2023 Annual Results

Secure Property Development & Investment PLC, the AIM quoted South Eastern European focused property company, is pleased to announce its full year audited financial results for the year ended 31 December 2023.

Highlights

• Advanced strategy to maximise shareholder value by working towards the contribution of Ukrainian assets to Arcona Property Fund N.V. as part of the larger transaction, with finalisation expected in Q3 2024.
• The Company externalised HR and office costs, through an agreement with a Cyprus-based advisory company, expected to further reduce annual costs by 35% to 50% compared to 2021 and 2020 levels.
• The Company settled the longstanding claim vis a vis Bluehouse Capital, removing the relevant provision, thus generating a one-off profit of ~€2 million.
• Consequently, NAV per share increased by 40% to €0.14 from €0.10.
• The Romanian economy saw strong growth of 2.1%, a decrease in inflation to 9.7%, and a marginal reduction in unemployment to 5.5%.

Copies of the Annual report and Accounts are being posted to Shareholders today and are available on the Company's website at www.secure-property.eu.

* * ENDS * *

2023 experienced further market disruption with one war continuing and another one commencing in our South East Europe / East Mediterranean Region. On the other hand global (and European) inflation seems to have been tamed and interest rate reduction is expected to hit the markets within 2024. In this difficult environment, SPDI succeeded in lightening its balance sheet eliminating both a number of liabilities, including settling the Bluehouse legal dispute, which in itself allowed the Company to get rid of the relative provision from its books, as well as a number of subsidiary SPVs.

In parallel, SPDI's Management increased its effort to monetize the remaining assets that had not yet been sold to Arcona Property Fund N.V. (Arcona) ("APF") while it commenced discussions about the future of the Company, after it reduces its capital and distributes the APF shares it owns to its shareholders.

We expect 2024 will be a pivotal year for SPDI as its shareholders will receive the APF shares concluding the effective merger of the two entities, and any new strategy for the future of the Company is put forward. Management and directors of SPDI are confident that the effective merger with Arcona which generates a pan-East European property company listed in Amsterdam will help our shareholders generate further value from their investment while also facilitating monetization for those that would like to do so. In any case, we believe we have followed through our promise to deliver on both options and are happy to see our long standing efforts nearing realization.

Best regards,

Lambros G. Anagnostopoulos, Chief Executive Officer

Management Report

2.1 Corporate Overview & Financial Performance

SPDI's core property asset portfolio consists of South Eastern European prime commercial and industrial real estate, the majority of which is let to blue chip tenants on long leases. During 2023, in line with the Company's strategy to maximise value for shareholders, management worked towards closing the sale of the Ukrainian assets included in Stage 2 of the transaction with Arcona Property Fund N.V (Arcona) as part of the conditional implementation agreement for the sale of Company's property portfolio, excluding its Greek logistics property (which has now also separately been sold), in an all-share transaction to Arcona, an Amsterdam and Prague listed company that invests in commercial property in Central Europe. Arcona originally held high yielding real estate investments in Czech Republic, Poland and Slovakia, the combination of two complementary asset portfolios is expected to create a significant European property company, benefiting both the Company's and Arcona's respective shareholders.

Following the completion of Stage 1 of the transaction in 2019, which involved the sale of two land plots in Ukraine and residential and land assets in Bulgaria and resulted in the Company receiving a total of 593.534 Arcona shares and 144.084 warrants over Arcona shares, in June 2021, the two parties signed SPA agreements for Stage 2 of the Arcona transaction. This stage involved the transfer of the EOS and Delenco assets in Romania and the Kiyanovskiy and Rozny land plots in Ukraine with a total net asset value of €8,2 million, in exchange for approximately 560.000 new ordinary shares in Arcona and approximately 135.000 warrants over shares in Arcona, as well as €1 million in cash, subject to, inter alia, standard form adjustment and finalisation in accordance with the relevant agreements.

During March and June 2022 the transactions for the sale of EOS and Delenco were concluded, in exchange for the issue to the Company of 479.376 new shares in Arcona and 115.543 warrants over shares in Arcona.

Although, the invasion of Ukraine by Russia during February 2022, suspended the transfer process of the relevant Ukrainian assets included in Stage 2 of the transaction, during 2023 the Management has worked intensively to resolve all relevant issues for the sale to be concluded, and as at today the transactions are expected to finally close during Q3 2024.

Furthermore, during 2023, as part of the cost optimization process adopted by the Board, the Company has started the implementation of the externalization of all existing HR and office costs in all jurisdictions that it currently operates, except Ukraine. As previously announced, the cost optimization plan involves an agreement with a Cyprus based advisory company wholly owned by the Company's CEO Lambros Anagnostopoulos, which has assumed all direct individual personnel contracts, all service contracts with local real estate service providers and all HR and office costs in Romania, for a fixed monthly fee of € 24.000 plus VAT. All relevant agreements related to this plan were signed during the period, and currently the Company has externalized all HR costs. It has been estimated that the plan will result in an annual reduction of 35% and 50% compared to similar costs incurred by the group in 2021 and 2020 respectively. The agreed monthly fee has been set to effectively reflect the reduced personnel time/cost and office expenses of the Company during the current phase of the transformation.

Moreover, during 2023, as part of the joint venture agreement with Myrian Nes Limited for converting €2,5 million of a loan into equity for developing logistics properties in Romania, the parties have identified and appraised relevant potential deals, and currently concentrate into one transaction involving the development of two different properties for the same tenant in two regional Romanian cities. The main terms have been in principle agreed and due diligence on relevant properties has been finalized, while the legal teams are currently engaging with drafting the required documentation.

Finally, during the period the Company sold its interests in all the corporate vehicles associated with Phase I of the GreenLake project in Bucharest, Romania, which remained idle following the sale of all Phase I units.

Regarding the economic environment in which the Company operates, the Romanian economy which constitutes the main operating market of the Company, grew by 2,1% in 2023. The economy decelerated during the year due to higher inflation and weaker external demand. Growth was driven by strong consumer spending, which increased significantly year-on-year on the back of the increased wages. The inflation rate dropped to 9,7% in 2023, while unemployment showed a marginal decrease to 5,5%, keeping the labor market relatively tight and wage increases high. Real estate investment volume reached in 2023 €0,5 billion, 60% lower than the volume registered in the previous year, with retail assets representing 57% of the annual volume, while office assets attracted 17% and industrial/logistics 14%.

Income from operations increased by 92% during 2023 as a result of new tenant agreements and increased energy costs re-charged to tenants, and similarly net operating income from operations increased by 90%.

Table 1

2.2 property Holdings

The Company's portfolio at the year-end, and as at the date of this report, consists of commercial income producing property in Romania, as well as land plots in Ukraine.

Innovations Logistics Park Bucharest, Romania Gross Leaseable Area: 16.570 sqm Anchor Tenant: Favorit Business Srl Occupancy Rate: 82%

Land & Residential Assets Location Key Features Kiyanovskiy Residence Kiev, Ukraine Plot of land (~ th. sqm): 6 Tsymlyanskiy Residence* Kiev, Ukraine Plot of land (~ th. sqm): 4 Rozny Lane Kiev, Ukraine Plot of land (~ th. sqm): 420

*As of November 2021, the Company submitted an official request to the City of Kiev to extend the lease of the property for another 5 years, since it has first extension rights over any other interested party. The first step in the process whereby the presiding committee of the municipality, before the final approval by the City Council, did not place as many other cases had accumulated which had time priority over our case. During the period between 15 December 2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for the interests and operational stability of the City of Kiev. From then on, all decisions have been put on hold due to the Russian insurgence of Ukraine. Management remains confident that the Company will be awarded the lease extension when the war status permits.

In 2023, the Company's accredited valuers, namely CBRE Ukraine for the Ukrainian Assets, and NAI RealAct for the Romanian Asset, remained appointed. The valuations have been carried out by the appraisers on the basis of Market Value in accordance with the current Practice Statements contained within the Royal Institution of Chartered Surveyors ("RICS") Valuation - Global Standards (2017) (the "Red Book") and are also compliant with the International Valuation Standards (IVS).

Following disposals of previous periods, SPDI's portfolio, excluding the Arcona shares, has become more concentrated in terms of geography. At the end of the reporting period, Romania remains the prime country of operations (86%) in terms of Gross Asset Value, excluding the Arcona shares, while in Ukraine (14%) the Company still has interests in land plots intended to be sold as part of the Arcona transaction.

In respect of the Company's income generation capacity, Romania has become gradually the single operating income source.

The table below summarizes the main financial position of each of the Company's assets (representing the Company's participation in each asset) at the end of the reporting period.

Table 2

* Reflects the Company's participation at each asset

**Among other items including Arcona shares. Refer to balance sheet and related notes of the financial statements.

The Net Equity attributable to the shareholders as at 31 December 2023 stood at ~€18,7 million. The table below depicts the discount of Market Share Price over NAV since 2012.

The NAV per share as at 31 December 2023 stood at GBP 0,125 and the discount of the Market Value vis a vis the Company's NAV denominated in GBP stands at 68% at year-end.

2.3 Financial and Rick Management

The Group's overall bank debt exposure at the end of the reporting period was ~€5,9 million being the balance of the financial lease of Innovations Logistics park.

Throughout 2023, the Company focused on managing and preserving liquidity through cash flow optimization. In this context, Management secured a) collection of scheduled re-payments of loans provided to third parties, b) complete sale of residential assets and c) advancement of discussions related to transaction with Arcona Property Fund N.V

2.4 2024 and beyond

During 2024 the Company intends to complete the repositioning of its remaining property assets as well as the distribution of its Arcona shares to its shareholders, with main operations already being minimized, including the externalization of all HR and relevant costs. Management is working along the guidelines of the board for the closing of the transaction with Arcona Property Fund N.V., which will mark effectively the maximization of Company's value and will give our shareholders the opportunity to gain direct exposure to an entity of considerably larger size, with a strong dividend distribution policy, and active in a more diversified and faster growing region (Central and South Eastern Europe) of the European property market.

At the same time, the Company along with the JV partner for the logistics platform in Romania, are evaluating different opportunities throughout the country, expecting the venture to materialize during 2024.

Regional Economic Developments[1]

The Romanian economy experienced in 2023 a growth of ~2,1% marking a slower y-o-y pace compared to previous years. Growth resulted from strong private consumption, despite the ongoing conflict in neighboring Ukraine and the high inflation rate from the increased energy prices.

The rate of unemployment is estimated marginally lower but still in low levels at 5,5% from 5,6% in 2022, keeping the labor market relatively tight and wage increases high. Inflation closed at ~9,7% at year end, marking a significant decline when compared to 2022 peak rate at 13,8%.

Macroeconomic data

Ukraine's economy grew by 5,3% in 2023 after contracting by almost a third in the first year of Russia's full-scale invasion. The economy is dependent on the financial aid received from Western countries and the World Bank, which reached during 2023 a total of $37,5 billion. Ukraine's trade deficit increased by c.30% during the year due to a ban on exporting agricultural products into Eastern Europe, despite the resumption of the maritime corridor for sea exports.

During 2023, the consumer price index (CPI) experienced a significant decline to ~14% from ~25% in 2022. The reduction was greater than the anticipated one By NBU, and came as a result of the successfully applied measures for the stabilization of the foreign exchange market, which limited the growth of prices for imported goods.

According to predictions of international financial institutions and agencies, the expected GDP will fluctuate in the range of 3-5% in 2024, and the pre-war GDP level is expected to be reached no sooner than 2030 provided average growth of 4% in 2025-2029.

Real Estate Market Developments[2]

4.1 Romania

Total real estate investment volume in Romania reached in 2023 €0,5 billion, representing a 60% y-o-y decrease, but reflecting cautious optimism in the face of all underlying issues, such as neighboring conflict, high energy prices and broader European economic considerations. Investment in 2023 spread beyond the capital Bucharest, with main drivers the tourist destinations of Brasov, Cluj, and Constanta. For the first time, Bucharest accounted for 25% of total volume, with 75% attributed to regional cities. After many years, retail emerged as the most attractive asset class, reaching 57% of total investment volume. Office and industrial/logistics segments represented 17% and 14% respectively of the annual volume, while hotel segment secured 8% of the market.

Prime yields registered a moderate adjustment in 2024, with office and retail yields settling at 7,75% from 7,5%, while industrial yields remained steady at ~7,75%. Local investors represent 23% of total investment volume, while foreign investment was driven by UK (44%) and Czech investors (12%).

With c.1.000.000 sq m delivered during 2023, the total modern industrial/ logistics stock reached c.7,6 million sq m. Almost 50% of the new deliveries were in Bucharest area, being by far the largest consumer market in the country. The following most important industrial/logistics hub in the country are Timisoara (11%), Brasov (7%), Ploiesti (5%) and Cluj (5%). At the end of 2023 the vacancy rate in Romania's industrial modern stock stood at ~4,8%, while the vacancy rate for Bucharest was ~5,5%. Headline rent in logistic parks is on an ascending trend and stands at €4,5/sqm/month mainly as a result of the robust demand.

4.2 Ukraine

Real estate market in Ukraine has not functioned normally since the invasion of the country by Russia in February 2022. Given the ongoing conflict, any relevant activity during the period is almost impossible, the country is operating under martial law, there are no available statistics and/or publications, and therefore no meaningful statements and inferences can be made for the local real estate market.

Property Assets

5.1 Innovations Logistics Park, Romania

As at the year end the terminal was 82% leased. Anchor tenant with 46% is Favorit Business Srl, a large Romanian logistics operator, which accommodates in the terminal their new business line which involves as end user Carrefour. Following last relevant agreement, Favorit's leases extended until 2026. During 2023, the Company signed a new lease agreement with Baustoff + Metall for 3.000 sq m ambient storage space plus office space.

5.2 Residential portfolio, GreenLake Bucharest, Romania

A residential compound of 40.500 sqm GBA, which consists of apartments and villas, situated on the banks of Grivita Lake, in the northern part of the Romanian capital - the only residential property in Bucharest with a 200 meters frontage to a lake. The compound also includes facilities such as one of Bucharest's leading private schools (International School for Primary Education), outdoor sports courts and a mini-market.

During 2023 all the units of the complex have been sold.

5.3 Land Assets

Kiyanovskiy Residence - Kiev, Ukraine

The property consists of 0,55 Ha of freehold and leasehold land located at Kiyanovskiy Lane, near Kiev city center. It is destined for the development of businesses and luxury residences with beautiful protected views overlooking the scenic Dnipro River, St. Michaels' Spires and historic Podil. Leasehold has been recently extended for a 10-year period.

The asset is part of Stage 2 of the Arcona transaction and relevant SPA for its disposal has already been signed in June 2021 while closing has been postponed due to the invasion of Russia in Ukraine, with the parties trying to conclude the transaction in 2024

Tsymlyanskit Residence - Kiev, Ukraine

The extension of the lease, originally expected during 2021, was delayed and currently is on hold due to the invasion of Russia in Ukraine. The asset is planned to be part of Stage 3 of the Arcona transaction.

Rozny Lane - Kiev Oblast, Kiev, Ukraine

The asset is part of Stage 2 of the Arcona transaction and relevant SPA for its disposal has already been signed in June 2021 while closing has been postponed due to the invasion of Russia in Ukraine, with the parties trying to conclude the transaction during 2024.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2023

Continued Operations

Profit/ (Loss) for the year from continued operations attributable to:

Profit/ (Loss) for the year from discontinued operations attributable to:

1 Share premium is not available for distribution.

2 Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution for defence at 17% and GHS contribution at 1,7%-2,65% for deemed distributions after 1 March 2019 will be payable on such deemed dividends to the extent that the ultimate shareholders are both Cyprus tax resident and Cyprus domiciled. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable by the Company for the account of the shareholders.

4 Exchange differences related to the translation from the functional currency of the Group's subsidiaries are accounted for directly to the foreign currency translation reserve. The foreign currency translation reserve represents unrealized profits or losses related to the appreciation or depreciation of the local currencies against the euro in the countries where the Group's subsidiaries own property assets.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2023

Notes to the Consolidated Financial Statements

For the ended 31 December 2023

Country of incorporation

Principal activities

The Group maintains offices in Nicosia, Cyprus, Bucharest, Romania and Kiev, Ukraine.

As at 31 December 2023, the companies of the Group employed and/or used the services of 2 full time equivalent people, (2022, 10 full time equivalent people).

Basis of preparation

Going concern basis

The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

In particular, the Company is in a process of disposing of its portfolio of assets in an all share transaction with Arcona Property Fund N.V., meaning that as soon as this transaction consummates the Company will be left with its corporate receivables and liabilities.

These conditions raise some doubt about the Company's ability to continue as a going concern within the next twelve months from the date these financial statements are available to be issued. The ability to continue as a going concern is dependent upon positive future cash flows.

Management believes that the Company will be able to finance its needs given the fact that the additional corporate receivables, as well as the consideration received in the form of Arcona shares is estimated that it can effectively discharge all corporate liabilities. At the same time, the transaction with Arcona Property Fund N.V., which is a cash flow generating entity, will result in the Company being a significant shareholder, entitled to dividends according to the dividend policy of Arcona Property Fund N.V.

• Adoption of new and revised Standards and Interpretations
• Significant accounting policies

4.1 Basis of consolidation

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognized amounts of acquiree's identifiable net assets.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in accordance with IAS 39, either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured and its subsequent settlement is accounted for within equity.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.

When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

4.2 Functional and presentation currency

Items included in the Group's financial statements are measured applying the currency of the primary economic environment in which the entities operate (''the functional currency''). The national currency of Ukraine, the Ukrainian Hryvnia, is the functional currency for all the Group's entities located in Ukraine, the Romanian leu is the functional currency for all Group's entities located in Romania, and the Euro is the functional currency for all Cypriot subsidiaries.

• All assets and liabilities are translated at closing rate;
• Equity of the Group has been translated using the historical rates;
• All resulting exchange differences are recognized as a separate component of equity;
• Monetary items receivable from foreign operations for which settlement is neither planned nor likely to occur in the foreseeable future and in substance are part of the Group's net investment in those foreign operations are recongised initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the foreign operation.

4.3 Discontinued operations

• represents a separate major line of business or geographic area of operations;
• is a subsidiary acquired exclusively with a view to resale.

4.4 Investment Property at fair value

Investment property, comprising freehold and leasehold land, investment properties held for future development, warehouse and office properties, as well as the residential property units, is held for long term rental yields and/or for capital appreciation and is not occupied by the Group. Investment property and investment property under construction are carried at fair value, representing open market value determined annually by external valuers. Changes in fair values are recorded in the statement of comprehensive income and are included in other operating income.

A number of the land leases (all in Ukraine) are held for relatively short terms and place an obligation upon the lessee to complete development by a predetermined date. It is important to note that the rights to complete a development may be lost or at least delayed if the lessee fails to complete a permitted development within the timescale set out by the ground lease.

Initial measurement and recognition

Investment property is measured initially at cost, including related transaction costs. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the consolidated statement of comprehensive income in the period of retirement or disposal.

Subsequent measurement

If a valuation obtained for an investment property held under a lease is net of all payments expected to be made, any related liabilities/assets recognized separately in the statement of financial position are added back/reduced to arrive at the carrying value of the investment property for accounting purposes.

Basis of valuation

The fair values reflect market conditions at the financial position date. These valuations are prepared annually by chartered surveyors (hereafter "appraisers"). The Group appointed valuers in 2014, which remain the same in 2023:

• CBRE Ukraine, for all its Ukrainian properties,
• NAI Real Act for all its Romanian properties.

"Market Value" is defined as: "The estimated amount for which a property should be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing actions, wherein the parties had each acted knowledgeably, prudently and without compulsion".

In expressing opinions on Market Value, in certain cases the appraisers have estimated net annual rentals/income from sale. These are assessed on the assumption that they are the best rent/sale prices at which a new letting/sale of an interest in property would have been completed at the date of valuation assuming: a willing landlord/buyer; that prior to the date of valuation there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the letting/sale; that the state of the market, levels of value and other circumstances were, on any earlier assumed date of entering into an agreement for lease/sale, the same as on the valuation date; that no account is taken of any additional bid by a prospective tenant/buyer with a special interest; that the principal deal conditions assumed to apply are the same as in the market at the time of valuation; that both parties to the transaction had acted knowledgeably, prudently and without compulsion.

The valuation is exclusive of VAT and no allowances have been made for any expenses of realization or for taxation which might arise in the event of a disposal of any property.

Valuation Approach

Pre Development

Development

Post Development

Rental values have been assessed as at the date of valuation but having regard to the existing occupational markets taking into account the likely supply and demand dynamics during the anticipated development period. The standard letting fees were assumed within the valuations. In arriving at their estimates of gross development value ("GDV"), the appraisers have capitalized their opinion of net operating income, having deducted any anticipated non-recoverable expenses, such as land payments, and permanent void allowance, which has then been capitalized into perpetuity.

The capitalization rates adopted in arriving at the opinions of GDV reflect the appraisers' opinions of the rates at which the properties could be sold as at the date of valuation.

4.5 Goodwill

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of comprehensive income. An impairment loss recognized for goodwill is not reversed in subsequent periods.

4.6 Property, Plant and equipment and intangible assets

Property, plant and equipment and intangible non-current assets are stated at historical cost less accumulated depreciation and amortization and any accumulated impairment losses.

Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined and intangibles not inputted into exploitation, are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Group's accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Depreciation and amortization are calculated on the straight‑line basis so as to write off the cost of each asset to its residual value over its estimated useful life. The annual depreciation rates are as follows:

No depreciation is charged on land.

An item of tangible and intangible assets is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the statement of comprehensive income.

4.7 Cash and Cash equivalents

4.8 Assets held for sale

4.9 Financial Instruments

4.9.1 Recognition and initial measurement

4.9.2 Classification and subsequent measurement

Financial assets

Financial assets - Business model assessment:

• how the performance of the portfolio is evaluated and reported to the Group's management;
• contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate, including variable-rate features;
• prepayment and extension features; and

Financial assets - Subsequent measurement and gains and losses:

Financial assets at amortised cost

Debt investments at FVOCI

Equity investments at FVOCI

4.9.3 Derecognition

Financial assets

Financial liabilities

4.9.4 Offsetting

4.9.5 Derivative financial instruments and hedge accounting

Derivative financial instruments and hedge accounting

Cash flow hedges

Net investment hedges

4.10 Leases

the Company has the right to operate the asset; or

The Company as lessor

If an arrangement contains lease and non lease components, the Company applies IFRS 15 to allocate the consideration in the contract.

The Company recognises lease payments received under operating leases as income on a straight line basis over the lease term as part of 'other income'.

The Company as lessee

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in substance fixed payments;
• amounts expected to be payable under a residual value guarantee; and

Short term leases and leases of low value assets

The Company has elected not to recognise the right of use assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets (i.e. IT equipment, office equipment etc.). The Company recognises the lease payments associated with these leases as an expense on a straight line basis over the lease term.

4.11 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalized as part of the cost of that asset.

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extend there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment and amortised over the period of the facility to which it relates.

Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortization of discounts or premium relating to borrowings, amortization of ancillary costs incurred in connection with the arrangement of borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

4.12 Tenant security deposits

Tenant security deposits represent financial advances made by lessees as guarantees during the lease and are repayable by the Group upon termination of the contracts. Tenant security deposits are recognized at nominal value.

4.13 Impairment of tangible and intangible assets other than goodwill

If the recoverable amount of an asset (or cash‑generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash‑generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash‑generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash‑generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

4.14 Share Capital

Ordinary shares are classified as equity.

4.15 Share premium

4.16 Share-based compensation

The Group had in the past and intends in the future to operate a number of equity-settled, share-based compensation plans, under which the Group receives services from Directors and/or employees as consideration for equity instruments (options) of the Group. The fair value of the Director and employee cost related to services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions. The total amount expensed is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each financial position date, the Group revises its estimates on the number of options that are expected to vest based on the non-marketing vesting conditions. It recognizes the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital and share premium when the options are exercised.

4.17 Provisions

Provisions are recognized when the Group has a present obligation (legal, tax or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. As at the reporting date the Group has settled all its construction liabilities.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

4.18 Non‑current liabilities

4.19 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. It is recognized to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group and the revenue can be measured reliably. Revenue earned by the Group is recognized on the following bases:

4.20.1 Income from investing activities

4.20.2 Dividend income

Dividend income from investments is recognized when the shareholders' right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).

4.20.3 Interest income

Interest income is recognized on a time-proportion (accrual) basis, using the effective interest rate method.

4.20.4 Rental income

4.20 Service charges and expenses recoverable from tenants

Income arising from expenses recharged to tenants is recognized on an accrual basis.

4.21 Other property expenses

4.22 Borrowing costs

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are recognized in the statement of comprehensive income in the period in which they are incurred as interest costs which are calculated using the effective interest rate method, net result from transactions with securities, foreign exchange gains and losses, and bank charges and commission.

4.23 Asset Acquisition Related Transaction Expenses

4.24 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

4.24.1 Current tax

4.24.2 Deferred tax

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

4.24.3 Current and deferred tax for the year

Current and deferred tax are recognized in the statement of comprehensive income, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

4.24.4 Withholding Tax

4.24.5 Dividend distribution

Dividend distribution to the Company's shareholders is recognized as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders.

4.25 Value added tax

4.26 Operating segments analysis

4.27 Earnings and Net Assets value per share

4.28 Comparative Period

• New accounting pronouncement
• Critical accounting estimates and judgments
• Provision for impairment of receivables
• Fair value of financial assets
• Fair value of investment property

The fair value of investment property is determined by using various valuation techniques. The Group selects accredited professional valuers with local presence to perform such valuations. Such valuers use their judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each financial reporting date. The fair value has been estimated as at 31 December 2023 (Note 19.2).

Income taxes

Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Impairment of tangible assets

Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Provision for deferred taxes

Deferred tax is not provided in respect of the revaluation of the investment property and investment property under development as the Group is able to control the timing of the reversal of this temporary difference and the Management has intention not to reverse the temporary difference in the foreseeable future. The properties are held by subsidiary companies in Ukraine, Greece and Romania. Management estimates that the assets will be realized through a share deal rather than through an asset deal. Should any subsidiary be disposed of, the gains generated from the disposal will be exempt from any tax.

• Application of IFRS 10
• not to be an Investment Management Service provider to Investors,
• Risk Management

7.1 Financial risk factors

7.1.1 Operating Country Risks

7.1.1.1 Ukraine

In 2023, growth in Ukraine had been supported by a record harvest, reaching 5,3%. However, recent war damage to the country's electricity infrastructure is among factors seen likely to constrain even higher growth in 2024.

The economy was boosted not only by bumper crops but also increased defense spending, which supported domestic demand, while net exports continued to decline as a result of the ongoing conflict.

Other supportive factors of 2023 economic performance, included the Ukrainian authorities' success in restoring electrical supply after the previous winter's Russian attacks on civilian infrastructure, and the resilience and adaptability of Ukrainian business. Moreover, timely external financing in 2023 was a further stabilizing factor, helping to reduce inflation to target levels. These lifted official foreign reserves to record levels as public debt surged to close to 90% of GDP.

However, in 2024, the prospect of a prolonged war of attrition and renewed doubts about external financing for this year, which persisted for several months before being resolved, have raised new challenges. Limited domestic demand, labour shortages and insufficient investments are also among factors that will likely constrain further growth prospects.

On the positive side, a new Ukrainian Black Sea export corridor along the coastline has been opened, removing some of the wartime uncertainty about the safety of using the Black Sea to export Ukraine's vast offerings of agricultural produce and other bulk good such as metals and ores.

After a slow start, this corridor's usage has been picking up, boosting not only agriculture but also the metal industry and mining, which have been among the hardest hit industries over the last two years. A recovery in exports and higher domestic military production will likely generate economic growth of +3% in 2024, accelerating to 6 per cent in 2025. However, risks remain high, in particular related to the damages in port and electricity infrastructure.

7.1.1.2 Romania

Romanian economy grew by 2,1% in 2023 despite the slow start made during the first two quarters, marking however a significant slower y-o-y pace compared to the previous periods.

Growth succeeded mainly due to strong private consumption, and despite the ongoing war in neighboring Ukraine and the high, although significantly lower than 2022, inflation rates.

Fiscal and current account deficits remain elevated as a result of the social politics adopted by the Government for the support of low income citizens, while unemployment rate is estimated marginally lower to 5,5%. Taking into account the European economic considerations and the international political circumstances, the macroeconomic indicators of local economy have become weaker, and therefore the associated risk has been increased.

7.1.2 Risks associated with property holding and development associated risks

Several factors may affect the economic performance and value of the Group's properties, including:

• cyclical fluctuations in the property market generally;
• the attractiveness of the property to tenants or residential purchasers;
• decreases in capital valuations of property;
• covenants, conditions, restrictions and easements relating to the properties;

7.1.2 Risks associated with property holding and development associated risks (continued)

7.1.3 Property Market price risk

7.1.4 Interest rate risk

7.1.5 Credit risk

7.1.6 Currency risk

Currency risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Group's functional currency. Excluding the transactions in Ukraine, all of the Group's transactions, including the rental proceeds are denominated or pegged to EUR. In Ukraine, even though there is no recurring income stream, the fluctuations of UAH against EUR entails significant FX risk for the Group in terms of its local assets valuation. Management monitors the exchange rate fluctuations on a continuous basis and acts accordingly, although there are no available financial tools for hedging the exposure on UAH. It should be noted though that the current war in Ukraine causing economic and political problems, as well as any probable currency devaluation may affect Group's financial position.

7.1.7 Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group's core strategy is described in Note 41.1 of the consolidated financial statements.

7.1.8 Compliance risk

7.1.9 Litigation risk

7.1.10 Insolvency risk

Insolvency arises from situations where a company may not meet its financial obligations towards a lender as debts become due. Addressing and resolving any insolvency issues is usually a slow moving process in the Region. Management is closely involved in discussions with creditors when/if such cases arise in any subsidiary of the Group aiming to effect alternate repayment plans including debt repayment so as to minimize the effects of such situations on the Group's asset base.

7.2. Operational risk

7.3. Fair value estimation

Investment in subsidiaries

Holding %

* As of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease of Tsymlyanskiy Residence property for another 5 years, since the Group has first extension rights over any other interested party. The first step in the process whereby the presiding committee of the municipality, before the final approval by the City Council, did not place as too many other cases had accumulated which had time priority over Group's case. During the period between 15 December 2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for the interests and operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence of Ukraine. The Management remains confident that the Company will be awarded the lease extension once the war status permits.

** During 2020 the Company initiated the process of striking off six holding subsidiaries in Cyprus, which became idle following recent disposals of local asset owning companies and properties. Bluehouse Accession Project IV Limited, Demetiva Holdings Limited, Diforio Holdings Limited and Mofben Investments Limited were already deleted from registrar of Companies. Jenby Ventures Limited and Ebenem Limited are still expected relevant official clearance from local Trade Registry and Tax Authorities in the following period. During 2022 the Group has also initiated strike off process for two additional Ukrainian entities, LLC Retail Development Balabino and LLC Interterminal.

*** During 2023 BlueBigBox 3 Srl, the SPV which used to hold Praktiker Craiova property that was sold back in 2018, was entered into an insolvency process initiated by a vendor. The case is associated with the Bluehouse litigation case (Note 39.3). Following the settlement made with BLUEHOUSE ACCESSION PROPERTY HOLDING III S.A.R.L. pursuant to a consensual order issued by the District Court of Nicosia in action no. 3362/2018, relevant legal motions against Bluebigbox3 Srl have been withdrawn. In relation to the insolvency procedure of the company, next hearing has been set on 17 September 2024, when the judicial administrator will file the request to close the bankruptcy procedure before the court. Following this, SPDI will re-gain control and will start the process of an ordinary liquidation, since the entity does no longer hold any assets.

Discontinued operations

9.(a) Description

The Company announced on 18 December 2018 that it has entered into a conditional implementation agreement for the sale of its property portfolio, excluding its Greek logistics properties ('the Non-Greek Portfolio'), in an all-share transaction to Arcona Property Fund N.V. The transaction is subject to, among other things, asset and tax due diligence (including third party asset valuations) and regulatory approvals (including the approval of a prospectus required in connection with the issuance and admission to listing of the new Arcona Property Fund N.V. shares), as well as successful negotiating and signature of transaction documents. During 2019 and as part of the Arcona transaction the Company sold the Boyana Residence asset in Bulgaria, as well as the Bela and Balabino land plots in Ukraine, while in March and June 2021 has signed SPAs related to Stage 2 of the transaction, namely for the EOS and Delenco assets in Romania, as well as the Kiyanovskiy and Rozny assets in Ukraine. In March and June 2022, the Company sold effectively to Arcona the Delenco and EOS assets. Regarding the Ukrainian assets included in Stage 2 of the transaction, discussions for closing had been put on hold after the invasion of Russia in the country, however currently negotiations have re-emerged, a commercial agreement has been reached, and relevant closing documentation is drafted for execution.

During 2023, the Company sold through a third-party transaction, SEC South East Continent Unique Real Estate (Secured) Investments Limited along with its subsidiaries, which no longer possessed any asset.

The companies that are classified under discontinued operations are the followings:

• Cyprus: Frizomo Holdings Limited and Ketiza Holdings Limited
• Romania: Best Day Real Estate Srl, Ketiza Real Estate Srl and Secmon SRL
• Ukraine: LLC Aisi Ukraine, LLC Almaz‑Pres‑Ukraine, LLC Trade Center, LLC Retail Development Balabino

9.(b) Results of discontinued operations

For the year ended 31 December 2023

9.(d) Assets and liabilities of disposal group classified as held for sale

The following assets and liabilities were reclassified as held for sale in relation to the discontinued operation as at 31 December 2023:

Liabilities directly related with assets classified as held for sale

Income

Income from continued operations for the year ended 31 December 2023 represents:

a) rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded with tenants of Innovations Logistics Park (Romania). It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park (Romania) is currently invoiced by the Company as part of a relevant lease agreement with the Innovations SPV and the lender, however the asset, through the SPV, is planned to be transferred as part of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer, the Company will negotiate with the lender its release from the aforementioned lease agreement, and if succeeds, upon completion such income will be also transferred.

The increase in the service charge and utility income in 2023 is due to the increased energy costs of the park re-invoiced to tenants.

Income from discontinued operations represents:

• rental income, as well as service charges and utilities income collected from tenants as a result of the rental agreements concluded with tenants of Innovations Logistics Park (Romania) for the year ended 31 December 2023, while for 2022 there was relevant income from Kindergarten (Romania) and EOS Business Park (Romania) which were sold during this year.
• rental income and service charges by tenants of the Residential Portfolio;

Occupancy rates as at 31 December 2023 were as follows:

Income producing assets

Asset operating expenses

The Group incurs expenses related to the proper operation and maintenance of all properties in Kiev and Bucharest. Part of these expenses is recovered from the tenants through the service charges and utilities recharge process (Note 10).

Under continued operations, there are no such expenses related to the operation of the assets.

Under discontinued operations all such expenses related to Innovations Logistics Park (Romania), EOS Business Park (Romania) in 2022, Residential Portfolio (Romania) in 2022, GreenLake (Romania), and all Ukrainian properties.

Property related taxes reflect local taxes of land and building properties (in the form of land taxes, building taxes, garbage fees, etc.). Relevant decrease in 2023 resulted from the assets sold during 2022.

Repairs and technical maintenance increased in 2023 due to required works conducted in Innovations Logistics Park, bringing the property in line with newly adopted Fire and Environmental legislation.

Utilities' increase resulted from Innovations Logistics Park in Bucharest, and matches with the increased service charges and utilities income invoiced back by the Company and included in continued operations.

Leasing expenses reflect expenses related to long term land leasing.

Administration Expenses

Salaries and wages include the remuneration of the CEO (2023: €1, 2022: €63.123), the CFO, the Group Commercial Director and the Country Managers in Ukraine and Romania, as well as the salary cost of personnel employed in the various Company's offices. Relevant decrease came as a result of the externalization of all HR costs after April 2023, except those in Ukraine, as part of the cost reduction plan adopted by the board.

Incentives provided to personnel refer for the successful implementation of Group's plan pursuant to relevant Remuneration Committee proposal dated 7 May 2021 as approved by the board on 01 June 2021.

Advisory fees are mainly related to advisors, brokers, valuers and other professionals engaged in relevant transactions, as well as outsourced human resources support on the basis of relevant contracts. The increase during the current period resulted from the externalization of HR and related costs, as well as from the increased fees to consultants in Ukraine in relation to the extension of Company's leaseholds in the country.

Accounting and related fees include fees from external accounting services.

Tax advisory fees are related to ad-hoc fees paid to advisors for applying and succeeding a new tax ruling for the Company, which based on current structure of operations, is expected to produce significantly lower imposed taxes, while its application has produced beneficial retrospective results.

Public group expenses include among others fees paid to the AIM:LSE stock exchange, Cyprus Stock Exchange as custodian, and the Nominated Adviser of the Company, as well as other expenses related to the listing of the Company, such as public relations and registry expenses. Relevant increase in current period resulted from ad hoc advise in respect of listing rule transaction opinion of the order of ~€25k.

Legal fees represent legal expenses incurred by the Group in relation to asset operations (rentals, sales, etc.), ongoing legal cases in Ukraine, Cyprus and Romania, compliance with AIM listing, as well as one-off fees associated with legal services and advise in relation to due diligence processes and transactions. During the current period, the Group incurred ~€152k relevant legal fees associated with the Bluehouse litigation and its eventual settlement.

Following relevant confirmation by the board, the Company registered in 2023 the remuneration of the board associated with H1 2022 (€75k) which remained pending from previous year, as well as a provision of a remuneration to cover the period including H2 2022 and 2023 (€250k).

Corporate operating expenses include D&O insurance, travel expenses, (tele)communication and conference expenses, software fees and other general expenses in Cyprus, Romania and Ukraine.

* As of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease of Tsymlyanskiy Residence property for another 5 years, since the Group has first extension rights over any other interested party. The first step in the process whereby the presiding committee of the municipality, before the final approval by the City Council, did not place as many other cases had accumulated which had time priority over Group's case. During the period between15 December 2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for the interests and operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence of Ukraine. We remain confident that we will be awarded the lease extension once the war status permits.

In relation to the Ukrainian assets excluding Tsymlyanskiy, and in view of the ongoing conflict in the country, the Management, although received updated third-party valuation reports to monitor effectively the underlying values, decided in H1 2022 accounts to impair the value of those assets at 50% of their value as at the end of 2021 and continues the same in every period since then.

Gain/ (Loss) from disposal of properties

During 2022 the Group sold in Moselin (Greenlake Parcel K) 2 villas, Green Lake Phase 2 land (in particular Parcels B,C,F and part of G) and additional adjacent land owned by Green Lake Development SRL, in a transaction with a local developer. The results of the part of the transaction which conducted by Green Lake Development SRL are not included in the table below since the selling entity was an associate.

Continued operations

Other income represents income from services to an associate company.

Account payable written off under continued operations, represents the reversal of the provision made in the past for the Bluehouse litigation case, as a result of the Redeemable Class B share redemption (Note 32). Pursuant to a concensual order issued by the District Court of Nicosia in action no.3362/2018, the Company paid €494.000, and as a result the surplus provision was reversed since it is no longer necessary.

Discontinued operations

Account payable written off in 2023 refer to old payable balances of Secmon for which local legislation allows for their effective elimination.

Other expenses in discontinued operations represent mainly property tax penalties incurred by a Romanian company from Local Tax Authorities.

Finance costs and income

Continued operations

Continued operations

Interest income from non-bank loans, reflects interest on Loan receivables from 3rd parties provided as an advance payment for acquiring a participation in an investment property portfolio (Olympians portfolio) in Romania. The funds provided initially with a convertibility option which was not exercised, and is currently treated as a loan. According to the last addendum of the loan agreement, part of the principal equal to €2,5 million will be contributed to a joint venture between the Company and the borrower for the development of logistics assets in Romania (Note 24). The remaining principal plus the interest is repaid in installments, expected to be fully repaid by the end of 2024. The loan is bearing a fixed interest rate of 10%.

Interest expenses represent interest charged on Bank and non-Bank borrowings (Note 30).

Discontinued operations

Interest income from non-bank loans, reflects income from loans granted by the Group for financial assistance of associates.

Interest expenses represent interest charged on Bank and non-Bank borrowings (Note 30).

Foreign exchange profit / (losses)

Non realised foreign exchange loss

Foreign exchange losses (non-realised) resulted from the loans and/or payables/receivables denominated in non EUR currencies when translated in EUR. The exchange loss for the year ended 31 December 2023 from continued operations is €26.824 (2022: loss €17.647).

The exchange loss from discontinued operations for the year ended 31 December 2023 is €55.699 (2022: loss €165.165) (Note 9).

Tax Expense

For the year ended 31 December 2023, the corporate income tax rate for the Group's subsidiaries is 18% in Ukraine, and 16% in Romania. The corporate tax that is applied to the qualifying income of the Company and its Cypriot subsidiaries is 12,5%.

The tax on the Group's results differs from the theoretical amount that would arise using the applicable tax rates as follows:

Investment Property

19.1 Investment Property Presentation

Investment Property consists of the following assets:

Income Producing Assets

• EOS Business Park consists of 3.386 sqm gross leasable area and includes a Class A office Building in Bucharest, which is currently fully let to Danone Romania until 2025. In June 2022 the Company proceeded to the sale of the Romanian SPV which holds the asset as part of Stage 2 of the transaction with Arcona.

Residential Assets

• At the end of the reporting period the Company does not own any more residential units, having sold during the period the remaining residential portfolio.

Land Assets

• Kiyanovskiy Residence consists of four adjacent plots of land, totaling 0,55 Ha earmarked for a residential development, overlooking the scenic Dnipro River, St. Michael's Spires and historic Podil neighborhood. The Company recently secured for the leashold part of the property a 10-year extension.
• Tsymlyanskiy Residence is a 0,36 Ha plot of land located in the historic Podil District of Kiev and is destined for the development of a residential complex. As of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease of Tsymlyanskiy Residence property for another 5 years, since the Group has first extension rights over any other interested party. The first step in the process whereby the presiding committee of the municipality, before the final approval by the City Council, did not place as many other cases had accumulated which had time priority over Group's case. During the period between 15 December 2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for the interests and operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence of Ukraine. We remain confident that we will be awarded the lease extension once the war status permits.
• Rozny Lane is a 42 Ha land plot located in Kiev Oblast, destined for the development of a residential complex. It has been registered under the Group pursuant to a legal decision in 2015.
• GreenLake land is a 40.360 sqm plot in GreenLake which was sold during 2022.

19.2 Investment Property Movement during the reporting period

Discontinued Operations

Discontinued Operations

Due to the situation in Ukraine and the associated uncertainty, the Management has decided in H1 2022 to proceed with valueing those assets 50% lower than the values provided by the third-party valuers (CBRE Ukraine), and in turn decided to keep the same decision in all subsequent periods, including the current one. As a result, the Ukrainian assets contribute €1,5 million in Group's assets, as compared to €3,1 million provided by the valuers and €3,1 million in 2022 accounts.

The two components comprising the fair value movements are presented in accordance with the requirements of IFRS in the consolidated statement of comprehensive income as follows:

• The translation loss due to the devaluation of local currencies of €150.753 (a) (2022: loss €442.765) is presented as part of the exchange difference on translation of foreign operations in other comprehensive income in the statement of comprehensive income and then carried forward in the Foreign currency translation reserve; and,
• The fair value loss in terms of the local functional currencies amounting to €223.730 (b) (2022: loss €1.245.230), is presented as Valuation gains/(losses) from investment properties in the statement of comprehensive income and is carried forward in Accumulated losses.

19.3 Investment Property Carrying Amount per asset as at the reporting date

19.4 Investment Property analysis

Investment Properties

The following assets are presented under Investment Property: Innovations Logistics park and all the land assets namely Kiyanovskiy Residence, Tsymlyanskiy Residenceand Rozny Lane in Ukraine.

Disposals of Investment Properties in 2022 represent the sale of EOS, Kindergarten and GreenLake Phase 2 land.

19.5 Investment Property valuation method presentation

In respect of the Fair Value of Investment Properties the following table represents an analysis based on the various valuation methods. The different levels as defined by IFRS have been defined as follows:

• Level 1 relates to quoted prices (unadjusted) in active and liquid markets for identical assets or liabilities.
• Level 2 relates to inputs other than quoted prices that are observable for the asset or liability indirectly (that is, derived from prices). Level 2 fair values of investment properties have been derived using the market value approach by comparing the subject asset with similar assets for which price information is available. Under this approach the first step is to consider the prices for transactions of similar assets that have occurred recently in the market. The most significant input into this valuation approach is price per sqm.
• Level 3 relates to inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). Level 3 valuations have been performed by the external valuer using the income approach (discounted cash flow) due to the lack of similar sales in the local market (unobservable inputs).

To derive Fair Values the Group has adopted a combination of income and market approach weighted according to the predominant local market and economic conditions.

The table below shows yearly adjustments for Level 3 investment property valuations:

• Investment Property Acquisitions, Goodwill Movement and Disposals

20.1 Acquisition of asset

In 2022, the Company acquired 50% of the share capital of Equardo Limited, an SPV holding stake in Victoria City (Vic City) project in Bucharest. The participation took place through a share capital increase of the order of €8.000, where the remaining shareholders waived their right to participate. Vic City is a land plot in north Bucharest on Bucuresti Noi Boulevard near a metro station, where a commercial mixed use center was to be developed. The project was to be contributed to SPDI by its promoters at the time, but neither its development nor its contribution progressed, due to other priorities. SPDI participated in Equardo Limited so as to retain some of the value originally destined to be part of its asset portfolio. During 2023, the Company acquired the remaining 50% of Equardo Limited for a consideration of €90.000.

20.2 Disposals of subsidiaries and associates

20.2.1 (A) Disposal of EOS Business Park

In June 2022 the Company closed the agreement for the sale of the Romanian SPV which owns the EOS Business Park asset in Bucharest. In exchange for the sale, the Company received 116.688 new ordinary shares in Arcona and 28.125 warrants over shares in Arcona.

In view of closing the transaction with Arcona for EOS, the Company entered in December 2021 into a new loan facility for re-financing the previous leasing contract of the asset, securing a net amount of ~€800k which was used to partially re-pay the shareholder loan provided by the Company to the relevant SPV before the closing of the transaction with Arcona.

20.2.1 (B) Disposal of Associate Lelar Holdings Limited (Note 21)

During 2022 and as part of Stage 2 of the transaction with Arcona, the Company sold Lelar Holdings Limited, the Cypriot holding company associated with Delea Nuova asset in Bucharest. In exchange of the transfer, the Company received 362.688 new ordinary shares in Arcona and 87.418 warrants over shares in Arcona, while at the same time the parties agreed that the already declared dividends by Lelar Holding Limited will be allocated and paid to the Company. The relevant amount of such dividends corresponding to the transferred ownership stake of 24,35% was €298k which has already been collected by the Company.

€

During 2022, the Company honouring certain commitment made in the past during the restructuring of the holdings of Green Lake project, proceeded to the sale of its 50% stake in Kindergarten asset in Greenlake, Bucharest. The consideration of the transaction was set at €175.000 plus release of available company's cash pledged by the Bank.

20.2.1 (D) Disposal of GreenLake Phase II land

During 2022, in an effort to accelerate monetization of assets that were to be part of Stage 3 of the transaction with Arcona, and since the discussions with Arcona took much longer than expected and negotiations on their valuation did not conclude, the Company proceeded with monetization of the remaining GreenLake land plots. The remaining land portfolio was not zoned for development and its disposal resulted also to the settlement, after prolonged negotiations with neighbouring land owners, of an ongoing overlapping dispute over the GreenLake land at a cost of ~€500k gross.

20.2.2 Acquisition and disposal of associate Equardo Holding Limited.

The Company in 2023 acquired the remaining 50% of the share capital of Equardo Holdings Limited (Note 21) for the consideration price of €90.000 increasing its participation in the company to 100% having a NAV of €180.218. Equardo has an indirect investment in a large land plot in Bucharest with a substantially higher value, yet the monetization of such investment is of increased risk and is expected to take substantial time. As such the Company sold this investment to the subsidiary Sertland Properties Limited in exchange of intra group payables of € 2.205.145, i.e. generating a book profit on disposal of €2.024.927.

20.2.3 Acquisition and disposal of Nottin Holdings Limited

The Company in 2023 acquired the 33,3% of Nottin Holding Limited and a receivable from the company amounted to €93.300 for a consideration of €1. Nottin Holdings Limited has an indirect investment in a large property and land plot in Belgrade with a substantially higher value, yet the monetization of such invesment is of increased risk and is expected to take substantial time. As such the Company sold this investment to the subsidiary Zirimon Properties Limited in exchange of intra group payables of € 5.604.753, i.e. generating a book profit on disposdal of €5.604.752.

20.2.4 Disposal of SEC I.

The Company in 2023 proceeded to the sale of SEC I group to a 3rd party.

During 2022 the Company acquired 50% of the share capital of Equardo Holdings Limited, an SPV holding stake in Victoria City (Vic City) project in Bucharest. The participation took place through a share capital increase of the order of €8.000. Vic City is a plot of land for development in north Bucharest on Bucuresti Noi Boulevard near the metro station, where a commercial mixed use center was to be developed. The project was to be contributed to SPDI by its promoters at the time, but neither its development nor its contribution progressed due to other priorities. SPDI participated in Equardo Holdings Limited so as to retain some of the value originally destined to be part of its asset portfolio.

During 2023 and as part of the sale of SEC I group, the Company sold GreenLake Development Srl which at that time had no remaining asset for sale in its portfolio, as well as Equardo Holdings Limited (Note 20.2.4).

Dividend Income reflects dividends declared by Lelar Holdings Limited the holding SPV of Delea Nuova building, where the Group used to hold a 24,35% participation. The associate was sold during 2022 with the already declared dividends agreed to be paid to the Company (Note 20.2.1 B).

The share of profit from the associate GreenLake Development Srl and Equardo Holdings Limited were limited up to the interest of the Group in the associate.

As at 31 December 2023, the Group's interests in its associates and their summarised financial information, including total assets at fair value, total liabilities, revenues and profit or loss, were as follows:

As at 31 December 2022, the Group's interests in its associates and their summarised financial information, including total assets at fair value, total liabilities, revenues and profit or loss, were as follows:

Tangible and intangible assets

As at 31 December 2023 the tangible non-current assets under continued operations were comprised mainly by electronic equipment (mobiles, computers etc.) of a net value of €164 (2022: €816).

As at 31 December 2023 the tangible non-current assets under discontinued operations mainly consisted of the machinery and equipment used for servicing the Group's investment properties in Ukraine and Romania amount to €29.997 (2022: €32.244). Accumulated depreciation as at the reporting date amounts to €29.972 (2022: €32.224).

Long Term Receivables and prepayments

Long term receivables under discontiniued operations mainly include the cash collateral existing in favor of Piraeus Leasing in relation to Innovations asset.

Prepayments and other current assets

Continued operations

Trade and other receivables mainly include receivables from tenants and prepayments made for services.

VAT receivable represent VAT which is refundable in Romania, Cyprus and Ukraine.

Deferred expenses include legal, advisory, consulting and marketing expenses.

Loan receivables from 3rd parties include an amount of €2.909.115 (2022: €3.404.467) provided as an advance payment for acquiring a participation in an investment property portfolio (Olympians portfolio) in Romania. The accrued interest was €243.335 (2022: €59.517). The loan provided initially with a convertibility option which was not exercised. The loan is bearing a fixed interest rate of 10%. In August 2022 the Company signed with the borrower a Shareholders Agreement for a joint venture for developing logistics properties in Romania. As part of this agreement the Company will convert €2,5 million of the loan into a 50% equity stake of the joint venture company. The objective of this new company, in which borrower is contributing €2,5 million in equity funds too, is to develop a portfolio of logistics properties in Romania with a view of letting them to third party tenants in a market that has very low vacancy and has shown substantial strength and resilience in recent years. The conversion will take place upon identifying and agreeing on the specific project to be undertaken by the JV. The parties have evaluated many opportunities and currently are in the final negotiations stage with a tenant for developing two different properties in two different regional cities in Romania. The remaining part of the Olympians Loan is being repaid in regular intervals and is expected to be fully repaid to the Company by the end of 2024.

Discontinued operations

Trade and other receivables decrease due to the sale of associate company during the year.

VAT receivable represent VAT which is refundable in Romania, Cyprus and Ukraine.

Deferred expenses include legal, advisory, consulting and marketing expenses.

Loan to associates reflects a loan receivable from GreenLake Development Srl, which was sold during the year as part of the sale of SEC I group (Notes 21 and 38.4).

Financial Assets at FV through P&L

The Company received during 2019 and 2020 593.534 Arcona shares as part of the completion of Stage 1 of the transaction with Arcona, for the sale of Bella and Balabino assets in Ukraine, and the Boyana asset in Bulgaria. During 2022 the Company received 479.376 additional shares in Arcona as part of Stage 2 of the transaction with Arcona, for the sale of EOS and Delea Nuova assets in Romania.

At the end of the reporting period the shares are revalued at their fair value based on the NAV per share of Arcona at the same date, and as a result a relevant fair value loss of €259.781 (2022: loss €1.089.317) is recognized.

On top of the aforementioned shares, the Company received for the sale of Bella and Balabino assets, 67.063 warrants over shares in Arcona for a consideration of EUR 1, and 77.021 warrants over Arcona shares for the sale of Boyana for a consideration of EUR 1. The warrants are exercisable upon the volume weighted average price of Arcona shares traded on a regulated market at €8,10 or higher.

Moreover, during 2022, the Company received 28.125 warrants over shares in Arcona for the sale of EOS asset, and 87.418 warrants over shares in Arcona for the sale of Delea Nuova asset for a total consideration of €3. These warrants are exercisable upon the volume weighted average price of Arcona shares traded on a regulated market at €7,2 or higher.

At year end, the warrants are re-valued to fair value and as a result a relevant loss of €132.429 (2022: gain €18.198) is recognized. The terms and assumptions used for such warrant re-valuation are:

Current stock price (as retrieved from Amsterdam Stock Exchange): EUR 4,99 per share

• Strike price of the warrants: EUR 8,10 and EUR 7,20 per share
• Expiration date: 1 November 2024, 25 March 2027, 15 June 2027
• Standard deviation of stock price: 20,88%
• Annualized dividend yield on shares: 3,01%
• 5 year Government Bond rate (weighted average rate of Government Bonds of countries that Arcona is exposed): 5,05%

During 2023, the Company realized dividend income from the shareholding in Arcona of the order of €160.937, as part of the dividend distribution policy of Arcona.

Cash and cash equivalents

Cash and cash equivalents represent liquidity held at banks.

27.1 Authorised share capital

• 989.869.935 Ordinary Shares of €0,01 nominal value each,
• 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each, (Note 27.3).

27.2 Issued Share Capital

As at the end of 2023, the issued share capital of the Company was as follows:

• 129.191.442 Ordinary Shares of €0,01 nominal value each,
• 8.618.997 Redeemable Preference Class B Shares of €0,01 nominal value each.

In respect of the Redeemable Preference Class B Shares, issued in connection to the acquisition of Craiova Praktiker, following the holders of such shares notifying the Company of their intent to redeem within 2016, the Company:

• in lieu of redemption transferred its 20% holding in Autounion (Note 27.3) in October 2016, to the Craiova Praktiker seller BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L., while final settlement has also been reached pursuant to a consensual order issued by the District Court of Nicosia in action no.3362/2018 (Note 39.3). As a result the Company has planned to cancel these shares and has included relevant resolution in the forthcoming Extraordinary General Meeting to be held on 10 July 2024.

27.3 Capital Structure as at the end of the reporting period

As at the reporting date the Company's share capital is as follows:

Redeemable Preference Class B Shares

The Redeemable Preference Class B Shares, issued to BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. as part of the Praktiker Craiova asset acquisition do not have voting rights but have economic rights at par with ordinary shares. As at the reporting date all of the Redeemable Preference Class B Shares have been redeemed and the Company plans to cancel them.

Foreign Currency Translation Reserve

Exchange differences relate to the translation from the functional currency to EUR of Group's subsidiaries' accounts and are recognized by entries made directly to the foreign currency translation reserve. The foreign exchange translation reserve represents unrealized profits or losses related to the appreciation or depreciation of the local currencies against EUR in the countries where Company's subsidiaries' functional currencies are not EUR. The Company had €931.988 loss on foreign exchange losses/gains on translation due to presentation currency for 2023, in comparison to €692.906 relevant loss in 2022.

Non-Controlling Interests

Continued Operations

Loans from other 3rd parties and related parties under continued operations include among others:

Α) Loan from one Director of €100k provided as bridge financing for future property acquisitions. The loan bears annual interest of 8% (Note 38.5).

Discontinued Operations

SEC South East Continent Unique Real Estate (Secured) Investments Limited has a debt facility with Piraeus Bank. As at the end of the previous period the balance of the loan was €2.525.938 plus accrued interest €1.492.923 bearing interest of EURIBOR 3M plus 5% plus the Greek law 128/75 0,6% contribution. During September 2019, the Company received a termination notice from Piraeus Bank and a payment order from court in relation to this loan. During 2023, the Company sold SEC South East Continent Unique Real Estate (Secured) Investments Limited.

Bonds

The Company in order to acquire up to a 50% interest in a portfolio of fully let logistics properties in Romania, the Olympians Portfolio, issued a financial instrument, 35% of which consists of a convertible bond and 65% of which is made up of a warrant. The convertible loan element of the instrument has been redeemed by 30% and at the end of the reporting period the balance stands at €723.690 (2022: €723.690). The instrument bears a 6,5% coupon, has a 7 year term, maturing in July 2024, and is convertible into ordinary shares of the Company at the option of the holder at 25p. starting from 1 January 2018. The Company plans to extend the maturity of the bond and for that purpose the consent of most of the bondholders has already been received. As at 31 December 2023, the balance of the bonds with interest amounts to €870.373.

Trade and other payables

Continued Operations

Payables to third parties represents: a) payable provision due to Bluehouse Capital as a result of the Redeemable Class B share redemption (Note 27.3) which was under legal proceedings and resolved during the current period (Note 39.3). As a result the remaining payable provision was written off through the profit and loss account; b) amounts payable to various service providers including auditors, legal advisors, consultants and third party accountants related to the current operations of the Group, and c) guarantee amounts collected from tenants.

Pre-sale advances reflect the advance received in relation to Kiyanovskiy Residence pre-sale agreement, which upon non closing of the said sale, part of which will be returned to the prospective buyer.

Discontinued Operations

Payables to related parties under discontinued operations represent payables to non-controlling interest shareholders.

Deposits from Tenants

Deposits from tenants appearing under non-current liabilities include the amounts received from tenants in Innovations Logistics Park.

Taxation

Corporate income tax represents taxes payable in Cyprus and Romania.

Other taxes represent local property taxes and VAT payable in Romania.

During 2023, the prior year taxes due were re-assessed downwards by the tax authorities following relevant motion by the Company.

Finance Lease Liabilities

As at the reporting date the finance lease liabilities consist of the non-current portion of €5.885.895 and the current portion of €57.306 (31 December 2022: €6.168.403 and €57.527, accordingly).

Discontinued operations

35.1 Land Plots Financial Leasing

The Group holds land plots in Ukraine under leasehold agreements which in terms of the accounts are classified as finance leases. Lease obligations are denominated in UAH. The fair value of lease obligations approximate to their carrying amounts as included above. Following the appropriate discounting, finance lease liabilities are carried at €21.580 under current and non-current portion. The Group's obligations under finance leases are secured by the lessor's title to the leased assets. Regarding Tsymlyanskiy, as of November 2021, the Group had submitted properly the official request to the City of Kiev to extend the lease property for another 5 years, since the Group has first extension rights over any other interested party. The first step in the process whereby the presiding committee of the municipality, before the final approval by the City Council, did not place as too many other cases had accumulated which had time priority over Group's case. During the period between 15 December 2021 and 20 January 2022, the committee did not convene at all as is usual during holiday and vacation times. Once the holiday season was over, the main focus of the committee and the City Council unfortunately were on issues not related to property lease extensions, but rather more pressing matters for the interests and operational stability of the City of Kiev. From there on, all decisions have been put on hold due to the Russian insurgence of Ukraine. We remain confident that we will be awarded the lease extension once the war status permits, and we continue calculate relevant future lease obligations.

35.2 Sale and Lease Back Agreements

Innovations Logistics Park

In May 2014 the Group concluded the acquisition of Innovations Logistics Park in Bucharest, owned by Best Day Real Estate Srl, through a sale and lease back agreement with Piraeus Leasing Romania SA. As at the end of the reporting period the balance is €5.921.621 (2022: €6.201.629), being repayable in monthly tranches until 2026 with a balloon payment of €5.244.926. At the maturity of the lease agreement and upon payment of the balloon Best Day Real Estate Srl will become owner of the asset.

Under the current finance lease agreement the collaterals for the facility are as follows:

• Best Day Real Estate Srl pledged its future receivables from its tenants.
• Best Day Real Estate Srl pledged its shares.
• Best Day Real Estate Srl was obliged to provide cash collateral in the amount of €250.000 in Piraeus Leasing Romania, which had been deposited as follows, half in May 2014 and half in May 2015.
• Earnings and net assets per share attributable to equity holders of the parent
• Weighted average number of ordinary shares

• Basic diluted and adjusted earnings per share from discontinued operations

Segment information

Commercial-Industrial

• Warehouse segment -Innovations Logistics Park
• Office segment - Eos Business Park - Delea Nuova (Associate) - 2022 only
• Retail segment - Kindergarten of GreenLake - 2022 only

Residential

Residential segment

Land Assets

Land assets

There are no sales between the segments.

Continued Operations

Profit and Loss for the year 2023

* It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park in Romania is currently invoiced by the Company as part of a relevant lease agreement with the Innovations SPV and the lender. However the asset, which is held through the SPV, is planned to be transferred as part of the transaction with Arcona Property Fund N.V. Upon a final agreement for such transfer, the Company will negotiate with the lender its release from the aforementioned lease agreement, and if succeeds, upon completion such income will be also transferred.

Discontinued Operations

Profit and Loss for the year 2023

* It is noted that part of the rental and service charges/ utilities income related to Innovations Logistics Park in Romania is currently invoiced by the Company as part of a relevant lease agreement with the Innovations SPV and the lender, however the asset, through the SPV, is planned to be transferred as part of the transaction with Arcona Property Fund N.V. or in the broader market. Upon a final agreement for such transfer, the Company will negotiate with the lender its release from the aforementioned lease agreement, and if succeeds, upon completion such income will be also transferred.

Carrying amount of assets (investment properties and investment in associates)

Interest income from associates relates to interest income from GreenLake Development Srl.

38.1.2 Expenses

Management remuneration includes the remuneration of the CEO, the CFO, the Group Commercial Director, and that of the Country Managers of Ukraine and Romania pursuant to the decisions of the Remuneration Committee. During 2023 the Company externalized most of the related HR cost as part of the cost minimization plan adopted by the board.

Incentives provided to personnel for the successful implementation of Group's plan pursuant to relevant Remuneration Committee proposal dated 7 May 2021 as approved by the BoD on 1st June 2021.

The annual Directors fees including Chairman and Committee remunerations have been set at GBP 129k. Following relevant confirmation by the board, the Company registered in 2023 the remuneration of the board associated with H1 2022 (€75k) which remained pending from previous year, as well as a provision of a remuneration to cover the period including H2 2022 and 2023 (€250k).

38.2 Payables to related parties (Note 32)

38.2.1 Board of Directors & Committees

The amount payable represents remuneration and expenses payable to Non-Executive Directors until the end of the reporting period.

38.2.2 Management Remuneration

Management Remuneration represents deferred amounts payable to the CEO of the Company.

38.3 Loans from SC Secure Capital Limited to the Group's subsidiaries

38.3 Loans from SC Secure Capital Limited to the Group's subsidiaries (continued)

A potential Ukrainian Hryvnia weakening/strengthening by 10% against the US dollar with all other variables held constant, would result in an exchange difference on I/C loans to foreign holdings of €60.508 (2022: €59.680), estimated on balances held at 31 December 2023.

38.4 Loans to associates (Note 24)

The loan was provided to GreenLake Development Srl from Edetrio Holdings Limited (discontinued operations) and from Sc Capital (continued operations). The agreement with Edetrio Holdings Limited was signed on 14 June 2012 and bears interest 5% and the agreement with Sc Capital Limited was signed on 4 December 2017 and bears interest 4% per annum. The loan with Sc Capital was fully repaid during 2022.

38.5 Loans from related parties (Note 30)

Loans from directors of the order of €375.000 reflect loans provided from three directors as bridge financing for future property acquisitions. The loans bear interest 8% annually. The loans have been partially repaid during 2023 and current balance is €100.000.

The rest of the amount of the order of €117.500 reflect payables to one director, converted to loan for facilitating Company's cash flow.

Contingent Liabilities

39.1 Tax Litigation

These facts create tax risks which are substantially more significant than those typically found in countries with more advanced tax systems. Management believes that it has adequtely provided for tax liabilities, based on its interpretation of tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant.

39.2 Construction related litigation

There are no claims from contractors due to the postponement of projects or delayed delivery other than those disclosed in the financial statements.

39.3 Bluehouse Accession case

BLUEHOUSE ACCESSION PROPERTY HOLDINGS III S.A.R.L. (Bluehouse) filed in Cypriot courts in December 2018 lawsuit against the Company for the total amount of €5.042.421,87, in relation to the Praktiker Craiova acquisition in 2015, and the redemption of the Redeemable Preference Class A shares which were issued as part of the transaction to the vendor, plus special compensations of €2.500.000 associated with the related pledge agreement. The redemption of such shares was requested in 2016, and in lieu of such redemption the Company transferred to the vendor the 20% holding in Autounion asset which was used as a guarantee to the transaction for the effective redemption of the Redeemable Preference Class A shares. At the same time the Company posted in its accounts a relevant payable provision for Bluehouse in the amount of €2.521.211 (Note 32). On the other hand, the Company during 2019, as part of the judicial process, filed a claim against Bluehouse for concealing certain key information during the Praktiker Craiova transaction, which if revealed would have resulted in a significant reduction of the final acquisition price. Following relevant negotiations and taking into account the timeline and the costs associated with these legal motions, the Company proceeded to a settlement against a payment of €494.000 pursuant to consensual order issued by the District Court of Nicosia in action no. 3362/2018.

39.4 Other Litigation

39.5 Other Contingent Liabilities

The Group had no other contingent liabilities as at 31 December 2023.

Commitments

The Group had no other commitments as at 31 December 2023.

Financial Risk Management

41.1 Capital Risk Management

The Group manages its capital to ensure adequate liquidity for implementing its strategy to maximize the return to stakeholders through the optimization of the debt-equity structure and value enhancing actions in respect of its portfolio of investments. The capital structure of the Group consists of borrowings (Note 30), bonds (Note 31), trade and other payables (Note 32) deposits from tenants (Note 33), financial leases (Note 35), taxes payable (Note 34) and equity attributable to ordinary or preferred shareholders.

Management reviews the capital structure on an on-going basis. As part of the review Management considers the differential capital costs in the debt and equity markets, the timing at which each investment project requires funding and the operating requirements so as to proactively provide for capital either in the form of equity (issuance of shares to the Group's shareholders) or in the form of debt. Management balances the capital structure of the Group with a view of maximizing the shareholder's Return on Equity (ROE) while adhering to the operational requirements of the property assets and exercising prudent judgment as to the extent of gearing.

41.2 Categories of Financial Instruments

41.3 Financial Risk Management Objectives

The Group's Treasury function provides services to its various corporate entities, coordinates access to local and international financial markets, monitors and manages the financial risks relating to the operations of the Group, mainly the investing and development functions. Its primary goal is to secure the Group's liquidity and to minimize the effect of the financial asset price variability on the cash flow of the Group. These risks cover market risks including foreign exchange risks and interest rate risk, as well as credit risk and liquidity risk.

41.4 Economic Market Risk Management

Foreign Exchange Risk

Currency risk arises when commercial transactions and recognized financial assets and liabilities are denominated in a currency that is not the Group's functional currency. Most of the Group's financial assets are denominated in the functional currency. Management is monitoring the net exposures and adopts policies to encounter them so that the net effect of devaluation is minimized.

Interest Rate Risk

The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no significant floating interest-bearing assets. On December 31st, 2023, cash and cash equivalent (including continued and discontinued operations) financial assets amounted to €497.389 (2022: €351.398) of which approx. €501 in UAH and €351.612 in RON (Note 26) while the remaining are mainly denominated in either USD,GBP or €.

The Group is exposed to interest rate risk in relation to its borrowings (including continued and discontinued operations) amounting to €114.865 (31 December 2022: €4.618.549) as they are issued at variable rates tied to the Libor or Euribor. Management monitors the interest rate fluctuations on a continuous basis and evaluates hedging options to align the Group's strategy with the interest rate view and the defined risk appetite. Although no hedging has been applied for the reporting period, such may take place in the future if deemed necessary in order to protect the cash flow of a property asset through different interest rate cycles.

As at 31 December 2023, the weighted average interest rate for all the interest bearing borrowing and financial leases of the Group stands at 4,7% (31 December 2022: 5,36%).

The Group's exposures to financial risk are discussed also in Note 7.

41.5 Credit Risk Management

41.6 Liquidity Risk Management

Continued Operations

• Events after the end of the reporting period
• Stage 2 of Arcona transaction

During 2024, the Company has worked extensively towards the closing of Stage 2 of the transaction with Arcona, which involves the sale of Rozhny and Kyianivskyi assets in Ukraine. To that end, the commercial terms of the transactions have been finally agreed, and the relevant valuations, for use as reference of the price, have been ordered and issued by the third-party local valuer. At this point, the two legal teams are finalizing the required documentation for execution, and it is estimated that, albeit the constraints in force, the transactions will materialize during the third quarter of the year.

Bluebigbox3 Srl insolvency procedure

Following the settlement made with BLUEHOUSE ACCESSION PROPERTY HOLDING III S.A.R.L. pursuant to a consensual order issued by the District Court of Nicosia in action no. 3362/2018, relevant legal motions against Bluebigbox3 Srl have been withdrawn. In relation to the insolvency procedure of the company, next hearing has been set on 17 September 2024, when the judicial administrator will file the request to close the bankruptcy procedure before the court, considering that this proposal was already confirmed by creditors in accordance with the Creditors Assembly held on 15 March 2024.

Liquidation of Romanian entities

During the first quarter of 2024, the Company initiated the process for liquidating two Romanian entities of the Group, without the appointment of a liquidator, according to the provisions of art.236 of Company law 31/1990. The entities are SPDI Management Srl and Secmon Srl, and their liquidation has been emerged from the fact that they are currently idle, the former following the externalization of all local HR and office costs, and the latter following the sale of its entire portfolio of assets.

Bond maturity extension

Regarding the Bond instrument issued by the Company on 19 December 2017 and for which 30% of the original amount has already been redeemed, the Company has at the date of this report secured the agreement of most of the bondholders to the extension of the maturity date of the instrument for one year, namely to 19 July 2025.

Extraordinary General Meeting of the Shareholders

On 17 June 2024, the Company announced the release of a Notice of Extraordinary General Meeting (EGM) to be held at the registered address of the Company on 10 July 2024. The purpose of the EGM is to make the necessary changes to the Company's share capital structure in order to proceed with the distribution to holders of SPDI ordinary shares their pro rata allocation of shares of Arcona Property Fund N.V. held by the Company, or by a bank transfer of readily available funds, or both as the board of directors in their absolute discretion may decide. To do this, the Company's redeemable preference Class B shares need to be cancelled (Resolution 1) and the Company's share premium account needs to be reduced (Resolution 2 and 3). Shareholders are encouraged to read the Notice of EGM in full for further detail. Both resolutions are to be proposed as special resolutions, and therefore require 75% of those present to vote in favour to pass.

[1] Sources: World Bank Group, Eurostat, EBRD, National Institute of Statistics- Romania, National Institute of Statistics - Ukraine, IMF, European Commission, CBRE.

[2] Sources : CBRE, Colliers International, Cushman & Wakefield, Crosspoint Real Estate, Knight Frank, Coldwell Banker Research, National Institute of Statistics- Romania, State Statistics Service-Ukraine, NAI Real Act