ONE UNITED PROPERTIES SA AND SUBSIDIARIES Consolidated financial statements for the year ended 31 December 2022 Prepared in accordance with the Ministry of Finance Order no. 2844/2016 for the approval of accounting regulations compliant with the International Financial Reporting Standards
CONTENTS Page INDEPENDENT AUDITOR’S REPORT 1 – 6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 7 – 8 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 10 – 11 CONSOLIDATED STATEMENT OF CASH FLOWS 12 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 13 – 86
ONE UNITED PROPERTIES SA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) Notes attached are an integrant part of these consolidated financial statements. 7 Note 31 December 2022 31 December 2021 ASSETS Non-current assets Goodwill 7 19,256,076 19,256,076 Intangible assets 7 15,259,605 597,608 Property, plant and equipment 6 51,131,523 17,040,010 Right of use assets 16 2,687,154 3,505,452 Investment properties 8 2,251,984,947 1,449,465,190 Investments in associates 17 3,369,877 2,967,158 Total non-current assets 2,343,689,182 1,492,831,494 Current assets Inventories 9 662,994,340 343,977,627 Advance payments to suppliers 10 116,316,909 93,266,448 Trade receivables 11 392,002,622 201,369,543 Other receivables 11 129,862,443 128,441,029 Prepayments 24,924,944 19,517,269 Other financial assets - 9,408,917 Cash and cash equivalents 12 566,960,043 508,347,161 Total current assets 1,893,061,301 1,304,327,994 TOTAL ASSETS 4,236,750,483 2,797,159,488 EQUITY AND LIABILITIES Equity Share capital 14 740,563,717 514,828,059 Share premium 14 27,981,399 4,307,781 Own shares 14 1,029 - Other capital reserves 14 51,848,900 1,390,179 Legal reserve 14 17,452,635 11,437,359 Retained earnings 1,184,656,306 791,788,303 Equity attributable to owners of the Group 2,022,503,986 1,323,751,681 Non-controlling interests 508,822,702 323,205,535 Total equity 2,531,326,688 1,646,957,216 Non-current liabilities Loans and borrowings from bank and others 15 654,206,589 390,342,321 Loans and borrowings from minority shareholders 15 3,528,882 7,472,207 Trade and other payables 18 23,442,273 564,912 Lease liabilities 16 2,646,947 2,646,947 Deferred tax liabilities 13 272,828,037 179,974,080 Total non-current liabilities 956,652,728 581,000,467
ONE UNITED PROPERTIES SA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) Notes attached are an integrant part of these consolidated financial statements. 8 Note 31 December 2022 31 December 2021 Current liabilities Loans and borrowings from bank and others 15 172,421,627 34,260,754 Loans and borrowings from minority shareholders 15 47,528 87,028 Lease liabilities 16 778,490 1,282,387 Trade and other payables 18 271,065,556 124,138,768 Accrued income 11,099,273 1,145,855 Current tax liabilities 13 717,144 2,023,447 Advance payments from customers 19 292,641,449 406,263,566 Total current liabilities 748,771,067 569,201,805 Total liabilities 1,705,423,795 1,150,202,272 TOTAL EQUITY AND LIABILITIES 4,236,750,483 2,797,159,488 The consolidated financial statements were approved by the Management of the Company, authorized for issue on 22 March 2023 and signed on its behalf by: Victor Capitanu Valentin-Cosmin Samoila Administrator Chief Financial Officer
ONE UNITED PROPERTIES SA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) Notes attached are an integrant part of these consolidated financial statements. 9 Note 31 December 2022 31 December 2021 Revenues from sales of residential property 20 769,518,382 703,317,672 Cost of sales of residential property 20 (445,459,287) (451,583,531) Other property operating expenses - residential (5,133,247) (5,046,897) Net income from residential property 318,925,848 246,687,244 Gains from investment property under development 8 54,883,687 298,636,043 Gains from completed investment property 8 88,485,173 44,364,366 Gains from investment property for further development (landbank) 8 75,097,712 56,187,770 Gains from investment property 218,466,572 399,188,179 Gains on the bargain purchase 8 94,079,969 - Rental income 21 62,377,460 6,544,367 Revenues from services to tenants 16,532,162 5,277,520 Expenses from services to tenants (16,532,162) (5,277,520) Other property operating expenses (8,171,409) (5,345,444) Net rental income 54,206,051 1,198,923 Commissions for brokerage real estate 22 (9,255,427) (4,641,595) Administrative expenses 23 (90,436,029) (27,936,859) Other operating expenses 24 (15,308,340) (8,065,542) Profit on disposal of investment property 304,746 536,526 Other operating income 5,141,316 5,688,365 Result from ordinary activities 576,124,706 612,655,241 Financial income 25 18,348,129 2,381,231 Financial expenses 25 (21,966,642) (12,145,485) Net financial result (3,618,513) (9,764,254) Share of result of associates 17 402,719 1,527,818 Result before tax 572,908,912 604,418,805 Tax on profit 13 (70,431,447) (94,731,652) Net result of the period 502,477,465 509,687,153 Total comprehensive income for the period 502,477,465 509,687,153 Net result attributable to: Owners of the Group 442,014,509 391,330,530 Non-controlling interests 60,462,956 118,356,623 Total comprehensive income attributable to: Owners of the Group 442,014,509 391,330,530 Non-controlling interests 60,462,956 118,356,623 Basic/diluted earnings per share attributable to equity holders 33 0.18 0.79 The consolidated financial statements were approved by the Management of the Company, authorized for issue on 22 March 2023 and signed on its behalf by: Victor Capitanu Valentin-Cosmin Samoila Administrator Chief Financial Officer
ONE UNITED PROPERTIES SA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) Notes attached are an integrant part of these consolidated financial statements. 10 Notes Share capital Share premiums Legal reserves Other capital reserves Own shares Retained earnings Non-controlling interests Total equity Balance at 1 January 2022 514,828,059 4,307,781 11,437,359 1,390,179 0 791,788,303 323,205,535 1,646,957,216 Profit of the year - - - - - 442,014,509 60,462,956 502,477,465 Dividends allocated from the statutory profit 14 - - - - - (42,473,315) (882,000) (43,355,315) Issue of ordinary shares 14 40,594,729 213,122,328 - - - - - 253,717,057 Issue of ordinary shares- premium shares conversion 14 185,140,929 (185,140,929) - - - - - - IPO costs 3 - - - - - (1,514,709) - (1,514,709) Transfer from share premiums in other reserves - (4,307,781) - 4,307,781 - - - - Transfer of legal reserve in/from retained earnings 14 - - 6,015,276 - - (6,015,276) - - Transactions with non-controlling interests 27 - - - - - 856,794 (10,898,032) (10,041,238) Acquisition of own shares 14 - - - - 1,029 - - 1,029 Stock option plan 14 - - - 46,150,940 - - - 46,150,940 Non-controlling interest on acquisition of subsidiary or change in share capital of subsidiary 27 - - - - - - 136,934,243 136,934,243 Balance as at 31 December 2022 740,563,717 27,981,399 17,452,635 51,848,900 1,029 1,184,656,306 508,822,702 2,531,326,688
ONE UNITED PROPERTIES SA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) Notes attached are an integrant part of these consolidated financial statements. 11 Notes Share capital Share premiums Legal reserves Other capital reserves Own shares Retained earnings Non-controlling interests Total equity Balance at 1 January 2021 259,824,598 9,192 - 463,393 (26,765,560) 498,235,187 92,264,592 824,031,402 Profit of the year - - - - - 391,330,530 118,356,623 509,687,153 Dividends allocated from the statutory profit 14 - - - - - (81,743,000) (328,836) (82,071,836) Issue of ordinary shares 14 26,001,417 233,111,060 - - - - - 259,112,477 Issue of ordinary shares- premium shares conversion 14 228,812,471 (228,812,471) - - - - - - Issue of ordinary shares - other reserves conversion 14 189,573 - - - - (189,573) - - Employee share scheme 14 - - - 926,786 - - - 926,786 IPO costs 3 - - - - - (6,096,360) - (6,096,360) Transfer of legal reserve in/from retained earnings 14 - - 11,437,359 - - (11,437,359) - - Transactions with non-controlling interests 27 - - - - - (2,603,992) (7,175,084) (9,779,076) Acquisition of own shares 14 - - - - - - - - Sale of own shares - - - - 26,765,560 9,269,654 - 36,035,214 Non-controlling interest without change in control 27 - - - - - (4,976,784) 120,088,240 115,111,456 Balance as at 31 December 2021 514,828,059 4,307,781 11,437,359 1,390,179 0 791,788,303 323,205,535 1,646,957,216
ONE UNITED PROPERTIES SA AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AT 31 DECEMBER 2022 ( Amounts are expressed in RON, unless otherwise mentioned) Notes attached are an integrant part of these consolidated financial statements. 12 Note 31 December 2022 31 December 2021 Cash flows from operating activities Result for the year 502,477,465 509,687,153 Adjustments for: Depreciation and amortization 23 2,519,971 2,223,680 Other financial income (4,861,828) (24,585) Share of result of associates 17 (402,719) (1,527,818) Allowances for current assets – receivables and other provisions 24 5,258,735 (105,620) Increase in fair value of investment property 8 (218,466,572) (399,188,179) Gains on the bargain purchase 8 (94,079,969) - Profit on disposal of investment property (304,746) (536,526) Share-based payments 23 46,150,940 926,786 (Gain)/Loss on sale of property, plant and equipment 19,449 (204,091) Unrealised foreign exchange loss/(gain) 1,363,740 5,725,044 Interest expenses 25 21,966,642 9,639,353 Interest income 25 (13,393,219) (2,356,646) Income tax expenses 13 70,431,447 94,731,652 Changes in working capital (Increase)/Decrease in trade and other receivables (210,660,660) (240,334,281) (Increase)/Decrease in inventories (89,760,315) 148,434,095 Increase/(Decrease) in trade and other payables 60,888,357 (7,401,109) Increase/(Decrease) in advance payments from customers (113,623,117) 112,408,364 Income tax paid (6,605,466) (15,602,881) Working capital from acquisition of new subsidiaries 11,656,689 - Net cash from operating activities (29,425,176) 216,494,391 Acquisition of property, plant and equipment (7,759,799) (3,033,324) Acquisition of intangible assets (422,438) (692,838) Acquisition of investment property (285,031,660) (49,965,795) Expenditure on investment property under development (111,294,812) (184,200,745) Expenditure on completed investment property (78,333,026) (25,770,292) Proceeds from sale of property, plant and equipment 5,043 338,050 Proceeds from sale of investment property 8,436,741 9,824,041 Amounts paid for transactions with non-controlling interests 27 (10,041,238) (9,779,075) Acquisition of subsidiaries - (11,200,555) Interest received 13,393,219 2,356,646 Other financial income 4,861,828 - Net cash flows used in investing activities (466,186,142) (272,123,887) Proceeds from loans and borrowings 28 438,871,492 373,217,603 Repayment of borrowings 28 (38,600,730) (207,964,880) Dividends paid (77,771,559) (54,762,517) Proceeds from issue of share capital and share premium 253,717,057 259,112,478 Acquisition of own shares - - Cash proceeds from sale of own shares - 36,035,213 Interest paid 28 (21,460,144) (11,693,437) Principal elements of lease payments 28 (531,916) (939,449) Net cash from financing activities 554,224,200 393,005,011 Net changes in cash and cash equivalents 58,612,882 337,375,515 Cash and cash equivalents at the beginning of the year 508,347,161 170,971,646 Cash and cash equivalents at the end of the year 12 566,960,043 508,347,161
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 13 NOTE 1. CORPORATE INFORMATION The consolidated financial statements of One United Properties SA and its subsidiaries (collectively, the Group) for the year ended 31 December 2022 were authorized for issue on 22 March 2023. The parent company, One United Properties SA (the “Company”), was established in 2007 according to Law no. 31/1990, having as object of activity real estate development and sale. The Company has fiscal code RO22767862 and is registered with the Trade Registry under no. J40/21705/2007. The registered office of the Company is at Maxim Gorki street 20, Bucharest, district 1 and second office at Calea Floreasca no 159, Building One Tower, Bucharest, district 1. The share capital of the Company is RON 740,563,717.2 divided into 3,702,818,586 shares at a nominal value of RON 0.2/each. One United Properties SA is owned by OA Liviu Holding Invest SRL (represented by Mr. Andrei Diaconescu) and Vinci Ver Holding SRL (represented by Mr. Victor Capitanu) holding 27.5830% each and other shareholders holding 44.8340%. All shares are paid in full. The Company shares floated on Bucharest Stock Exchange (BVB) on 12 July 2021, following an initial public offering that took place between 22 June 2021 and 02 July 2021, during which the company raised RON 259,112,477.28 for further developments and investments in both the residential and office segments. As of 20 September 2021, the Company shares are included in the BET index, which follows the evolution of the 19 most liquid companies listed on the Bucharest Stock Exchange. On 20 December 2021, the Company shares entered the FTSE Global All Cap index. The global index provider FTSE Russell announced, following the quarterly review, that the Company’s shares are included, as of 20.06.2022, in the FTSE EPRA Nareit EMEA Emerging Index. The object of activity of the Group consists in the development and sale/lease of residences, offices and retail in Bucharest, Romania. The Company had the following subsidiaries undertakings as at 31 December 2022 and 31 December 2021: Name of the subsidiary Activity % ownership as at 31 December 2022 % ownership as at 31 December 2021 Registered office One Modrogan SRL Real estate developer in Bucharest 99.99% 99.99% Maxim Gorki street 20, Bucharest, district 1 One Peninsula SRL (former One Herastrau Park Residence SA) Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Charles de Gaulle Residence SRL Real estate developer in Bucharest 99.99% 99.99% Maxim Gorki street 20, Bucharest, district 1 One Herastrau Plaza SRL Real estate developer in Bucharest 98.00% 98.00% Maxim Gorki street 20, Bucharest, district 1 One Verdi Park SRL Real estate developer in Bucharest 95.00% 95.00% Maxim Gorki street 20, Bucharest, district 1 X Architecture & Engineering Consult SRL Architecture services for group and non-group projects 80.00% 80.00% Maxim Gorki street 20, Bucharest, district 1 One Mircea Eliade Properties SRL Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Long Term Value SRL Real estate developer in Bucharest 98.00% 98.00% Maxim Gorki street 20, Bucharest, district 1 One Herastrau Towers SRL Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Cotroceni Park SRL (former One Herastrau Properties SRL) Real estate developer in Bucharest 80.00% 80.00% Maxim Gorki street 20, Bucharest, district 1 Skia Real Estate SRL Operational services – project development 51.00% 51.00% Maxim Gorki street 20, Bucharest, district 1 One Lake District SRL (former One District Properties SRL) Real estate developer in Bucharest 98.00% 98.00% Maxim Gorki street 20, Bucharest, district 1 One North Gate SA Real estate developer in Bucharest 67.69% 62.41% Maxim Gorki street 20, Bucharest, district 1
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 14 NOTE 1. CORPORATE INFORMATION (CONTINUED) Group companies Activity % ownership as at 31 December 2022 % ownership as at 31 December 2021 Registered office One United Tower SA (former One United Tower SRL) Real estate developer in Bucharest 70.24% 70.24% Maxim Gorki street 20, Bucharest, district 1 Neo Floreasca Lake SRL Real estate developer in Bucharest 95.00% 80.58% Maxim Gorki street 20, Bucharest, district 1 One Mamaia Nord SRL (former Neo Mamaia SRL) Real estate developer in Bucharest 95.00% 82.33% Maxim Gorki street 20, Bucharest, district 1 Neo Timpuri Noi SRL Real estate developer in Bucharest 95.00% 82.33% Maxim Gorki street 20, Bucharest, district 1 One Herastrau Vista SRL (former Neo Herastrau Park SRL) Real estate developer in Bucharest 95.00% 82.00% Maxim Gorki street 20, Bucharest, district 1 One Floreasca Towers SRL (former One Herastrau IV SRL) Real estate developer in Bucharest 99.99% 99.99% Maxim Gorki street 20, Bucharest, district 1 One Long Term Investments SRL (former One Herastrau Real Estate SRL) Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Cotroceni Park Office SA Real estate developer in Bucharest 57.25% 57.25% Maxim Gorki street 20, Bucharest, district 1 One Cotroceni Park Office Faza 2 SA Real estate developer in Bucharest 57.25% 57.25% Maxim Gorki street 20, Bucharest, district 1 One Cotroceni Park Office Faza 3 SA (former One Verdi Park Office SA) Real estate developer in Bucharest 80.00% 80.00% Maxim Gorki street 20, Bucharest, district 1 One Mamaia SRL Real estate developer in Bucharest 99.99% 99.99% Maxim Gorki street 20, Bucharest, district 1 One High District S.R.L. (former One Proiect 1 SRL) Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Plaza Athenee SRL (former One Proiect 3 SRL) Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Proiect 4 SRL Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Proiect 5 SRL Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Lake Club SRL (former One Proiect 6 SRL) Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Herastrau City SRL (former One Proiect 7 SRL) Real estate developer in Bucharest 100.00% 100.00% Maxim Gorki street 20, Bucharest, district 1 One Carphatian Lodge Magura SRL (former Carpathian Estate SRL) Real estate developer in Bucharest 66.72% 66.72% Maxim Gorki street 20, Bucharest, district 1 One Proiect 8 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One City Club SRL (former One Proiect 9 SRL) Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 10 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One United Italia SRL Real estate developer in Bucharest 90.00% - Maxim Gorki street 20, Bucharest, district 1 Bo Retail Invest SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 Bucur Obor SA Lease of retail space 54.44% - Colentina street 2, Bucharest, district 2
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 15 NOTE 1. CORPORATE INFORMATION (CONTINUED) Group companies Activity % Ownership as at 31 December 2022 % Ownership as at 31 December 2021 Registered office One United Management Services SRL Management services 100.00% Maxim Gorki street 20, Bucharest, district 1 One Proiect 11 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 12 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 14 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 15 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Victoriei Plaza SRL (former Mam Imob Business Center SRL) Renting office premises in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 Eliade Tower SA Renting office premises in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 16 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 17 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 18 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 One Proiect 2 SRL Real estate developer in Bucharest 100.00% - Maxim Gorki street 20, Bucharest, district 1 During 2022, thirteen new subsidiaries were established within the One group: One Proiect 8 SRL, One City Club SRL (former One Proiect 9 SRL), One Proiect 10 SRL, One Proiect 11 SRL, One Proiect 12 SRL, One Proiect 14 SRL, One Proiect 15 SRL, One Proiect 16 SRL, One Proiect 17 SRL, One Proiect 18 SRL, One Proiect 2 SRL, One United Management Services SRL and One United Italia SRL which are 100% owned by the Company. The Company have increased its ownership in the share capital of the below subsidiaries, as follows: - One Mamaia Nord SRL (former Neo Mamaia SRL) from 82.33% to 95.00%, the total consideration price for the shares acqcuired is RON 808,349. - Neo Floreasca Lake SRL from 80.58% to 95.00%, the total consideration price for the shares acqcuired is RON 2,063,158. - Neo Timpuri Noi SRL from 82.33% to 95.00%, the total consideration price for the shares acqcuired is RON 902,834. - One Herastrau Vista SRL (former Neo Herastrau Park SRL) from 82.00% to 95.00%, the total consideration price for the shares acqcuired is RON 2,042,970. - One North Gate SA from 62.41% to 67.69%, the total consideration price for the shares acqcuired is RON 4,2 million. On 8 February 2022, the Company directly acquired 100% of the shares of BO Retail Invest SRL a subsidiary which has previously acquired a controlling stake of 54.4351% in Bucur Obor SA, a company listed on the Multilateral Trading System of the Bucharest Stock Exchange, under symbol BUCU. The transaction was subject to Competition Council clearance, which the Company received on 4 February 2022. The total amount paid for the transaction was of RON 65,4 million, representing the consideration of the acquisition of the shares. Please refer for further details to Note 8. On 27 July 2022 the Company acquired 100% shares in a new subsidiary One Victoriei Plaza SRL (former Mam Imob Business Center SRL) that owns and operates the office building located at 29-31 Nicolae Titulescu Boulevard, Bucharest, Romania (One Victoriei Plaza). The total value of the transaction is approximately EUR 28 million. The office building is fully leased to First Bank as a tenant. Please refer for further details to Note 8. On 05 October 2022, the Company have completed the acquisition of Eliade Tower, office building located at 18 Mircea Eliade Boulevard, Bucharest, Romania. The total value of the transaction is approximately EUR 9.8 million. Please refer for further details to Note 8.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 16 NOTE 1. CORPORATE INFORMATION (CONTINUED) The scope of the consolidation is summarized below: Scope of consolidation Subsidiaries full consolidation Associates at equity Total Balance on 31 December 2021 33 7 40 Acquisitions 3 - 3 New foundations 14 - 14 Disposal (1) - (1) Balance on 31 December 2022 49 7 56 NOTE 2. GENERAL INFORMATION 2.a Basis of preparation The Group has prepared financial statements which comprise the statement of financial position, statement of profit or loss and other comprehensive income, statement of cash flows and statement of changes in equity for the year ended 31 December 2022, notes comprising a summary of significant accounting policies and other explanatory information. The consolidated financial statements of the Group have been prepared in accordance with the provisions of the Ministry of Finance Order no. 2844/2016 approving the accounting regulations compliant with the International Financial Reporting Standards (“OMFP nr. 2844/2016”). According to OMFP no. 2844/2016, International Financial Reporting Standards are the standards adopted according to the procedures of the European Commission Regulation no. 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (IFRS). The accompanying consolidated financial statements are based on the statutory accounting records of the Group, adjusted and reclassified in order to obtain a fair presentation, according to IFRS. The consolidated financial statements provide comparative information in respect of the previous period. The Group’s financial statements have been prepared on a historical cost basis, except for investment property and financial assets and liabilities (where the case) at fair value through profit or loss which are measured at fair value. Assumptions underlying management’s estimates of fair value are detailed in Note 8. The consolidated financial statements are presented in RON, except where otherwise indicated. In contrast to the consolidated financial statements as of 31 December 2021, the Group has presented in more granularity some of the information in the current period to increase the level of relevance. Where applicable, the Group has reclassified the comparative information for consistency purposes. The following captions from the consolidated statement of profit or loss and other comprehensive income and consolidated statement of financial position were changed due to such reclassifications: the expenses related to properties which are available for lease were included in other operating expenses line as of 31 December 2021, while in current period were reclassified under the rental activity, the costs related to fit out, power and water which were not included in cost of sales were included under other operating expenses line in prior period, while in current period were reclassified in “Other property operating expenses – residential” line, the broker commissions for rental activity were reclassified from administrative expenses to “Commissions for brokerage real estate”, the employee benefits and provisions were included under trade and other payables line as of 31 December 2022. 2.b Going concern The Group has prepared forecasts, including certain sensitivities, considering the potential impact on the business considering current economic factors, such as inflation raise, post covid-19 influence and the armed conflict between Russia and Ukraine. Having considered these forecasts and that the Group has no activities that are significantly dependant of the area affected by the conflict or by sanctions (particularly Russia, Ukraine, Belarus), neither in respect of acquisitions, nor concerning sales or investments, the Directors remain of the view that the Group’s financing arrangements and capital structure provide both the necessary facilities and covenant headroom to enable the Group to conduct its business for at least the next 12 months, although there are still uncertainties regarding the evolution of the conflict and the potential impact on the countries that are close to the conflict zone and on the global economy in general. Accordingly, the consolidated financial statements have been prepared on a going concern basis, which means that the Group will continue its activity in the foreseeable future, the current results estimated by the management of the companies and shareholders being considered solid.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 17 NOTE 2. GENERAL INFORMATION (CONTINUED) 2.c Standards, amendments and new interpretations of the standards The accounting policies adopted are consistent with those of the previous financial year except for the following amended IFRSs which have been adopted by the Company as of 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective and 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 Group in the period of initial application. New and amended standards and interpretations effective for the current reporting period The following new standards, amendments to the existing standards and new interpretation issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period and their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements: - Amendments to IFRS 3: Definition of a Business – Reference to the Conceptual Framework with amendments to IFRS 3 issued by IASB on 14 May 2020. The amendments: (a) update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework; (b) add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and (c) add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination. - Amendments to IAS 16 “Property, Plant and Equipment” - Proceeds before Intended Use issued by IASB on 14 May 2020. The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss. - Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Onerous Contracts — Cost of Fulfilling a Contract issued by IASB on 14 May 2020. The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. - Amendments to various standards due to “Improvements to IFRSs (cycle 2018 -2020)” issued by IASB on 14 May 2020. Amendments to various standards resulting from the annual improvement project of IFRS (IFRS 1, IFRS 9, IFRS 16 and IAS 41) primarily with a view to removing inconsistencies and clarifying wording. The amendments: (a) clarify that subsidiary which applies paragraph D16(a) of IFRS 1 is permitted to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs (IFRS 1); (b) clarify which fees an entity includes when it applies the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other’s behalf (IFRS 9); (c) removes from the example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated in that example (Illustrative Example 13 accompanying IFRS 16); and (d) removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash flows when measuring the fair value of a biological asset using a present value technique (IAS 41). New and revised IFRS Accounting Standards in issue and adopted by the EU but not yet effective At the date of authorisation of these financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued and adopted by the EU but are not yet effective: - Amendments to IFRS 17 “Insurance contracts” - Initial Application of IFRS 17 and IFRS 9 – Comparative Information issued by IASB on 9 December 2021. It is a narrow-scope amendment to the transition requirements of IFRS 17 for entities that first apply IFRS 17 and IFRS 9 at the same time. - Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current or Non-Current issued by IASB on 23 January 2020. The amendments provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 18 NOTE 2. GENERAL INFORMATION (continued) 2.c Standards, amendments and new interpretations of the standards (continued) Amendments to IAS 1 issued by IASB on 15 July 2020 defer the effective date by one year to annual periods beginning on or after 1 January 2023. Disclosure of Accounting Policies issued by IASB on 12 February 2021. Amendments require entities to disclose their material accounting policies rather than their significant accounting policies and provide guidance and examples to help preparers in deciding which accounting policies to disclose in their financial statements. Non-current Liabilities with Covenants issued by IASB on 31 October 2022. Amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. - Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” - Definition of Accounting Estimates issued by IASB on 12 February 2021. Amendments focus on accounting estimates and provide guidance how to distinguish between accounting policies and accounting estimates. - Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities arising from a Single Transaction issued by IASB on 6 May 2021. According to amendments, the initial recognition exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities. These amendments had no impact on the consolidated financial statements of, nor is there expected to be any future impact to the Group. New and revised IFRS Accounting Standards in issue but not adopted by the EU - Amendments to IAS 1 “Classification of Liabilities as Current or Non-Current (IASB effective date: 1 January 2023)” - Amendments to IAS 1 “Non-current Liabilities with Covenants (IASB effective date: 1 January 2024)” - Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback (IASB effective date: 1 January 2024)” - IFRS 14 “Regulatory Deferral Accounts” issued by IASB on 30 January 2014. This standard is intended to allow entities that are first-time adopters of IFRS, and that currently recognise regulatory deferral accounts in accordance with their previous GAAP, to continue to do so upon transition to IFRS. - Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture issued by IASB on 11 September 2014. The amendments address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The Group do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of the Group in future periods. NOTE 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The preparation of the Group’s consolidated financial statements requires management to make professional judgments, estimates and assumptions that affect the application of accounting policies, as well as the recognized value of assets, liabilities, revenue and expenses, and the accompanying disclosures. The actual results may vary from the estimated values. The estimates and assumptions are based on the historical experience and other elements, including the expectations regarding the future events considered reasonable in the existing circumstances. The underlying estimates and assumptions are periodically revised. The revision of accounting estimates is recognized starting with the period in which the estimates are revised. For preparing the consolidated financial statements according to IFRS adopted by the EU, the Group makes estimates and assumptions related to future developments that might have a significant effect on the recognition of the value of the reported assets and liabilities, presentation of contingent liabilities as at the preparation date of the consolidated financial statements and the revenue and expenses reported for the respective period.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 19 NOTE 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 3.a Judgements In the process of applying the Group accounting policies, the management made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements: 3.a.1 Revenue from contracts with customers The Group applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers: Determination of performance obligations With respect to the sale of property, the Group concluded the goods and services transferred in each contract constitute a single performance obligation. In particular, the promised goods and services in contracts for the sale of property under development mainly include design work, procurement of materials and development of the property. Generally, the Group is responsible for all these goods and services and the overall management of the project. Although these goods and services are capable of being distinct, the Group accounts for them as a single performance obligation because they are not distinct in the context of the contract. The Group uses those goods and services as inputs and provides a significant service of integrating them into a combined output i.e., the completed property for which the customer has contracted. In relation to the services provided to tenants of investment property (such as cleaning, security, landscaping, reception services, catering) as part of the lease agreements into which the Group enters as a lessor, the Group has determined that the promise is the overall property management service and that the service performed each day is distinct and substantially the same. Although the individual activities that comprise the performance obligation vary significantly throughout the day and from day to day, the nature of the overall promise to provide management service is the same from day to day. Therefore, the Group has concluded that the services to tenants represent a series of daily services that are individually satisfied over time, using a time- elapsed measure of progress, because tenants simultaneously receive and consumes the benefits provided by the Group. Principal versus agent considerations – services to tenants The Group arranges for certain services provided to tenants of investment property included in the contract the Group enters into as a lessor, to be provided by third parties. The Group has determined that it controls the services before they are transferred to tenants, because it has the ability to direct the use of these services and obtain the benefits from them. In making this determination, the Group has considered that it is primarily responsible for fulfilling the promise to provide these specified services because it directly deals with tenants’ complaints and it is primarily responsible for the quality or suitability of the services. In addition, the Group has discretion in establishing the price that it charges to the tenants for the specified services. Therefore, the Group has concluded that it is the principal in these contracts. In addition, the Group has concluded that it transfers control of these services over time, as services are rendered by the third-party service providers, because this is when tenants receive and at the same time, consume the benefits from these services. Determining the timing of revenue recognition on the sale of property The Group has evaluated the timing of revenue recognition on the sale of property based on an analysis of the rights and obligations under the terms of the contract. The Group has generally concluded that contracts relating to the sale of completed property are recognised at a point in time when control transfers. For unconditional exchanges of contracts, control is generally expected to transfer to the customer together with the legal title. For conditional exchanges, this is expected to take place when all the significant conditions are satisfied. For contracts relating to the sale of property under development, the Group has generally concluded that the overtime criteria are met and, therefore, recognises revenue over time. The Group’s performance does not create an asset with alternative use to the Group. Furthermore, the Group has generally an enforceable right to payment for performance completed to date. It has considered the factors that indicate that it is restricted (contractually or practically) from readily directing the property under development for another use during its development.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 20 NOTE 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 3.a Judgements (continued) 3.a.1 Revenue from contracts with customers (continued) In making this determination, the Group has considered the contractual terms as well as any legislation or legal precedent that could supplement or override those contractual terms. The Group has determined that the input method is the best method for measuring progress for these contracts because there is a direct relationship between the costs incurred by the Group and the transfer of goods and services to the customer. 3.a.2 Transfers of assets both from and to investment property IAS 40 Investment property requires that transfers from and to investment property are evidenced by a change in use. Conditions which are indications of a change in use are judgmental and the treatment can have a significant impact on the financial statements since investment property is recorded at fair value and inventory is recorded at cost. Transfers are made to (or from) investment property only when there is evidence of a change in use (such as commencement of development with the view to sale or inception of an operating lease to another party). For a transfer from investment property to inventories, the deemed cost for subsequent accounting is the fair value at the date of change in use. If an inventory property becomes an investment property, the difference between the fair value of the property at the date of transfer and its previous carrying amount is recognised in profit or loss. The Group considers as evidence the receiving of the construction permit (for a transfer from investment property to inventories) or inception of an operating lease to another party or change in the construction permit scope (for a transfer from inventories to investment property). 3.b Estimates and assumptions The key assumptions concerning future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur. 3.b.1 Measurement of progress when revenue is recognised over time For those contracts involving the sale of property under development that meet the overtime criteria of revenue recognition, the Group’s performance is measured using an input method, by reference to the inputs towards satisfying the performance obligation relative to the total expected inputs to satisfy the performance obligation, i.e., the completion of the property. The Group generally uses the costs incurred method as a measure of progress for its contracts because it best depicts the Group’s performance. Under this method of measuring progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The Group adjusts the input method for any cost incurred that are not proportionate to the Group’s progress in satisfying the performance obligation. 3.b.2 Valuation of investment property Valuation and recoverable amounts of the property developed for sale and investment property. The Company has obtained a report from an international valuation company, Colliers Romania, setting out the estimated market values for the Company’s investment property. The most recent real estate investment assessment took place on 31 December 2022. Colliers Romania is an independent professionally qualified valuation specialist who holds a recognized relevant professional qualification and has recent experience in the locations and categories of the valued properties. The valuation was based on the assumption as to the best use of each property by a third-party developer. For investment property assets are mainly valued using the market approach or income approach based on the discounted cash flow technique.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 21 NOTE 3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued) 3.b Estimates and assumptions (continued) 3.b.2 Valuation of investment property (continued) For market approach the key assumptions underlying the market value of the groups land assets are: the selection of comparable land plots resulting in order to determine the “offer price” which is taken as the basis to form an indicative price and the quantum of adjustments to apply against the offer price to reflect deal prices, and differences in location and condition. For income approach based on the discounted cash flow technique the valuations are prepared by considering the aggregate of the net annual rents’ receivable from the properties, and where relevant, associated costs. A yield which reflects the risks inherent in the net cash flows is then applied to the net annual rentals to arrive at the property valuation. The prospective period used in valuation is 10 years. The key assumptions used to determine the fair value of the properties and sensitivity analyses are summarized in note 8. The valuation is highly sensitive to these variables and adjustments to these inputs would have a direct impact on the resulting valuation. The fair value measurement for all the investment properties has been categorized as a Level 3 fair value. The management considers that the valuation of its property developed and investment property is currently subject to an increased degree of judgment and an increased likelihood that actual proceeds on a sale may differ from the carrying value. 3.b.3 Operating cycle The normal operating cycle of the Group is of three years for inventories (residential projects). As a result, the current assets and liabilities contain elements whose realization is designed and/or anticipated to take place during the normal operating cycle of the Group. 3.b.4 IPO associated costs The costs of an IPO that involves both issuing new shares and a stock market listing are accounted for as follows: • Incremental costs that are directly attributable to issuing new shares are deducted from equity (net of any income tax benefit) in line with, IAS 32.37 • Costs that relate to the stock market listing, or are otherwise not incremental and directly attributable to issuing new shares, are recorded as an expense in the statement of comprehensive income • Costs that relate to both share issuance and listing are allocated between those functions on a rational and consistent basis in line with IAS 32.38. In the absence of a more specific basis for apportionment, an allocation of common costs based on the proportion of new shares issued to the total number of (new and existing) shares represent an acceptable approach. The Company has performed this analysis and has booked, in Equity, incremental costs directly attributable to issuing new shares, gross of tax, of RON 1,5 million (Dec 2021: RON 7,3 million). NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies presented below were consistently applied for all periods shown in these consolidated financial statements by the parent company and its subsidiaries. 4.1 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December, each year. Control is achieved where the Company: – has the power over the investee; – is exposed, or has rights, to variable return from its involvement with the investee; and – has the ability to use its power to affect its returns. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 22 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.1 Basis of consolidation (continued) Subsidiaries Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date it ceases to control the subsidiary. The subsidiaries’ financial statements are prepared for the same reporting period as those of the parent company, using consistent accounting policies. The global result of a subsidiary is attributed to the equity holders of the parent company and to the non-controlling interests, even if this results in the non-controlling interests having a negative balance. Changes in the ownership of a subsidiary, without loss of control, is accounted for as an equity transaction. If the Group loses control on a subsidiary, then it will derecognize the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value. Intra-group transactions All intra-group assets and liabilities, allotments of dividends and intra-group transactions as well as any profit not realised as result of intra-group transactions are eliminated in full on consolidation. Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss. When a business combination is achieved in stages, the Group’s previously held interests (including joint operations) in the acquired entity are remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 23 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.1 Basis of consolidation (continued) Business combination (continued) Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. Goodwill Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re- assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, the gain is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash- generating units (CGUs) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the CGU. Non-controlling interest and others The interest of non-controlling shareholders is stated at the non-controlling interest’s proportion of the value of the assets and liabilities recognised. Subsequently, all comprehensive income is attributed to the owners and the non-controlling interests, which may result in the non-controlling interest having a debit balance. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where a subsidiary is disposed of which constituted a major line of business, it is disclosed as a discontinued operation. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. Investments in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 24 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.1 Basis of consolidation (continued) Investments in associates (continued) Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. If there is objective evidence that the Group’s net investment in an associate is impaired, the requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. The Group discontinues the use of the equity method from the date when the investment ceases to be an associate. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the associate is disposed of. When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. When a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group. The Group applies IFRS 9, including the impairment requirements, to long-term interests in an associate to which the equity method is not applied and which form part of the net investment in the investee. 4.2 Current versus non-current classification The Group presents assets and liabilities in the statement of financial position based on current/non-current classification, except residential, where the operating cycle is of three years. Refer to 3.b.3. An asset is current when it is: - Expected to be realised or intended to be sold or consumed in the normal operating cycle - Held primarily for the purpose of trading - Expected to be realised within twelve months after the reporting period Or - Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current. A liability is current when:
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 25 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Current versus non-current classification (continued) - It is expected to be settled in the normal operating cycle - It is held primarily for the purpose of trading - It is due to be settled within twelve months after the reporting period Or - There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities. 4.3 Revenue 4.3.1 Revenues from the sale of residential property Revenue is recognised when the performance obligation associated with the sale is completed. The transaction price comprises the fair value of the consideration received or receivable, net of value added tax, rebates and discounts and after eliminating sales within the Group. The Group’s key sources of income include: - Revenue from contracts with customers: - Sale of residential property – completed property and property under development - Services to tenants including management charges and other expenses recoverable from tenants - Rental income The Group enters into contracts with customers to sell property that are either completed or under development. i) Completed inventory property The sale of completed property constitutes a single performance obligation and the Group has determined that this is satisfied at the point in time when control transfers. For unconditional exchange of contracts, this generally occurs when legal title transfers to the customer. For conditional exchanges, this generally occurs when all significant conditions are satisfied. Payments are usually received on the date when contracts are signed or with several days delay. ii) Property under development related to residential The Group considers whether there are promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated. For contracts relating to the sale of property under development, the Group is responsible for the overall management of the project and identifies various goods and services to be provided, including design work, procurement of materials, site preparation and foundation pouring, framing and plastering, mechanical and electrical work, installation of fixtures (e.g., windows, doors, cabinetry, etc.) and finishing work. The Group accounts for these items as a single performance obligation because it provides a significant service of integrating the goods and services (the inputs) into the completed property (the combined output) which the customer has contracted to buy. Revenue arising on contracts which give the customer control over properties as they are constructed, and for which the Group has an enforceable right to payments for work performed to date, is recognised over time. For contracts that meet the overtime revenue recognition criteria, the Group’s performance is measured using an input method, by reference to the costs incurred to the satisfaction of a performance obligation (e.g., resources consumed, costs incurred or labour hours expended) relative to the total expected inputs to the completion of the property. The Group excludes the effect of any costs incurred that do not contribute to the Group’s performance in transferring control of goods or services to the customer (such as unexpected amounts of wasted materials, labour or other resources) and adjusts the input method for any costs incurred that are not proportionate to the Group’s progress in satisfying the performance obligation (such as uninstalled materials). Variations in contract work, claims and incentive payments are included to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. When legal title to land is transferred at the start of a long-term contract, revenue is recognised at that point in time for the land.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 26 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Revenue (continued) 4.3.1 Revenues from the sale of residential property (continued) Where the outcome of a long-term contract cannot be estimated reliably, contract revenue where recoverability is probable is recognised to the extent of contract costs incurred. The costs associated with fulfilling a contract are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. iii) Other consideration related to the sale of residential property In determining the transaction price, the Group considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any). If the consideration in a contract for the sale of property under development includes a variable amount in the form of delay penalties and, in limited cases, early completion bonuses, the Group estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur. At the end of each reporting period, an entity updates the estimated transaction price, including its assessment of whether an estimate of variable consideration is constrained to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period. In most of the contracts involving the sale of property, the Group is entitled to receive an initial deposit. The initial deposits are used to protect the Group from the other party failing to adequately complete some or all of its obligations under the contract where customers do not have an established credit history or have a history of late payments. In addition, for contracts involving the sale of property under development, the Group requires customers to make progress payments of the selling price, as work goes on, that give rise to a significant financing component. For contracts where revenue is recognised over time, the Group uses the practical expedient for the significant financing component, as it generally expects, at contract inception, that the length of time between when the customers pay for the asset and when the Group transfers the asset to the customer will be short. Part exchange In certain instances, property may be accepted in part consideration for a sale of a residential property. The fair value of the exchanged property is established by independent surveyors or by the parties, reduced for costs to sell. The original sale is recorded in the normal way, with the fair value of the exchanged property replacing cash receipts. 4.3.2 Rental income The Group earns revenue from acting as a lessor in operating leases which do not transfer substantially all the risks and rewards incidental to ownership of an investment property. Rental income arising from operating leases on investment property is accounted for on a straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its operating nature, except for contingent rental income which is recognised when it arises. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income. Lease incentives that are paid or payable to the lessee are deducted from lease payments. Accordingly, tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease. The lease term is the non- cancellable period of the lease together with any further term for which the tenant has the option to continue the lease, where, at the inception of the lease, the Group is reasonably certain that the tenant will exercise that option. Amounts received from tenants to terminate leases or to compensate for damages are recognised in the statement of profit or loss when the right to receive them arises. 4.3.3 Revenue from services to tenants For investment property held primarily to earn rental income, the Group enters as a lessor into lease agreements that fall within the scope of IFRS 16.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 27 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Revenue (continued) 4.3.3 Revenue from services to tenants (continued) These agreements include certain services offered to tenants (i.e., customers) including common area maintenance services (such as cleaning, security, landscaping and snow removal of common areas), as well as other support services (e.g., reception services, catering and other event related services). These services are specified in the lease agreements and separately invoiced. The Group has determined that these services constitute distinct non-lease components (transferred separately from the right to use the underlying asset) and are within the scope of IFRS 15. The Group allocates the consideration in the contract to the separate lease and revenue (non-lease) components on a relative stand-alone selling price basis. In respect of the revenue component, these services represent a series of daily services that are individually satisfied over time because the tenants simultaneously receive and consume the benefits provided by the Group. The Group applies the time elapsed method to measure progress. The Group arranges for third parties to provide certain of these services to its tenants. The Group concluded that it acts as a principal in relation to these services as it controls the specified services before transferring them to the customer. Therefore, the Group records revenue on a gross basis. 4.4 Contract assets and contract liabilities A contract asset is the right to consideration in exchange for goods or services transferred to the customer when that right is conditioned on something other than the passage of time, for example, billings require certification by the customer. Contract assets are initially recognised for revenue earned from property under development rendered but not yet to be billed to customers. Upon billing of invoice, the amounts recognised as contract assets are reclassified to trade receivables. Contract assets are subject to impairment assessment. A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e. transfers control of the related goods or services to the customer). Unlike the method used to recognise contract revenue related to sale of completed property, the amounts billed to the customer for the sale of a property under development are based on achievement of the various milestones established in the contract. The amounts recognised as revenue for a given period do not necessarily coincide with the amounts billed to the customer. In the case of contracts in which the goods or services transferred to the customer exceed the related amount billed, the difference is recognised (as a contract asset) and presented in the statement of financial position under “Trade receivables”, whereas in contracts in which the goods or services transferred are lower than the amount billed to the customer, the difference is recognised (as a contract liability) and presented in the statement of financial position under “Advance payments from customers”. Contract liabilities include non-refundable deposits received from customers on conditional exchange of contracts relating to sale of property under development. 4.5 Foreign currencies The Group’s consolidated financial statements are presented in RON, which is also the parent Company’s functional currency. Transactions and balances Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognized in profit or loss.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 28 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.5 Foreign currencies (continued) Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. In determining the spot exchange rate to use on initial recognition of the related asset, liability, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of advance consideration. 4.6 Borrowing costs Borrowing costs directly attributable to the acquisition or construction of an investment property that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. Interest is capitalised from the commencement of the development work until the date of practical completion, i.e., when substantially all the development work is completed. The capitalisation of finance costs is suspended if there are prolonged periods when development activity is interrupted. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs incurred in relation to property under development are expensed as incurred. Group subsidiaries provide collateral for loans related to project financing. Financing is generally concluded at the individual project level, and each company or property is responsible for the related debt service. As security for the loan, the lending bank receives a package of collateral that can be used to satisfy the receivable in the event a loan is called. This package can include the following types of collateral: – Mortgage on the land or the land and the building – Pledge of receivables – Pledge of bank accounts 4.7 Investment property Investment property comprises completed property and property under development or re-development that is held, or to be held, to earn rentals or for capital appreciation or both. Property held under a lease is classified as investment property when it is held to earn rentals or for capital appreciation or both, rather than for sale in the ordinary course of business or for use in production or administrative functions. Investment property comprises principally offices, commercial and retail property that are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. These buildings are substantially rented to tenants and not intended to be sold in the ordinary course of business. Investment property is measured initially at cost, including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and (only in case of investment property held under a lease) initial leasing commissions to bring the property to the condition necessary for it to be capable of operating. Subsequent to initial recognition, investment property is stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment property are included in profit or loss in the period in which they arise, including the corresponding tax effect. For the purposes of these financial statements, in order to avoid double counting, the fair value reported in the financial statements is reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives and/or minimum lease payments. Transfers are made to (or from) investment property only when there is evidence of a change in use (such as commencement of development or inception of an operating lease to another party). For a transfer from investment property to inventories, the deemed cost for subsequent accounting is the fair value at the date of change in use.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 29 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.7 Investment property (continued) If an inventory property or a property under development becomes an investment property, the difference between the fair value of the property at the date of transfer and its previous carrying amount is recognised in profit or loss. The Group considers as evidence the receipt of the construction permit and the commencement of development with a view to sale (for a transfer from investment property to inventories) or inception of an operating lease to another party or change in the construction permit scope (for a transfer from inventories to investment property). Investment property is derecognised either when it has been disposed of (i.e., at the date the recipient obtains control) or when it is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition. The amount of consideration to be included in the gain or loss arising from the derecognition of investment property is determined in accordance with the requirements for determining the transaction price in IFRS 15. 4.8 Inventory property Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory property and is measured at the lower of cost and net realisable value (NRV). Principally, this is residential property that the Group develops and intends to sell before, or on completion of, development. Cost incurred in bringing each property to its present location and condition includes: - Freehold and leasehold rights for land - Amounts paid to contractors for development - Planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, development overheads and other related costs NRV is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date, less estimated costs of completion and the estimated costs necessary to make the sale. When an inventory property is sold, the carrying amount of the property is recognized as an expense in the period in which the related revenue is recognized. The carrying amount of inventory property recognized in profit or loss is determined with reference to the directly attributable costs incurred on the property sold and an allocation of any other related costs based on the relative size of the property sold. 4.9 Impairment of non-financial assets The Group assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators. The Group bases its impairment calculation on most recent budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. Impairment losses of continuing operations are recognised in the statement of profit or loss in expense categories consistent with the function of the impaired asset.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 30 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.9 Impairment of non-financial assets (continued) For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase. Goodwill is tested for impairment annually as at 31 December and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. 4.10 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial Assets Initial recognition and measurement Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through other comprehensive income, or fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. As the Group’s rent and other trade receivables do not contain a significant financing component, they are measured at the transaction price determined under IFRS 15. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows. Subsequent measurement For purposes of subsequent measurement, the Group measures financial assets at amortised cost if both of the following conditions are met: - The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows And - The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. Since the Group’s financial assets (rent and other trade receivables, cash and short-term deposits, loans issued) meet these conditions, they are subsequently measured at amortised cost.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 31 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.10 Financial instruments (continued) Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Group’s consolidated statement of financial position) when: - The rights to receive cash flows from the asset have expired Or - The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. Impairment of financial assets The Group recognises an allowance for expected credit losses (ECLs) for all receivables and contract assets held by the Group. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. For trade and other receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date (i.e., a loss allowance for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default). The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The Group considers a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full. Indicators that there is no reasonable expectation of recovery include, among others, the probability of insolvency or significant financial difficulties of the debtor. Financial assets are written off when there is no reasonable expectation of recovery. Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. For all the financial assets due more than 90 days, the Group performs cash collection procedures. The Group maintains close client relationships through its internal sales team, and clients’ creditworthiness is monitored regularly by the Group’s team. Financial liabilities Initial recognition and measurement The Group’s financial liabilities comprise interest-bearing loans and borrowings, lease liabilities and trade and other payables. Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Refer to the accounting policy on lease for the initial recognition and measurement of finance lease liabilities, as this is not in the scope of IFRS 9.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 32 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.10 Financial instruments (continued) All financial liabilities are recognized initially at fair value and, in the case of all financial liabilities except derivative financial instruments, net of directly attributable transaction costs. Subsequent measurement For purposes of subsequent measurement, all financial liabilities, except derivative financial instruments, are subsequently measured at amortised cost using the effective interest rate method (EIR). Gains and losses are recognized in profit or loss when the liabilities are derecognized, as well as through the EIR amortisation process. Amortised cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. Refer to the accounting policy on lease for the subsequent measurement of finance lease liabilities. Derecognition A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss. Advance payments from customers Advance payments from customers, measured at amortised cost, are recorded as a liability on receipt and released to the income statement as revenue upon legal completion or over time where the Group has a right to payments for work performed. Offsetting of financial instruments Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. 4.11 Cash and short-term deposits Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term highly liquid deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group’s cash management. 4.12 Leases The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i) Right-of-use assets The Group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right- of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 33 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.12 Leases (continued) If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to accounting policies on impairment on non-financial assets in this note. ii) Lease liabilities At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate (IBR) at the lease commencement date because the interest rate implicit in the lease is not readily determinable. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating). After the commencement date, the amount of lease liabilities are increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. IFRS 16 requires certain adjustments to be expensed, while others are added to the cost of the related right-of-use asset. iii) Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of equipment that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. Group as a lessor Refer to the accounting policies on rental income. 4.13 Rent receivables Rent receivables are recognized at their original invoiced value except where the time value of money is material, in which case rent receivables are recognized at fair value and subsequently measured at amortised cost. Refer to accounting policies on financial assets in this note. 4.14 Tenant deposits Tenant deposits are initially recognized at fair value and subsequently measured at amortised cost. Any difference between the initial fair value and the nominal amount is included as a component of operating lease income and recognized on a straight- line basis over the lease term. Refer also to accounting policies on financial liabilities in this note.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 34 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.15 Trade receivables A trade receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Revenue earned from property development activities, but not yet to be billed to customers, is initially recognized as contract assets and reclassified to trade receivables when the right to consideration becomes unconditional. Refer also to the accounting policies on financial assets in this note for more information. 4.16 Warranties The sale of property contains certain warranties covering a period of up to 3 years after completion of the property, such as the property meeting specific operational performance requirements (e.g., insulation, energy efficiency, etc.). These conditions represent ‘assurance-type’ warranties that are legally required to be provided as quality guarantees. Minor repairs are expensed immediately and included in other property operating expenses. A provision is recognized for expected warranty claims on property sold during the year, based on past experience of the level of major repairs and considering also the stipulations in the contracts with the suppliers (which offer in return warranty for the services provided and the equipment installed). Assurance-type warranty provisions for the year are charged to cost of sales. The estimate of such provision is revised annually. 4.17 Investment in associates An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies. The Group’s investments in its associates are accounted for using the equity method. Under the equity method, the investment in an associate is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment separately. The statement of profit or loss reflects the Group’s share of the results of operations of the associate. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognized directly in the equity of the associate, the Group recognized its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss outside operating profit and represents profit or loss after tax and noncontrolling interests in the subsidiaries of the associate. The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method, the Group determines whether it is necessary to recognize an impairment loss on its investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognizes the loss within ‘Share of profit of an associate’ in the statement of profit or loss. Upon loss of significant influence over the associate, the Group measures and recognizes any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognized in profit or loss. 4.18 Intangible assets i) Goodwill Goodwill is measured as described in note 4.1. Goodwill is not amortized but is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Once impaired, goodwill can no longer be appreciated.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 35 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.18 Intangible assets (continued) ii) Licences Separately acquired licences are shown at historical cost. Licences acquired in a business combination are recognized at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses. iii) Software Separately acquired software is measured at cost. After initial recognition, the software is carried at cost less any accumulated amortization and any accumulated impairment losses, if any. Costs associated with maintaining software programmes are recognized as an expense as incurred. iv) Brand and client relationship (Intangible assets acquired in a business combination) In accordance with IFRS 3 Business Combinations, if an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date. The fair value of an intangible asset will reflect market participants’ expectations at the acquisition date about the probability that the expected future economic benefits embodied in the asset will flow to the entity. In other words, the entity expects there to be an inflow of economic benefits, even if there is uncertainty about the timing or the amount of the inflow. If an asset acquired in a business combination is separable or arises from contractual or other legal rights, sufficient information exists to measure reliably the fair value of the asset. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. v) Amortisation method and period Software is amortized on a straight-line basis for a period of maximum 3 years, licenses are amortized over their validity periods and the brand is amortized on a straight-line basis for a period of maximum 20 years. The amortization period and amortization method for an intangible asset with a determined useful life are reviewed at least at the end of each reporting period. Changes in expected useful lives or expected future economic benefits embodied in assets are accounted for by changes in the method or the amortization period as appropriate and are treated as changes in accounting estimates. Gains or losses arising from the derecognition of an intangible asset are calculated as difference between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss when the asset is derecognized. i) Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised. 4.19 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and/or accumulated impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repair and maintenance costs are recognized in profit or loss when incurred. Depreciation The economic useful life is the amount of time that the asset is expected to be used by the Group. Depreciation is calculated using the straight-line method over the life of the asset.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 36 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.19 Property, plant and equipment (continued) Type Useful life Light constructions (shacks, etc.) 3-10 years Building 8-40 years Technological equipment 1-5 years Vehicles 3-5 years Other fixed assets and IT equipment 1-5 years The useful life and depreciation method are reviewed periodically and, if necessary, adjusted prospectively, so that there is a consistency with the expected economic benefits of those assets. Derecognition An item of property, plant and equipment is derecognized upon disposal or when no future economic benefit is expected from its use or disposal. Any gain or loss resulting from the derecognition of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement when the asset is derecognized. Impairment An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Refer to accounting policies on impairment on non-financial assets in this note. 4.20 Taxes Current income tax Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in OCI or in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Deferred tax Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, except: - When the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or loss; - In respect of taxable temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except: - When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. - In respect of deductible temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 37 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.20 Taxes (continued) The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if there is new information about changes in facts and circumstances. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognized in profit or loss. The Group offsets deferred tax assets and deferred tax liabilities if, and only if, it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. 4.21 Share-based payments Employees (senior executives) of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). Equity-settled transactions The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognized in administrative expenses, together with a corresponding increase in other reserves in equity, over the period in which the service conditions and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognized for equity- settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in administrative expenses. Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions. No expense is recognized for awards that do not ultimately vest because non-market performance and/or service conditions have not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. When the terms of an equity-settled award are modified, the minimum expense recognized is the grant date fair value of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as at the date of modification, is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 38 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.22 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. 4.23 Fair value measurements The Group measures investment property at fair value at each balance sheet date. 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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: - 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 principal or the most advantageous market must be accessible by the Group at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities, for which fair value is measured or disclosed in the financial statements, are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: - Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities - Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable - Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. 4.24 Contingencies Contingent liabilities represent possible or existing obligations arising from past events, in cases where it is not probable that an outflow of resources will be required to settle the obligation. The contingent liabilities that are not recognised on Group’s balance sheet are evaluated with respect to the probability of their occurrence. If an outflow of resources embodying economic benefits is neither sufficiently probable to require the recognition of a provision nor improbable, the obligations are recognised as contingent liabilities. Please refer to Note 30.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 39 NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 4.25 Dividends and share capital increase Dividends are distributed from the annual net distributable profit based on the audited individual annual financial statements, after their approval by the Company's Ordinary General Meeting ("OGMS") and after the approval of the dividend proposal by the OGMS. The distributable profit represents the part of the net profit of the financial year that can be distributed as dividends after legal and statutory distributions have been made, such as the distribution for the legal reserve and, where applicable, the use of the net profit for other purposes prescribed by law (for example, coverage of accounting losses from the previous year, if applicable). Shareholders receive dividends in proportion to their share in the paid-up share capital of the Company, no right of priority or preference over the distribution of dividends in favour of any shareholder being applicable. The proposal regarding the distribution of dividends made by the Board of Directors will be submitted to the vote of the OGMS, as a rule, in the same meeting in which the Company's audited financial statements are approved, respectively no later than within four (4) months from the end of the financial year, respectively during the third quarter of the year in respect of any interim dividend distributions or distributions from retained earnings. The Company will be able to pay the dividends also in the form of shares of the same class as those giving the right to these dividends. The Company is carrying out share capital increase operation to diversify the shareholders base, increase liquidity and raise capital for further expanding the pipeline. The newly raised capital will be invested with priority in new developments, according to the existing solid pipeline of the company, while the current cash position will be used to accelerate the delivery of the ongoing developments. The decision of the Board of Directors, in accordance with the Resolution of the Extraordinary General Meeting of the Shareholders approve the increase of the share capital. The participants to the share capital increase are existing shareholders, local and international institutional investors, qualified investors, retail investors. 4.26 Others Expenses Typically, the expenses are recognized and recorded in the same period as the revenues associated with those expenses (under accrual accounting). The Group classifies expenses by the nature of expenses. Sales brokerage commissions Sales brokerage commissions are recorded and paid for signing bilateral purchase undertakings of apartments. The brokerage commissions are recorded as advance payment when the pre sales are signed and expensed in the period when the final sale contract is concluded. Segment reporting Segment reporting highlight the information and measures that management believes are important and are used to make key decisions. Reporting segments are residential, office and landbank and corporate and the Group manages operations in accordance with this classification. Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated on a reasonable basis.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 40 NOTE 5. RISK MANAGEMENT 5.1. General objectives, policies and processes The Group’s activities may give rise to various risks. Management is aware of and monitors the effects of those risks and events that may have adverse effects on the Group’s operations. The main risks to which the Group is exposed may be classified as follows: Financial risks: - Credit risk - Liquidity risk - Market risk, which includes interest rate risk, foreign exchange risk and price risk Other risks: - Operating risk - Strategic risk 5.2. Financial risks This note provides information on the Group’s exposure to the risks mentioned above, the Group’s objectives, policies and processes to manage the risks and the methods used to measure them. More quantitative information on these risks is presented in these consolidated financial statements. There were no material changes in the Group’s exposure to the risks of a financial instrument, objectives, policies, and processes to manage those risks, or the methods used to measure them in prior periods, unless otherwise specified in this note. The Group is primarily exposed to risks arising from the use of financial instruments. A summary of the financial instruments held by the Group, depending on the classification category, is presented below: Description Trade receivables, short-term deposits and cash and cash equivalents 31 December 2022 31 December 2021 Trade receivables 124,107,224 65,099,039 Other receivables 64,901,563 83,059,458 Other financial assets - 9,408,917 Cash and cash equivalents 566,960,043 508,347,161 Total 755,968,830 665,914,575 Description Financial liabilities at amortized cost 31 December 2022 31 December 2021 Trade and other payables 287,139,920 123,568,138 Short and long-term loans 830,204,626 432,162,310 Lease liabilities 3,425,437 3,929,334 Total 1,120,769,983 559,659,782 Management has the overall responsibility for determining risk management objectives, policies and processes while retaining ultimate responsibility in this respect. The overall objective of management is to set policies that aim at mitigating risks as much as possible without unjustifiably affecting the Group’s competitiveness and flexibility. Further details on these policies are provided below: 5.2.1. Credit risk The carrying amounts of financial assets represent the Group’s maximum exposure to credit risk for existing receivables.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 41 5.2. Financial risks (continued) 5.2.1. Credit risk (continued) Credit risk is the risk that the Group will incur a financial loss as a result of non-fulfilment of the contractual obligations by a client or counterparty to a financial instrument, and this risk arises mainly from the Group’s trade receivables, cash and cash equivalents, and short-term deposits. Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with its policies. The Group’s maximum exposure to credit risk for the components of the statement of financial position at 31 December 2022 and 31 December 2021, respectively, is the carrying amounts of each class of financial instruments. In the course of its business, the Group is subject to credit risk, particularly due to trade receivables and bank deposits. The Group management constantly and closely monitors exposure to credit risk. Credit risk is low due to the fact that the advance required from clients covers up a significant part of the contracts’ value, and the transfer of ownership of the property is done only after the entire receivable has been collected. The customers’ outstanding balances were also analysed individually for creditworthiness and after the assessment performed, management considers that the credit quality of the various receivables is good in respect of the amounts outstanding and therefore credit risk is considered to be low. There is no significant concentration of risk. As required by IFRS 9, the Group used the simplified approach in calculating ECL for trade receivables and contract assets th at did not contain a significant financing component. The Group performed the allowance trade receivable analysis taking in consideration historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions Also the outstanding balances from customers at 31 December were analysed for collections in the subsequent period until the issue of these financial statements and minimal risk of non-collection was identified. The ECLs relating to cash and short-term deposits of the Group is determined based on the net exposure of the cash balance held by the Group in each bank. Group policy is that surplus cash is placed on deposit with the Group’s main relationship banks and with other banks. The arrangements in place result in a favourable mix between flexibility and interest earnings. The Group’s cash and cash equivalents is held in eight stable financial institutions for investment and cash handling purposes. 5.2.2. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations when they become due. The Group ’s approach to liquidity management is to ensure, as far as possible, that it will have sufficient liquidity to meet its outstanding obligations under both normal and crisis conditions, without incurring major losses or risking affecting the Group’s reputation. The Group prepares budgets, cash flow analyses and forecasts, which enable the Directors to assess the level of financing required for future periods. Budgets and projections are used to assess any future potential investments and are compared to existing funds held on deposit to evaluate the nature, and extent of any future funding requirements . Currently the Group’s liquidity enables it to meet the committed and due payments. During 2022, the focus of the business was on operations, liquidity and capital allocation. The Group has access to a sufficient variety of sources of funding which enable it to meet its financial obligations when they become due. The table below shows the remaining contractual maturities for financial liabilities: As at 31 December 2022 Less than 1 year 1 to 5 years More than 5 years Total Trade and other payables 268,676,223 18,463,697 - 287,139,920 Short and long-term loans 172,469,155 314,063,980 343,671,491 830,204,626 Lease liabilities 778,490 2,646,947 - 3,425,437 Total 441,923,868 335,174,624 343,671,491 1,120,769,983
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 42 NOTE 5. RISK MANAGEMENT (continued) 5.2. Financial risks (continued) 5.2.2. Liquidity risk (continued) As at 31 December 2021 Less than 1 year 1 to 5 years More than 5 years Total Trade and other payables 123,568,138 - - 123,568,138 Short and long-term loans 34,347,782 248,372,822 149,441,706 432,162,310 Lease liabilities 1,282,387 2,646,947 - 3,929,334 Total 159,198,307 251,019,769 149,441,706 559,659,782 The following table details the due date for the Group’s financial assets and contract assets. The table below was based on the remaining maturities of the financial assets and contract assets, including the interest earned on these assets, except for those in which the Group anticipates that the cash flow will take place in a different period. As at 31 December 2022 Less than 1 year 1 to 5 years More than 5 years Cash and cash equivalents 566,960,043 - - Trade and other receivables 188,704,829 303,958 - Contract assets 267,895,398 Total 1,023,560,270 303,958 - As at 31 December 2021 Less than 1 year 1 to 5 years More than 5 years Cash and cash equivalents 508,347,161 - - Trade and other receivables 148,158,497 - - Other financial assets - 9,408,917 Contract assets 136,270,504 - - Total 792,776,162 9,408,917 - 5.2.3. Market risk Market risk is the possibility of recording losses or not realizing the estimated profits that result, directly or indirectly, from market price fluctuations, the interest rate or exchange rate related to the Group’s assets and liabilities. Consequently, the main sub- categories of market risk are the following: (i) Interest rate risk: the risk that the fair value of future cash flows or future cash flows for financial instruments will fluctuate in line with interest rate variations; (ii) Foreign currency risk: the risk that the fair value of future cash flows or future cash flows associated with financial instruments will fluctuate in line with exchange rate fluctuations; The financial instruments held by the Group that are affected by market risk are principally loans and borrowings. (i) Interest rate risk Interest rate risk is the risk that the future cash flow of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations with floating interest rates. The interest rates on loans from related parties and minority shareholders are fixed. As far as bank loans are concerned, the variable interest is based on 6M or 3M Euribor, plus a margin of 2.00% to 4.00% pa.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 43 NOTE 5. RISK MANAGEMENT (continued) 5.2. Financial risks (continued) 5.2.3. Market risk (continued) 31 December 2022 Description Loans and borrowings – short-term and long term Interest rate fixed Interest rate variable Bank loans - 806,162,742 Loans from related parties - - Loans from minority shareholders 11,734 - Total 11,734 806,162,742 31 December 2021 Description Loans and borrowings – short-term and long term Interest rate fixed Interest rate variable Bank loans and bond issued - 412,992,288 Loans from related parties - - Loans from minority shareholders 2,267,577 - Total 2,267,577 412,992,288 31 December 2022 Description Loans granted Interest rate fixed Interest rate variable Loans granted to related parties 6,621,986 - Loans granted to others 16,858,658 - Total 23,480,644 - 31 December 2021 Description Loans granted Interest rate fixed Interest rate variable Loans granted to related parties 10,966,323 - Loans granted to others 68,534,108 - Total 79,500,431 - Bank deposits held by the Group are short-term deposits, which makes them sensitive to changes in interest rates on the market. The Group’s sensitivity analysis of interest rate risk was calculated below, taking into account the interest expense and the interest income recognized in the profit or loss for that year. Period Interest rate variation Change in Group’s result 31 December 2022 +/-5% -/+ 629,026 31 December 2021 +/-5% -/+ 364,135 (ii) Foreign exchange risk Currency risk is the risk that the fair value or future cash flows for financial instruments will fluctuate due to exchange rate fluctuations. The Group is exposed to foreign exchange risk on loans that are denominated in a currency other than the functional currency of the Group. The currency used on the domestic market is the Romanian leu (RON). The currency that exposes the Group to this risk is mainly EUR. The Group’s exposure to the risk of changes in foreign exchange rates relates also to its operating activities (when revenue or expense is denominated in a foreign currency).
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 44 NOTE 5. RISK MANAGEMENT (continued) The carrying amounts of monetary assets and liabilities denominated in foreign currency at the reporting date are as follows: 31 December 2022 EUR USD TOTAL in RON Monetary assets Cash and cash equivalents 51,373,158 552 254,166,120 Other receivables 4,937,163 - 24,426,120 Monetary liabilities Loans (167,726,814) - (829,811,638) Trade and other payables (331,421) - (1,639,672) Net excess/(exposure) (111,747,914) 552 (552,859,070) 31 December 2021 EUR USD TOTAL in RON Monetary assets Cash and cash equivalents 88,986,710 148,259 440,963,136 Other receivables 16,270,598 - 80,508,545 Monetary liabilities Loans (87,253,779) - (431,740,423) Trade and other payables (1,273,874) - (6,303,258) Net excess/(exposure) 16,729,655 148,259 83,428,000 Sensitivity analysis for foreign exchange risk A 5% appreciation of the RON against the EUR on 31 December 2022 would increase the Group’s profit by RON 27,643,081 (2021: RON 4,139,000), while a 5% depreciation of the RON against the EUR as of 31 December 2021 would have a similar, but opposite effect. The 5% sensitivity is the reasonable estimate of management of possible changes in foreign exchange rates. Sensitivity analysis includes only monetary elements denominated in foreign currency and adjusts their translation at the end of the period for a 5% change in foreign exchange rates. This analysis assumes that all other variables, especially interest rates, remain constant. 5.3. Other risks Management cannot anticipate all the developments that could have an impact on the financial market liquidity, depreciation of financial assets and increased volatility on foreign exchange markets and the effect, if any, which it could have on the consolidated financial statements. The management of the Group believes that it has taken all the necessary measures to support the sustainability and growth of the company’s business in the current circumstances through: - preparing a liquidity crisis strategy and laying down specific measures together with shareholders’ support to address potential liquidity crises; - constant monitoring of its liquidity position; - short-term forecasting of its liquidity position. (i) Operating risk The process of risk assessment over the last few years on the international financial markets has affected the performance of these markets, including the Romanian financial and banking market, and raises an increased uncertainty about the future economic development.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 45 NOTE 5. RISK MANAGEMENT (continued) 5.3. Other risks (continued) Determining the compliance with the lending agreement and other contractual obligations, as well as assessing significant uncertainties, including uncertainties associated with the Group’s ability to continue its activity for a reasonable amount of time, have their own challenges. The Group’s debtors could also be affected by the low liquidity level, which could also have an impact on their ability to pay their overdue loans. (ii) Strategic risk Strategic risk is the risk that one or more assumptions on which the Group’s business strategy is based are no longer valid due to internal and / or external changes. Strategic risk is difficult to quantify because it refers to: - the strategic decisions of the Group’s management; - uncertainties related to the external environment; - the management’s response level and time to changes in the internal and/or external environment; - the quality of the IT systems etc. (iii) Ownership title risk In Romania, title to private property is guaranteed by the Constitution. However, under the Roman Civil Code, if the ownership title to an immovable property is cancelled, all subsequent acts of transfer of ownership may, under certain circumstances, also be cancelled. Therefore, in theory, almost any ownership title in Romania could be exposed to a third-party risk through a litigation or claims for property restitution (either before or after the transfer of the ownership title). For the Group’s management, the Group’s title risk is low in the light of past history. (iv) Legislative risk The Group’s economic environment is also influenced by the legislative environment. In addition, obtaining building permits and other documents required to start residential projects can be affected by politic al instability as well as possible changes in the administrative organizational structure at the level of local governments where the Group intends to develop its projects. (v) Taxation risk The Romanian tax system is subject to many constant interpretations and changes. In Romania, the prescription for tax audits is 5 years. However due to state of emergency from 2020, the prescription period for financial years 2015-2019 was prolonged with 9 months and for the financial years staring 2016 the prescription period of 5 years starts at July 1 of the next financial year. The legislation and fiscal framework in Romania and their implementation are subject to frequent changes. Tax audits, by their nature, are similar to tax audits carried out by designated tax authorities in many countries, but may extend not only to tax issues, but also to other legislative or regulatory aspects in which the agency in question might be interested. Moreover, tax returns are subject to verification and correction by the tax authorities for a period of five years after their registration (and following the general rules described above), and therefore the Group’s tax returns from 2017 to 2022 are still subject to such verifications. In accordance with the relevant tax laws, the tax assessment of a transaction conducted between affiliates is based on the concept of the market price pertaining to the respective transaction. Based on this concept, transfer pricing need s to be adjusted such as to reflect the market rates set between non-affiliates acting independently in an arm’s length transaction. It is likely that the tax authorities should conduct verifications of the transfer pricing to determine whether the respective prices are arm’s length, and the taxable base of the Romanian taxpayer is not distorted. In case of an audit, tax authorities may request a transfer pricing file also for taxpayers not classified as large taxpayers, but which carry out transactions with affiliates, in order to determine whether the arm’s length principle has been complied with .
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 46 NOTE 5. RISK MANAGEMENT (continued) 5.4. Capital management The objectives of the Group’s management regarding capital management are to protect the Group’s ability to continue its activity in order to share profit to shareholders, provide benefits to other stakeholders and to maintain an optima l capital structure in order to reduce the cost of capital. The Group’s management reviews the capital structure and considers the cost of capital and the risks associated with each class of capital. The Group has a gearing ratio of 11% at 31 December 2022 (-4% at 31 December 2021) determined as the proportion of net debt to equity. Debt is defined as long- and short-term borrowings and lease liabilities. The net debt is computed as debt less cash and cash equivalents. Equity includes all capital and reserves of the Group that are managed as capital. In order to maintain or adjust the capital structure, the Group’s management can adjust the shareholders’ share of profitability or may issue new shares to reduce debts.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 47 NOTE 6. PROPERTY, PLANT AND EQUIPMENT Description Land, Buildings, barracks Technological equipment Measurement apparatus and devices Vehicles Furniture and other non- current assets Total Cost At 1 January 2021 15,433,739 278,608 546,290 1,443,171 1,714,179 19,415,987 Additions 389,839 503,590 276,120 152,824 1,738,995 3,061,368 Disposals (32,119) (23,566) (12,833) (420,278) (287,251) (776,047) As at 31 December 2021 15,791,459 758,632 809,577 1,175,717 3,165,923 21,701,308 Additions 1,530,119 526,610 160,324 722,420 6,105,348 9,044,821 Disposals - - (199,506) (18,750) (36,851) (255,107) Transfer from property, plant and equipment to investment property (12,156,938) - - - - (12,156,938) Transfer from investment property to property, plant and equipment 38,860,861 - - - - 38,860,861 As at 31 December 2022 44,025,501 1,285,242 770,395 1,879,387 9,234,420 57,194,945 Depreciation and impairment At 1 January 2021 1,643,784 75,463 449,794 754,487 415,317 3,338,845 Additions 670,535 369,207 217,957 257,410 278,195 1,793,304 Disposals (4,889) (19,354) (12,833) (326,042) (107,733) (470,851) As at 31 December 2021 2,309,430 425,316 654,918 685,855 585,779 4,661,298 Depreciation charge for the year 685,952 297,578 242,747 325,331 856,025 2,407,633 Disposals - - (178,618) (15,208) (36,851) (230,677) Transfer from property, plant and equipment to investment property (774,832) - - (774,832) As at 31 December 2022 2,220,550 722,894 719,047 995,978 1,404,953 6,063,422 Net book value As at 31 December 2021 13,482,029 333,316 154,659 489,862 2,580,144 17,040,010 As at 31 December 2022 41,804,951 562,348 51,348 883,409 7,829,467 51,131,523
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 48 NOTE 6. PROPERTY, PLANT AND EQUIPMENT (continued) Under the “land, buildings and barracks” are presented the Group assets from which the main amount is related to the own office space occupied. At 31 December 2019, the Company has reclassified part of the land and building owned by the subsidiary One North Gate SA from investment property in property, plant and equipment for the value of RON 12,156,938, following the occupancy of the own office space. In 2022, the Group have moved the office from the building owned by the subsidiary, One North Gate SA to the building One Tower, developed by the subsidiary One United Tower SA, therefore have transferred from property, plant and equipment to investment property the office space occupied in North Gate and in the same time transferred from investment property to property, plant and equipment the new office space located in One Tower building for the fair value of RON 38,860,861. For assets pledged as security refer to Note 15. No indication of impairment was identified for the property, plant and equipment in balance. NOTE 7. INTANGIBLE ASSETS Description Goodwill Concessions, patents, licenses Other intangible assets Total Cost As at 1 January 2021 19,256,076 205,496 642,018 20,103,590 Additions - 130,006 562,832 692,838 Disposals - - - - As at 31 December 2021 19,256,076 335,502 1,204,850 20,796,428 Additions - 14,383,714 429,694 14,813,408 Disposals - (19,556) (475,168) (494,724) As at 31 December 2022 19,256,076 14,699,660 1,159,376 35,115,112 Amortization and impairment As at 1 January 2021 - 115,962 566,845 682,807 Amortization - 77,744 182,193 259,937 Impairment - - - - Disposals - - - - As at 31 December 2021 - 193,706 749,038 942,744 Amortization - 51,247 100,164 151,411 Impairment - - - - Disposals - (19,556) (475,168) (494,724) As at 31 December 2022 - 225,397 374,034 599,431 Net book value As at 31 December 2021 19,256,076 141,796 455,812 19,853,684 As at 31 December 2022 19,256,076 14,474,263 785,342 34,515,681 As at 31 December 2022 and 31 December 2021 other intangible assets include mainly, costs of licenses and IT software. The goodwill in balance refers to One Peninsula, a subsidiary of the Group that develop a residential project in district 1, Bucharest. The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 49 NOTE 7. INTANGIBLE ASSETS (continued) As at 31 December 2022 and 31 December 2021, the Group performed the assessment of the recoverable amount of goodwill allocated to One Peninsula based on a value in use calculation taking in consideration the financial budget approved by the management which comprise forecasts of revenue, construction development costs and overheads based on current and anticipated market conditions and a discount rate of 3.30%. As at 31 December 2022 and 31 December 2021, following the impairment test performed for One Peninsula, the Group assessed the recoverable amount of the identified CGU to which the goodwill, relates to be higher than its carrying amount, therefore no impairment loss is recognized. An identifiable intangible asset acquired in a business combination, related to Bucur Obor Brand, was recognized at fair value of RON 14,4 million. The brand "Bucur Obor" has been officially registered by the Bucur Obor SA since 2011, its first appearance being in 1975 when the Bucur Obor store was opened. The phrase "Bucur Obor" is associated with th e location of the Bucur Obor commercial store, which is a commercial landmark of Bucharest. Part of the revenues generated by renting commercial spaces in the complex are directly attributable to the "Bucur Obor" brand. Please refer to Note 8 for more details about business combination related to the acquisition of Bucur Obor. As at 31 December 2022, the Group performed the assessment of the recoverable amount of the Bucur Obor Brand , considering a WACC rate of 13.77% and a risk premium of 2%. No indicators of impairment were identified. NOTE 8. INVESTMENT PROPERTY The Group investment properties are measured at fair value by professionaly qualified valuers at annual reporting dates. The fair value measurement of the investment properties is done at year end reporting dates and also during the year when there are indicators that the fair value is substantially changed. The Group holds mainly undeveloped land, office buildings and residential properties held to earn rentals: Completed investment property (IPC): - Land in surface area of 12,000 sqm and office building in surface area of 34,628 sqm located at Sos Pipera Tunari, 2III, owned by subsidiary One North Gate SA; - 3 apartments and 4 parking spaces owned by subsidiary One Long Term Value SA; - Land in surface area of 6,096 sqm and office buiding with a total GLA of 23,800 sqm located at Calea Floreasca, Nr. 159-165, owned by subsidiary One United Tower SA; - Land plot and one office building in total surface area of 46,253 sqm located at 44 Sergent Nutu Ion Street, owned by subsidiary One Cotroceni Park Office SA; - Property located in Buzau County acquired during September, owned by subsiadiary One Carphatian Lodge Magura SRL comprising of a boutique hotel together with a 56ha of forest and land. The Group targets further investments on short and medium-term; - 30 apartments and 35 parking spaces owned by subsidiary One Mircea Eliade Properties SRL. During Q1-2022, the Group started the activities with the view to rental of several apartments and related parking spaces owned by subsidiary One Mircea Eliade Properties SRL and therefore changes the presentation from apartments available for sale to apartments available for rental. The Group have performed the valuation of the assets with an independent evaluator, Colliers Romania and recognized a gain from fair value adjustment of RON 45,2 million; - Retail building acquired through business combination with Bucur Obor SA. The subject property has a total leasable area of 24,325 sqm of retail and 2,452 sqm storages. The investment property was valued at fair value at the date of acqusition at RON 307,1 million; On November 19th, 2021, One United Properties announced the intention to acquire (indirectly, through BO Retail Invest S.R.L.) a controlling stake in Bucur Obor SA, a company listed on the Multilateral Trading System of the Bucharest Stock Exchange, under symbol BUCU. On the same date, by means of the loan made available by the company One United Properties SA, BO Retail Invest S.R.L. acquired a 54.4351% of the share capital of Bucur Obor, against a sum of RON 65 million. The transaction was subject to Competition Council clearance, which the Company received on February 4 th , 2022. On February 8 th , 2022, One United Properties closed the transaction of the acquisition by the Company of direct sole control over BO Retail Invest S.R.L., and indirectly the control over Bucur Obor SA. Bucur Obor S.A. carries out its activity within the Bucur Commercial Complex Obor, located in Bucharest, Sos. Colentina no. 2, in the building from Sos. Mihai Bravu no. 2 and in the building from Sos. Colentina no. 6A. All these properties are owned by the company.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 50 NOTE 8. INVESTMENT PROPERTY (continued) Completed investment property (IPC) (continued): Bucur Obor has as main activity the renting of commercial spaces, in which the clients retail goods. The shopping complex offers a multitude of stores, in a unique mix in Bucharest, a combination of family business such as haberdashery, fabrics, footage, windows & mirrors, leather goods, gold, jewelry and more, along with international brands consecrated; - At the end of July 2022, the Group have concluded the transaction for the takeover of a 100% stake in Mam Imob Business Center SRL the company that owns and operates the office building located at 29-31 Nicolae Titulescu Boulevard, Bucharest, Romania (after the acquisition date the entity name was changed in “One Victoriei Plaza SRL”). The office building has a total GLA of app. 12,000 square meters and 4 underground levels with 93 parking spaces, and it is fully leased to First Bank as a tenant for a remaining period of app. 12 years with a break option after 7 years. The total value of the transaction was in amount of EUR 28 million; - During October 2022, the Group have acquired Eliade Tower SA, office building located at 18 Mircea Eliade Boulevard, Bucharest, Romania for 100% ownwership. The total value of the transaction was approximately EUR 9.8 million. The office building has a total GLA of over 8,000 square meters spread over 10 floors, has a parking and is currently 50% leased; - The Group started the activities with the view to rental of 2 apartments and related parking spaces owned by subsidiary One Mamaia Nord SRL and therefore changes the presentation from apartments available for sale to apartments available for rental. The Group have performed the valuation of the assets with an independent evaluator, Colliers Romania and recognized a gain from fair value adjustment of RON 1,7 million. Investment property under development (IPUC): - Land in surface area of 8,847 sqm located at Sergent Nutu Ion Street and Calea 13 Septembrie, owned by subsidiary One Cotroceni Park Office Faza 2 SA and related construction in progress; - Land in surface area of 5,563 sqm owned by subsidiary One Verdi Park SRL and related construction in progress which were transferred to inventories as of 30 June 2021 following the issue of the new building permit for the change in destination from office to residential development; - Land in surface area of 37,796 sqm located at Sergent Nutu Ion Street and Calea 13 Septembrie, owned by subsidiary One Cotroceni Park SRL and related construction in progress which were transferred to inventories as of 30 June 2021 following the issue of the building permit for a residential development. Investment property for further development (landbank) (IPFD): - Land in surface area of 82,734 sqm owned by subsidiary One Lake District SRL which were transferred to inventories as of 31 December 2022 following the issue of the building permit; At the date of obtaining the building permit, the Group have performed the valuation of the assets with an independent evaluator and recognized a fair value of RON 206,6 million; - Land in surface area of 5,627 sqm owned by subsidiary One Floreasca Towers SRL which fair value was determined at RON 53,2 million and transferred to inventories as of 31 December 2022 following the issue of the building permit for a residential development; - Vacant land plot with a surface area of 4,688 sqm located at 44 Sergent Nutu Ion Street and 164C 13 Septembrie Road, District 5, Bucharest, Romania, owned by One Cotroceni Park SRL; - Property acquired by subsidiary One Plaza Athenee SRL (former One Proiect 3 SRL) located in the central of the Bucharest, district 1 comprising of: a plot of land in surface area of 521 sqm and related construction with a total gross built area of 2,896 sqm; The property is classified as a historical monument by local authorities. Building permit was issued in Q1 2023; - Land in surface area of 801,028.380 sqm owned by the subsidiary One Proiect 11 SRL, located in Ilfov county. The total acqusition price is of EUR 9,330,000 from which the Group have paid until 31 December 2022 the amount of EUR 1,866,000, while the remaning amount will be paid in 4 equal instalments of EUR 1,866,000 each, according to the schedule established in the acquisition contract. The last instalment is due in 24 months from the signing date of the acquisition contract, 24 August 2022; - An under development hotel project located at 8-10 Georges Clemenceau street, Bucharest, Romania owned by the subisidiary One Proiect 12 SRL; - Three buildings located in Bucharest sector 1, at no. 19, 21 and 23 Academiei street, near the Odeon Theater and the Ion Mincu University of Architecture and Urbanism owned by the subsidiary One Proiect 10. Following the renovation, the three buildings will represent a new development of the Company - One Downtown. The total surface of the land is approximately 1,300 sqm and the gross buildable area is 7,100 sqm. The final use of the buildings will be decided later, with residential and hotel options currently being considered.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 51 NOTE 8. INVESTMENT PROPERTY (continued) The changes in investment property values during 2022 and 2021 were as follows: Completed investment property 31 December 2022 31 December 2021 At 1 January 549,398,406 144,581,151 Capital expenditure on owned property 54,590,744 8,144,441 Acquisition 4,816,997 12,442,650 Fair value of investment property of Bucur Obor acquired 307,120,316 - Fair value of investment property of Eliade Tower acquired 47,104,439 - Investment property acquired (One Victoriei Plaza) 138,118,400 - Transfer from inventories 27,507,442 - Transfer to fixed assets (38,860,861) - Transfer from fixed assets 11,382,107 - Transfer from investment property under development 454,265,348 331,527,462 Disposals (8,165,678) (9,287,515) Fair value adjustment during the year 88,485,173 44,364,366 Lease incentive 53,128,527 17,625,851 At 31 December 1,688,891,360 549,398,406 Investment Property under development 31 December 2022 31 December 2021 At 1 January 650,175,262 720,733,992 Capital expenditure 95,644,331 190,927,581 Interest capitalized 156,298 491,773 (234,275,661) Transfer (to)/from inventories - Transfer to completed investment property (454,265,348) (331,527,462) Lease incentive 2,847,626 5,188,996 Fair value adjustment during the year 54,883,687 298,636,043 At 31 December 349,441,856 650,175,262 Investment Property for further development (landbank) 31 December 2022 31 December 2021 At 1 January 249,891,522 145,100,833 Capital expenditure Acquisition 12,945,058 11,079,774 37,523,145 131,919,218 Transfer from inventories 16,792,471 - Transfer to inventories (272,994,250) - Fair value adjustment during the year 75,097,712 56,187,770 At 31 December 213,651,731 249,891,522 Grand Total Investment Property at 31 December 2,251,984,947 1,449,465,190 Investment property comprises land and properties held with the purpose of capital appreciation or to be rented to third parties. Please refer also to Note 21 for details about the renting activity. The investment property balance as at 31 December 2022 and 31 December 2021 is detailed below:
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 52 NOTE 8. INVESTMENT PROPERTY (continued) Type Object Valuation Method 31 December 2022 One United Tower IPC Office DCF 387,165,700 Eliade Tower IPC Office DCF 45,021,340 One Victoriei Plaza IPC Office DCF 138,527,200 Bucur Obor IPC Office DCF 307,459,982 One North Gate IPC Office DCF and Residual approach 131,419,899 One Carphatian Lodge-Magura IPC Accommodation unit area and the land in excess and forest Market approach 7,708,049 One Long Term Value IPC Apartments and parking lots Market approach 17,517,892 One Mircea Eliade IPC Apartments and parking lots Market approach 75,873,326 One Mamaia Nord IPC Apartments and parking lots Market approach 8,306,685 One Cotroceni Park Office IPUC Office DCF 569,891,286 One Cotroceni Park Office Faza 2 IPUC Office DCF 349,441,859 One Plaza Athenee (former Proiect 3) IPFD Construction classified as a historical monument and associated land plot Income and market approach 50,196,612 One Cotroceni Park IPFD Office Market approach 28,991,764 One Proiect 10 IPFD Hotel Market approach 18,845,554 One Proiect 11 IPFD Residential Market approach 47,551,470 One Proiect 12 IPFD Hotel Income and Residual approach 68,066,329 2,251,984,947 Developer Type Object Valuation Method 31 December 2021 One United Tower IPC Office DCF 396,115,356 One Long Term Value IPC Apartments and parking lots Market approach 19,781,595 One North Gate IPC Office DCF 126,352,983 One Carphatian Lodge- Magura IPC Accommodation unit area and the land in excess and forest Market approach 7,148,471 One Cotroceni Park Office IPUC Office DCF 454,265,348 One Cotroceni Park Office Faza 2 IPUC Office Residual approach 195,909,915 One Lake District IPFD Residential Market approach 168,730,400 One Proiect 3 IPFD Construction classified as a historical monument and associated land plot Income and market approach 33,571,875 One Floreasca Towers IPFD Residential Market approach 47,589,247 Total 1,449,465,190 The Group has accounted for the business combination resulted from the acqusition of an interest of 54.4351% in Bucur Obor SA and in which control was obtained. Colliers, independent evaluator have performed the valuation of the net assets of the business acquired for the scope of purchase price allocation at 31 January 2022. The results of the valuation are presented below: Description Amount in “RON” Net assets at Fair Value 293,013,115 % of Ownership 54.4351% Consideration paid 65,422,013 Gain resulted from acquisition From which: Non controlling interest recognized in retained earnings Owner’s gain related to % of ownership acquired – included in profit and loss account under "Gain on the bargain purchase” line 227,591,102 133,511,133 94,079,969
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 53 NOTE 8. INVESTMENT PROPERTY (continued) The net assets at Fair Value are detailed below: Description Amount in “RON” Intangible assets 14,397,936 Tangible assets 308,125,159 Current assets 2,203,943 Cash and cash equivalents 11,656,689 Liabilities (43,370,612) Net assets at fair value 293,013,115 Bucur Obor SA contributed RON 33,4 million revenue between the date of acquisition and the reporting date. If the acquisition of Bucur Obor had been completed on the first day of the financial year, Bucur Obor would have contributed RON 36,3 million to Group revenues for the year. Investment properties in amount of RON 1,697 million (2021: RON 963 million) have been pledged as security for certain of the Group’s bank loans. Please see Note 15 for further details. Valuation processes The Company’s investment properties were valued at 31 December 2022 by Colliers Romania and 31 December 2021 by Colliers Romania, external, independent evaluators, authorized by ANEVAR, having recent experience regarding the location and nature of the properties evaluated. The valuation models in accordance with those recommended by the International Valuation Standards Committee have been applied and are consistent with the principles in IFRS 13. For all investment properties, their current use equates to the highest and best use. Below there is description of the valuation technique used in determination of the fair value of investment property. Fair value hierarchy Based on the inputs to the valuation technique, the fair value measurement for investment property has been categorized as Level 3 fair value at 31 December 2022 and 31 December 2021. This assessment is deemed appropriate considering the adjustments of the date for comparable lands and of the construction assessments, including future level of net operating revenues of the investment properties. These adjustments are based on location and condition and are not directly observable. There were no transfers from levels 1 and 2 to level 3 during the year. Based on the purchase price allocation report performed by an independent evaluator, the Group have recognized all identifiable assets acquired and liabilities assumed in the business combination at fair value. Valuation techniques The main inputs used in the valuation are: a) capitalisation rate - the rate at which net market income is capitalised to determine the value of a property. The rate is determined with regards to market evidence and the prior external valuation; b) terminal yield - the capitalisation rate used to convert income into an indication of the anticipated value of the property at the end of the holding period when carrying out the DCF method. The rate is determined with regards to market evidence and the prior external valuation; c) discount rate - the rate of return used to convert a monetary sum, payable or receivable in the future, into present value. It reflects the opportunity cost of capital, that is, the rate of return the capital can earn if put to other uses having similar risk. The rate is determined with regards to market evidence and the prior external valuation; d) 10 year average market rental growth - the expected annual rate of change in market rent over a 10 year forecast period in alignment with expected market movements; e) net market rent - a net market rent is the estimated amount for which a property or space within a property should lease between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and wherein the parties have each acted knowledgeably, prudently and without compulsion. The following table presents the valuation techniques used in the determination of the fair value of investment properties categorized as a Level 3 fair value:
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 54 31 December 2022 Valuation technique Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement The fair values are determined through the application of the market comparison technique. The valuation model is based on a price per square meter for both land and buildings, derived from data observable in the market, in an active and transparent market. - Offer price per square meter for land in Bucharest (325 Euro /square meter up to 4,616 Euro per square meter) - Adjustments to observable offer prices to reflect deal prices, location and condition (5- 25% discount for asking price, 5-20% discount for location, access and position) - Offer price per square meter for apartments in Bucharest in district 1 (4,756 EUR/sqm up to 8,567 EUR/sqm) - Adjustments to observable offer prices to reflect deal prices, location and condition (5- 10% discount for asking price, 0% discount for location, access and position The estimated fair value would increase/(decrease) if: - Adjustments for liquidity, location, size were lower/ (higher) Discounted cash-flows (DCF) method. This method involves the projection of a series of cash flows, to which an appropriate market-derived discount rate is applied to establish the present value of the income stream associated with the asset. The exit yield is separately determined and differs from the discount rate. The duration of the cash flows and the specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal, redevelopment and refurbishment. Cash flows are typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commission cost and other operating and management expenses. The series of periodic net operating income, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted. - Exit yield: 6.5% - 8.5% - Discount rate: 8.25% - 10.5% - Average rent office: 9.44-19.8 EUR/sqm/month - Average rent retail: 13.5-37.87 EUR/sqm/month - Future vacancy: 1%-25% - Capex of NOI: 0% - 5% The estimated fair value would increase/(decrease) if: • Discount rates were lower/ (higher) • Costs with tenants were lower/(higher) • Annual rent per sqm was higher/(lower) The Residual Approach of valuation is used when a property has development or redevelopment potential, and it is needed when there is an element of latent value that can be released by the expenditure of money on a property. This approach assumes that a potential buyer, who normally would be a developer, will acquire the subject property as at the date of valuation in its current condition and will develop it till completion and sell. - Hard costs (office): 350-400 EUR/sqm (without underground) - Sales price for residential: 2,100 EUR/sqm/month - Sales price for under/above ground parking (office): 10,500 EUR/parking space The estimated fair value would increase/(decrease) if: • Hard rates were lower/ (higher) • Sales price/(higher)
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 55 Income Approach - Direct Capitalization method The income approach provides an indication of value by converting future cash flow to a single current value. Under the income approach, the value of an asset is determined by reference to the value of income, cash flow or cost savings generated by the asset. A fundamental basis for the income approach is that investors expect to receive a return on their investments and that such a return should reflect the perceived level of risk in the investment. This approach can be applied when the income-producing ability of the property (either present or anticipated) is the critical element affecting value from the perspective of a typical market participant, and also reasonable projections regarding the future income streams can be made. - Capitalization rate: 6.00%-10.00% - Capital expenditure: 2% - Vacancy and collection loss: 2%-3% - Average rent retail: 4.20-50 EUR/sq. m/month The estimated fair value would increase/(decrease) if: • Capitalization rates were lower/ (higher) • variation in vacancy and collection loss • Annual rent per sqm was higher/(lower) 31 December 2021 Valuation technique Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement The fair values are determined through the application of the market comparison technique. The valuation model is based on a price per square meter for both land and buildings, derived from data observable in the market, in an active and transparent market. - Offer price per square meter for land in Bucharest (293 Euro /square meter up to 4,220 Euro per square meter) - Adjustments to observable offer prices to reflect deal prices, location and condition (5-15% discount for asking price, 5-20% discount for location, access and position) - Offer price per square meter for apartments in Bucharest in district 1 (4,885 EUR/sqm up to 6,945 EUR/sqm) - Adjustments to observable offer prices to reflect deal prices, location and condition (5-20% discount for asking price, 0% discount for location, access and position The estimated fair value would increase/(decrease) if: - Adjustments for liquidity, location, size were lower/ (higher) Discounted cash-flows (DCF) method. This method involves the projection of a series of cash flows, to which an appropriate market-derived discount rate is applied to establish the present value of the income stream associated with the asset. The exit yield is separately determined and differs from the discount rate. The duration of the cash flows and the specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal, redevelopment and refurbishment. Cash flows are typically estimated as gross - Exit yield: 6.25% - 7.75% - Discount rate: 7.50% - 9.25% - Average rent office: 10.08-18.26 EUR/sqm/month - Average rent retail: 15-40 EUR/sqm/month - Future vacancy: 2%-10% - Capex of NOI: 1.5% - 2% The estimated fair value would increase/(decrease) if: • Discount rates were lower/ (higher) • Costs with tenants were lower/(higher) • Annual rent per sqm was higher/(lower)
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 56 income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commission cost and other operating and management expenses. The series of periodic net operating income, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted. The Residual Approach of valuation is used when a property has development or redevelopment potential, and it is needed when there is an element of latent value that can be released by the expenditure of money on a property. This approach assumes that a potential buyer, who normally would be a developer, will acquire the subject property as at the date of valuation in its current condition and will develop it till completion and sell. - Hard costs (office): 800-1200 EUR/sqm (without underground) - Obtainable rent for the retail space: 25 EUR/sqm/month - Obtainable rent for office space: 14.25-15 EUR/sqm/month - Rent for under/above ground parking (office): 100 EUR/parking space The estimated fair value would increase/(decrease) if: • Hard rates were lower/ (higher) • Sales price/(higher) Income Approach - Direct Capitalization method The income approach provides an indication of value by converting future cash flow to a single current value. Under the income approach, the value of an asset is determined by reference to the value of income, cash flow or cost savings generated by the asset. A fundamental basis for the income approach is that investors expect to receive a return on their investments and that such a return should reflect the perceived level of risk in the investment. This approach can be applied when the income-producing ability of the property (either present or anticipated) is the critical element affecting value from the perspective of a typical market participant, and also reasonable projections regarding the future income streams can be made. - Capitalization rate: 6.00% - Capital expenditure: 2% - Vacancy and collection loss: 2% - Average rent retail: 50 EUR/sq. m/month The estimated fair value would increase/(decrease) if: • Capitalization rates were lower/ (higher) • variation in vacancy and collection loss • Annual rent per sqm was higher/(lower)
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 57 NOTE 8. INVESTMENT PROPERTY (continued) Sensitivity analysis at 31 December 2022 and 31 December 2021 A quantitative sensitivity analysis for the properties where discounted cash-flows (DCF) method was used in the valuation report at 31 December 2022 and 31 December 2021, is presented below: Effect on fair value 2022 Sensitivity used Completed Investment Property Investment Property under development Investment Property for further development (landbank) Decrease in Estimated Rental Value (ERV) 5% (44,527,004) (4,705,210) n/a Increase in Discount Rate/yield 0.25% (49,465,479) (15,519,771) n/a Effect on fair value 2021 Sensitivity used Completed Investment Property Investment Property under development Investment Property for further development (landbank) Decrease in Estimated Rental Value (ERV) 5% (17,590,327) (15,833,920) n/a Increase in Discount Rate/yield 0.25% (10,224,645) (9,647,152) n/a A quantitative sensitivity analysis for the properties where residual approach of valuation or market comparison techniques were used in the valuation report performed at 31 December 2022 and 31 December 2021, is presented below: Effect on fair value 2022 Sensitivity used Completed Investment Property Investment Property under development Investment Property for further development (landbank) Decrease with 1% of Fair Value 1% (2,112,391) - (4,546,288) Effect on fair value 2021 Sensitivity used Completed Investment Property Investment Property under development Investment Property for further development (landbank) Decrease with 1% of Fair Value 1% (193,817) (1,959,099) (2,375,525)
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 58 NOTE 9. INVENTORIES Most of the Company’s subsidiaries have as object of activity the development of residential real estate projects that are so ld in the normal course of business. Depending on the estimated completion and sales dates of each real estate project, considering the Group's operating cycle (a period of approximately three years), inventory is detailed as follows: Developer Project name 31 December 2022 31 December 2021 One Peninsula SRL (former One Herastrau Park Residence SRL) One Peninsula 75,136,000 60,216,695 One Verdi Park SRL One Verdi Park 72,017,173 105,692,534 One Mircea Eliade Properties SRL One Floreasca City 15,861,977 45,598,156 One Herastrau Towers SRL One Herastrau Towers 19,660,230 23,737,633 Neo Floreasca Lake SRL Neo Floreasca Lake 14,603,243 17,041,339 One Mamaia Nord SRL (former Neo Mamaia SRL) One Mamaia Nord - 2,793,126 Neo Timpuri Noi SRL Neo Timpuri Noi 8,963,730 10,948,885 One Herastrau Vista SRL (former Neo Herastrau Park SRL) One Herastrau Vista 4,586,823 4,817,770 One Modrogran One Modrogan 43,432,300 29,865,921 One Mamaia Nord SRL - phase 2 One Mamaia Nord 2 11,082,766 7,151,736 One Cotroceni Park One Cotroceni Park 39,808,973 35,007,147 One High District (former One Proiect 1) One High District 4,352,515 - One Lake Club (former One Proiect 6) One Lake Club 117,968,858 - One Lake District One Lake District 188,991,343 - One Floreasca Towers One Floreasca Towers 45,499,262 - Other inventories 1,029,147 1,106,685 Total 662,994,340 343,977,627 During 2022, the Group obtained the building permits for One High District, One Floreasca Towers, One Lake Club, One Lake District and One Herastrau Vista. The land owned by One Lake District and One Floreasca Towers were included in previous periods under investment property line as the building permit was not yet received and were measured at fair value by professionaly qualified valuers at annual reporting dates. In 2022, at the date of obtaing the buidling permit the land was transferred from investment propety to inventories at the fair value established by the evaluator. Please see Note 8 for further details. A summary of movement in inventories is set out below: 2022 2021 At 1 January 343,977,627 257,348,157 Development costs incurred 535,781,663 304,496,893 Transfer to investment property (44,299,913) (559,553) Transfer from investment property 272,994,250 234,275,661 Disposals (recognized in cost of sales) (445,459,287) (451,583,531) At 31 December 662,994,340 343,977,627 The amounts recognised in cost of sales for the year are as follows: 2022 2021 In respect of sale of completed inventory property (16,464,849) (47,625,788) In respect of sale of residential property under development (428,994,438) (403,957,743) Total (445,459,287) (451,583,531) Inventories with a carrying amount of RON 156 million (2021: RON 177 million) have been pledged as security for certain of the Group’s bank loans. Please see Note 15 for further details.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 59 NOTE 10. ADVANCES TO SUPPLIERS As at 31 December 2022 and 31 December 2021, advances to suppliers are detailed as follows: Description 31 December 2022 31 December 2021 Advances to suppliers for acquisition of goods 31,083,375 35,921,773 Advances to suppliers for acquisition of services 85,233,534 57,344,675 Total 116,316,909 93,266,448 NOTE 11. TRADE AND OTHER RECEIVABLES As at 31 December 2022 and 31 December 2021 trade and other receivables are detailed as follows: Description 31 December 2022 31 December 2021 Trade receivables – customers 130,752,011 65,072,007 Loss allowances for trade receivables (8,692,226) (220,608) Accrued receivables 2,047,439 247,640 Contract assets 267,895,398 136,270,504 Total trade receivables 392,002,622 201,369,543 VAT receivable 63,746,367 44,446,223 Various debtors 3,842,428 2,542,296 Loans granted to related parties 7,060,180 11,453,361 Loans granted to others 17,189,519 68,811,377 Prepaid interim dividends 36,102,481 - Income tax receivables 1,214,513 935,348 Interest receivable 374,070 - Other receivables 791,367 459,032 Loss allowances for other receivables (458,482) (206,608) Total other receivables 129,862,443 128,441,029 Total 521,865,065 329,810,572 Contract assets represents the amounts estimated by the management of the Group based on the application of IFRS 15 Revenue from Contracts with Customers. For contracts relating to the sale of property under development, the Group has generally concluded that the overtime criteria are met and, therefore, recognises revenue over time with reference to the stage of completion of the contract activity at the balance sheet date. Details on contract assets are presented below: Developer Project Name 31 December 2022 31 December 2021 One Herastrau Plaza SRL One Herastrau Plaza - - One Modrogan SRL One Modrogan 8,209,728 17,968,612 One Herastrau Vista SRL (former Neo Herastrau Park) One Herastrau Vista 20,952,941 36,770,981 One Peninsula SRL One Peninsula 501,259 - One Mircea Eliade Properties SRL One Mircea Eliade 4,619,182 27,696,205 One Verdi Park SRL One Verdi Park 170,880,505 18,634,073 Neo Floreasca Lake SRL Neo Floreasca Lake 24,886,822 2,034,029 One Mamaia Nord SRL (former Neo Mamaia SRL) One Mamaia Nord 4,657,706 10,176,584 Neo Timpuri Noi SRL Neo Timpuri Noi 33,187,255 22,990,020 Total 267,895,398 136,270,504
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 60 NOTE 11. TRADE AND OTHER RECEIVABLES (continued) Related parties’ balances are disclosed in Note 26. As at 31 December 2022 and 31 December 2021, for the VAT recoverable, the Group filed refund applications. Parent company One United Properties SA acts as the representative of the single tax VAT group. The tax authorities have approved the fund application and after the control performed, the Group collecting the amounts approved for reimbursement. On 28 September 2022, through Decision of the Ordinary General Meeting of Shareholders it was was approved the distribution of interim dividends from the Company’s profit corresponding to the first six months of the financial year ending on 31 December 2022 in value of RON 36,102,481 (gross amount), from the distributable net profit of RON 46,075,910 for the first half of the financial year ending 31 December 2022. The proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a liability in these financial statements. Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group. The Group have recorded loss allowance for trade receivables and contract assets as follow: Customers Customers related to Bucur Obor – resulted from business combination Doubtful customers Contract assets Total Gross amount 125,826,775 3,334,924 1,590,312 267,895,398 398,647,409 Allowance for expected credit losses (501,828) (1,553,514) (1,590,312) (5,046,572) (8,692,226) The allowance for expected credit losses related to customers as at 31 December 2022 was determined as follows: 31-Dec-22 RON Current < 90 days 91 - 365 days > 365 days Total Expected loss rate 0% 2% 0.5% 2.0% Gross carrying amount - trade receivables 39,387,136 27,423,889 49,803,133 9,212,617 125,826,775 Allowance for doubtful receivables - 68,560 249,016 184,252 501,828 31-Dec-21 RON Current < 90 days 91 - 365 days > 365 days Total Expected loss rate 0% 0% 0.5% 2.0% Gross carrying amount - trade receivables 12,232,903 24,370,496 23,250,954 5,217,654 65,072,007 Allowance for doubtful receivables - - 116,255 104,353 220,608 The expected loss rate for the trade receivable overdue over 90 days and contract assets as at 31 December 2022 and 31 December 2021 were established based on historical credit losses adjusted for any known factors that would influence the future amount to be received in relation to the receivable. The Group have also taken in consideration the subsequent collections procedures performed until the date of issue of these financial statements and creditworthiness analysis made by the Group’s sales team at individual client level. By using the simplified expected credit loss model, the Group assessed its receivables for allowance and concluded that a net amount of expected credit losses of RON 8,692,225 (31 December 2021: RON 220,608) are unlikely to be recovered. In loans granted to related parties are included mainly the loans granted to One Herastrau Office Properties SA with a maximum period of reimbursement of 5 years, depending on the cash flows availability of the borrower. The interest loan is 3.25% p.a. The loan outstanding balance as at 31 December 2022 is of RON 6,13 million (31 December 2021: RON 10,97 million) and related interest of RON 286,113 (31 December 2021: 106,867 RON).
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 61 NOTE 11. TRADE AND OTHER RECEIVABLES (continued) In the loans granted to others is included the loan granted by the subsidiary, One Long Term Investments SRL to Agro -Mixt Avero Prod SRL with a maximum credit facility of EUR 2 million and an interest loan of 3.25% p.a. The period of reimbursement is depending on the cash flows availability of the borrower. The loan outstanding balance as at 3 1 December 2022 is of RON 16,6 million (31 December 2021: RON 1,5 million) and related interest of RON 303,958. On 16 November 2021, the Company have granted a loan in total amount 13,5 million EUR to Bo Retail Invest SRL in order to indirectly acquire a package of shares in Bucur Obor, a company listed on the Multilateral Trading System of the Bucharest Stock Exchange. The transaction was subject to Competition Council clearance, which the Company received on February 4th, 2022. On February 8th, 2022, One United Properties closed the transaction of the acquisition by the Company of direct sole control over BO Retail Invest S.R.L., and indirectly the control over Bucur Obor, where BO Retail Invest S.R.L. acquired a 54.4351% of the share capital of Bucur Obor, therefore the balance of the loan included under “Loans granted to others” at 31 December 2021 of RON 66,8 million RON and related interest of RON 262,221 were eliminated in consolidation in 2022, as Bo Retail was included under One Group after the completion of the acquisition of Bucur Obor. NOTE 12. CASH AND CASH EQUIVALENTS Cash and cash equivalents are detailed as follows: Description 31 December 2022 31 December 2021 Bank deposits in EUR 194,593,878 235,613,850 Bank deposits in RON 287,986,090 51,138,976 Bank accounts in EUR 59,569,684 204,701,288 Bank accounts in USD 2,557 647,998 Bank deposits in GBP - - Bank accounts in RON 24,603,987 16,061,810 Petty cash – RON 203,709 183,239 Other cash items 138 - Total 566,960,043 508,347,161 Also, the maturity of bank deposits is as follows: Description 31 December 2022 Maturity 31 December 2021 Maturity Bank deposits in EUR 194,593,878 2023 235,613,850 2022 Bank deposits in RON 287,986,090 2023 51,138,976 2022 Total 482,579,968 286,752,826 The Company have determined the ECLs relating to the net exposure for cash and short-term deposits of the Group at the amount of RON 3,5 million. The cash and cash equivalent amounts are deposited in banks from Romania that belong to banking Groups at European level or state-owned banks and in the recognizable past in Romania there were no cases of bank defaults. Out of total cash and cash equivalent amounts held at 31 December 2022, 49% are held in banks with BB- Fitch rate, 10% are held in banks with BBB Fitch rate, and 13% are held in banks with BB+ Fitch rate. The Group's exposure to credit risk associated cash and cash equivalents is limited using financial institutions of good standing for investment and cash handling purposes. The Group have restricted cash in amount of EUR 8,2 mil in bank accounts in EUR and RON 3,5 mil in bank account in RON.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 62 NOTE 13. PROFIT TAX Starting with 2022, the parent company, One United Properties SA have established a fiscal group for profit taxpayer which include the following subsidiaries as at 31 December 2022: One Mamaia Nord SRL, Neo Timpuri Noi SRL, One Cotroceni Park SRL, One Floreasca Towers SRL, One Herastrau Towers SRL, One Lake District SRL, One Long Term Value SRL, One Mircea Eliade Properties SRL, One Modrogan SRL, One Peninsula SRL and One Verdi Park SRL. The other subsidiaries which are not micro-entities are profit tax payers as of 31 December 2022, while the other subsidiaries are micro-entities paying income tax, according to the provisions of Law no. 571/2003 regarding the Fiscal Code and the application rules. The tax rates for 2022 and 2021 are 16% for taxable profit and 1% for micro entities of total revenues (in prior period the % was between 1-3% for micro). The Group’s current profit tax for the years 2022 and 2021 is determined at a statutory rate of 16% based on the statutory profit adjusted by non-deductible expenses and non-taxable revenues. The deferred profit tax as at 31 December 2022 and 31 December 2021 is determined based on the 16% tax rate, which is expected to be effective when temporary differences are reversed. The current and deferred tax assets and liabilities are detailed as follows: Description 31 December 2022 31 December 2021 Current tax liabilities (717,144) (2,023,447) Deferred tax liabilities (272,828,037) (179,974,080) Total assets /(liabilities) (273,545,181) (181,997,527) Income tax expense for the years ended 31 December 2022 and 31 December 2021 is detailed as follows: Description 2022 2021 Current tax expenses 10,963,405 15,662,309 Deferred tax expenses 59,468,042 79,069,343 Total expenses /(revenues) 70,431,447 94,731,652 (i) Reconciliation of effective tax rate The numerical reconciliation between profit tax expenses and the product of accounting result and applicable profit tax rate is as follows: 2022 2021 Gross result 572,908,912 604,418,805 16% rate 91,665,426 96,707,009 Effect of non-deductible elements 1,624,626 5,452,133 Effect of tax losses (22,294,743) (2,468,218) Legal reserve (962,444) (377,487) Other tax effects (1,706,997) (1,347,237) Profit tax decrease due to sponsorship expenses 2,105,579 (3,234,548) Total profit tax expenses 70,431,447 94,731,652 (ii) Deferred tax balance movement As at 31 December 2022 and 31 December 2021, the net deferred tax assets or liabilities relate to temporary differences attributable to:
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 63 NOTE 13. PROFIT TAX (continued) Consolidated statement of financial position Consolidated profit or loss 31 December 2022 31 December 2021 2022 2021 Construction contracts – IFRS15 effect (93,397,982) (54,692,419) 38,705,563 21,008,718 Fair value increase of investment property and effect of amortization (157,412,416) (122,374,775) 35,037,641 49,918,929 Acquisition of Bucur Obor – recognized in retained earnings (33,385,915) - - - Investment property for Bucur Obor - effect of amortization Stock option plan 7,384,150 - (7,384,150) - Inventories (22,275,211) (21,388,653) 886,558 13,977,723 Trade and other receivables (838,653) (5,746) 832,907 - Fiscal losses 21,780,916 12,195,781 (9,585,135) (2,468,218) Sponsorship 5,049,609 6,115,959 1,066,350 (3,234,548) Leases 28,755 (21,747) (50,502) 22,935 Property, plant and equipment 109,089 67,764 (41,325) (26,440) Prepayments 129,621 129,756 135 (129,756) Deferred tax expenses / (income) 59,468,042 79,069,343 Deferred tax assets / (liabilities) net (272,828,037) (179,974,080) NOTE 14. EQUITY Management monitors capital, which includes all components of equity (i.e., share capital, retained earnings and reserves). The primary objective of the parent company is to protect its capital and ability to continue its business so that it can continue to provide benefits to its shareholders and other stakeholders. The parent company establishes the amount of capital that it imposes pro rata with risk. The parent company manages the capital structure and makes adjustments according to the evolution of the economic conditions and the risk characteristics of the underlying assets. (i) Share capital As at 31 December 2022 the Group’s share capital is RON 740,563,717.20 (31 December 2021: RON 514,828,058.8) divided into 3,702,818,586 shares (31 December 2021: 2,574,140,294 shares) at a nominal value of RON 0.2 each (31 December 2021: RON 0.2 each). All issued shares are fully paid. Structure of share capital Name of shareholder 31 December 2022 31 December 2021 Number of shares Nominal value [RON] Holding [%] Number of shares Nominal value [RON] Holding [%] OA Liviu Holding Invest SRL (represented by Mr. Andrei Diaconescu) 1,021,349,895 204,269,979 27.5830% 766,012,669 153,202,534 29.7580% Vinci Ver Holding SRL (represented by Mr. Victor Capitanu) 1,021,349,895 204,269,979 27.5830% 766,012,669 153,202,534 29.7580% Others 1,660,118,796 332,023,759 44.8340% 1,042,114,956 208,422,991 40.4840% Total 3,702,818,586 740,563,717 100.00% 2,574,140,294 514,828,059 100.00%
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 64 NOTE 14. EQUITY (continued) On 19 April 2021, the extraordinary general meeting of the shareholders have approved to list the holding company One United Properties SA on the regulated market of the Bucharest Stock Exchange. On 19 April 2021, the extraordinary general meeting of the shareholders have approved to increase the Company share capital from the amount of RON 259,824,598 to the amount of RON 260,014,171, by increasing the nominal value of the shares from the amount of RON 260.41/share to the amount of RON 260.60/share, by incorporating the reserves of RON 189,573. Also have approved to amend the nominal value of one share from the amount of RON 260.60/share to RON 0.2/share. The total number of shares following this change is of 1,300,070,856 shares. On 16 July 2021, the Board of Directors have approved to increase the share capital of the Company up to the amount of RON 286,015,588 by issuing of a number of 130,007,085 new ordinary, nominative, dematerialized shares at a nominal value of 0.2/share. The share capital increase took place in the context of listing the Company on the regulated market operated by the Bucharest Stock Exchange, as approved by the EGMS Resolution no 55/19 April 2021. The amount of RON 233,111,060 representing the difference between the total amount of the subscription price paid for all new shares and the total nominal value of all new shares subscribed in the share capital increase was recognized as share premium. On 6 December 2021, the Board of Directors have approved to increase the Company’s share capital with the amount of up to RON 228,812,471 by issuance of a number of 1,144,062,353 new ordinary shares with a nominal value of RON 0.2 per share by incorporating approximately 80% of the share premiums resulted from the public offering conducted between 22 June and 2 July 2021. On April 26th, 2022, held the Ordinary and Extraordinary General Meetings of Shareholders. During the GMS, the shareholders approved, among other items, the distribution of the second tranche of the dividends of RON 42.5 million (with first tranche paid in October 2021, full gross dividend for 2021 is RON 75 million). The gross dividend of RON 0.0165 per share was paid until September 30th, 2022. Company’ dividend policy includes the payment of dividends on a semi-annual basis. On 26 April 2022, the Extraordinary General Meeting of Shareholders and subsequent on 5 May 2022, the Board of Directors have approved the share capital increase in order to raise funds to finance the current activity of the Company and its group, respectively to finance developments and acquisitions, through one or more issues of ordinary, registered and dematerialized shares. On August 3, 2022, the Board of Directors approved the results of the Share Capital Increase, respectively the subscription of a number of 202,973,646 new shares offered at a price of 1.25 RON / share representing a total gross capital raise of 253,717,057.50 RON divided into share capital nominal value of 40,594,729.2 RON respectively 0.2 RON per each share and share premium of 213,122,328.30 RON. The share capital of the Company is thus increased from the nominal value of 514,828,058.80 RON to the nominal value of 555,422,788 RON. Decision of the Board of Directors no. 34/1 November 2022 have approved, in accordance with the Resolution of the Extraordinary General Meeting of the Shareholders no. 64/28 September 2022, the increase of the share capital with the amount of RON 185,140,929.20 by issuance of a number of 925,704,646 new ordinary, nominative and dematerialised shares with a nominal value of RON 0.2 per share, by incorporating approximately 87% of the share premiums resulted from the share capital increase operation conducted between 27 June 2022 – 3 August 2022. Following the Share Capital Increase, the share capital of the Company will be of RON 740,563,717.2, fully subscribed and paid up by the shareholders, divided into 3,702,818,586 nominative shares, dematerialised, with a nominal value of RON 0.2 /share. (ii) Legal reserve The legal reserve of RON 17,452,635 as at 31 December 2022 (2021: RON 11,437,359) is established in accordance with the Company Law, according to which 5% of the statutory annual accounting profit is transferred to legal reserves until their balance reaches 20% of the company's share capital. If this reserve is used wholly or partially to cover losses or to distribute in any form (such as the issuance of new shares under the Company Law), it becomes taxable. The management of the Group does not expect to use the legal reserve in a way that it becomes taxable (except as provided by the Fiscal Code, where the reserve constituted by the legal entities providing utilities to the companies that are being restructured, reorganized or privatized can be used to cover the losses of value of the share package obtained as a result of the debt conversion procedure, and the amounts intended for its subsequent replenishment are deductible when calculating taxable profit). The accounting profit remaining after the distribution of the legal reserve is transferred to retained earnings at the beginning of the financial year following the year for which the annual financial statements are prepared, from where it will be distributed.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 65 NOTE 14. EQUITY (continued) (iii) Other capital reserves – share based payments The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided to senior employees, as part of their remuneration. A share-based payment plan was set up during Q4 2020 by which a number of 941 shares of the holding company were granted to an employee. The vesting period is of minimum 12 months and the option can be exercised up to 15 months from the granting date. According to the resolution of the Board of Directors no 20/30 December 2021 and pursuant to the resolution of the extraordinary general meeting of the Company’s shareholders no 55/19 April 2021, the Company approved the “split” of shares, by decreasing the nominal value of a share from RON 260.60 to RON 0.2, and pursuant to the resolution of the extraordinary general meeting of the Company’s shareholders no 56/26 May 2021, the “split” of shares has been confirmed to apply to any share options granted prior to the “split” operation. Therefore, it was approved the amendment of the contract in order to reflect the “split”, as well as to extend the term for exercising the share options granted to the beneficiary. The Group has estimated the reserve by taking into account the fair value of the instrument and the vesting period. On 19 April 2021, the General Shareholder Meeting (GSM) approved an algorithm proposed by the Board of Directors of the Company with respect to awarding certain bonifications to two executive members of the Board of Directors of One United Properties SA, which will materialize in granting a package of shares of maximum 5% of the share capital of the Company, no amount will be paid by the beneficiaries for granting and / or exercising an Option. This stock option plan (“SOP”) will be vested in the following 5 years, following the fulfilment of the performance conditions assessed on a yearly basis by the remuneration committee. In case of exercising the Options, newly issued shares will be allocated by the holding company. The performance conditions that must be met in order to exercise the Options are: (a) holding the position of executive member of the Board of Directors at the Performance Measurement Date and (b) reaching a price per share according to an algorithm established by the decision of the Board of Directors and subsequently approved by the General Shareholder Meeting. During the year 2022, the Group and the beneficiaries have confirmed that all terms and conditions have been established for the stock option plan described above, the grant date have occurred and therefore the Group have accounted for an expense of RON 46 million and in correspondence the related capital reserve. NOTE 15. BORROWINGS The loans outstanding as at 31 December 2022 and 31 December 2021 are detailed as follows: Description Original Currency 31 December 2022 31 December 2021 Secured loans Bank loans due in one year EUR 172,386,427 34,225,549 Bank loans due in more than one year EUR 633,776,316 378,766,739 Unsecured loans Loans received from minority shareholders due in one year EUR 22,652 103,812 Loans received from minority shareholders due in more than one year EUR 3,528,882 7,228,487 Loans received from minority shareholders due in one year RON 24,876 (16,784) Loans received from minority shareholders due in more than one year RON - 243,720 Loans received from related parties due in one year EUR 35,200 35,205 Loans received from related parties due in more than one year EUR 20,062,162 11,380,630 Loans received from related parties due in more than one year RON 368,111 194,952 Total 830,204,626 432,162,310 Of which: Long-term 657,735,471 397,814,528 Short-term 172,469,155 34,347,782
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 66 NOTE 15. BORROWINGS (continued) Detailed information about the balances and transactions with related parties are presented in Note 26. Interest rates for bank loans are based on EURIBOR plus margins that vary from 2% to 4%. Some of the Group’s borrowings have, among others, loan-to-value and debt service coverage ratio covenants. The Group has complied with the financial covenants of its borrowing facilities during the 2022 and 2021 reporting period. The bank loan contracts contain pledges on the real estate developments (land and construction in progress), as well as receivables from customers and bank accounts. Please refer to note 8, note 9 and note 12 for amounts pledged. In addition, in the subsidiary One Verdi Park bank loan there is a pledge on the holding company’s shares in the subsidiary One North Gate SA for a number of 5,104 shares before the issuing of new shares in One North Gate SA. On 19 January 2021, the subsidiary One United Towers SA has signed the loan agreement with Black Sea Trade and Development Bank for an amount of maximum EUR 50,000,000. As at 31 December 2022, the subsidiary have withdrawn the amount of EUR 43.6 million. The loan agreement requires the observance of some financial indicators such as: financial debt less restricted cash to value ratio, forward-looking debt service coverage ratio, debt service coverage ratio, loan-to-value. The Group has complied with the financial covenants of its borrowing facilitiy as at 31 December 2022. The loan balance as of 31 December 2022 is RON 204,8 million (31 December 2021: RON 217,1 million) from which due on short term – RON 14,5 million. In March 2021, the subsidiary One Verdi Park SRL has obtained the re-authorization for change in destination from a mixt development, including office to a residential development. As a consequence, the subsidiary has signed an addendum to the existing bank loan contract in order to accommodate the change in destination of the development. The credit facility period was reduced from 144 to 28 months. The subsidiary performs withdrawls from the credit line in order to finance the development of the residential project which construction is in progress, the balance of the loan as of 31 December 2022 is of RON 98,36 million (31 December 2021: RON 53,07 million) and is in full due on short term. On 23 July 2021, the subsidiaries One Cotroceni Park Office SA and One Cotroceni Park Office Faza 2 SA have signed the loan agreement with Banca Comerciala Romana SA, BRD Groupe Societe Generale SA and Erste Group Bank AG for an amount of maximum EUR 78,000,000. The loan agreement requires the observance of some financial indicators. The bank loan contract contains pledges on land and construction in progress, as well as receivables from leasing contracts, insurance policies and shareholder loan, bank account and 100% of the share capital of the borrowers. The holding Company guarantees to each finance party the punctual performance which will cover costs differences or cash flows deficit related. During 2022, the subsidiary One Cotroceni Park Office SA have withdrawn the amount of RON 146,1 million, therefore the loan balance as of 31 December 2022 is RON 211,52 million (31 December 2021: RON 78,91 million) from which on short term the amount of RON 28,3 million. During 2022, the subsidiary One Cotroceni Park Office SA Faza 2 have withdrawn the amount of RON 48,98 million, therefore the loan balance as of 31 December 2022 is RON 49,25 million (31 December 2021: RON 0 million) from which on short term the amount of RON 0.7 million. On 30 September 2021, the subsidiary One Peninsula SRL have signed the loan agreement with First Bank SA for a maximum amount of EUR 15,000,000. The loan period is for 36 months starting with 01 October 2021. The loan balance as at 31 December 2022 is of RON 59,37 million (31 December 2021: RON 19,30 million). The bank loan contract contains pledges on land and construction in progress, as well as receivables from customers and bank accounts. Also, the loan has attached a corporate guarantee issued by the holding Company which will cover costs differences or cash flows deficit related to project completion for 15% of total development costs (EUR 7,47 million). On September 2021, the subsidiary Neo Timpuri Noi SRL have obtained a new credit facility for a maximum amount of EUR 4,049,314. The loan balance as at 31 December 2022 is of RON 18,55 million (31 December 2021: RON 8,48 million) and is due on short term. The bank loan contract contains pledges on land and construction in progress, as well as receivables from customers and insurance policies and bank accounts. On 15 February 2022, the Company, through its subsidiary One Mircea Eliade Properties SRL contracted a bank loan from Garanti Bank in total value of RON 44,5 million (equivalent of EUR 9 million) and fully utilized this amount. The loan has a maturity of 10 years. The bank loan contract contains pledges over 29 apartments and 35 parking places, as well as bank accounts and a corporate guarantee issued by the holding Company. The subsidiary have reimbursed until 31 December 2022 the amount of RON 3,35 million, therefore the loan balance as at 31 December 2022 is RON 41,16 million, from which on short term 4,09 million.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 67 NOTE 15. BORROWINGS (continued) On 27 July 2022, the Company, through its subsidiary One Victoria Plaza SRL (former MAM Imob Business Center SRL) contracted a bank loan from Garanti Bank in total value of EUR 18,43 million and fully utilized this amount, therefore the lo an balance as at 31 December 2022 is RON 89,18 million, from which on short term 5,08 million. The loan will be fully repaid until June 2037. The subsdiaries One United Tower SA and One Cotroceni Park Office Faza2 SA have withdraw during 2022 RON 3,7 million, respectively 8,37 million RON from Element Invest Partners, related party. The group loan balance, including interest with Element Invest Partners is RON 20,46 million at 31 December 2022. The reconciliation of the changes in liabilities arising from financing activities is provided in Note 28. NOTE 16. LEASES Group as a lessor The Group has entered into leases on its office property portfolio. Refer to Notes 21 for further information. Group as a lessee The Group leases various land, building and equipment. Rental contracts are typically made for fixed periods of 1 to 2 years but may have extension options. Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. The Group has lease contracts with lease terms of 12 months or less and has certain leases of equipment with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Land Buildings Equipment Total At 1 January 2022 30,923 3,426,862 47,667 3,505,452 Additions - - - Depreciation expense (218,159) (527,665) (72,474) (818,298) At 31 December 2022 (187,236) 2,899,197 (24,807) 2,687,154 Set out below are the carrying amounts of lease liabilities and the movements during the period: 2022 2021 As at 1 January 3,929,334 1,208,149 Additions - 3,566,471 Accretion of interest 16,231 82,799 Payments (531,917) (939,449) Translation difference 11,789 11,364 As at 31 December 3,425,437 3,929,334 The reconciliation of the changes in liabilities arising from financing activities is provided in Note 28.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 68 NOTE 16. LEASES (continued) The following are the amounts recognised in profit or loss: 2022 2021 Depreciation expense of right-of-use assets (482,229) (662,680) Interest expense on lease liabilities (14,666) (79,669) Currency translation gain / (loss) (11,789) (11,364) Expense relating to leases of low-value assets (10,031) (10,031) Expense relating to short-term leases (62,607) (62,607) Total amount recognised in profit or loss (581,322) (826,351) NOTE 17. INVESTMENTS IN ASSOCIATES As at 31 December 2022 and 31 December 2021, the Group has interests in a number of individually immaterial associates that are accounted for using the equity method: Name of the entity Place of business/ country of incorporation Object of activity % of ownership interest Carrying amount 31-Dec-22 31-Dec-21 31-Dec-22 31-Dec-21 Reinvent Energy SRL Romania Constructions 20% 20% 2,157,759 1,937,759 CTT & ONT AG Switzerland Investment 49.90% 49.9% 675,656 675,656 Glass Rom Invest SRL Romania Constructions 20% 20% 288,956 269,621 One Property Support Services SRL Romania Property management 20% 20% 245,006 81,622 One Herastrau Office Properties S.A. Romania Holding 30% 30% - - One Herastrau Office S.A. Romania Rental of office space 20% 20% - - Asociatia ASAR Romania Architecture 20% 20% 2,500 2,500 Total equity-accounted investments 3,369,877 2,967,158 2022 2021 Aggregate amounts of the Group’s share of: Profit from continuing operations 402,719 1,527,818 Total comprehensive income 402,719 1,527,818 NOTE 18. TRADE AND OTHER PAYABLES Trade and other payables are detailed as follows:
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 69 NOTE 18. TRADE AND OTHER PAYABLES (continued) Description 31 December 2022 Short Term Long term 31 December 2021 Short Term Long term Suppliers 163,841,716 163,841,716 - 58,659,711 58,659,711 - Accrued payables 28,602,207 28,602,207 - 16,565,766 16,565,766 - Performance guarantees retained from suppliers 48,722,743 48,722,743 - 41,852,148 41,852,148 - Dividends 2,806,389 2,806,389 - 679,899 679,899 - Other taxes and duties 1,326,580 1,326,580 - 16,789 16,789 - Sundry creditors 43,166,659 24,703,167 18,463,492 5,810,614 5,810,614 - Provisions 1,450,526 - 1,450,526 564,912 - 564,912 Employee benefits 1,062,754 1,062,754 - 553,841 553,841 - Other creditors 3,528,255 - 3,528,255 - - - Total trade and other payables 294,507,829 271,065,556 23,442,273 124,703,680 124,138,768 564,912 The normal operating cycle of the Group is three years. As a result, current assets and liabilities include items whose realization is intended and / or anticipated to occur during the normal operating cycle of the Group. Accrued payables represent the value of accepted services rendered by entrepreneurs and contractors for which invoices have not yet been received at the reporting date. In Sundry creditors line is included the amount outstanding to be paid (RON 36,9 million) for the acquisition of land in surface area of 801,028.380 sqm owned by the subsidiary One Proiect 11 SRL, located in Ilfov county. The management consider that the carrying amount of trade payables approximates to their fair value. NOTE 19. ADVANCES RECEIVED FROM CLIENTS At the moment of signing the bilateral sales undertakings between the promissory-seller and the promissory-purchaser, the promissory-seller undertakes not to sell, not to encumber, promise or offer for sale the apartments (with / without parking spaces) to a third party. Developer Project Name Description 31-Dec-22 31-Dec-21 One Floreasca Towers One Floreasca Towers Residential 15,530,020 29,711,635 One Herastrau Plaza SRL One Herastrau Plaza Residential 79,393 79,393 One Peninsula SRL One Peninsula Residential - 61,126,149 One North Gate SRL One North Lofts Investment property 8,165,132 - One Cotroceni Park SRL One Cotroceni Park Residential 30,377,463 158,125,865 One Lake District SRL One District Properties Residential 88,640,773 115,360,327 One Plaza Athenee SRL (former One Proiect 3 SRL) One Plaza Athenee Investment property 39,552,200 9,896,600 One Lake Club SRL (former One Proiect 6 SRL) One Lake Club SRL Residential 53,182,697 16,841,955 One Lake Club (OP6 - Vlago) One Lake Club (OP6 - Vlago) Residential 5,226,929 - One City Club SRL (former One Proiect 9 SRL) One City Club Investment property 5,088,154 - One Mamaia Nord SRL (former Neo Mamaia SRL) One Mamaia Nord Residential 6,992,261 7,251,338 Neo Timpuri Noi SRL Neo Timpuri Noi Residential - 876 One Herastrau Vista (former Neo Herastrau Park SRL) One Herastrau Vista Residential 26,634,795 7,869,428 One High District SRL One High District Residential 10,209,552 - Eliade Tower SA Eliade Tower Investment property 2,961,080 - Bucur Obor SA Bucur Obor Investment property 1,000 - Total 292,641,449 406,263,566
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 70 NOTE 19. ADVANCES RECEIVED FROM CLIENTS (continued) Description 2022 2021 Advances received from clients in relation to residential portfolio (contract liabilities) 236,873,883 234,453,049 Advances received from clients in relation to investment property 55,767,566 171,810,517 Total 292,641,449 406,263,566 NOTE 20. NET INCOME FROM RESIDENTIAL PROPERTY Contract revenue results from the development of apartments. The revenues from sales of inventory property and residential property under development are detailed below: Development 2022 2021 Sales of completed inventory property Sales – One Mircea Eliade Properties 26,644,100 79,925,036 Sales – One Mamaia Nord (1,465,538) 9,604,778 Sales - One Herastrau Towers 13,616,206 - Sales of residential property under development from which: Contract revenues – One Herastrau Towers - 50,309,898 Contract revenues - One Peninsula 104,789,370 115,142,190 Contract revenues - One Verdi Park 252,997,195 138,467,976 Contract revenues - One Mircea Eliade Properties - - Contract revenues - Neo Floreasca Lake 39,190,885 57,748,530 Contract revenues - Neo Timpuri Noi 14,378,401 27,312,857 Contract revenues - One Herastrau Vista 7,919,636 1,905,122 Contract revenues – One Modrogan 49,269,158 94,972,128 Contract revenues – One Cotroceni Park 180,319,265 127,828,308 Contract revenues - One Mamaia Nord - faza 2 1,558,574 100,849 Contract revenues - One High District 13,751,963 - Contract revenues - One Floreasca Towers 17,248,551 - Contract revenues - One Lake District 26,719,555 - Contract revenues - One Lake Club 22,581,061 - Total revenues from contracts with customers 769,518,382 703,317,672 The cost of sales of residential property is detailed below: 2022 2021 Cost of sales of completed inventory property Cost of sales – One Mircea Eliade 10,170,810 37,282,377 Cost of sales – One Mamaia Nord (1,030,872) 10,343,412 Cost of sales - One Herastrau Towers 7,324,911 - Cost of sales of residential property under development from which: Contract cost - One Herastrau Towers - 25,362,963 Contract cost - One Peninsula 48,239,989 60,521,152 Contract cost - One Verdi Park 122,545,454 86,256,068 Contract cost - Neo Floreasca Lake 23,253,839 29,827,081 Contract cost - Neo Timpuri Noi 13,346,872 20,326,240 Contract cost - One Herastrau Vista 5,452,336 1,551,932 Contract cost – One Modrogan 17,958,788 55,517,629 Contract cost – One Cotroceni Park 121,021,892 124,345,159 Contract cost - One Mamaia Nord - faza 2 2,216,040 249,518 Contract cost - One High District 12,576,406 - Contract cost - One Floreasca Towers 16,473,342 - Contract cost - One Lake District 26,958,446 - Contract cost - One Lake Club 18,951,034 - Total cost of sales 445,459,287 451,583,531
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 71 NOTE 20. NET INCOME FROM RESIDENTIAL PROPERTY (continued) The Group’s revenue includes revenue from construction contracts that are recognised over time by reference to the stage of completion of the contract with the customer. As at 31 December 2022, the construction at One Mircea Eliade Properties, One Mamaia Nord (former Neo Mamaia), One Herastrau Towers were completed and therefore the residential property under development was transferred in completed inventory property. On 8 July 2022, the Bucharest Court of Appeal suspended the building permit of the development One Modrogan, issued by the General Mayor of the Municipality of Bucharest. The litigation case in on-going. At 31 December 2022, the aggregate amount of the transaction price allocated to unsatisfied performance obligations on construction contracts was RON 1,034,295,559 (2021: RON 817,205,020), of which approximately 45% is expected to be recognised as revenues during 2023. NOTE 21. NET INCOME FROM RENTAL ACTIVITY The Group has entered into leases on its office property portfolio. The office property leases typically have lease terms of between 5 and 10 years and include clauses to enable periodic upward revision of the rental charge according to preva iling market conditions. Some leases contain options to break before the end of the lease term. 2022 2021 Rental income (excluding straight-lining of lease incentives) 71,210,714 7,587,766 Straight-lining of lease incentives (8,833,254) (1,043,399) Rental income 62,377,460 6,544,367 Under the office activity, are mainly included the revenues generated by One United Tower, One Cotroceni Park Office and One Victoriei Plaza with a share of 94% in total office rental revenues. The rental activity increase during 2022 as One Tower and One Cotroceni Park Office buildings started to generated revenues as the development were finalized. The occupancy rate at 31 December 2022 for One Tower was 100%, One Cotroceni Park Office – 83% and One Victoriei Plaza – 100%. Under the retail activity, are included the revenues generated by Bucur Obor. Details about the base annual rent and the amortization of lease incentive are presented below: As at 31 December 2022 Gross rental income Straight-lining of lease incentives Rental income Office 43,216,446 (8,833,254) 34,383,192 Retail 27,230,617 - 27,230,617 Other 763,651 - 763,651 Total 71,210,714 (8,833,254) 62,377,460 The Group has granted incentives such as rent free and fit outs. The total unamortised portion of lease incentives is, as follows: 2022 2021 Gross amount of lease incentives not fully amortised 121,123,808 25,026,596 Cumulative amount recognised in profit or loss (9,992,841) (1,159,587) Net amount of lease incentives not fully amortised 111,130,967 23,867,009 The net amount of lease incentives not fully amortised are included in the statement of financial position under ‘Investment property’ at 31 December 2022 and 31 December 2021.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 72 NOTE 22. SALES BROKERAGE EXPENSES AND OVERHEAD EXPENSES Description 2022 2021 Sales brokerage commissions 9,255,427 4,641,595 Total 9,255,427 4,641,595 Sales brokerage commissions are recorded and paid for signing bilateral purchase undertakings of apartments or rental contracts. NOTE 23. GENERAL AND ADMINISTRATIVE EXPENSES The general and administrative expenses in 2022 and 2021 are detailed as follows: Description 2022 2021 Bank commissions and similar charges 1,862,959 836,912 Commissions, fees and legal consultancy 8,519,286 4,130,770 Repairs and maintenance 80,413 280,016 Fuel, office equipment and similar 1,113,344 843,727 Amortization of fixed assets 2,037,742 1,561,000 Protocol, advertising and publicity 11,002,963 6,377,195 Taxes and duties 154,783 166,692 Accounting, audit and consultancy services 1,611,150 1,142,258 Valuation services 435,153 309,384 Other consultancy services 3,239,021 2,054,600 Administration services 1,751,740 1,921,007 Other expenses with third party services 602,939 366,728 Salaries and similar contributions 8,311,553 4,949,213 Share based payment transactions 46,150,939 926,786 Postage and telecommunication expenses 115,584 116,874 Transport and travels 1,543,038 966,708 Sundry rentals 809,519 104,458 Recruitment 117,447 64,722 Insurance 494,227 155,129 Depreciation of right of use assets 482,229 662,680 Total 90,436,029 27,936,859 The average number of employees as of 31 December 2022 is 89 (31 December 2021: 77 employees). The fees charged by Deloitte Audit for services provided in 2022 to the company and subsidiaries within the group comprise audit fees amounting EUR thousand 218.7 (out of which statutory audit in amount of EUR thousand 140, other audit fees in amount of EUR thousand 46.7 and other non-audit services in amount of EUR thousand 32). NOTE 24. OTHER OPERATING EXPENSES Other operating expenses in 2022 and 2021 are detailed as follows: Description 2022 2021 Donations granted 7,467,118 6,653,601 Bad debts written off 498,907 - Expense with provisions and allowance for impairment 5,258,735 194,505 Contractual penalties 1,052,967 165,500 Other operating expenses 1,030,613 1,051,936 Total 15,308,340 8,065,542
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 73 NOTE 25. NET FINANCIAL RESULT The financial income and expenses in 2022 and 2021 are detailed as follows: Description 2022 2021 Interest income 13,393,219 2,356,646 FX net gain 93,082 - Other financial income 4,861,828 24,585 Total financial income 18,348,129 2,381,231 Interest expenses (21,966,642) (9,639,353) FX net gain - (2,506,132) Total financial expenses (21,966,642) (12,145,485) Total net financial result (3,618,513) (9,764,254) NOTE 26. RELATED PARTIES The Group’s related parties with which have incurred transactions at 31 December 2022 and 31 December 2021 are: Name Country Type of affiliation Andrei Liviu Diaconescu Romania Shareholder and key management personnel Victor Capitanu Romania Shareholder and key management personnel Vinci Invest SRL Romania Other related party Liviu Investments SRL Romania Other related party Lemon Interior Design SRL Romania Other related party Lemon Office Design SRL Romania Other related party Blue Capital SA (former Smart Capital Investments SA) Romania Other related party Ploiesti Logistics SRL Romania Other related party Element Investments SRL Romania Other related party Element Invest Partners SRL Romania Other related party DR Consulting & Other Services SRL Romania Other related party One Energy Division SRL Romania Other related party One Holding Investments SRL Romania Other related party One Holding Ver SRL Romania Other related party One Holding OA SRL Romania Other related party YR-WNT SRL (former Neo Downtown SRL) Romania Other related party ACC Investments SRL Romania Other related party Reinvent Energy SRL Romania Associate One Property Support Services SRL Romania Associate One Herastrau Office Properties SA Romania Associate One Herastrau Office SA Romania Associate Glass Rom Invest SRL Romania Associate CTT & ONE AG Switzerland Associate CC Trust Group AG Switzerland Other related party CCT & One Properties SA Luxembourg Associate Vinci Ver Holding SRL Romania Other related party OA Liviu Holding SRL Romania Other related party Dragos-Horia Manda Romania Key management personnel, minority shareholder of the Group Claudio Cisullo Switzerland Key management personnel, minority shareholder of the Group Gabriel-Ionut Dumitrescu Romania Key management personnel, starting 2022 exit the Board Adriana-Anca Anton Romania Key management personnel, starting 2022 exit the Board Valentin-Cosmin Samoila Romania Key management personnel
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 74 Name Country Type of affiliation Marius-Mihail Diaconu Romania Key management personnel, minority shareholder of the Group Augusta Dragic Romania Key management personnel Magdalena Souckova Czech Rep. Key management personnel In its normal course of business, the Group carries out transactions with the key management personnel (executive management and directors). The volume of such transactions is presented in the table below: Key management personnel compensation 2022 2021 Short - term employee benefits 769,062 552,179 Please refer to Note 14 for disclosure of share-based payments to key management personnel. Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates/joint ventures are disclosed below. The following tables provides the total amount of transactions that have been entered into with related parties during 2022 and 2021, as well as balances with related parties as at 31 December 2022 and 31 December 2021: Statement of financial position (Amounts owing (to)/from) Nature of balances Related party categories 31 December 2022 31 December 2021 Receivables and other receivables related to goods and services sold Key management personnel of the Group 2,482 2,482 Associates 4,744,972 4,135,900 Other related parties 12,050,587 11,171,879 Advances paid for purchases of goods and services Key management personnel of the Group - - Associates 10,869,424 12,266,422 Other related parties 21,883,513 24,677,386 Payables related to goods and services paid Key management personnel of the Group 3,305 3,305 Associates 10,270,577 6,681,849 Other related parties 8,850,374 4,042,747 Dividends paid during the year, net of tax Key management personnel of the Group 4,309,192 35,064,786 Other related parties 48,473,059 2,841,692 Advance payments received Other related parties 10,999,262 15,950,589 Associates 102,004,454 161,854,758 Income statement (Income/(expense)) Nature of transactions Related party categories 2022 2021 Sales of goods and services Key management personnel of the Group - - Associates 29,405,151 27,702,217 Other related parties 8,126,879 45,374,992 Purchases of various goods and services Key management personnel of the Group - - Associates 80,244,759 65,098,966 Other related parties 45,450,524 8,719,948
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 75 NOTE 26. RELATED PARTIES (continued) Loans from related parties Interest expenses Amounts owed to related parties Companies – Other related parties 2022 - 20,465,473 2021 99,014 11,610,787 Total loans from related parties 2022 - 20,465,473 2021 99,014 11,610,787 Loans granted to related parties Interest income Amounts granted to related parties Loans granted to associates 2022 178,566 7,060,180 2021 177,124 11,453,361 Total loans from related parties 2022 178,566 7,060,180 2021 177,124 11,453,361 At 31 December 2022 and 31 December 2021, the Group have entered into contractual commitments with related parties for the sale of property, development of investment property and residential property in relation to which the related parties perform constructions works such as: design, structure, site organization, installations, envelope, finishes and other services such as: property management, broker commissions. The transactions with related parties are made on terms equivalent to those that prevail in arm’s-length transactions.
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 76 NOTE 27. NON-CONTROLLING INTERESTS Set out below is summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. The amounts disclosed for each subsidiary are before inter-company eliminations. Summarized balance sheet One Cotroceni Park One North Gate One United Tower 2022 2021 2022 2021 2022 2021 Current assets 157,538,289 230,118,519 7,348,484 4,138,035 42,499,887 22,538,497 Current liabilities 55,779,573 168,940,497 13,867,896 3,168,518 29,743,558 19,539,644 Current net assets 101,758,716 61,178,022 (6,519,412) 969,517 12,756,329 2,998,853 Non-current assets 117,248,486 86,874,959 131,443,936 138,063,485 426,205,696 396,174,211 Non-current liabilities 35,943,423 25,328,846 48,454,588 53,331,531 277,839,942 257,319,415 Non-current net assets 81,305,063 61,546,113 82,989,348 84,731,954 148,365,754 138,854,796 Net assets 183,063,779 122,724,135 76,469,936 85,701,471 161,122,083 141,853,649 NCI % at year end 20.00% 20.00% 32.32% 37.60% 29.76% 29.76% Equity attributable to owners of the Company 146,451,023 98,179,308 51,758,676 53,482,003 113,172,151 99,638,003 Non-controlling interests 36,612,756 24,544,827 24,711,260 32,219,468 47,949,932 42,215,646
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 77 NOTE 27. NON-CONTROLLING INTERESTS (continued) Summarized balance sheet One Cotroceni Park Office One Cotroceni Park Office Faza 2 2022 2021 2022 2021 Bucur Obor (acquired in 2022) Current assets 66,350,765 70,019,055 26,866,425 17,937,891 36,419,480 Current liabilities 28,433,311 46,915,517 23,238,706 5,063,405 7,907,617 Current net assets 37,917,454 23,103,538 3,627,719 12,874,486 28,511,863 Non-current assets 569,909,990 454,316,335 351,073,805 196,146,066 307,931,439 Non-current liabilities 261,996,147 162,597,901 170,746,951 69,299,415 33,167,754 Non-current net assets 307,913,843 291,718,434 180,326,854 126,846,651 274,763,685 Net assets 345,831,297 314,821,972 183,954,573 139,721,137 303,275,548 NCI % at year end 42.75% 42.75% 42.75% 42.75% 45.56% Equity attributable to owners of the Company 197,988,418 180,235,579 105,313,993 79,990,351 165,103,208 Non-controlling interests 147,842,879 134,586,393 78,640,580 59,730,786 138,172,340
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 78 NOTE 27. NON-CONTROLLING INTERESTS (continued) One Cotroceni Park One North Gate One United Towers Summarized statement of comprehensive income 2022 2021 2022 2021 2022 2021 Revenue 180,319,265 127,828,308 2,530,265 2,962,315 23,398,082 8,889,353 Profit for the period 60,339,644 21,353,239 (9,231,535) (1,715,260) 19,268,434 23,772,981 Total comprehensive income 60,339,644 21,353,239 (9,231,535) (1,715,260) 19,268,434 23,772,981 NCI % at year end 20.00% 20.00% 32.32% 37.60% 29.76% 29.76% Profit allocated to NCI 12,067,929 4,270,648 (2,983,170) (644,852) 5,734,286 7,074,839 Dividends paid to NCI - - - - - - Summarized statement of cash flow 2022 2021 2022 2021 2022 2021 Net cash from operating activities (83,685,776) 94,670,446 6,772,580 (2,043,495) 2,370,480 (33,735,204) Net cash flows from used in investing activities (1,381,763) (43,735) (3,669,562) (685,509) (17,275,834) (36,262,560) Net cash from financing activities (754,917) 21,598 (311,025) 2,332,226 24,511,454 85,133,646 Net changes in cash and cash equivalents (85,822,456) 94,648,309 2,791,993 (396,778) 9,606,100 15,135,882
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 79 NOTE 27. NON-CONTROLLING INTERESTS (continued) One Cotroceni Park Office One Cotroceni Park Office Faza 2 Bucur Obor Summarized statement of comprehensive income 2022 2021 2022 2021 2022 Revenue 18,625,662 - - - 32,544,419 Profit for the period 31,009,325 147,856,804 44,233,436 78,454,968 14,753,225 Total comprehensive income 31,009,325 147,856,804 44,233,436 78,454,968 14,753,225 NCI % at year end 42.75% 42.75% 42.75% 42.75% 42.75% Profit allocated to NCI 13,256,486 63,208,784 18,909,794 33,539,499 6,307,004 Dividends paid to NCI - - - - - Summarized statement of cash flow 2022 2021 2022 2021 2022 Net cash from operating activities (13,769,883) (9,004,457) 16,879,813 (14,506,651) 20,789,608 Net cash flows from used in investing activities (79,712,444) (63,341,744) (100,044,052) (31,017,427) (830,000) Net cash from financing activities 82,659,811 121,532,012 93,142,766 45,679,990 (17,355,955) Net changes in cash and cash equivalents (10,822,516) 49,185,811 9,978,527 155,912 2,603,653
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 80 NOTE 27. NON-CONTROLLING INTERESTS (continued) Transactions with non-controlling interests During 2022 and 2021, the Group had several transactions with non-controlling interests. The effect of the main transactions on the equity attributable to owners of the parent is summarised as follows: 31 December 2022 One Herastrau Vista Neo Floreasca Lake One Mamaia Nord Neo Timpuri Noi One North Gate One Carphatian Lodge Magura One United Italia Bucur Obor Total 13% change in NCI 14.42% change in NCI 12.67% change in NCI 12.67% change in NCI 5.28% change in NCI No change in control – incorporation of loans 90% 54.44% Carrying amount of non-controlling interests acquired/sold (32,463) 4,329,874 770,795 1,734,860 4,094,966 - - 10,898,032 Consideration (paid)/received to/from non-controlling interests (2,042,969) (2,063,158) (808,349) (902,834) -4,223,928 - - (10,041,238) Impact in retained earnings (2,075,432) 2,266,716 (37,554) 832,026 -128,962 - - 856,794 Non-controlling interest on incorporation of subsidiary or on increase in share capital of subsidiary (without change in control) 3,418,610 4,500 133,511,133 136,934,243 31 December 2021 One Verdi Park One North Gate One Herastrau Towers Carphatian One Cotroceni Park Office One Cotroceni Park Office Faza 2 Others Total 5% change in NCI 2.86% change in NCI 2% change in NCI 33.28% change in NCI Carrying amount of non-controlling interests acquired/sold 1,715,463 4,554,504 (148,448) 1,046,980 6,585 7,175,084 Consideration (paid)/received to/from non-controlling interests (4,948,600) (5,560,575) (900) 631,898 99,101 (9,779,076) Impact in retained earnings (3,233,137) (1,006,071) (149,348) 1,678,878 105,686 (2,603,992) Non-controlling interest on incorporation of subsidiary or on increase in share capital of subsidiary (without change in control) (4,976,784) 88,365,220 31,723,020 115,111,456
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 81 NOTE 28. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non -cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s consolidated cash flow statement as cash flows from financing activities. 1-Jan-22 New leases Interest charge Interest charge capitalized in investment property Cash flows payments Foreign exchange movements Conversion to equity Other movements 31-Dec-22 Bank loans 412,992,288 335,295,908 21,826,016 156,298 (56,617,994) 1,571,170 - 90,939,057 806,162,743 Loans received from shareholders 7,559,236 306,416 123,511 - - (27,929) (3,418,614) (966,210) 3,576,410 Loans received from related parties 11,610,788 12,220,170 - - (3,442,880) 77,395 - - 20,465,473 Lease liabilities 3,929,334 - 14,666 1,565 (531,917) 11,789 - - 3,425,437 Total liabilities from financing activities 436,091,646 347,822,494 21,964,193 157,863 (60,592,791) 1,632,425 (3,418,614) 89,972,847 833,630,063 1-Jan-21 New leases Interest charge Interest charge capitalized in investment property Cash flows payments Foreign exchange movements Conversion to equity Other movements 31-Dec-21 Bonds 82,980,346 - 631,711 (83,702,405) 90,348 - - - Bank loans 117,480,524 356,091,563 8,768,842 491,773 (77,403,014) 4,684,917 - 2,877,683 412,992,288 Loans received from shareholders 157,624,533 4,308,626 98,238 - (38,636,684) 861,833 (114,843,220) (1,854,090) 7,559,236 Loans received from related parties 26,282,524 12,815,250 99,014 - (19,916,214) 47,828 (5,245,019) (2,472,595) 11,610,788 Lease liabilities 1,208,149 3,566,471 81,234 1,565 (939,449) 11,364 - - 3,929,334 Total liabilities from financing activities 385,576,076 376,781,910 9,679,039 493,338 (220,597,766) 5,696,290 (120,088,239) (1,449,002) 436,091,646
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 82 NOTE 29. COMMITMENTS Through the contracts concluded with the clients, the Group undertakes to deliver on time, state-of-the-art apartments forming the object of the concluded contracts. Other obligations resulting from the contracts concluded with clients: the apartments were not and are not removed from the civil circuit; are not the subject of any rental agreement; are not the subject of any litigation; are not subject to any form of forced execution; does not constitute contribution to the set-up of any commercial company; is not alienated or mortgaged; is free from any liens. The Group has no significant capital commitments at 31 December 2022 and 31 December 2021. NOTE 30. CONTINGENCIES There are several lawsuits in which the Group entities are involved in the normal course of business, which in case of negative outcome, may have an effect on the Group’s operations. However, the Group does not anticipate significant impact based on the status of these lawsuits at the issue date. The Group in the normal course of business has given warranties for the quality of the apartments for 3 years and is obliged by the local legislation to guarantee the construction design on the entire lift time of the construction. Provision is made for the Directors’ best estimate of all known legal claims and all legal actions in progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to succeed. The Romanian tax system is under continuous development, being subject to constant interpretations and changes, sometimes retrospectively applied. The statute of limitation for tax periods is 5 years. The Group management consider that the tax liabilities of the Group have been calculated and recorded according to the legal provisions. NOTE 31. FAIR VALUE HIERARCHY The Group holds financial instruments that are not measured at fair value in the consolidated statement of financial position. For financial instruments such as cash and cash equivalents, trade and other receivables, the management of the Group has estimated that their carrying amount is an approximation of their fair value. The fair value of these types of instruments was determined as level 3 in the fair value hierarchy. Financial liabilities that are not measured at fair value are loans with a contractual maturity of less than one year, debts to employees, trade payables and other debts and qualify for level 3 in the fair value hierarchy. Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments, other tha n those with carrying amounts that are reasonable approximations of fair values: Carrying amount Fair value 31 December 2022 31 December 2021 31 December 2022 31 December 2021 Financial liabilities for which fair values are disclosed: Interest-bearing loans and borrowings 830,204,626 432,162,310 734,965,433 378,908,650 Advances from customers 292,641,449 406,263,566 276,373,333 381,888,811 Quantitative disclosures of the Group’s financial instruments in the fair value measurement hierarchy as at 31 December 2022 and 31 December 2021: 31 December 2022 Level 1 Level 2 Level 3 Total Financial liabilities for which fair values are disclosed: Interest-bearing loans and borrowings - - 734,965,433 734,965,433 Advances from customers - - 276,373,333 276,373,333
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 83 NOTE 31. FAIR VALUE HIERARCHY (continued) 31 December 2021 Level 1 Level 2 Level 3 Total Financial liabilities for which fair values are disclosed: Interest-bearing loans and borrowings - - 378,908,650 378,908,650 Advances from customers - - 381,888,811 381,888,811 There were no transfers between Level 1 and 2 during 2022 or 2021. Management has assessed that the fair values of cash and short-term deposits, trade and other receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The following methods and assumptions were used to estimate the fair values: - Receivables are evaluated by the Group based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer, and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the estimated losses of these receivables. As at 31 December 2022, the carrying amounts of such receivables, net of allowances, were not materially different from their calculated fair values. - The fair value of advances from customers is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. - Fair values of the Group’s interest-bearing borrowings and loans are determined by using the DCF method, using a discount rate that reflects the issuer’s borrowing rate including its own non-performance risk as at 31 December 2022. NOTE 32. SEGMENT REPORTING Reporting segments are residential, office and landbank and corporate and the Group manages operations in accordance with this classification. Segment results, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated on a reasonable basis. Segment revenue reported above represents revenue generated from external customers and related party. See note 26. There were no intersegment sales in the current year (2021: nil). No single customers contributed 10 per cent or more to the Group's revenue in either 2022 or 2021. Segment results 31 December 2022 Residential Office & landbank Corporate Total RON Revenues from sales of residential property 769,518,382 - - 769,518,382 Revenues from rentals, service charge and similar - 78,909,622 - 78,909,622 Cost of sales of residential property (445,459,287) - - (445,459,287) Other property operating expenses - residential (5,133,247) - - (5,133,247) Cost of rental revenues, service charge and similar - (16,532,162) - (16,532,162) Other property operating expenses - (8,171,409) - (8,171,409) Net income 318,925,848 54,206,051 - 373,131,899 Segment results 31 December 2021 Residential Office & landbank Corporate Total RON Revenues from sales of residential property 703,317,672 - - 703,317,672 Revenues from rentals, service charge and similar - 11,821,887 - 11,821,887 Cost of sales of residential property (451,583,531) - - (451,583,531) Other property operating expenses - residential (5,046,897) - - (5,046,897) Cost of rental revenues, service charge and similar - (5,277,520) - (5,277,520) Other property operating expenses - (5,345,444) - (5,345,444) Net income 246,687,244 1,198,923 - 247,886,167
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 84 NOTE 32. SEGMENT REPORTING (continued) Segment results 31 December 2022 Residential Office & landbank Corporate Total RON Gains from investment property 45,133,983 173,332,589 - 218,466,572 Gain on the bargain purchase - 94,079,969 - 94,079,969 Segment results 31 December 2021 Residential Office & landbank Corporate Total RON Gains from investment property 23,905,756 375,282,423 - 399,188,179 Segment assets and liabilities 31 December 2022 Residential Office & landbank Corporate Total RON Goodwill 19,256,076 - - 19,256,076 Intangible assets 1,110 14,411,673 846,822 15,259,605 Investment properties 84,180,011 2,167,804,936 - 2,251,984,947 Investments in associates - - 3,369,877 3,369,877 Right of use assets 2,229,909 457,245 - 2,687,154 Property, plant and equipment 3,887,116 3,074,099 44,170,308 51,131,523 Total non-current assets 109,554,222 2,185,747,953 48,387,007 2,343,689,182 Inventories 662,896,020 98,320 - 662,994,340 Advance payments to suppliers 88,929,853 19,121,548 8,265,508 116,316,909 Trade receivables 371,814,135 19,758,362 430,125 392,002,622 Other receivables 6,144,058 36,400,719 87,317,666 129,862,443 Prepayments 11,399,818 13,148,513 376,613 24,924,944 Cash and cash equivalents 288,455,917 131,105,165 147,398,961 566,960,043 Total current assets 1,429,639,801 219,632,627 243,788,873 1,893,061,301 Total assets 1,539,194,023 2,405,380,580 292,175,880 4,236,750,483 Loans and borrowings - long term 61,946,481 595,788,990 - 657,735,471 Trade and other payables 564,912 885,614 21,991,747 23,442,273 Lease liabilities - long term portion 2,646,947 - - 2,646,947 Deferred tax liabilities 89,652,566 190,798,332 (7,622,861) 272,828,037 Total non-current liabilities 154,810,906 787,472,936 14,368,886 956,652,728 Loans and borrowings - short term 116,929,233 55,539,922 - 172,469,155 Trade and other payables 111,210,483 135,630,710 24,224,363 271,065,556 Accrued income 370,523 10,692,119 36,631 11,099,273 Lease liabilities 332,990 445,500 - 778,490 Current tax liabilities 2,661 522,366 192,117 717,144 Advance payments from customers 236,873,883 55,767,566 - 292,641,449 Total current liabilities 465,719,773 258,598,183 24,453,111 748,771,067 Total liabilities 620,530,679 1,046,071,119 38,821,997 1,705,423,795
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 85 NOTE 32. SEGMENT REPORTING (continued) Segment assets and liabilities 31 December 2021 Residential Office & landbank Corporate Total RON Goodwill 19,256,076 - - 19,256,076 Intangible assets 1,698 1,568 594,342 597,608 Investment properties - 1,449,465,190 - 1,449,465,190 Investments in associates - - 2,967,158 2,967,158 Right of use assets 3,048,207 457,245 - 3,505,452 Property, plant and equipment 2,738,225 1,107,589 13,194,196 17,040,010 Total non-current assets 25,044,206 1,451,031,592 16,755,696 1,492,831,494 Inventories 343,439,523 - 538,104 343,977,627 Advance payments to suppliers 60,958,349 25,040,780 7,267,319 93,266,448 Trade receivables 195,777,677 4,377,652 1,214,214 201,369,543 Other receivables 2,846,770 25,292,932 100,301,327 128,441,029 Prepayments 779,589 18,737,680 - 19,517,269 Other financial assets - - 9,408,917 9,408,917 Cash and cash equivalents 257,181,313 123,684,667 127,481,181 508,347,161 Total current assets 860,983,221 197,133,711 246,211,062 1,304,327,994 Total assets 886,027,427 1,648,165,303 262,966,758 2,797,159,488 Loans and borrowings - long term 74,637,587 323,176,941 - 397,814,528 Trade and other payables 564,912 - - 564,912 Lease liabilities - long term portion 2,646,947 - - 2,646,947 Deferred tax liabilities 51,166,157 129,669,782 (861,859) 179,974,080 Total non-current liabilities 129,015,603 452,846,723 (861,859) 581,000,467 Loans and borrowings - short term 8,526,478 25,821,304 - 34,347,782 Trade and other payables 69,598,658 50,466,678 4,073,432 124,138,768 Accrued income 263,449 882,406 - 1,145,855 Lease liabilities 836,887 445,500 - 1,282,387 Current tax liabilities 2,760,093 2,839 (739,485) 2,023,447 Advance payments from customers 234,453,049 171,810,517 - 406,263,566 Total current liabilities 316,438,614 249,429,244 3,333,947 569,201,805 Total liabilities 445,454,217 702,275,967 2,472,088 1,150,202,272
ONE UNITED PROPERTIES SA AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED AT 31 DECEMBER 2022 (Amounts are expressed in RON, unless otherwise mentioned) 86 NOTE 33. EARNING PER SHARE The calculation of basic earnings per share for the year ended 31 December 2022 was based on the profit attributable to equity holders of RON 502,296,355 (31 December 2021: RON 509,687,153) and the weighted average ordinary shares in issue during the year. RON 31 December 2022 31 December 2021 Profit for the year attributable to equity holders 502,477,465 509,687,153 Weighted average number of shares in issue 2,812,996,754 647,837,366 Basic earnings per share attributable to equity holders 0.18 0.79 NOTE 34. EVENTS AFTER THE REPORTING PERIOD In February 2023, the Company have concluded the agreement for the acquisition of a plot of land of 44,863 sqm on Soseaua Progresului 56-80, in Bucharest district 5. The value of the transaction is EUR 35 million, out of which EUR 20 million will be paid in cash and the rest of EUR 15 million will be exchanged with future apartments and commercial spaces. On 09 March 2023, the Revenue & Expense Budget for 2023 was approved by the Board of Directors on 9 March 2023 and will subsequently be subject to approval in the annual Ordinary General Meeting of the Shareholders that will take place on 25 April 2023. On 10 March 2023, the management of the Company informed the market that Wiener Borse (Vienna Stock Exchange) announced the Company’s shares will be included, as of 20.03.2023, in the ROTX Index. The ROTX is a capitalization-weighted price index and is made up of 15 Romanian blue-chip stocks traded at Bucharest Stock Exchange. Calculated in EUR, USD and RON and disseminated in real-time by Wiener Borse, the ROTX is designed as tradable index and is used as underlying for structured products. The inclusion in the ROTX was part of the Company’s strategy to improve the visibility of Romanian capital market on the international arena as well as contribute to the further appreciation of the Company’s liquidity. The Group through its subsidiary, One Plaza Athenee have obtained the building permit for a building located in the central of the Bucharest, district 1 comprising of: a plot of land in surface area of 521 sqm and related construction with a total gross built area of 2,896 sqm. The property is classified as a historical monument by local authorities.