareholders | 11.053 | |
| 3,400.000 |
During March 2022, the board of directors of the Company approved an interim dividend amounting to €3.400.000 which was settled in cash.
The following guarantees were provided to the Company and other related entities as security for its bank borrowings:
a) Atterbury Cyprus Limited guaranteed the loans of the Company up to an amount of €134.400.000.
b) The Mall of Engomi (ME) Plc guaranteed the loans of the Company up to an amount of €134.400.000
The Company acts as a quarantor to the bank loan of fellow subsidiary The Mall of Engomi (ME) Plc up to an amount of €23.200.000 and €15.600.000. It is not expected that any loss will result from such guarantees provided by the Company, since the property of the borrower is also pledged as security.
l icense fee
The Company's license fee/operating lease income is derived from income from rights for use of space.
The Company entered into an agreement to lease out part of the land owned by it. The lessee constructed on this land a retail outlet (IKEA). The lease term signed is for a period of 14 years and 10 months. At the end of the lease period the lessee has the right to extend the lease term for another 14 years and 10 months and at the first extension the lessee has the right for a second extension of 14 years and 10 months.
Operating leases, in which the Company is the lessor, relate to investment property owned by the Company with varying duration lease terms. Where applicable, operating lease contain market review clauses in the event that the lessee is given an option to renew. Lessees do not have an option to purchase the property at the expiry of the lease period.
The Company is exposed to changes in the residual value of investment property at the end of current lease agreements. The residual value risk born by the Company is mitigated by active management of its property with the objective of optimising and improving tenant mix in order to:
The Company also grants lease incentives to encourage key tenain in the Mall for longer lease terms. In the case of anchor tenants, this also attracts other tenants to the property thereby contributing to overall occupancy levels. Lease agreements generally include a clause requiring the tenant to reinstate the leased space to its original state when the lease expires the tenant decides not to renew the lease agreement. This contributes to the maintenance of the property and allows for the space to be re let on a timely basis, once a tenant has departed.
In addition, the Company has a regular capitalised expenditure plan thoroughly considered by the Asset Management function of the Atterbury Group, to keep properties in line with market standards and trends.
There were no material events after the reporting period, which have a bearing on the financial statements.
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