AGI-RRE HERA SRL IFRS FINANCIAL STATEMENTS FOR ...AGI-RRE HERA SRL IFRS FINANCIAL STATEMENTS AS OF...

AGI-RRE HERA SRL

IFRS FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2019

AGI-RRE HERA SRL


AS OF DECEMBER 31, 2019

4

CONTENTS

INDEPENDENT AUDITOR’S REPORT 1 – 3

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 4

STATEMENT OF FINANCIAL POSITION 5

STATEMENT OF CHANGES IN EQUITY 6

STATEMENT OF CASH FLOWS 7

NOTES TO THE IFRS FINANCIAL STATEMENTS 8 – 29

AGI-RRE HERA SRL



5

AGI-RRE HERA SRL



6

AGI-RRE HERA SRL



7

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

In thousands of RON

Notes

For the

period ended

December 31, 2019

For the

period ended

December 31, 2018

Gain/Losses from sale of investment property 4,12 - 227

Depreciation expenses 4 (185) (161)

Other direct property operating expenses 13 (268) (263)

Operating profit/(loss) (453) (197)

Other income - 2

Other expenses 13 (75) (67)

Gains from exchange differences 112 118

Finance costs 14 - (123)

Profit/(loss) before income tax (416) (267)

Income tax expense 15 (3) -

Profit/(loss) for the year (419) (267)

Other comprehensive income - -

Total comprehensive income for the year (419) (267)

Drafted by: Approved by: ESPECIAL AUDIT SRL Aristeidis Mathiopoulos Ana Nicolescu Administrator Alexandros Mengos Administrator

AGI-RRE HERA SRL



8

STATEMENT OF FINANCIAL POSITION

In thousands of RON

Notes December 31,

2019 December 31,

2018

Assets

Non-current assets

Investment property 4 21,627 21,812

Total non-current assets 21,627 21,812

Current assets

Trade receivables 6 1 1

Other assets 5 447 397

Cash and deposits 7 4,742 5,079

Total current assets 5,190 5,477

Total assets 26,817 27,289

Equity

Share capital 8 23,659 23,659

Retained earnings/(losses) 3,074 3,493

Total equity 26,733 27,152

Liabilities

Trade and other payables 9 81 137

Current income tax liabilities 15 3 -

Total current liabilities 84 137

Total liabilities 84 137

Total equity and liabilities 26,817 27,289

Drafted by: Approved by: ESPECIAL AUDIT SRL Aristeidis Mathiopoulos

Ana Nicolescu Administrator Alexandros Mengos Administrator

AGI-RRE HERA SRL



9

STATEMENT OF CHANGES IN EQUITY

In thousands of RON

Notes Share Retained

earnings Total

Capital Reserves Equity

Balance at January 01, 2018 -

- 3,760 3,760

Profit /(loss) for the year - - (267) (267) Other comprehensive income for the year -

- - -

Total comprehensive income for

the year -

- (267) (267)

Share capital increase 23,659 - - 23,659

Balance at December 31, 2018 23,659 - 3,493 27,152

Balance at January 01, 2019 23,659 - 3,493 27,152

Profit /(loss) for the year - - (419) (419)

Other comprehensive income for the year -

- - -

Total comprehensive income for the year -

- (419) (419)

Balance at December 31, 2019 23,659

- 3,074 26,733

AGI-RRE HERA SRL



10

STATEMENT OF CASH FLOWS

In thousands of RON

2019 2018

Cash flows from operating activities:

Loss before income tax (416) (267)

Depreciation expense 185 161

Finance costs - 123

Exchange differences - (118)

Gains from sale of investment property - (227)

Other adjustments (44)

Changes in working capital:

(Increase)/decrease in trade receivables and other assets (50) 99

Increase/(Decrease) in trade and other payables (56) (233)

Cash generated from operations (337) (506)

Income tax paid - -

Net cash used in operating activities (337) (506)

Cash flows from investing activities:

Purchases of investment property - (16)

Proceeds from sale of investment property - 564

Net cash from investing activities - 548

Cash flows from financing activities:

Share capital increase - 23,822

Repayments of borrowings - (19,763)

Net cash from financing activities - 4,059

Net increase/(decrease) in cash and cash equivalents (337) 4,101

Cash and cash equivalents at January 01, 2019 5,079 978

Cash and cash equivalents at December 31, 2019 4,742 5,079

AGI-RRE HERA SRL



11

1. REPORTING ENTITY

AGI-RRE HERA SRL (“The Company”) is a company registered in Romania.

The address of the Company’s registered office is Bucharest, district 1, Grigore Alexandrescu

Street, no. 85, floor 1. The Company is part of the Alpha Bank Group. The Company is 100%

owned by AGI - RRE HERA LIMITED.

The Company is primarily involved in real estate development and construction and renting out of

its property.

2. BASIS OF PREPARATION

a) Statement of compliance

These Financial Statements relate to 2019 financial year and they have been prepared:

- 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.

- on the historical cost conventions for all financial and non-financial assets and liabilities.

The comparatives are presented as at December 31, 2019 for the statement of financial position,

the statement of comprehensive income, the statement of changes in equity and the statement of

cash flows.

The Company’s statutory accounting records are maintained in accordance with the Romanian

Accounting Standards (RAS). These accounts have been restated to reflect the differences between

RAS and IFRS accounts. Accordingly, RAS accounts were adjusted, if necessary, to harmonize, in

all material respects, with IFRS as adopted by the European Union.

The most important changes to the Financial Statements prepared in accordance with RAS in order

to bring them into line with IFRS requirements adopted by European Union are:

- grouping more elements into more comprehensive categories;

- disclosure requirements in accordance with IFRSs.

The Financial Statements are presented in RON, rounded to the closest thousand, unless otherwise

indicated.

The amounts presented in the financial statements prepared and approved based on local

GAAP may be different from the amounts presented above, due to timing recognition and

other adjustments which are not related to the adoption of IFRS accounting policies.

b) Functional and presentation currency

The Company’s management considers that the functional currency, as defined by IAS 21 “Effects

of changes in foreign exchange rates”, is the Romanian Leu (RON). The financial statements are

presented in RON, rounded at the closest RON value, which the Company’s management has

chosen as presentation currency.

AGI-RRE HERA SRL



12

2. BASIS OF PREPARATION (continued)

c) Going Concern Principle

These Financial Statements have been prepared on a going concern basis which assumes that the

Company will continue in the next 12 months.

The Company applied the going concern principle for the preparation of the financial statements as

at 31.12.2019. For the application of this principle, the Company takes into consideration current

economic developments in order to make projections for future economic conditions of the

environment in which it operates.

For the application of this principle, the Company takes into consideration current economic

developments in order to make projections for future economic conditions of the environment in

which it operates. The main factors that cause uncertainties regarding the application of this

principle relate to the economic environment in Romania and abroad, as well as to the effects of

the spread of coronavirus (Covid-19) in Europe in the first quarter of 2020.

The emergence of coronavirus in Europe in the first quarter of 2020, which soon received

pandemic features, is adding a major uncertainty in terms of both macroeconomic developments

and the ability of businesses to operate under the regime of the restrictive measures imposed. This

development is expected to adversely affect the ability of the clients to repay their debts towards

the Company.

However, even in case of small decreases in land prices we expect the demand for plots of land in

Bucharest area to remain strong.

Based on the above and taking into account:

- the company’s high capital

- significant cash available in the bank accounts which can cover operating expenses for long

periods of time

- the decisions of the European union countries to adopt a series of fiscal and other

measures to stimulate the economy

the Company estimates that, at least for the next 12 months, the conditions for the application of

the going concern principle for the preparation of its financial statements are met.

d) Use of estimates and judgments

The preparation of the IFRS Financial statements requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported

amounts of assets and liabilities. Actual results may differ from these estimates. Estimates and

underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimates are revised and in any future periods affected.

Information about assumptions and estimation uncertainties that are used by the company are

analysed below:

Provision for Expected Credit Losses of Financial Assets

For trade receivables, the Company recognised impairment taking into consideration the ageing of

the balances using simplified approach.

AGI-RRE HERA SRL



13

3. SIGNIFICANT ACCOUNTING POLICIES

a) Accounting policies

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

• 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.

AGI-RRE HERA SRL



14

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

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

➢ IFRIC Interpretation 23 “Uncertainty over Income Tax Treatments”

(Regulation 2018/1595/23.10.2018)

On 7.6.2017 the International Accounting Standards Board issued IFRIC 23. The Interpretation

clarifies application of recognition and measurement requirements in IAS 12 when there is

uncertainty over income tax treatments. The Interpretation specifically clarifies the following:

• An entity shall determine whether to consider each uncertain tax treatment separately or

together with one or more other uncertain tax treatments based on which approach better

predicts the resolution of the uncertainty.

• The estimations for the examination by taxation authorities shall be based on the fact that a

taxation authority will examine amounts it has a right to examine and have full knowledge of all

related information when making those examinations.

AGI-RRE HERA SRL



15

• For the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates, an entity shall consider whether it is probable that a taxation authority will

accept an uncertain tax treatment.


• An entity shall reassess an estimate if the facts and circumstances change or as a result of new

information.

The adoption of IFRIC 23 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.

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

➢ 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

AGI-RRE HERA SRL



16

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 required in order a business to have been acquired,

- the assessment for the acquisition of either a business or a group of assets is simplified

and it is based on current condition of acquired elements rather than on the market

participant’s ability to integrate them into his own processes,

- the definition of outputs is amended so that apart from the revenue arising from ordinary

activities falling within the scope of IFRS 15, it also includes other income from main

activities such as income from investment services,

- guidance is added to assess whether a production process is substantive both in cases

where a product is produced at the date of acquisition and in cases where there is no

product produced,

- an optional exercise is introduced based on the fair value of the assets acquired to assess

whether a business or group of assets has been acquired.


statements.

➢ Amendment to International Financial Reporting Standard 10

“Consolidated Financial Statements” and to International Accounting

Standard 28 “Investments in Associates and Joint Ventures”: Sale or

contribution of assets between an investor and its associate or joint venture.

Effective date: To be determined.

On 11.9.2014 the International Accounting Standards Board issued an amendment to IFRS 10 and

IAS 28 in order to clarify the accounting treatment of a transaction of sale or contribution of assets

between an investor and its associate or joint venture. In particular, IFRS 10 was amended in

order to be clarified that in case that as a result of a transaction with an associate or joint venture,

a parent loses control of a subsidiary, which does not contain a business, as defined in IFRS 3, it

shall recognise to profit or loss only the part of the gain or loss which is related to the unrelated

investor’s interests in that associate or joint venture. The remaining part of the gain from the

transaction shall be eliminated against the carrying amount of the investment in that associate or

joint venture. In addition, in case the investor retains an investment in the former subsidiary and

the former subsidiary is now an associate or joint venture, it recognises the part of the gain or loss

resulting from the remeasurement at fair value of the investment retained in that former

subsidiary in its profit or loss only to the extent of the unrelated investor’s interests in the new

AGI-RRE HERA SRL



17

associate or joint venture. The remaining part of the gain is eliminated against the carrying

amount of the investment retained in the former subsidiary.

In IAS 28, respectively, it was clarified that the partial recognition of the gains or losses shall be

applied only when the involved assets do not constitute a business. Otherwise, the total of the gain

or loss shall be recognised.


On 17.12.2015, the International Accounting Standards Board deferred the effective date for the

application of the amendment that had been initially determined. The new effective date will be

determined by the International Accounting Standards Board at a future date after taking into

account the results of its project relating to the equity method.

➢ International Financial Reporting Standard 14 “Regulatory deferral accounts”


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.


➢ 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:

An entity:

• identifies as insurance contracts those contracts under which the entity accepts significant

insurance risk from another party (the policyholder) by agreeing to compensate the

policyholder if a specified uncertain future event adversely affects the policyholder;

• separates specified embedded derivatives, distinct investment components and distinct

performance obligations from the insurance contracts;

• divides the contracts into groups that it will recognise and measure;

• recognises and measures groups of insurance contracts at:

i. a risk-adjusted present value of the future cash flows (the fulfilment cash flows)

that incorporates all of the available information about the fulfilment cash flows in

a way that is consistent with observable market information; plus (if this value is a

liability) or minus (if this value is an asset)

ii. an amount representing the unearned profit in the group of contracts (the

contractual service margin);

• recognises the profit from a group of insurance contracts over the period the entity

provides insurance cover, and as the entity is released from risk. If a group of contracts is

or becomes loss-making, an entity recognises the loss immediately;

AGI-RRE HERA SRL



18

• presents separately insurance revenue, insurance service expenses and insurance finance

income or expenses; and

• discloses information to enable users of financial statements to assess the effect that

contracts within the scope of IFRS 17 have on the financial position, financial performance

and cash flows of an entity.

It is also noted that in November 2018 the International Accounting Standards Board proposed to

defer the IFRS 17 effective date to 1.1.2022.



➢ 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.

b) Foreign currency transactions

Transactions in foreign currencies are translated into RON (functional currency) at the official

closing exchange rate on the transaction date. Monetary assets and liabilities denominated in

foreign currencies at the balance sheet date are translated into RON at the closing exchange rate

of that date.

Exchange differences arising on the settlement of monetary items or on translating monetary

items at the closing exchange rate as of balance sheet date are recognized in the statement of

comprehensive income

Non-monetary assets and liabilities are translated using the rate of exchange at the transaction

date, except for non-monetary items denominated in foreign currencies that are measured at fair

value which are translated at the exchange rate of the date that the fair value is determined. The

exchange differences relating to these items are part of the change in fair value and they are

recognized in the income statement or recorded directly in equity depending on the classification

of the non-monetary item.

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

c) Cash and cash equivalents

AGI-RRE HERA SRL



19

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 up to 3

months and interest thereon.

d) 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.

The Company holds financial assets that are classified as current accounts with banks, bank term

deposits and trade receivables

These financial instruments are measured at amortised cost since they satisfy both of the following

criteria:

- they are held within a business model whose objective is to hold financial assets in order

to collect contractual cash flows,

- the contractual terms of the financial asset give rise on specified dates to cash flows that

are solely payments of principal and interest (SPPI) on the principal amount outstanding.

These assets are measured at amortized cost using the effective interest rate method and are

periodically tested for impairment based on the procedures described in note 2(h).

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 to the gross carrying amount of a financial asset and to the amortized cost of a financial

liability through the contractual life of a financial instrument or the next repricing date. When

calculating the effective interest rate, the Company estimates the expected cash flows by

considering all the contractual terms of the financial instrument but does not consider the

expected credit losses.

Business model assessment

The business model reflects how the Company manages its financial assets in order to generate

cash flows. That is, the Company’s business model determines whether cash flows will result from

collecting contractual cash flows, selling financial assets or both. The Company’s business model is

determined at a level that reflects how groups of financial assets are managed together to achieve

a particular business objective. Accordingly, business model does not depend on management’s

intentions for an individual instrument but it is determined on a higher level of aggregation.

The Company, at each reporting date, reassesses its business models in order to confirm that

there has been no change compared to the prior period or application of a new business model.

Solely Payments of Principal and Interest (SPPI) assessment of the contractual cash

flows for the purposes of applying the SPPI assessment:

- Principal is the fair value of the asset at initial recognition, which may change over the

life of the financial asset, (for example if there are repayments of principal).

AGI-RRE HERA SRL



20

- Interest is the consideration for the time value of money, for the credit risk associated

with the principal amount outstanding during a particular period of time and for other

basic lending risks (i.e. liquidity risk) and costs, as well as a profit margin.

Contractual terms that introduce exposure to risks and volatility in the contractual cash flows that

are not related to a basic lending arrangement, such as exposure to changes in equity prices or

commodity prices, do not give rise to contractual cash flows that are solely payments of principal

and interest on the principal amount outstanding.

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:

- 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.

- for this purpose, a retained servicing asset shall be treated as a part that continues to be

recognized

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.

AGI-RRE HERA SRL



21

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.

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.

e) 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 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

f) Investment property

The Company includes in this category buildings (hotels) 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 as incurred.

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

years.

AGI-RRE HERA SRL



22

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 on non- financial assets

The Company assesses as at each balance sheet date its non-financial assets for impairment,

particularly, right of use assets and at least annually property, plant and equipment and

investment property.

In assessing whether there is an indication that an asset may be impaired both external and

internal sources of information are considered, of which the following are indicatively mentioned:

- The asset’s market value has declined significantly, more than would be expected as a

result of the passage of time or normal use.

- Significant changes with an adverse effect have taken place during the period or will take

place in the near future, in the technological, economic or legal environment in which the

entity operates or in the market to which the asset is dedicated.

- Significant unfavorable changes in foreign exchange rates.

- Market interest rates or other rates of return of investments have increased during the

period, and those increases are likely to affect the discount rate used in calculating an

asset’s value in use.

- Evidence is available of obsolescence or physical damage of an asset.

An impairment loss is recognized in profit or loss when the recoverable amount of an asset is less

than its carrying amount. The recoverable amount of an asset is the higher of its fair value less

costs to sell and its value in use. Fair value less costs to sell is the amount received from the sale

of an asset (less the cost of disposal) in an orderly transaction between market participants. Value

in use is the present value of the future cash flows expected to be derived from an asset or cash –

generating unit through their use and not from their disposal.

h) Impairment

The Company, at each reporting date, estimates expected credit losses on financial assets

measured at amortised cost and recognizes the related loss allowance.

The loss allowance is based on expected credit losses related to the probability of default within

the next twelve months, unless there has been a significant increase in credit risk from the date of

initial recognition in which case expected credit losses are recognized over the life of the

instrument. In addition, if the financial asset falls under the definition of purchased or originated

credit impaired (POCI) financial assets, a loss allowance equal to the lifetime expected credit

losses is recognized.

Financial assets 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.

AGI-RRE HERA SRL



23

For receivables from customers derived from rent receivables, the loss allowance is measured at

an amount equal to the lifetime expected credit losses (there is no stage allocation) based on the

simplified approach provided by IFRS 9.

i) 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 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.

j) 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.

k) Revenue

Revenue includes gains from the sale of investment property which is recognised in statement of

profit or loss at the point in time of handing the ownership.

l) Finance income and finance costs

AGI-RRE HERA SRL



24

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 re measured using the effective

interest rate.

m) 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.

n) 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. 4. INVESTMENT PROPERTY

In the category of investment property as of December 31, 2019 and 2018 respectively, the

Company included a plot of land located in Popesti-Leordeni and constructions (a hall and its

auxiliary constructions). held for capital appreciation.

In thousands of RON Land and land

improvements Buildings Total

Cost Balance at January 01, 2018 20,457 2,209 22,666

Additions 16 - 16

AGI-RRE HERA SRL



25

Disposals 338 - 338 Transfers - - -

Balance at December 31, 2018

20,135 2,209 22,344

Balance at January 01, 2019 20,135 2,209 22,344

Additions - Disposals - Transfers - - -

Balance at December 31, 2019 20,135 2,209 22,344

4. INVESTMENT PROPERTY (continued) Depreciation and impairment loss Balance at January 01, 2018 21 350 371

Depreciation 53 108 161 Transfers - - - Disposals - - -

Balance at December 31, 2018 74 458 532

Balance at January 01, 2019 74 458 532

Depreciation for the year 77 108 185 Transfers - - - Disposals - - -

Balance at December 31, 2019 151 566 717

Balance value at January 01, 2018 20,436 1,859 22,295

Balance value at December 31, 2018 20,061 1,751 21,812

Balance value at December 31, 2019 19,984 1,643 21,627

The fair value of investment property as at December 31, 2019 amounts to 6,560 thousand of

EUR.

5. OTHER ASSETS In thousands of RON December 31,

2019 December 31,

2018

State Budget receivables

Prepaid expenses

433

14

383

14

447 397

6. TRADE RECEIVABLES

AGI-RRE HERA SRL



26

In thousands of RON December 31, 2019

December 31, 2018

Trade receivables from lessees - -

Trade receivable from corporate Less: Provision for impairment of trade receivables

1 -

1 -

1 1

7. CASH AND CASH EQUIVALENTS

In thousands of RON December 31,

2019 December 31,

2018

Cash in current accounts – RON 112 553 Cash in current accounts - EUR 4,630 4,526

4,742 5,079

All the cash held by the Company are in RON and EUR.

The current accounts are open at ALPHA BANK ROMANIA and ALPHA BANK ATHENS.

8. SHARE CAPITAL AND RESERVES

AGI - RRE HERA LIMITED is the Sole owner of the capital of AGI-RRE HERA SRL. As at December 31, 2019 the authorized capital of the company is 23,659 thousand Ron distributed in 2,365,857 shares with nominal value of Ron 10 each.

9. TRADE AND OTHER PAYABLES


2019 December 31, 2018

Trade payables 17 17 Other financial liabilities 53 93

Accruals 11 27

81 137

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.

10. FINANCIAL RISK MANAGEMENT Overview

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

• credit risk

AGI-RRE HERA SRL



27

• 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: In thousands of RON December 31,

2019 December 31,

2018

Cash and cash equivalents 4,742 5,079 Trade and other receivables 1 1

Other assets 447 397

5,190 5,477

Credit risk TOTAL NOT RATED BB B

Cash and cash equivalents 4,742 -

249

4,493

Trade and other receivables 1 1 - -

Other assets 447 447 - -

5,190 448

249

4,493

All exposures are classified as stage 1.

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.

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

Cash and cash equivalents 4,742 4,742 - - - -

AGI-RRE HERA SRL



28

Trade receivables 1 - - - - 1

Other assets 447 - 64 - - 383 Trade and other

payable (81) (81) - - - - Current income tax

liability (3) (3) - - - -

NET POSITION 5,106 4,658 64 - - 384

December 31, 2018 In thousands of RON

Total

Below 1

month 1-3

months 3-6

months 6-12

months

More than 1

year

Cash and cash equivalents 5,079 5,079 - - - -

Trade receivables 1 - - - 1 -

Other assets 397 - 92 - - 305

Borrowings - - - - - - Trade and other

payables (137) (137) - - - -

NET POSITION 5,340 4,942 92 - 1 305

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.

Currency risk In thousands of RON December 31, 2019 Total RON EUR

Cash and cash equivalents 4,742 112 4,630

Other assets 447 447 -

Trade receivables 1 1 -

Trade and other payables (81) (81) -

Income tax liability (3) (3) -

In thousands of RON December 31, 2018 Total RON EUR

Cash and cash equivalents

5,079

553

4,526

Other assets 397 397 -

Trade receivables 1 1 -

Trade and other payables 137 137 -

AGI-RRE HERA SRL



29

Borrowings - - -

11. FAIR VALUE

The following table analyses within the fair value hierarchy the company’s financial assets and financial liabilities (by class) not measured at fair value:

December 31, 2019

December 31, 2019

December 31, 2018

December 31, 2018

Book Value Market Value Book Value Market Value

Trade receivables 1 1 1 1

Other assets 447 447 397 397 Cash and cash

equivalents 4,742 4,742 5,079 5,079

Total Assets 5,190 5,190 5,477 5,477

Trade payables 81 81 137 137 Total Liabilities 81 81 137 137

12. GAIN / (LOSS) FROM THE SALE OF INVESTMENT PROPERTY In thousands of RON December 31,

2019 December 31,

2018

Revenues from sales of investment property Expense with disposal of investment property sold

- -

564 (337)

- 227

During 2019 The Company has no income from sale of investment property.

13. OTHER EXPENSES & OTHER DIRECT PROPERTY

13.1. Other expenses


2019 December 31,

2018

Legal services (10) (1) Audit and accounting services (63) (57) Other expenses (2) (9)

Total (75) (67)

AGI-RRE HERA SRL



30

13.2. Other direct property operating expenses

In thousands of RON

December 31,

2019

December 31,

2018

Property tax and fees (84) (83)

Maintenance expenses related to investment property (5) (3) Property management services (171) (167) Insurance expenses (1) (3) Other expenses (7) (7)

Total (268) (263)

14. FINANCE INCOME AND FINANCE COST

In thousands of RON December

31, 2019 December 31,

2018

Finance costs - (123)

Interest expense from borrowings - (123)

Total - (123)

As of December 31, 2019, the company has no borrowings due to fully reimbursement of the bank loans existed. Therefore, no finance cost for 2019.

15. TAXES The income tax in the statement of profit and loss and other comprehensive income is presented in the table below.

Income Tax expense In thousands of RON December

31, 2019 December 31,

2018

Current Tax 3 - Deferred Tax - -

Total Income Tax Expense 3 -

A reconciliation between the effective and nominal tax rate is provided below:

Total revenues 145

Decrease due to:

Exchange differences revenues 145

Non-taxable income -

Increase due to: Exchange differences revenues - exchange differences expenses 112

Taxable basis 112

AGI-RRE HERA SRL



31

Income tax (2019: 3%) 3

The effective income tax rate is 2% from total revenues. The Company has not recognised a deferred tax asset for fiscal losses or temporary differences.

As of December 31, 2019, the Company recorded a cumulated fiscal loss in amount of 267 thousand of RON.

16. RELATED PARTIES

The Company carries out transactions with the following related parties:

• Alpha Bank Romania, • Alpha Real Estate Services SRL,

• Alpha Bank A.E, • Alpha Astika Akinita A.E.

The Company has receivables from related parties as follows:

In thousands of RON

December 31,

2019

December 31,

2018

Alpha Bank Romania – cash and deposits 249 694

Alpha Bank Athens – cash and deposits 4,493 4,385

Alpha Real Estate Services – other assets 14 14

4,756 5,093

The Company has liabilities to related parties as follows:


2019 December 31,

2018

Alpha Real Estate Services SRL – Trade and Other Payables 17 17

17 17

The Company has not income to related parties for 2019. The expenses of Company to related parties are as follows:

In thousands of RON

December 31,

2019

December 31,

2018

Alpha Bank A.E. London branch – finance cost - 123

Alpha Bank Romania – other expenses 1 2 Alpha Real Estate Services – other direct property operating expenses 171 174

Alpha Astika Akinita AE- other expenses 7 -

AGI-RRE HERA SRL



32

179 299

17. LITIGATIONS AND CONTINGENT LIABILITIES

There are no litigations as of December 31, 2019. The Company does not have any contingent liabilities.

18. EVENTS AFTER REPORTING DATE

The company management monitors the current situation regarding the rapid transmission of

COVID-19 and assesses the impact on the asset quality as well as the implementation of the

Business Plan. We also reassessed the ability to retain our business operations, in order to support

our customers in these harsh times.

The above efforts are being carried out concurrently with the actions of the Romanian Government

to address the economic impact of the coronavirus (COVID-19) and to support the economy and

entrepreneurship.

Date post:	30-Jan-2021
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

AGI-RRE HERA SRL IFRS FINANCIAL STATEMENTS FOR ...AGI-RRE HERA SRL IFRS FINANCIAL STATEMENTS AS OF...

Documents