NEPI Rockcastle N.V. (\u201cthe Company\u201d, \u201cNEPI Rockcastle\u201d, \u201cthe Group\u201d) is a public limited company domiciled in the Netherlands, having its registered office at Strawinskylaan 563, WTC Zuidas, Tower Ten, 5th Floor, 1077 XX Amsterdam, with registration number at the Dutch Chamber of Commerce 87488329. The Company\u2019s shares are listed on the Main Board of the Johannesburg Stock Exchange Limited (\u201cJSE\u201d), Euronext Amsterdam and A2X. NEPI Rockcastle is the premier owner and operator of shopping centres in Central and Eastern Europe (\u201cCEE\u201d). The Group benefits from a highly-skilled internal management team which combines asset management, development, investment, leasing and financial expertise.
\nThe Company was incorporated in the Isle of Man on 1 December 2016. On 29 November 2021, the Board of Directors (the \u201cBoard\u201d) approved the migration of NEPI Rockcastle from the Isle of Man to the Netherlands, via an initial migration to Luxembourg (together, the \u201cMigration\u201d). Structured in this way, the migration of the Company to the Netherlands ensured the corporate continuity of NEPI Rockcastle and the trading in Group shares, which remain available to be traded on the JSE, Euronext Amsterdam and A2X. On 10 May 2022, the Migration was approved by the shareholders of the Company. As a result, following fulfilment of certain conditions precedent, the Group has, with effect from 6 September 2022, established its registered office and place of effective management and central administration in the Netherlands as a public limited liability company.
\nThe Group\u2019s Consolidated Financial Statements and the Company\u2019s Separate Financial Statements are collectively referred to as the Financial Statements. The Financial Statements for the year ended 31 December 2023 were approved by the Board of Directors on 19 March 2024 and authorised for publication on 20 March 2024.
\nThe Consolidated Financial Statements are presented in thousands of Euros (\u201c\u20ac\u2019000s\u201d), rounded off to the nearest thousand, unless stated otherwise.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-0": { "value": "NEPI Rockcastle N.V.", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-2": { "value": "public limited company", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-1": { "value": "the Netherlands", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-4": { "value": "Strawinskylaan 563, WTC Zuidas, Tower Ten, 5th Floor, 1077 XX Amsterdam", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-5": { "value": "NEPI Rockcastle is the premier owner and operator of shopping centres in Central and Eastern Europe (\u201cCEE\u201d)", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-3": { "value": "the Netherlands", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-378": { "value": "\nThe Group\u2019s Consolidated Financial Statements and the Company\u2019s Separate Financial Statements are collectively referred to as the Financial Statements. The Financial Statements for the year ended 31 December 2023 were approved by the Board of Directors on 19 March 2024 and authorised for publication on 20 March 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-379": { "value": "\nThe Consolidated Financial Statements have been consistently prepared in accordance with International Financial Reporting Standards (\u2018IFRS\u2019) as issued by the International Accounting Standards Board (\u2018IASB\u2019), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements, International Financial Reporting Standards (\u2018IFRS\u2019) as adopted by the European Union and with Title 9 of Book 2 of the Dutch Civil Code. They comprise the Company and its subsidiaries, as detailed in \u201cBasis of consolidation\u201d in Note 3.2.
\nThe material accounting policies applied in the preparation of these Consolidated Financial Statements are set out below in Note 3 and are consistent with those applied for the preparation of the annual Consolidated Financial Statements as at 31 December 2022, except for the new mandatory standards and interpretations effective as of 1 January 2023, described below:
IFRS 17 insurance contracts
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Amendments)
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments)
International Tax Reform Pillar Two Model Rules (Amendments to IAS 12)
These standards, amendments and interpretations did not have a significant impact on the Consolidated Financial Statements as at 31 December 2023, except as indicated below:
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
The Amendments are effective for annual periods beginning on or after 1 January 2023. The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose \u2018significant\u2019 accounting policies with a requirement to disclose \u2018material\u2019 accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Group revisited the accounting policy information disclosures to ensure compliance with the amended standard. The amendments have had an impact on the Group\u2019s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Group\u2019s financial statements.
IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)
The amendments are effective immediately upon issuance, but certain disclosure requirements are effective later. The Organisation for Economic Co-operation and Development\u2019s (OECD) published the Pillar Two Model Rules in December 2021 to ensure that large multinational companies would be subject to a minimum 15% tax rate. On 23 May 2023, the IASB issued International Tax Reform\u2014Pillar Two Model Rules \u2013 Amendments to IAS 12. The amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two Model Rules and disclosure requirements for affected entities on the potential exposure to Pillar Two income taxes. The Amendments require, for periods in which Pillar Two legislation is (substantively) enacted but not yet effective, disclosure of known or reasonably estimable information that helps users of financial statements understand the entity\u2019s exposure arising from Pillar Two income taxes. To comply with these requirements, an entity is required to disclose qualitative and quantitative information about its exposure to Pillar Two income taxes at the end of the reporting period. The disclosure of the current tax expense related to Pillar Two income taxes and the disclosures in relation to periods before the legislation is effective are required for annual reporting periods beginning on or after 1 January 2023, but are not required for any interim period ending on or before 31 December 2023. Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. However, this legislation does not apply to the Group as its consolidated revenue has not been higher than \u20ac750 million for two consecutive years.
\nManagement has prepared the financial statements on a going concern basis. Having considered the potential impact of the military conflict in Ukraine and the overall macroeconomic environment on the Company\u2019s and the wider NEPI Rockcastle Group revenues, profits, cash flows, operations, liquidity position and debt facilities, management concluded that despite the market events generated by these circumstances during 2023 and subsequent to the year-end, there are no material uncertainties relating to the Group\u2019s ability to continue as a going concern.
\nClimate change has a major impact on the economy, requiring increasing awareness of its consequences on the financial and non-financial performance of companies. Climate-related matters aspects have also become increasingly important for the real estate industry. The Group\u2019s strategy is based on adopting climate-resilient activities and on reducing the carbon emissions resulting from its operations.
\nNEPI Rockcastle aims to contribute to a more sustainable environment by reducing the carbon footprint of its buildings, meeting stringent green building standards for new constructions, redevelopment, refurbishment projects and integrating the renewable energy production in the core of NEPI Rockcastle\u2019s business strategy.
\nA carbon reduction pathway has been established and is endorsed by the Board of Directors, encompassing development and redevelopment, operations, engagement with key stakeholders, management of own offices and employees\u2019 business travel. The carbon pathway outlines how NEPI Rockcastle plans to reduce its greenhouse gas emissions and reach its climate goals of reducing operations carbon footprint by 70% and embedded carbon by 30% by 2030. This serves as a roadmap for transitioning the organization and the assets portfolio to a low-carbon economy.
\nThe implementation of these initiatives has an impact on the Group\u2019s financial statements, mainly through its investment strategy and the implementation of costs incurred with the aim to address sustainability related targets and environmental challenges.
\nValuation of investment properties
\nThe value of investment properties is positively impacted by the certification of all of Group\u2019s shopping malls with the Building Research Establishment Environmental Assessment Method (BREEAM) In-Use certificates, attesting their recognition as environmentally friendly.
In addition, the Group incurred capital expenditure aimed to anticipate regulatory developments and adapt to changes in demand for more sustainable spaces. These investments include, among others, installation of LED technology in lighting systems, installation of more efficient air-conditioning systems, the implementation of smart systems such as metering and high-performance building management systems, which are meant to enable collecting data from the assets, facilitating decisions on modernization, retrofitting or adjustments to the equipment parameters.
During 2023, NEPI Rockcastle accelerated the installation of photovoltaic panels in Romania, with 35MW of power-generating capacity being installed in 27 properties, covering approximately 25% of those properties\u2019 consumption needs. Following the successful roll-out in Romania, management is assessing the opportunity to expand the development of photovoltaic plants in other geographies.
The above information was provided to and was considered by the Group\u2019s appraisers in their valuation process.
Funding activity
\nIn 2023, The Group has launched its Sustainability-Linked Finance Framework (the \u201cFramework\u201d) as an alternative green funding approach, the new IFC loan concluded in December 2023 and the revolving facilities extended in December 2023 and February 2024 were based on this ambitious framework. The Framework can be applied for bilateral financing agreements such as Sustainability-Linked term loans, revolving credit facilities,\u00a0etc.
\nAs disclosed in Note 18, in December 2023, NEPI Rockcastle entered into a \u20ac387 million green financing agreement with IFC, a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets. The senior unsecured facility is structured as a green loan with sustainability-linked features, aimed at reducing greenhouse gas emissions and increasing energy efficiency in the Group\u2019s property portfolio. The funding has been secured at competitive pricing in the current market conditions, with reference to the Euribor rate. The Group also extended a sustainability-linked \u20ac150 million revolving credit facility (RCF) with Deutsche Bank, Citi, and HSBC, during December 2023.
\nUnder the previously published Green Finance Framework, NEPI Rockcastle has issued \u20ac1 billion green bonds. The Group has committed to use proceeds from green bonds to finance or refinance existing and future projects which improve the environmental performance of the Group\u2019s property portfolio, which translate into allocating all resources to environmentally sustainable assets (buildings certified as BREEAM \u201cexcellent\u201d or \u201cvery good\u201d). Going forward, both newly issued and currently outstanding bonds will be governed under the updated framework, with allocation to a single portfolio of assets, in alignment with the more rigorous eligibility criteria in the framework.
\nThe Consolidated Financial Statements are prepared on the historical cost basis, except for investment property in use, land for investment property under development, and interest rate derivatives, which are measured at fair value.
\nThe preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and associated assumptions are based on experience and other factors believed to be reasonable under the circumstances and enable judgements to be made about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised and future periods if applicable.
\nThe Consolidated Financial Statements are presented in thousands of Euros (\u201c\u20ac\u2019000s\u201d), rounded off to the nearest thousand, unless stated otherwise.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-380": { "value": "\nThe material accounting policies applied in the preparation of these Consolidated Financial Statements are set out below in Note 3 and are consistent with those applied for the preparation of the annual Consolidated Financial Statements as at 31 December 2022, except for the new mandatory standards and interpretations effective as of 1 January 2023, described below:
IFRS 17 insurance contracts
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Amendments)
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments)
International Tax Reform Pillar Two Model Rules (Amendments to IAS 12)
These standards, amendments and interpretations did not have a significant impact on the Consolidated Financial Statements as at 31 December 2023, except as indicated below:
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
The Amendments are effective for annual periods beginning on or after 1 January 2023. The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose \u2018significant\u2019 accounting policies with a requirement to disclose \u2018material\u2019 accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Group revisited the accounting policy information disclosures to ensure compliance with the amended standard. The amendments have had an impact on the Group\u2019s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Group\u2019s financial statements.
IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)
The amendments are effective immediately upon issuance, but certain disclosure requirements are effective later. The Organisation for Economic Co-operation and Development\u2019s (OECD) published the Pillar Two Model Rules in December 2021 to ensure that large multinational companies would be subject to a minimum 15% tax rate. On 23 May 2023, the IASB issued International Tax Reform\u2014Pillar Two Model Rules \u2013 Amendments to IAS 12. The amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two Model Rules and disclosure requirements for affected entities on the potential exposure to Pillar Two income taxes. The Amendments require, for periods in which Pillar Two legislation is (substantively) enacted but not yet effective, disclosure of known or reasonably estimable information that helps users of financial statements understand the entity\u2019s exposure arising from Pillar Two income taxes. To comply with these requirements, an entity is required to disclose qualitative and quantitative information about its exposure to Pillar Two income taxes at the end of the reporting period. The disclosure of the current tax expense related to Pillar Two income taxes and the disclosures in relation to periods before the legislation is effective are required for annual reporting periods beginning on or after 1 January 2023, but are not required for any interim period ending on or before 31 December 2023. Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. However, this legislation does not apply to the Group as its consolidated revenue has not been higher than \u20ac750 million for two consecutive years.
\nCertain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the Group.
\nIAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted, and will need to be applied retrospectively in accordance with IAS 8. The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as either current or non-current. The amendments clarify the meaning of a right to defer settlement, the requirement for this right to exist at the end of the reporting period, that management intent does not affect current or non-current classification, that options by the counterparty that could result in settlement by the transfer of the entity\u2019s own equity instruments do not affect current or non-current classification. Also, the amendments specify that only covenants with which an entity must comply on or before the reporting date will affect a liability\u2019s classification. Additional disclosures are also required for non-current liabilities arising from loan arrangements that are subject to covenants to be complied with within twelve months after the reporting period. The amendments have not yet been endorsed by the EU. The Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.
\nIFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted. The amendments are intended to improve the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the accounting for leases unrelated to sale and leaseback transactions. In particular, the seller-lessee determines \u2018lease payments\u2019 or \u2018revised lease payments\u2019 in such a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use it retains. Applying these requirements does not prevent the seller-lessee from recognising, in profit or loss, any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendment retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date of initial application, being the beginning of the annual reporting period in which an entity first applied IFRS 16. The amendments have not yet been endorsed by the EU. This amendment is not expected to have a material impact on the Group.
\nAmendment in 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
\nThe amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. The Group is currently assessing the impact of the amendments.
\nIAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosure - Supplier Finance Arrangements (Amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted. The amendments supplement requirements already in IFRS and require an entity to disclose the terms and conditions of supplier finance arrangements. Additionally, entities are required to disclose at the beginning and end of reporting period the carrying amounts of supplier finance arrangement financial liabilities and the line items in which those liabilities are presented as well as the carrying amounts of financial liabilities and line items, for which the finance providers have already settled the corresponding trade payables. Entities should also disclose the type and effect of non-cash changes in the carrying amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the financial liabilities from being comparable. Furthermore, the amendments require an entity to disclose at the beginning and end of the reporting period the range of payment due dates for financial liabilities owed to the finance providers and for comparable trade payables that are not part of those arrangements. The amendments have not yet been endorsed by the EU. Management does not expect that the adoption of these amendments will have a significant impact on the Group\u2019s financial statements.
\nIAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2025, with earlier application permitted. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. A currency is considered to be exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. If a currency is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement date. An entity\u2019s objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions. The amendments have not yet been endorsed by the EU. Management does not expect that the adoption of these amendments will have a significant impact on the Group\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-381": { "value": "\nThe material accounting policies applied in the preparation of these Consolidated Financial Statements are set out below in Note 3 and are consistent with those applied for the preparation of the annual Consolidated Financial Statements as at 31 December 2022, except for the new mandatory standards and interpretations effective as of 1 January 2023, described below:
IFRS 17 insurance contracts
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (Amendments)
IAS 12 Income taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments)
International Tax Reform Pillar Two Model Rules (Amendments to IAS 12)
These standards, amendments and interpretations did not have a significant impact on the Consolidated Financial Statements as at 31 December 2023, except as indicated below:
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (Amendments)
The Amendments are effective for annual periods beginning on or after 1 January 2023. The amendments provide guidance on the application of materiality judgements to accounting policy disclosures. In particular, the amendments to IAS 1 replace the requirement to disclose \u2018significant\u2019 accounting policies with a requirement to disclose \u2018material\u2019 accounting policies. Also, guidance and illustrative examples are added in the Practice Statement to assist in the application of the materiality concept when making judgements about accounting policy disclosures. The Group revisited the accounting policy information disclosures to ensure compliance with the amended standard. The amendments have had an impact on the Group\u2019s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Group\u2019s financial statements.
IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules (Amendments)
The amendments are effective immediately upon issuance, but certain disclosure requirements are effective later. The Organisation for Economic Co-operation and Development\u2019s (OECD) published the Pillar Two Model Rules in December 2021 to ensure that large multinational companies would be subject to a minimum 15% tax rate. On 23 May 2023, the IASB issued International Tax Reform\u2014Pillar Two Model Rules \u2013 Amendments to IAS 12. The amendments introduce a mandatory temporary exception to the accounting for deferred taxes arising from the jurisdictional implementation of the Pillar Two Model Rules and disclosure requirements for affected entities on the potential exposure to Pillar Two income taxes. The Amendments require, for periods in which Pillar Two legislation is (substantively) enacted but not yet effective, disclosure of known or reasonably estimable information that helps users of financial statements understand the entity\u2019s exposure arising from Pillar Two income taxes. To comply with these requirements, an entity is required to disclose qualitative and quantitative information about its exposure to Pillar Two income taxes at the end of the reporting period. The disclosure of the current tax expense related to Pillar Two income taxes and the disclosures in relation to periods before the legislation is effective are required for annual reporting periods beginning on or after 1 January 2023, but are not required for any interim period ending on or before 31 December 2023. Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. However, this legislation does not apply to the Group as its consolidated revenue has not been higher than \u20ac750 million for two consecutive years.
\nCertain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2023 reporting periods and have not been early adopted by the Group.
\nIAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (Amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted, and will need to be applied retrospectively in accordance with IAS 8. The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as either current or non-current. The amendments clarify the meaning of a right to defer settlement, the requirement for this right to exist at the end of the reporting period, that management intent does not affect current or non-current classification, that options by the counterparty that could result in settlement by the transfer of the entity\u2019s own equity instruments do not affect current or non-current classification. Also, the amendments specify that only covenants with which an entity must comply on or before the reporting date will affect a liability\u2019s classification. Additional disclosures are also required for non-current liabilities arising from loan arrangements that are subject to covenants to be complied with within twelve months after the reporting period. The amendments have not yet been endorsed by the EU. The Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.
\nIFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted. The amendments are intended to improve the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction in IFRS 16, while it does not change the accounting for leases unrelated to sale and leaseback transactions. In particular, the seller-lessee determines \u2018lease payments\u2019 or \u2018revised lease payments\u2019 in such a way that the seller-lessee would not recognise any amount of the gain or loss that relates to the right of use it retains. Applying these requirements does not prevent the seller-lessee from recognising, in profit or loss, any gain or loss relating to the partial or full termination of a lease. A seller-lessee applies the amendment retrospectively in accordance with IAS 8 to sale and leaseback transactions entered into after the date of initial application, being the beginning of the annual reporting period in which an entity first applied IFRS 16. The amendments have not yet been endorsed by the EU. This amendment is not expected to have a material impact on the Group.
\nAmendment in 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
\nThe amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. The Group is currently assessing the impact of the amendments.
\nIAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments Disclosure - Supplier Finance Arrangements (Amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2024, with earlier application permitted. The amendments supplement requirements already in IFRS and require an entity to disclose the terms and conditions of supplier finance arrangements. Additionally, entities are required to disclose at the beginning and end of reporting period the carrying amounts of supplier finance arrangement financial liabilities and the line items in which those liabilities are presented as well as the carrying amounts of financial liabilities and line items, for which the finance providers have already settled the corresponding trade payables. Entities should also disclose the type and effect of non-cash changes in the carrying amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the financial liabilities from being comparable. Furthermore, the amendments require an entity to disclose at the beginning and end of the reporting period the range of payment due dates for financial liabilities owed to the finance providers and for comparable trade payables that are not part of those arrangements. The amendments have not yet been endorsed by the EU. Management does not expect that the adoption of these amendments will have a significant impact on the Group\u2019s financial statements.
\nIAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments)
\nThe amendments are effective for annual reporting periods beginning on or after 1 January 2025, with earlier application permitted. The amendments specify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. A currency is considered to be exchangeable into another currency when an entity is able to obtain the other currency within a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. If a currency is not exchangeable into another currency, an entity is required to estimate the spot exchange rate at the measurement date. An entity\u2019s objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange transaction would take place at the measurement date between market participants under prevailing economic conditions. The amendments have not yet been endorsed by the EU. Management does not expect that the adoption of these amendments will have a significant impact on the Group\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-382": { "value": "\nManagement has prepared the financial statements on a going concern basis. Having considered the potential impact of the military conflict in Ukraine and the overall macroeconomic environment on the Company\u2019s and the wider NEPI Rockcastle Group revenues, profits, cash flows, operations, liquidity position and debt facilities, management concluded that despite the market events generated by these circumstances during 2023 and subsequent to the year-end, there are no material uncertainties relating to the Group\u2019s ability to continue as a going concern.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-385": { "value": "\nThe Consolidated Financial Statements have been consistently prepared in accordance with International Financial Reporting Standards (\u2018IFRS\u2019) as issued by the International Accounting Standards Board (\u2018IASB\u2019), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements, International Financial Reporting Standards (\u2018IFRS\u2019) as adopted by the European Union and with Title 9 of Book 2 of the Dutch Civil Code. They comprise the Company and its subsidiaries, as detailed in \u201cBasis of consolidation\u201d in Note 3.2.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-402": { "value": "\nThe preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and associated assumptions are based on experience and other factors believed to be reasonable under the circumstances and enable judgements to be made about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised and future periods if applicable.
\nThe Group\u2019s management discusses with the Audit Committee the development, selection and disclosure of the Group\u2019s material accounting policies, as well as their application.
\nThe estimates and associated assumptions are based on historical experience and various other factors which are considered reasonable under the circumstances. These are used to make judgements about the carrying values of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates.
\nThe estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both.
\nJudgements that have the most significant effect on the amounts recognised in the Consolidated Financial Statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year are detailed below.
\nInvestment property is stated at its fair value based on valuation reports prepared by international appraisers as at 30 June and 31 December each year. Valuations are based on discounted cash flow projections based on reliable estimates of future cash flows, using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. These are supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition.
\nIn preparing the valuation reports on the Group\u2019s investment property, the external appraisers excluded distressed sales when considering comparable sales prices (used for valuation of plots of land held for development). Management reviewed the appraisers\u2019 assumptions relating to the discounted cash flow models used in the valuations and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period.
\nValuations of the income generating properties are based on cash flow statements, in which the present value of net operating income during a ten-year period and the residual value of the property at the end of the period are calculated.
\nForecasts of net operating income are based on leases signed at the time of the valuation date, the estimated rental values for existing leases when they expire and the estimated achievable rental values of the existing vacancies. The value of long-term vacancies is estimated based on the properties\u2019 location and condition. The valuers\u2019 assessments of non-recoverable expenses are based on their experience of comparable properties and historical costs provided by the Group.
\nThe discount rates used are nominal returns on total capital before tax and vary between 7.90% and 11.95% (2022: 7.30% and 11.95%). The required rates of return are based on assessments of the market\u2019s required returns for similar properties. The discount rate is set individually for each property and is based on the condition and location, the stability of the tenants and lease duration.
\nFurther information relating to sensitivity of material accounting estimates used in the valuation of investment property is presented in Note 8.
\nIn assessing the functional currency of the Group, including the Company and its subsidiaries, management considers factors such as the local currencies of the countries where the Group operates, as well as the currency that mainly influences rental prices for its properties, the currency that mostly influences labour, material and other costs of providing its services, the currency in which funding is accessed by the Group.
\nAlthough the competitive forces and regulations that determine the sales prices of goods and services are present in the countries which use different currencies than EUR, the macroeconomic developments in these countries to some extent is influenced by the eurozone. In addition, in real estate, leases agreements in the countries where the Group operates, as well as the financing of properties are generally denominated in EUR.
\nThe Group predominately concludes its lease agreements in Euro (or, if these contracts are not concluded in Euro, they are indexed to the Euro exchange rate), even if invoiced in local currencies. Agreements for construction and development of investment properties are negotiated and concluded in EUR. Administrative and corporate expenses, such as advisory fees, audit fees, valuation fees, asset management fees are mostly negotiated and contracted in EUR. Salary and other employee related costs, although denominated in local currencies, are benchmarked to EUR.
\nFinancing contracted by the Group, which include bonds, unsecured credit facilities and secured bank loans is denominated and settled in EUR. Interest paid on bank loans is linked to Euribor. Intra-group funding for property development is also denominated and settled in EUR.
\nIn terms of transactions on the real estate market, acquisitions and sales of properties are negotiated and contracted in EUR in all jurisdictions the Group operate, due to the active international investors in those markets. This is also substantiated in external valuation reports, as valuations of properties are prepared in EUR.
\nIn conclusion, management assessed that EUR is the functional currency for the Group, including the Company and its subsidiaries.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
\nPortfolio valuation: sensitivity to changes in the discount rate, exit rate and rental income
\nThe tables below present the change in the valuation of the shopping centre portfolio using different discount rate and exit rate assumptions than those used by the appraisers:
\nDiscount rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 3.37% | 1.67% | -1.63% | -3.23% |
Poland | 3.40% | 1.70% | -1.60% | -3.20% |
Slovakia | 3.56% | 1.73% | -1.71% | -3.43% |
Hungary | 3.64% | 1.79% | -1.77% | -3.50% |
Bulgaria | 1.98% | 1.00% | -0.97% | -1.91% |
Croatia | 3.21% | 1.64% | -1.68% | -3.40% |
Czech Republic | 3.34% | 1.67% | -1.78% | -3.56% |
Serbia | 3.20% | 1.65% | -1.51% | -3.10% |
Lithuania | 3.40% | 1.70% | -1.60% | -3.20% |
Total | 3.27% | 1.62% | -1.58% | -3.14% |
Exit rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 6.94% | 3.35% | -3.14% | -6.08% |
Poland | 7.90% | 3.80% | -3.50% | -6.70% |
Slovakia | 7.60% | 3.68% | -3.45% | -6.65% |
Hungary | 8.20% | 3.92% | -3.68% | -7.09% |
Bulgaria | 4.66% | 2.36% | -2.11% | -4.00% |
Croatia | 5.85% | 3.02% | -3.21% | -6.66% |
Czech Republic | 6.45% | 3.34% | -3.67% | -7.45% |
Serbia | 5.90% | 2.88% | -2.68% | -5.20% |
Lithuania | 6.70% | 3.30% | -3.00% | -5.80% |
Total | 7.02% | 3.40% | -3.19% | -6.18% |
Rental Income (ERV) | ||||
|---|---|---|---|---|
Country | -10% | -5% | 5% | 10% |
Romania | -10.03% | -5.01% | 5.01% | 10.03% |
Poland | -8.30% | -4.10% | 4.10% | 8.30% |
Slovakia | -8.61% | -4.32% | 4.27% | 8.55% |
Hungary | -8.41% | -4.22% | 4.19% | 8.39% |
Bulgaria | -6.96% | -3.24% | 3.48% | 7.20% |
Croatia | -7.77% | -3.90% | 3.90% | 7.80% |
Czech Republic | -8.24% | -4.12% | 4.17% | 7.95% |
Serbia | -6.80% | -3.37% | 3.43% | 6.87% |
Lithuania | -6.90% | -3.40% | 3.50% | 6.90% |
Total | -8.69% | -4.32% | 4.33% | 8.70% |
The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and associated assumptions are based on experience and other factors believed to be reasonable under the circumstances and enable judgements to be made about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised and future periods if applicable.
\nThe Group\u2019s management discusses with the Audit Committee the development, selection and disclosure of the Group\u2019s material accounting policies, as well as their application.
\nThe estimates and associated assumptions are based on historical experience and various other factors which are considered reasonable under the circumstances. These are used to make judgements about the carrying values of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates.
\nThe estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both.
\nJudgements that have the most significant effect on the amounts recognised in the Consolidated Financial Statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year are detailed below.
\nInvestment property is stated at its fair value based on valuation reports prepared by international appraisers as at 30 June and 31 December each year. Valuations are based on discounted cash flow projections based on reliable estimates of future cash flows, using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. These are supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition.
\nIn preparing the valuation reports on the Group\u2019s investment property, the external appraisers excluded distressed sales when considering comparable sales prices (used for valuation of plots of land held for development). Management reviewed the appraisers\u2019 assumptions relating to the discounted cash flow models used in the valuations and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period.
\nValuations of the income generating properties are based on cash flow statements, in which the present value of net operating income during a ten-year period and the residual value of the property at the end of the period are calculated.
\nForecasts of net operating income are based on leases signed at the time of the valuation date, the estimated rental values for existing leases when they expire and the estimated achievable rental values of the existing vacancies. The value of long-term vacancies is estimated based on the properties\u2019 location and condition. The valuers\u2019 assessments of non-recoverable expenses are based on their experience of comparable properties and historical costs provided by the Group.
\nThe discount rates used are nominal returns on total capital before tax and vary between 7.90% and 11.95% (2022: 7.30% and 11.95%). The required rates of return are based on assessments of the market\u2019s required returns for similar properties. The discount rate is set individually for each property and is based on the condition and location, the stability of the tenants and lease duration.
\nFurther information relating to sensitivity of material accounting estimates used in the valuation of investment property is presented in Note 8.
\nIn assessing the functional currency of the Group, including the Company and its subsidiaries, management considers factors such as the local currencies of the countries where the Group operates, as well as the currency that mainly influences rental prices for its properties, the currency that mostly influences labour, material and other costs of providing its services, the currency in which funding is accessed by the Group.
\nAlthough the competitive forces and regulations that determine the sales prices of goods and services are present in the countries which use different currencies than EUR, the macroeconomic developments in these countries to some extent is influenced by the eurozone. In addition, in real estate, leases agreements in the countries where the Group operates, as well as the financing of properties are generally denominated in EUR.
\nThe Group predominately concludes its lease agreements in Euro (or, if these contracts are not concluded in Euro, they are indexed to the Euro exchange rate), even if invoiced in local currencies. Agreements for construction and development of investment properties are negotiated and concluded in EUR. Administrative and corporate expenses, such as advisory fees, audit fees, valuation fees, asset management fees are mostly negotiated and contracted in EUR. Salary and other employee related costs, although denominated in local currencies, are benchmarked to EUR.
\nFinancing contracted by the Group, which include bonds, unsecured credit facilities and secured bank loans is denominated and settled in EUR. Interest paid on bank loans is linked to Euribor. Intra-group funding for property development is also denominated and settled in EUR.
\nIn terms of transactions on the real estate market, acquisitions and sales of properties are negotiated and contracted in EUR in all jurisdictions the Group operate, due to the active international investors in those markets. This is also substantiated in external valuation reports, as valuations of properties are prepared in EUR.
\nIn conclusion, management assessed that EUR is the functional currency for the Group, including the Company and its subsidiaries.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
\nPortfolio valuation: sensitivity to changes in the discount rate, exit rate and rental income
\nThe tables below present the change in the valuation of the shopping centre portfolio using different discount rate and exit rate assumptions than those used by the appraisers:
\nDiscount rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 3.37% | 1.67% | -1.63% | -3.23% |
Poland | 3.40% | 1.70% | -1.60% | -3.20% |
Slovakia | 3.56% | 1.73% | -1.71% | -3.43% |
Hungary | 3.64% | 1.79% | -1.77% | -3.50% |
Bulgaria | 1.98% | 1.00% | -0.97% | -1.91% |
Croatia | 3.21% | 1.64% | -1.68% | -3.40% |
Czech Republic | 3.34% | 1.67% | -1.78% | -3.56% |
Serbia | 3.20% | 1.65% | -1.51% | -3.10% |
Lithuania | 3.40% | 1.70% | -1.60% | -3.20% |
Total | 3.27% | 1.62% | -1.58% | -3.14% |
Exit rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 6.94% | 3.35% | -3.14% | -6.08% |
Poland | 7.90% | 3.80% | -3.50% | -6.70% |
Slovakia | 7.60% | 3.68% | -3.45% | -6.65% |
Hungary | 8.20% | 3.92% | -3.68% | -7.09% |
Bulgaria | 4.66% | 2.36% | -2.11% | -4.00% |
Croatia | 5.85% | 3.02% | -3.21% | -6.66% |
Czech Republic | 6.45% | 3.34% | -3.67% | -7.45% |
Serbia | 5.90% | 2.88% | -2.68% | -5.20% |
Lithuania | 6.70% | 3.30% | -3.00% | -5.80% |
Total | 7.02% | 3.40% | -3.19% | -6.18% |
Rental Income (ERV) | ||||
|---|---|---|---|---|
Country | -10% | -5% | 5% | 10% |
Romania | -10.03% | -5.01% | 5.01% | 10.03% |
Poland | -8.30% | -4.10% | 4.10% | 8.30% |
Slovakia | -8.61% | -4.32% | 4.27% | 8.55% |
Hungary | -8.41% | -4.22% | 4.19% | 8.39% |
Bulgaria | -6.96% | -3.24% | 3.48% | 7.20% |
Croatia | -7.77% | -3.90% | 3.90% | 7.80% |
Czech Republic | -8.24% | -4.12% | 4.17% | 7.95% |
Serbia | -6.80% | -3.37% | 3.43% | 6.87% |
Lithuania | -6.90% | -3.40% | 3.50% | 6.90% |
Total | -8.69% | -4.32% | 4.33% | 8.70% |
The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and associated assumptions are based on experience and other factors believed to be reasonable under the circumstances and enable judgements to be made about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised and future periods if applicable.
\nThe Group\u2019s management discusses with the Audit Committee the development, selection and disclosure of the Group\u2019s material accounting policies, as well as their application.
\nThe estimates and associated assumptions are based on historical experience and various other factors which are considered reasonable under the circumstances. These are used to make judgements about the carrying values of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates.
\nThe estimates and associated assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period when the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both.
\nJudgements that have the most significant effect on the amounts recognised in the Consolidated Financial Statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year are detailed below.
\nInvestment property is stated at its fair value based on valuation reports prepared by international appraisers as at 30 June and 31 December each year. Valuations are based on discounted cash flow projections based on reliable estimates of future cash flows, using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. These are supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition.
\nIn preparing the valuation reports on the Group\u2019s investment property, the external appraisers excluded distressed sales when considering comparable sales prices (used for valuation of plots of land held for development). Management reviewed the appraisers\u2019 assumptions relating to the discounted cash flow models used in the valuations and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period.
\nValuations of the income generating properties are based on cash flow statements, in which the present value of net operating income during a ten-year period and the residual value of the property at the end of the period are calculated.
\nForecasts of net operating income are based on leases signed at the time of the valuation date, the estimated rental values for existing leases when they expire and the estimated achievable rental values of the existing vacancies. The value of long-term vacancies is estimated based on the properties\u2019 location and condition. The valuers\u2019 assessments of non-recoverable expenses are based on their experience of comparable properties and historical costs provided by the Group.
\nThe discount rates used are nominal returns on total capital before tax and vary between 7.90% and 11.95% (2022: 7.30% and 11.95%). The required rates of return are based on assessments of the market\u2019s required returns for similar properties. The discount rate is set individually for each property and is based on the condition and location, the stability of the tenants and lease duration.
\nFurther information relating to sensitivity of material accounting estimates used in the valuation of investment property is presented in Note 8.
\nIn assessing the functional currency of the Group, including the Company and its subsidiaries, management considers factors such as the local currencies of the countries where the Group operates, as well as the currency that mainly influences rental prices for its properties, the currency that mostly influences labour, material and other costs of providing its services, the currency in which funding is accessed by the Group.
\nAlthough the competitive forces and regulations that determine the sales prices of goods and services are present in the countries which use different currencies than EUR, the macroeconomic developments in these countries to some extent is influenced by the eurozone. In addition, in real estate, leases agreements in the countries where the Group operates, as well as the financing of properties are generally denominated in EUR.
\nThe Group predominately concludes its lease agreements in Euro (or, if these contracts are not concluded in Euro, they are indexed to the Euro exchange rate), even if invoiced in local currencies. Agreements for construction and development of investment properties are negotiated and concluded in EUR. Administrative and corporate expenses, such as advisory fees, audit fees, valuation fees, asset management fees are mostly negotiated and contracted in EUR. Salary and other employee related costs, although denominated in local currencies, are benchmarked to EUR.
\nFinancing contracted by the Group, which include bonds, unsecured credit facilities and secured bank loans is denominated and settled in EUR. Interest paid on bank loans is linked to Euribor. Intra-group funding for property development is also denominated and settled in EUR.
\nIn terms of transactions on the real estate market, acquisitions and sales of properties are negotiated and contracted in EUR in all jurisdictions the Group operate, due to the active international investors in those markets. This is also substantiated in external valuation reports, as valuations of properties are prepared in EUR.
\nIn conclusion, management assessed that EUR is the functional currency for the Group, including the Company and its subsidiaries.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
\nPortfolio valuation: sensitivity to changes in the discount rate, exit rate and rental income
\nThe tables below present the change in the valuation of the shopping centre portfolio using different discount rate and exit rate assumptions than those used by the appraisers:
\nDiscount rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 3.37% | 1.67% | -1.63% | -3.23% |
Poland | 3.40% | 1.70% | -1.60% | -3.20% |
Slovakia | 3.56% | 1.73% | -1.71% | -3.43% |
Hungary | 3.64% | 1.79% | -1.77% | -3.50% |
Bulgaria | 1.98% | 1.00% | -0.97% | -1.91% |
Croatia | 3.21% | 1.64% | -1.68% | -3.40% |
Czech Republic | 3.34% | 1.67% | -1.78% | -3.56% |
Serbia | 3.20% | 1.65% | -1.51% | -3.10% |
Lithuania | 3.40% | 1.70% | -1.60% | -3.20% |
Total | 3.27% | 1.62% | -1.58% | -3.14% |
Exit rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 6.94% | 3.35% | -3.14% | -6.08% |
Poland | 7.90% | 3.80% | -3.50% | -6.70% |
Slovakia | 7.60% | 3.68% | -3.45% | -6.65% |
Hungary | 8.20% | 3.92% | -3.68% | -7.09% |
Bulgaria | 4.66% | 2.36% | -2.11% | -4.00% |
Croatia | 5.85% | 3.02% | -3.21% | -6.66% |
Czech Republic | 6.45% | 3.34% | -3.67% | -7.45% |
Serbia | 5.90% | 2.88% | -2.68% | -5.20% |
Lithuania | 6.70% | 3.30% | -3.00% | -5.80% |
Total | 7.02% | 3.40% | -3.19% | -6.18% |
Rental Income (ERV) | ||||
|---|---|---|---|---|
Country | -10% | -5% | 5% | 10% |
Romania | -10.03% | -5.01% | 5.01% | 10.03% |
Poland | -8.30% | -4.10% | 4.10% | 8.30% |
Slovakia | -8.61% | -4.32% | 4.27% | 8.55% |
Hungary | -8.41% | -4.22% | 4.19% | 8.39% |
Bulgaria | -6.96% | -3.24% | 3.48% | 7.20% |
Croatia | -7.77% | -3.90% | 3.90% | 7.80% |
Czech Republic | -8.24% | -4.12% | 4.17% | 7.95% |
Serbia | -6.80% | -3.37% | 3.43% | 6.87% |
Lithuania | -6.90% | -3.40% | 3.50% | 6.90% |
Total | -8.69% | -4.32% | 4.33% | 8.70% |
The material accounting policies set out below have been consistently applied to all periods presented.
\nThe Consolidated Financial Statements are presented in Euro (\u201c\u20ac\u201d, \u201cEUR\u201d) thousands unless otherwise stated, which is NEPI Rockcastle\u2019s functional and presentation currency. The assessment of the functional currency of the Group is presented in Note 4 \u2013 Significant Accounting Estimates and Judgements in Applying Accounting Policies.
\nForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re\u2011measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year\u2011end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
\nThe Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
These Consolidated Financial Statements include the Company and the fully consolidated subsidiaries, as set out below:
\nNo | Subsidiary | Country of | Principal activity | Effective interest 2023 (%) | Effective interest 2022 (%) |
|---|---|---|---|---|---|
1 | ACE3 Sp. z o.o. | Poland | Property-owning | 100 | 100 |
2 | Arena Center Zagreb d.o.o. | Croatia | Property-owning | 100 | 100 |
3 | AUPARK Kosice SC, s.r.o. | Slovakia | Services | 100 | 100 |
4 | AUPARK Kosice, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
5 | AUPARK Piestany SC, s.r.o. | Slovakia | Services | 100 | 100 |
6 | AUPARK Piestany, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
7 | AUPARK Tower Kosice, s.r.o. | Slovakia | Property-owning | 100 | 100 |
8 | AUPARK \u017dilina SC a.s. | Slovakia | Services | 100 | 100 |
9 | AUPARK \u017dilina, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
10 | Aurora Mall Buzau SRL | Romania | Property-owning | 100 | 100 |
11 | Bia\u0142ystok Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
12 | Bonarka City Center Sp. z o.o. | Poland | Property-owning | 100 | 100 |
13 | Braila Promenada Mall SRL | Romania | Property-owning | 100 | 100 |
14 | Brasov Shopping City SRL | Romania | Property-owning | 100 | 100 |
15 | Bulfeld EOOD | Bulgaria | Property-owning | 100 | 100 |
16 | CEE Property Bulgaria EOOD | Bulgaria | Property-owning | 100 | 100 |
17 | CHP 1 Sp. z o.o. | Poland | Services | 100 | 100 |
18 | City Park Constanta SRL | Romania | Property-owning | 100 | 100 |
19 | Constanta Shopping City SRL | Romania | Property-owning | 100 | 100 |
20 | Copernicus Property Sp. z o.o. (former Atrium Copernicus Sp. Zo.o) | Poland | Property-owning | 100 | 100 |
21 | Deva Shopping City SRL | Romania | Property-owning | 100 | 100 |
22 | ECP Security Holdings Limited (wound up in 2023) | Isle of Man | Holding | - | 100 |
23 | Energit Sp. z o.o. | Poland | Services | 100 | 100 |
24 | E-Power Supply d.o.o. Beograd | Serbia | Services | 100 | 100 |
25 | E-power supply EOOD | Bulgaria | Services | 100 | 100 |
26 | E-power supply management d.o.o. | Croatia | Services | 100 | 100 |
27 | E-Power Supply s.r.o. | Slovakia | Services | 100 | 100 |
28 | Expo Real Estate Project SRL | Romania | Services | 100 | 100 |
29 | Festival Shopping Center SRL | Romania | Property-owning | 100 | 100 |
30 | Floreasca Center SRL | Romania | Holding | 100 | 100 |
31 | FORUM Usti s.r.o. | Czech Republic | Property-owning | 100 | 100 |
32 | Galati Shopping City SRL | Romania | Property-owning | 100 | 100 |
33 | General Building Management SRL | Romania | Property-owning | 100 | 100 |
34 | General Investment SRL | Romania | Property-owning | 100 | 100 |
35 | Gontar Sp. z o.o. | Poland | Property-owning | 100 | 100 |
36 | Forum Gdansk Property Sp. zo.o. | Poland | Property-owning | 100 | 100 |
37 | HANSA Immobilien EOOD | Bulgaria | Property-owning | 100 | 100 |
38 | INLOGIS VI s.r.o. (sold in 2023) | Slovakia | Property-owning | - | 100 |
39 | Iris Titan Shopping Center SRL | Romania | Property-owning | 100 | 100 |
40 | Karolinka Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
41 | Liberec Property s.r.o. | Czech Republic | Property-owning | 100 | 100 |
42 | Mammut Zrt | Hungary | Property-owning | 100 | 100 |
43 | Mammut Management Kft | Hungary | Services | 100 | 100 |
44 | Mammut Real Estate Kft | Hungary | Property-owning | 100 | 100 |
45 | Marapi Sp. z o.o. | Poland | Property-owning | 100 | 100 |
46 | Marketing Advisers SRL (merged with Nepi Investment Management in 2023) | Romania | Services | - | 100 |
47 | Mega Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
48 | Milvus Sp. z o.o. | Poland | Property-owning | 100 | 100 |
49 | Mlyny a.s. | Slovakia | Property-owning | 100 | 100 |
50 | Monarda Sp. z o.o. | Poland | Property-owning | 100 | 100 |
51 | NE Property B.V. | Netherlands | Holding | 100 | 100 |
52 | NEPI Bucharest One SRL | Romania | Property-owning | 100 | 100 |
53 | NEPI Bucharest Two SRL | Romania | Property-owning | 100 | 100 |
54 | NEPI Croatia Management d.o.o. | Croatia | Services | 100 | 100 |
55 | NEPI Czech Management s.r.o. | Czech Republic | Services | 100 | 100 |
56 | Nepi Four Real Estate Solutions SRL | Romania | Holding | 100 | 100 |
57 | NEPI Investment Management SRL | Romania | Services | 100 | 100 |
58 | NEPI Project Four EOOD | Bulgaria | Property-owning | 100 | 100 |
59 | NEPI Project One EOOD | Bulgaria | Property-owning | 100 | 100 |
60 | NEPI Project Three EOOD | Bulgaria | Services | 100 | 100 |
61 | NEPI Project Two EOOD | Bulgaria | Holding | 100 | 100 |
62 | NEPI Real Estate Development d.o.o. | Serbia | Services | 100 | 100 |
63 | NEPI Real Estate Project One d.o.o. | Serbia | Property-owning | 100 | 100 |
64 | NEPI Rockcastle Hungary Kft. | Hungary | Services | 100 | 100 |
65 | NEPI Rockcastle Lithuania UAB | Lithuania | Services | 100 | 100 |
66 | Nepi Seventeen Land Development SRL | Romania | Services | 100 | 100 |
67 | NEPI Six Development SRL | Romania | Services | 100 | 100 |
68 | Nepi Sixteen Real Estate Investment SRL | Romania | Holding | 100 | 100 |
69 | Nepi Slovak Centres One a.s. | Slovakia | Services | 100 | 100 |
70 | NEPI Slovakia Management s.r.o. | Slovakia | Services | 100 | 100 |
71 | NEPI Ten Development Solutions SRL | Romania | Property-owning | 100 | 100 |
72 | Nepi Twenty Real Estate Development SRL | Romania | Services | 100 | 100 |
73 | Nepi Twenty-One Investment Estate SRL | Romania | Services | 100 | 100 |
74 | Nepi Twenty-Three Investment Solutions SRL | Romania | Property-owning | 100 | 100 |
75 | NEPIOM Ltd | Malta | Holding | 100 | 100 |
76 | New Energy Management SRL | Romania | Services | 100 | 100 |
77 | Nobilia Sp. z o.o. | Poland | Services | 100 | 100 |
78 | NRE Sibiu Shopping City SRL | Romania | Property-owning | 100 | 100 |
79 | Olsztyn Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
80 | Otopeni Warehouse and Logistics SRL | Romania | Property-owning | 100 | 100 |
81 | Piotrk\u00f3w Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
82 | Platan Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
83 | Ploiesti Shopping City SRL | Romania | Property-owning | 100 | 100 |
84 | Pogoria Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
85 | Promenada Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
86 | Ramnicu Valcea Shopping City SRL | Romania | Property-owning | 100 | 100 |
87 | Real Estate Asset Management SRL | Romania | Services | 100 | 100 |
88 | Retail Park Pitesti SRL | Romania | Property-owning | 100 | 100 |
89 | Rockcastle Europe Limited | Mauritius | Holding | 100 | 100 |
90 | Rockcastle Global Real Estate Holdings B.V. (merged with NE Property B.V. in 2023) | Netherlands | Holding | - | 100 |
91 | Rockcastle Poland Sp. z o.o. | Poland | Services | 100 | 100 |
92 | Satu Mare Shopping City SRL | Romania | Property-owning | 100 | 100 |
93 | SCP s.r.o. | Slovakia | Property-owning | 100 | 100 |
94 | Serenada Property Sp. z o.o. (wound up in 2023) | Poland | Services | - | 100 |
95 | Severin Shopping Center SRL | Romania | Property-owning | 100 | 100 |
96 | Shopping City Piatra Neamt SRL | Romania | Property-owning | 100 | 100 |
97 | Sibiu Shopping City 2 SRL | Romania | Property-owning | 100 | 100 |
98 | Shopping City Timisoara SRL | Romania | Property-owning | 100 | 100 |
99 | ShoppingSpot sp. z o.o. | Polonia | Services | 100 | 100 |
100 | Sofia Commercial Centre EOOD | Bulgaria | Services | 100 | 100 |
101 | Stichting NEPI Rockcastle Incentive Plan Foundation. | Poland | Services | 100 | - |
102 | Symmetry Arena Kft | Hungary | Property-owning | 100 | 100 |
103 | Targu Jiu Development SRL | Romania | Property-owning | 100 | 100 |
104 | Targu Mures Shopping City SRL | Romania | Property-owning | 100 | 100 |
105 | Tummam Kft | Hungary | Property-owning | 100 | 100 |
106 | U\u017edaroji akcin\u0117 bendrov\u0117 Ozantis | Lithuania | Property-owning | 100 | 100 |
107 | Vulcan Residential Park SRL | Romania | Property-owning | 100 | 100 |
108 | Vulcan Value Centre SRL | Romania | Property-owning | 100 | 100 |
109 | Zielona G\u00f3ra Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
Investment property is held to earn rental income, capital appreciation or both.
\nThe cost of investment property acquired by any other means than a business combination consists of the purchase price and directly attributable expenditure.
\nSubsequent expenditure relating to investment property is capitalised when future economic benefits from the use of the asset are probable and the cost of the item can be measured reliably. All other subsequent expenditure is recognised as an expense during the period it is incurred.
\nAfter initial recognition, investment property in use is measured at fair value. Fair value is determined semi-annually by external, independent professional valuers, with appropriate and recognised qualifications and recent experience in the location and category of property being valued. Valuations are based on the income method, respectively, the applied method used for all investment property in use is discounted cash flow (\u201cDCF\u201d).
\nGains or losses arising from changes in the fair values are included in the Statement of comprehensive income for the period during which they arise. Unrealised gains or losses, net of deferred tax, are non-distributable.
\nLease incentives, such as rent-free periods, discounts during the lease or payment of fit-out works for the benefit of the tenants, are part of value of the investment property and are straight-lined over the lease term. The lease term corresponds to the contractual duration for the majority of the leases, except for the anchor tenants, for which the lease duration is assessed by the Group based on past experience and taking into account factors such as: GLA of the property where the anchor tenant is located, catchment area, dominance/competition in the catchment area or purchasing power.
\nProperty that is being constructed or developed for future use as investment property is classified as investment property under development and carried at cost until construction or development is complete, or its fair value can be reliably determined.
\nThe land on which investment property is constructed or developed is carried at fair value, which is determined semi-annually by external, independent professional valuers, with appropriate and recognised qualifications and recent experience in the location and category of property being valued. Valuations are performed using the market comparable approach or residual approach.
\nGains or losses arising from changes in the fair values are included in the Statement of comprehensive income during the period when they arise. Unrealised gains or losses, net of deferred tax, are non-distributable.
\nAn investment property or a group of assets including an investment property (disposal group) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For this to be the case:
the assets must be available for immediate sale in their present condition;
the Group must be committed to sell;
there must be a plan to locate a buyer; and
it is highly probable that a sale will be completed within one year from the date of classification.\u00a0
On re-classification as held for sale, investment property that is measured at fair value continues to be measured in this way.
\nAn investment property or disposal group classified as held for sale is presented separately in the Statement of financial position as assets or liabilities classified as held for sale.
\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
The classification and subsequent measurement of debt instruments financial assets depends on: (i) the Group\u2019s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.
\nFor financial assets measured at fair value through profit or loss (\u201cFVTPL\u201d), gains and losses are recorded in profit or loss.
\nAll purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (\u201cregular way\u201d purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
\nAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price.
\nSubsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset: assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (\u201cSPPI\u201d) are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the Statement of comprehensive income. Financial assets measured at amortised cost (\u201cAC\u201d) comprise cash and cash equivalents, loans to participants in the Share Purchase Scheme, long term receivables and trade and other receivables (excluding prepaid expenses).
\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nFinancial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
\nFinancial assets are written-off, in whole or in part, when the Group has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is no reasonable expectation of recovery include, among others, insolvency or significant financial difficulties of the tenant, default on payment terms and vacation or abandonment of the leased premises. Impaired trade and other receivables are derecognised when all reasonable efforts to collect the amounts outstanding have failed and they are assessed as uncollectable.
\nThe Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination.
\nIf the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a significant increase in credit risk has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
\nIn a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assess whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate and recognises a modification gain or loss in profit or loss.
\nSpecific valuation techniques used to value financial assets include:
The use of quoted market prices or dealer quotes for similar instruments (for financial assets/liabilities at fair value through profit or loss);
Discounted cash flow analysis (for the remaining financial instruments).
Financial liabilities are initially recognised at fair value and classified and subsequently measured at amortised cost, except for financial liabilities at FVTPL: this classification is applied to interest rate derivatives and other financial liabilities designated as such at initial recognition.
\nBorrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
\nCash and cash equivalents include cash balances, cash deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest (SPPI), and (ii) they are not designated at FVTPL.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
\nProperty 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 (\u201cNRV\u201d). Principally, this is residential property that the Group develops and intends to sell on completion of development.
\nThe commencement of development with a plan or a prior agreement to sell represents a change in use and accordingly the project is transferred from investment property to inventory property.
\nCosts incurred in inventory property include:
freehold and leasehold rights for land;
amounts paid to contractors for development; and
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 business, based on market prices at the reporting date, less estimated costs of completion and the estimated costs necessary to make the sale.
\nWhen an inventory property is sold, the carrying amount of the property is recognised as an expense in the period in which the related revenue is recognised. The carrying amount of inventory property recognised 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.
\nOrdinary shares are classified as equity. Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
\nThe consideration paid, including any directly attributable incremental costs (net of income taxes for the purchases of the Company\u2019s equity instruments by any of the Group\u2019s subsidiaries, as a result of a share buy-back or for a share-based incentive plan) is presented within \u201cOther reserves\u201d, until the shares are cancelled or reissued. Where such ordinary shares are cancelled, their nominal value is debited to Share capital, with the corresponding difference up to their purchase price (including any attributable incremental cost, net of taxes) debited from Share premium. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Group. Usually, shares are purchased for the debt-free Long-Term Share Incentive Plan (Note 3.15 (b)).
\nTo date, NEPI Rockcastle has initiated two types of incentive programs that offered share-based payments in exchange for services provided to it by its directors and employees (equity-settled transactions), which are detailed below.
\nThis program was put in place before the 2017 merger of the former groups New Europe Property Investments plc (\u201cNEPI\u201d) and Rockcastle Global Real Estate Company Ltd (\u201cRockcastle\u201d). Under this program, participants were granted loans to acquire shares in the Company at fair value at the grant date. These loans were classified as \u201cloans to participants in the incentive plan\u201d and included in Other long-term assets (Note 10). The loans are carried at amortised cost and the accrued interest is recognised as finance income in the Statement of Comprehensive Income. The costs under this program are nil.
\nThis program was put in place after the 2017 merger of the former groups NEPI and Rockcastle. Under this incentive plan, shares may be issued by the Group to executive directors and other key personnel for no cash consideration. Awards under this plan are at the discretion of the Board of Directors and are based on the performance of the Group and the employees. The costs related to the LTSIP are measured based on the fair value of the shares at the grant date and are recognized over the vesting period.
\nThe costs are presented as part of the Administrative expenses in the Statement of comprehensive income and within Other reserves in the Statement of changes in equity.
\nThe balance on the Statement of comprehensive income is transferred to accumulated profit at the end of each financial period. Distributions paid in cash are deducted from accumulated profit. Distributions for which shareholders elected to receive a return of capital are accounted for as an issue of share capital with a corresponding deduction from the share premium account.
\nRevenue is recognised at the fair value of the consideration received or receivable. Revenue comprises rental and related income and recovery of expenses, excluding VAT.
\nRental income receivable from operating leases is recognised on a straight-line basis over the duration of the lease, except for variable lease payments which are recognized when they arise.
\nContractually agreed and signed concessions granted to, and obtained from, tenants are treated according to IFRS 16 \u201cLeases\u201d. IFRS 16 defines \u201clease modification\u201d as a change in scope, or consideration, of the lease, not part of the original terms and conditions, such as rent discounts, lease extensions, increase in variable rent (overage/turnover), introduction of break options, etc. Lease modifications are recognised prospectively over the new lease term and accounted for by the Group from the date the modification is contractually agreed and signed by both parties. Agreed lease modifications are recognised as lease incentives from the date the modification was signed. Such modifications are straight-lined over the new lease term and recognised in the Consolidated Statement of comprehensive income as a reduction of Gross rental income.
\nRevenue from service and property management charges is recognised in the accounting period in which control of the services are passed to the customer, which is when the service is rendered. For certain service contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services.
\nAs specified in the lease agreements, the Group has the primary responsibility for providing services to tenants (electricity, water and gas utilities, interior and exterior cleaning, security, maintenance, repairs, etc). 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.
\nThe Group negotiates directly with the suppliers all contracts for services provided to tenants. These contracts are concluded between the Group subsidiaries which own the properties and the direct supplier. As the Group sometimes uses the same providers for services across most of its portfolio, it can negotiate better prices through the economies of scale. The Group is considered principal in these transactions, in terms of the IFRS 15 requirements.
\nThe Group negotiates and pays all expenses incurred by the tenants and then re-invoices these costs to them as defined in the contractual clauses included in the lease agreements. A flat fee is charged monthly during the year. This fee is estimated based on the previous year\u2019s actual costs, with an annual service charge reconciliation performed based on current year\u2019s actual costs incurred by the Group. For contracts terminated during the year, the Group estimates the service charge to be collected based on the current budget and last year\u2019s actual costs.
\nRevenue 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.
\nThe 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. The Group\u2019s sales contracts qualify as unconditional exchange of contracts, which occurs when legal title transfers to the customer. Payments are usually received on the date when contracts are signed or with several days delay.
\nProperty operating expenses and administrative expenses are recognised on an accrual basis.
\nA distribution is recorded as a liability and deducted from equity in the period in which it is declared and approved. Any distribution declared after the reporting period and before the financial statements are authorised for issue is disclosed in Note 16.
\nTaxation on the profit or loss for the year comprises current and deferred tax. Current income tax and liabilities are measured at the amount expected to be recovered from, or paid to, taxation authorities. 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.
\nDeferred tax is determined using the liability method and is based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
\nThe following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries that are unlikely to reverse in the foreseeable future.
\nA deferred tax asset is recognised based on the assumption that it is probable that future taxable profits will be available against which it can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
\nThe current tax expense incurred by the Group reflects tax accrued in the subsidiaries of the Group located in Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Malta, Poland, Romania, Serbia, Slovakia, and the Netherlands.
\nIn accordance with IFRS 8, operating segments are identified on the basis of the internal reporting used by management when evaluating performance and allocating resources.
\nThe Group has a homogeneous asset base (real estate properties), with similar economic characteristics, which provide similar nature of services, i.e. leasing of its properties, that generate rental income.
\nThe Group\u2019s Chief Operating Decision Makers (CODM) are the executive directors, and they take decisions based on detailed reports. These are prepared regularly and are presented to the Board of Directors, which approves the results and gives guidance on the subsequent strategy to be undertaken.
\nIn particular, the financial information in respect of investment property is provided to the Board of Directors focuses primarily on net rentals (including rental income, service charge income and property operating expenses) and valuation gains and losses.
\nThe operating segments for management purposes are the individual properties. For reporting purposes, the Group aggregates the retail properties (shopping malls and retail centres) on country level and presents the financial information on the following geographic reportable segments: Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Poland, Romania, Serbia, Slovakia.
\nIn addition, the Group\u2019s CODM closely follow changes in distributable earnings to its shareholders as a measure of profitability and as a result of successful implementation of the Group\u2019s strategy. Distributable earnings per share is calculated in terms of the SA REIT Association\u2019s Best Practice Recommendations Second Edition.
\nThe Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set of activities and assets, including property, is acquired. More specifically the following criteria, which indicate an acquisition of a business, are considered: the number of properties acquired, the extent to which strategic management processes and operation processes are acquired and the complexity of the processes acquired. In line with amended IFRS 3 since 1 January 2020 the Group may also apply optional concentration test.
\nBusiness combinations are accounted for using the acquisition method. When the acquisition of subsidiaries does not represent a business combination, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised.
\nTransactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
\nThe Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets for all leases, except for short-term leases and leases of low-value assets. The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
\nRight-of-use assets are measured at cost, adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised and lease payments made at or before the commencement date.
\nLease liabilities are measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments. The present value of lease payments is recognised by discounting the contractual lease payments using the interest rate implicit in the lease, representing the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-408": { "value": "\nThe Consolidated Financial Statements are presented in Euro (\u201c\u20ac\u201d, \u201cEUR\u201d) thousands unless otherwise stated, which is NEPI Rockcastle\u2019s functional and presentation currency. The assessment of the functional currency of the Group is presented in Note 4 \u2013 Significant Accounting Estimates and Judgements in Applying Accounting Policies.
\nForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re\u2011measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year\u2011end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-410": { "value": "\nForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re\u2011measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year\u2011end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-411": { "value": "\nThe Consolidated Financial Statements are presented in Euro (\u201c\u20ac\u201d, \u201cEUR\u201d) thousands unless otherwise stated, which is NEPI Rockcastle\u2019s functional and presentation currency. The assessment of the functional currency of the Group is presented in Note 4 \u2013 Significant Accounting Estimates and Judgements in Applying Accounting Policies.
\nIn assessing the functional currency of the Group, including the Company and its subsidiaries, management considers factors such as the local currencies of the countries where the Group operates, as well as the currency that mainly influences rental prices for its properties, the currency that mostly influences labour, material and other costs of providing its services, the currency in which funding is accessed by the Group.
\nAlthough the competitive forces and regulations that determine the sales prices of goods and services are present in the countries which use different currencies than EUR, the macroeconomic developments in these countries to some extent is influenced by the eurozone. In addition, in real estate, leases agreements in the countries where the Group operates, as well as the financing of properties are generally denominated in EUR.
\nThe Group predominately concludes its lease agreements in Euro (or, if these contracts are not concluded in Euro, they are indexed to the Euro exchange rate), even if invoiced in local currencies. Agreements for construction and development of investment properties are negotiated and concluded in EUR. Administrative and corporate expenses, such as advisory fees, audit fees, valuation fees, asset management fees are mostly negotiated and contracted in EUR. Salary and other employee related costs, although denominated in local currencies, are benchmarked to EUR.
\nFinancing contracted by the Group, which include bonds, unsecured credit facilities and secured bank loans is denominated and settled in EUR. Interest paid on bank loans is linked to Euribor. Intra-group funding for property development is also denominated and settled in EUR.
\nIn terms of transactions on the real estate market, acquisitions and sales of properties are negotiated and contracted in EUR in all jurisdictions the Group operate, due to the active international investors in those markets. This is also substantiated in external valuation reports, as valuations of properties are prepared in EUR.
\nIn conclusion, management assessed that EUR is the functional currency for the Group, including the Company and its subsidiaries.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-414": { "value": "\nThe Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
These Consolidated Financial Statements include the Company and the fully consolidated subsidiaries, as set out below:
\nNo | Subsidiary | Country of | Principal activity | Effective interest 2023 (%) | Effective interest 2022 (%) |
|---|---|---|---|---|---|
1 | ACE3 Sp. z o.o. | Poland | Property-owning | 100 | 100 |
2 | Arena Center Zagreb d.o.o. | Croatia | Property-owning | 100 | 100 |
3 | AUPARK Kosice SC, s.r.o. | Slovakia | Services | 100 | 100 |
4 | AUPARK Kosice, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
5 | AUPARK Piestany SC, s.r.o. | Slovakia | Services | 100 | 100 |
6 | AUPARK Piestany, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
7 | AUPARK Tower Kosice, s.r.o. | Slovakia | Property-owning | 100 | 100 |
8 | AUPARK \u017dilina SC a.s. | Slovakia | Services | 100 | 100 |
9 | AUPARK \u017dilina, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
10 | Aurora Mall Buzau SRL | Romania | Property-owning | 100 | 100 |
11 | Bia\u0142ystok Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
12 | Bonarka City Center Sp. z o.o. | Poland | Property-owning | 100 | 100 |
13 | Braila Promenada Mall SRL | Romania | Property-owning | 100 | 100 |
14 | Brasov Shopping City SRL | Romania | Property-owning | 100 | 100 |
15 | Bulfeld EOOD | Bulgaria | Property-owning | 100 | 100 |
16 | CEE Property Bulgaria EOOD | Bulgaria | Property-owning | 100 | 100 |
17 | CHP 1 Sp. z o.o. | Poland | Services | 100 | 100 |
18 | City Park Constanta SRL | Romania | Property-owning | 100 | 100 |
19 | Constanta Shopping City SRL | Romania | Property-owning | 100 | 100 |
20 | Copernicus Property Sp. z o.o. (former Atrium Copernicus Sp. Zo.o) | Poland | Property-owning | 100 | 100 |
21 | Deva Shopping City SRL | Romania | Property-owning | 100 | 100 |
22 | ECP Security Holdings Limited (wound up in 2023) | Isle of Man | Holding | - | 100 |
23 | Energit Sp. z o.o. | Poland | Services | 100 | 100 |
24 | E-Power Supply d.o.o. Beograd | Serbia | Services | 100 | 100 |
25 | E-power supply EOOD | Bulgaria | Services | 100 | 100 |
26 | E-power supply management d.o.o. | Croatia | Services | 100 | 100 |
27 | E-Power Supply s.r.o. | Slovakia | Services | 100 | 100 |
28 | Expo Real Estate Project SRL | Romania | Services | 100 | 100 |
29 | Festival Shopping Center SRL | Romania | Property-owning | 100 | 100 |
30 | Floreasca Center SRL | Romania | Holding | 100 | 100 |
31 | FORUM Usti s.r.o. | Czech Republic | Property-owning | 100 | 100 |
32 | Galati Shopping City SRL | Romania | Property-owning | 100 | 100 |
33 | General Building Management SRL | Romania | Property-owning | 100 | 100 |
34 | General Investment SRL | Romania | Property-owning | 100 | 100 |
35 | Gontar Sp. z o.o. | Poland | Property-owning | 100 | 100 |
36 | Forum Gdansk Property Sp. zo.o. | Poland | Property-owning | 100 | 100 |
37 | HANSA Immobilien EOOD | Bulgaria | Property-owning | 100 | 100 |
38 | INLOGIS VI s.r.o. (sold in 2023) | Slovakia | Property-owning | - | 100 |
39 | Iris Titan Shopping Center SRL | Romania | Property-owning | 100 | 100 |
40 | Karolinka Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
41 | Liberec Property s.r.o. | Czech Republic | Property-owning | 100 | 100 |
42 | Mammut Zrt | Hungary | Property-owning | 100 | 100 |
43 | Mammut Management Kft | Hungary | Services | 100 | 100 |
44 | Mammut Real Estate Kft | Hungary | Property-owning | 100 | 100 |
45 | Marapi Sp. z o.o. | Poland | Property-owning | 100 | 100 |
46 | Marketing Advisers SRL (merged with Nepi Investment Management in 2023) | Romania | Services | - | 100 |
47 | Mega Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
48 | Milvus Sp. z o.o. | Poland | Property-owning | 100 | 100 |
49 | Mlyny a.s. | Slovakia | Property-owning | 100 | 100 |
50 | Monarda Sp. z o.o. | Poland | Property-owning | 100 | 100 |
51 | NE Property B.V. | Netherlands | Holding | 100 | 100 |
52 | NEPI Bucharest One SRL | Romania | Property-owning | 100 | 100 |
53 | NEPI Bucharest Two SRL | Romania | Property-owning | 100 | 100 |
54 | NEPI Croatia Management d.o.o. | Croatia | Services | 100 | 100 |
55 | NEPI Czech Management s.r.o. | Czech Republic | Services | 100 | 100 |
56 | Nepi Four Real Estate Solutions SRL | Romania | Holding | 100 | 100 |
57 | NEPI Investment Management SRL | Romania | Services | 100 | 100 |
58 | NEPI Project Four EOOD | Bulgaria | Property-owning | 100 | 100 |
59 | NEPI Project One EOOD | Bulgaria | Property-owning | 100 | 100 |
60 | NEPI Project Three EOOD | Bulgaria | Services | 100 | 100 |
61 | NEPI Project Two EOOD | Bulgaria | Holding | 100 | 100 |
62 | NEPI Real Estate Development d.o.o. | Serbia | Services | 100 | 100 |
63 | NEPI Real Estate Project One d.o.o. | Serbia | Property-owning | 100 | 100 |
64 | NEPI Rockcastle Hungary Kft. | Hungary | Services | 100 | 100 |
65 | NEPI Rockcastle Lithuania UAB | Lithuania | Services | 100 | 100 |
66 | Nepi Seventeen Land Development SRL | Romania | Services | 100 | 100 |
67 | NEPI Six Development SRL | Romania | Services | 100 | 100 |
68 | Nepi Sixteen Real Estate Investment SRL | Romania | Holding | 100 | 100 |
69 | Nepi Slovak Centres One a.s. | Slovakia | Services | 100 | 100 |
70 | NEPI Slovakia Management s.r.o. | Slovakia | Services | 100 | 100 |
71 | NEPI Ten Development Solutions SRL | Romania | Property-owning | 100 | 100 |
72 | Nepi Twenty Real Estate Development SRL | Romania | Services | 100 | 100 |
73 | Nepi Twenty-One Investment Estate SRL | Romania | Services | 100 | 100 |
74 | Nepi Twenty-Three Investment Solutions SRL | Romania | Property-owning | 100 | 100 |
75 | NEPIOM Ltd | Malta | Holding | 100 | 100 |
76 | New Energy Management SRL | Romania | Services | 100 | 100 |
77 | Nobilia Sp. z o.o. | Poland | Services | 100 | 100 |
78 | NRE Sibiu Shopping City SRL | Romania | Property-owning | 100 | 100 |
79 | Olsztyn Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
80 | Otopeni Warehouse and Logistics SRL | Romania | Property-owning | 100 | 100 |
81 | Piotrk\u00f3w Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
82 | Platan Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
83 | Ploiesti Shopping City SRL | Romania | Property-owning | 100 | 100 |
84 | Pogoria Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
85 | Promenada Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
86 | Ramnicu Valcea Shopping City SRL | Romania | Property-owning | 100 | 100 |
87 | Real Estate Asset Management SRL | Romania | Services | 100 | 100 |
88 | Retail Park Pitesti SRL | Romania | Property-owning | 100 | 100 |
89 | Rockcastle Europe Limited | Mauritius | Holding | 100 | 100 |
90 | Rockcastle Global Real Estate Holdings B.V. (merged with NE Property B.V. in 2023) | Netherlands | Holding | - | 100 |
91 | Rockcastle Poland Sp. z o.o. | Poland | Services | 100 | 100 |
92 | Satu Mare Shopping City SRL | Romania | Property-owning | 100 | 100 |
93 | SCP s.r.o. | Slovakia | Property-owning | 100 | 100 |
94 | Serenada Property Sp. z o.o. (wound up in 2023) | Poland | Services | - | 100 |
95 | Severin Shopping Center SRL | Romania | Property-owning | 100 | 100 |
96 | Shopping City Piatra Neamt SRL | Romania | Property-owning | 100 | 100 |
97 | Sibiu Shopping City 2 SRL | Romania | Property-owning | 100 | 100 |
98 | Shopping City Timisoara SRL | Romania | Property-owning | 100 | 100 |
99 | ShoppingSpot sp. z o.o. | Polonia | Services | 100 | 100 |
100 | Sofia Commercial Centre EOOD | Bulgaria | Services | 100 | 100 |
101 | Stichting NEPI Rockcastle Incentive Plan Foundation. | Poland | Services | 100 | - |
102 | Symmetry Arena Kft | Hungary | Property-owning | 100 | 100 |
103 | Targu Jiu Development SRL | Romania | Property-owning | 100 | 100 |
104 | Targu Mures Shopping City SRL | Romania | Property-owning | 100 | 100 |
105 | Tummam Kft | Hungary | Property-owning | 100 | 100 |
106 | U\u017edaroji akcin\u0117 bendrov\u0117 Ozantis | Lithuania | Property-owning | 100 | 100 |
107 | Vulcan Residential Park SRL | Romania | Property-owning | 100 | 100 |
108 | Vulcan Value Centre SRL | Romania | Property-owning | 100 | 100 |
109 | Zielona G\u00f3ra Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
The Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
These Consolidated Financial Statements include the Company and the fully consolidated subsidiaries, as set out below:
\nNo | Subsidiary | Country of | Principal activity | Effective interest 2023 (%) | Effective interest 2022 (%) |
|---|---|---|---|---|---|
1 | ACE3 Sp. z o.o. | Poland | Property-owning | 100 | 100 |
2 | Arena Center Zagreb d.o.o. | Croatia | Property-owning | 100 | 100 |
3 | AUPARK Kosice SC, s.r.o. | Slovakia | Services | 100 | 100 |
4 | AUPARK Kosice, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
5 | AUPARK Piestany SC, s.r.o. | Slovakia | Services | 100 | 100 |
6 | AUPARK Piestany, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
7 | AUPARK Tower Kosice, s.r.o. | Slovakia | Property-owning | 100 | 100 |
8 | AUPARK \u017dilina SC a.s. | Slovakia | Services | 100 | 100 |
9 | AUPARK \u017dilina, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
10 | Aurora Mall Buzau SRL | Romania | Property-owning | 100 | 100 |
11 | Bia\u0142ystok Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
12 | Bonarka City Center Sp. z o.o. | Poland | Property-owning | 100 | 100 |
13 | Braila Promenada Mall SRL | Romania | Property-owning | 100 | 100 |
14 | Brasov Shopping City SRL | Romania | Property-owning | 100 | 100 |
15 | Bulfeld EOOD | Bulgaria | Property-owning | 100 | 100 |
16 | CEE Property Bulgaria EOOD | Bulgaria | Property-owning | 100 | 100 |
17 | CHP 1 Sp. z o.o. | Poland | Services | 100 | 100 |
18 | City Park Constanta SRL | Romania | Property-owning | 100 | 100 |
19 | Constanta Shopping City SRL | Romania | Property-owning | 100 | 100 |
20 | Copernicus Property Sp. z o.o. (former Atrium Copernicus Sp. Zo.o) | Poland | Property-owning | 100 | 100 |
21 | Deva Shopping City SRL | Romania | Property-owning | 100 | 100 |
22 | ECP Security Holdings Limited (wound up in 2023) | Isle of Man | Holding | - | 100 |
23 | Energit Sp. z o.o. | Poland | Services | 100 | 100 |
24 | E-Power Supply d.o.o. Beograd | Serbia | Services | 100 | 100 |
25 | E-power supply EOOD | Bulgaria | Services | 100 | 100 |
26 | E-power supply management d.o.o. | Croatia | Services | 100 | 100 |
27 | E-Power Supply s.r.o. | Slovakia | Services | 100 | 100 |
28 | Expo Real Estate Project SRL | Romania | Services | 100 | 100 |
29 | Festival Shopping Center SRL | Romania | Property-owning | 100 | 100 |
30 | Floreasca Center SRL | Romania | Holding | 100 | 100 |
31 | FORUM Usti s.r.o. | Czech Republic | Property-owning | 100 | 100 |
32 | Galati Shopping City SRL | Romania | Property-owning | 100 | 100 |
33 | General Building Management SRL | Romania | Property-owning | 100 | 100 |
34 | General Investment SRL | Romania | Property-owning | 100 | 100 |
35 | Gontar Sp. z o.o. | Poland | Property-owning | 100 | 100 |
36 | Forum Gdansk Property Sp. zo.o. | Poland | Property-owning | 100 | 100 |
37 | HANSA Immobilien EOOD | Bulgaria | Property-owning | 100 | 100 |
38 | INLOGIS VI s.r.o. (sold in 2023) | Slovakia | Property-owning | - | 100 |
39 | Iris Titan Shopping Center SRL | Romania | Property-owning | 100 | 100 |
40 | Karolinka Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
41 | Liberec Property s.r.o. | Czech Republic | Property-owning | 100 | 100 |
42 | Mammut Zrt | Hungary | Property-owning | 100 | 100 |
43 | Mammut Management Kft | Hungary | Services | 100 | 100 |
44 | Mammut Real Estate Kft | Hungary | Property-owning | 100 | 100 |
45 | Marapi Sp. z o.o. | Poland | Property-owning | 100 | 100 |
46 | Marketing Advisers SRL (merged with Nepi Investment Management in 2023) | Romania | Services | - | 100 |
47 | Mega Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
48 | Milvus Sp. z o.o. | Poland | Property-owning | 100 | 100 |
49 | Mlyny a.s. | Slovakia | Property-owning | 100 | 100 |
50 | Monarda Sp. z o.o. | Poland | Property-owning | 100 | 100 |
51 | NE Property B.V. | Netherlands | Holding | 100 | 100 |
52 | NEPI Bucharest One SRL | Romania | Property-owning | 100 | 100 |
53 | NEPI Bucharest Two SRL | Romania | Property-owning | 100 | 100 |
54 | NEPI Croatia Management d.o.o. | Croatia | Services | 100 | 100 |
55 | NEPI Czech Management s.r.o. | Czech Republic | Services | 100 | 100 |
56 | Nepi Four Real Estate Solutions SRL | Romania | Holding | 100 | 100 |
57 | NEPI Investment Management SRL | Romania | Services | 100 | 100 |
58 | NEPI Project Four EOOD | Bulgaria | Property-owning | 100 | 100 |
59 | NEPI Project One EOOD | Bulgaria | Property-owning | 100 | 100 |
60 | NEPI Project Three EOOD | Bulgaria | Services | 100 | 100 |
61 | NEPI Project Two EOOD | Bulgaria | Holding | 100 | 100 |
62 | NEPI Real Estate Development d.o.o. | Serbia | Services | 100 | 100 |
63 | NEPI Real Estate Project One d.o.o. | Serbia | Property-owning | 100 | 100 |
64 | NEPI Rockcastle Hungary Kft. | Hungary | Services | 100 | 100 |
65 | NEPI Rockcastle Lithuania UAB | Lithuania | Services | 100 | 100 |
66 | Nepi Seventeen Land Development SRL | Romania | Services | 100 | 100 |
67 | NEPI Six Development SRL | Romania | Services | 100 | 100 |
68 | Nepi Sixteen Real Estate Investment SRL | Romania | Holding | 100 | 100 |
69 | Nepi Slovak Centres One a.s. | Slovakia | Services | 100 | 100 |
70 | NEPI Slovakia Management s.r.o. | Slovakia | Services | 100 | 100 |
71 | NEPI Ten Development Solutions SRL | Romania | Property-owning | 100 | 100 |
72 | Nepi Twenty Real Estate Development SRL | Romania | Services | 100 | 100 |
73 | Nepi Twenty-One Investment Estate SRL | Romania | Services | 100 | 100 |
74 | Nepi Twenty-Three Investment Solutions SRL | Romania | Property-owning | 100 | 100 |
75 | NEPIOM Ltd | Malta | Holding | 100 | 100 |
76 | New Energy Management SRL | Romania | Services | 100 | 100 |
77 | Nobilia Sp. z o.o. | Poland | Services | 100 | 100 |
78 | NRE Sibiu Shopping City SRL | Romania | Property-owning | 100 | 100 |
79 | Olsztyn Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
80 | Otopeni Warehouse and Logistics SRL | Romania | Property-owning | 100 | 100 |
81 | Piotrk\u00f3w Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
82 | Platan Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
83 | Ploiesti Shopping City SRL | Romania | Property-owning | 100 | 100 |
84 | Pogoria Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
85 | Promenada Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
86 | Ramnicu Valcea Shopping City SRL | Romania | Property-owning | 100 | 100 |
87 | Real Estate Asset Management SRL | Romania | Services | 100 | 100 |
88 | Retail Park Pitesti SRL | Romania | Property-owning | 100 | 100 |
89 | Rockcastle Europe Limited | Mauritius | Holding | 100 | 100 |
90 | Rockcastle Global Real Estate Holdings B.V. (merged with NE Property B.V. in 2023) | Netherlands | Holding | - | 100 |
91 | Rockcastle Poland Sp. z o.o. | Poland | Services | 100 | 100 |
92 | Satu Mare Shopping City SRL | Romania | Property-owning | 100 | 100 |
93 | SCP s.r.o. | Slovakia | Property-owning | 100 | 100 |
94 | Serenada Property Sp. z o.o. (wound up in 2023) | Poland | Services | - | 100 |
95 | Severin Shopping Center SRL | Romania | Property-owning | 100 | 100 |
96 | Shopping City Piatra Neamt SRL | Romania | Property-owning | 100 | 100 |
97 | Sibiu Shopping City 2 SRL | Romania | Property-owning | 100 | 100 |
98 | Shopping City Timisoara SRL | Romania | Property-owning | 100 | 100 |
99 | ShoppingSpot sp. z o.o. | Polonia | Services | 100 | 100 |
100 | Sofia Commercial Centre EOOD | Bulgaria | Services | 100 | 100 |
101 | Stichting NEPI Rockcastle Incentive Plan Foundation. | Poland | Services | 100 | - |
102 | Symmetry Arena Kft | Hungary | Property-owning | 100 | 100 |
103 | Targu Jiu Development SRL | Romania | Property-owning | 100 | 100 |
104 | Targu Mures Shopping City SRL | Romania | Property-owning | 100 | 100 |
105 | Tummam Kft | Hungary | Property-owning | 100 | 100 |
106 | U\u017edaroji akcin\u0117 bendrov\u0117 Ozantis | Lithuania | Property-owning | 100 | 100 |
107 | Vulcan Residential Park SRL | Romania | Property-owning | 100 | 100 |
108 | Vulcan Value Centre SRL | Romania | Property-owning | 100 | 100 |
109 | Zielona G\u00f3ra Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
Transactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
\nAcquisition of non-controlling interest
In March 2022, the Group acquired the remaining non-controlling stakes in ACE3 Sp.zo.o. and Monarda Sp. z o.o. of 15% in 10% respectively, for a cash consideration of \u20ac9.4 million, thus obtaining 100% control in the two Polish entities.
Ploiesti Shopping City
On 1 September 2022, the Group completed the acquisition of joint-venture partner\u2019s remaining 50% stake in Ploiesti Shopping City SRL, the owner of Ploiesti Shopping City mall. The acquisition was recognized as a property asset acquisition as the Company does not represent a business as defined by IFRS 3.
The Group followed the \u2018accumulated cost approach\u2019 for recognition of the previously held interest, whereby the carrying amount of the joint venture is considered the relevant cost in accounting for the acquisition of the subsidiary. Accordingly, no gain or loss was recorded on the acquisition of the subsidiary. The deemed cost of the previously held interest was \u20ac50,297 thousand. The consideration for the acquisition was allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax was recognised.
\nThe carrying amount of the identifiable assets and liabilities at the date of acquisition was as follows:
\nin \u20ac\u00a0thousand | \u00a0 |
|---|---|
Investment property in use | 104,287 |
Investment property under development | 1,700 |
Trade and other receivables | 3,595 |
Cash and cash equivalents | 16,747 |
Identifiable acquired assets | 126,329 |
Current financial debt | (18,432) |
Other long-term liabilities | (552) |
Trade and other payables | (1,746) |
Identifiable acquired liabilities | (20,730) |
Net identifiable assets | 105,599 |
The net cash outflow connected with the acquisition (cash outflow adjusted for working capital items, less cash and cash equivalents acquired) amounted to \u20ac36,980 thousand for the purchase of the remaining 50% stake in the property. No acquisition costs were incurred.
\nCopernicus Shopping Centre
On 19 December 2022, the Group acquired Atrium Copernicus Sp. Zo.o., the legal entity that owns Copernicus Shopping Centre in Torun, Poland. The acquisition was recognised as a property asset acquisition as the Company does not represent a business as defined by IFRS 3.
The carrying value of the identifiable assets and liabilities at the date of acquisition was as follows:
\nin \u20ac\u00a0thousand | \u00a0 |
|---|---|
Investment property in use | 122,841 |
Investment property under development | 1,030 |
Trade and other receivables | 853 |
Cash and cash equivalents | 1,689 |
Identifiable acquired assets | 126,413 |
Other long-term liabilities | (482) |
Trade and other payables | (1,227) |
Identifiable acquired liabilities | (1,709) |
Net identifiable assets | 124,704 |
Net identifiable assets of the subsidiary acquired at the date of acquisition amounted to \u20ac124,704 thousand. The net cash outflow connected with the acquisition (cash outflow adjusted for working capital items, less cash and cash equivalents acquired) amounted to \u20ac121,645 thousand, the remaining difference to the net asset value being an accrued payable adjustment to the purchase price paid. Acquisition costs of \u20ac1,434 thousand were capitalised on the value of investment property.
\nThe investment property reflected above does not include the right-of-use assets and related lease liability, of \u20ac3,843 thousand, connected to the land under concession of Copernicus Shopping Centre.
\nForum Gdansk Shopping Center
On 19 December 2022, the Group acquired Forum Gdansk Sp. Zo.o., the legal entity that owns Forum Gdansk Shopping Centre in Poland. The acquisition was recognized as a property asset acquisition as the Company does not represent a business as defined by IFRS 3.
The carrying amount of the identifiable assets and liabilities at the date of acquisition was as follows:
\nin \u20ac\u00a0thousand | \u00a0 |
|---|---|
Investment property | 243,646 |
Trade and other receivables | 2,653 |
Cash and cash equivalents | 7,815 |
Identifiable acquired assets | 254,114 |
Other long-term liabilities | (1,176) |
Trade and other payables | (3,308) |
Identifiable acquired liabilities | (4,484) |
Net identifiable assets | 249,630 |
Net identifiable assets of the subsidiary acquired at the date of acquisition amounted to \u20ac249,630 thousand. The net cash outflow connected with the acquisition (cash outflow adjusted for working capital items, less cash and cash equivalents acquired) amounted to \u20ac195,101 thousand. In addition to the cash paid, the Group obtained vendor financing on the transaction in the form of a three-year unsecured loan from the seller, for part of the purchase price amounting to \u20ac50,000 thousand. Accrued receivable from the seller of \u20ac3,286 thousand was recognised as adjustment to the purchase price paid. Acquisition costs of \u20ac1,995 thousand were capitalised on the value of investment property.
\nThe Group had an investment of 50% together with its joint venture partner, Carrefour Romania S.A., in Ploiesti Shopping City, a shopping centre located in Ploiesti, Romania. In September 2022 the Group completed the acquisition of the remaining 50% stake in Ploiesti Shopping City to become the sole owner of the property.
\nThe \u201cShare of profit of joint ventures\u201d line on the Consolidated Statement of comprehensive income represents 50% of the line \u201cProfit for the year attributable to equity holders\u201d, as presented below for the period in 2022 where Ploiesti Shopping City was a joint venture (up to 1 September 2022).
\nStatement of comprehensive income
\nin \u20ac\u00a0thousand | Ploiesti Shopping City 31 Dec 2022 |
|---|---|
Revenue from rent and recoveries | 8,648 |
Property operating expenses | (2,689) |
Partial forgiveness of receivables (Covid-19 forgiveness) | 48 |
Administrative expenses | (176) |
Fair value adjustment investment property | 3,264 |
Foreign exchange loss | (122) |
Profit before net finance costs and other items | 8,973 |
Finance income | 85 |
Finance costs | (2,452) |
Bank charges, commissions, and fees | 6 |
Fair value adjustments of derivatives and losses on | 814 |
Profit before tax | 7,426 |
Income tax expense | (866) |
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS | 6,560 |
Share of profit of joint venture (50% of the Profit of the | 3,280 |
The Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
These Consolidated Financial Statements include the Company and the fully consolidated subsidiaries, as set out below:
\nNo | Subsidiary | Country of | Principal activity | Effective interest 2023 (%) | Effective interest 2022 (%) |
|---|---|---|---|---|---|
1 | ACE3 Sp. z o.o. | Poland | Property-owning | 100 | 100 |
2 | Arena Center Zagreb d.o.o. | Croatia | Property-owning | 100 | 100 |
3 | AUPARK Kosice SC, s.r.o. | Slovakia | Services | 100 | 100 |
4 | AUPARK Kosice, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
5 | AUPARK Piestany SC, s.r.o. | Slovakia | Services | 100 | 100 |
6 | AUPARK Piestany, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
7 | AUPARK Tower Kosice, s.r.o. | Slovakia | Property-owning | 100 | 100 |
8 | AUPARK \u017dilina SC a.s. | Slovakia | Services | 100 | 100 |
9 | AUPARK \u017dilina, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
10 | Aurora Mall Buzau SRL | Romania | Property-owning | 100 | 100 |
11 | Bia\u0142ystok Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
12 | Bonarka City Center Sp. z o.o. | Poland | Property-owning | 100 | 100 |
13 | Braila Promenada Mall SRL | Romania | Property-owning | 100 | 100 |
14 | Brasov Shopping City SRL | Romania | Property-owning | 100 | 100 |
15 | Bulfeld EOOD | Bulgaria | Property-owning | 100 | 100 |
16 | CEE Property Bulgaria EOOD | Bulgaria | Property-owning | 100 | 100 |
17 | CHP 1 Sp. z o.o. | Poland | Services | 100 | 100 |
18 | City Park Constanta SRL | Romania | Property-owning | 100 | 100 |
19 | Constanta Shopping City SRL | Romania | Property-owning | 100 | 100 |
20 | Copernicus Property Sp. z o.o. (former Atrium Copernicus Sp. Zo.o) | Poland | Property-owning | 100 | 100 |
21 | Deva Shopping City SRL | Romania | Property-owning | 100 | 100 |
22 | ECP Security Holdings Limited (wound up in 2023) | Isle of Man | Holding | - | 100 |
23 | Energit Sp. z o.o. | Poland | Services | 100 | 100 |
24 | E-Power Supply d.o.o. Beograd | Serbia | Services | 100 | 100 |
25 | E-power supply EOOD | Bulgaria | Services | 100 | 100 |
26 | E-power supply management d.o.o. | Croatia | Services | 100 | 100 |
27 | E-Power Supply s.r.o. | Slovakia | Services | 100 | 100 |
28 | Expo Real Estate Project SRL | Romania | Services | 100 | 100 |
29 | Festival Shopping Center SRL | Romania | Property-owning | 100 | 100 |
30 | Floreasca Center SRL | Romania | Holding | 100 | 100 |
31 | FORUM Usti s.r.o. | Czech Republic | Property-owning | 100 | 100 |
32 | Galati Shopping City SRL | Romania | Property-owning | 100 | 100 |
33 | General Building Management SRL | Romania | Property-owning | 100 | 100 |
34 | General Investment SRL | Romania | Property-owning | 100 | 100 |
35 | Gontar Sp. z o.o. | Poland | Property-owning | 100 | 100 |
36 | Forum Gdansk Property Sp. zo.o. | Poland | Property-owning | 100 | 100 |
37 | HANSA Immobilien EOOD | Bulgaria | Property-owning | 100 | 100 |
38 | INLOGIS VI s.r.o. (sold in 2023) | Slovakia | Property-owning | - | 100 |
39 | Iris Titan Shopping Center SRL | Romania | Property-owning | 100 | 100 |
40 | Karolinka Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
41 | Liberec Property s.r.o. | Czech Republic | Property-owning | 100 | 100 |
42 | Mammut Zrt | Hungary | Property-owning | 100 | 100 |
43 | Mammut Management Kft | Hungary | Services | 100 | 100 |
44 | Mammut Real Estate Kft | Hungary | Property-owning | 100 | 100 |
45 | Marapi Sp. z o.o. | Poland | Property-owning | 100 | 100 |
46 | Marketing Advisers SRL (merged with Nepi Investment Management in 2023) | Romania | Services | - | 100 |
47 | Mega Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
48 | Milvus Sp. z o.o. | Poland | Property-owning | 100 | 100 |
49 | Mlyny a.s. | Slovakia | Property-owning | 100 | 100 |
50 | Monarda Sp. z o.o. | Poland | Property-owning | 100 | 100 |
51 | NE Property B.V. | Netherlands | Holding | 100 | 100 |
52 | NEPI Bucharest One SRL | Romania | Property-owning | 100 | 100 |
53 | NEPI Bucharest Two SRL | Romania | Property-owning | 100 | 100 |
54 | NEPI Croatia Management d.o.o. | Croatia | Services | 100 | 100 |
55 | NEPI Czech Management s.r.o. | Czech Republic | Services | 100 | 100 |
56 | Nepi Four Real Estate Solutions SRL | Romania | Holding | 100 | 100 |
57 | NEPI Investment Management SRL | Romania | Services | 100 | 100 |
58 | NEPI Project Four EOOD | Bulgaria | Property-owning | 100 | 100 |
59 | NEPI Project One EOOD | Bulgaria | Property-owning | 100 | 100 |
60 | NEPI Project Three EOOD | Bulgaria | Services | 100 | 100 |
61 | NEPI Project Two EOOD | Bulgaria | Holding | 100 | 100 |
62 | NEPI Real Estate Development d.o.o. | Serbia | Services | 100 | 100 |
63 | NEPI Real Estate Project One d.o.o. | Serbia | Property-owning | 100 | 100 |
64 | NEPI Rockcastle Hungary Kft. | Hungary | Services | 100 | 100 |
65 | NEPI Rockcastle Lithuania UAB | Lithuania | Services | 100 | 100 |
66 | Nepi Seventeen Land Development SRL | Romania | Services | 100 | 100 |
67 | NEPI Six Development SRL | Romania | Services | 100 | 100 |
68 | Nepi Sixteen Real Estate Investment SRL | Romania | Holding | 100 | 100 |
69 | Nepi Slovak Centres One a.s. | Slovakia | Services | 100 | 100 |
70 | NEPI Slovakia Management s.r.o. | Slovakia | Services | 100 | 100 |
71 | NEPI Ten Development Solutions SRL | Romania | Property-owning | 100 | 100 |
72 | Nepi Twenty Real Estate Development SRL | Romania | Services | 100 | 100 |
73 | Nepi Twenty-One Investment Estate SRL | Romania | Services | 100 | 100 |
74 | Nepi Twenty-Three Investment Solutions SRL | Romania | Property-owning | 100 | 100 |
75 | NEPIOM Ltd | Malta | Holding | 100 | 100 |
76 | New Energy Management SRL | Romania | Services | 100 | 100 |
77 | Nobilia Sp. z o.o. | Poland | Services | 100 | 100 |
78 | NRE Sibiu Shopping City SRL | Romania | Property-owning | 100 | 100 |
79 | Olsztyn Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
80 | Otopeni Warehouse and Logistics SRL | Romania | Property-owning | 100 | 100 |
81 | Piotrk\u00f3w Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
82 | Platan Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
83 | Ploiesti Shopping City SRL | Romania | Property-owning | 100 | 100 |
84 | Pogoria Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
85 | Promenada Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
86 | Ramnicu Valcea Shopping City SRL | Romania | Property-owning | 100 | 100 |
87 | Real Estate Asset Management SRL | Romania | Services | 100 | 100 |
88 | Retail Park Pitesti SRL | Romania | Property-owning | 100 | 100 |
89 | Rockcastle Europe Limited | Mauritius | Holding | 100 | 100 |
90 | Rockcastle Global Real Estate Holdings B.V. (merged with NE Property B.V. in 2023) | Netherlands | Holding | - | 100 |
91 | Rockcastle Poland Sp. z o.o. | Poland | Services | 100 | 100 |
92 | Satu Mare Shopping City SRL | Romania | Property-owning | 100 | 100 |
93 | SCP s.r.o. | Slovakia | Property-owning | 100 | 100 |
94 | Serenada Property Sp. z o.o. (wound up in 2023) | Poland | Services | - | 100 |
95 | Severin Shopping Center SRL | Romania | Property-owning | 100 | 100 |
96 | Shopping City Piatra Neamt SRL | Romania | Property-owning | 100 | 100 |
97 | Sibiu Shopping City 2 SRL | Romania | Property-owning | 100 | 100 |
98 | Shopping City Timisoara SRL | Romania | Property-owning | 100 | 100 |
99 | ShoppingSpot sp. z o.o. | Polonia | Services | 100 | 100 |
100 | Sofia Commercial Centre EOOD | Bulgaria | Services | 100 | 100 |
101 | Stichting NEPI Rockcastle Incentive Plan Foundation. | Poland | Services | 100 | - |
102 | Symmetry Arena Kft | Hungary | Property-owning | 100 | 100 |
103 | Targu Jiu Development SRL | Romania | Property-owning | 100 | 100 |
104 | Targu Mures Shopping City SRL | Romania | Property-owning | 100 | 100 |
105 | Tummam Kft | Hungary | Property-owning | 100 | 100 |
106 | U\u017edaroji akcin\u0117 bendrov\u0117 Ozantis | Lithuania | Property-owning | 100 | 100 |
107 | Vulcan Residential Park SRL | Romania | Property-owning | 100 | 100 |
108 | Vulcan Value Centre SRL | Romania | Property-owning | 100 | 100 |
109 | Zielona G\u00f3ra Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
Transactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
\nAcquisition of non-controlling interest
In March 2022, the Group acquired the remaining non-controlling stakes in ACE3 Sp.zo.o. and Monarda Sp. z o.o. of 15% in 10% respectively, for a cash consideration of \u20ac9.4 million, thus obtaining 100% control in the two Polish entities.
Ploiesti Shopping City
On 1 September 2022, the Group completed the acquisition of joint-venture partner\u2019s remaining 50% stake in Ploiesti Shopping City SRL, the owner of Ploiesti Shopping City mall. The acquisition was recognized as a property asset acquisition as the Company does not represent a business as defined by IFRS 3.
The Group followed the \u2018accumulated cost approach\u2019 for recognition of the previously held interest, whereby the carrying amount of the joint venture is considered the relevant cost in accounting for the acquisition of the subsidiary. Accordingly, no gain or loss was recorded on the acquisition of the subsidiary. The deemed cost of the previously held interest was \u20ac50,297 thousand. The consideration for the acquisition was allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax was recognised.
\nThe carrying amount of the identifiable assets and liabilities at the date of acquisition was as follows:
\nin \u20ac\u00a0thousand | \u00a0 |
|---|---|
Investment property in use | 104,287 |
Investment property under development | 1,700 |
Trade and other receivables | 3,595 |
Cash and cash equivalents | 16,747 |
Identifiable acquired assets | 126,329 |
Current financial debt | (18,432) |
Other long-term liabilities | (552) |
Trade and other payables | (1,746) |
Identifiable acquired liabilities | (20,730) |
Net identifiable assets | 105,599 |
The net cash outflow connected with the acquisition (cash outflow adjusted for working capital items, less cash and cash equivalents acquired) amounted to \u20ac36,980 thousand for the purchase of the remaining 50% stake in the property. No acquisition costs were incurred.
\nCopernicus Shopping Centre
On 19 December 2022, the Group acquired Atrium Copernicus Sp. Zo.o., the legal entity that owns Copernicus Shopping Centre in Torun, Poland. The acquisition was recognised as a property asset acquisition as the Company does not represent a business as defined by IFRS 3.
The carrying value of the identifiable assets and liabilities at the date of acquisition was as follows:
\nin \u20ac\u00a0thousand | \u00a0 |
|---|---|
Investment property in use | 122,841 |
Investment property under development | 1,030 |
Trade and other receivables | 853 |
Cash and cash equivalents | 1,689 |
Identifiable acquired assets | 126,413 |
Other long-term liabilities | (482) |
Trade and other payables | (1,227) |
Identifiable acquired liabilities | (1,709) |
Net identifiable assets | 124,704 |
Net identifiable assets of the subsidiary acquired at the date of acquisition amounted to \u20ac124,704 thousand. The net cash outflow connected with the acquisition (cash outflow adjusted for working capital items, less cash and cash equivalents acquired) amounted to \u20ac121,645 thousand, the remaining difference to the net asset value being an accrued payable adjustment to the purchase price paid. Acquisition costs of \u20ac1,434 thousand were capitalised on the value of investment property.
\nThe investment property reflected above does not include the right-of-use assets and related lease liability, of \u20ac3,843 thousand, connected to the land under concession of Copernicus Shopping Centre.
\nForum Gdansk Shopping Center
On 19 December 2022, the Group acquired Forum Gdansk Sp. Zo.o., the legal entity that owns Forum Gdansk Shopping Centre in Poland. The acquisition was recognized as a property asset acquisition as the Company does not represent a business as defined by IFRS 3.
The carrying amount of the identifiable assets and liabilities at the date of acquisition was as follows:
\nin \u20ac\u00a0thousand | \u00a0 |
|---|---|
Investment property | 243,646 |
Trade and other receivables | 2,653 |
Cash and cash equivalents | 7,815 |
Identifiable acquired assets | 254,114 |
Other long-term liabilities | (1,176) |
Trade and other payables | (3,308) |
Identifiable acquired liabilities | (4,484) |
Net identifiable assets | 249,630 |
Net identifiable assets of the subsidiary acquired at the date of acquisition amounted to \u20ac249,630 thousand. The net cash outflow connected with the acquisition (cash outflow adjusted for working capital items, less cash and cash equivalents acquired) amounted to \u20ac195,101 thousand. In addition to the cash paid, the Group obtained vendor financing on the transaction in the form of a three-year unsecured loan from the seller, for part of the purchase price amounting to \u20ac50,000 thousand. Accrued receivable from the seller of \u20ac3,286 thousand was recognised as adjustment to the purchase price paid. Acquisition costs of \u20ac1,995 thousand were capitalised on the value of investment property.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-418": { "value": "\nThe Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
These Consolidated Financial Statements include the Company and the fully consolidated subsidiaries, as set out below:
\nNo | Subsidiary | Country of | Principal activity | Effective interest 2023 (%) | Effective interest 2022 (%) |
|---|---|---|---|---|---|
1 | ACE3 Sp. z o.o. | Poland | Property-owning | 100 | 100 |
2 | Arena Center Zagreb d.o.o. | Croatia | Property-owning | 100 | 100 |
3 | AUPARK Kosice SC, s.r.o. | Slovakia | Services | 100 | 100 |
4 | AUPARK Kosice, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
5 | AUPARK Piestany SC, s.r.o. | Slovakia | Services | 100 | 100 |
6 | AUPARK Piestany, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
7 | AUPARK Tower Kosice, s.r.o. | Slovakia | Property-owning | 100 | 100 |
8 | AUPARK \u017dilina SC a.s. | Slovakia | Services | 100 | 100 |
9 | AUPARK \u017dilina, spol. s.r.o. | Slovakia | Property-owning | 100 | 100 |
10 | Aurora Mall Buzau SRL | Romania | Property-owning | 100 | 100 |
11 | Bia\u0142ystok Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
12 | Bonarka City Center Sp. z o.o. | Poland | Property-owning | 100 | 100 |
13 | Braila Promenada Mall SRL | Romania | Property-owning | 100 | 100 |
14 | Brasov Shopping City SRL | Romania | Property-owning | 100 | 100 |
15 | Bulfeld EOOD | Bulgaria | Property-owning | 100 | 100 |
16 | CEE Property Bulgaria EOOD | Bulgaria | Property-owning | 100 | 100 |
17 | CHP 1 Sp. z o.o. | Poland | Services | 100 | 100 |
18 | City Park Constanta SRL | Romania | Property-owning | 100 | 100 |
19 | Constanta Shopping City SRL | Romania | Property-owning | 100 | 100 |
20 | Copernicus Property Sp. z o.o. (former Atrium Copernicus Sp. Zo.o) | Poland | Property-owning | 100 | 100 |
21 | Deva Shopping City SRL | Romania | Property-owning | 100 | 100 |
22 | ECP Security Holdings Limited (wound up in 2023) | Isle of Man | Holding | - | 100 |
23 | Energit Sp. z o.o. | Poland | Services | 100 | 100 |
24 | E-Power Supply d.o.o. Beograd | Serbia | Services | 100 | 100 |
25 | E-power supply EOOD | Bulgaria | Services | 100 | 100 |
26 | E-power supply management d.o.o. | Croatia | Services | 100 | 100 |
27 | E-Power Supply s.r.o. | Slovakia | Services | 100 | 100 |
28 | Expo Real Estate Project SRL | Romania | Services | 100 | 100 |
29 | Festival Shopping Center SRL | Romania | Property-owning | 100 | 100 |
30 | Floreasca Center SRL | Romania | Holding | 100 | 100 |
31 | FORUM Usti s.r.o. | Czech Republic | Property-owning | 100 | 100 |
32 | Galati Shopping City SRL | Romania | Property-owning | 100 | 100 |
33 | General Building Management SRL | Romania | Property-owning | 100 | 100 |
34 | General Investment SRL | Romania | Property-owning | 100 | 100 |
35 | Gontar Sp. z o.o. | Poland | Property-owning | 100 | 100 |
36 | Forum Gdansk Property Sp. zo.o. | Poland | Property-owning | 100 | 100 |
37 | HANSA Immobilien EOOD | Bulgaria | Property-owning | 100 | 100 |
38 | INLOGIS VI s.r.o. (sold in 2023) | Slovakia | Property-owning | - | 100 |
39 | Iris Titan Shopping Center SRL | Romania | Property-owning | 100 | 100 |
40 | Karolinka Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
41 | Liberec Property s.r.o. | Czech Republic | Property-owning | 100 | 100 |
42 | Mammut Zrt | Hungary | Property-owning | 100 | 100 |
43 | Mammut Management Kft | Hungary | Services | 100 | 100 |
44 | Mammut Real Estate Kft | Hungary | Property-owning | 100 | 100 |
45 | Marapi Sp. z o.o. | Poland | Property-owning | 100 | 100 |
46 | Marketing Advisers SRL (merged with Nepi Investment Management in 2023) | Romania | Services | - | 100 |
47 | Mega Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
48 | Milvus Sp. z o.o. | Poland | Property-owning | 100 | 100 |
49 | Mlyny a.s. | Slovakia | Property-owning | 100 | 100 |
50 | Monarda Sp. z o.o. | Poland | Property-owning | 100 | 100 |
51 | NE Property B.V. | Netherlands | Holding | 100 | 100 |
52 | NEPI Bucharest One SRL | Romania | Property-owning | 100 | 100 |
53 | NEPI Bucharest Two SRL | Romania | Property-owning | 100 | 100 |
54 | NEPI Croatia Management d.o.o. | Croatia | Services | 100 | 100 |
55 | NEPI Czech Management s.r.o. | Czech Republic | Services | 100 | 100 |
56 | Nepi Four Real Estate Solutions SRL | Romania | Holding | 100 | 100 |
57 | NEPI Investment Management SRL | Romania | Services | 100 | 100 |
58 | NEPI Project Four EOOD | Bulgaria | Property-owning | 100 | 100 |
59 | NEPI Project One EOOD | Bulgaria | Property-owning | 100 | 100 |
60 | NEPI Project Three EOOD | Bulgaria | Services | 100 | 100 |
61 | NEPI Project Two EOOD | Bulgaria | Holding | 100 | 100 |
62 | NEPI Real Estate Development d.o.o. | Serbia | Services | 100 | 100 |
63 | NEPI Real Estate Project One d.o.o. | Serbia | Property-owning | 100 | 100 |
64 | NEPI Rockcastle Hungary Kft. | Hungary | Services | 100 | 100 |
65 | NEPI Rockcastle Lithuania UAB | Lithuania | Services | 100 | 100 |
66 | Nepi Seventeen Land Development SRL | Romania | Services | 100 | 100 |
67 | NEPI Six Development SRL | Romania | Services | 100 | 100 |
68 | Nepi Sixteen Real Estate Investment SRL | Romania | Holding | 100 | 100 |
69 | Nepi Slovak Centres One a.s. | Slovakia | Services | 100 | 100 |
70 | NEPI Slovakia Management s.r.o. | Slovakia | Services | 100 | 100 |
71 | NEPI Ten Development Solutions SRL | Romania | Property-owning | 100 | 100 |
72 | Nepi Twenty Real Estate Development SRL | Romania | Services | 100 | 100 |
73 | Nepi Twenty-One Investment Estate SRL | Romania | Services | 100 | 100 |
74 | Nepi Twenty-Three Investment Solutions SRL | Romania | Property-owning | 100 | 100 |
75 | NEPIOM Ltd | Malta | Holding | 100 | 100 |
76 | New Energy Management SRL | Romania | Services | 100 | 100 |
77 | Nobilia Sp. z o.o. | Poland | Services | 100 | 100 |
78 | NRE Sibiu Shopping City SRL | Romania | Property-owning | 100 | 100 |
79 | Olsztyn Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
80 | Otopeni Warehouse and Logistics SRL | Romania | Property-owning | 100 | 100 |
81 | Piotrk\u00f3w Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
82 | Platan Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
83 | Ploiesti Shopping City SRL | Romania | Property-owning | 100 | 100 |
84 | Pogoria Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
85 | Promenada Mall Bucuresti SRL | Romania | Property-owning | 100 | 100 |
86 | Ramnicu Valcea Shopping City SRL | Romania | Property-owning | 100 | 100 |
87 | Real Estate Asset Management SRL | Romania | Services | 100 | 100 |
88 | Retail Park Pitesti SRL | Romania | Property-owning | 100 | 100 |
89 | Rockcastle Europe Limited | Mauritius | Holding | 100 | 100 |
90 | Rockcastle Global Real Estate Holdings B.V. (merged with NE Property B.V. in 2023) | Netherlands | Holding | - | 100 |
91 | Rockcastle Poland Sp. z o.o. | Poland | Services | 100 | 100 |
92 | Satu Mare Shopping City SRL | Romania | Property-owning | 100 | 100 |
93 | SCP s.r.o. | Slovakia | Property-owning | 100 | 100 |
94 | Serenada Property Sp. z o.o. (wound up in 2023) | Poland | Services | - | 100 |
95 | Severin Shopping Center SRL | Romania | Property-owning | 100 | 100 |
96 | Shopping City Piatra Neamt SRL | Romania | Property-owning | 100 | 100 |
97 | Sibiu Shopping City 2 SRL | Romania | Property-owning | 100 | 100 |
98 | Shopping City Timisoara SRL | Romania | Property-owning | 100 | 100 |
99 | ShoppingSpot sp. z o.o. | Polonia | Services | 100 | 100 |
100 | Sofia Commercial Centre EOOD | Bulgaria | Services | 100 | 100 |
101 | Stichting NEPI Rockcastle Incentive Plan Foundation. | Poland | Services | 100 | - |
102 | Symmetry Arena Kft | Hungary | Property-owning | 100 | 100 |
103 | Targu Jiu Development SRL | Romania | Property-owning | 100 | 100 |
104 | Targu Mures Shopping City SRL | Romania | Property-owning | 100 | 100 |
105 | Tummam Kft | Hungary | Property-owning | 100 | 100 |
106 | U\u017edaroji akcin\u0117 bendrov\u0117 Ozantis | Lithuania | Property-owning | 100 | 100 |
107 | Vulcan Residential Park SRL | Romania | Property-owning | 100 | 100 |
108 | Vulcan Value Centre SRL | Romania | Property-owning | 100 | 100 |
109 | Zielona G\u00f3ra Property Sp. z o.o. | Poland | Property-owning | 100 | 100 |
The Group had an investment of 50% together with its joint venture partner, Carrefour Romania S.A., in Ploiesti Shopping City, a shopping centre located in Ploiesti, Romania. In September 2022 the Group completed the acquisition of the remaining 50% stake in Ploiesti Shopping City to become the sole owner of the property.
\nThe \u201cShare of profit of joint ventures\u201d line on the Consolidated Statement of comprehensive income represents 50% of the line \u201cProfit for the year attributable to equity holders\u201d, as presented below for the period in 2022 where Ploiesti Shopping City was a joint venture (up to 1 September 2022).
\nStatement of comprehensive income
\nin \u20ac\u00a0thousand | Ploiesti Shopping City 31 Dec 2022 |
|---|---|
Revenue from rent and recoveries | 8,648 |
Property operating expenses | (2,689) |
Partial forgiveness of receivables (Covid-19 forgiveness) | 48 |
Administrative expenses | (176) |
Fair value adjustment investment property | 3,264 |
Foreign exchange loss | (122) |
Profit before net finance costs and other items | 8,973 |
Finance income | 85 |
Finance costs | (2,452) |
Bank charges, commissions, and fees | 6 |
Fair value adjustments of derivatives and losses on | 814 |
Profit before tax | 7,426 |
Income tax expense | (866) |
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS | 6,560 |
Share of profit of joint venture (50% of the Profit of the | 3,280 |
Identity of related parties with whom material transactions have occurred
\nThe Directors and jointly controlled entities are related parties for the Group.
\nMaterial related party transactions
\nFees paid to Directors, together with the performance bonus, during the current and previous year are detailed below. No other payments were made to Directors by NEPI Rockcastle, except reimbursements for travel and accommodation.
\nTransactions with joint ventures are presented in Note 35.
\n| \u00a0 | 31 Dec 2023 | 31 Dec 2022 | |||||
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | Directors\u2019 fees | Performance related remuneration | Reconciling differences between 2022 performance related remuneration paid vs. accrual | Directors\u2019 fees | 2022 performance related remuneration | 2021 performance related remuneration | Interim period related remuneration |
R\u00fcdiger Dany1 | 675 | 1,009 | (3) | 517 | 870 | 200 | 200 |
Eliza Predoiu2 | 385 | 543 | (12) | 253 | 490 | - | 150 |
Marek Noetzel3 | 385 | 601 | (7) | 329 | 518 | 225 | - |
Alex Morar4 | - | - | - | 188 | - | - | - |
Mirela Covasa5 | - | - | - | 147 | - | - | - |
George Aase | 102 | - | - | 102 | - | - | - |
Antoine Dijkstra | 88 | - | - | 88 | - | - | - |
Andre van der Veer | 98 | - | - | 98 | - | - | - |
Andreas Klingen | 89 | - | - | 89 | - | - | - |
Steve Brown | 75 | - | - | 75 | - | - | - |
Andries de Lange | 63 | - | - | 63 | - | - | - |
Jonathan Lurie | 68 | - | - | 68 | - | - | - |
Ana Maria Mihaescu | 74 | - | - | 74 | - | - | - |
Total | 2,102 | 2,153 | (22) | 2,091 | 1,878 | 425 | 350 |
Name of Director | Number of shares held as at 31 Dec 2023 | Number of shares held as at 31 Dec 20221 |
|---|---|---|
Marek Noetzel | 88,358 | 88,358 |
Total | 88,358 | 88,358 |
Name of Director | Number of shares unvested at 31 Dec 2023 | Number of shares unvested at 31 Dec 2022 |
|---|---|---|
R\u00fcdiger Dany | 271,983 | 137,945 |
Eliza Predoiu | 174,922 | 22,000 |
Marek Noetzel | 210,532 | 78,394 |
Total | 657,437 | 238,339 |
The share based payment expense related to the directors of the Group amounted to \u20ac393 thousand in 2023 (31 December 2022: \u20ac262 thousand).
\nThe Directors of the Group hold 1,304,206 shares as at 31 December 2023 (31 December 2022: 739,612 shares), which represents 0.2% of the outstanding shares (31 December 2022: 0.12% of the outstanding shares). Out of the above-mentioned shareholding, 343,052 shares (31 December 2022: 283,397 shares) which represent 0.05% of the outstanding shares (31 December 2022: 0.05% of the outstanding shares) are held by the non-Executive Directors. There were no changes to the Director\u2019s interests from 31 December 2023 to the approval of the annual audited Consolidated Financial Statements, other than the shares awarded in March 2024, as detailed in the Remuneration section of this Annual Report, on pages . Other than as set out in note 39(a) above, none of the shares of the Director are subject to security, guarantee, collateral, and they are not encumbered in any way.
\nIn 2022 the Group incurred advisory fees of \u20ac2 million with companies which are related parties of former management.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-420": { "value": "\nThe Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
The Consolidated Financial Statements incorporate the assets, liabilities, operating results and cash flows of the Company and its subsidiaries.
Subsidiaries are all entities controlled by the Company. The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date the control commences until the date the control ceases.
Investment property is held to earn rental income, capital appreciation or both.
\nThe cost of investment property acquired by any other means than a business combination consists of the purchase price and directly attributable expenditure.
\nSubsequent expenditure relating to investment property is capitalised when future economic benefits from the use of the asset are probable and the cost of the item can be measured reliably. All other subsequent expenditure is recognised as an expense during the period it is incurred.
\nAfter initial recognition, investment property in use is measured at fair value. Fair value is determined semi-annually by external, independent professional valuers, with appropriate and recognised qualifications and recent experience in the location and category of property being valued. Valuations are based on the income method, respectively, the applied method used for all investment property in use is discounted cash flow (\u201cDCF\u201d).
\nGains or losses arising from changes in the fair values are included in the Statement of comprehensive income for the period during which they arise. Unrealised gains or losses, net of deferred tax, are non-distributable.
\nLease incentives, such as rent-free periods, discounts during the lease or payment of fit-out works for the benefit of the tenants, are part of value of the investment property and are straight-lined over the lease term. The lease term corresponds to the contractual duration for the majority of the leases, except for the anchor tenants, for which the lease duration is assessed by the Group based on past experience and taking into account factors such as: GLA of the property where the anchor tenant is located, catchment area, dominance/competition in the catchment area or purchasing power.
\nProperty that is being constructed or developed for future use as investment property is classified as investment property under development and carried at cost until construction or development is complete, or its fair value can be reliably determined.
\nThe land on which investment property is constructed or developed is carried at fair value, which is determined semi-annually by external, independent professional valuers, with appropriate and recognised qualifications and recent experience in the location and category of property being valued. Valuations are performed using the market comparable approach or residual approach.
\nGains or losses arising from changes in the fair values are included in the Statement of comprehensive income during the period when they arise. Unrealised gains or losses, net of deferred tax, are non-distributable.
\nInvestment property is stated at its fair value based on valuation reports prepared by international appraisers as at 30 June and 31 December each year. Valuations are based on discounted cash flow projections based on reliable estimates of future cash flows, using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. These are supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition.
\nIn preparing the valuation reports on the Group\u2019s investment property, the external appraisers excluded distressed sales when considering comparable sales prices (used for valuation of plots of land held for development). Management reviewed the appraisers\u2019 assumptions relating to the discounted cash flow models used in the valuations and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period.
\nValuations of the income generating properties are based on cash flow statements, in which the present value of net operating income during a ten-year period and the residual value of the property at the end of the period are calculated.
\nForecasts of net operating income are based on leases signed at the time of the valuation date, the estimated rental values for existing leases when they expire and the estimated achievable rental values of the existing vacancies. The value of long-term vacancies is estimated based on the properties\u2019 location and condition. The valuers\u2019 assessments of non-recoverable expenses are based on their experience of comparable properties and historical costs provided by the Group.
\nThe discount rates used are nominal returns on total capital before tax and vary between 7.90% and 11.95% (2022: 7.30% and 11.95%). The required rates of return are based on assessments of the market\u2019s required returns for similar properties. The discount rate is set individually for each property and is based on the condition and location, the stability of the tenants and lease duration.
\nFurther information relating to sensitivity of material accounting estimates used in the valuation of investment property is presented in Note 8.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentPropertyExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-429": { "value": "\nInvestment property is held to earn rental income, capital appreciation or both.
\nThe cost of investment property acquired by any other means than a business combination consists of the purchase price and directly attributable expenditure.
\nSubsequent expenditure relating to investment property is capitalised when future economic benefits from the use of the asset are probable and the cost of the item can be measured reliably. All other subsequent expenditure is recognised as an expense during the period it is incurred.
\nAfter initial recognition, investment property in use is measured at fair value. Fair value is determined semi-annually by external, independent professional valuers, with appropriate and recognised qualifications and recent experience in the location and category of property being valued. Valuations are based on the income method, respectively, the applied method used for all investment property in use is discounted cash flow (\u201cDCF\u201d).
\nGains or losses arising from changes in the fair values are included in the Statement of comprehensive income for the period during which they arise. Unrealised gains or losses, net of deferred tax, are non-distributable.
\nLease incentives, such as rent-free periods, discounts during the lease or payment of fit-out works for the benefit of the tenants, are part of value of the investment property and are straight-lined over the lease term. The lease term corresponds to the contractual duration for the majority of the leases, except for the anchor tenants, for which the lease duration is assessed by the Group based on past experience and taking into account factors such as: GLA of the property where the anchor tenant is located, catchment area, dominance/competition in the catchment area or purchasing power.
\nProperty that is being constructed or developed for future use as investment property is classified as investment property under development and carried at cost until construction or development is complete, or its fair value can be reliably determined.
\nThe land on which investment property is constructed or developed is carried at fair value, which is determined semi-annually by external, independent professional valuers, with appropriate and recognised qualifications and recent experience in the location and category of property being valued. Valuations are performed using the market comparable approach or residual approach.
\nGains or losses arising from changes in the fair values are included in the Statement of comprehensive income during the period when they arise. Unrealised gains or losses, net of deferred tax, are non-distributable.
\nInvestment property is stated at its fair value based on valuation reports prepared by international appraisers as at 30 June and 31 December each year. Valuations are based on discounted cash flow projections based on reliable estimates of future cash flows, using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows. These are supported by the terms of any existing lease and other contracts and by external evidence such as current market rents for similar properties in the same location and condition.
\nIn preparing the valuation reports on the Group\u2019s investment property, the external appraisers excluded distressed sales when considering comparable sales prices (used for valuation of plots of land held for development). Management reviewed the appraisers\u2019 assumptions relating to the discounted cash flow models used in the valuations and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period.
\nValuations of the income generating properties are based on cash flow statements, in which the present value of net operating income during a ten-year period and the residual value of the property at the end of the period are calculated.
\nForecasts of net operating income are based on leases signed at the time of the valuation date, the estimated rental values for existing leases when they expire and the estimated achievable rental values of the existing vacancies. The value of long-term vacancies is estimated based on the properties\u2019 location and condition. The valuers\u2019 assessments of non-recoverable expenses are based on their experience of comparable properties and historical costs provided by the Group.
\nThe discount rates used are nominal returns on total capital before tax and vary between 7.90% and 11.95% (2022: 7.30% and 11.95%). The required rates of return are based on assessments of the market\u2019s required returns for similar properties. The discount rate is set individually for each property and is based on the condition and location, the stability of the tenants and lease duration.
\nFurther information relating to sensitivity of material accounting estimates used in the valuation of investment property is presented in Note 8.
\nMovement in investment property in use | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Carrying value at beginning of year | \u00a0 | 6,331,793 | 5,670,776 |
Additions from asset deals | - | 367,769 | |
Additions from the acquisition of the remaining 50% stake in joint venture | - | 104,287 | |
Capital expenditure | \u00a0 | 44,982 | 37,449 |
Transferred from investment property under development | 214,177 | 13,690 | |
Fair value adjustments | 168,185 | 134,234 | |
Remeasurement of right-of-use assets | \u00a0 | 20,062 | - |
Additions to the right-of-use assets from acquired assets | - | 3,843 | |
Fair value adjustment of right-of-use asset | (742) | (255) | |
Investment property reclassified as held for sale | (151,210) | - | |
CARRYING VALUE | \u00a0 | 6,627,247 | 6,331,793 |
As at 31 December 2023, the balance of investment property included also right-of-use assets of \u20ac56,520 thousand (2022: \u20ac37,200 thousand) representing long-term land concessions for the Group Polish properties contracted from local government.
\nThe significant additions to investment property transferred from investment property under development are in most part the result of development at Promenada Craiova mall, completed during the year and opened in October 2023, and the completion of investments in photovoltaic panels on Romanian properties.
\nInvestment property is carried at fair value and is independently assessed on a semi-annual basis, as at 30 June and 31 December.
\nFor the year ended 31 December 2023 - the Group commissioned independent appraisal reports on its investment property from Cushman&Wakefield and Affiliate Partners and Colliers International (for the year ended 31 December 2022: Cushman&Wakefield and Affiliate Partners, Colliers International and Jones Lang LaSalle), all of whom are members of the Royal Institution of Chartered Surveyors (RICS). Valuations are prepared in accordance with the RICS Valuation \u2013 Global Standards 2021 (the \u201cRed Book\") and ANEVAR Valuation Standards - 2022 Edition which incorporate the International Valuation Standards (\u201cIVS\u201d).
\nAll investment property in use is valued by the Income Method. For the years ended 31 December 2023 and 31 December 2022 respectively, the applied method used for all investment property in use was discounted cash flow (\u201cDCF\u201d).
\nDCF uses explicit assumptions regarding the benefits and liabilities of ownership over the asset\u2019s life, including an exit, or terminal, value. As an accepted method within the Income Method to valuation, the DCF method involves the projection of a series of cash flows onto a real property interest. To these projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of cash inflows associated with the real property.
\nThe duration of cash flow, and the specific timing of inflows and outflows, are determined by events such as rent reviews, lease renewal and related lease-up periods, re-letting, redevelopment or refurbishment. The appropriate duration is typically driven by market behaviour. In the case of investment property, periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance costs, agent and commission fees, and other operating and management expenses. The series of periodic net cash inflows, combined with the estimated terminal value anticipated at the end of the projection period, is then discounted. For all investment property in use, the current use equates to the highest and best use.
\nThe Group provides all information necessary for the valuations, including detailed tenancy schedules, comprising information on occupied and vacant units, unit areas and numbers, lease commencement and expiry dates, break options and indexation clauses. All properties have been inspected by representatives of external valuers for the purpose of 31 December 2023 valuations.
\nThe Group\u2019s valuers note in their valuation reports that wherever appropriate, sustainability and environmental matters are an integral part of the valuation approach. Sustainability is taken to mean the consideration of such matters as environment and climate change, health and wellbeing and corporate responsibility that can or do impact the valuation of an asset. In a valuation context, sustainability encompasses a wide range of physical, social, environmental, and economic factors that can affect value. The range of issues includes key environmental risks, such as energy efficiency and climate, as well as matters of design, configuration, accessibility, legislation, management, and fiscal considerations.
\nAs at 31 December 2023, the investment property in use had an EPRA Vacancy Rate of 2.2% (31 December 2022: 2.7%). EPRA Vacancy Rate is a non-IFRS measure which is defined in section Other information, Glossary.
\nAs compared to the valuations on 31 December 2022, the estimated rental values generally increased, supported by the excellent performance of the assets, and valuation yields slightly increased as well (by 15 basis points on average).
\nAs at 31 December 2023, the Group\u2019s portfolio included retail, office and industrial properties.
\nThe Group currently discloses fair values according to a \u2018fair value hierarchy\u2019 (as per IFRS 13) which categorises the inputs used in valuation techniques into three levels. The hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs. The fair value hierarchy is explained below:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: use of a model with inputs (other than quoted prices included within Level 1) that are directly, or indirectly, observable market data, and
Level 3: use of a model with inputs not based on observable market data.
The Group\u2019s investment property is categorised as Level 3. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. There were no transfers between hierarchy levels during the year.
\nThe significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy of the Group\u2019s property portfolio, together with the impact of significant movements in these inputs on the fair value measurement, are detailed below:
\nUnobservable input | Impact on fair value of increase in input |
|---|---|
Estimated rental value | Increase |
Discount rate | Decrease |
Capitalisation rate for terminal value | Decrease |
Information relating to fair value measurement using significant unobservable inputs (Level 3) for 2023 for retail properties is presented in the table below:
\nSegment | Valuation technique | Estimated market rental value | Discount rate | Capitalisation rate for terminal value |
|---|---|---|---|---|
| \u00a0 | \u00a0 | (yearly amount in \u2018000 \u20ac) | (%) | (%) |
Romania | Discounted cash flow | 311 - 26,281 (13,128)1 | 8.95% - 10.45% (9.73)1 | 6.75% - 8.25% (7.53)1 |
Poland | Discounted cash flow | 2,817 - 23,746 (14,110)1 | 7.90% - 10.80% (8.72)1 | 5.80% - 8.70% (6.62)1 |
Slovakia | Discounted cash flow | 3,307 - 12,784 (9,734)1 | 9.10% - 10.35% (9.22)1 | 7.00% - 8.25% (7.12)1 |
Hungary | Discounted cash flow | 19,602 - 21,309 (20,515)1 | 8.75% - 9.00% (8.87)1 | 6.65% - 6.90% (6.77)1 |
Bulgaria | Discounted cash flow | 17,022 - 26,148 (22,514)1 | 10.30% | 7.50% -7.75% (7.60)1 |
Croatia | Discounted cash flow | 1,550 - 19,433 (18,138)1 | 9.60% - 9.85% (9.83)1 | 7.50% - 7.75% (7.73)1 |
Czech Republic | Discounted cash flow | 6,737 - 6,748 (6,743)1 | 9.35% | 7.25% |
Serbia | Discounted cash flow | 13,321 | 11.10% | 9.00% |
Lithuania | Discounted cash flow | 12,767 | 10.00% | 7.90% |
Information relating to fair value measurement using significant unobservable inputs (Level 3) for 2022 for retail properties is presented in the table below:
\nSegment | Valuation technique | Estimated market rental value | Discount rate | Capitalisation rate for terminal value |
|---|---|---|---|---|
| \u00a0 | \u00a0 | (yearly amount in \u2018000 \u20ac) | (%) | (%) |
Romania | Discounted cash flow | 294 - 24,411 (12,301)1 | 8.70% - 11.45% (9.71)1 | 6.50% - 9.25% (7.51)1 |
Poland | Discounted cash flow | 2,750 - 22,375 (13,042)1 | 7.85% - 10.95% (8.75)1 | 5.45% - 8.55% (6.35)1 |
Slovakia | Discounted cash flow | 3,062 - 12,223 (9,118)1 | 7.50% - 8.50% (7.58)1 | 6.75% - 7.75% (6.83)1 |
Hungary | Discounted cash flow | 11,984 - 18,352 (15,018)1 | 7.60% - 10.00% (8.86)1 | 6.55% - 7.60% (7.10)1 |
Bulgaria | Discounted cash flow | 13,054 - 21,967 (18,588)1 | 8.85% - 9.15% (8.96)1 | 7.70% -7.95% (7.79)1 |
Croatia | Discounted cash flow | 1,461 - 18,934 (17,752)1 | 8.95% - 9.25% (8.97)1 | 7.95% - 8.25% (7.97)1 |
Czech Republic | Discounted cash flow | 6,196 - 6,661 (6,425)1 | 7.30% - 7.70%(7.50)1 | 6.65% |
Serbia | Discounted cash flow | 11,217 | 9.45% | 8.45% |
Lithuania | Discounted cash flow | 11,984 | 10.00% | 7.60% |
Portfolio valuation: sensitivity to changes in the discount rate, exit rate and rental income
\nThe tables below present the change in the valuation of the shopping centre portfolio using different discount rate and exit rate assumptions than those used by the appraisers:
\nDiscount rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 3.37% | 1.67% | -1.63% | -3.23% |
Poland | 3.40% | 1.70% | -1.60% | -3.20% |
Slovakia | 3.56% | 1.73% | -1.71% | -3.43% |
Hungary | 3.64% | 1.79% | -1.77% | -3.50% |
Bulgaria | 1.98% | 1.00% | -0.97% | -1.91% |
Croatia | 3.21% | 1.64% | -1.68% | -3.40% |
Czech Republic | 3.34% | 1.67% | -1.78% | -3.56% |
Serbia | 3.20% | 1.65% | -1.51% | -3.10% |
Lithuania | 3.40% | 1.70% | -1.60% | -3.20% |
Total | 3.27% | 1.62% | -1.58% | -3.14% |
Exit rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 6.94% | 3.35% | -3.14% | -6.08% |
Poland | 7.90% | 3.80% | -3.50% | -6.70% |
Slovakia | 7.60% | 3.68% | -3.45% | -6.65% |
Hungary | 8.20% | 3.92% | -3.68% | -7.09% |
Bulgaria | 4.66% | 2.36% | -2.11% | -4.00% |
Croatia | 5.85% | 3.02% | -3.21% | -6.66% |
Czech Republic | 6.45% | 3.34% | -3.67% | -7.45% |
Serbia | 5.90% | 2.88% | -2.68% | -5.20% |
Lithuania | 6.70% | 3.30% | -3.00% | -5.80% |
Total | 7.02% | 3.40% | -3.19% | -6.18% |
Rental Income (ERV) | ||||
|---|---|---|---|---|
Country | -10% | -5% | 5% | 10% |
Romania | -10.03% | -5.01% | 5.01% | 10.03% |
Poland | -8.30% | -4.10% | 4.10% | 8.30% |
Slovakia | -8.61% | -4.32% | 4.27% | 8.55% |
Hungary | -8.41% | -4.22% | 4.19% | 8.39% |
Bulgaria | -6.96% | -3.24% | 3.48% | 7.20% |
Croatia | -7.77% | -3.90% | 3.90% | 7.80% |
Czech Republic | -8.24% | -4.12% | 4.17% | 7.95% |
Serbia | -6.80% | -3.37% | 3.43% | 6.87% |
Lithuania | -6.90% | -3.40% | 3.50% | 6.90% |
Total | -8.69% | -4.32% | 4.33% | 8.70% |
Movement in investment property under development | \u00a0 | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
in \u20ac\u00a0thousand | Note | \u00a0 | \u00a0 |
Carrying value at beginning of year | \u00a0 | 264,344 | 170,900 |
Additions from the acquisition of the remaining 50% stake in joint venture | - | 1,700 | |
Additions from asset deals (acquisition of land for development) | - | 18,201 | |
Additions from construction in progress | \u00a0 | 150,219 | 98,634 |
Fair value adjustments | (2,643) | 8,917 | |
Assets which became operational and were transferred to Investment property in use | (214,177) | (13,690) | |
Investment property under development reclassified as held for sale | - | (20,318) | |
Carrying value | \u00a0 | 197,743 | 264,344 |
Land included in Investment property under development is carried at fair value and is independently assessed on a semi-annual basis. For the year ended 31 December 2023 the Group commissioned independent year-end reports to Cushman&Wakefield and Affiliate Partners and Colliers International (for the year ended 31 December 2022: Cushman&Wakefield and Affiliate Partners, Colliers International and Jones Lang LaSalle), based on which the fair value of land was adjusted. Land included in Investment property under development is classified Level 3 on the fair value hierarchy as defined in IFRS 13.
\nThe valuation technique is sales comparison or residual approach, in accordance with RICS Valuation Standards and ANEVAR Valuation Standards (for Romanian properties). Land under sales comparison method was valued by the external appraisers using the recent transactions of similar land for development in the proximity of the subject property.
\nThe estimated fair value of Investment property under development would increase/(decrease) if the market comparable price per square meter is higher/(lower) as there is a direct relationship between the fair value and the market comparable price per square meter.
\nThe residual approach determines the residual land value by subtracting purchase and development cost from the expected gross development value of the project at completion. The construction works in the investment property under development are held at cost, and their carrying value is a reasonable approximation of their fair value. The methods have been consistently applied for the comparative period.
\nBorrowing costs capitalised in 2023 amount to \u20ac5,085 thousand (2022: \u20ac3,513 thousand) and were calculated using an average annual interest rate of 2.5% (2022: 2.3%).
\nThe balance of Investment property under development split by land carried at fair value and additions from construction works held at cost (which approximate fair value) is detailed below:
\nInvestment property under development | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Land (at fair value) | 104,316 | 157,609 |
Construction works (at cost) | 93,427 | 106,735 |
Total | 197,743 | 264,344 |
An investment property or a group of assets including an investment property (disposal group) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For this to be the case:
the assets must be available for immediate sale in their present condition;
the Group must be committed to sell;
there must be a plan to locate a buyer; and
it is highly probable that a sale will be completed within one year from the date of classification.\u00a0
On re-classification as held for sale, investment property that is measured at fair value continues to be measured in this way.
\nAn investment property or disposal group classified as held for sale is presented separately in the Statement of financial position as assets or liabilities classified as held for sale.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-435": { "value": "\nAn investment property or a group of assets including an investment property (disposal group) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For this to be the case:
the assets must be available for immediate sale in their present condition;
the Group must be committed to sell;
there must be a plan to locate a buyer; and
it is highly probable that a sale will be completed within one year from the date of classification.\u00a0
On re-classification as held for sale, investment property that is measured at fair value continues to be measured in this way.
\nAn investment property or disposal group classified as held for sale is presented separately in the Statement of financial position as assets or liabilities classified as held for sale.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-437": { "value": "\nAn investment property or a group of assets including an investment property (disposal group) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For this to be the case:
the assets must be available for immediate sale in their present condition;
the Group must be committed to sell;
there must be a plan to locate a buyer; and
it is highly probable that a sale will be completed within one year from the date of classification.\u00a0
On re-classification as held for sale, investment property that is measured at fair value continues to be measured in this way.
\nAn investment property or disposal group classified as held for sale is presented separately in the Statement of financial position as assets or liabilities classified as held for sale.
\nInvestment property held for sale is carried at fair value and is independently assessed on a semi-annual basis, as at 30 June and 31 December.
\nDisposals in the period
\nIn August 2022, the Group entered into a binding agreement for the sale of a plot of excess land owned by General Building Management S.R.L., owner of the development in Craiova, Romania. The sale was finalized in May 2023 for a net consideration received of \u20ac8 million and a net gain on disposal of \u20ac1.6 million.\u00a0
\nIn January 2023, the Group sold at cost a non-core property in Romania held by Nepi Bucharest One S.R.L.
\nIn July 2023, the Group sold the land plot in Kosice, Slovakia held by INLOGIS VI s.r.o, in a share deal, for a cash consideration of \u20ac13.2 million and a gain on disposal of \u20ac4 million.
\nDisposals in the comparative period
\nIn November 2022, the Group disposed of a plot of land in Sabac, Serbia held by Nepi Project Three d.o.o. in a share deal, for a transaction value of \u20ac3.3 million, with a net gain on disposal of \u20ac1.1 million.
\nAssets held for sale as at 31 December 2023
\nAt 31 December 2023, the assets held for sale included the shopping centre in Novi Sad, Serbia (held by NEPI Real Estate Project One d.o.o.), the Otopeni Warehouse and Logistics industrial property and another non-core property located in Romania.
\nIn December 2023, the Group entered into:
a letter of intent (\u201cLOI\u201d) for the sale of retail property Promenada Novi Sad, in Serbia. The transaction is planned to be completed in 2024; and
a share sale purchase agreement (\u201cSPA\u201d) for the sale of one of its industrial properties, Otopeni Warehouse and Logistics S.R.L. The completion of the transaction with the correspondent transfer of ownership to the buyer has been concluded in January 2024.
The major classes of assets and liabilities of subsidiaries which are presented as held for sale at the end of the reporting period are as follows:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Non-current assets | 154,150 | 18,666 |
Investment property at fair value | 151,820 | 1,730 |
Investment property under development | - | 16,936 |
Deferred tax assets | 2,330 | - |
Current assets | 6,765 | 19 |
Trade and other receivables | 4,406 | - |
Cash and cash equivalents | 2,359 | 19 |
Assets held for sale | 160,915 | 18,685 |
Non-current liabilities | 1,539 | 1,111 |
Deferred tax liabilities | 657 | 1,111 |
Other long-term liabilities | 882 | - |
Current liabilities | 2,127 | 7 |
Liabilities held for sale | 3,666 | 1,118 |
Net assets held for sale | 157,249 | 17,567 |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Carrying value at beginning of year | \u00a0 | 18,666 | 1,752 |
Transfer from investment property in use | 151,210 | - | |
Transfer from investment property under development | - | 20,318 | |
Additions during the period | \u00a0 | 10 | 21 |
Fair value adjustments | (330) | (1,195) | |
Disposals | \u00a0 | (17,736) | (2,230) |
CARRYING VALUE | \u00a0 | 151,820 | 18,666 |
An investment property or a group of assets including an investment property (disposal group) are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For this to be the case:
the assets must be available for immediate sale in their present condition;
the Group must be committed to sell;
there must be a plan to locate a buyer; and
it is highly probable that a sale will be completed within one year from the date of classification.\u00a0
On re-classification as held for sale, investment property that is measured at fair value continues to be measured in this way.
\nAn investment property or disposal group classified as held for sale is presented separately in the Statement of financial position as assets or liabilities classified as held for sale.
\nInvestment property held for sale is carried at fair value and is independently assessed on a semi-annual basis, as at 30 June and 31 December.
\nDisposals in the period
\nIn August 2022, the Group entered into a binding agreement for the sale of a plot of excess land owned by General Building Management S.R.L., owner of the development in Craiova, Romania. The sale was finalized in May 2023 for a net consideration received of \u20ac8 million and a net gain on disposal of \u20ac1.6 million.\u00a0
\nIn January 2023, the Group sold at cost a non-core property in Romania held by Nepi Bucharest One S.R.L.
\nIn July 2023, the Group sold the land plot in Kosice, Slovakia held by INLOGIS VI s.r.o, in a share deal, for a cash consideration of \u20ac13.2 million and a gain on disposal of \u20ac4 million.
\nDisposals in the comparative period
\nIn November 2022, the Group disposed of a plot of land in Sabac, Serbia held by Nepi Project Three d.o.o. in a share deal, for a transaction value of \u20ac3.3 million, with a net gain on disposal of \u20ac1.1 million.
\nAssets held for sale as at 31 December 2023
\nAt 31 December 2023, the assets held for sale included the shopping centre in Novi Sad, Serbia (held by NEPI Real Estate Project One d.o.o.), the Otopeni Warehouse and Logistics industrial property and another non-core property located in Romania.
\nIn December 2023, the Group entered into:
a letter of intent (\u201cLOI\u201d) for the sale of retail property Promenada Novi Sad, in Serbia. The transaction is planned to be completed in 2024; and
a share sale purchase agreement (\u201cSPA\u201d) for the sale of one of its industrial properties, Otopeni Warehouse and Logistics S.R.L. The completion of the transaction with the correspondent transfer of ownership to the buyer has been concluded in January 2024.
The major classes of assets and liabilities of subsidiaries which are presented as held for sale at the end of the reporting period are as follows:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Non-current assets | 154,150 | 18,666 |
Investment property at fair value | 151,820 | 1,730 |
Investment property under development | - | 16,936 |
Deferred tax assets | 2,330 | - |
Current assets | 6,765 | 19 |
Trade and other receivables | 4,406 | - |
Cash and cash equivalents | 2,359 | 19 |
Assets held for sale | 160,915 | 18,685 |
Non-current liabilities | 1,539 | 1,111 |
Deferred tax liabilities | 657 | 1,111 |
Other long-term liabilities | 882 | - |
Current liabilities | 2,127 | 7 |
Liabilities held for sale | 3,666 | 1,118 |
Net assets held for sale | 157,249 | 17,567 |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Carrying value at beginning of year | \u00a0 | 18,666 | 1,752 |
Transfer from investment property in use | 151,210 | - | |
Transfer from investment property under development | - | 20,318 | |
Additions during the period | \u00a0 | 10 | 21 |
Fair value adjustments | (330) | (1,195) | |
Disposals | \u00a0 | (17,736) | (2,230) |
CARRYING VALUE | \u00a0 | 151,820 | 18,666 |
Goodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-440": { "value": "\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-441": { "value": "\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nThe Group recognised goodwill for the following business acquisitions:
\nin \u20ac\u00a0thousand | Balance at | Balance at |
|---|---|---|
Pitesti Retail Park (Romania) | 1,671 | 1,671 |
Internalisation of NEPI Investment Management (Romania) | 5,882 | 5,882 |
Aupark Kosice Mall (Slovakia) | 5,189 | 5,189 |
Iris Titan Shopping Center (Romania) | 934 | 934 |
Forum Usti nad Labem (Czech Republic) | 5,646 | 5,646 |
Shopping City Sibiu (Romania) | 9,850 | 9,850 |
Korzo Shopping Centrum (Slovakia) | 2,899 | 2,899 |
Aupark Shopping Center Piestany (Slovakia) | 1,585 | 1,585 |
Arena Centar and Retail Park (Croatia) | 13,512 | 13,512 |
Energit (Poland) | 6,976 | 6,976 |
Paradise Center (Bulgaria) | 9,311 | 9,311 |
Arena Mall (Hungary) | 7,905 | 7,905 |
Galeria Mlyny (Slovakia) | 5,444 | 5,444 |
Total | 76,804 | 76,804 |
There were no movements of goodwill in 2023 and 2022.
\nAccording to the Group\u2019s accounting policies based on IFRS, goodwill is tested at least annually for impairment or whenever there is an indication that it may be impaired. The lowest level within the Group at which the goodwill is allocated and monitored for internal management purposes is the CGU, represented by each individual property. CGUs to which the goodwill has been allocated were tested for impairment by comparing their net asset value with the recoverable value, which is the higher of value in use and fair value less cost to sell.
\nAll the goodwill summarised in the table above, with the exception of NEPI Investment Management and Energit, resulted from business combinations, as the difference between the deferred tax liability recognised in the balance sheet of the business acquired and the expected tax to be paid in case of a future disposal.
\nAs a consequence, impairment tests performed on this type of goodwill at each reporting date consist in comparing its carrying amount with the amounts expected to arise from deferred taxes payable, should a disposal occur, at the level of each CGU.
\nAs a result of this test in 2023, no impairment arose in respect to the goodwill from recognition of deferred taxes at the date of the business combination (31 December 2022: nil).
\nGoodwill arising at the level of management company, NEPI Investment Management, is monitored at the level of this subsidiary, which employs part of the Group\u2019s key management and charges management fees to property operating companies.
\nThe recoverable amount of NEPI Investment Management and Energit is represented by their value in use, determined based on the DCF derived from the five-year financial budgets for these two entities approved by management. Cash flows beyond the five-year period were extrapolated using the estimated cash flow of year 5. The discount rate used was based on the weighted average cost of capital in the specific geography of the two entities.
\nAs a result of this test, no impairment arose in connection with the above two entities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-442": { "value": "\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nAccording to the Group\u2019s accounting policies based on IFRS, goodwill is tested at least annually for impairment or whenever there is an indication that it may be impaired. The lowest level within the Group at which the goodwill is allocated and monitored for internal management purposes is the CGU, represented by each individual property. CGUs to which the goodwill has been allocated were tested for impairment by comparing their net asset value with the recoverable value, which is the higher of value in use and fair value less cost to sell.
\nAll the goodwill summarised in the table above, with the exception of NEPI Investment Management and Energit, resulted from business combinations, as the difference between the deferred tax liability recognised in the balance sheet of the business acquired and the expected tax to be paid in case of a future disposal.
\nAs a consequence, impairment tests performed on this type of goodwill at each reporting date consist in comparing its carrying amount with the amounts expected to arise from deferred taxes payable, should a disposal occur, at the level of each CGU.
\nAs a result of this test in 2023, no impairment arose in respect to the goodwill from recognition of deferred taxes at the date of the business combination (31 December 2022: nil).
\nGoodwill arising at the level of management company, NEPI Investment Management, is monitored at the level of this subsidiary, which employs part of the Group\u2019s key management and charges management fees to property operating companies.
\nThe recoverable amount of NEPI Investment Management and Energit is represented by their value in use, determined based on the DCF derived from the five-year financial budgets for these two entities approved by management. Cash flows beyond the five-year period were extrapolated using the estimated cash flow of year 5. The discount rate used was based on the weighted average cost of capital in the specific geography of the two entities.
\nAs a result of this test, no impairment arose in connection with the above two entities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-443": { "value": "\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nOther long-term assets are classified below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Loans to participants under the Share Purchase Scheme | 3,451 | 4,205 |
Property, plant, and equipment | 4,745 | 3,780 |
Intangible assets | 5,613 | 3,065 |
Non-current receivables | 2,498 | - |
Total | 16,307 | 11,050 |
The Group recognised goodwill for the following business acquisitions:
\nin \u20ac\u00a0thousand | Balance at | Balance at |
|---|---|---|
Pitesti Retail Park (Romania) | 1,671 | 1,671 |
Internalisation of NEPI Investment Management (Romania) | 5,882 | 5,882 |
Aupark Kosice Mall (Slovakia) | 5,189 | 5,189 |
Iris Titan Shopping Center (Romania) | 934 | 934 |
Forum Usti nad Labem (Czech Republic) | 5,646 | 5,646 |
Shopping City Sibiu (Romania) | 9,850 | 9,850 |
Korzo Shopping Centrum (Slovakia) | 2,899 | 2,899 |
Aupark Shopping Center Piestany (Slovakia) | 1,585 | 1,585 |
Arena Centar and Retail Park (Croatia) | 13,512 | 13,512 |
Energit (Poland) | 6,976 | 6,976 |
Paradise Center (Bulgaria) | 9,311 | 9,311 |
Arena Mall (Hungary) | 7,905 | 7,905 |
Galeria Mlyny (Slovakia) | 5,444 | 5,444 |
Total | 76,804 | 76,804 |
There were no movements of goodwill in 2023 and 2022.
\nAccording to the Group\u2019s accounting policies based on IFRS, goodwill is tested at least annually for impairment or whenever there is an indication that it may be impaired. The lowest level within the Group at which the goodwill is allocated and monitored for internal management purposes is the CGU, represented by each individual property. CGUs to which the goodwill has been allocated were tested for impairment by comparing their net asset value with the recoverable value, which is the higher of value in use and fair value less cost to sell.
\nAll the goodwill summarised in the table above, with the exception of NEPI Investment Management and Energit, resulted from business combinations, as the difference between the deferred tax liability recognised in the balance sheet of the business acquired and the expected tax to be paid in case of a future disposal.
\nAs a consequence, impairment tests performed on this type of goodwill at each reporting date consist in comparing its carrying amount with the amounts expected to arise from deferred taxes payable, should a disposal occur, at the level of each CGU.
\nAs a result of this test in 2023, no impairment arose in respect to the goodwill from recognition of deferred taxes at the date of the business combination (31 December 2022: nil).
\nGoodwill arising at the level of management company, NEPI Investment Management, is monitored at the level of this subsidiary, which employs part of the Group\u2019s key management and charges management fees to property operating companies.
\nThe recoverable amount of NEPI Investment Management and Energit is represented by their value in use, determined based on the DCF derived from the five-year financial budgets for these two entities approved by management. Cash flows beyond the five-year period were extrapolated using the estimated cash flow of year 5. The discount rate used was based on the weighted average cost of capital in the specific geography of the two entities.
\nAs a result of this test, no impairment arose in connection with the above two entities.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-445": { "value": "\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nThe Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set of activities and assets, including property, is acquired. More specifically the following criteria, which indicate an acquisition of a business, are considered: the number of properties acquired, the extent to which strategic management processes and operation processes are acquired and the complexity of the processes acquired. In line with amended IFRS 3 since 1 January 2020 the Group may also apply optional concentration test.
\nBusiness combinations are accounted for using the acquisition method. When the acquisition of subsidiaries does not represent a business combination, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised.
\nTransactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-446": { "value": "\nGoodwill arises upon business combination and represents the excess of the consideration transferred over the Group\u2019s interest in net fair value of the net identifiable assets, liabilities, and contingent liabilities of the acquiree.
\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nThe Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set of activities and assets, including property, is acquired. More specifically the following criteria, which indicate an acquisition of a business, are considered: the number of properties acquired, the extent to which strategic management processes and operation processes are acquired and the complexity of the processes acquired. In line with amended IFRS 3 since 1 January 2020 the Group may also apply optional concentration test.
\nBusiness combinations are accounted for using the acquisition method. When the acquisition of subsidiaries does not represent a business combination, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised.
\nTransactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-447": { "value": "\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-448": { "value": "\nFor the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (\u201cCGUs\u201d), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes and it is represented by the individual properties.
\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-461": { "value": "\nAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non\u2011financial assets, other than goodwill and intangible assets with infinitive useful life, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date, if indicators of reversal exist.
\nOther long-term assets are classified below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Loans to participants under the Share Purchase Scheme | 3,451 | 4,205 |
Property, plant, and equipment | 4,745 | 3,780 |
Intangible assets | 5,613 | 3,065 |
Non-current receivables | 2,498 | - |
Total | 16,307 | 11,050 |
In line with IFRS 9 \u201cFinancial instruments\u201d, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
The classification and subsequent measurement of debt instruments financial assets depends on: (i) the Group\u2019s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.
\nFor financial assets measured at fair value through profit or loss (\u201cFVTPL\u201d), gains and losses are recorded in profit or loss.
\nAll purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (\u201cregular way\u201d purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
\nAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price.
\nSubsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset: assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (\u201cSPPI\u201d) are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the Statement of comprehensive income. Financial assets measured at amortised cost (\u201cAC\u201d) comprise cash and cash equivalents, loans to participants in the Share Purchase Scheme, long term receivables and trade and other receivables (excluding prepaid expenses).
\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nFinancial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
\nFinancial assets are written-off, in whole or in part, when the Group has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is no reasonable expectation of recovery include, among others, insolvency or significant financial difficulties of the tenant, default on payment terms and vacation or abandonment of the leased premises. Impaired trade and other receivables are derecognised when all reasonable efforts to collect the amounts outstanding have failed and they are assessed as uncollectable.
\nThe Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination.
\nIf the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a significant increase in credit risk has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
\nIn a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assess whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate and recognises a modification gain or loss in profit or loss.
\nSpecific valuation techniques used to value financial assets include:
The use of quoted market prices or dealer quotes for similar instruments (for financial assets/liabilities at fair value through profit or loss);
Discounted cash flow analysis (for the remaining financial instruments).
Cash and cash equivalents include cash balances, cash deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest (SPPI), and (ii) they are not designated at FVTPL.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-465": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
The classification and subsequent measurement of debt instruments financial assets depends on: (i) the Group\u2019s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.
\nFor financial assets measured at fair value through profit or loss (\u201cFVTPL\u201d), gains and losses are recorded in profit or loss.
\nAll purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (\u201cregular way\u201d purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
\nAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price.
\nSubsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset: assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (\u201cSPPI\u201d) are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the Statement of comprehensive income. Financial assets measured at amortised cost (\u201cAC\u201d) comprise cash and cash equivalents, loans to participants in the Share Purchase Scheme, long term receivables and trade and other receivables (excluding prepaid expenses).
\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nFinancial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
\nFinancial assets are written-off, in whole or in part, when the Group has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is no reasonable expectation of recovery include, among others, insolvency or significant financial difficulties of the tenant, default on payment terms and vacation or abandonment of the leased premises. Impaired trade and other receivables are derecognised when all reasonable efforts to collect the amounts outstanding have failed and they are assessed as uncollectable.
\nThe Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination.
\nIf the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a significant increase in credit risk has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
\nIn a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assess whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate and recognises a modification gain or loss in profit or loss.
\nSpecific valuation techniques used to value financial assets include:
The use of quoted market prices or dealer quotes for similar instruments (for financial assets/liabilities at fair value through profit or loss);
Discounted cash flow analysis (for the remaining financial instruments).
Financial liabilities are initially recognised at fair value and classified and subsequently measured at amortised cost, except for financial liabilities at FVTPL: this classification is applied to interest rate derivatives and other financial liabilities designated as such at initial recognition.
\nBorrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
\nCash and cash equivalents include cash balances, cash deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest (SPPI), and (ii) they are not designated at FVTPL.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-466": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
The classification and subsequent measurement of debt instruments financial assets depends on: (i) the Group\u2019s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.
\nFor financial assets measured at fair value through profit or loss (\u201cFVTPL\u201d), gains and losses are recorded in profit or loss.
\nAll purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (\u201cregular way\u201d purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
\nAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price.
\nSubsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset: assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (\u201cSPPI\u201d) are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the Statement of comprehensive income. Financial assets measured at amortised cost (\u201cAC\u201d) comprise cash and cash equivalents, loans to participants in the Share Purchase Scheme, long term receivables and trade and other receivables (excluding prepaid expenses).
\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nFinancial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
\nFinancial assets are written-off, in whole or in part, when the Group has exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is no reasonable expectation of recovery include, among others, insolvency or significant financial difficulties of the tenant, default on payment terms and vacation or abandonment of the leased premises. Impaired trade and other receivables are derecognised when all reasonable efforts to collect the amounts outstanding have failed and they are assessed as uncollectable.
\nThe Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination.
\nIf the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a significant increase in credit risk has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
\nIn a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assess whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate and recognises a modification gain or loss in profit or loss.
\nSpecific valuation techniques used to value financial assets include:
The use of quoted market prices or dealer quotes for similar instruments (for financial assets/liabilities at fair value through profit or loss);
Discounted cash flow analysis (for the remaining financial instruments).
Financial liabilities are initially recognised at fair value and classified and subsequently measured at amortised cost, except for financial liabilities at FVTPL: this classification is applied to interest rate derivatives and other financial liabilities designated as such at initial recognition.
\nBorrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
\nCash and cash equivalents include cash balances, cash deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest (SPPI), and (ii) they are not designated at FVTPL.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
\nThis program was put in place before the 2017 merger of the former groups New Europe Property Investments plc (\u201cNEPI\u201d) and Rockcastle Global Real Estate Company Ltd (\u201cRockcastle\u201d). Under this program, participants were granted loans to acquire shares in the Company at fair value at the grant date. These loans were classified as \u201cloans to participants in the incentive plan\u201d and included in Other long-term assets (Note 10). The loans are carried at amortised cost and the accrued interest is recognised as finance income in the Statement of Comprehensive Income. The costs under this program are nil.
\nThe Group has exposure to the following risks due to its use of financial instruments: credit, liquidity, and market, including currency and interest rate. This note presents information about the Group\u2019s exposure to each, as well as its objectives, policies and processes for measuring and managing risk.
\nThe Board of Directors has overall responsibility for the establishment and oversight of the Group\u2019s risk management framework. The Board of Directors has delegated the responsibility for developing this framework to the Risk Committee. This Committee reports to the Board of Directors on its activities, oversees how management monitors compliance policies and procedures, and reviews the adequacy of the framework regarding the risks faced.
\nThe Group\u2019s policies are established to identify and analyse the risks it may encounter by performing its activities, to set appropriate limits and controls, and to monitor risks and adherence to limits. These policies and systems are reviewed regularly to reflect changes in market conditions and Group activities.
\nThe Groups operations remain unaffected by the military conflicts in any significant way. All the markets where NEPI Rockcastle operates are outside the conflict areas and continue to function normally. The indirect macroeconomic effects that the conflicts had in the CEE region, such as the increase in energy and other commodities costs, did not have a significant impact in the current year, as the local economies adapted to the new context. Nevertheless, due to ongoing uncertainty in geopolitical landscape and volatility in the financial markets, the Group continues to closely monitor development in all market conditions.
\nAs part of appropriate risk management measures, and identifying and managing risk, management has considered possible events and conditions for the purpose of identifying whether these events and conditions affect or may affect the future performance of the Group.
\nThe following risks were assessed:
\nSurge in operational costs due to increased energy prices
\nThe increase in energy prices in 2023 had minimal direct effect on NEPI Rockcastle, as its operations are not energy intensive. Moreover, the majority of energy costs incurred by the Group are passed on to its tenants, which were able to absorb the increased energy costs due to the strong growth in sales in substantially all jurisdictions of operation. The occupancy cost ratio of Group\u2019s tenants has been consistent over the last periods. As the photovoltaic projects in Romania are substantially completed, NEPI Rockcastle will produce solar energy using photovoltaic panels installed on the rooftops of the Group\u2019s properties. This will further contribute to mitigation of the risk of increased energy costs, as well as contribute to a faster transition of the group to green energy use, with a positive impact on the value of its assets.
\nImpact on credit risk tenant receivable
\nNEPI Rockcastle did not experience any significant change in the collection rate of its receivables from tenants in 2023 as compared to previous periods, there were no important client losses due to bankruptcies or financial difficulties. In fact, the tenant receivables collection pattern and tenant discipline has not changed since the end of the pandemic, with majority of receivables paid within the contracted payment period. The increasing tenant sales have proved to be a continuous trend since the pandemic, throughout 2022 and 2023 and there are indications that this trend will continue in near future. The Group regularly consults retailers to gain insight into their performance and assess their financial robustness.
\nDisruptions in the Group\u2019s development program
\nThe current macroeconomic context had an effect on the price fluctuations and changes in availability of construction materials, components and services, which are required by the Group for its pipeline related to development and extension of its planned projects. NEPI Rockcastle has an in-house development team, which controls the construction process, which is in its turn monitored by the Investment Committee. As a general rule, development projects are entered into in a phased manner, allowing management the possibility to put certain construction projects on hold if circumstances, such as availability or price of resources, require it. Also, the development team usually enters into fixed price contracts with suppliers when ordering components for committed projects going into construction, thus allowing to mitigate potential spikes in material prices.
\nRefinancing risk and impact on loan covenants
\nGlobal financial markets continued to experience disruptions, including increased volatility and diminished liquidity and credit availability. NEPI Rockcastle is in constant contact with its current and prospective financing partners. As disclosed in Note 18 Borrowings, in December 2023 the Group successfully concluded several funding extensions and agreements, including a \u20ac387 million green unsecured sustainability-linked loan facility, syndicated by the International Finance Corporation (IFC). These agreements ensure that the Group not only has access to ample liquidity but also will have no material debt maturities until the end of 2025. The Group is also closely monitoring its loan covenants, which currently show ample headroom for all existing loan arrangements, while also ensuring that future compliance with covenants will be achieved based on current and future financing arrangements and forecast results.
\nBroader economic impact in the jurisdictions where the Group operates
\nThe uncertain macroeconomic outlook, with high inflation can ultimately affect the labour market and purchasing power of consumers, which can in turn impact Group operations and valuation of its properties. The diversified nature of Group\u2019s portfolio, with 60 assets across 9 CEE countries and thousands of tenants from across the retail industry spectrum, mitigates risks associated with adverse changes in macroeconomic conditions (inflation, increased costs). Rents paid by the top ten tenants represented 25.2% of the Group\u2019 revenues in the year ended 31 December 2023. Furthermore, the annual rent indexation mechanism (HICP EU27), which is used by the Group in all of its leases with its tenants, provides the Group with an economic hedge against inflation. The Group\u2019s main tenants are leading companies in their sectors and all tenants are subject to a financial review before signing leases with the Group.
\nValuers included in their valuations assumptions factors resulting from the indirect impact of the current macroeconomic environment, through:
increased valuation yields (weighted average of 15 bps);
adjusting future cash flows with risk premia, to account for additional unrecoverable expenses and potential collection difficulties (on average 0.5%);
indexing the future cash flows with projected inflation rates for the next period (in the range of 2.1% - 2.2%).
More details on valuation assumptions and inputs are provided in Notes 8 and 9.
\nCredit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group\u2019s receivables from tenants and cash and cash equivalents.
\nThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is set out below:
\nCredit exposure on financial instruments | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Tenant receivables | 71,721 | 59,691 | |
Cash and cash equivalents | 338,519 | 250,631 | |
Financial assets at fair value through profit or loss1 | 21,568 | 36,064 | |
Loans to participants in the Share Purchase Scheme2 | 3,451 | 4,205 | |
Total | \u00a0 | 435,259 | 350,591 |
Out of the above maximum credit exposure, the balance of Loans to participants in the Share Purchase Scheme is not considered to present credit risk as these are guaranteed with the Company\u2019s shares held as security (see details in Note 17).
\nWhen monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, the industry they work in, business size and previous financial difficulties.
\nThe exposure to credit risk is mainly influenced by the tenant\u2019s individual characteristics. The Group\u2019s widespread customer base reduces credit risk. The majority of rental income 68%, (31 December 2022: 67%) is derived from type A tenants (large international and national tenants; large listed tenants; government and major franchisees and companies with assets and/or turnovers exceeding \u20ac200 million), and there is no concentration of credit risk with respect to trade debtors: top 10 tenants account for 25.2% of the rental income as at 31 December 2023 (31 December 2022: 24.8%).
\nManagement has established a credit policy where new customers are analysed individually for creditworthiness before standard payment terms and conditions are offered. When available, the analysis includes external ratings.
\nThe Group establishes an allowance for impairment based on a simplified expected credit loss model in respect of Trade and other receivables. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nThe carrying value of financial assets approximates their fair value. The Group\u2019s exposure to credit risk associated cash and cash equivalents is limited through using financial institutions of good standing for investment and cash handling purposes.
\nAn overview of the tenant receivables net of impairment provision is set out below:
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables \u2013 gross | \u00a0 | 82,422 | 69,033 |
Less: Impairment provisions | \u00a0 | (10,701) | (9,342) |
TENANT RECEIVABLES - NET OF IMPAIRMENT PROVISION | 71,721 | 59,691 |
Reconciliation of impairment provisions is set out below:
\nMovement of provisions for doubtful debtors | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Carrying value at beginning of the year | (9,342) | (7,282) |
Additional provision from properties acquired during the year | - | (2,489) |
Additional expected credit losses | (5,485) | (2,841) |
Write-off of receivables | 1,900 | 986 |
Recovery of previously expected credit losses | 2,366 | 2,182 |
Transfers to assets held for sale | 100 | - |
Foreign exchange gain | (240) | 102 |
Carrying value | (10,701) | (9,342) |
The expected loss rates are based on the historical payment profiles of tenants and the corresponding historical credit losses, adjusting for forward looking macroeconomic data. For example, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in a customer segment, the historical default rates are adjusted upwards. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the provision for doubtful debtors as at 31 December 2023 was determined as follows for trade receivables:
\n31 December 2023 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 2% | 7% | 81% | 96% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 60,458 | 9,299 | 1,979 | 332 | 10,354 | 82,422 |
PROVISION FOR DOUBTFUL DEBTORS | (219) | (172) | (135) | (268) | (9,907) | (10,701) |
The impairment provision for trade receivables as at 31 December 2022 is set out below:
\n31 December 2022 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 1% | 5% | 24% | 89% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 48,148 | 8,685 | 1,483 | 529 | 10,188 | 69,033 |
PROVISION FOR DOUBTFUL DEBTORS | (74) | (56) | (67) | (128) | (9,017) | (9,342) |
The maturity profile of the Financial assets at fair value through profit or loss is disclosed below:
\n31 December 2023 | 3\u201312 months | 1\u20135 years | over 5 years | Total |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial assets at fair value through profit or loss | 2,626 | 18,942 | - | 21,568 |
31 December 2022 | 3\u201312 months | 1\u20135 years | over 5 years | Total |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial assets at fair value through profit or loss | - | 25,958 | 10,106 | 36,064 |
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the expected credit losses are immaterial.
\nFor purposes of liquidity management, the Group has\u00a0various\u00a0deposit accounts and negotiated current account agreements with several banks.\u00a0The arrangements in place result in an optimized mix between flexibility and reduced interest charges or best interest offered. The banks\u2019 credit ratings, as well as exposure per each bank are constantly monitored. At 31 December 2023, 97% of the Group's cash was held with investment-grade rated banks (31 December 2022: 95%), as detailed below:
\nCash and cash equivalents | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Held with banks as rated by Moody\u2019s | \u00a0 | \u00a0 |
A1 | 49% | 7% |
A2 | 10% | 30% |
A3 | 10% | 15% |
Aa3 | 8% | 8% |
Baa1 | 19% | 35% |
Baa2 | 1% | - |
Held with not rated banks | 3% | 5% |
Total | 100% | 100% |
Liquidity risk is the risk that the Group will not be able to meet its financial obligations when due. The Group\u2019s approach to managing this risk ensures, as far as possible, it will always have enough liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to its reputation. To ensure this occurs, 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.
\nFurther reference to bank loan maturity analysis is made in Note 18.
\nThe table below presents undiscounted cash flows for all financial liabilities, computed at the contractual rates:
\n31 Dec 2023 | Note | under 3 months | 3\u201312 months | 1\u20135 years | over 5 years | Total undiscounted cash flows | Total carying amount |
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Bonds (including estimated future interest) | 30,076 | 527,589 | 1,087,805 | 509,430 | 2,154,900 | 1,999,031 | |
Bank loans (including estimated future interest) | 13,730 | 35,226 | 406,034 | 236,408 | 691,398 | 533,721 | |
Loans from third parties (including estimated future interest) | 611 | 18,264 | 17,715 | - | 36,590 | 33,405 | |
Trade and other payables | 128,388 | 25,945 | - | - | 154,333 | 154,333 | |
Income tax payable | 7,837 | 12,350 | - | - | 20,187 | 20,187 | |
Other long-term liabilities | - | - | 26,034 | 10,040 | 36,074 | 36,074 | |
Lease liabilities (including estimated future interest) | 1,545 | - | 6,181 | 97,503 | 105,229 | 56,520 | |
Total | \u00a0 | 182,187 | 619,374 | 1,543,769 | 853,381 | 3,198,711 | 2,833,271 |
31 Dec 2022 | Note | under 3 months | 3\u201312 months | 1\u20135 years | over 5 years | Total undiscounted cash flows | Total carying amount |
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Bonds (including estimated future interest) | 30,707 | 28,539 | 1,616,496 | 518,081 | 2,193,823 | 1,992,971 | |
Bank loans (including estimated future interest) | 9,232 | 22,974 | 393,592 | 211,739 | 637,537 | 557,901 | |
Loans from third parties (including estimated future interest) | 908 | 19,080 | 36,518 | - | 56,506 | 50,107 | |
Trade and other payables | 24,185 | 112,485 | - | - | 136,670 | 136,670 | |
Income tax payable | 6,815 | 11,517 | - | - | 18,332 | 18,332 | |
Other long-term liabilities | - | - | 31,303 | 6,363 | 37,666 | 37,666 | |
Lease liabilities (including estimated future interest) | 832 | - | 4,506 | 67,036 | 72,374 | 37,200 | |
Total | \u00a0 | 72,679 | 194,595 | 2,082,415 | 803,219 | 3,152,908 | 2,830,847 |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates or equity prices will affect the Group\u2019s fair value or future cash flows of financial instruments. The objective of market risk management is to manage market risk exposures within acceptable parameters, while optimising returns. The carrying value of financial assets and liabilities approximates their fair value, except for the carrying value of bonds.
\nGroup\u2019s current assets and liabilities are exposed to foreign currency risk on purchases and receivables denominated in Romanian leu (RON), Polish zloty (PLN), Bulgarian Lev (BGN), Hungarian forint (HUF), Serbian dinar (RSD), Czech crown (CZK) and South African rand (ZAR). Cash inflows received in other currencies than Euro are converted to Euro using the spot rate available on the collection date. The amount converted to Euro is the net amount of cash inflow in a foreign currency and the estimated cash outflow in the same currency. The Group applies this policy to control its currency exposures in respect of monetary assets and liabilities denominated in currencies other than EUR. Sensitivities of profit or loss to reasonably possible changes in exchange rates applied at the financial position date relative to the local currency of the respective Group entities, with all other variables such as interest rates held constant, are immaterial.
\nInterest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk on loans, borrowings and cash balances held. Group policy is to substantially hedge this risk through the use of derivative financial instruments. As at 31 December 2023 and 31 December 2022, the Group held interest rate instruments in the form of interest rate swaps and interest rate caps, as further disclosed in Note 19.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Bank loans | 533,721 | 557,901 |
Rate capped | 432,653 | 330,000 |
Rate swapped | 112,793 | 114,928 |
Variable rate1 | - | 115,333 |
Accrued interest on loans and deferred loan costs | (11,725) | (2,360) |
A change of 100 basis points (bps) in interest rates would have increased/(decreased) equity and profit for the year as shown below. Calculations are based on the cash and loans and borrowings balances outstanding at the respective balance sheet dates as of 31 December 2023 and respectively 31 December 2022. Cash and loans and borrowings balances are subject to change over the year. This analysis assumes that all other variables, particularly foreign currency rates, remain constant. All sensitivity analysis calculations presented below are before tax.
\nThe benchmark rate for the bank loans with an outstanding amount of \u20ac533,721 thousand as at 31 December 2023 (2022: \u20ac557,901 thousand) is Euribor 3 months; if this rate is less than zero, Euribor shall be deemed to be zero. There are no plans to discontinue Euribor.
\nLoans and borrowings with fixed or swapped interest rates are not affected by market changes in interest rates.
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Loans to participants in the Share Purchase Scheme | 3,451 | 4,205 | |
Loans and borrowings (variable or capped rate) | \u00a0 | (432,653) | (445,333) |
Total | \u00a0 | (429,202) | (441,128) |
31 Dec 2023 | Profit or loss 100bps increase | Profit or loss 100bps decrease | Equity 100bps increase | Equity 100bps decrease |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to participants in the Share Purchase Scheme (including accrued interest) | 35 | (35) | 35 | (35) |
Loans and borrowings (variable or capped rate)1 | - | - | - | - |
Total | 35 | (35) | 35 | (35) |
31 Dec 2022 | Profit or loss 100bps increase | Profit or loss 100bps decrease | Equity 100bps increase | Equity 100bps decrease |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to participants in the Share Purchase Scheme (including accrued interest) | 42 | (42) | 42 | (42) |
Loans and borrowings (variable or capped rate)1 | (856) | 1,130 | (856) | 1,130 |
Total | (814) | 1,088 | (814) | 1,088 |
To estimate the fair value of individual classes of financial instruments, the following methods and assumptions are used:
\nCash and cash equivalents
The book value of cash approximates their fair value, as these financial instruments have a short maturity.
Receivables and payables
The book value of short-term receivables and payables approximates their fair value, as these financial instruments have a short maturity.
Short-term loans
The book value approximates their fair value, as these instruments have a floating interest rate and a short maturity.
Long-term loans
The fair value of long-term loans as at 31 December 2023 is \u20ac583,146 thousand (2022 \u2013 \u20ac614,903 thousand). The valuation model of fair value of bank loans considers the present value of expected payments, discounted using risk adjusted discount rate. The Group has determined that all of its Interest-bearing loans and borrowings from financial institutions are classified within Level 2 of the fair value hierarchy. To determine the fair value of such instruments, management used a valuation technique in which all significant inputs were based on observable market data.
Bonds
The fair value of bonds outstanding as at 31 December 2023 is presented in Note 18.
Derivatives
The fair value of derivatives is based on fair value quotes from counterparty banks and are disclosed in Note 19.
Other long-term assets are classified below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Loans to participants under the Share Purchase Scheme | 3,451 | 4,205 |
Property, plant, and equipment | 4,745 | 3,780 |
Intangible assets | 5,613 | 3,065 |
Non-current receivables | 2,498 | - |
Total | 16,307 | 11,050 |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables (net of ECL) | 71,721 | 59,691 | |
VAT receivable | \u00a0 | 7,510 | 11,287 |
Prepaid property expenses | \u00a0 | 4,915 | 9,447 |
Other receivables | \u00a0 | 8,956 | 4,989 |
Other prepaid fees | \u00a0 | 363 | 82 |
Total | \u00a0 | 93,465 | 85,496 |
Cash and cash equivalents by currency | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
EUR | 213,959 | 161,035 |
RON | 54,615 | 38,556 |
PLN | 35,911 | 19,837 |
BGN | 14,050 | 10,663 |
HUF | 8,991 | 3,213 |
HRK | - | 7,703 |
CZK | 9,864 | 5,909 |
RSD | 238 | 3,101 |
ZAR | 891 | 614 |
Total | 338,519 | 250,631 |
Cash and cash equivalents by type | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Current accounts | 258,371 | 196,019 |
Deposits | 80,000 | 50,079 |
Restricted cash | - | 4,250 |
Petty cash | 148 | 283 |
Total | 338,519 | 250,631 |
Under this program, loans were granted to participants in the share purchase schemes (the \u201cShare Purchase Scheme\u201d or \u201cSPS\u201d) to buy shares, the repayment of which could be made in part out of the distribution payable in relation to the shares (the \u201cNRP SPS\u201d). Of the shares initially subscribed for, 20% vested annually. The Group offered each participant the immediate right to subscribe for the permitted number of shares at their market value, less a maximum discount of 5%, together with a loan to fund the purchase. Each loan carried interest at the weighted average rate that the Group can borrow money. Loans are payable in full, together with interest, ten years after its subscription date, but could be repaid earlier. The Company has security interests that ensure the repayment of the principal and interest on the loan given to participants. The NRP SPS is a full recourse scheme (i.e., recourse in relation to loans granted is not limited to shares issued). Pending repayment of the loan, the distributions on such shares are used to repay loan interest. Any excess distribution after interest payment is used to repay the loan.
\nNo shares were issued during 2023 and 2022 under the NRP SPS.
\nThe number of shares outstanding and the loans to participants under the Share Purchase Scheme as at the year-end are summarised below:
\nNRP SPS | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Number of shares outstanding, collateralizing the Loans to participants under the Share Purchase Scheme | 550,990 | 657,276 |
Loans to participants under the Share Purchase Scheme (in \u20ac\u00a0thousand) | 3,451 | 4,205 |
The Group is currently assigned a long-term corporate credit rating of BBB (stable outlook) from Standard & Poor\u2019s Rating Services and BBB+ (stable outlook) from Fitch Ratings.
\nIn March 2023 the Group concluded a \u20ac200 million secured green loan which matures in June 2028. The loan proceeds were used to repay the revolving credit facilities utilised for the acquisition of Forum Gdansk Shopping Center and Copernicus Shopping Centre.
\nIn December 2023, the Group extended the contractual maturities to two of its secured term loans \u2013 a \u20ac40 million loan contracted by its subsidiary in Czech Republic extended until December 2030 and a \u20ac76 million loan contracted by its subsidiary in Poland extended until March 2029.
\nIn 2023, NEPI Rockcastle extended the contractual maturities related to its unsecured committed revolving credit facilities, as follows:
the revolving credit facility from BRD-Groupe Soci\u00e9t\u00e9 G\u00e9n\u00e9rale and Garanti Bank was extended for one year, until July 2026, with the maximum principal available maintained at \u20ac170 million;
the revolving credit facility from ING Bank was extended for one year, until July 2026, with the maximum principal available maintained at \u20ac100 million; and
the revolving credit facility from a three-bank syndicate lead by Deutsche Bank AG as arranger, was extended for three years, until January 2027, with the maximum principal available decreased to \u20ac150 million.
The above mentioned committed revolving credit facilities together with the revolving credit facility of a maximum limit of \u20ac150 million with Raiffeisen Bank International amount to a total of \u20ac570 million available unsecured committed revolving credit facilities, undrawn as at 31 December 2023 (31 December 2022: \u20ac620 million, of which \u20ac420 million were undrawn).
\nIn February 2024, the Group extended the maturity of the revolving credit facility with Raiffeisen Bank International until January 2027 and increased the maximum limit to \u20ac196 million, having Erste Group Bank joining the facility. Consequently, as at the date of the publication of these financial statements, the revolving credit facilities\u2019 capacity amounts to \u20ac616 million.
\nIn December 2023, NEPI Rockcastle entered into a \u20ac387 million green financing agreement with IFC, a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets. The senior unsecured facility is structured as a green loan with sustainability-linked features, aimed at reducing greenhouse gas emissions and increasing energy efficiency in the Group\u2019s property portfolio. The facility matures in January 2029 and was disbursed in the mid-February 2024. The facility has been put in place to cater for the repayment of the upcoming bond maturing in November 2024.
\nThe average interest rate of the Group\u2019s debt, including hedging result, was approximately 2.5% during 2023 (31 December 2022: 2.3%). As at 31 December 2023, fixed-coupon bonds represented 78% of NEPI Rockcastle\u2019s outstanding debt; out of the remaining long-term debt exposed to Euribor, 79% was hedged with interest rate caps and 21% with interest rate swaps.
\nThe fair value of all financial instruments is substantially in line with their carrying amounts as reflected on the Statement of financial position, except for the bonds. For reference, as at 31 December 2023, the \u20ac499 million bonds issued in 2017 were trading on the market at 96.78% (31 December 2022: 93.55%), the \u20ac500 million bonds issued in 2019 were trading on the market at 91.22% (31 December 2022: 84.13%), the \u20ac500 million bonds issued in July 2020 were trading on the market at 94.43% (31 December 2022: 86.52%) and the \u20ac500 million bonds issued in January 2022 were trading on the market at 80.25% (31 December 2022: 69.04%).
\nThe repayment profile for outstanding loans, excluding future interest, is detailed below:
\nInterest bearing borrowings 31 Dec 2023 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | 498,980 | 1,000,000 | 500,000 | 1,998,980 |
Netherlands | Unsecured loans | - | 73,521 | - | 73,521 |
Poland | Secured loans | 745 | 2,979 | 70,570 | 74,294 |
Slovakia | Secured loans | 6,475 | 23,200 | 76,337 | 106,012 |
Czech Republic | Secured loans | 600 | 2,400 | 35,848 | 38,848 |
Romania | Secured loans | 9,476 | 199,659 | 43,636 | 252,771 |
Accrued interest on loans and deferred loan costs | \u00a0 | (1,473) | (9,904) | (348) | (11,725) |
Accrued coupon on bonds | \u00a0 | 20,323 | - | - | 20,323 |
Deferred bond costs | \u00a0 | (2,459) | (5,486) | (616) | (8,561) |
Issue discount on bonds | \u00a0 | (3,434) | (7,491) | (786) | (11,711) |
Total | \u00a0 | 529,233 | 1,278,878 | 724,641 | 2,532,752 |
Interest bearing borrowings 31 Dec 2022 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | - | 1,498,980 | 500,000 | 1,998,980 |
Netherlands | Revolving facilities | - | 200,000 | - | 200,000 |
Netherlands | Unsecured loans | - | - | 73,521 | 73,521 |
Poland | Secured loans | 1,520 | 74,100 | - | 75,620 |
Slovakia | Secured loans | 6,475 | 23,200 | 82,137 | 111,812 |
Czech Republic | Secured loans | 615 | 38,694 | - | 39,309 |
Romania | Secured loans | 2,727 | 10,908 | 46,365 | 60,000 |
Accrued interest on loans and deferred loan costs | \u00a0 | (180) | (2,181) | - | (2,361) |
Accrued coupon on bonds | \u00a0 | 20,353 | - | - | 20,353 |
Deferred bond costs | \u00a0 | (2,504) | (7,359) | (1,203) | (11,066) |
Issue discount on bonds | \u00a0 | (3,586) | (10,161) | (1,549) | (15,296) |
Total | \u00a0 | 25,420 | 1,826,181 | 699,271 | 2,550,872 |
This section sets out an analysis of bonds and bank loans outstanding and the related movements for the periods presented.
\nin \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Cash repayments of principal | (214,815) | - | (214,815) |
Cash proceeds from bank loans or bonds | 200,000 | - | 200,000 |
Cash payments of interest on bank loans or coupon on bonds | (28,428) | (44,982) | (73,410) |
Interest expense1 | 29,584 | 44,952 | 74,536 |
Amortisation of capitalised borrowing costs | 1,758 | 2,504 | 4,262 |
Amortisation of bond discount | - | 3,586 | 3,586 |
Additional capitalised borrowing costs in the period | (12,279) | - | (12,279) |
Debt as at 31 December 2023 | 533,721 | 1,999,031 | 2,532,752 |
in \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2021 | 304,586 | 1,988,239 | 2,292,825 |
Cash repayments of principal | (25,563) | (496,020) | (521,583) |
Loan taken over from the acquisition of the remaining 50% stake in joint venture | 18,432 | - | 18,432 |
Cash proceeds from bank loans or bonds | 260,000 | 493,566 | 753,566 |
Cash payments of interest on bank loans or coupon on bonds | (5,972) | (44,024) | (49,996) |
Interest expense | 6,288 | 45,522 | 51,810 |
Amortisation of capitalised borrowing costs | 916 | 2,595 | 3,511 |
Amortisation of bond discount | - | 3,824 | 3,824 |
Additional capitalised borrowing costs in the period | (786) | (4,674) | (5,460) |
Costs released following bonds buy-back prior maturity | - | 3,943 | 3,943 |
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Further details for the Group\u2019s loans and bonds are presented below:
\nThe Group has secured term loans contracted by some of its subsidiaries in Poland, Slovakia, Czech Republic, and Romania. In March 2023, two Romanian subsidiaries concluded a \u20ac200 million secured loan which matures in June 2028.
\nSecurities
General security over the properties (fair values as at 31 December 2023), current assets, cash inflows from operating activities, accounts and receivables; and
General security over the shares in the property-owning entities.
Covenants
Debt service cover ratio of a minimum between 120% and 125%; and
Loan to value ratio of a maximum between 60% and 70%.
The Group has a green unsecured financing agreement which matures in June 2028 in amount of \u20ac73.5 million.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
At 31 December 2023, there were \u20ac570 million revolving facilities available for drawdown.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
All available revolving facilities are linked either to the ESG performance of the Group through the sustainability rating provided by Sustainalytics or have sustainability-linked KPIs in line with the Group\u2019s Sustainability-Linked Financing Framework.
\nManagement considers that the above ESG related variability feature does not meet the definition of a derivative, as defined in Appendix A of IFRS 9, on the basis that the external rating is a non\u2013financial variable specific to the Group.
\nThe Group successfully issued fixed coupon bonds as follows:
November 2017: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 23 November 2024 and carry a 1.75% fixed coupon, with an issue price of 99.051%;
October 2019: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 9 October 2026 and carry a 1.875% fixed coupon, with an issue price of 98.927%;
July 2020: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 14 July 2027 and carry a 3.375% fixed coupon, with an issue price of 98.172%; and
January 2022: \u20ac500 million of unsecured, 8-year Eurobonds. The bonds mature on 21 January 2030 and carry a 2.00% fixed coupon, with an issue price of 98.713%.
All the bonds include early redemption options. At each date of bond issue initial recognition management has performed an assessment whether those options are closely related to the host contract, considering the IFRS 9 clauses, which states that early repayment options are closely related to the host debt, if either:
the option\u2019s exercise price is approximately equal on each exercise date to the host debt instrument\u2019s amortised cost; or
the exercise price of a prepayment option reimburses the lender for an amount up to the approximate present value of lost interest for the remaining term of the host contract.
Based on management assessment in case of the exercise of any of the early redemption options either first or second criteria will be met, therefore those were considered as closely related to the bond and thus not separately valued and disclosed.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
NEPI Rockcastle has complied with all financial covenants of its borrowing facilities during 2023 and 2022. The ratios calculated for all unsecured loans and bonds showed ample headroom compared to the covenants:
Solvency Ratio: 0.38 (31 December 2022: 0.40);
Consolidated Coverage Ratio: 6.06 (31 December 2022: 6.2); and
Unsecured Ratio: 269% (31 December 2022: 251%).
The Group uses mainly derivative instruments to hedge variable interest rate (Euribor) exposure. Their fair value is summarised below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Derivative financial assets \u2013 long term | 12,241 | 25,585 |
Derivative financial assets \u2013 short term | 9,327 | 10,479 |
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nThe derivative financial assets and liabilities classification to non-current or current sections of the Statement of financial position is driven by the contractual maturities of the instruments.
\nAt 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Property related payables1 | 65,674 | 61,835 |
Advances from tenants | 49,453 | 43,710 |
Advances from residential customers | 3,474 | - |
Payable for assets under construction | 17,892 | 16,973 |
Accrued administrative expenses | 14,192 | 5,246 |
Tenant security deposits | 2,824 | 2,635 |
Deferred consideration on acquisitions of subsidiaries and asset deals | 824 | 6,271 |
Total | 154,333 | 136,670 |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Tenant security deposits | 35,011 | 32,990 |
Advances from residential customers | - | 3,427 |
Other long-term payables | 1,063 | 1,249 |
Total | 36,074 | 37,666 |
As part of the deal for the acquisition of Forum Gdansk Sp. z o.o. (made in 2022), the Group obtained vendor financing in the form of a three-year unsecured loan from the seller, for part of the purchase price amounting to \u20ac50,000 thousand, bearing an interest rate of 6.5%. One third of the loan principal is repayable at each anniversary of the loan until maturity, however the loan can be repaid by the Group at any time at its own discretion. The fair value of the loan is substantially in line with its carrying amount.
\nThis section sets out the movements in loans from third parties for the periods presented.
\nin \u20ac\u00a0thousand | Loans from third parties |
|---|---|
Loans from third parties as at 31 December 2022 | 50,107 |
Out of which short term | 16,774 |
Cash payments of principal | (16,666) |
Cash payments of interest | (3,250) |
Interest expense | 3,214 |
Loans from third parties as at 31 December 2023 | 33,405 |
Out of which short term | 16,738 |
in \u20ac\u00a0thousand | Loans from third parties |
|---|---|
Loans from third parties as at 31 December 2021 | - |
Out of which short term | - |
Loan taken over following subsidiary acquisition | 50,000 |
Interest expense | 107 |
Loans from third parties as at 31 December 2022 | 50,107 |
Out of which short term | 16,774 |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
The fair value adjustments of derivatives include the fair value loss of \u20ac17,376 thousand (31 December 2022: gain of \u20ac37,946 thousand, including a fair value gain of \u20ac4.1 million from pre-hedging \u20ac250 million of the bond issued in January 2022) from existing interest rate caps and swaps.
\nAt 31 December 2022, losses on extinguishment of financial instruments included the premium paid on repurchase of bond notes due in 2023 of \u20ac21,925 thousand (refer to Note 18).
\nAs at 31 December 2023, the Group had received letters of guarantee from tenants worth \u20ac132,297 thousand (31 December 2022: \u20ac108,406 thousand) and from suppliers worth \u20ac29,789 thousand (31 December 2022: \u20ac62,692 thousand) related to ongoing developments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-468": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
The classification and subsequent measurement of debt instruments financial assets depends on: (i) the Group\u2019s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.
\nFor financial assets measured at fair value through profit or loss (\u201cFVTPL\u201d), gains and losses are recorded in profit or loss.
\nAll purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (\u201cregular way\u201d purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
\nAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price.
\nSubsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset: assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (\u201cSPPI\u201d) are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the Statement of comprehensive income. Financial assets measured at amortised cost (\u201cAC\u201d) comprise cash and cash equivalents, loans to participants in the Share Purchase Scheme, long term receivables and trade and other receivables (excluding prepaid expenses).
\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nFinancial liabilities are initially recognised at fair value and classified and subsequently measured at amortised cost, except for financial liabilities at FVTPL: this classification is applied to interest rate derivatives and other financial liabilities designated as such at initial recognition.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-470": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
The classification and subsequent measurement of debt instruments financial assets depends on: (i) the Group\u2019s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.
\nFor financial assets measured at fair value through profit or loss (\u201cFVTPL\u201d), gains and losses are recorded in profit or loss.
\nAll purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (\u201cregular way\u201d purchases and sales) are recorded at trade date, which is the date when the Group commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
\nAt initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price.
\nSubsequent measurement of debt instruments depends on the Group\u2019s business model for managing the asset and the cash flow characteristics of the asset: assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest (\u201cSPPI\u201d) are measured at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented as separate line item in the Statement of comprehensive income. Financial assets measured at amortised cost (\u201cAC\u201d) comprise cash and cash equivalents, loans to participants in the Share Purchase Scheme, long term receivables and trade and other receivables (excluding prepaid expenses).
\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nFinancial liabilities are initially recognised at fair value and classified and subsequently measured at amortised cost, except for financial liabilities at FVTPL: this classification is applied to interest rate derivatives and other financial liabilities designated as such at initial recognition.
\nThe Group uses mainly derivative instruments to hedge variable interest rate (Euribor) exposure. Their fair value is summarised below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Derivative financial assets \u2013 long term | 12,241 | 25,585 |
Derivative financial assets \u2013 short term | 9,327 | 10,479 |
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nThe derivative financial assets and liabilities classification to non-current or current sections of the Statement of financial position is driven by the contractual maturities of the instruments.
\nAt 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
\nThe fair value adjustments of derivatives include the fair value loss of \u20ac17,376 thousand (31 December 2022: gain of \u20ac37,946 thousand, including a fair value gain of \u20ac4.1 million from pre-hedging \u20ac250 million of the bond issued in January 2022) from existing interest rate caps and swaps.
\nAt 31 December 2022, losses on extinguishment of financial instruments included the premium paid on repurchase of bond notes due in 2023 of \u20ac21,925 thousand (refer to Note 18).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-473": { "value": "\nFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group have transferred substantially all the risks and rewards of ownership.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-477": { "value": "\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-478": { "value": "\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-479": { "value": "\nDerivatives are initially recognised at fair value on the date a derivative contract is entered into, and they are subsequently remeasured to their fair value at the end of each reporting period.
\nThe Group uses mainly derivative instruments to hedge variable interest rate (Euribor) exposure. Their fair value is summarised below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Derivative financial assets \u2013 long term | 12,241 | 25,585 |
Derivative financial assets \u2013 short term | 9,327 | 10,479 |
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nThe derivative financial assets and liabilities classification to non-current or current sections of the Statement of financial position is driven by the contractual maturities of the instruments.
\nAt 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
\nThe fair value adjustments of derivatives include the fair value loss of \u20ac17,376 thousand (31 December 2022: gain of \u20ac37,946 thousand, including a fair value gain of \u20ac4.1 million from pre-hedging \u20ac250 million of the bond issued in January 2022) from existing interest rate caps and swaps.
\nAt 31 December 2022, losses on extinguishment of financial instruments included the premium paid on repurchase of bond notes due in 2023 of \u20ac21,925 thousand (refer to Note 18).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-481": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-482": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-483": { "value": "\nIn line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
\nThe Group establishes an allowance for impairment based on a simplified expected credit loss model in respect of Trade and other receivables. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nAn overview of the tenant receivables net of impairment provision is set out below:
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables \u2013 gross | \u00a0 | 82,422 | 69,033 |
Less: Impairment provisions | \u00a0 | (10,701) | (9,342) |
TENANT RECEIVABLES - NET OF IMPAIRMENT PROVISION | 71,721 | 59,691 |
Reconciliation of impairment provisions is set out below:
\nMovement of provisions for doubtful debtors | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Carrying value at beginning of the year | (9,342) | (7,282) |
Additional provision from properties acquired during the year | - | (2,489) |
Additional expected credit losses | (5,485) | (2,841) |
Write-off of receivables | 1,900 | 986 |
Recovery of previously expected credit losses | 2,366 | 2,182 |
Transfers to assets held for sale | 100 | - |
Foreign exchange gain | (240) | 102 |
Carrying value | (10,701) | (9,342) |
The expected loss rates are based on the historical payment profiles of tenants and the corresponding historical credit losses, adjusting for forward looking macroeconomic data. For example, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in a customer segment, the historical default rates are adjusted upwards. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the provision for doubtful debtors as at 31 December 2023 was determined as follows for trade receivables:
\n31 December 2023 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 2% | 7% | 81% | 96% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 60,458 | 9,299 | 1,979 | 332 | 10,354 | 82,422 |
PROVISION FOR DOUBTFUL DEBTORS | (219) | (172) | (135) | (268) | (9,907) | (10,701) |
The impairment provision for trade receivables as at 31 December 2022 is set out below:
\n31 December 2022 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 1% | 5% | 24% | 89% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 48,148 | 8,685 | 1,483 | 529 | 10,188 | 69,033 |
PROVISION FOR DOUBTFUL DEBTORS | (74) | (56) | (67) | (128) | (9,017) | (9,342) |
In line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
\nCredit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group\u2019s receivables from tenants and cash and cash equivalents.
\nThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is set out below:
\nCredit exposure on financial instruments | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Tenant receivables | 71,721 | 59,691 | |
Cash and cash equivalents | 338,519 | 250,631 | |
Financial assets at fair value through profit or loss1 | 21,568 | 36,064 | |
Loans to participants in the Share Purchase Scheme2 | 3,451 | 4,205 | |
Total | \u00a0 | 435,259 | 350,591 |
Out of the above maximum credit exposure, the balance of Loans to participants in the Share Purchase Scheme is not considered to present credit risk as these are guaranteed with the Company\u2019s shares held as security (see details in Note 17).
\nWhen monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, the industry they work in, business size and previous financial difficulties.
\nThe exposure to credit risk is mainly influenced by the tenant\u2019s individual characteristics. The Group\u2019s widespread customer base reduces credit risk. The majority of rental income 68%, (31 December 2022: 67%) is derived from type A tenants (large international and national tenants; large listed tenants; government and major franchisees and companies with assets and/or turnovers exceeding \u20ac200 million), and there is no concentration of credit risk with respect to trade debtors: top 10 tenants account for 25.2% of the rental income as at 31 December 2023 (31 December 2022: 24.8%).
\nManagement has established a credit policy where new customers are analysed individually for creditworthiness before standard payment terms and conditions are offered. When available, the analysis includes external ratings.
\nThe Group establishes an allowance for impairment based on a simplified expected credit loss model in respect of Trade and other receivables. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nThe carrying value of financial assets approximates their fair value. The Group\u2019s exposure to credit risk associated cash and cash equivalents is limited through using financial institutions of good standing for investment and cash handling purposes.
\nAn overview of the tenant receivables net of impairment provision is set out below:
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables \u2013 gross | \u00a0 | 82,422 | 69,033 |
Less: Impairment provisions | \u00a0 | (10,701) | (9,342) |
TENANT RECEIVABLES - NET OF IMPAIRMENT PROVISION | 71,721 | 59,691 |
Reconciliation of impairment provisions is set out below:
\nMovement of provisions for doubtful debtors | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Carrying value at beginning of the year | (9,342) | (7,282) |
Additional provision from properties acquired during the year | - | (2,489) |
Additional expected credit losses | (5,485) | (2,841) |
Write-off of receivables | 1,900 | 986 |
Recovery of previously expected credit losses | 2,366 | 2,182 |
Transfers to assets held for sale | 100 | - |
Foreign exchange gain | (240) | 102 |
Carrying value | (10,701) | (9,342) |
The expected loss rates are based on the historical payment profiles of tenants and the corresponding historical credit losses, adjusting for forward looking macroeconomic data. For example, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in a customer segment, the historical default rates are adjusted upwards. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the provision for doubtful debtors as at 31 December 2023 was determined as follows for trade receivables:
\n31 December 2023 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 2% | 7% | 81% | 96% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 60,458 | 9,299 | 1,979 | 332 | 10,354 | 82,422 |
PROVISION FOR DOUBTFUL DEBTORS | (219) | (172) | (135) | (268) | (9,907) | (10,701) |
The impairment provision for trade receivables as at 31 December 2022 is set out below:
\n31 December 2022 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 1% | 5% | 24% | 89% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 48,148 | 8,685 | 1,483 | 529 | 10,188 | 69,033 |
PROVISION FOR DOUBTFUL DEBTORS | (74) | (56) | (67) | (128) | (9,017) | (9,342) |
The maturity profile of the Financial assets at fair value through profit or loss is disclosed below:
\n31 December 2023 | 3\u201312 months | 1\u20135 years | over 5 years | Total |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial assets at fair value through profit or loss | 2,626 | 18,942 | - | 21,568 |
31 December 2022 | 3\u201312 months | 1\u20135 years | over 5 years | Total |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial assets at fair value through profit or loss | - | 25,958 | 10,106 | 36,064 |
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the expected credit losses are immaterial.
\nFor purposes of liquidity management, the Group has\u00a0various\u00a0deposit accounts and negotiated current account agreements with several banks.\u00a0The arrangements in place result in an optimized mix between flexibility and reduced interest charges or best interest offered. The banks\u2019 credit ratings, as well as exposure per each bank are constantly monitored. At 31 December 2023, 97% of the Group's cash was held with investment-grade rated banks (31 December 2022: 95%), as detailed below:
\nCash and cash equivalents | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Held with banks as rated by Moody\u2019s | \u00a0 | \u00a0 |
A1 | 49% | 7% |
A2 | 10% | 30% |
A3 | 10% | 15% |
Aa3 | 8% | 8% |
Baa1 | 19% | 35% |
Baa2 | 1% | - |
Held with not rated banks | 3% | 5% |
Total | 100% | 100% |
In line with IFRS 9 \u201cFinancial instruments\u201d, the Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group measures ECL and recognises credit loss allowance on an annual basis. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
\nThe carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of any loss is recognised in the Statement of comprehensive income (profit or loss). Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
\nECLs are recognised for loans granted in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nExpected credit losses for trade receivables are recognised using the simplified approach. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
\nTrade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
\nThe Group has exposure to the following risks due to its use of financial instruments: credit, liquidity, and market, including currency and interest rate. This note presents information about the Group\u2019s exposure to each, as well as its objectives, policies and processes for measuring and managing risk.
\nThe Board of Directors has overall responsibility for the establishment and oversight of the Group\u2019s risk management framework. The Board of Directors has delegated the responsibility for developing this framework to the Risk Committee. This Committee reports to the Board of Directors on its activities, oversees how management monitors compliance policies and procedures, and reviews the adequacy of the framework regarding the risks faced.
\nThe Group\u2019s policies are established to identify and analyse the risks it may encounter by performing its activities, to set appropriate limits and controls, and to monitor risks and adherence to limits. These policies and systems are reviewed regularly to reflect changes in market conditions and Group activities.
\nThe Groups operations remain unaffected by the military conflicts in any significant way. All the markets where NEPI Rockcastle operates are outside the conflict areas and continue to function normally. The indirect macroeconomic effects that the conflicts had in the CEE region, such as the increase in energy and other commodities costs, did not have a significant impact in the current year, as the local economies adapted to the new context. Nevertheless, due to ongoing uncertainty in geopolitical landscape and volatility in the financial markets, the Group continues to closely monitor development in all market conditions.
\nAs part of appropriate risk management measures, and identifying and managing risk, management has considered possible events and conditions for the purpose of identifying whether these events and conditions affect or may affect the future performance of the Group.
\nThe following risks were assessed:
\nSurge in operational costs due to increased energy prices
\nThe increase in energy prices in 2023 had minimal direct effect on NEPI Rockcastle, as its operations are not energy intensive. Moreover, the majority of energy costs incurred by the Group are passed on to its tenants, which were able to absorb the increased energy costs due to the strong growth in sales in substantially all jurisdictions of operation. The occupancy cost ratio of Group\u2019s tenants has been consistent over the last periods. As the photovoltaic projects in Romania are substantially completed, NEPI Rockcastle will produce solar energy using photovoltaic panels installed on the rooftops of the Group\u2019s properties. This will further contribute to mitigation of the risk of increased energy costs, as well as contribute to a faster transition of the group to green energy use, with a positive impact on the value of its assets.
\nImpact on credit risk tenant receivable
\nNEPI Rockcastle did not experience any significant change in the collection rate of its receivables from tenants in 2023 as compared to previous periods, there were no important client losses due to bankruptcies or financial difficulties. In fact, the tenant receivables collection pattern and tenant discipline has not changed since the end of the pandemic, with majority of receivables paid within the contracted payment period. The increasing tenant sales have proved to be a continuous trend since the pandemic, throughout 2022 and 2023 and there are indications that this trend will continue in near future. The Group regularly consults retailers to gain insight into their performance and assess their financial robustness.
\nDisruptions in the Group\u2019s development program
\nThe current macroeconomic context had an effect on the price fluctuations and changes in availability of construction materials, components and services, which are required by the Group for its pipeline related to development and extension of its planned projects. NEPI Rockcastle has an in-house development team, which controls the construction process, which is in its turn monitored by the Investment Committee. As a general rule, development projects are entered into in a phased manner, allowing management the possibility to put certain construction projects on hold if circumstances, such as availability or price of resources, require it. Also, the development team usually enters into fixed price contracts with suppliers when ordering components for committed projects going into construction, thus allowing to mitigate potential spikes in material prices.
\nRefinancing risk and impact on loan covenants
\nGlobal financial markets continued to experience disruptions, including increased volatility and diminished liquidity and credit availability. NEPI Rockcastle is in constant contact with its current and prospective financing partners. As disclosed in Note 18 Borrowings, in December 2023 the Group successfully concluded several funding extensions and agreements, including a \u20ac387 million green unsecured sustainability-linked loan facility, syndicated by the International Finance Corporation (IFC). These agreements ensure that the Group not only has access to ample liquidity but also will have no material debt maturities until the end of 2025. The Group is also closely monitoring its loan covenants, which currently show ample headroom for all existing loan arrangements, while also ensuring that future compliance with covenants will be achieved based on current and future financing arrangements and forecast results.
\nBroader economic impact in the jurisdictions where the Group operates
\nThe uncertain macroeconomic outlook, with high inflation can ultimately affect the labour market and purchasing power of consumers, which can in turn impact Group operations and valuation of its properties. The diversified nature of Group\u2019s portfolio, with 60 assets across 9 CEE countries and thousands of tenants from across the retail industry spectrum, mitigates risks associated with adverse changes in macroeconomic conditions (inflation, increased costs). Rents paid by the top ten tenants represented 25.2% of the Group\u2019 revenues in the year ended 31 December 2023. Furthermore, the annual rent indexation mechanism (HICP EU27), which is used by the Group in all of its leases with its tenants, provides the Group with an economic hedge against inflation. The Group\u2019s main tenants are leading companies in their sectors and all tenants are subject to a financial review before signing leases with the Group.
\nValuers included in their valuations assumptions factors resulting from the indirect impact of the current macroeconomic environment, through:
increased valuation yields (weighted average of 15 bps);
adjusting future cash flows with risk premia, to account for additional unrecoverable expenses and potential collection difficulties (on average 0.5%);
indexing the future cash flows with projected inflation rates for the next period (in the range of 2.1% - 2.2%).
More details on valuation assumptions and inputs are provided in Notes 8 and 9.
\nCredit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group\u2019s receivables from tenants and cash and cash equivalents.
\nThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is set out below:
\nCredit exposure on financial instruments | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Tenant receivables | 71,721 | 59,691 | |
Cash and cash equivalents | 338,519 | 250,631 | |
Financial assets at fair value through profit or loss1 | 21,568 | 36,064 | |
Loans to participants in the Share Purchase Scheme2 | 3,451 | 4,205 | |
Total | \u00a0 | 435,259 | 350,591 |
Out of the above maximum credit exposure, the balance of Loans to participants in the Share Purchase Scheme is not considered to present credit risk as these are guaranteed with the Company\u2019s shares held as security (see details in Note 17).
\nWhen monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, the industry they work in, business size and previous financial difficulties.
\nThe exposure to credit risk is mainly influenced by the tenant\u2019s individual characteristics. The Group\u2019s widespread customer base reduces credit risk. The majority of rental income 68%, (31 December 2022: 67%) is derived from type A tenants (large international and national tenants; large listed tenants; government and major franchisees and companies with assets and/or turnovers exceeding \u20ac200 million), and there is no concentration of credit risk with respect to trade debtors: top 10 tenants account for 25.2% of the rental income as at 31 December 2023 (31 December 2022: 24.8%).
\nManagement has established a credit policy where new customers are analysed individually for creditworthiness before standard payment terms and conditions are offered. When available, the analysis includes external ratings.
\nThe Group establishes an allowance for impairment based on a simplified expected credit loss model in respect of Trade and other receivables. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nThe carrying value of financial assets approximates their fair value. The Group\u2019s exposure to credit risk associated cash and cash equivalents is limited through using financial institutions of good standing for investment and cash handling purposes.
\nAn overview of the tenant receivables net of impairment provision is set out below:
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables \u2013 gross | \u00a0 | 82,422 | 69,033 |
Less: Impairment provisions | \u00a0 | (10,701) | (9,342) |
TENANT RECEIVABLES - NET OF IMPAIRMENT PROVISION | 71,721 | 59,691 |
Reconciliation of impairment provisions is set out below:
\nMovement of provisions for doubtful debtors | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Carrying value at beginning of the year | (9,342) | (7,282) |
Additional provision from properties acquired during the year | - | (2,489) |
Additional expected credit losses | (5,485) | (2,841) |
Write-off of receivables | 1,900 | 986 |
Recovery of previously expected credit losses | 2,366 | 2,182 |
Transfers to assets held for sale | 100 | - |
Foreign exchange gain | (240) | 102 |
Carrying value | (10,701) | (9,342) |
The expected loss rates are based on the historical payment profiles of tenants and the corresponding historical credit losses, adjusting for forward looking macroeconomic data. For example, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in a customer segment, the historical default rates are adjusted upwards. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the provision for doubtful debtors as at 31 December 2023 was determined as follows for trade receivables:
\n31 December 2023 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 2% | 7% | 81% | 96% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 60,458 | 9,299 | 1,979 | 332 | 10,354 | 82,422 |
PROVISION FOR DOUBTFUL DEBTORS | (219) | (172) | (135) | (268) | (9,907) | (10,701) |
The impairment provision for trade receivables as at 31 December 2022 is set out below:
\n31 December 2022 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 1% | 5% | 24% | 89% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 48,148 | 8,685 | 1,483 | 529 | 10,188 | 69,033 |
PROVISION FOR DOUBTFUL DEBTORS | (74) | (56) | (67) | (128) | (9,017) | (9,342) |
The maturity profile of the Financial assets at fair value through profit or loss is disclosed below:
\n31 December 2023 | 3\u201312 months | 1\u20135 years | over 5 years | Total |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial assets at fair value through profit or loss | 2,626 | 18,942 | - | 21,568 |
31 December 2022 | 3\u201312 months | 1\u20135 years | over 5 years | Total |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial assets at fair value through profit or loss | - | 25,958 | 10,106 | 36,064 |
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the expected credit losses are immaterial.
\nFor purposes of liquidity management, the Group has\u00a0various\u00a0deposit accounts and negotiated current account agreements with several banks.\u00a0The arrangements in place result in an optimized mix between flexibility and reduced interest charges or best interest offered. The banks\u2019 credit ratings, as well as exposure per each bank are constantly monitored. At 31 December 2023, 97% of the Group's cash was held with investment-grade rated banks (31 December 2022: 95%), as detailed below:
\nCash and cash equivalents | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Held with banks as rated by Moody\u2019s | \u00a0 | \u00a0 |
A1 | 49% | 7% |
A2 | 10% | 30% |
A3 | 10% | 15% |
Aa3 | 8% | 8% |
Baa1 | 19% | 35% |
Baa2 | 1% | - |
Held with not rated banks | 3% | 5% |
Total | 100% | 100% |
Liquidity risk is the risk that the Group will not be able to meet its financial obligations when due. The Group\u2019s approach to managing this risk ensures, as far as possible, it will always have enough liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to its reputation. To ensure this occurs, 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.
\nFurther reference to bank loan maturity analysis is made in Note 18.
\nThe table below presents undiscounted cash flows for all financial liabilities, computed at the contractual rates:
\n31 Dec 2023 | Note | under 3 months | 3\u201312 months | 1\u20135 years | over 5 years | Total undiscounted cash flows | Total carying amount |
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Bonds (including estimated future interest) | 30,076 | 527,589 | 1,087,805 | 509,430 | 2,154,900 | 1,999,031 | |
Bank loans (including estimated future interest) | 13,730 | 35,226 | 406,034 | 236,408 | 691,398 | 533,721 | |
Loans from third parties (including estimated future interest) | 611 | 18,264 | 17,715 | - | 36,590 | 33,405 | |
Trade and other payables | 128,388 | 25,945 | - | - | 154,333 | 154,333 | |
Income tax payable | 7,837 | 12,350 | - | - | 20,187 | 20,187 | |
Other long-term liabilities | - | - | 26,034 | 10,040 | 36,074 | 36,074 | |
Lease liabilities (including estimated future interest) | 1,545 | - | 6,181 | 97,503 | 105,229 | 56,520 | |
Total | \u00a0 | 182,187 | 619,374 | 1,543,769 | 853,381 | 3,198,711 | 2,833,271 |
31 Dec 2022 | Note | under 3 months | 3\u201312 months | 1\u20135 years | over 5 years | Total undiscounted cash flows | Total carying amount |
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Bonds (including estimated future interest) | 30,707 | 28,539 | 1,616,496 | 518,081 | 2,193,823 | 1,992,971 | |
Bank loans (including estimated future interest) | 9,232 | 22,974 | 393,592 | 211,739 | 637,537 | 557,901 | |
Loans from third parties (including estimated future interest) | 908 | 19,080 | 36,518 | - | 56,506 | 50,107 | |
Trade and other payables | 24,185 | 112,485 | - | - | 136,670 | 136,670 | |
Income tax payable | 6,815 | 11,517 | - | - | 18,332 | 18,332 | |
Other long-term liabilities | - | - | 31,303 | 6,363 | 37,666 | 37,666 | |
Lease liabilities (including estimated future interest) | 832 | - | 4,506 | 67,036 | 72,374 | 37,200 | |
Total | \u00a0 | 72,679 | 194,595 | 2,082,415 | 803,219 | 3,152,908 | 2,830,847 |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates or equity prices will affect the Group\u2019s fair value or future cash flows of financial instruments. The objective of market risk management is to manage market risk exposures within acceptable parameters, while optimising returns. The carrying value of financial assets and liabilities approximates their fair value, except for the carrying value of bonds.
\nGroup\u2019s current assets and liabilities are exposed to foreign currency risk on purchases and receivables denominated in Romanian leu (RON), Polish zloty (PLN), Bulgarian Lev (BGN), Hungarian forint (HUF), Serbian dinar (RSD), Czech crown (CZK) and South African rand (ZAR). Cash inflows received in other currencies than Euro are converted to Euro using the spot rate available on the collection date. The amount converted to Euro is the net amount of cash inflow in a foreign currency and the estimated cash outflow in the same currency. The Group applies this policy to control its currency exposures in respect of monetary assets and liabilities denominated in currencies other than EUR. Sensitivities of profit or loss to reasonably possible changes in exchange rates applied at the financial position date relative to the local currency of the respective Group entities, with all other variables such as interest rates held constant, are immaterial.
\nInterest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk on loans, borrowings and cash balances held. Group policy is to substantially hedge this risk through the use of derivative financial instruments. As at 31 December 2023 and 31 December 2022, the Group held interest rate instruments in the form of interest rate swaps and interest rate caps, as further disclosed in Note 19.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Bank loans | 533,721 | 557,901 |
Rate capped | 432,653 | 330,000 |
Rate swapped | 112,793 | 114,928 |
Variable rate1 | - | 115,333 |
Accrued interest on loans and deferred loan costs | (11,725) | (2,360) |
A change of 100 basis points (bps) in interest rates would have increased/(decreased) equity and profit for the year as shown below. Calculations are based on the cash and loans and borrowings balances outstanding at the respective balance sheet dates as of 31 December 2023 and respectively 31 December 2022. Cash and loans and borrowings balances are subject to change over the year. This analysis assumes that all other variables, particularly foreign currency rates, remain constant. All sensitivity analysis calculations presented below are before tax.
\nThe benchmark rate for the bank loans with an outstanding amount of \u20ac533,721 thousand as at 31 December 2023 (2022: \u20ac557,901 thousand) is Euribor 3 months; if this rate is less than zero, Euribor shall be deemed to be zero. There are no plans to discontinue Euribor.
\nLoans and borrowings with fixed or swapped interest rates are not affected by market changes in interest rates.
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Loans to participants in the Share Purchase Scheme | 3,451 | 4,205 | |
Loans and borrowings (variable or capped rate) | \u00a0 | (432,653) | (445,333) |
Total | \u00a0 | (429,202) | (441,128) |
31 Dec 2023 | Profit or loss 100bps increase | Profit or loss 100bps decrease | Equity 100bps increase | Equity 100bps decrease |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to participants in the Share Purchase Scheme (including accrued interest) | 35 | (35) | 35 | (35) |
Loans and borrowings (variable or capped rate)1 | - | - | - | - |
Total | 35 | (35) | 35 | (35) |
31 Dec 2022 | Profit or loss 100bps increase | Profit or loss 100bps decrease | Equity 100bps increase | Equity 100bps decrease |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to participants in the Share Purchase Scheme (including accrued interest) | 42 | (42) | 42 | (42) |
Loans and borrowings (variable or capped rate)1 | (856) | 1,130 | (856) | 1,130 |
Total | (814) | 1,088 | (814) | 1,088 |
The Board of Directors is responsible for the Group\u2019s system of internal control and for reviewing its effectiveness. This system is designed to mitigate rather than eliminate the risk of failure to meet business objectives, and can only provide reasonable, not absolute, assurance against material misstatement or loss.
\nThe key features of the Group\u2019s system of internal control include:
Strategic and business planning: the Group prepares, and agrees, a business plan each year, to which the performance of the business is regularly monitored;
Investment appraisal: capital projects, major contracts and business and property acquisitions are reviewed in detail and approved by the Investment Committee, and/or the Board of Directors where appropriate, in accordance with delegated authority limits;
Financial monitoring: profitability, cash flow and capital expenditure are closely monitored, and key financial information is reported to the Board of Directors regularly, including explanations of variances between actual and budgeted performance; and
Systems of control procedures and delegated authority: clearly defined guidelines and approval limits exist for capital and operating expenditure and other key business transactions and decisions.
The repayment profile for outstanding loans, excluding future interest, is detailed below:
\nInterest bearing borrowings 31 Dec 2023 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | 498,980 | 1,000,000 | 500,000 | 1,998,980 |
Netherlands | Unsecured loans | - | 73,521 | - | 73,521 |
Poland | Secured loans | 745 | 2,979 | 70,570 | 74,294 |
Slovakia | Secured loans | 6,475 | 23,200 | 76,337 | 106,012 |
Czech Republic | Secured loans | 600 | 2,400 | 35,848 | 38,848 |
Romania | Secured loans | 9,476 | 199,659 | 43,636 | 252,771 |
Accrued interest on loans and deferred loan costs | \u00a0 | (1,473) | (9,904) | (348) | (11,725) |
Accrued coupon on bonds | \u00a0 | 20,323 | - | - | 20,323 |
Deferred bond costs | \u00a0 | (2,459) | (5,486) | (616) | (8,561) |
Issue discount on bonds | \u00a0 | (3,434) | (7,491) | (786) | (11,711) |
Total | \u00a0 | 529,233 | 1,278,878 | 724,641 | 2,532,752 |
Interest bearing borrowings 31 Dec 2022 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | - | 1,498,980 | 500,000 | 1,998,980 |
Netherlands | Revolving facilities | - | 200,000 | - | 200,000 |
Netherlands | Unsecured loans | - | - | 73,521 | 73,521 |
Poland | Secured loans | 1,520 | 74,100 | - | 75,620 |
Slovakia | Secured loans | 6,475 | 23,200 | 82,137 | 111,812 |
Czech Republic | Secured loans | 615 | 38,694 | - | 39,309 |
Romania | Secured loans | 2,727 | 10,908 | 46,365 | 60,000 |
Accrued interest on loans and deferred loan costs | \u00a0 | (180) | (2,181) | - | (2,361) |
Accrued coupon on bonds | \u00a0 | 20,353 | - | - | 20,353 |
Deferred bond costs | \u00a0 | (2,504) | (7,359) | (1,203) | (11,066) |
Issue discount on bonds | \u00a0 | (3,586) | (10,161) | (1,549) | (15,296) |
Total | \u00a0 | 25,420 | 1,826,181 | 699,271 | 2,550,872 |
The Group successfully issued fixed coupon bonds as follows:
November 2017: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 23 November 2024 and carry a 1.75% fixed coupon, with an issue price of 99.051%;
October 2019: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 9 October 2026 and carry a 1.875% fixed coupon, with an issue price of 98.927%;
July 2020: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 14 July 2027 and carry a 3.375% fixed coupon, with an issue price of 98.172%; and
January 2022: \u20ac500 million of unsecured, 8-year Eurobonds. The bonds mature on 21 January 2030 and carry a 2.00% fixed coupon, with an issue price of 98.713%.
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nAt 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-486": { "value": "\nFinancial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-487": { "value": "\nFinancial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-490": { "value": "\nFinancial liabilities are initially recognised at fair value and classified and subsequently measured at amortised cost, except for financial liabilities at FVTPL: this classification is applied to interest rate derivatives and other financial liabilities designated as such at initial recognition.
\nBorrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-494": { "value": "\nBorrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-497": { "value": "\nBorrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
\nThe average interest rate of the Group\u2019s debt, including hedging result, was approximately 2.5% during 2023 (31 December 2022: 2.3%). As at 31 December 2023, fixed-coupon bonds represented 78% of NEPI Rockcastle\u2019s outstanding debt; out of the remaining long-term debt exposed to Euribor, 79% was hedged with interest rate caps and 21% with interest rate swaps.
\nThe fair value of all financial instruments is substantially in line with their carrying amounts as reflected on the Statement of financial position, except for the bonds. For reference, as at 31 December 2023, the \u20ac499 million bonds issued in 2017 were trading on the market at 96.78% (31 December 2022: 93.55%), the \u20ac500 million bonds issued in 2019 were trading on the market at 91.22% (31 December 2022: 84.13%), the \u20ac500 million bonds issued in July 2020 were trading on the market at 94.43% (31 December 2022: 86.52%) and the \u20ac500 million bonds issued in January 2022 were trading on the market at 80.25% (31 December 2022: 69.04%).
\nThe repayment profile for outstanding loans, excluding future interest, is detailed below:
\nInterest bearing borrowings 31 Dec 2023 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | 498,980 | 1,000,000 | 500,000 | 1,998,980 |
Netherlands | Unsecured loans | - | 73,521 | - | 73,521 |
Poland | Secured loans | 745 | 2,979 | 70,570 | 74,294 |
Slovakia | Secured loans | 6,475 | 23,200 | 76,337 | 106,012 |
Czech Republic | Secured loans | 600 | 2,400 | 35,848 | 38,848 |
Romania | Secured loans | 9,476 | 199,659 | 43,636 | 252,771 |
Accrued interest on loans and deferred loan costs | \u00a0 | (1,473) | (9,904) | (348) | (11,725) |
Accrued coupon on bonds | \u00a0 | 20,323 | - | - | 20,323 |
Deferred bond costs | \u00a0 | (2,459) | (5,486) | (616) | (8,561) |
Issue discount on bonds | \u00a0 | (3,434) | (7,491) | (786) | (11,711) |
Total | \u00a0 | 529,233 | 1,278,878 | 724,641 | 2,532,752 |
Interest bearing borrowings 31 Dec 2022 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | - | 1,498,980 | 500,000 | 1,998,980 |
Netherlands | Revolving facilities | - | 200,000 | - | 200,000 |
Netherlands | Unsecured loans | - | - | 73,521 | 73,521 |
Poland | Secured loans | 1,520 | 74,100 | - | 75,620 |
Slovakia | Secured loans | 6,475 | 23,200 | 82,137 | 111,812 |
Czech Republic | Secured loans | 615 | 38,694 | - | 39,309 |
Romania | Secured loans | 2,727 | 10,908 | 46,365 | 60,000 |
Accrued interest on loans and deferred loan costs | \u00a0 | (180) | (2,181) | - | (2,361) |
Accrued coupon on bonds | \u00a0 | 20,353 | - | - | 20,353 |
Deferred bond costs | \u00a0 | (2,504) | (7,359) | (1,203) | (11,066) |
Issue discount on bonds | \u00a0 | (3,586) | (10,161) | (1,549) | (15,296) |
Total | \u00a0 | 25,420 | 1,826,181 | 699,271 | 2,550,872 |
This section sets out an analysis of bonds and bank loans outstanding and the related movements for the periods presented.
\nin \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Cash repayments of principal | (214,815) | - | (214,815) |
Cash proceeds from bank loans or bonds | 200,000 | - | 200,000 |
Cash payments of interest on bank loans or coupon on bonds | (28,428) | (44,982) | (73,410) |
Interest expense1 | 29,584 | 44,952 | 74,536 |
Amortisation of capitalised borrowing costs | 1,758 | 2,504 | 4,262 |
Amortisation of bond discount | - | 3,586 | 3,586 |
Additional capitalised borrowing costs in the period | (12,279) | - | (12,279) |
Debt as at 31 December 2023 | 533,721 | 1,999,031 | 2,532,752 |
in \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2021 | 304,586 | 1,988,239 | 2,292,825 |
Cash repayments of principal | (25,563) | (496,020) | (521,583) |
Loan taken over from the acquisition of the remaining 50% stake in joint venture | 18,432 | - | 18,432 |
Cash proceeds from bank loans or bonds | 260,000 | 493,566 | 753,566 |
Cash payments of interest on bank loans or coupon on bonds | (5,972) | (44,024) | (49,996) |
Interest expense | 6,288 | 45,522 | 51,810 |
Amortisation of capitalised borrowing costs | 916 | 2,595 | 3,511 |
Amortisation of bond discount | - | 3,824 | 3,824 |
Additional capitalised borrowing costs in the period | (786) | (4,674) | (5,460) |
Costs released following bonds buy-back prior maturity | - | 3,943 | 3,943 |
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
The Group successfully issued fixed coupon bonds as follows:
November 2017: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 23 November 2024 and carry a 1.75% fixed coupon, with an issue price of 99.051%;
October 2019: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 9 October 2026 and carry a 1.875% fixed coupon, with an issue price of 98.927%;
July 2020: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 14 July 2027 and carry a 3.375% fixed coupon, with an issue price of 98.172%; and
January 2022: \u20ac500 million of unsecured, 8-year Eurobonds. The bonds mature on 21 January 2030 and carry a 2.00% fixed coupon, with an issue price of 98.713%.
All the bonds include early redemption options. At each date of bond issue initial recognition management has performed an assessment whether those options are closely related to the host contract, considering the IFRS 9 clauses, which states that early repayment options are closely related to the host debt, if either:
the option\u2019s exercise price is approximately equal on each exercise date to the host debt instrument\u2019s amortised cost; or
the exercise price of a prepayment option reimburses the lender for an amount up to the approximate present value of lost interest for the remaining term of the host contract.
Based on management assessment in case of the exercise of any of the early redemption options either first or second criteria will be met, therefore those were considered as closely related to the bond and thus not separately valued and disclosed.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
NEPI Rockcastle has complied with all financial covenants of its borrowing facilities during 2023 and 2022. The ratios calculated for all unsecured loans and bonds showed ample headroom compared to the covenants:
Solvency Ratio: 0.38 (31 December 2022: 0.40);
Consolidated Coverage Ratio: 6.06 (31 December 2022: 6.2); and
Unsecured Ratio: 269% (31 December 2022: 251%).
The fair value adjustments of derivatives include the fair value loss of \u20ac17,376 thousand (31 December 2022: gain of \u20ac37,946 thousand, including a fair value gain of \u20ac4.1 million from pre-hedging \u20ac250 million of the bond issued in January 2022) from existing interest rate caps and swaps.
\nAt 31 December 2022, losses on extinguishment of financial instruments included the premium paid on repurchase of bond notes due in 2023 of \u20ac21,925 thousand (refer to Note 18).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-500": { "value": "\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-501": { "value": "\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
\nBorrowing costs capitalised in 2023 amount to \u20ac5,085 thousand (2022: \u20ac3,513 thousand) and were calculated using an average annual interest rate of 2.5% (2022: 2.3%).
\nThis section sets out an analysis of bonds and bank loans outstanding and the related movements for the periods presented.
\nin \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Cash repayments of principal | (214,815) | - | (214,815) |
Cash proceeds from bank loans or bonds | 200,000 | - | 200,000 |
Cash payments of interest on bank loans or coupon on bonds | (28,428) | (44,982) | (73,410) |
Interest expense1 | 29,584 | 44,952 | 74,536 |
Amortisation of capitalised borrowing costs | 1,758 | 2,504 | 4,262 |
Amortisation of bond discount | - | 3,586 | 3,586 |
Additional capitalised borrowing costs in the period | (12,279) | - | (12,279) |
Debt as at 31 December 2023 | 533,721 | 1,999,031 | 2,532,752 |
in \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2021 | 304,586 | 1,988,239 | 2,292,825 |
Cash repayments of principal | (25,563) | (496,020) | (521,583) |
Loan taken over from the acquisition of the remaining 50% stake in joint venture | 18,432 | - | 18,432 |
Cash proceeds from bank loans or bonds | 260,000 | 493,566 | 753,566 |
Cash payments of interest on bank loans or coupon on bonds | (5,972) | (44,024) | (49,996) |
Interest expense | 6,288 | 45,522 | 51,810 |
Amortisation of capitalised borrowing costs | 916 | 2,595 | 3,511 |
Amortisation of bond discount | - | 3,824 | 3,824 |
Additional capitalised borrowing costs in the period | (786) | (4,674) | (5,460) |
Costs released following bonds buy-back prior maturity | - | 3,943 | 3,943 |
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
Borrowings are recognised initially at the fair value of the liability (determined using the prevailing market rate of interest if significantly different from the transaction price) and net of transaction costs incurred. In subsequent periods, borrowings are subsequently carried at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in Statement of comprehensive income over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
\nBorrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the Statement of comprehensive income.
\nAn exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
\nIf an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
\nModifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch-up method, with any gain or loss recognised in Statement of comprehensive income.
\nBorrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings to the extent that they are regarded as an adjustment to interest costs.
\nBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use (such as properties developed for future sale, capital appreciation or rental income) are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Group and the costs can be measured reliably.
\nThe Group is currently assigned a long-term corporate credit rating of BBB (stable outlook) from Standard & Poor\u2019s Rating Services and BBB+ (stable outlook) from Fitch Ratings.
\nIn March 2023 the Group concluded a \u20ac200 million secured green loan which matures in June 2028. The loan proceeds were used to repay the revolving credit facilities utilised for the acquisition of Forum Gdansk Shopping Center and Copernicus Shopping Centre.
\nIn December 2023, the Group extended the contractual maturities to two of its secured term loans \u2013 a \u20ac40 million loan contracted by its subsidiary in Czech Republic extended until December 2030 and a \u20ac76 million loan contracted by its subsidiary in Poland extended until March 2029.
\nIn 2023, NEPI Rockcastle extended the contractual maturities related to its unsecured committed revolving credit facilities, as follows:
the revolving credit facility from BRD-Groupe Soci\u00e9t\u00e9 G\u00e9n\u00e9rale and Garanti Bank was extended for one year, until July 2026, with the maximum principal available maintained at \u20ac170 million;
the revolving credit facility from ING Bank was extended for one year, until July 2026, with the maximum principal available maintained at \u20ac100 million; and
the revolving credit facility from a three-bank syndicate lead by Deutsche Bank AG as arranger, was extended for three years, until January 2027, with the maximum principal available decreased to \u20ac150 million.
The above mentioned committed revolving credit facilities together with the revolving credit facility of a maximum limit of \u20ac150 million with Raiffeisen Bank International amount to a total of \u20ac570 million available unsecured committed revolving credit facilities, undrawn as at 31 December 2023 (31 December 2022: \u20ac620 million, of which \u20ac420 million were undrawn).
\nIn February 2024, the Group extended the maturity of the revolving credit facility with Raiffeisen Bank International until January 2027 and increased the maximum limit to \u20ac196 million, having Erste Group Bank joining the facility. Consequently, as at the date of the publication of these financial statements, the revolving credit facilities\u2019 capacity amounts to \u20ac616 million.
\nIn December 2023, NEPI Rockcastle entered into a \u20ac387 million green financing agreement with IFC, a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets. The senior unsecured facility is structured as a green loan with sustainability-linked features, aimed at reducing greenhouse gas emissions and increasing energy efficiency in the Group\u2019s property portfolio. The facility matures in January 2029 and was disbursed in the mid-February 2024. The facility has been put in place to cater for the repayment of the upcoming bond maturing in November 2024.
\nThe average interest rate of the Group\u2019s debt, including hedging result, was approximately 2.5% during 2023 (31 December 2022: 2.3%). As at 31 December 2023, fixed-coupon bonds represented 78% of NEPI Rockcastle\u2019s outstanding debt; out of the remaining long-term debt exposed to Euribor, 79% was hedged with interest rate caps and 21% with interest rate swaps.
\nThe fair value of all financial instruments is substantially in line with their carrying amounts as reflected on the Statement of financial position, except for the bonds. For reference, as at 31 December 2023, the \u20ac499 million bonds issued in 2017 were trading on the market at 96.78% (31 December 2022: 93.55%), the \u20ac500 million bonds issued in 2019 were trading on the market at 91.22% (31 December 2022: 84.13%), the \u20ac500 million bonds issued in July 2020 were trading on the market at 94.43% (31 December 2022: 86.52%) and the \u20ac500 million bonds issued in January 2022 were trading on the market at 80.25% (31 December 2022: 69.04%).
\nThe repayment profile for outstanding loans, excluding future interest, is detailed below:
\nInterest bearing borrowings 31 Dec 2023 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | 498,980 | 1,000,000 | 500,000 | 1,998,980 |
Netherlands | Unsecured loans | - | 73,521 | - | 73,521 |
Poland | Secured loans | 745 | 2,979 | 70,570 | 74,294 |
Slovakia | Secured loans | 6,475 | 23,200 | 76,337 | 106,012 |
Czech Republic | Secured loans | 600 | 2,400 | 35,848 | 38,848 |
Romania | Secured loans | 9,476 | 199,659 | 43,636 | 252,771 |
Accrued interest on loans and deferred loan costs | \u00a0 | (1,473) | (9,904) | (348) | (11,725) |
Accrued coupon on bonds | \u00a0 | 20,323 | - | - | 20,323 |
Deferred bond costs | \u00a0 | (2,459) | (5,486) | (616) | (8,561) |
Issue discount on bonds | \u00a0 | (3,434) | (7,491) | (786) | (11,711) |
Total | \u00a0 | 529,233 | 1,278,878 | 724,641 | 2,532,752 |
Interest bearing borrowings 31 Dec 2022 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | - | 1,498,980 | 500,000 | 1,998,980 |
Netherlands | Revolving facilities | - | 200,000 | - | 200,000 |
Netherlands | Unsecured loans | - | - | 73,521 | 73,521 |
Poland | Secured loans | 1,520 | 74,100 | - | 75,620 |
Slovakia | Secured loans | 6,475 | 23,200 | 82,137 | 111,812 |
Czech Republic | Secured loans | 615 | 38,694 | - | 39,309 |
Romania | Secured loans | 2,727 | 10,908 | 46,365 | 60,000 |
Accrued interest on loans and deferred loan costs | \u00a0 | (180) | (2,181) | - | (2,361) |
Accrued coupon on bonds | \u00a0 | 20,353 | - | - | 20,353 |
Deferred bond costs | \u00a0 | (2,504) | (7,359) | (1,203) | (11,066) |
Issue discount on bonds | \u00a0 | (3,586) | (10,161) | (1,549) | (15,296) |
Total | \u00a0 | 25,420 | 1,826,181 | 699,271 | 2,550,872 |
This section sets out an analysis of bonds and bank loans outstanding and the related movements for the periods presented.
\nin \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Cash repayments of principal | (214,815) | - | (214,815) |
Cash proceeds from bank loans or bonds | 200,000 | - | 200,000 |
Cash payments of interest on bank loans or coupon on bonds | (28,428) | (44,982) | (73,410) |
Interest expense1 | 29,584 | 44,952 | 74,536 |
Amortisation of capitalised borrowing costs | 1,758 | 2,504 | 4,262 |
Amortisation of bond discount | - | 3,586 | 3,586 |
Additional capitalised borrowing costs in the period | (12,279) | - | (12,279) |
Debt as at 31 December 2023 | 533,721 | 1,999,031 | 2,532,752 |
in \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2021 | 304,586 | 1,988,239 | 2,292,825 |
Cash repayments of principal | (25,563) | (496,020) | (521,583) |
Loan taken over from the acquisition of the remaining 50% stake in joint venture | 18,432 | - | 18,432 |
Cash proceeds from bank loans or bonds | 260,000 | 493,566 | 753,566 |
Cash payments of interest on bank loans or coupon on bonds | (5,972) | (44,024) | (49,996) |
Interest expense | 6,288 | 45,522 | 51,810 |
Amortisation of capitalised borrowing costs | 916 | 2,595 | 3,511 |
Amortisation of bond discount | - | 3,824 | 3,824 |
Additional capitalised borrowing costs in the period | (786) | (4,674) | (5,460) |
Costs released following bonds buy-back prior maturity | - | 3,943 | 3,943 |
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Further details for the Group\u2019s loans and bonds are presented below:
\nThe Group has secured term loans contracted by some of its subsidiaries in Poland, Slovakia, Czech Republic, and Romania. In March 2023, two Romanian subsidiaries concluded a \u20ac200 million secured loan which matures in June 2028.
\nSecurities
General security over the properties (fair values as at 31 December 2023), current assets, cash inflows from operating activities, accounts and receivables; and
General security over the shares in the property-owning entities.
Covenants
Debt service cover ratio of a minimum between 120% and 125%; and
Loan to value ratio of a maximum between 60% and 70%.
The Group has a green unsecured financing agreement which matures in June 2028 in amount of \u20ac73.5 million.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
At 31 December 2023, there were \u20ac570 million revolving facilities available for drawdown.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
All available revolving facilities are linked either to the ESG performance of the Group through the sustainability rating provided by Sustainalytics or have sustainability-linked KPIs in line with the Group\u2019s Sustainability-Linked Financing Framework.
\nManagement considers that the above ESG related variability feature does not meet the definition of a derivative, as defined in Appendix A of IFRS 9, on the basis that the external rating is a non\u2013financial variable specific to the Group.
\nThe Group successfully issued fixed coupon bonds as follows:
November 2017: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 23 November 2024 and carry a 1.75% fixed coupon, with an issue price of 99.051%;
October 2019: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 9 October 2026 and carry a 1.875% fixed coupon, with an issue price of 98.927%;
July 2020: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 14 July 2027 and carry a 3.375% fixed coupon, with an issue price of 98.172%; and
January 2022: \u20ac500 million of unsecured, 8-year Eurobonds. The bonds mature on 21 January 2030 and carry a 2.00% fixed coupon, with an issue price of 98.713%.
All the bonds include early redemption options. At each date of bond issue initial recognition management has performed an assessment whether those options are closely related to the host contract, considering the IFRS 9 clauses, which states that early repayment options are closely related to the host debt, if either:
the option\u2019s exercise price is approximately equal on each exercise date to the host debt instrument\u2019s amortised cost; or
the exercise price of a prepayment option reimburses the lender for an amount up to the approximate present value of lost interest for the remaining term of the host contract.
Based on management assessment in case of the exercise of any of the early redemption options either first or second criteria will be met, therefore those were considered as closely related to the bond and thus not separately valued and disclosed.
\nCovenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
NEPI Rockcastle has complied with all financial covenants of its borrowing facilities during 2023 and 2022. The ratios calculated for all unsecured loans and bonds showed ample headroom compared to the covenants:
Solvency Ratio: 0.38 (31 December 2022: 0.40);
Consolidated Coverage Ratio: 6.06 (31 December 2022: 6.2); and
Unsecured Ratio: 269% (31 December 2022: 251%).
At 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Tenant security deposits | 35,011 | 32,990 |
Advances from residential customers | - | 3,427 |
Other long-term payables | 1,063 | 1,249 |
Total | 36,074 | 37,666 |
As part of the deal for the acquisition of Forum Gdansk Sp. z o.o. (made in 2022), the Group obtained vendor financing in the form of a three-year unsecured loan from the seller, for part of the purchase price amounting to \u20ac50,000 thousand, bearing an interest rate of 6.5%. One third of the loan principal is repayable at each anniversary of the loan until maturity, however the loan can be repaid by the Group at any time at its own discretion. The fair value of the loan is substantially in line with its carrying amount.
\nThis section sets out the movements in loans from third parties for the periods presented.
\nin \u20ac\u00a0thousand | Loans from third parties |
|---|---|
Loans from third parties as at 31 December 2022 | 50,107 |
Out of which short term | 16,774 |
Cash payments of principal | (16,666) |
Cash payments of interest | (3,250) |
Interest expense | 3,214 |
Loans from third parties as at 31 December 2023 | 33,405 |
Out of which short term | 16,738 |
in \u20ac\u00a0thousand | Loans from third parties |
|---|---|
Loans from third parties as at 31 December 2021 | - |
Out of which short term | - |
Loan taken over following subsidiary acquisition | 50,000 |
Interest expense | 107 |
Loans from third parties as at 31 December 2022 | 50,107 |
Out of which short term | 16,774 |
Cash and cash equivalents include cash balances, cash deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest (SPPI), and (ii) they are not designated at FVTPL.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-517": { "value": "\nCash and cash equivalents include cash balances, cash deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent solely payments of principal and interest (SPPI), and (ii) they are not designated at FVTPL.
\nCash and cash equivalents by currency | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
EUR | 213,959 | 161,035 |
RON | 54,615 | 38,556 |
PLN | 35,911 | 19,837 |
BGN | 14,050 | 10,663 |
HUF | 8,991 | 3,213 |
HRK | - | 7,703 |
CZK | 9,864 | 5,909 |
RSD | 238 | 3,101 |
ZAR | 891 | 614 |
Total | 338,519 | 250,631 |
Cash and cash equivalents by type | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Current accounts | 258,371 | 196,019 |
Deposits | 80,000 | 50,079 |
Restricted cash | - | 4,250 |
Petty cash | 148 | 283 |
Total | 338,519 | 250,631 |
Trade receivables are amounts due from customers for rental and service charge income from tenants in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
\nTrade receivables are recognised initially at fair value, generally at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
\nTrade receivables are also subject to the impairment requirements of IFRS 9. The Group applies the IFRS 9 simplified approach to measuring expected credit losses.
\nTrade receivables are written-off when 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.
\nThe Group establishes an allowance for impairment based on a simplified expected credit loss model in respect of Trade and other receivables. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
\nAn overview of the tenant receivables net of impairment provision is set out below:
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables \u2013 gross | \u00a0 | 82,422 | 69,033 |
Less: Impairment provisions | \u00a0 | (10,701) | (9,342) |
TENANT RECEIVABLES - NET OF IMPAIRMENT PROVISION | 71,721 | 59,691 |
Reconciliation of impairment provisions is set out below:
\nMovement of provisions for doubtful debtors | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Carrying value at beginning of the year | (9,342) | (7,282) |
Additional provision from properties acquired during the year | - | (2,489) |
Additional expected credit losses | (5,485) | (2,841) |
Write-off of receivables | 1,900 | 986 |
Recovery of previously expected credit losses | 2,366 | 2,182 |
Transfers to assets held for sale | 100 | - |
Foreign exchange gain | (240) | 102 |
Carrying value | (10,701) | (9,342) |
The expected loss rates are based on the historical payment profiles of tenants and the corresponding historical credit losses, adjusting for forward looking macroeconomic data. For example, if forecast economic conditions are expected to deteriorate over the next year which can lead to an increased number of defaults in a customer segment, the historical default rates are adjusted upwards. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the provision for doubtful debtors as at 31 December 2023 was determined as follows for trade receivables:
\n31 December 2023 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 2% | 7% | 81% | 96% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 60,458 | 9,299 | 1,979 | 332 | 10,354 | 82,422 |
PROVISION FOR DOUBTFUL DEBTORS | (219) | (172) | (135) | (268) | (9,907) | (10,701) |
The impairment provision for trade receivables as at 31 December 2022 is set out below:
\n31 December 2022 | Current | 0-30 days | 31-60 days | 61-90 days | >90 days | Total |
|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Expected loss rate | 0% | 1% | 5% | 24% | 89% | \u00a0 |
Gross carrying amount \u2013 trade receivables | 48,148 | 8,685 | 1,483 | 529 | 10,188 | 69,033 |
PROVISION FOR DOUBTFUL DEBTORS | (74) | (56) | (67) | (128) | (9,017) | (9,342) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Tenant receivables (net of ECL) | 71,721 | 59,691 | |
VAT receivable | \u00a0 | 7,510 | 11,287 |
Prepaid property expenses | \u00a0 | 4,915 | 9,447 |
Other receivables | \u00a0 | 8,956 | 4,989 |
Other prepaid fees | \u00a0 | 363 | 82 |
Total | \u00a0 | 93,465 | 85,496 |
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 (\u201cNRV\u201d). Principally, this is residential property that the Group develops and intends to sell on completion of development.
\nThe commencement of development with a plan or a prior agreement to sell represents a change in use and accordingly the project is transferred from investment property to inventory property.
\nCosts incurred in inventory property include:
freehold and leasehold rights for land;
amounts paid to contractors for development; and
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 business, based on market prices at the reporting date, less estimated costs of completion and the estimated costs necessary to make the sale.
\nWhen an inventory property is sold, the carrying amount of the property is recognised as an expense in the period in which the related revenue is recognised. The carrying amount of inventory property recognised 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.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-538": { "value": "\nProperty 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 (\u201cNRV\u201d). Principally, this is residential property that the Group develops and intends to sell on completion of development.
\nThe commencement of development with a plan or a prior agreement to sell represents a change in use and accordingly the project is transferred from investment property to inventory property.
\nCosts incurred in inventory property include:
freehold and leasehold rights for land;
amounts paid to contractors for development; and
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 business, based on market prices at the reporting date, less estimated costs of completion and the estimated costs necessary to make the sale.
\nWhen an inventory property is sold, the carrying amount of the property is recognised as an expense in the period in which the related revenue is recognised. The carrying amount of inventory property recognised 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.
\nThe Group has a residential property development that it intends to sell on completion. The residential project is held as inventory property and is measured at the lower of cost and net realisable value (\u201cNRV\u201d).
\nThe commencement of development with a plan or a prior agreement to sell represents a change in use and accordingly the project is transferred from investment property to inventory property.
\nNRV is the estimated selling price in the ordinary course of business, based on market prices at the reporting date, less estimated costs of completion and the estimated costs necessary to make the sale.
\nThe Group has a residential property development that was completed in 2023 and the sale of its units (apartments) started in December 2023.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Inventory property | 17,266 | 20,694 |
Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
\nThe consideration paid, including any directly attributable incremental costs (net of income taxes for the purchases of the Company\u2019s equity instruments by any of the Group\u2019s subsidiaries, as a result of a share buy-back or for a share-based incentive plan) is presented within \u201cOther reserves\u201d, until the shares are cancelled or reissued. Where such ordinary shares are cancelled, their nominal value is debited to Share capital, with the corresponding difference up to their purchase price (including any attributable incremental cost, net of taxes) debited from Share premium. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Group. Usually, shares are purchased for the debt-free Long-Term Share Incentive Plan (Note 3.15 (b)).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-541": { "value": "\nOrdinary shares are classified as equity. Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
\nThe consideration paid, including any directly attributable incremental costs (net of income taxes for the purchases of the Company\u2019s equity instruments by any of the Group\u2019s subsidiaries, as a result of a share buy-back or for a share-based incentive plan) is presented within \u201cOther reserves\u201d, until the shares are cancelled or reissued. Where such ordinary shares are cancelled, their nominal value is debited to Share capital, with the corresponding difference up to their purchase price (including any attributable incremental cost, net of taxes) debited from Share premium. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Group. Usually, shares are purchased for the debt-free Long-Term Share Incentive Plan (Note 3.15 (b)).
\nAs a result of the above elections for the settlement of the final distribution for 2022 and the interim distribution for 2023, the impact in the Share capital and Share premium reserves has been set out below:
\nMovement of ordinary shares | Number of shares | Share capital | Share premium |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Balance at 1 January 2023 | 607,000,000 | 6,070 | 3,190,735 |
Share capital increase1 | - | 434,990 | (434,990) |
Share capital decrease1 | - | (381,750) | 381,750 |
Capital repayment paid to shareholders | - | (53,240) | - |
Impact of foreign exchange hedges | - | - | 106 |
Theoretical effect of scrip issue settlement through share premium2 | - | - | (278,690) |
Theoretical effect of issue of shares as a result of scrip issue election2 | 53,826,020 | 538 | 278,152 |
Carried forward as at 31 December 2023 | 660,826,020 | 6,608 | 3,137,063 |
Ordinary shares carry the right to vote at general meetings, to distribution and to the surplus assets of the Group on winding-up.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-543": { "value": "\nThe consideration paid, including any directly attributable incremental costs (net of income taxes for the purchases of the Company\u2019s equity instruments by any of the Group\u2019s subsidiaries, as a result of a share buy-back or for a share-based incentive plan) is presented within \u201cOther reserves\u201d, until the shares are cancelled or reissued. Where such ordinary shares are cancelled, their nominal value is debited to Share capital, with the corresponding difference up to their purchase price (including any attributable incremental cost, net of taxes) debited from Share premium. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of the Group. Usually, shares are purchased for the debt-free Long-Term Share Incentive Plan (Note 3.15 (b)).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-545": { "value": "\nTo date, NEPI Rockcastle has initiated two types of incentive programs that offered share-based payments in exchange for services provided to it by its directors and employees (equity-settled transactions), which are detailed below.
\nThis program was put in place before the 2017 merger of the former groups New Europe Property Investments plc (\u201cNEPI\u201d) and Rockcastle Global Real Estate Company Ltd (\u201cRockcastle\u201d). Under this program, participants were granted loans to acquire shares in the Company at fair value at the grant date. These loans were classified as \u201cloans to participants in the incentive plan\u201d and included in Other long-term assets (Note 10). The loans are carried at amortised cost and the accrued interest is recognised as finance income in the Statement of Comprehensive Income. The costs under this program are nil.
\nThis program was put in place after the 2017 merger of the former groups NEPI and Rockcastle. Under this incentive plan, shares may be issued by the Group to executive directors and other key personnel for no cash consideration. Awards under this plan are at the discretion of the Board of Directors and are based on the performance of the Group and the employees. The costs related to the LTSIP are measured based on the fair value of the shares at the grant date and are recognized over the vesting period.
\nThe costs are presented as part of the Administrative expenses in the Statement of comprehensive income and within Other reserves in the Statement of changes in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-546": { "value": "\nTo date, NEPI Rockcastle has initiated two types of incentive programs that offered share-based payments in exchange for services provided to it by its directors and employees (equity-settled transactions), which are detailed below.
\nThis program was put in place before the 2017 merger of the former groups New Europe Property Investments plc (\u201cNEPI\u201d) and Rockcastle Global Real Estate Company Ltd (\u201cRockcastle\u201d). Under this program, participants were granted loans to acquire shares in the Company at fair value at the grant date. These loans were classified as \u201cloans to participants in the incentive plan\u201d and included in Other long-term assets (Note 10). The loans are carried at amortised cost and the accrued interest is recognised as finance income in the Statement of Comprehensive Income. The costs under this program are nil.
\nThis program was put in place after the 2017 merger of the former groups NEPI and Rockcastle. Under this incentive plan, shares may be issued by the Group to executive directors and other key personnel for no cash consideration. Awards under this plan are at the discretion of the Board of Directors and are based on the performance of the Group and the employees. The costs related to the LTSIP are measured based on the fair value of the shares at the grant date and are recognized over the vesting period.
\nThe costs are presented as part of the Administrative expenses in the Statement of comprehensive income and within Other reserves in the Statement of changes in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-548": { "value": "\nTo date, NEPI Rockcastle has initiated two types of incentive programs that offered share-based payments in exchange for services provided to it by its directors and employees (equity-settled transactions), which are detailed below.
\nThis program was put in place before the 2017 merger of the former groups New Europe Property Investments plc (\u201cNEPI\u201d) and Rockcastle Global Real Estate Company Ltd (\u201cRockcastle\u201d). Under this program, participants were granted loans to acquire shares in the Company at fair value at the grant date. These loans were classified as \u201cloans to participants in the incentive plan\u201d and included in Other long-term assets (Note 10). The loans are carried at amortised cost and the accrued interest is recognised as finance income in the Statement of Comprehensive Income. The costs under this program are nil.
\nThis program was put in place after the 2017 merger of the former groups NEPI and Rockcastle. Under this incentive plan, shares may be issued by the Group to executive directors and other key personnel for no cash consideration. Awards under this plan are at the discretion of the Board of Directors and are based on the performance of the Group and the employees. The costs related to the LTSIP are measured based on the fair value of the shares at the grant date and are recognized over the vesting period.
\nThe costs are presented as part of the Administrative expenses in the Statement of comprehensive income and within Other reserves in the Statement of changes in equity.
\nThe Group has implemented incentive plans to reward performance and align the interests of executive directors and key individuals with those of the shareholders.
\nThe aim of the Group\u2019s incentive plan (\u201cIncentive Plan\u201d) is to motivate directors and employees to meet the Group\u2019s short-term and long-term objectives by giving such participants an opportunity to receive performance-based Awards (in cash or shares), on short-term (immediate settlement in cash or shares) or long-term (shares with a vesting component). The Board determines which executive directors are eligible to participate in the Incentive Plan, and the allocation of incentives, based on key performance indicators. The executive directors determine which key employees are eligible to participate in the Incentive Plan, and the allocation of incentives is discretionary, based on key performance indicators and other considerations regarding the employees\u2019 performance.
\nTo date, NEPI Rockcastle has initiated two types of incentive programs that offered share-based payments in exchange for services provided to it by its directors and employees (equity-settled transactions), which are detailed below.
\nUnder this program, loans were granted to participants in the share purchase schemes (the \u201cShare Purchase Scheme\u201d or \u201cSPS\u201d) to buy shares, the repayment of which could be made in part out of the distribution payable in relation to the shares (the \u201cNRP SPS\u201d). Of the shares initially subscribed for, 20% vested annually. The Group offered each participant the immediate right to subscribe for the permitted number of shares at their market value, less a maximum discount of 5%, together with a loan to fund the purchase. Each loan carried interest at the weighted average rate that the Group can borrow money. Loans are payable in full, together with interest, ten years after its subscription date, but could be repaid earlier. The Company has security interests that ensure the repayment of the principal and interest on the loan given to participants. The NRP SPS is a full recourse scheme (i.e., recourse in relation to loans granted is not limited to shares issued). Pending repayment of the loan, the distributions on such shares are used to repay loan interest. Any excess distribution after interest payment is used to repay the loan.
\nNo shares were issued during 2023 and 2022 under the NRP SPS.
\nThe number of shares outstanding and the loans to participants under the Share Purchase Scheme as at the year-end are summarised below:
\nNRP SPS | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Number of shares outstanding, collateralizing the Loans to participants under the Share Purchase Scheme | 550,990 | 657,276 |
Loans to participants under the Share Purchase Scheme (in \u20ac\u00a0thousand) | 3,451 | 4,205 |
Under this incentive plan, shares are awarded by the Group to executive directors and other key employees for no cash consideration. For key employees, shares are awarded to participants on condition of employment in the Group for the next three years (vesting period), with shares being vested proportionally over each year of the corresponding vesting periods (tranche vesting). For executive directors, shares are awarded subject to a full vesting of them at the end of three years (cliff vesting) plus a further two-year lock-up period, during which the vested shares cannot be disposed of by the directors. Shares awarded under LTSIP cannot be disposed of or otherwise encumbered up to their respective vesting dates.
\nThe number of shares granted but unvested at 31 December 2023 and their fair value at grant date are summarised below:
\nLTSIP | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Number of shares granted but unvested at year-end | 1,308,834 | 817,822 |
Fair value at the grant date (\u20ac\u00a0thousand) | 7,543 | 4,734 |
The number of shares and their fair value at grant date are presented below. The fair value was calculated using the share price on the date of acquisition of shares allocated to LTSIP.
\nLTSIP | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Number of shares granted during the year | 882,537 | 530,000 |
Fair value at the grant date (\u20ac\u00a0thousand) | 5,158 | 3,074 |
The maximum number of shares which could be offered for subscription under the Incentive Plan is 5% of the issued share capital of the Company at the end of any financial year prior to each award, provided that such number shall not exceed 30,449,745 shares. The number of shares that remained available for issue in terms of the Incentive Plan were as follows:
\n| \u00a0 | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Number of shares that remain available for issue at year-end | 27,444,043 | 28,226,835 |
The balance on the Statement of comprehensive income is transferred to accumulated profit at the end of each financial period. Distributions paid in cash are deducted from accumulated profit. Distributions for which shareholders elected to receive a return of capital are accounted for as an issue of share capital with a corresponding deduction from the share premium account.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-553": { "value": "\nThe balance on the Statement of comprehensive income is transferred to accumulated profit at the end of each financial period. Distributions paid in cash are deducted from accumulated profit. Distributions for which shareholders elected to receive a return of capital are accounted for as an issue of share capital with a corresponding deduction from the share premium account.
\nIn August 2023, the Board has declared a distribution of 25.67 euro cents per share for the six months ended 30 June 2023, corresponding to a 95% dividend pay-out ratio, to be received as capital repayment (to be settled from Share capital). Shareholders could have also elected the settlement of the same dividend amount as ordinary cash distribution out distributable profits (to be settled from Accumulated profit).
\nAs an alternative, the shareholders were given the option to elect to receive a dividend of 27.10 euro cents, corresponding to a 100% pay-out ratio, as a scrip issue (issue of new shares).The results of the election by NEPI Rockcastle shareholders and their Euro equivalent have been summarised below:
\nInterim distribution for 2023: elections | Number of NEPI Rockcastle shares election | Final distribution per share (euro cents) | EUR equivalent out of the final distribution (thousand) |
|---|---|---|---|
Capital repayment | 136,383,373 | 25.67 | 35,010 |
Dividend out of accumulated profit | 27,174,378 | 25.67 | 6,976 |
Scrip issue | 472,272,517 | 27.10 | 127,986 |
Impact of foreign exchange hedges1 | - | - | 112 |
Total | 635,830,268 | \u00a0 | 170,084 |
As a result of the above elections for the settlement of the final distribution for 2022 and the interim distribution for 2023, the impact in the Share capital and Share premium reserves has been set out below:
\nMovement of ordinary shares | Number of shares | Share capital | Share premium |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Balance at 1 January 2023 | 607,000,000 | 6,070 | 3,190,735 |
Share capital increase1 | - | 434,990 | (434,990) |
Share capital decrease1 | - | (381,750) | 381,750 |
Capital repayment paid to shareholders | - | (53,240) | - |
Impact of foreign exchange hedges | - | - | 106 |
Theoretical effect of scrip issue settlement through share premium2 | - | - | (278,690) |
Theoretical effect of issue of shares as a result of scrip issue election2 | 53,826,020 | 538 | 278,152 |
Carried forward as at 31 December 2023 | 660,826,020 | 6,608 | 3,137,063 |
Ordinary shares carry the right to vote at general meetings, to distribution and to the surplus assets of the Group on winding-up.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-554": { "value": "\nRevenue is recognised at the fair value of the consideration received or receivable. Revenue comprises rental and related income and recovery of expenses, excluding VAT.
\nRental income receivable from operating leases is recognised on a straight-line basis over the duration of the lease, except for variable lease payments which are recognized when they arise.
\nContractually agreed and signed concessions granted to, and obtained from, tenants are treated according to IFRS 16 \u201cLeases\u201d. IFRS 16 defines \u201clease modification\u201d as a change in scope, or consideration, of the lease, not part of the original terms and conditions, such as rent discounts, lease extensions, increase in variable rent (overage/turnover), introduction of break options, etc. Lease modifications are recognised prospectively over the new lease term and accounted for by the Group from the date the modification is contractually agreed and signed by both parties. Agreed lease modifications are recognised as lease incentives from the date the modification was signed. Such modifications are straight-lined over the new lease term and recognised in the Consolidated Statement of comprehensive income as a reduction of Gross rental income.
\nRevenue from service and property management charges is recognised in the accounting period in which control of the services are passed to the customer, which is when the service is rendered. For certain service contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services.
\nAs specified in the lease agreements, the Group has the primary responsibility for providing services to tenants (electricity, water and gas utilities, interior and exterior cleaning, security, maintenance, repairs, etc). 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.
\nThe Group negotiates directly with the suppliers all contracts for services provided to tenants. These contracts are concluded between the Group subsidiaries which own the properties and the direct supplier. As the Group sometimes uses the same providers for services across most of its portfolio, it can negotiate better prices through the economies of scale. The Group is considered principal in these transactions, in terms of the IFRS 15 requirements.
\nThe Group negotiates and pays all expenses incurred by the tenants and then re-invoices these costs to them as defined in the contractual clauses included in the lease agreements. A flat fee is charged monthly during the year. This fee is estimated based on the previous year\u2019s actual costs, with an annual service charge reconciliation performed based on current year\u2019s actual costs incurred by the Group. For contracts terminated during the year, the Group estimates the service charge to be collected based on the current budget and last year\u2019s actual costs.
\nRevenue 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.
\nThe 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. The Group\u2019s sales contracts qualify as unconditional exchange of contracts, which occurs when legal title transfers to the customer. Payments are usually received on the date when contracts are signed or with several days delay.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-556": { "value": "\nRevenue is recognised at the fair value of the consideration received or receivable. Revenue comprises rental and related income and recovery of expenses, excluding VAT.
\nRental income receivable from operating leases is recognised on a straight-line basis over the duration of the lease, except for variable lease payments which are recognized when they arise.
\nContractually agreed and signed concessions granted to, and obtained from, tenants are treated according to IFRS 16 \u201cLeases\u201d. IFRS 16 defines \u201clease modification\u201d as a change in scope, or consideration, of the lease, not part of the original terms and conditions, such as rent discounts, lease extensions, increase in variable rent (overage/turnover), introduction of break options, etc. Lease modifications are recognised prospectively over the new lease term and accounted for by the Group from the date the modification is contractually agreed and signed by both parties. Agreed lease modifications are recognised as lease incentives from the date the modification was signed. Such modifications are straight-lined over the new lease term and recognised in the Consolidated Statement of comprehensive income as a reduction of Gross rental income.
\nRevenue from service and property management charges is recognised in the accounting period in which control of the services are passed to the customer, which is when the service is rendered. For certain service contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services.
\nAs specified in the lease agreements, the Group has the primary responsibility for providing services to tenants (electricity, water and gas utilities, interior and exterior cleaning, security, maintenance, repairs, etc). 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.
\nThe Group negotiates directly with the suppliers all contracts for services provided to tenants. These contracts are concluded between the Group subsidiaries which own the properties and the direct supplier. As the Group sometimes uses the same providers for services across most of its portfolio, it can negotiate better prices through the economies of scale. The Group is considered principal in these transactions, in terms of the IFRS 15 requirements.
\nThe Group negotiates and pays all expenses incurred by the tenants and then re-invoices these costs to them as defined in the contractual clauses included in the lease agreements. A flat fee is charged monthly during the year. This fee is estimated based on the previous year\u2019s actual costs, with an annual service charge reconciliation performed based on current year\u2019s actual costs incurred by the Group. For contracts terminated during the year, the Group estimates the service charge to be collected based on the current budget and last year\u2019s actual costs.
\nRevenue 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.
\nThe 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. The Group\u2019s sales contracts qualify as unconditional exchange of contracts, which occurs when legal title transfers to the customer. Payments are usually received on the date when contracts are signed or with several days delay.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gross rental income | 510,103 | 422,051 |
Service charge income | 254,369 | 199,812 |
Gross rental and service charge income | 764,472 | 621,863 |
Property management fees, tax, insurance, and utilities | (164,577) | (138,651) |
Property maintenance cost | (105,567) | (80,077) |
Net expected credit losses | (3,119) | (660) |
Property operating expenses | (273,263) | (219,388) |
Partial forgiveness of receivables (Covid-19 forgiveness) | - | 2,090 |
TOTAL NET RENTAL AND RELATED INCOME | 491,209 | 404,565 |
The Group rents its investment property under operating leases of various expiry terms. The standard terms of the leases comprise information relating to leased space, rent, rights and obligations of the landlord and tenant, including notice periods, renewal options and service charge arrangements. For most of the leases, the rent is indexed annually, over the term of the leases. Most retail leases have turnover rent clauses, which specify that if the agreed percentage of turnover from the retail unit under lease exceeds the base rent, the tenant will pay the difference to the Group.
\nA proportion of 5.1% (\u20ac26,205 thousand) of the Gross rental income is represented by the turnover rent (paid on top of fixed rent) as at 31 December 2023 (31 December 2022: 4.4% (\u20ac\u00a018,758 thousand)).
\nLease incentives represent the non-recurring amount granted (in cash or as fit-out works) by the Group, to a new or an existing tenant, in connection with a new or renewed lease. Lease incentives are straight-lined over the lease term. The lease term corresponds to the contractual duration for the majority of the leases, except for the anchor tenants, for which the lease duration is assessed by the Group based on past experience and taking into account factors such as: GLA of the property where the anchor tenant is located, catchment area, dominance/competition in the catchment area or purchasing power.
\nThe future minimum lease payments receivable under operating leases are detailed below:
\nin \u20ac\u00a0thousand | 31 Dec 20231 | 31 Dec 20232 | 31 Dec 20221 | 31 Dec 20222 |
|---|---|---|---|---|
No later than 1 year | 438,968 | 436,955 | 399,418 | 397,217 |
Between 1-2 years | 342,251 | 334,395 | 318,806 | 307,032 |
Between 2-3 years | 265,069 | 250,480 | 243,528 | 221,625 |
Between 3-4 years | 200,485 | 180,298 | 178,431 | 150,927 |
Between 4-5 years | 140,949 | 118,620 | 125,594 | 93,167 |
Later than 5 years | 358,375 | 259,264 | 316,903 | 147,887 |
Total | 1,746,097 | 1,580,012 | 1,582,680 | 1,317,855 |
The breakdown of the net rental and related income by country is disclosed in Note 36.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-557": { "value": "\nRevenue is recognised at the fair value of the consideration received or receivable. Revenue comprises rental and related income and recovery of expenses, excluding VAT.
\nRental income receivable from operating leases is recognised on a straight-line basis over the duration of the lease, except for variable lease payments which are recognized when they arise.
\nContractually agreed and signed concessions granted to, and obtained from, tenants are treated according to IFRS 16 \u201cLeases\u201d. IFRS 16 defines \u201clease modification\u201d as a change in scope, or consideration, of the lease, not part of the original terms and conditions, such as rent discounts, lease extensions, increase in variable rent (overage/turnover), introduction of break options, etc. Lease modifications are recognised prospectively over the new lease term and accounted for by the Group from the date the modification is contractually agreed and signed by both parties. Agreed lease modifications are recognised as lease incentives from the date the modification was signed. Such modifications are straight-lined over the new lease term and recognised in the Consolidated Statement of comprehensive income as a reduction of Gross rental income.
\nRevenue from service and property management charges is recognised in the accounting period in which control of the services are passed to the customer, which is when the service is rendered. For certain service contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services.
\nAs specified in the lease agreements, the Group has the primary responsibility for providing services to tenants (electricity, water and gas utilities, interior and exterior cleaning, security, maintenance, repairs, etc). 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.
\nThe Group negotiates directly with the suppliers all contracts for services provided to tenants. These contracts are concluded between the Group subsidiaries which own the properties and the direct supplier. As the Group sometimes uses the same providers for services across most of its portfolio, it can negotiate better prices through the economies of scale. The Group is considered principal in these transactions, in terms of the IFRS 15 requirements.
\nThe Group negotiates and pays all expenses incurred by the tenants and then re-invoices these costs to them as defined in the contractual clauses included in the lease agreements. A flat fee is charged monthly during the year. This fee is estimated based on the previous year\u2019s actual costs, with an annual service charge reconciliation performed based on current year\u2019s actual costs incurred by the Group. For contracts terminated during the year, the Group estimates the service charge to be collected based on the current budget and last year\u2019s actual costs.
\nRevenue 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.
\nThe 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. The Group\u2019s sales contracts qualify as unconditional exchange of contracts, which occurs when legal title transfers to the customer. Payments are usually received on the date when contracts are signed or with several days delay.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gross rental income | 510,103 | 422,051 |
Service charge income | 254,369 | 199,812 |
Gross rental and service charge income | 764,472 | 621,863 |
Property management fees, tax, insurance, and utilities | (164,577) | (138,651) |
Property maintenance cost | (105,567) | (80,077) |
Net expected credit losses | (3,119) | (660) |
Property operating expenses | (273,263) | (219,388) |
Partial forgiveness of receivables (Covid-19 forgiveness) | - | 2,090 |
TOTAL NET RENTAL AND RELATED INCOME | 491,209 | 404,565 |
Revenue is recognised at the fair value of the consideration received or receivable. Revenue comprises rental and related income and recovery of expenses, excluding VAT.
\nRental income receivable from operating leases is recognised on a straight-line basis over the duration of the lease, except for variable lease payments which are recognized when they arise.
\nContractually agreed and signed concessions granted to, and obtained from, tenants are treated according to IFRS 16 \u201cLeases\u201d. IFRS 16 defines \u201clease modification\u201d as a change in scope, or consideration, of the lease, not part of the original terms and conditions, such as rent discounts, lease extensions, increase in variable rent (overage/turnover), introduction of break options, etc. Lease modifications are recognised prospectively over the new lease term and accounted for by the Group from the date the modification is contractually agreed and signed by both parties. Agreed lease modifications are recognised as lease incentives from the date the modification was signed. Such modifications are straight-lined over the new lease term and recognised in the Consolidated Statement of comprehensive income as a reduction of Gross rental income.
\nRevenue from service and property management charges is recognised in the accounting period in which control of the services are passed to the customer, which is when the service is rendered. For certain service contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services.
\nAs specified in the lease agreements, the Group has the primary responsibility for providing services to tenants (electricity, water and gas utilities, interior and exterior cleaning, security, maintenance, repairs, etc). 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.
\nThe Group negotiates directly with the suppliers all contracts for services provided to tenants. These contracts are concluded between the Group subsidiaries which own the properties and the direct supplier. As the Group sometimes uses the same providers for services across most of its portfolio, it can negotiate better prices through the economies of scale. The Group is considered principal in these transactions, in terms of the IFRS 15 requirements.
\nThe Group negotiates and pays all expenses incurred by the tenants and then re-invoices these costs to them as defined in the contractual clauses included in the lease agreements. A flat fee is charged monthly during the year. This fee is estimated based on the previous year\u2019s actual costs, with an annual service charge reconciliation performed based on current year\u2019s actual costs incurred by the Group. For contracts terminated during the year, the Group estimates the service charge to be collected based on the current budget and last year\u2019s actual costs.
\nThe Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets for all leases, except for short-term leases and leases of low-value assets. The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
\nRight-of-use assets are measured at cost, adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised and lease payments made at or before the commencement date.
\nLease liabilities are measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments. The present value of lease payments is recognised by discounting the contractual lease payments using the interest rate implicit in the lease, representing the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
\nThe Group recognises the right-of-use assets from leases of land plots on which its Polish properties are located, commissioned from the local authorities. The correspondent lease liabilities are recognised by discounting the contractual lease payments using the interest rate implicit in the lease, representing the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The contractual lease agreements are signed for the period of 99 years with extension option by the lessee. The agreements include fixed payment terms subject to adjustment due to revaluation of land, such revaluation can be done by the lessor not more often than every three years.
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Carrying value of the lease liabilities | \u00a0 | 37,200 | 33,611 |
Out of which short term | \u00a0 | 832 | 832 |
Additions to lease liabilities from acquired assets | \u00a0 | - | 3,843 |
Remeasurement of lease liability | \u00a0 | 20,062 | - |
Interest expense | 804 | 577 | |
Lease liability payment | \u00a0 | (1,546) | (832) |
Lease liabilities | \u00a0 | 56,520 | 37,200 |
Out of which short term | \u00a0 | 1,546 | 832 |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gross rental income | 510,103 | 422,051 |
Service charge income | 254,369 | 199,812 |
Gross rental and service charge income | 764,472 | 621,863 |
Property management fees, tax, insurance, and utilities | (164,577) | (138,651) |
Property maintenance cost | (105,567) | (80,077) |
Net expected credit losses | (3,119) | (660) |
Property operating expenses | (273,263) | (219,388) |
Partial forgiveness of receivables (Covid-19 forgiveness) | - | 2,090 |
TOTAL NET RENTAL AND RELATED INCOME | 491,209 | 404,565 |
The Group rents its investment property under operating leases of various expiry terms. The standard terms of the leases comprise information relating to leased space, rent, rights and obligations of the landlord and tenant, including notice periods, renewal options and service charge arrangements. For most of the leases, the rent is indexed annually, over the term of the leases. Most retail leases have turnover rent clauses, which specify that if the agreed percentage of turnover from the retail unit under lease exceeds the base rent, the tenant will pay the difference to the Group.
\nA proportion of 5.1% (\u20ac26,205 thousand) of the Gross rental income is represented by the turnover rent (paid on top of fixed rent) as at 31 December 2023 (31 December 2022: 4.4% (\u20ac\u00a018,758 thousand)).
\nLease incentives represent the non-recurring amount granted (in cash or as fit-out works) by the Group, to a new or an existing tenant, in connection with a new or renewed lease. Lease incentives are straight-lined over the lease term. The lease term corresponds to the contractual duration for the majority of the leases, except for the anchor tenants, for which the lease duration is assessed by the Group based on past experience and taking into account factors such as: GLA of the property where the anchor tenant is located, catchment area, dominance/competition in the catchment area or purchasing power.
\nThe future minimum lease payments receivable under operating leases are detailed below:
\nin \u20ac\u00a0thousand | 31 Dec 20231 | 31 Dec 20232 | 31 Dec 20221 | 31 Dec 20222 |
|---|---|---|---|---|
No later than 1 year | 438,968 | 436,955 | 399,418 | 397,217 |
Between 1-2 years | 342,251 | 334,395 | 318,806 | 307,032 |
Between 2-3 years | 265,069 | 250,480 | 243,528 | 221,625 |
Between 3-4 years | 200,485 | 180,298 | 178,431 | 150,927 |
Between 4-5 years | 140,949 | 118,620 | 125,594 | 93,167 |
Later than 5 years | 358,375 | 259,264 | 316,903 | 147,887 |
Total | 1,746,097 | 1,580,012 | 1,582,680 | 1,317,855 |
Rental income receivable from operating leases is recognised on a straight-line basis over the duration of the lease, except for variable lease payments which are recognized when they arise.
\nContractually agreed and signed concessions granted to, and obtained from, tenants are treated according to IFRS 16 \u201cLeases\u201d. IFRS 16 defines \u201clease modification\u201d as a change in scope, or consideration, of the lease, not part of the original terms and conditions, such as rent discounts, lease extensions, increase in variable rent (overage/turnover), introduction of break options, etc. Lease modifications are recognised prospectively over the new lease term and accounted for by the Group from the date the modification is contractually agreed and signed by both parties. Agreed lease modifications are recognised as lease incentives from the date the modification was signed. Such modifications are straight-lined over the new lease term and recognised in the Consolidated Statement of comprehensive income as a reduction of Gross rental income.
\nRevenue from service and property management charges is recognised in the accounting period in which control of the services are passed to the customer, which is when the service is rendered. For certain service contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services.
\nAs specified in the lease agreements, the Group has the primary responsibility for providing services to tenants (electricity, water and gas utilities, interior and exterior cleaning, security, maintenance, repairs, etc). 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.
\nThe Group negotiates directly with the suppliers all contracts for services provided to tenants. These contracts are concluded between the Group subsidiaries which own the properties and the direct supplier. As the Group sometimes uses the same providers for services across most of its portfolio, it can negotiate better prices through the economies of scale. The Group is considered principal in these transactions, in terms of the IFRS 15 requirements.
\nThe Group negotiates and pays all expenses incurred by the tenants and then re-invoices these costs to them as defined in the contractual clauses included in the lease agreements. A flat fee is charged monthly during the year. This fee is estimated based on the previous year\u2019s actual costs, with an annual service charge reconciliation performed based on current year\u2019s actual costs incurred by the Group. For contracts terminated during the year, the Group estimates the service charge to be collected based on the current budget and last year\u2019s actual costs.
\nThe Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets for all leases, except for short-term leases and leases of low-value assets. The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
\nRight-of-use assets are measured at cost, adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised and lease payments made at or before the commencement date.
\nLease liabilities are measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments. The present value of lease payments is recognised by discounting the contractual lease payments using the interest rate implicit in the lease, representing the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-564": { "value": "\nProperty operating expenses and administrative expenses are recognised on an accrual basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-565": { "value": "\nProperty operating expenses and administrative expenses are recognised on an accrual basis.
\nProperty management fees, tax, insurance, and utility costs presented above are split as follows:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Utility expenses1 | (101,735) | (86,183) |
Property related taxes | (28,522) | (25,433) |
Property management fees | (31,831) | (24,973) |
Property insurance expenses | (2,489) | (2,062) |
Property management fees, tax, insurance, and utilities | (164,577) | (138,651) |
Property maintenance cost presented above comprises of:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Cleaning and security | (42,034) | (32,862) |
Maintenance and repairs | (32,900) | (23,545) |
Marketing | (21,795) | (17,426) |
Services and related costs | (3,323) | (2,688) |
Other | (5,515) | (3,556) |
Property maintenance cost | (105,567) | (80,077) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Staff costs1 | \u00a0 | (11,890) | (10,671) |
Directors\u2019 remuneration | (4,233) | (4,744) | |
Advisory services | \u00a0 | (4,651) | (7,683) |
Audit and other assurance services | \u00a0 | (2,402) | (1,740) |
Companies\u2019 administration | \u00a0 | (5,766) | (2,459) |
Travel and accommodation | \u00a0 | (1,655) | (1,015) |
Stock exchange expenses | \u00a0 | (772) | (597) |
Share based payment expense | \u00a0 | (2,000) | (1,472) |
Total | \u00a0 | (33,369) | (30,381) |
Out of the above administrative expenses, fees related to EY, as the Group\u2019s current auditor, are summarised below:
\n31 Dec 2023 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (356) | (1,889) | (21) |
Other assurance procedures | (62) | (74) | - |
Total | (418) | (1,963) | (21) |
31 Dec 2022 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (300) | (1,143) | (96) |
Other assurance procedures | - | (177) | (24) |
Total | (300) | (1,320) | (120) |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gain from reversal of litigation claim | - | 21,304 |
In October 2017, one of the Group's subsidiaries entered into an agreement in relation to the conditional acquisition of an operating shopping centre and a related development, Serenada and Krokus Shopping Centres in Poland. On 1 January 2019, upon the lapse of the respective transaction's long stop date, the subsidiary notified the counterparty that it had exercised its right to terminate the transaction as the long stop date had passed and certain conditions precedent had not been met. The counterparty consequently initiated arbitration proceedings against the Group, claiming a contractual penalty in the amount of \u20ac30 million.
\nOn 31 January 2022, the Group was informed by the Arbitral Tribunal that the arbitrators ordered that the Group is liable to pay the contractual penalty of \u20ac30 million plus accumulated interest and arbitration expenses. A litigation provision expense was previously recognised as a result in the 2021 financial statements for the amount of \u20ac37,304 thousand.
\nFollowing negotiations between the Company and the counterparty to the initial transaction, the parties agreed on 23 November 2022 on an amicable settlement. Pursuant to the settlement, the Group paid to the counterparty an amount of \u20ac16 million and the parties have reciprocally waived, definitely and irrevocably, all and any present and potential rights and claims arising out of or in connection with the initial purchase transaction and Arbitral Tribunal award. As a result, a gain from the reversal of the difference between the initially provided amount and the settled amount of \u20ac21,304 thousand was recognised in the 2022 financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-566": { "value": "\nProperty operating expenses and administrative expenses are recognised on an accrual basis.
\nProperty management fees, tax, insurance, and utility costs presented above are split as follows:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Utility expenses1 | (101,735) | (86,183) |
Property related taxes | (28,522) | (25,433) |
Property management fees | (31,831) | (24,973) |
Property insurance expenses | (2,489) | (2,062) |
Property management fees, tax, insurance, and utilities | (164,577) | (138,651) |
Property maintenance cost presented above comprises of:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Cleaning and security | (42,034) | (32,862) |
Maintenance and repairs | (32,900) | (23,545) |
Marketing | (21,795) | (17,426) |
Services and related costs | (3,323) | (2,688) |
Other | (5,515) | (3,556) |
Property maintenance cost | (105,567) | (80,077) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Staff costs1 | \u00a0 | (11,890) | (10,671) |
Directors\u2019 remuneration | (4,233) | (4,744) | |
Advisory services | \u00a0 | (4,651) | (7,683) |
Audit and other assurance services | \u00a0 | (2,402) | (1,740) |
Companies\u2019 administration | \u00a0 | (5,766) | (2,459) |
Travel and accommodation | \u00a0 | (1,655) | (1,015) |
Stock exchange expenses | \u00a0 | (772) | (597) |
Share based payment expense | \u00a0 | (2,000) | (1,472) |
Total | \u00a0 | (33,369) | (30,381) |
Out of the above administrative expenses, fees related to EY, as the Group\u2019s current auditor, are summarised below:
\n31 Dec 2023 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (356) | (1,889) | (21) |
Other assurance procedures | (62) | (74) | - |
Total | (418) | (1,963) | (21) |
31 Dec 2022 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (300) | (1,143) | (96) |
Other assurance procedures | - | (177) | (24) |
Total | (300) | (1,320) | (120) |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gain from reversal of litigation claim | - | 21,304 |
In October 2017, one of the Group's subsidiaries entered into an agreement in relation to the conditional acquisition of an operating shopping centre and a related development, Serenada and Krokus Shopping Centres in Poland. On 1 January 2019, upon the lapse of the respective transaction's long stop date, the subsidiary notified the counterparty that it had exercised its right to terminate the transaction as the long stop date had passed and certain conditions precedent had not been met. The counterparty consequently initiated arbitration proceedings against the Group, claiming a contractual penalty in the amount of \u20ac30 million.
\nOn 31 January 2022, the Group was informed by the Arbitral Tribunal that the arbitrators ordered that the Group is liable to pay the contractual penalty of \u20ac30 million plus accumulated interest and arbitration expenses. A litigation provision expense was previously recognised as a result in the 2021 financial statements for the amount of \u20ac37,304 thousand.
\nFollowing negotiations between the Company and the counterparty to the initial transaction, the parties agreed on 23 November 2022 on an amicable settlement. Pursuant to the settlement, the Group paid to the counterparty an amount of \u20ac16 million and the parties have reciprocally waived, definitely and irrevocably, all and any present and potential rights and claims arising out of or in connection with the initial purchase transaction and Arbitral Tribunal award. As a result, a gain from the reversal of the difference between the initially provided amount and the settled amount of \u20ac21,304 thousand was recognised in the 2022 financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-567": { "value": "\nProperty operating expenses and administrative expenses are recognised on an accrual basis.
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Staff costs1 | \u00a0 | (11,890) | (10,671) |
Directors\u2019 remuneration | (4,233) | (4,744) | |
Advisory services | \u00a0 | (4,651) | (7,683) |
Audit and other assurance services | \u00a0 | (2,402) | (1,740) |
Companies\u2019 administration | \u00a0 | (5,766) | (2,459) |
Travel and accommodation | \u00a0 | (1,655) | (1,015) |
Stock exchange expenses | \u00a0 | (772) | (597) |
Share based payment expense | \u00a0 | (2,000) | (1,472) |
Total | \u00a0 | (33,369) | (30,381) |
Out of the above administrative expenses, fees related to EY, as the Group\u2019s current auditor, are summarised below:
\n31 Dec 2023 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (356) | (1,889) | (21) |
Other assurance procedures | (62) | (74) | - |
Total | (418) | (1,963) | (21) |
31 Dec 2022 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (300) | (1,143) | (96) |
Other assurance procedures | - | (177) | (24) |
Total | (300) | (1,320) | (120) |
A distribution is recorded as a liability and deducted from equity in the period in which it is declared and approved. Any distribution declared after the reporting period and before the financial statements are authorised for issue is disclosed in Note 16.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-570": { "value": "\nA distribution is recorded as a liability and deducted from equity in the period in which it is declared and approved. Any distribution declared after the reporting period and before the financial statements are authorised for issue is disclosed in Note 16.
\nIn February 2023, the Board has declared a final distribution of 27.85 euro cents per share for the six months ended 31 December 2022, corresponding to a 95% dividend pay-out ratio, to be received as capital repayment (to be settled from Share capital). Shareholders could have also elected the settlement of the same dividend amount as ordinary cash distribution out of distributable profits (to be settled from Accumulated profit).
\nAs an alternative, the shareholders were given the option to elect to receive a dividend of 29.32 euro cents, corresponding to a 100% pay-out ratio, as a scrip issue (issue of new shares).
\nThe results of the election by NEPI Rockcastle shareholders and their Euro equivalent have been summarised below:
\nFinal distribution for 2022: elections | Number of NEPI Rockcastle shares election | Final distribution per share (euro cents) | EUR equivalent out of the final distribution (thousand) |
|---|---|---|---|
Capital repayment | 65,460,053 | 27.85 | 18,231 |
Dividend out of accumulated profit | 27,541,128 | 27.85 | 7,670 |
Scrip issue | 513,998,819 | 29.32 | 150,704 |
Impact of foreign exchange hedges1 | - | - | (219) |
Total | 607,000,000 | \u00a0 | 176,386 |
In August 2023, the Board has declared a distribution of 25.67 euro cents per share for the six months ended 30 June 2023, corresponding to a 95% dividend pay-out ratio, to be received as capital repayment (to be settled from Share capital). Shareholders could have also elected the settlement of the same dividend amount as ordinary cash distribution out distributable profits (to be settled from Accumulated profit).
\nAs an alternative, the shareholders were given the option to elect to receive a dividend of 27.10 euro cents, corresponding to a 100% pay-out ratio, as a scrip issue (issue of new shares).The results of the election by NEPI Rockcastle shareholders and their Euro equivalent have been summarised below:
\nInterim distribution for 2023: elections | Number of NEPI Rockcastle shares election | Final distribution per share (euro cents) | EUR equivalent out of the final distribution (thousand) |
|---|---|---|---|
Capital repayment | 136,383,373 | 25.67 | 35,010 |
Dividend out of accumulated profit | 27,174,378 | 25.67 | 6,976 |
Scrip issue | 472,272,517 | 27.10 | 127,986 |
Impact of foreign exchange hedges1 | - | - | 112 |
Total | 635,830,268 | \u00a0 | 170,084 |
Taxation on the profit or loss for the year comprises current and deferred tax. Current income tax and liabilities are measured at the amount expected to be recovered from, or paid to, taxation authorities. 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.
\nDeferred tax is determined using the liability method and is based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
\nThe following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries that are unlikely to reverse in the foreseeable future.
\nA deferred tax asset is recognised based on the assumption that it is probable that future taxable profits will be available against which it can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
\nThe current tax expense incurred by the Group reflects tax accrued in the subsidiaries of the Group located in Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Malta, Poland, Romania, Serbia, Slovakia, and the Netherlands.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-573": { "value": "\nTaxation on the profit or loss for the year comprises current and deferred tax. Current income tax and liabilities are measured at the amount expected to be recovered from, or paid to, taxation authorities. 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.
\nDeferred tax is determined using the liability method and is based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
\nThe following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries that are unlikely to reverse in the foreseeable future.
\nA deferred tax asset is recognised based on the assumption that it is probable that future taxable profits will be available against which it can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
\nThe current tax expense incurred by the Group reflects tax accrued in the subsidiaries of the Group located in Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Malta, Poland, Romania, Serbia, Slovakia, and the Netherlands.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
\nTax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss, except to the extent they relate to business combination or items recognised directly to equity. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets are realised or the liabilities are settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent it is probable that future taxable profit will be available against which temporary differences can be utilised.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Current tax expense | 28,334 | 23,068 |
Deferred tax expense | 41,527 | 43,266 |
INCOME TAX EXPENSE | 69,861 | 66,334 |
Deferred tax brought forward | 364,875 | 322,697 |
Other adjustments (included in the disposal proceeds) - with P&L effect | 61 | 23 |
Deferred tax balance transferred to Held for sale (HFS) assets - no P&L effect | 1,673 | (1,111) |
Deferred tax expense | 41,527 | 43,266 |
Net deferred tax liability carried forward, out of which: | 408,136 | 364,875 |
Deferred tax asset (other than related to HFS portfolio)1 | (63,555) | (54,679) |
Deferred tax liability (other than related to HFS portfolio)1 | 471,691 | 419,554 |
Net deferred tax liability results from the following types of differences:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Fiscal losses | 235,502 | 249,282 |
Other deductible temporary differences1 | 248,973 | 241,514 |
Deferred tax asset | 95,072 | 95,657 |
Net deferred tax asset related to HFS portfolio | (2,330) | - |
Deferred tax asset adjusted for HFS | 92,742 | - |
Temporary differences between accounting and fiscal value of investment property | (3,234,900) | (2,983,715) |
Other taxable temporary differences1 | (29,024) | (22,649) |
Deferred tax liability | (501,536) | (460,532) |
Net deferred tax liability related to HFS portfolio | 658 | - |
Deferred tax liability adjusted for HFS | (500,878) | - |
Net deferred tax liability | (408,136) | (364,875) |
The deferred tax balance as at 31 December 2023 is the net effect of deferred tax assets resulted mainly from fiscal losses and deferred tax liabilities resulted from differences between the fiscal base and the accounting base of assets and liabilities, mainly investment property. Deferred tax liabilities are not expected to be settled within the following five years from the reporting date.
\nDeferred tax liabilities, which are a non-cash item, result directly from the fair value revaluation of the investment property and other local tax adjustments (e.g., local tax depreciation charges, non-capitalisation of certain items, foreign exchange impact given that tax value is recorded in local currency, etc.) which diminishes the tax value of the investment property.
\nin \u20ac\u00a0thousand | Consolidated Statement of | Consolidated Statement of | ||
|---|---|---|---|---|
Deferred tax liability (net) | 31-Dec-23 | 31-Dec-22 | 31-Dec-23 | 31-Dec-22 |
Valuation of investment property at fair value | (496,027) | (456,232) | (39,737) | (49,221) |
Recognised unused tax losses | 47,804 | 49,934 | (2,130) | (7,338) |
Deferred tax balance transferred to HFS (no P&L impact) | (1,673) | - | - | - |
Deductible/Taxable temporary differences | 41,760 | 41,423 | 340 | 13,293 |
TOTAL | (408,136) | (364,875) | (41,527) | (43,266) |
The Group is liable for taxation on taxable profits in the following jurisdictions at the rates below:
\nCorporate income tax rates | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Netherlands | 25.8% | 25.8% |
Romania | 16% | 16% |
Poland | 19% | 19% |
Slovakia | 21% | 21% |
Serbia | 15% | 15% |
Czech Republic1 | 19% | 19% |
Croatia | 18% | 18% |
Bulgaria | 10% | 10% |
Hungary | 9% | 9% |
Lithuania | 15% | 15% |
Malta | 35% | 35% |
A reconciliation between the current year income tax charge (current and deferred tax) and the Group consolidated profit/(loss) before tax for the years 2023 and 2022 is presented below:
\nProfit Before Tax Reconciliation | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Consolidated Profit Before Tax | 546,662 | 501,607 |
Weighted tax rate on consolidated Profit Before Tax | 14.49% | 14.91% |
Group income tax charge based on Group weighted | (79,227) | (74,771) |
Effect in corporate income tax resulting from | \u00a0 | \u00a0 |
Group share in earnings from companies accounted for under equity | - | 489 |
Effect of gains/(losses) at Holding level without tax impact (including | - | 6,583 |
Tax expense in Holdings (inter-companies) not included in Profit before | - | (3,862) |
Effects in changes in foreign exchange rates1 | 1,367 | 5,221 |
Recognition of Deferred Tax Asset previously unrecognised1 | 6,650 | 645 |
Changes in the liabilities for uncertain tax positions1 | 4,635 | (5,784) |
Utilisation of previously unrecognised temporary differences1 | 746 | 5,872 |
Tax rate differences inter-company transactions1 | (2,587) | 6,160 |
Refund of minimum tax for Polish entities related to previous years | - | 342 |
Deferred tax assets released due to fiscal losses expired and/or not utilised | (1,320) | (2,821) |
Release of deferred tax asset recognised for prior year tax losses | - | (4,550) |
Increase of Deferred Tax Liability due to change of tax rate in Czech Republic (from 19% in 2023 to 21% starting 2024) | (591) | - |
Others | 466 | 142 |
Total Group tax expense | (69,861) | (66,334) |
Effective tax rate (Group consolidated Profit Before Tax) | 13% | 13% |
The Group accounts for deferred taxes assuming the theoretical future disposals of properties in the form of asset deals, triggering the full corporate income tax rate in each jurisdiction in which the Group owns property. In practice, if the Group would be in the position to dispose of certain assets, these disposals will most probably be conducted via share deals, as assets are held in separate SPVs, significantly reducing the effective tax rate on potential capital gains.
\nGroup subsidiaries are subject to corporate tax on an annual basis. The Group carries forward aggregate fiscal losses of \u20ac314,243 thousand (31 December 2022: \u20ac249,282 thousand), which are mainly available for up to seven years to offset against any future taxable profits of the companies in which the losses arose. The notable exception is the Netherlands where, starting 1 January 2022 tax losses available as at 31 December 2021 may be used for an indefinite amount of time to offset against 50% of the future taxable profits of the Dutch companies. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine recognisable deferred tax assets, based on the likely timing and the level of future taxable profits and future tax planning strategies. Deferred tax assets have not been recognised for fiscal losses of \u20ac78,780 thousand (31 December 2022: \u20ac40,754 thousand) as these could have been used only to offset the taxable profits of certain companies in the Group, and there is uncertainty whether these companies will either generate sufficient taxable profit in the future.
\nThe expiry dates for these losses are as follows:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
2023 | - | 5,619 |
2024 | 11,062 | 4,271 |
2025 | 17,385 | 2,457 |
2026 | 5,053 | 6,906 |
2027 | 17,120 | 1,347 |
2028 | 5,105 | 2,712 |
2029 | 8,818 | 17,442 |
2030 and later | 14,237 | - |
Total | 78,780 | 40,754 |
The Group does not withhold taxes on distribution paid.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-575": { "value": "\nDeferred tax is determined using the liability method and is based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
\nThe following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries that are unlikely to reverse in the foreseeable future.
\nA deferred tax asset is recognised based on the assumption that it is probable that future taxable profits will be available against which it can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-576": { "value": "\nDeferred tax is determined using the liability method and is based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases.
\nThe following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries that are unlikely to reverse in the foreseeable future.
\nA deferred tax asset is recognised based on the assumption that it is probable that future taxable profits will be available against which it can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
\nThe Group is subject to income taxes on taxable profits of its companies\u2019 operating in all jurisdictions. The calculation of the Group\u2019s tax charge and provisions for income taxes necessarily involves a degree of estimation and judgment in evaluating the nature of its companies\u2019 transactions and their respective tax treatment.
\nSignificant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
\nTax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss, except to the extent they relate to business combination or items recognised directly to equity. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets are realised or the liabilities are settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent it is probable that future taxable profit will be available against which temporary differences can be utilised.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Current tax expense | 28,334 | 23,068 |
Deferred tax expense | 41,527 | 43,266 |
INCOME TAX EXPENSE | 69,861 | 66,334 |
Deferred tax brought forward | 364,875 | 322,697 |
Other adjustments (included in the disposal proceeds) - with P&L effect | 61 | 23 |
Deferred tax balance transferred to Held for sale (HFS) assets - no P&L effect | 1,673 | (1,111) |
Deferred tax expense | 41,527 | 43,266 |
Net deferred tax liability carried forward, out of which: | 408,136 | 364,875 |
Deferred tax asset (other than related to HFS portfolio)1 | (63,555) | (54,679) |
Deferred tax liability (other than related to HFS portfolio)1 | 471,691 | 419,554 |
Net deferred tax liability results from the following types of differences:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Fiscal losses | 235,502 | 249,282 |
Other deductible temporary differences1 | 248,973 | 241,514 |
Deferred tax asset | 95,072 | 95,657 |
Net deferred tax asset related to HFS portfolio | (2,330) | - |
Deferred tax asset adjusted for HFS | 92,742 | - |
Temporary differences between accounting and fiscal value of investment property | (3,234,900) | (2,983,715) |
Other taxable temporary differences1 | (29,024) | (22,649) |
Deferred tax liability | (501,536) | (460,532) |
Net deferred tax liability related to HFS portfolio | 658 | - |
Deferred tax liability adjusted for HFS | (500,878) | - |
Net deferred tax liability | (408,136) | (364,875) |
The deferred tax balance as at 31 December 2023 is the net effect of deferred tax assets resulted mainly from fiscal losses and deferred tax liabilities resulted from differences between the fiscal base and the accounting base of assets and liabilities, mainly investment property. Deferred tax liabilities are not expected to be settled within the following five years from the reporting date.
\nDeferred tax liabilities, which are a non-cash item, result directly from the fair value revaluation of the investment property and other local tax adjustments (e.g., local tax depreciation charges, non-capitalisation of certain items, foreign exchange impact given that tax value is recorded in local currency, etc.) which diminishes the tax value of the investment property.
\nin \u20ac\u00a0thousand | Consolidated Statement of | Consolidated Statement of | ||
|---|---|---|---|---|
Deferred tax liability (net) | 31-Dec-23 | 31-Dec-22 | 31-Dec-23 | 31-Dec-22 |
Valuation of investment property at fair value | (496,027) | (456,232) | (39,737) | (49,221) |
Recognised unused tax losses | 47,804 | 49,934 | (2,130) | (7,338) |
Deferred tax balance transferred to HFS (no P&L impact) | (1,673) | - | - | - |
Deductible/Taxable temporary differences | 41,760 | 41,423 | 340 | 13,293 |
TOTAL | (408,136) | (364,875) | (41,527) | (43,266) |
The Group accounts for deferred taxes assuming the theoretical future disposals of properties in the form of asset deals, triggering the full corporate income tax rate in each jurisdiction in which the Group owns property. In practice, if the Group would be in the position to dispose of certain assets, these disposals will most probably be conducted via share deals, as assets are held in separate SPVs, significantly reducing the effective tax rate on potential capital gains.
\nGroup subsidiaries are subject to corporate tax on an annual basis. The Group carries forward aggregate fiscal losses of \u20ac314,243 thousand (31 December 2022: \u20ac249,282 thousand), which are mainly available for up to seven years to offset against any future taxable profits of the companies in which the losses arose. The notable exception is the Netherlands where, starting 1 January 2022 tax losses available as at 31 December 2021 may be used for an indefinite amount of time to offset against 50% of the future taxable profits of the Dutch companies. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine recognisable deferred tax assets, based on the likely timing and the level of future taxable profits and future tax planning strategies. Deferred tax assets have not been recognised for fiscal losses of \u20ac78,780 thousand (31 December 2022: \u20ac40,754 thousand) as these could have been used only to offset the taxable profits of certain companies in the Group, and there is uncertainty whether these companies will either generate sufficient taxable profit in the future.
\nThe expiry dates for these losses are as follows:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
2023 | - | 5,619 |
2024 | 11,062 | 4,271 |
2025 | 17,385 | 2,457 |
2026 | 5,053 | 6,906 |
2027 | 17,120 | 1,347 |
2028 | 5,105 | 2,712 |
2029 | 8,818 | 17,442 |
2030 and later | 14,237 | - |
Total | 78,780 | 40,754 |
In accordance with IFRS 8, operating segments are identified on the basis of the internal reporting used by management when evaluating performance and allocating resources.
\nThe Group has a homogeneous asset base (real estate properties), with similar economic characteristics, which provide similar nature of services, i.e. leasing of its properties, that generate rental income.
\nThe Group\u2019s Chief Operating Decision Makers (CODM) are the executive directors, and they take decisions based on detailed reports. These are prepared regularly and are presented to the Board of Directors, which approves the results and gives guidance on the subsequent strategy to be undertaken.
\nIn particular, the financial information in respect of investment property is provided to the Board of Directors focuses primarily on net rentals (including rental income, service charge income and property operating expenses) and valuation gains and losses.
\nThe operating segments for management purposes are the individual properties. For reporting purposes, the Group aggregates the retail properties (shopping malls and retail centres) on country level and presents the financial information on the following geographic reportable segments: Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Poland, Romania, Serbia, Slovakia.
\nIn addition, the Group\u2019s CODM closely follow changes in distributable earnings to its shareholders as a measure of profitability and as a result of successful implementation of the Group\u2019s strategy. Distributable earnings per share is calculated in terms of the SA REIT Association\u2019s Best Practice Recommendations Second Edition.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-584": { "value": "\nIn accordance with IFRS 8, operating segments are identified on the basis of the internal reporting used by management when evaluating performance and allocating resources.
\nThe Group has a homogeneous asset base (real estate properties), with similar economic characteristics, which provide similar nature of services, i.e. leasing of its properties, that generate rental income.
\nThe Group\u2019s Chief Operating Decision Makers (CODM) are the executive directors, and they take decisions based on detailed reports. These are prepared regularly and are presented to the Board of Directors, which approves the results and gives guidance on the subsequent strategy to be undertaken.
\nIn particular, the financial information in respect of investment property is provided to the Board of Directors focuses primarily on net rentals (including rental income, service charge income and property operating expenses) and valuation gains and losses.
\nThe operating segments for management purposes are the individual properties. For reporting purposes, the Group aggregates the retail properties (shopping malls and retail centres) on country level and presents the financial information on the following geographic reportable segments: Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Poland, Romania, Serbia, Slovakia.
\nIn addition, the Group\u2019s CODM closely follow changes in distributable earnings to its shareholders as a measure of profitability and as a result of successful implementation of the Group\u2019s strategy. Distributable earnings per share is calculated in terms of the SA REIT Association\u2019s Best Practice Recommendations Second Edition.
\nThe operating segments for management purposes are the individual properties. For reporting purposes, the Group aggregates the retail properties (shopping malls and street retail centres) on geographic regions of operation. There are a total of nine reportable segments, which include Romania, Poland, Bulgaria, Slovakia, Hungary, Croatia, Serbia, Czech Republic, and Lithuania.
\nRetail properties are considered to have a different economic and risk profiles compared to other types of properties in the group portfolio, therefore are aggregated and reported separately on geographies.
\nThe office, industrial and residential businesses are immaterial for the Group from both operational and financial statements disclosure points of view the weight of these categories are around 1% of the total Group portfolio. These properties, together with the corporate entities (group holding companies), are separately disclosed in the \u201cUnallocated\u201d section below.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
\nThe CODM monitor the results of each reportable segment independently for the purposes of allocating resources to the segment and assessing its performance, as this is the key IFRS 8 driver of segmentation. The measure of reporting segment performance is Profit before net finance costs and other items, as disclosed in the following tables. The Group\u2019s financing policy (including its impact on financial income and expenses), corporate activities and income tax matters are handled at Group level, and the resulting impacts are not allocated to the operating segments.
\nFor the balance sheet, the relevant measure of segment analysis is considered the investment properties, as the CODM are monitoring closely the asset performance at each reporting date.
\nSegment investments over a period is the total cost incurred during the period to acquire and develop investment properties, as well as capital expenditure spent on investment properties.
\nIn the 2022 financial statements, segment information was presented under five reportable segments (retail, office, residential, industrial, and corporate). The Group also reported the net rental and related income, profit before tax and investment properties information by geographic segments, which included Bulgaria, Croatia, Czech Republic, Hungary, Lithuania, Poland, Romania, Serbia, Slovakia, and a corporate segment composed of entities located in Malta and the Netherlands.
\nIn 2023, the Group voluntarily chosen to present the retail business at country level and not to aggregate on a higher level the presentation of retail properties\u2019 information, to enhance the relevance of the disclosure.
\nSegment results 31 Dec 2023 | Romania | Poland | Hungary | Slovakia | Bulgaria | Croatia | Czech Republic | Lithuania | Serbia | Total Segments | Unallocated | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross rental income | 192,993 | 131,272 | 38,167 | 37,434 | 41,765 | 22,919 | 12,802 | 13,236 | 13,935 | 504,523 | 5,580 | 510,103 |
Service charge income | 106,126 | 58,308 | 18,855 | 19,531 | 19,045 | 11,022 | 7,146 | 5,338 | 5,912 | 251,283 | 3,086 | 254,369 |
Property operating expenses | (107,713) | (72,938) | (19,357) | (19,722) | (19,660) | (11,135) | (7,480) | (5,401) | (6,524) | (269,930) | (3,333) | (273,263) |
Net rental and related income | 191,406 | 116,642 | 37,665 | 37,243 | 41,150 | 22,806 | 12,468 | 13,173 | 13,323 | 485,876 | 5,333 | 491,209 |
Administrative expenses | (12,114) | (4,265) | (119) | 257 | 403 | (158) | 121 | (23) | (64) | (15,962) | (17,407) | (33,369) |
Revenues from sales of inventory property | - | - | - | - | - | - | - | - | - | - | 9,808 | 9,808 |
Cost of sales of inventory property | - | - | - | - | - | - | - | - | - | - | (7,076) | (7,076) |
EBIT1 | 179,292 | 112,377 | 37,546 | 37,500 | 41,553 | 22,648 | 12,589 | 13,150 | 13,259 | 469,914 | (9,342) | 460,572 |
Fair value adjustments of investment property | 131,634 | (32,781) | (16,718) | 20,262 | 38,217 | 16,262 | 928 | 3,339 | 8,264 | 169,407 | (4,937) | 164,470 |
Foreign exchange (loss)/gain | (709) | 288 | (186) | - | (28) | 1 | (447) | - | 14 | (1,067) | (120) | (1,187) |
Gain on disposal of assets held for sale | 1,649 | - | - | - | - | - | - | - | - | 1,649 | 3,992 | 5,641 |
Profit before net finance costs and other items | 311,866 | 79,884 | 20,642 | 57,762 | 79,742 | 38,911 | 13,070 | 16,489 | 21,537 | 639,903 | (10,407) | 629,496 |
Finance income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 6,891 | 6,891 |
Finance costs | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (69,052) | (69,052) |
Bank charges, commissions and fees | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (3,297) | (3,297) |
Fair value adjustments of derivatives | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (17,376) | (17,376) |
Profit before tax | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 546,662 |
Income tax expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (69,861) | (69,861) |
Current tax expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (28,334) | (28,334) |
Deferred tax expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (41,527) | (41,527) |
Profit after tax | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 476,801 |
Segment per country results 31 Dec 2022 | Romania | Poland | Hungary | Slovakia | Bulgaria | Croatia | Czech Republic | Lithuania | Serbia | Total Segments | Unallocated | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gross rental income | 162,111 | 90,275 | 35,205 | 34,454 | 35,833 | 21,141 | 11,494 | 11,679 | 12,487 | 414,679 | 7,372 | 422,051 |
Service charge income | 84,094 | 40,028 | 13,806 | 17,480 | 15,187 | 9,607 | 6,675 | 4,345 | 5,423 | 196,645 | 3,167 | 199,812 |
Property operating expenses | (89,994) | (50,193) | (14,011) | (18,078) | (15,848) | (9,749) | (6,713) | (5,204) | (5,784) | (215,574) | (3,814) | (219,388) |
Partial forgiveness of receivables (Covid-19 forgiveness) | 351 | 261 | 101 | 61 | 1,402 | (21) | (12) | (58) | 12 | 2,097 | (7) | 2,090 |
Net rental and related income | 156,562 | 80,371 | 35,101 | 33,917 | 36,574 | 20,978 | 11,444 | 10,762 | 12,138 | 397,847 | 6,718 | 404,565 |
Administrative expenses | (8,662) | (2,526) | (422) | 37 | (11) | 38 | (271) | (147) | (198) | (12,162) | (18,219) | (30,381) |
Reversal of expense with litigation claim | - | - | - | - | - | - | - | - | - | - | 21,304 | 21,304 |
EBIT1 | 147,900 | 77,845 | 34,679 | 33,954 | 36,563 | 21,016 | 11,173 | 10,615 | 11,940 | 385,685 | 9,803 | 395,488 |
Fair value adjustments of investment property | 147,273 | (22,810) | (9,517) | (870) | 10,644 | 7,797 | (720) | 6,774 | 4,421 | 142,992 | (1,291) | 141,701 |
Foreign exchange (loss)/gain | 283 | 900 | 355 | - | (18) | (72) | 162 | - | 8 | 1,618 | (33) | 1,585 |
Gain on disposal of assets held for sale | - | - | - | - | - | - | - | - | - | - | 1,121 | 1,121 |
Profit before net finance costs and other items | 295,456 | 55,935 | 25,517 | 33,084 | 47,189 | 28,741 | 10,615 | 17,389 | 16,369 | 530,295 | 9,600 | 539,895 |
Finance income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,511 | 3,511 |
Finance costs | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (56,802) | (56,802) |
Bank charges, commissions and fees | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (4,298) | (4,298) |
Fair value adjustments of derivatives | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 37,946 | 37,946 |
Losses on extinguishment of financial instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (21,925) | (21,925) |
Share of profit of Joint Ventures | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,280 | 3,280 |
Profit before tax | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 501,607 |
Income tax expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (66,334) | (66,334) |
Current tax expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (23,068) | (23,068) |
Deferred tax expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (43,266) | (43,266) |
Profit after tax | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 435,273 |
The value of investment properties and inventory property by operating segment, as shown in the consolidated statement of financial position, is presented below:
\nSegment per country assets and liabilities 31 Dec 2023 | Note | Romania | Poland1 | Hungary | Slovakia | Bulgaria | Croatia | Czech Republic | Lithuania | Serbia | Total Segments | Unallocated | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment property | \u00a0 | 2,695,522 | 1,819,636 | 576,206 | 526,123 | 503,167 | 288,930 | 179,810 | 156,560 | - | 6,745,954 | 79,036 | 6,824,990 |
-Investment property in use | 2,547,307 | 1,814,620 | 570,900 | 525,100 | 472,784 | 281,800 | 179,800 | 155,900 | - | 6,548,211 | 79,036 | 6,627,247 | |
-Investment property under development | 148,215 | 5,016 | 5,306 | 1,023 | 30,383 | 7,130 | 10 | 660 | - | 197,743 | - | 197,743 | |
Investment property held for sale | 610 | - | - | - | - | - | - | - | 145,600 | 146,210 | 5,610 | 151,820 | |
Inventory property | - | - | - | - | - | - | - | - | - | - | 17,266 | 17,266 |
Segment per country assets and liabilities 31 Dec 2022 | Note | Romania | Poland1 | Hungary | Slovakia | Bulgaria | Croatia | Czech Republic | Lithuania | Serbia | Total Segments | Unallocated | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Investment property | \u00a0 | 2,423,226 | 1,802,833 | 585,900 | 503,583 | 455,443 | 272,490 | 175,200 | 152,030 | 137,100 | 6,507,805 | 88,332 | 6,596,137 |
-Investment property in use | 2,210,298 | 1,800,899 | 580,600 | 502,600 | 428,100 | 264,700 | 175,200 | 151,700 | 129,400 | 6,243,497 | 88,296 | 6,331,793 | |
-Investment property under development | 212,928 | 1,934 | 5,300 | 983 | 27,343 | 7,790 | - | 330 | 7,700 | 264,308 | 36 | 264,344 | |
Investment property held for sale | 8,066 | - | - | 10,600 | - | - | - | - | - | 18,666 | - | 18,666 | |
Inventory property | - | - | - | - | - | - | - | - | - | - | 20,694 | 20,694 |
Segment Investments over the period 31 Dec 2023 | Note | Romania | Poland | Hungary | Slovakia | Bulgaria | Croatia | Czech Republic | Lithuania | Serbia | Total Segments | Unallocated | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Development works | 125,439 | 17,015 | 4,146 | - | 1,924 | - | 1,375 | 344 | - | 150,243 | (24) | 150,219 | |
Capital expenditure | 15,214 | 12,506 | 2,878 | 1,957 | 7,584 | 178 | 2,307 | 847 | 236 | 43,707 | 1,275 | 44,982 |
Segment Investments over the period 31 Dec 2022 | Note | Romania | Poland | Hungary | Slovakia | Bulgaria | Croatia | Czech Republic | Lithuania | Serbia | Total Segments | Unallocated | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Development works | 83,861 | 13,536 | - | 20 | 1,058 | - | 159 | - | - | 98,634 | - | 98,634 | |
Capital expenditure | 11,416 | 13,939 | 3,934 | 2,027 | 2,176 | 503 | 1,261 | 1,161 | 131 | 36,548 | 901 | 37,449 |
RECONCILIATION OF PROFIT FOR THE YEAR TO DISTRIBUTABLE EARNINGS | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Profit per IFRS Statement of comprehensive income attributable to equity holders of the parent | 476,801 | 435,167 |
Accounting specific adjustments | (107,357) | (118,112) |
Fair value adjustments of investment property | (164,470) | (141,701) |
Depreciation and amortisation expense (in relation to property, plant and equipment of an administrative nature) | 1,469 | 1,469 |
Fair value adjustments of derivatives | 17,376 | (37,946) |
Losses on extinguishment of financial instruments | - | 21,925 |
Amortisation of financial assets | (2,997) | (1,940) |
Deferred tax expense | 41,527 | 43,266 |
Profit from inventory property sale | (2,732) | - |
Gain on disposal of assets held for sale | (5,641) | (1,121) |
Adjustments related to joint ventures: | - | (1,727) |
Fair value adjustment investment property for joint ventures | - | (1,632) |
Fair value adjustments of derivatives for joint ventures | - | (407) |
Depreciation in relation to property, plant and equipment of an administrative nature for joint venture | - | (32) |
Deferred tax expense for joint ventures | - | 344 |
Adjustments related to non-controlling interest: | - | 7 |
Fair value adjustment investment property for non-controlling interest | - | (1) |
Deferred tax income for non-controlling interest | - | 8 |
Antecedent earnings | 8,111 | (344) |
Distributable earnings | 369,444 | 317,055 |
Interim distributable earnings | (181,360) | (139,058) |
Final distributable earnings | (188,084) | (177,997) |
Distributable earnings per share (euro cents) | 56.98 | 52.15 |
Interim distributable earnings per share (euro cents) | 28.52 | 22.83 |
Final distributable earnings per share (euro cents) | 28.46 | 29.32 |
Distribution declared | 332,500 | 308,155 |
Interim distribution | 163,224 | 139,058 |
Final distribution | 169,276 | 169,097 |
Distribution declared per share (euro cents) | 51.28 | 50.68 |
Interim distribution per share (euro cents) | 25.67 | 22.83 |
Final distribution per share (euro cents) | 25.61 | 27.85 |
Earnings not distributed | 36,944 | 8,900 |
Interim earnings not distributed | 18,136 | - |
Final earnings not distributed | 18,808 | 8,900 |
Earnings not distributed per share (euro cents) | 5.70 | 1.47 |
Earnings not distributed per share interim (euro cents) | 2.85 | - |
Earnings not distributed per share final (euro cents) | 2.85 | 1.47 |
Number of shares entitled to interim distribution | 635,830,268 | 608,994,907 |
Number of shares entitled to final distribution | 660,826,020 | 607,000,000 |
The Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set of activities and assets, including property, is acquired. More specifically the following criteria, which indicate an acquisition of a business, are considered: the number of properties acquired, the extent to which strategic management processes and operation processes are acquired and the complexity of the processes acquired. In line with amended IFRS 3 since 1 January 2020 the Group may also apply optional concentration test.
\nBusiness combinations are accounted for using the acquisition method. When the acquisition of subsidiaries does not represent a business combination, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill or deferred tax is recognised.
\nTransactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
\nThe Group recognised goodwill for the following business acquisitions:
\nin \u20ac\u00a0thousand | Balance at | Balance at |
|---|---|---|
Pitesti Retail Park (Romania) | 1,671 | 1,671 |
Internalisation of NEPI Investment Management (Romania) | 5,882 | 5,882 |
Aupark Kosice Mall (Slovakia) | 5,189 | 5,189 |
Iris Titan Shopping Center (Romania) | 934 | 934 |
Forum Usti nad Labem (Czech Republic) | 5,646 | 5,646 |
Shopping City Sibiu (Romania) | 9,850 | 9,850 |
Korzo Shopping Centrum (Slovakia) | 2,899 | 2,899 |
Aupark Shopping Center Piestany (Slovakia) | 1,585 | 1,585 |
Arena Centar and Retail Park (Croatia) | 13,512 | 13,512 |
Energit (Poland) | 6,976 | 6,976 |
Paradise Center (Bulgaria) | 9,311 | 9,311 |
Arena Mall (Hungary) | 7,905 | 7,905 |
Galeria Mlyny (Slovakia) | 5,444 | 5,444 |
Total | 76,804 | 76,804 |
All the goodwill summarised in the table above, with the exception of NEPI Investment Management and Energit, resulted from business combinations, as the difference between the deferred tax liability recognised in the balance sheet of the business acquired and the expected tax to be paid in case of a future disposal.
\nAs a consequence, impairment tests performed on this type of goodwill at each reporting date consist in comparing its carrying amount with the amounts expected to arise from deferred taxes payable, should a disposal occur, at the level of each CGU.
\nAs a result of this test in 2023, no impairment arose in respect to the goodwill from recognition of deferred taxes at the date of the business combination (31 December 2022: nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-590": { "value": "\nTransactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-592": { "value": "\nTransactions with non-controlling interests, where control is maintained, are accounted for as transactions within equity. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in the accumulated profit reserve.
\nAcquisition of non-controlling interest
In March 2022, the Group acquired the remaining non-controlling stakes in ACE3 Sp.zo.o. and Monarda Sp. z o.o. of 15% in 10% respectively, for a cash consideration of \u20ac9.4 million, thus obtaining 100% control in the two Polish entities.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations when due. The Group\u2019s approach to managing this risk ensures, as far as possible, it will always have enough liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to its reputation. To ensure this occurs, 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.
\nFurther reference to bank loan maturity analysis is made in Note 18.
\nThe table below presents undiscounted cash flows for all financial liabilities, computed at the contractual rates:
\n31 Dec 2023 | Note | under 3 months | 3\u201312 months | 1\u20135 years | over 5 years | Total undiscounted cash flows | Total carying amount |
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Bonds (including estimated future interest) | 30,076 | 527,589 | 1,087,805 | 509,430 | 2,154,900 | 1,999,031 | |
Bank loans (including estimated future interest) | 13,730 | 35,226 | 406,034 | 236,408 | 691,398 | 533,721 | |
Loans from third parties (including estimated future interest) | 611 | 18,264 | 17,715 | - | 36,590 | 33,405 | |
Trade and other payables | 128,388 | 25,945 | - | - | 154,333 | 154,333 | |
Income tax payable | 7,837 | 12,350 | - | - | 20,187 | 20,187 | |
Other long-term liabilities | - | - | 26,034 | 10,040 | 36,074 | 36,074 | |
Lease liabilities (including estimated future interest) | 1,545 | - | 6,181 | 97,503 | 105,229 | 56,520 | |
Total | \u00a0 | 182,187 | 619,374 | 1,543,769 | 853,381 | 3,198,711 | 2,833,271 |
31 Dec 2022 | Note | under 3 months | 3\u201312 months | 1\u20135 years | over 5 years | Total undiscounted cash flows | Total carying amount |
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Bonds (including estimated future interest) | 30,707 | 28,539 | 1,616,496 | 518,081 | 2,193,823 | 1,992,971 | |
Bank loans (including estimated future interest) | 9,232 | 22,974 | 393,592 | 211,739 | 637,537 | 557,901 | |
Loans from third parties (including estimated future interest) | 908 | 19,080 | 36,518 | - | 56,506 | 50,107 | |
Trade and other payables | 24,185 | 112,485 | - | - | 136,670 | 136,670 | |
Income tax payable | 6,815 | 11,517 | - | - | 18,332 | 18,332 | |
Other long-term liabilities | - | - | 31,303 | 6,363 | 37,666 | 37,666 | |
Lease liabilities (including estimated future interest) | 832 | - | 4,506 | 67,036 | 72,374 | 37,200 | |
Total | \u00a0 | 72,679 | 194,595 | 2,082,415 | 803,219 | 3,152,908 | 2,830,847 |
The repayment profile for outstanding loans, excluding future interest, is detailed below:
\nInterest bearing borrowings 31 Dec 2023 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | 498,980 | 1,000,000 | 500,000 | 1,998,980 |
Netherlands | Unsecured loans | - | 73,521 | - | 73,521 |
Poland | Secured loans | 745 | 2,979 | 70,570 | 74,294 |
Slovakia | Secured loans | 6,475 | 23,200 | 76,337 | 106,012 |
Czech Republic | Secured loans | 600 | 2,400 | 35,848 | 38,848 |
Romania | Secured loans | 9,476 | 199,659 | 43,636 | 252,771 |
Accrued interest on loans and deferred loan costs | \u00a0 | (1,473) | (9,904) | (348) | (11,725) |
Accrued coupon on bonds | \u00a0 | 20,323 | - | - | 20,323 |
Deferred bond costs | \u00a0 | (2,459) | (5,486) | (616) | (8,561) |
Issue discount on bonds | \u00a0 | (3,434) | (7,491) | (786) | (11,711) |
Total | \u00a0 | 529,233 | 1,278,878 | 724,641 | 2,532,752 |
Interest bearing borrowings 31 Dec 2022 | Type | Payable in less than 1 year | Payable in 1-5 years | Payable over 5 years | Total |
|---|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Netherlands | Unsecured fixed coupon bonds | - | 1,498,980 | 500,000 | 1,998,980 |
Netherlands | Revolving facilities | - | 200,000 | - | 200,000 |
Netherlands | Unsecured loans | - | - | 73,521 | 73,521 |
Poland | Secured loans | 1,520 | 74,100 | - | 75,620 |
Slovakia | Secured loans | 6,475 | 23,200 | 82,137 | 111,812 |
Czech Republic | Secured loans | 615 | 38,694 | - | 39,309 |
Romania | Secured loans | 2,727 | 10,908 | 46,365 | 60,000 |
Accrued interest on loans and deferred loan costs | \u00a0 | (180) | (2,181) | - | (2,361) |
Accrued coupon on bonds | \u00a0 | 20,353 | - | - | 20,353 |
Deferred bond costs | \u00a0 | (2,504) | (7,359) | (1,203) | (11,066) |
Issue discount on bonds | \u00a0 | (3,586) | (10,161) | (1,549) | (15,296) |
Total | \u00a0 | 25,420 | 1,826,181 | 699,271 | 2,550,872 |
The Group successfully issued fixed coupon bonds as follows:
November 2017: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 23 November 2024 and carry a 1.75% fixed coupon, with an issue price of 99.051%;
October 2019: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 9 October 2026 and carry a 1.875% fixed coupon, with an issue price of 98.927%;
July 2020: \u20ac500 million of unsecured, 7-year Eurobonds. The bonds mature on 14 July 2027 and carry a 3.375% fixed coupon, with an issue price of 98.172%; and
January 2022: \u20ac500 million of unsecured, 8-year Eurobonds. The bonds mature on 21 January 2030 and carry a 2.00% fixed coupon, with an issue price of 98.713%.
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates or equity prices will affect the Group\u2019s fair value or future cash flows of financial instruments. The objective of market risk management is to manage market risk exposures within acceptable parameters, while optimising returns. The carrying value of financial assets and liabilities approximates their fair value, except for the carrying value of bonds.
\nGroup\u2019s current assets and liabilities are exposed to foreign currency risk on purchases and receivables denominated in Romanian leu (RON), Polish zloty (PLN), Bulgarian Lev (BGN), Hungarian forint (HUF), Serbian dinar (RSD), Czech crown (CZK) and South African rand (ZAR). Cash inflows received in other currencies than Euro are converted to Euro using the spot rate available on the collection date. The amount converted to Euro is the net amount of cash inflow in a foreign currency and the estimated cash outflow in the same currency. The Group applies this policy to control its currency exposures in respect of monetary assets and liabilities denominated in currencies other than EUR. Sensitivities of profit or loss to reasonably possible changes in exchange rates applied at the financial position date relative to the local currency of the respective Group entities, with all other variables such as interest rates held constant, are immaterial.
\nInterest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group is exposed to interest rate risk on loans, borrowings and cash balances held. Group policy is to substantially hedge this risk through the use of derivative financial instruments. As at 31 December 2023 and 31 December 2022, the Group held interest rate instruments in the form of interest rate swaps and interest rate caps, as further disclosed in Note 19.
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Bank loans | 533,721 | 557,901 |
Rate capped | 432,653 | 330,000 |
Rate swapped | 112,793 | 114,928 |
Variable rate1 | - | 115,333 |
Accrued interest on loans and deferred loan costs | (11,725) | (2,360) |
A change of 100 basis points (bps) in interest rates would have increased/(decreased) equity and profit for the year as shown below. Calculations are based on the cash and loans and borrowings balances outstanding at the respective balance sheet dates as of 31 December 2023 and respectively 31 December 2022. Cash and loans and borrowings balances are subject to change over the year. This analysis assumes that all other variables, particularly foreign currency rates, remain constant. All sensitivity analysis calculations presented below are before tax.
\nThe benchmark rate for the bank loans with an outstanding amount of \u20ac533,721 thousand as at 31 December 2023 (2022: \u20ac557,901 thousand) is Euribor 3 months; if this rate is less than zero, Euribor shall be deemed to be zero. There are no plans to discontinue Euribor.
\nLoans and borrowings with fixed or swapped interest rates are not affected by market changes in interest rates.
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Loans to participants in the Share Purchase Scheme | 3,451 | 4,205 | |
Loans and borrowings (variable or capped rate) | \u00a0 | (432,653) | (445,333) |
Total | \u00a0 | (429,202) | (441,128) |
31 Dec 2023 | Profit or loss 100bps increase | Profit or loss 100bps decrease | Equity 100bps increase | Equity 100bps decrease |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to participants in the Share Purchase Scheme (including accrued interest) | 35 | (35) | 35 | (35) |
Loans and borrowings (variable or capped rate)1 | - | - | - | - |
Total | 35 | (35) | 35 | (35) |
31 Dec 2022 | Profit or loss 100bps increase | Profit or loss 100bps decrease | Equity 100bps increase | Equity 100bps decrease |
|---|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Loans to participants in the Share Purchase Scheme (including accrued interest) | 42 | (42) | 42 | (42) |
Loans and borrowings (variable or capped rate)1 | (856) | 1,130 | (856) | 1,130 |
Total | (814) | 1,088 | (814) | 1,088 |
The average interest rate of the Group\u2019s debt, including hedging result, was approximately 2.5% during 2023 (31 December 2022: 2.3%). As at 31 December 2023, fixed-coupon bonds represented 78% of NEPI Rockcastle\u2019s outstanding debt; out of the remaining long-term debt exposed to Euribor, 79% was hedged with interest rate caps and 21% with interest rate swaps.
\nThe Group uses mainly derivative instruments to hedge variable interest rate (Euribor) exposure. Their fair value is summarised below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Derivative financial assets \u2013 long term | 12,241 | 25,585 |
Derivative financial assets \u2013 short term | 9,327 | 10,479 |
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nThe derivative financial assets and liabilities classification to non-current or current sections of the Statement of financial position is driven by the contractual maturities of the instruments.
\nAt 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-664": { "value": "\nTo estimate the fair value of individual classes of financial instruments, the following methods and assumptions are used:
\nCash and cash equivalents
The book value of cash approximates their fair value, as these financial instruments have a short maturity.
Receivables and payables
The book value of short-term receivables and payables approximates their fair value, as these financial instruments have a short maturity.
Short-term loans
The book value approximates their fair value, as these instruments have a floating interest rate and a short maturity.
Long-term loans
The fair value of long-term loans as at 31 December 2023 is \u20ac583,146 thousand (2022 \u2013 \u20ac614,903 thousand). The valuation model of fair value of bank loans considers the present value of expected payments, discounted using risk adjusted discount rate. The Group has determined that all of its Interest-bearing loans and borrowings from financial institutions are classified within Level 2 of the fair value hierarchy. To determine the fair value of such instruments, management used a valuation technique in which all significant inputs were based on observable market data.
Bonds
The fair value of bonds outstanding as at 31 December 2023 is presented in Note 18.
Derivatives
The fair value of derivatives is based on fair value quotes from counterparty banks and are disclosed in Note 19.
The fair value of all financial instruments is substantially in line with their carrying amounts as reflected on the Statement of financial position, except for the bonds. For reference, as at 31 December 2023, the \u20ac499 million bonds issued in 2017 were trading on the market at 96.78% (31 December 2022: 93.55%), the \u20ac500 million bonds issued in 2019 were trading on the market at 91.22% (31 December 2022: 84.13%), the \u20ac500 million bonds issued in July 2020 were trading on the market at 94.43% (31 December 2022: 86.52%) and the \u20ac500 million bonds issued in January 2022 were trading on the market at 80.25% (31 December 2022: 69.04%).
\nThe Group uses mainly derivative instruments to hedge variable interest rate (Euribor) exposure. Their fair value is summarised below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Derivative financial assets \u2013 long term | 12,241 | 25,585 |
Derivative financial assets \u2013 short term | 9,327 | 10,479 |
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nThe fair value adjustments of derivatives include the fair value loss of \u20ac17,376 thousand (31 December 2022: gain of \u20ac37,946 thousand, including a fair value gain of \u20ac4.1 million from pre-hedging \u20ac250 million of the bond issued in January 2022) from existing interest rate caps and swaps.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-666": { "value": "\nThe primary objective of the Group\u2019s capital management is to ensure it complies with its quantitative banking covenants and maintains a strong credit rating. During the year, no changes were made in the objectives, policies or processes.
\nCapital is primarily monitored using the gearing ratio (Loan-to-value or \u201cLTV\u201d), which was 32.2% (31 December 2022: 35.7%). The Group\u2019s strategic LTV threshold is 35%. The ratio is computed as interest bearing debt less lease liabilities less cash, divided by investment property (including investment property held for sale) and excludes the right-of-use assets. Loan-to-value is a non IFRS measure.
\nThe Group\u2019s policy is to maintain a strong capital base of equity so as to maintain investor, creditor and market confidence and to sustain future business development. In particular, the Group monitors the Debt/ Debt + Equity ratio, a non IFRS measure, calculated as interest bearing debt less lease liabilities less cash, divided by interest bearing debt less lease liabilities less cash and shareholders\u2019 equity. The Debt/ Debt + Equity ratio targeted by the Group is a maximum 40%. As at 31 December 2023, the Debt/ Debt + Equity ratio was 34.1% (31 December 2022: 37.6%). The Board of Directors also monitors the level of distributions to shareholders. Neither the Company, nor its subsidiaries, are subject to externally imposed capital requirements, except that the Group\u2019s subsidiaries are subject to compliance with bonds and bank borrowings\u2019 covenants, as presented in Note 18.
\nThe Group ensures it retains comfortable levels of access to liquidity to finance the Group\u2019s ongoing operations and further investment opportunities.
\nCovenants
Debt service cover ratio of a minimum between 120% and 125%; and
Loan to value ratio of a maximum between 60% and 70%.
Covenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
Covenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
Covenants
Solvency Ratio of maximum 0.60;
Consolidated Coverage Ratio of minimum 2:1; and
Unsecured Ratio of minimum 150%.
NEPI Rockcastle has complied with all financial covenants of its borrowing facilities during 2023 and 2022. The ratios calculated for all unsecured loans and bonds showed ample headroom compared to the covenants:
Solvency Ratio: 0.38 (31 December 2022: 0.40);
Consolidated Coverage Ratio: 6.06 (31 December 2022: 6.2); and
Unsecured Ratio: 269% (31 December 2022: 251%).
Investment property is carried at fair value and is independently assessed on a semi-annual basis, as at 30 June and 31 December.
\nFor the year ended 31 December 2023 - the Group commissioned independent appraisal reports on its investment property from Cushman&Wakefield and Affiliate Partners and Colliers International (for the year ended 31 December 2022: Cushman&Wakefield and Affiliate Partners, Colliers International and Jones Lang LaSalle), all of whom are members of the Royal Institution of Chartered Surveyors (RICS). Valuations are prepared in accordance with the RICS Valuation \u2013 Global Standards 2021 (the \u201cRed Book\") and ANEVAR Valuation Standards - 2022 Edition which incorporate the International Valuation Standards (\u201cIVS\u201d).
\nAll investment property in use is valued by the Income Method. For the years ended 31 December 2023 and 31 December 2022 respectively, the applied method used for all investment property in use was discounted cash flow (\u201cDCF\u201d).
\nDCF uses explicit assumptions regarding the benefits and liabilities of ownership over the asset\u2019s life, including an exit, or terminal, value. As an accepted method within the Income Method to valuation, the DCF method involves the projection of a series of cash flows onto a real property interest. To these projected cash flow series, an appropriate, market-derived discount rate is applied to establish the present value of cash inflows associated with the real property.
\nThe duration of cash flow, and the specific timing of inflows and outflows, are determined by events such as rent reviews, lease renewal and related lease-up periods, re-letting, redevelopment or refurbishment. The appropriate duration is typically driven by market behaviour. In the case of investment property, periodic cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance costs, agent and commission fees, and other operating and management expenses. The series of periodic net cash inflows, combined with the estimated terminal value anticipated at the end of the projection period, is then discounted. For all investment property in use, the current use equates to the highest and best use.
\nThe Group provides all information necessary for the valuations, including detailed tenancy schedules, comprising information on occupied and vacant units, unit areas and numbers, lease commencement and expiry dates, break options and indexation clauses. All properties have been inspected by representatives of external valuers for the purpose of 31 December 2023 valuations.
\nThe Group\u2019s valuers note in their valuation reports that wherever appropriate, sustainability and environmental matters are an integral part of the valuation approach. Sustainability is taken to mean the consideration of such matters as environment and climate change, health and wellbeing and corporate responsibility that can or do impact the valuation of an asset. In a valuation context, sustainability encompasses a wide range of physical, social, environmental, and economic factors that can affect value. The range of issues includes key environmental risks, such as energy efficiency and climate, as well as matters of design, configuration, accessibility, legislation, management, and fiscal considerations.
\nAs at 31 December 2023, the investment property in use had an EPRA Vacancy Rate of 2.2% (31 December 2022: 2.7%). EPRA Vacancy Rate is a non-IFRS measure which is defined in section Other information, Glossary.
\nAs compared to the valuations on 31 December 2022, the estimated rental values generally increased, supported by the excellent performance of the assets, and valuation yields slightly increased as well (by 15 basis points on average).
\nThe Group currently discloses fair values according to a \u2018fair value hierarchy\u2019 (as per IFRS 13) which categorises the inputs used in valuation techniques into three levels. The hierarchy gives the highest priority (Level 1) to quoted prices in active markets for identical assets or liabilities and the lowest priority (Level 3) to unobservable inputs. The fair value hierarchy is explained below:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: use of a model with inputs (other than quoted prices included within Level 1) that are directly, or indirectly, observable market data, and
Level 3: use of a model with inputs not based on observable market data.
The Group\u2019s investment property is categorised as Level 3. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. There were no transfers between hierarchy levels during the year.
\nThe significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy of the Group\u2019s property portfolio, together with the impact of significant movements in these inputs on the fair value measurement, are detailed below:
\nUnobservable input | Impact on fair value of increase in input |
|---|---|
Estimated rental value | Increase |
Discount rate | Decrease |
Capitalisation rate for terminal value | Decrease |
Information relating to fair value measurement using significant unobservable inputs (Level 3) for 2023 for retail properties is presented in the table below:
\nSegment | Valuation technique | Estimated market rental value | Discount rate | Capitalisation rate for terminal value |
|---|---|---|---|---|
| \u00a0 | \u00a0 | (yearly amount in \u2018000 \u20ac) | (%) | (%) |
Romania | Discounted cash flow | 311 - 26,281 (13,128)1 | 8.95% - 10.45% (9.73)1 | 6.75% - 8.25% (7.53)1 |
Poland | Discounted cash flow | 2,817 - 23,746 (14,110)1 | 7.90% - 10.80% (8.72)1 | 5.80% - 8.70% (6.62)1 |
Slovakia | Discounted cash flow | 3,307 - 12,784 (9,734)1 | 9.10% - 10.35% (9.22)1 | 7.00% - 8.25% (7.12)1 |
Hungary | Discounted cash flow | 19,602 - 21,309 (20,515)1 | 8.75% - 9.00% (8.87)1 | 6.65% - 6.90% (6.77)1 |
Bulgaria | Discounted cash flow | 17,022 - 26,148 (22,514)1 | 10.30% | 7.50% -7.75% (7.60)1 |
Croatia | Discounted cash flow | 1,550 - 19,433 (18,138)1 | 9.60% - 9.85% (9.83)1 | 7.50% - 7.75% (7.73)1 |
Czech Republic | Discounted cash flow | 6,737 - 6,748 (6,743)1 | 9.35% | 7.25% |
Serbia | Discounted cash flow | 13,321 | 11.10% | 9.00% |
Lithuania | Discounted cash flow | 12,767 | 10.00% | 7.90% |
Information relating to fair value measurement using significant unobservable inputs (Level 3) for 2022 for retail properties is presented in the table below:
\nSegment | Valuation technique | Estimated market rental value | Discount rate | Capitalisation rate for terminal value |
|---|---|---|---|---|
| \u00a0 | \u00a0 | (yearly amount in \u2018000 \u20ac) | (%) | (%) |
Romania | Discounted cash flow | 294 - 24,411 (12,301)1 | 8.70% - 11.45% (9.71)1 | 6.50% - 9.25% (7.51)1 |
Poland | Discounted cash flow | 2,750 - 22,375 (13,042)1 | 7.85% - 10.95% (8.75)1 | 5.45% - 8.55% (6.35)1 |
Slovakia | Discounted cash flow | 3,062 - 12,223 (9,118)1 | 7.50% - 8.50% (7.58)1 | 6.75% - 7.75% (6.83)1 |
Hungary | Discounted cash flow | 11,984 - 18,352 (15,018)1 | 7.60% - 10.00% (8.86)1 | 6.55% - 7.60% (7.10)1 |
Bulgaria | Discounted cash flow | 13,054 - 21,967 (18,588)1 | 8.85% - 9.15% (8.96)1 | 7.70% -7.95% (7.79)1 |
Croatia | Discounted cash flow | 1,461 - 18,934 (17,752)1 | 8.95% - 9.25% (8.97)1 | 7.95% - 8.25% (7.97)1 |
Czech Republic | Discounted cash flow | 6,196 - 6,661 (6,425)1 | 7.30% - 7.70%(7.50)1 | 6.65% |
Serbia | Discounted cash flow | 11,217 | 9.45% | 8.45% |
Lithuania | Discounted cash flow | 11,984 | 10.00% | 7.60% |
The tables below present the change in the valuation of the shopping centre portfolio using different discount rate and exit rate assumptions than those used by the appraisers:
\nDiscount rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 3.37% | 1.67% | -1.63% | -3.23% |
Poland | 3.40% | 1.70% | -1.60% | -3.20% |
Slovakia | 3.56% | 1.73% | -1.71% | -3.43% |
Hungary | 3.64% | 1.79% | -1.77% | -3.50% |
Bulgaria | 1.98% | 1.00% | -0.97% | -1.91% |
Croatia | 3.21% | 1.64% | -1.68% | -3.40% |
Czech Republic | 3.34% | 1.67% | -1.78% | -3.56% |
Serbia | 3.20% | 1.65% | -1.51% | -3.10% |
Lithuania | 3.40% | 1.70% | -1.60% | -3.20% |
Total | 3.27% | 1.62% | -1.58% | -3.14% |
Exit rate variance | ||||
|---|---|---|---|---|
Country | (50 bps) | (25 bps) | 25 bps | 50 bps |
Romania | 6.94% | 3.35% | -3.14% | -6.08% |
Poland | 7.90% | 3.80% | -3.50% | -6.70% |
Slovakia | 7.60% | 3.68% | -3.45% | -6.65% |
Hungary | 8.20% | 3.92% | -3.68% | -7.09% |
Bulgaria | 4.66% | 2.36% | -2.11% | -4.00% |
Croatia | 5.85% | 3.02% | -3.21% | -6.66% |
Czech Republic | 6.45% | 3.34% | -3.67% | -7.45% |
Serbia | 5.90% | 2.88% | -2.68% | -5.20% |
Lithuania | 6.70% | 3.30% | -3.00% | -5.80% |
Total | 7.02% | 3.40% | -3.19% | -6.18% |
Rental Income (ERV) | ||||
|---|---|---|---|---|
Country | -10% | -5% | 5% | 10% |
Romania | -10.03% | -5.01% | 5.01% | 10.03% |
Poland | -8.30% | -4.10% | 4.10% | 8.30% |
Slovakia | -8.61% | -4.32% | 4.27% | 8.55% |
Hungary | -8.41% | -4.22% | 4.19% | 8.39% |
Bulgaria | -6.96% | -3.24% | 3.48% | 7.20% |
Croatia | -7.77% | -3.90% | 3.90% | 7.80% |
Czech Republic | -8.24% | -4.12% | 4.17% | 7.95% |
Serbia | -6.80% | -3.37% | 3.43% | 6.87% |
Lithuania | -6.90% | -3.40% | 3.50% | 6.90% |
Total | -8.69% | -4.32% | 4.33% | 8.70% |
The fair value of all financial instruments is substantially in line with their carrying amounts as reflected on the Statement of financial position, except for the bonds. For reference, as at 31 December 2023, the \u20ac499 million bonds issued in 2017 were trading on the market at 96.78% (31 December 2022: 93.55%), the \u20ac500 million bonds issued in 2019 were trading on the market at 91.22% (31 December 2022: 84.13%), the \u20ac500 million bonds issued in July 2020 were trading on the market at 94.43% (31 December 2022: 86.52%) and the \u20ac500 million bonds issued in January 2022 were trading on the market at 80.25% (31 December 2022: 69.04%).
\nThe Group uses mainly derivative instruments to hedge variable interest rate (Euribor) exposure. Their fair value is summarised below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Derivative financial assets \u2013 long term | 12,241 | 25,585 |
Derivative financial assets \u2013 short term | 9,327 | 10,479 |
The above financial assets and liabilities consist of interest rate caps and fixed interest rate swaps which are not designated as cash flow hedges. The fair value was categorised in Level 2 of the fair value hierarchy.
\nThe derivative financial assets and liabilities classification to non-current or current sections of the Statement of financial position is driven by the contractual maturities of the instruments.
\nAt 31 December 2023, \u20ac433 million of debt exposed to Euribor was hedged with interest rate caps and \u20ac113 million with interest rate swaps.
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Fair value adjustments of investment property in use | 168,185 | 134,234 | |
Fair value adjustments of investment property under development | (2,643) | 8,917 | |
Fair value adjustments of investment property held for sale | (330) | (1,195) | |
Fair value adjustments of right-of-use assets | (742) | (255) | |
Total | \u00a0 | 164,470 | 141,701 |
The fair value adjustments of derivatives include the fair value loss of \u20ac17,376 thousand (31 December 2022: gain of \u20ac37,946 thousand, including a fair value gain of \u20ac4.1 million from pre-hedging \u20ac250 million of the bond issued in January 2022) from existing interest rate caps and swaps.
\nAt 31 December 2022, losses on extinguishment of financial instruments included the premium paid on repurchase of bond notes due in 2023 of \u20ac21,925 thousand (refer to Note 18).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-715": { "value": "\nOther long-term assets are classified below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Loans to participants under the Share Purchase Scheme | 3,451 | 4,205 |
Property, plant, and equipment | 4,745 | 3,780 |
Intangible assets | 5,613 | 3,065 |
Non-current receivables | 2,498 | - |
Total | 16,307 | 11,050 |
Other long-term assets are classified below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Loans to participants under the Share Purchase Scheme | 3,451 | 4,205 |
Property, plant, and equipment | 4,745 | 3,780 |
Intangible assets | 5,613 | 3,065 |
Non-current receivables | 2,498 | - |
Total | 16,307 | 11,050 |
Other long-term assets are classified below:
\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Loans to participants under the Share Purchase Scheme | 3,451 | 4,205 |
Property, plant, and equipment | 4,745 | 3,780 |
Intangible assets | 5,613 | 3,065 |
Non-current receivables | 2,498 | - |
Total | 16,307 | 11,050 |
Cash and cash equivalents by type | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 |
Current accounts | 258,371 | 196,019 |
Deposits | 80,000 | 50,079 |
Restricted cash | - | 4,250 |
Petty cash | 148 | 283 |
Total | 338,519 | 250,631 |
This section sets out an analysis of bonds and bank loans outstanding and the related movements for the periods presented.
\nin \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Cash repayments of principal | (214,815) | - | (214,815) |
Cash proceeds from bank loans or bonds | 200,000 | - | 200,000 |
Cash payments of interest on bank loans or coupon on bonds | (28,428) | (44,982) | (73,410) |
Interest expense1 | 29,584 | 44,952 | 74,536 |
Amortisation of capitalised borrowing costs | 1,758 | 2,504 | 4,262 |
Amortisation of bond discount | - | 3,586 | 3,586 |
Additional capitalised borrowing costs in the period | (12,279) | - | (12,279) |
Debt as at 31 December 2023 | 533,721 | 1,999,031 | 2,532,752 |
in \u20ac\u00a0thousand | Bank loans | Bonds | Total1 |
|---|---|---|---|
Debt as at 31 December 2021 | 304,586 | 1,988,239 | 2,292,825 |
Cash repayments of principal | (25,563) | (496,020) | (521,583) |
Loan taken over from the acquisition of the remaining 50% stake in joint venture | 18,432 | - | 18,432 |
Cash proceeds from bank loans or bonds | 260,000 | 493,566 | 753,566 |
Cash payments of interest on bank loans or coupon on bonds | (5,972) | (44,024) | (49,996) |
Interest expense | 6,288 | 45,522 | 51,810 |
Amortisation of capitalised borrowing costs | 916 | 2,595 | 3,511 |
Amortisation of bond discount | - | 3,824 | 3,824 |
Additional capitalised borrowing costs in the period | (786) | (4,674) | (5,460) |
Costs released following bonds buy-back prior maturity | - | 3,943 | 3,943 |
Debt as at 31 December 2022 | 557,901 | 1,992,971 | 2,550,872 |
Further details for the Group\u2019s loans and bonds are presented below:
\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Carrying value of the lease liabilities | \u00a0 | 37,200 | 33,611 |
Out of which short term | \u00a0 | 832 | 832 |
Additions to lease liabilities from acquired assets | \u00a0 | - | 3,843 |
Remeasurement of lease liability | \u00a0 | 20,062 | - |
Interest expense | 804 | 577 | |
Lease liability payment | \u00a0 | (1,546) | (832) |
Lease liabilities | \u00a0 | 56,520 | 37,200 |
Out of which short term | \u00a0 | 1,546 | 832 |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
OPERATING ACTIVITIES | \u00a0 | \u00a0 | \u00a0 |
Profit after tax | \u00a0 | 476,801 | 435,273 |
Adjustments | \u00a0 | (12,760) | (54,868) |
Fair value adjustments of investment property | (164,470) | (141,701) | |
Foreign exchange loss/(gain) | \u00a0 | 1,187 | (1,585) |
Gain on disposal of assets held for sale | (5,641) | (1,121) | |
Net finance costs | 65,458 | 57,589 | |
Fair value adjustments of derivatives | 17,376 | (37,946) | |
Losses on extinguishment of financial instruments | - | 21,925 | |
Deferred tax expense | 41,527 | 43,266 | |
Current tax expense | 28,334 | 23,068 | |
Depreciation expense for property, plant and equipment | \u00a0 | 1,469 | 1,469 |
Share based payment expense | \u00a0 | 2,000 | 1,472 |
Reversal of litigation claim expense | - | (21,304) | |
Changes in working capital | \u00a0 | (4,963) | (5,043) |
(Increase) in trade and other receivables | \u00a0 | (22,176) | (12,484) |
Increase in trade and other payables | \u00a0 | 13,785 | 18,613 |
Decrease/(Increase) in Inventory property | \u00a0 | 3,428 | (11,172) |
Net cash flow from operations | \u00a0 | 459,078 | 375,362 |
Securities
General security over the properties (fair values as at 31 December 2023), current assets, cash inflows from operating activities, accounts and receivables; and
General security over the shares in the property-owning entities.
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Property related payables1 | 65,674 | 61,835 |
Advances from tenants | 49,453 | 43,710 |
Advances from residential customers | 3,474 | - |
Payable for assets under construction | 17,892 | 16,973 |
Accrued administrative expenses | 14,192 | 5,246 |
Tenant security deposits | 2,824 | 2,635 |
Deferred consideration on acquisitions of subsidiaries and asset deals | 824 | 6,271 |
Total | 154,333 | 136,670 |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Tenant security deposits | 35,011 | 32,990 |
Advances from residential customers | - | 3,427 |
Other long-term payables | 1,063 | 1,249 |
Total | 36,074 | 37,666 |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Tenant security deposits | 35,011 | 32,990 |
Advances from residential customers | - | 3,427 |
Other long-term payables | 1,063 | 1,249 |
Total | 36,074 | 37,666 |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Tenant security deposits | 35,011 | 32,990 |
Advances from residential customers | - | 3,427 |
Other long-term payables | 1,063 | 1,249 |
Total | 36,074 | 37,666 |
Out of the above administrative expenses, fees related to EY, as the Group\u2019s current auditor, are summarised below:
\n31 Dec 2023 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (356) | (1,889) | (21) |
Other assurance procedures | (62) | (74) | - |
Total | (418) | (1,963) | (21) |
31 Dec 2022 | Ernst and Young Accountants LLP | Other EY network | Non-EY network |
|---|---|---|---|
in \u20ac\u00a0thousand | \u00a0 | \u00a0 | \u00a0 |
Audit of financial statements | (300) | (1,143) | (96) |
Other assurance procedures | - | (177) | (24) |
Total | (300) | (1,320) | (120) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Staff costs1 | \u00a0 | (11,890) | (10,671) |
Directors\u2019 remuneration | (4,233) | (4,744) | |
Advisory services | \u00a0 | (4,651) | (7,683) |
Audit and other assurance services | \u00a0 | (2,402) | (1,740) |
Companies\u2019 administration | \u00a0 | (5,766) | (2,459) |
Travel and accommodation | \u00a0 | (1,655) | (1,015) |
Stock exchange expenses | \u00a0 | (772) | (597) |
Share based payment expense | \u00a0 | (2,000) | (1,472) |
Total | \u00a0 | (33,369) | (30,381) |
in \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gain from reversal of litigation claim | - | 21,304 |
In October 2017, one of the Group's subsidiaries entered into an agreement in relation to the conditional acquisition of an operating shopping centre and a related development, Serenada and Krokus Shopping Centres in Poland. On 1 January 2019, upon the lapse of the respective transaction's long stop date, the subsidiary notified the counterparty that it had exercised its right to terminate the transaction as the long stop date had passed and certain conditions precedent had not been met. The counterparty consequently initiated arbitration proceedings against the Group, claiming a contractual penalty in the amount of \u20ac30 million.
\nOn 31 January 2022, the Group was informed by the Arbitral Tribunal that the arbitrators ordered that the Group is liable to pay the contractual penalty of \u20ac30 million plus accumulated interest and arbitration expenses. A litigation provision expense was previously recognised as a result in the 2021 financial statements for the amount of \u20ac37,304 thousand.
\nFollowing negotiations between the Company and the counterparty to the initial transaction, the parties agreed on 23 November 2022 on an amicable settlement. Pursuant to the settlement, the Group paid to the counterparty an amount of \u20ac16 million and the parties have reciprocally waived, definitely and irrevocably, all and any present and potential rights and claims arising out of or in connection with the initial purchase transaction and Arbitral Tribunal award. As a result, a gain from the reversal of the difference between the initially provided amount and the settled amount of \u20ac21,304 thousand was recognised in the 2022 financial statements.
\nThe Group is subject to income taxes in all jurisdictions and the calculation of the Group\u2019s tax charge and provisions for income taxes involves a degree of estimation and judgment. There are transactions and calculations for which the relevant tax authorities have indicated different interpretations of the fiscal legislation compared to the Group\u2019s approach. In such cases, the carrying amount of any tax provisions and charges are determined based on the manner in which tax assessments are expected to be resolved, and the stage of negotiations or discussions with the relevant tax authorities. There may be significant uncertainty regarding the final outcome of tax proceedings, which in many instances, will only be concluded after a number of years.
\nA number of Group entities in Romania have recently been subject to tax inspections by the Romanian Tax Authorities (\u201cRTA\u201d). For three entities, the tax inspections have been finalized, resulting in additional tax liabilities imposed by the RTA totalling \u20ac2.5 million, on the grounds of the RTA disallowing the deductibility of certain expenses. The RTA\u2019s position appears to differ from the Group\u2019s interpretation of the relevant tax laws. On the basis that the Group is unaware of the RTA\u2019s position being adopted or implemented as established market practice in Romania or in other CEE countries where the Group operates, the Group intends to challenge the conclusions of the RTA as and when appropriate.
\nThe additional tax liabilities imposed have been paid by the Group and a related tax receivable has been recognised based on management\u2019s assessment of the expected outcome of challenging the RTA position as noted above.
\nThere are currently tax audits ongoing at different stages for other Romanian subsidiaries, which are not finalized by the publication date of these financial statements. In respect of these ongoing tax audits, no additional tax liabilities have been recorded in the financial statements, as management believes an additional tax assessment is not warranted. Management has calculated a variety of scenarios for tax contingencies, using different sets of potential outcomes with respect to the relevant tax assessments, resulting in a weighted average value of potential impact of additional tax liabilities imposed by authorities of \u20ac9.8 million.
\nThe Group operates in a complex legal and regulatory environment that exposes it to various risks, and evaluates all facts and assesses the implications that could have a material effect on the financial statements. To the extent the Group is involved in reviews, procedures, information requests and other assessments, including regulatory or tax matters, different outcomes are possible, which may result in further regulatory or tax investigations, litigations or sanctions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-900": { "value": "\nin \u20ac\u00a0thousand | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Gain from reversal of litigation claim | - | 21,304 |
In October 2017, one of the Group's subsidiaries entered into an agreement in relation to the conditional acquisition of an operating shopping centre and a related development, Serenada and Krokus Shopping Centres in Poland. On 1 January 2019, upon the lapse of the respective transaction's long stop date, the subsidiary notified the counterparty that it had exercised its right to terminate the transaction as the long stop date had passed and certain conditions precedent had not been met. The counterparty consequently initiated arbitration proceedings against the Group, claiming a contractual penalty in the amount of \u20ac30 million.
\nOn 31 January 2022, the Group was informed by the Arbitral Tribunal that the arbitrators ordered that the Group is liable to pay the contractual penalty of \u20ac30 million plus accumulated interest and arbitration expenses. A litigation provision expense was previously recognised as a result in the 2021 financial statements for the amount of \u20ac37,304 thousand.
\nFollowing negotiations between the Company and the counterparty to the initial transaction, the parties agreed on 23 November 2022 on an amicable settlement. Pursuant to the settlement, the Group paid to the counterparty an amount of \u20ac16 million and the parties have reciprocally waived, definitely and irrevocably, all and any present and potential rights and claims arising out of or in connection with the initial purchase transaction and Arbitral Tribunal award. As a result, a gain from the reversal of the difference between the initially provided amount and the settled amount of \u20ac21,304 thousand was recognised in the 2022 financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-903": { "value": "\nin \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
in \u20ac\u00a0thousand | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
Interest income on loans granted to joint ventures | \u00a0 | - | 889 |
Interest on Loan to participants under Share Purchase Scheme | \u00a0 | 96 | 100 |
Interest on bank deposits | \u00a0 | 6,795 | 2,522 |
Finance income | \u00a0 | 6,891 | 3,511 |
Bonds borrowing costs1 | (51,042) | (51,941) | |
Interest expense on bank borrowings | (31,343) | (7,204) | |
Interest rate derivatives settlements | 11,950 | - | |
Interest expense on borrowings from third parties | (3,214) | (593) | |
Interest expense on lease liabilities | (804) | (577) | |
Interest expense capitalised on developments and inventory property | \u00a0 | 5,401 | 3,513 |
Finance costs | \u00a0 | (69,052) | (56,802) |
Bank charges, commissions, and fees | \u00a0 | (3,297) | (4,298) |
Total | \u00a0 | (65,458) | (57,589) |
The calculation of basic and diluted earnings per share for the year ended 31 December 2023 was based on the profit attributable to equity holders of the parent of \u20ac476,801 thousand (31 December 2022: \u20ac435,167 thousand) and the weighted average number of shares.
\nin \u20ac\u00a0thousand, unless otherwise stated | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|
Profit for the year attributable to equity holders of the parent | 476,801 | 435,167 |
Basic weighted average number of shares | 633,150,875 | 607,756,809 |
Diluted weighted average number of shares | 634,211,475 | 608,529,063 |
Basic earnings per share (euro cents) attributable to equity holders | 75.31 | 71.60 |
Diluted earnings per share (euro cents) attributable to equity holders | 75.18 | 71.51 |
Weighted and diluted weighted average number of shares for basic and diluted earnings per share purposes are detailed below:
\n2023 | Event | Number of shares | Cumulative number of shares after equity-related transactions | % of period | Weighted average |
|---|---|---|---|---|---|
01/01/2023 | Opening balance | 607,000,000 | 607,000,000 | 26% | 158,420,330 |
06/04/2023 | Return of capital | 28,830,268 | 635,830,268 | 50% | 319,661,920 |
06/10/2023 | Return of capital | 24,995,752 | 660,826,020 | 24% | 156,129,225 |
31/12/2023 | Diluted weighted average number of shares | \u00a0 | \u00a0 | \u00a0 | 634,211,475 |
| \u00a0 | Effect of unvested shares under LTSIP | \u00a0 | \u00a0 | \u00a0 | (1,060,600) |
| \u00a0 | Basic weighted average number of shares | \u00a0 | \u00a0 | \u00a0 | 633,150,875 |
2022 | Event | Number of shares | Cumulative number of shares after equity-related transactions | % of period | Weighted average |
|---|---|---|---|---|---|
01/01/2022 | Opening balance | 608,994,907 | 608,994,907 | 77% | 466,784,558 |
07/10/2022 | Repurchase of shares1 | (1,994,907) | 607,000,000 | 23% | 141,744,505 |
31/12/2022 | Diluted weighted average number of shares | \u00a0 | \u00a0 | \u00a0 | 608,529,063 |
| \u00a0 | Effect of unvested shares under LTSIP | \u00a0 | \u00a0 | \u00a0 | (772,254) |
| \u00a0 | Basic weighted average number of shares | \u00a0 | \u00a0 | \u00a0 | 607,756,809 |
The starting point is for headline earnings per share calculation are earnings as determined in IAS 33, excluding \u201cseparately identifiable re-measurements\u201d, net of related tax (both current and deferred) and minority interest, other than re-measurements specifically included in headline earnings (referred to as included re-measurements), in terms of Circular 1/2023 issued by South African Institute of Chartered Accountants (SAICA).
\nThe calculation of headline earnings per share for the year ended 31 December 2023 was based on headline earnings of \u20ac333,780 thousand (31 December 2022: of \u20ac313,186 thousand) and the weighted average number of shares.
\nReconciliation of profit for the year to headline earnings | Note | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|
in \u20ac\u00a0thousand, unless otherwise stated | \u00a0 | \u00a0 | \u00a0 |
Profit for the year attributable to equity holders of the parent | \u00a0 | 476,801 | 435,167 |
Fair value adjustments of investment property | (164,470) | (141,701) | |
Gain on disposal of assets held for sale | (5,641) | (1,121) | |
Tax effects of adjustments for investment property and gain on disposal of assets held for sale | \u00a0 | 27,090 | 22,212 |
Fair value adjustment of investment property for joint ventures | \u00a0 | - | (1,632) |
Tax effects of adjustments for joint ventures | \u00a0 | - | 261 |
HEADLINE EARNINGS | \u00a0 | 333,780 | 313,186 |
Basic weighted average number of shares | \u00a0 | 633,150,875 | 607,756,809 |
Diluted weighted average number of shares | \u00a0 | 634,211,475 | 608,529,063 |
Headline earnings per share (euro cents) | \u00a0 | 52.72 | 51.53 |
Diluted headline earnings per share (euro cents) | \u00a0 | 52.63 | 51.47 |
The Group had an investment of 50% together with its joint venture partner, Carrefour Romania S.A., in Ploiesti Shopping City, a shopping centre located in Ploiesti, Romania. In September 2022 the Group completed the acquisition of the remaining 50% stake in Ploiesti Shopping City to become the sole owner of the property.
\nThe \u201cShare of profit of joint ventures\u201d line on the Consolidated Statement of comprehensive income represents 50% of the line \u201cProfit for the year attributable to equity holders\u201d, as presented below for the period in 2022 where Ploiesti Shopping City was a joint venture (up to 1 September 2022).
\nStatement of comprehensive income
\nin \u20ac\u00a0thousand | Ploiesti Shopping City 31 Dec 2022 |
|---|---|
Revenue from rent and recoveries | 8,648 |
Property operating expenses | (2,689) |
Partial forgiveness of receivables (Covid-19 forgiveness) | 48 |
Administrative expenses | (176) |
Fair value adjustment investment property | 3,264 |
Foreign exchange loss | (122) |
Profit before net finance costs and other items | 8,973 |
Finance income | 85 |
Finance costs | (2,452) |
Bank charges, commissions, and fees | 6 |
Fair value adjustments of derivatives and losses on | 814 |
Profit before tax | 7,426 |
Income tax expense | (866) |
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS | 6,560 |
Share of profit of joint venture (50% of the Profit of the | 3,280 |
The Group had an investment of 50% together with its joint venture partner, Carrefour Romania S.A., in Ploiesti Shopping City, a shopping centre located in Ploiesti, Romania. In September 2022 the Group completed the acquisition of the remaining 50% stake in Ploiesti Shopping City to become the sole owner of the property.
\nThe \u201cShare of profit of joint ventures\u201d line on the Consolidated Statement of comprehensive income represents 50% of the line \u201cProfit for the year attributable to equity holders\u201d, as presented below for the period in 2022 where Ploiesti Shopping City was a joint venture (up to 1 September 2022).
\nStatement of comprehensive income
\nin \u20ac\u00a0thousand | Ploiesti Shopping City 31 Dec 2022 |
|---|---|
Revenue from rent and recoveries | 8,648 |
Property operating expenses | (2,689) |
Partial forgiveness of receivables (Covid-19 forgiveness) | 48 |
Administrative expenses | (176) |
Fair value adjustment investment property | 3,264 |
Foreign exchange loss | (122) |
Profit before net finance costs and other items | 8,973 |
Finance income | 85 |
Finance costs | (2,452) |
Bank charges, commissions, and fees | 6 |
Fair value adjustments of derivatives and losses on | 814 |
Profit before tax | 7,426 |
Income tax expense | (866) |
PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS | 6,560 |
Share of profit of joint venture (50% of the Profit of the | 3,280 |
The Group is subject to income taxes in all jurisdictions and the calculation of the Group\u2019s tax charge and provisions for income taxes involves a degree of estimation and judgment. There are transactions and calculations for which the relevant tax authorities have indicated different interpretations of the fiscal legislation compared to the Group\u2019s approach. In such cases, the carrying amount of any tax provisions and charges are determined based on the manner in which tax assessments are expected to be resolved, and the stage of negotiations or discussions with the relevant tax authorities. There may be significant uncertainty regarding the final outcome of tax proceedings, which in many instances, will only be concluded after a number of years.
\nA number of Group entities in Romania have recently been subject to tax inspections by the Romanian Tax Authorities (\u201cRTA\u201d). For three entities, the tax inspections have been finalized, resulting in additional tax liabilities imposed by the RTA totalling \u20ac2.5 million, on the grounds of the RTA disallowing the deductibility of certain expenses. The RTA\u2019s position appears to differ from the Group\u2019s interpretation of the relevant tax laws. On the basis that the Group is unaware of the RTA\u2019s position being adopted or implemented as established market practice in Romania or in other CEE countries where the Group operates, the Group intends to challenge the conclusions of the RTA as and when appropriate.
\nThe additional tax liabilities imposed have been paid by the Group and a related tax receivable has been recognised based on management\u2019s assessment of the expected outcome of challenging the RTA position as noted above.
\nThere are currently tax audits ongoing at different stages for other Romanian subsidiaries, which are not finalized by the publication date of these financial statements. In respect of these ongoing tax audits, no additional tax liabilities have been recorded in the financial statements, as management believes an additional tax assessment is not warranted. Management has calculated a variety of scenarios for tax contingencies, using different sets of potential outcomes with respect to the relevant tax assessments, resulting in a weighted average value of potential impact of additional tax liabilities imposed by authorities of \u20ac9.8 million.
\nThe Group operates in a complex legal and regulatory environment that exposes it to various risks, and evaluates all facts and assesses the implications that could have a material effect on the financial statements. To the extent the Group is involved in reviews, procedures, information requests and other assessments, including regulatory or tax matters, different outcomes are possible, which may result in further regulatory or tax investigations, litigations or sanctions.
\nIn 2024, the Group estimates to invest \u20ac178 million in development and capital expenditure related to its ongoing projects or new development opportunities, out of which only a portion is already contracted at reporting date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-960": { "value": "\nThe Group is subject to income taxes in all jurisdictions and the calculation of the Group\u2019s tax charge and provisions for income taxes involves a degree of estimation and judgment. There are transactions and calculations for which the relevant tax authorities have indicated different interpretations of the fiscal legislation compared to the Group\u2019s approach. In such cases, the carrying amount of any tax provisions and charges are determined based on the manner in which tax assessments are expected to be resolved, and the stage of negotiations or discussions with the relevant tax authorities. There may be significant uncertainty regarding the final outcome of tax proceedings, which in many instances, will only be concluded after a number of years.
\nA number of Group entities in Romania have recently been subject to tax inspections by the Romanian Tax Authorities (\u201cRTA\u201d). For three entities, the tax inspections have been finalized, resulting in additional tax liabilities imposed by the RTA totalling \u20ac2.5 million, on the grounds of the RTA disallowing the deductibility of certain expenses. The RTA\u2019s position appears to differ from the Group\u2019s interpretation of the relevant tax laws. On the basis that the Group is unaware of the RTA\u2019s position being adopted or implemented as established market practice in Romania or in other CEE countries where the Group operates, the Group intends to challenge the conclusions of the RTA as and when appropriate.
\nThe additional tax liabilities imposed have been paid by the Group and a related tax receivable has been recognised based on management\u2019s assessment of the expected outcome of challenging the RTA position as noted above.
\nThere are currently tax audits ongoing at different stages for other Romanian subsidiaries, which are not finalized by the publication date of these financial statements. In respect of these ongoing tax audits, no additional tax liabilities have been recorded in the financial statements, as management believes an additional tax assessment is not warranted. Management has calculated a variety of scenarios for tax contingencies, using different sets of potential outcomes with respect to the relevant tax assessments, resulting in a weighted average value of potential impact of additional tax liabilities imposed by authorities of \u20ac9.8 million.
\nThe Group operates in a complex legal and regulatory environment that exposes it to various risks, and evaluates all facts and assesses the implications that could have a material effect on the financial statements. To the extent the Group is involved in reviews, procedures, information requests and other assessments, including regulatory or tax matters, different outcomes are possible, which may result in further regulatory or tax investigations, litigations or sanctions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-969": { "value": "\nIn 2024, the Group estimates to invest \u20ac178 million in development and capital expenditure related to its ongoing projects or new development opportunities, out of which only a portion is already contracted at reporting date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-972": { "value": "\nIdentity of related parties with whom material transactions have occurred
\nThe Directors and jointly controlled entities are related parties for the Group.
\nMaterial related party transactions
\nFees paid to Directors, together with the performance bonus, during the current and previous year are detailed below. No other payments were made to Directors by NEPI Rockcastle, except reimbursements for travel and accommodation.
\nTransactions with joint ventures are presented in Note 35.
\n| \u00a0 | 31 Dec 2023 | 31 Dec 2022 | |||||
|---|---|---|---|---|---|---|---|
in \u20ac\u00a0thousand | Directors\u2019 fees | Performance related remuneration | Reconciling differences between 2022 performance related remuneration paid vs. accrual | Directors\u2019 fees | 2022 performance related remuneration | 2021 performance related remuneration | Interim period related remuneration |
R\u00fcdiger Dany1 | 675 | 1,009 | (3) | 517 | 870 | 200 | 200 |
Eliza Predoiu2 | 385 | 543 | (12) | 253 | 490 | - | 150 |
Marek Noetzel3 | 385 | 601 | (7) | 329 | 518 | 225 | - |
Alex Morar4 | - | - | - | 188 | - | - | - |
Mirela Covasa5 | - | - | - | 147 | - | - | - |
George Aase | 102 | - | - | 102 | - | - | - |
Antoine Dijkstra | 88 | - | - | 88 | - | - | - |
Andre van der Veer | 98 | - | - | 98 | - | - | - |
Andreas Klingen | 89 | - | - | 89 | - | - | - |
Steve Brown | 75 | - | - | 75 | - | - | - |
Andries de Lange | 63 | - | - | 63 | - | - | - |
Jonathan Lurie | 68 | - | - | 68 | - | - | - |
Ana Maria Mihaescu | 74 | - | - | 74 | - | - | - |
Total | 2,102 | 2,153 | (22) | 2,091 | 1,878 | 425 | 350 |
Name of Director | Number of shares held as at 31 Dec 2023 | Number of shares held as at 31 Dec 20221 |
|---|---|---|
Marek Noetzel | 88,358 | 88,358 |
Total | 88,358 | 88,358 |
Name of Director | Number of shares unvested at 31 Dec 2023 | Number of shares unvested at 31 Dec 2022 |
|---|---|---|
R\u00fcdiger Dany | 271,983 | 137,945 |
Eliza Predoiu | 174,922 | 22,000 |
Marek Noetzel | 210,532 | 78,394 |
Total | 657,437 | 238,339 |
The share based payment expense related to the directors of the Group amounted to \u20ac393 thousand in 2023 (31 December 2022: \u20ac262 thousand).
\nThe Directors of the Group hold 1,304,206 shares as at 31 December 2023 (31 December 2022: 739,612 shares), which represents 0.2% of the outstanding shares (31 December 2022: 0.12% of the outstanding shares). Out of the above-mentioned shareholding, 343,052 shares (31 December 2022: 283,397 shares) which represent 0.05% of the outstanding shares (31 December 2022: 0.05% of the outstanding shares) are held by the non-Executive Directors. There were no changes to the Director\u2019s interests from 31 December 2023 to the approval of the annual audited Consolidated Financial Statements, other than the shares awarded in March 2024, as detailed in the Remuneration section of this Annual Report, on pages . Other than as set out in note 39(a) above, none of the shares of the Director are subject to security, guarantee, collateral, and they are not encumbered in any way.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "ixv-981": { "value": "\nAs presented in the Note 14 Assets held for sale and Note 18 Borrowings, the Group entered into the following transactions subsequent to the year end:
\nSale of Otopeni Warehouse and Logistics
\nIn December 2023, the Group entered into a share sale purchase agreement (\u201cSPA\u201d) for the sale of one of its industrial properties, Otopeni Warehouse and Logistics S.R.L. The completion of the transaction with the correspondent transfer of ownership to the buyer has been concluded in January 2024.
\nCredit revolving facility extension
\nIn February 2024, the Group extended the maturity of the revolving credit facility with Raiffeisen Bank International until January 2027 and increased the maximum limit to \u20ac196 million, having Erste Group Bank joining the facility. Consequently, as at the date of the publication of these financial statements, the revolving credit facilities\u2019 capacity amount to \u20ac616 million.
\nDisbursement of IFC loan
\nThe \u20ac387 million green financing agreement with IFC signed by the Group in December 2023, was disbursed in February 2024.
\nThe Directors are not aware of any other subsequent events from 31 December 2023 and up to the date of signing these Consolidated Financial Statements which are likely to have a material effect on the financial information contained in this report.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:549300FMWM53K9ULYT15", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }