CUBIC CENTER DEVELOPMENT S.A. IFRS FINANCIAL … · These financial statements relate to the fiscal year 1.1 – 31.12.2019 and they have been prepared: a) in accordance with International

CUBIC CENTER DEVELOPMENT S.A.

IFRS FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2019

CONTENTS

INDEPENDENT AUDITOR’S REPORT 1 – 2

STATEMENT OF FINANCIAL POSITION 3

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 4

STATEMENT OF CHANGES IN EQUITY 5

STATEMENT OF CASH FLOWS 6

NOTES TO THE FINANCIAL STATEMENTS 7 – 28



AS OF DECEMBER 31, 2019

5

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

In thousands of RON

For the period ended 31 December

Notes 2019 2018

Revenue 12 5,469 4,179

Other Income 12 356 141

Operating Expenses 13 (5,263)

(5,086)

Depreciation expenses 3,4 (1,926) (1,916)

Impairment of investment property - -

Other expenses -

-

Operating profit/(loss)

(1,364)

(2,682)

Finance income 14 32

832

Finance costs 14 0

(1,190)

Profit/(loss) before income tax

(1,332)

(3,040)

Income tax expense 15 0

(90)

Profit/(loss) for the period

(1,332)

(3,130)

Other comprehensive income

-

-

Total comprehensive income for the year (1,332) (3,130)




6

STATEMENT OF FINANCIAL POSITION

In thousands of RON

Assets Notes 31-Dec-19

31-Dec-18

Investment property 3 65,729

67,500

Property plant and equipemnt 4 2,470

2,597

Total non-current assets

68,199

70,097

Current assets

Trade receivables 5 596

1,801

Other assets 6 247

144

Cash and cash equivalents 7 5,918

4,994

Total current assets

6,761

6,940

Total assets

74,960

77,037

Equity

Share capital 8 226,096

226,096

Reserves 8 0

0

Retained earnings/ (losses)

(152,457)

(151,125)

Total equity

73,639 74,971

Liabilities

Trade and other payables 9 1,321

2,066

Current income tax liabilities 15 0

0

Provisions 0

0

Total current liabilities

1,321

2,066

Total liabilities

1,321

2,066

Total equity and liabilities

74,960

77,037




7

Statement of changes in the equity

In thousands of RON

Notes Share Reserves Retained earnings

Total

capital equity

Balance at 01 January 2018

64,030 (147,995) (83,965)

Profit /(Loss) for the year

(3,130) (3,130)

Other comprehensive income for the

year

Total comprehensive income for the year

64,030

(151,125) (87,095)

Transactions with owners

162,066 162,066

Balance at 31 December 2018

226,096 (151,125) 74,971


226,096

(151,125) 74,971 0

Profit /(Loss) for the year

(1,332) (1,332)

Other comprehensive income for the

year

0

Total comprehensive income for the year

226,096 0 (152,457) 73,639

Transactions with owners

0


226,096 0 (152,457) 73,639




8

STATEMENT OF CASH FLOWS

In thousands of RON

Notes 2019

2018

Cash flows from operating activities

Profit before income tax

(1,332) (3,040)

Depreciation of property, plant and equipment 3,4 1,926 1,916

Finance costs – net 15 (32) 358

Impairment charge for trade receivables

51 -

Provisions

- -

Other (income) / expense

- -

Changes in working capital

Increase)/decrease in trade receivables 5 1,162 (110)

Increase)/decrease in other assets 6 (102) (16)

Increase /(Decrease) in inventories

- -

Increase/(Decrease in trade and other payables

9 (745)

144

Cash generated from operations

928 (749)

Interest paid 14 - -

Income tax paid 15 - (90)

Net cash generated from operating activities

928

(839)

Cash flows from investing activities

Purchases of investment property 3 - -

Purchases of Property Plant and Equipemnt 4 (28) (121)

Proceeds from sale of investment property 3 - -

Proceeds from sale of Property Plant and Equipemnt

4 -

-

Interest received

24 -

Net cash used in investing activities

(4) (121)

Cash flows from financing activities Proceeds from borrowings - 0 1,102

Repayments of borrowings - 0 (158,007)

Dividends paid to the Company's shareholders 0 -

Transactions with owners 0 162,066

Net cash used in financing activities 0 5,162

Net increase in cash and cash equivalents 924 4,202

Cash and cash equivalents at 1 January 4,994 792

Cash and cash equivalents at 31 December

5,918

4,994

The breakdown of cash position as of December 31, 2019 is presented in note 10.




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1. REPORTING ENTITY

Cubic Center Development SA (“The Company”) is a company registered in Romania. The address of

the Company’s registered office is 1B Pipera Bvdl Voluntary City, Ilfov County. The Company is part of the

Alpha Bank Group. The Company is 99.9992% owned by AGI-RRE Arsinoe LTD, a Cypriote company with

its registered office at Lemesou Avenue 11, Galatariotis Building, 2nd floor, 2112 Nicosia, Cyprus and

0.0008% by AGI-RRE Cleopatra LTD, a Cypriote company with its registered office at Lemesou Avenue 11,

Galatariotis Building, 2nd floor, 2112 Nicosia, Cyprus. The Company is primarily involved in real estate development and construction and renting out of its property

2. BASIS OF PREPARATION

These financial statements relate to the fiscal year 1.1 – 31.12.2019 and they have been prepared:

a) in accordance with International Financial Reporting Standards (IFRS), as adopted by the European

Union, in accordance with Regulation 1606/2002 of the European Parliament and the Council of the

European Union on 19 July 2002 and

b) on the historical cost basis. As an exception, some assets and liabilities are measured at fair value.

The financial statements are presented in RON, rounded to the nearest thousand, unless otherwise

indicated.

The estimates and judgments applied by the Company in preparing the financial statements are based on

historical information and assumptions which at present are considered appropriate.

The estimates and assumptions are reviewed on an ongoing basis to take into account current conditions,

and the effect of any revisions is recognized in the period in which the estimate is revised.

The accounting policies for the preparation of the financial statements have been consistently applied by

the Company to the years 2018 and 2019 after taking into account the following new standards and

amendments to standards as well as IFRIC 23 which were issued by the International Accounting

Standards Board (IASB), adopted by the European Union and applied on 1.1.2019:

‣ Amendment to International Financial Reporting Standard 9 “Financial Instruments”: Prepayment

Features with Negative Compensation (Regulation 2018/498/22.3.2018)

On 12.10.2017 the International Accounting Standards Board issued an amendment to IFRS 9 that permits

some prepayable financial assets with negative compensation features, that would otherwise been

measured at fair value through profit or loss, to be measured at amortised cost or at fair value through

other comprehensive income. The amendment to IFRS 9 clarifies that a financial asset passes the SPPI

criterion regardless of the event or circumstance that cause the early termination of the contract and

irrespective of which party pays or receives reasonable compensation for the early termination of the

contract.

The adoption of the above amendment had no impact on the financial statements of the Company.

‣ International Financial Reporting Standard 16 “Leases” (Regulation 2017/1986/31.10.2017)

On 13.1.2016 the International Accounting Standards Board issued IFRS 16 “Leases” which supersedes:

• IAS 17 “Leases”

• IFRIC 4 “Determining whether an arrangement contains a lease”

• SIC 15 “Operating Leases – Incentives” and




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• SIC 27 “Evaluating the substance of transactions involving the legal form of a lease”.

The new standard significantly differentiates the accounting of leases for lessees while essentially

maintaining the existing requirements of IAS 17 for the lessors. In particular, under the new requirements,

the classification of leases as either operating or finance is eliminated. A lessee is required to recognize,

for all leases with term of more than 12 months, the right-of-use asset as well as the corresponding

obligation to pay the lease payments. The above treatment is not required when the asset is of low value.

At initial recognition, the right-of-use asset comprises the amount of the initial measurement of the lease

liability, any initial direct costs, any lease payments made before the commencement date as well as an

estimate of dismantling costs.

At initial recognition, the lease liability is equal to the present value of the lease payments that are not

paid at that date.

The adoption of the above amendment had no impact on the financial statements of the Company.

‣ Amendments to International Accounting Standard 19 “Employee Benefits”: Plan Amendment,

Curtailment or Settlement (Regulation 2019/402/13.3.2019)

On 7.2.2018 the International Accounting Standards Board issued an amendment to IAS 19 with which it

specified how companies determine pension expenses when changes to a defined benefit pension plan

occur. In case that an amendment, curtailment or settlement takes place IAS 19 requires a company to

remeasure its net defined benefit liability or asset. The amendments to IAS 19 require specifically a

company to use the updated assumptions from this remeasurement to determine current service cost and

net interest for the remainder of the reporting period after the change to the plan. In addition, the

amendment to IAS 19 clarifies the effect of a plan amendment, curtailment or settlement on the

requirements regarding the asset ceiling.

The above amendment does not apply to the financial statement of the Company.

‣ Amendment to International Accounting Standard 28 “Investments in Associates”: Long-term

Interests in Associates and Joint Ventures (Regulation 2019/237/8.2.2019).

On 12.10.2017 the International Accounting Standards Board issued an amendment to IAS 28 to clarify

that long-term interests in an associate or joint venture that form part of the net investment in the associate

or joint venture —to which the equity method is not applied—should be accounted for using IFRS 9,

including its impairment requirements. In applying IFRS 9, the entity does not take account of any

adjustments to the carrying amount of long-term interests that arise from applying IAS 28.

The above amendment does not apply to the financial statement of the Company.

‣ Improvements to International Accounting Standards – cycle 2015-2017 (Regulation

2019/412/14.3.2019)

As part of the annual improvements project, the International Accounting Standards Board issued, on

12.12.2017, non- urgent but necessary amendments to various standards.

The adoption of the above amendments had no impact on the financial statements of the Company.

‣

Except for the standards mentioned above, the European Union has adopted the following amendments

to standards which are effective for annual periods beginning after 1.1.2019 and have not been early

adopted by the Company.




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‣ Amendment to International Financial Reporting Standard 9 “Financial Instruments”, to

International Accounting Standard 39 “Financial Instruments” and to International Financial

Reporting Standard 7 “Financial instruments: Disclosures”: Interest rate benchmark reform (Regulation

2020/34/15.1.2020)

Effective for annual periods beginning on or after 1.1.2020

On 26.9.2019 the International Accounting Standards Board issued amendments to IFRS 9, IAS 39 and

IFRS 7, according to which temporary exceptions from the application of specific hedge accounting

requirements are provided in the context of interest rate benchmark reform.

In accordance with the exceptions, entities applying those hedge accounting requirements may assume

that the interest rate benchmark is not altered as a result of the interest rate benchmark reform. Relief is

provided regarding the following requirements: - the highly probable requirement in cash flow hedge,

- prospective assessments, - separately identifiable risk components.

The Company is examining the impact from the adoption of the above amendments on its financial

statements.

‣ Amendments to International Accounting Standard 1 “Presentation of Financial Statements” and

to International Accounting Standard 8 “ Accounting Policies, Changes in Accounting Estimates and

Errors: “Definition of material” (Regulation 2019/2104/29.11.2019)


On 31.10.2018 the International Accounting Standards Board, as part of the Disclosure Initiative, issued

amendments to IAS 1 and IAS 8 to align the definition of ‘material’ across the standards and to clarify

certain aspects of the definition.

The new definition states that information is material if omitting, misstating or obscuring it could

reasonably be expected to influence decisions that the primary users of general purpose financial

statements make on the basis of those financial statements, which provide financial information about a

specific reporting entity. The amendments include examples of circumstances that may result in material

information being obscured. The IASB has also amended the definition of material in the Conceptual

Framework to align it with the revised definition of material in IAS 1 and IAS 8.

The Company is examining the impact from the adoption of the above amendment on its financial

statements.

In addition, the International Accounting Standards Board has issued the following standards and

amendments to standards which have not yet been adopted by the European Union and they have not

been early applied by the Company.

‣ Amendment to International Financial Reporting Standard 3 “Business Combinations”: Definition

of a Business


On 22.10.2018 the International Accounting Standards Board issued an amendment to IFRS 3 aimed at

resolving the difficulties that arise when an entity determines whether it has acquired a business or a

group of assets. The amendments clarify the minimum requirements to be a business, remove the

assessment of a market participant’s ability to replace missing elements, narrow the definition of outputs,

add guidance to assess whether an acquired process is substantive, introduce an optional fair value

concentration test and add illustrative examples.




12


statements.

14 “Regulatory deferral accounts”. Effective for annual periods beginning on or after 1.1.2016

On 30.1.2014 the International Accounting Standards Board issued IFRS 14. The new standard, which is

limited-scope, addresses the accounting treatment and the disclosures required for regulatory deferral

accounts that are maintained in accordance with local legislation when an entity provides rate-regulated

goods or services. The scope of this standard is limited to first-time adopters that recognized regulatory

deferral accounts in their financial statements in accordance with their previous GAAP. IFRS 14 permits these

entities to capitalize expenditure that non-rate-regulated entities would recognize as expense.

It is noted that European Union has decided not to launch the endorsement of this standard and to wait for

the final standard.

The above standard does not apply to the financial statements of the Company.

‣ International Financial Reporting Standard 17 “Insurance Contracts”


On 18.5.2017 the International Accounting Standards Board issued IFRS 17 which replaces IFRS 4

“Insurance Contracts”. In contrast to IFRS 4, the new standard introduces a consistent

methodology for the measurement of insurance contracts. The key principles in IFRS 17 are the

following:

The above standard does not apply to the financial statements of the Company.

‣ Amendment to the International Accounting Standard 1 “Presentation of Financial Statements”:

Classification of liabilities as current or non-current


On 23.1.2020, the International Accounting Standards Board issued amendments to IAS 1 relating to the

classification of liabilities as current or non-current. More specifically:

• The amendments specify that the conditions which exist at the end of the reporting period are those which will be used to determine if the liability must be classified as current or non-current.

• Management expectations about events after the balance sheet date must not be taken into account.

• The amendments clarify the situations that are considered settlement of a liability.


statements.

The Company anticipates that the adoption of these new standards and amendments to the existing standards will have no material impact on the financial statements of the Company in the period of

initial application. 3. SIGNIFICANT ACCOUNTING POLICIES

a) Foreign currency transactions

Operations denominated in foreign currencies are recorded in RON at the official exchange rate on the




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transaction date. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into RON at the exchange rate of that date.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the exchange rate at the end of the year of monetary assets and liabilities denominated in a foreign currency are recognized in the statement of comprehensive income except those recognized in equity as a result of their registration based on hedge accounting. The exchange rates of the main foreign currencies were:

Currency December 31,

2019 December 31,

2018

EUR 1: LEU 4.7793 1: LEU 4.6639

USD 1: LEU 4.2608 1: LEU 4.0736

b) Cash and cash equivalents Cash and cash equivalents include: current accounts and deposits at banks.

In the preparation of the statement of cash flows, the Company considers the following as cash and cash equivalents: actual cash, current bank accounts, deposits with initial maturity of less than 90 days and interest thereon. c) Financial instruments

Initial recognition

The Company recognizes financial assets or financial liabilities in its statement of financial position when it becomes a party to the contractual conditions of the instrument.

Upon initial recognition the Company measures financial assets and liabilities at fair value. Subsequent measurement of financial assets

The Company holds financial assets that are classified as current accounts, bank deposits and other assets. These financial assets are non-derivative financial assets, with fixed or determinable payments, that are not quoted in an active market and other than those that the Company intends to sell immediately or in the near term.

This category is measured at amortized cost using the effective interest rate method and is periodically tested for impairment based on the procedures described in note 2(j). The effective interest rate method is a method of calculating the amortised cost of a financial instrument and of allocating the interest income or expense during the relative period. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the contractual life

of a financial instrument or the next repricing date. Derecognition of financial assets The Company derecognizes a financial asset when the rights to the cash flows from the financial asset expire, or when the Company has transferred the contractual rights to the cash flows from the financial asset in a transaction in which it has transferred substantially all the risks and rewards of ownership.

On derecognition of a financial asset in its entirety, the difference between: 3. SIGNIFICANT ACCOUNTING POLICIES (continued) c) Financial instruments (continued)




14

- the carrying amount; and

- the amount of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in other comprehensive

income shall be recognized in statement of profit or loss and other comprehensive income. If the transferred asset is part of a larger financial asset (e.g. when an entity transfers interest cash flows that are part of a debt instrument interest) and the part transferred qualifies for derecognition in its entirety, the previous carrying amount of the larger financial asset shall be allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts on the date of the transfer. For this purpose, a servicing asset shall be treated as a part that continues

to be recognized.

Subsequent measurement of financial liabilities

The Company carries financial liabilities at amortized cost using the effective interest method. Liabilities to credit institutions and other liabilities (such as trade payables) are classified in this category.

Derecognition of financial liabilities The Company derecognizes a financial liability (or part thereof) when its contractual obligations are discharged, cancelled or expire. In cases that a financial liability is exchanged with another one with substantially different terms, the

exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new one. The same applies in cases of a substantial modification of the terms of an existing financial liability or a part of it (whether or not attributable to the financial difficulty of the debtor). The terms are considered substantially different if the discounted present value of the cash flows under the new terms (including any fees paid net of any fees received), discounted using the original effective interest rate, is at least 10%

different from the present value of the remaining cash flows of the original financial liability. In cases of derecognition, the difference between the carrying amount of the financial liability (or part of the financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in statement of profit or loss and other comprehensive income.

Offsetting financial assets and financial liabilities Financial assets and liabilities are offset, and the net amount is presented in the balance sheet, only in cases when the Company has both the legal right and the intention to settle them on a net basis, or to realize the asset and settle the liability simultaneously.

d) Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability.

The Company measures the fair value of assets and liabilities traded in active markets based on available quoted market prices. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The fair value of financial instruments that are not traded in an active market is determined by the use of valuation techniques, appropriate in the circumstances, and for which sufficient data to measure fair value 3. SIGNIFICANT ACCOUNTING POLICIES (continued) d) Fair value (continued)




15

are available, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. If observable inputs are not available, other model inputs are used which are based on estimations and assumptions such as the determination of expected future cash flows, discount rates, probability of

counterparty default and prepayments. In all cases, the Company uses the assumptions that ‘market participants’ would use when pricing the asset or liability, assuming that market participants act in their economic best interest. Assets and liabilities which are measured at fair value or for which fair value is disclosed are categorized according to the inputs used to measure their fair value as follows:

• Level 1 inputs: quoted market prices (unadjusted) in active markets

• Level 2 inputs: directly or indirectly observable inputs

• Level 3 inputs: unobservable inputs used by the Company, to the extent that relevant

observable inputs are not available

e) Property, Plant and Equipment

This caption includes: land and buildings for business purposes, additions and improvements of leased property and equipment. Property, plant and equipment are initially recognised at cost which includes any expenditure directly attributable to the acquisition of the asset.

Subsequently, property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Subsequent expenditure is recognized on the carrying amount of the item when it increases future economic benefit.

Expenditure on repairs and maintenance is recognized in statement of profit or loss and other comprehensive income as an expense as incurred. Depreciation is charged on a straight-line basis over the estimated useful lives of property, plant and equipment and it is calculated on the asset’s cost minus residual value. The estimated useful lives are as follows:

• Furniture: up to 5 years;

• Additions to leased fixed assets and improvements: duration of the lease

• Equipment and vehicles: up to 10 years The residual value of property and equipment and their useful lives are periodically reviewed and adjusted

if necessary, at each reporting date.

Property, plant and equipment are reviewed at each reporting date to determine whether there is an indication of impairment and if they are impaired, the carrying amount is adjusted to its recoverable amount with the difference recorded in statement of profit or loss and other comprehensive income. Gains and losses from the sale of property and equipment are recognized in statement of profit or loss and

other comprehensive income. 3. SIGNIFICANT ACCOUNTING POLICIES (continued)




16

f) Investment property

The Company includes in this category commercial buildings together with their respective portion of land

that are held to earn rental income. Investment property is initially recognised at cost which includes any expenditure directly attributable to the acquisition of the asset. Subsequently investment property is measured at cost less accumulated depreciation and impairment losses.

Subsequent expenditure is recognized on the carrying amount of the item when it increases future economic benefit. All costs for repairs and maintenance are recognized in statement of profit or loss and other comprehensive income as incurred.

The estimated useful lives over which depreciation is calculated using the straight-line up to 50 years.

In case of a change in the Company’s intention regarding the use of property, reclassifications to or from the “Investment Property” category occur. g) Impairment

The Company analyses at each reporting date whether there is any evidence of the impairment of a financial

asset. A financial asset is impaired and impairment losses are incurred if a loss is expected as a result of one or more events that will occur after the initial recognition of the asset and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In this regard, the financial instruments are classified in stage 1, stage 2 or stage 3 according to their absolute or relative credit quality with respect to initial disbursement. Specifically:

• stage 1: includes (i) newly issued or acquired credit exposures, (ii) exposures for which credit

risk has not significantly deteriorated since initial recognition, (iii) exposures having low credit risk (low credit risk exemption);

• stage 2: includes credit exposures that, although performing, have seen their credit risk significantly deteriorating since initial recognition;

• stage 3: includes impaired credit exposures.

For exposures in stage 1, impairment is equal to the expected loss calculated over a time horizon of up to one year. For exposures in stages 2 or 3, impairment is equal to the expected loss calculated over a time period corresponding to the entire duration of the exposure. Allowances for impairment of receivables are based on the present value of expected cash flows of principal

and interest. In determining the present value of future cash flows, the basic requirement is the identification of estimated collections, the timing of payments and the discount rate used.

The amount of the loss on impaired exposures classified as non-performing loans and unlikely to pay the difference between the carrying amount and the present value of estimated cash flows discounted at the original interest rate of the financial asset.

h) Provisions and contingent liabilities

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The amount recognized as a provision shall be the best estimate of the expenditure required to settle the

present obligation at the end of the reporting period. Where the effect of the time value of money is 3. SIGNIFICANT ACCOUNTING POLICIES (continued)




17

h) Provisions and contingent liabilities (continued)

material, the amount of the provision is equal to the present value of the expenditures expected to settle

the obligation. Amounts paid for the settlement of an obligation are set against the original provisions for these obligations. Provisions are reviewed at the end of each reporting period. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. Additionally, provisions are not recognized for future

operating losses. Future events that may affect the amount required to settle the obligation, for which a provision has been recognized, are taken into account when sufficient objective evidence exists that they will occur.

Reimbursements from third parties relating to a portion of or all of the estimated cash outflow are recognized as assets, only when it is virtually certain that they will be received. The amount recognized for

the reimbursement does exceed the amount of the provision. The expense recognized in statement of profit or loss and other comprehensive income relating to the provision is presented net of the amount of the reimbursement. The Company does not recognize in the statement of financial position contingent liabilities which relate to:

• possible obligations resulting from past events whose existence will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or

• present obligations resulting from past events for which:

- it is not probable that an outflow of resources will be required, or

- the amount of liability cannot be measured reliably.

The Company provides disclosures for contingent liabilities taking into consideration their materiality. i) Share capital

Ordinary shares are recognized in the share capital. Incremental costs directly attributable to an issuance of ordinary shares are deducted from capital, net of taxation effects. j) Revenue

Revenue includes rental income, and service charges and management charges from properties. Rental income from investment property is recognised in statement of profit or loss and other comprehensive income over the term of the lease.

Service and management charges are recognised in the accounting period in which the services are rendered.

k) Finance income and finance costs Financial revenues consist of revenue and expenses recognized in the income statement for all interest-bearing financial assets and liabilities. Income and expense are recognized on an accrual basis and are measured using the effective interest rate.

Gains and losses from foreign currency exchange differences are reported on a net basis.

3. SIGNIFICANT ACCOUNTING POLICIES (continued)




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l) Tax

Income tax consists of current and deferred tax.

Current tax for a period includes the expected amount of income tax payable in respect of the taxable profit for the current reporting period, based on the tax rates enacted at the balance sheet date. Deferred tax is the tax that will be paid or for which relief will be obtained in future periods due to the different period that certain items are recognized for financial reporting purposes and for taxation purposes.

It is calculated based on the temporary differences between the tax base of assets and liabilities and their respective carrying amounts in the opening IFRS statement of financial position. Deferred tax assets and liabilities are calculated using the tax rates that are expected to apply when the

temporary difference reverses, based on the tax rates (and laws) enacted at the balance sheet date. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available

against which the asset can be utilized. Income tax, both current and deferred, is recognized in statement of profit or loss and other comprehensive income except when it relates to items recognized directly in equity. In such cases, the respective income tax is also recognized in equity.

m) Related parties definition

According to IAS 24, a related party is a person or entity that is related to the entity that is preparing its financial statements. For the Company, in particular, related parties are considered:

a) An entity is part of Alpha Bank Group.

b) A person or an entity that have control, or joint control, or significant influence over the Company.

c) A person and his close family members, if that person is a member of the key management

personnel.




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3. INVESTMENT PROPERTY

In thousands of RON Land

Buildings

Total

Cost

Balance at 01 January 2018 6,356

68,227

74,583

Additions

Disposals

Transfers

Balance at 31 December 2018 6,356

68,227

74,583

Balance at 01 January 2019 6,356

68,227

74,583

Additions

Disposals

Transfers

Balance at 31 December 2019 6,356 68,227 74,583

Depreciation and impairment loss

Balance at 01 January 2018 195

5,117

5,312

Depreciation for the year 65

1,706

1,771

Transfers

Disposals

Balance at 31 December 2018 260

6,823

7,083

Balance at 01 January 2019 260

6,823

7,083

Depreciation for the year 65

1,706

1,771

Transfers

0

Disposals

0

Balance at 31 December 2019 325 8,529 8,854

Balance value at 1st January 2019 6,096 61,404 67,500

Balance value at 31 December 2019 6,031 59,698 65,729

Cubic Center is a Class A office building with ground floor, twelve upper floors and three floors of underground parking. The built area of the building is 44,466.63 sqm and the rentable area is 38,915 sqm. The building is located in Ilfov, Voluntary City 18B Pipera Bvdl. The fair value of investment property as at December 31, 2018 amounts to 112,027 thousand of RON.




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4. PROPERTY PLANT AND EQUIPMENT

In thousands of RON

Plant, equipment, furnishing

Total

Cost


15,239

15,239

Additions

121

121

Disposals

Transfers


15,360

15,360


15,360

15,360

Additions

28

28

Disposals

0

Transfers

0

Balance at 31 December 2019 15,388 15,388

Depreciation and impairment loss


12,618

12,618

Depreciation for the year

145

145

Transfers

Disposals


12,763

12,763


12,763

12,763

Depreciation for the year

155

155

Transfers

0

Disposals

0

Balance at 31 December 2019 12,918 12,918

Balance value at 1st January 2019 2,597 2,597

Balance value at 31 December 2019 2,470 2,470




21

5. TRADE RECEIVABLES

In thousands of RON December 31,

2019

December 31,

2019

Receivables from corporate - - Rent receivables from lessees 1,968 3,083 Other trade receivables 23 63 Less: Provision for impairment of trade receivables

(1,395)

(1,344)

596 1,801

As of December 31, 2019, the Company owned a receivable towards MIC.RO, a client in bankruptcy, in

amount of 1,344 thousand of RON, with no chances of recoverability. The Company recorded an allowance in amount of 1,344 thousand of RON in relation to this receivable. . During 2019 an additional provision was performed for the amount of 51 thousand RON for the receivable from Auto Service Promotional SRL that was reconsidered as not recoverable. Movements in the accumulated impairment losses on trade receivables were as follows:

In thousands of RON

Balance at January 01, 2018

1,344

Additions, including increases in existing provisions

-

Reversal during the current year

-

Balance at December 31, 2018

1,344

Additions, including increases in existing provisions

51

Reversal during the current year

-

Balance at December 31, 2019

1,395


2019 December 31,

2018

594 1,684 Receivables – stages 1 and 2

Receivables – stage 3 1,395 1,400

Receivables allowances – stages 1 and 2 - -

Receivables allowances – stage 3 (1,395) (1,344)

594 1,738

The receivables allowance in amount of 1,395 is related to the clients MIC.RO and Auto Service

Promotional SRL, for which there are low chances of recoverability.

6. OTHER ASSETS


2019 December 31,

2018




22

Advances towards suppliers State Budget receivables Sundry debtors Prepaid expenses

139 1 -

107

- - -

144

247 144

7. CASH AND CASH EQUIVALENTS


2018 December 31,

2018

Deposits in RON with maturity below 90 days 2,501 2,500

Cash in current accounts – RON and EUR 3,417 2,494

5,918

4,994

All the cash held by the Company are in RON and EUR. Placement of cash in bank accounts of ALPHA BANK ROMANIA and ALPHA BANK ATHENS. 8. SHARE CAPITAL

The Company has two shareholders: AGI-RRE Arsinoe LTD (99.9992%), and AGI_RRE Cleopatra LTD (0.0008%).

Amount of

share capital Numbers of

shares % of

ownership

AGI – RRE Arsinoe LTD 226,094 71,143 99.9991%

AGI-RRE Cleopatra LTD 2 2 0.0009%

226,096 71,145 100.0000% As at December 31, 2019 the authorized capital of the company is 226,096 thousand Ron distributed in

251,218 shares with nominal value of Ron 900 each.

9. TRADE AND OTHER PAYABLES


2019 December 31,

2018

Trade payables 191 256

Other financial liabilities 928 1,700

Payable VAT 36 111

Accruals 165 -

Sundry creditors - - 1,321 2,066

Trade payables represent outstanding balance of current suppliers and accrual represent invoices to be received from suppliers, related to management property services, utilities, accounting, audit and security services. Other financial liabilities represent rent guarantees received from clients.




23

10. FINANCIAL RISK MANAGEMENT Overview

The Company has exposure to the following risks from its use of financial instruments:

• credit risk • liquidity risk • currency risk • interest rate risk.

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk.

Credit Risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument

fails to meet its contractual obligations. The Company effectively implements procedures and controls in order to limit the associated risk. The procedures followed include a rigorous assessment of the credibility of each client and monitors, on an ongoing basis, the aging analysis of the balance. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Credit risk Total Not rated

BB B

Cash and cash equivalents 5,918 - 5,075 843

Trade and other receivables 596 596 - -

Other assets 247 247 - -

Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s

approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. 10. FINANCIAL RISK MANAGEMENT (continued)

The maturities of assets and liabilities are the following: December 31, 2019

In thousands of RON Total Below 1

month

1-3

months

3-6

months

6-12

months

More than 1

year

Trade receivables 596 596 - - - -

Other assets 247 - - - 246 1

Cash and cash equivalents 5,918 3,417 2,501 - - -

Trade and other payable (1,321) (392) - - - (929)

NET POSITION 5,440 3,621 2,501 - 246 (928)




24

De pus comparative de la 2018 December 31, 2018

In thousands of RON Total

Below 1 month

1-3 months

3-6 months

6-12 months

More than 1

year

Trade receivables 1,738 338 - - 1,349 51

Other assets 208 - - - 144 64 Cash and cash

equivalents 4,994 2,494 2,500 - - -

Trade and other payable (2,066) - (717) - -(1,349) -

NET POSITION 4,874 2,832 1,783 - 144 115

Interest rate risk Interest rate risk is the risk that the value of financial instruments fluctuates due to changes in market interest rates. Revenue and cash flow from the Company's operations are substantially independent of

changes in market interest rates, since the Company does not have significant interest-bearing assets. The Company is exposed to interest rate risk with respect to its borrowing. Currency risk

In thousands of RON December 31, 2019 Total RON EUR

Cash and cash equivalents

5,918

5,074

845

Other assets 247 247 -

Trade receivables 596 596 -

Trade and other payables (1,321) (1,321) - De pus comparative de la 2018

In thousands of RON December 31, 2018 Total RON EUR

Cash and cash equivalents

4,994

4,169

825

Other assets 144 144 -

Trade receivables 1,801 1,801 -

Trade and other payables (2,066) (2,066) -

Nota de credit risc - (Not rated, BB (Alpha Bank Ro)

11. RENT REVENUE




25

In thousands of RON December 31, 2019

December 31, 2018

Rental revenues Service charge revenue

4,062 1,407

3,116 1,063

5,469 4,179

Cubic Center Development recorded rent revenues in amount of 5,469 thousand RON representing building

rented to related and non related companies.

The period of leases that the Company leases out its investment property under operating lease is 5 to 10 years or more.

12. OTHER EXPENSES & OTHER DIRECT PROPERTY EXPENSES

12.1 Other expenses

In thousand of RON December 31, 2019

December 31, 2018

Insurance 70 67

Legal services 21 9

Brokerage and consultancy services 226 54

Audit and accounting services 112 92

Advertising and Promotion cost 176 28

Cleaning services 110 98

Others expenses 614 1,010

Total 1,330 1,358

12.2 Other direct property operating expenses

In thousand of RON December 31,

2019 December 31,

2018

Property tax and fees 954 918

Maintenance expenses related to investment property

1,310 1,307

Electricity, heating, cold water 851 629

Property management services 566 684

Security services 252 191

3,933 3,728

13. FINANCE INCOME AND FINANCE COST


2019 December 31,

2018

Finance income (32)

(832)

Interest Income (24) (1)

Net foreign exchange differences (8)

(831)




26

Finance costs 0

1,190

Interest Expense 0 1,190

Net foreign exchange differences 0

-

Total (32) 358

14. TAXES Income Tax expense


2019 December 31,

2018

Current Tax - 90

Deferred Tax - -

Total Income Tax Expense - 90

As of December 31, 2019, the Company recorded a cumulated fiscal loss in quantum of 42,166 thousand of RON, for which the Company decided not to recognize a deferred tax asset due to the lack of future imposable profits through which the fiscal loss could be used. Also, the Company did not record deferred tax from temporary deductible and imposable differences due to the lack of future imposable profits.

The breakdown of fiscal loss until the prescription year is the following:

Year Fiscal Loss

2020 (10,089)

2021 (7,556)

2022 (10,009)

2023 (6,458)

2024 (6,253)

2025 (475)

2026 (1,326) The effective income tax rate is 16 % on profit..




27

15. RELATED PARTIES The Company carries out transactions with the following related parties:

• Alpha Bank Romania SA, • Alpha Real Estate Services SRL • Alpha Bank A.E.

The Company has receivables from related parties as follows:


2019 December 31,

2018

Alpha Bank Romania SA – Cash and cash equivalents

Alpha Bank Athena – Cash and cash equivalents

5,074

844

4,171

823

Alpha Bank Romania -Trade receivables 40 15

Alpha Real Estate Services SRL – Trade receivables 2 2

Alpha Real Estate Services SRL – Other assets 67 65

6,027 5,076

The Company has liabilities to related parties as follows:


2019 December 31,

2018

Alpha Real Estate Services SRL – Trade and other

payables 22 -

22 -

The income of the Company from related parties is as follows:


2019 December 31,

2018

Alpha Bank Romania SA – Rental revenues 1,392 1,163 Alpha Real Estate Services SRL – Rental

revenues Alpha Bank Romania SA –Finance income

137 29

133 1

1,558 1,297

The expenses of Company to related parties are as follows:

In thousands of RON

December 31,

2019

December 31,

2018

Alpha Bank Romania SA – Finance cost - 1,190

Alpha Astika Akinita – Other expenses 12 4 Alpha Real Estate Services SRL - Other

direct property operating expenses 598 584

610 1,778




28

De adaugat o nota cu future lease revenue (IAS 17) – exista si in pachetul de raportare Grup

The future lease revenue of Company to related parties are as follows:


2019 December 31,

2018

Alpha Bank Romania SA 3,764 4,869

Alpha Real Estate Services SRL 644 97

4,408 4,966




1

16. LITIGATIONS AND CONTINGENT LIABILITIES

The Company is not involved in any litigation. Also, there are no contingent liabilities as of December 31, 2019. 17. EVENTS AFTER REPORTING DATE

There are no other significant events after the reporting date which requires disclosure in the financial statement as at December 31, 2019.

Documents

CUBIC CENTER DEVELOPMENT S.A. IFRS FINANCIAL … · These financial statements relate to the fiscal year 1.1 – 31.12.2019 and they have been prepared: a) in accordance with International