Unaudited pro forma consolidated 2013 financials

RNS Number : 9740C

Globalworth Real Estate Inv Ltd

24 March 2014

 



March 24, 2014

Globalworth Real Estate Investments Limited ("Globalworth" or the "Company")

2013 year-end pro forma EPRA Net Asset Value

Unaudited Pro-forma Consolidated Financial Information for the period ended December 31, 2013

The Board of Globalworth is pleased to release the following:

·    2013 year-end Pro forma EPRA Net Asset Value

·    Unaudited Pro forma Consolidated Financial Information for the period ended December 31, 2013

Following the  acquisition of Upground Estates S.R.L., Tower Center International, and Oystermouth Holding Limited and Dunvant Holding Limited (holding companies of BOB Development S.R.L and BOC Real Property S.R.L) and the drawdown of the short term debt facility obtained from UBS Limited ("UBS"), which took place after the Company's 2013 financial year-end, this unaudited pro forma consolidated financial information has been prepared to illustrate the effect of these transactions on the financial statements for the period ended 31 December 2013.

Key highlights, based on the unaudited Pro forma consolidated financial information are as follows:

·    Portfolio Open Market Value ("OMV") of € 487.9 million

·    Bank loans outstanding (Principal) of € 248.3 million

·    Loan to Value of 50.9 per cent

·    EPRA NAV of €  259.4 million

·    EPRA NAV/share of € 9.17

For further information visit www.globalworth.com or contact: 

EastWest Partners (Financial Adviser)

David Hill                                                                            Tel: [phone]

Scott Evans                                                                        Tel: [phone]

Panmure Gordon (Nominated Adviser)                                Tel: [phone]

Nicola Marrin

Freddy Crossley

Cantor Fitzgerald Europe (Joint Broker)                               Tel: [phone]

Rick Thompson

David Foreman

Milbourne (Public Relations)                                                Tel: [phone]

Tim Draper

About Globalworth:

Globalworth Real Estate Investments Ltd is a real estate investment company founded by real estate investor and developer Ioannis Papalekas to take advantage of investment opportunities in Romania and the broader SEE and CEE regions. The Company is Guernsey incorporated and has been declared by the Guernsey Financial Services Commission to be a registered closed-ended collective investment scheme. The Company's shares were admitted to trading on AIM in July 2013.

The Romanian market offers an attractive real estate investment proposition in the medium-to-long term. Globalworth believes that global investor capital flows will gradually move from markets considered as "safe havens" to more peripheral markets such as Romania and the broader SEE and CEE regions in search of higher yielding investments. As a result, Romania and the broader SEE and CEE regions should, in due course, become more attractive destinations for a wide investor audience. Globalworth anticipates holding an early mover advantage in these markets and benefitting from this gradual shift in investor sentiment.

The unaudited pro forma basic and diluted net asset value attributable to the Group per ordinary share for the period presented are based on the ordinary shares issued and assigned for future business acquisitions at the period end. The audited basic and diluted outstanding number of shares of the Group was assumed to be increased by the shares issued by the Group as part of new business acquisitions.  The impact to the outstanding shares based on the issuance of the Group's shares as part of consideration in the acquisitions is reflected in the unaudited pro forma consolidated financial information assuming that the assigned shares under new acquisitions were outstanding at period end.

PRO FORMA NET ASSET VALUE (NAV) PER SHARE

Pro forma basic NAV per share amounts are calculated by dividing net assets in the pro forma consolidated statement of financial position attributable to ordinary equity holders of the parent by the number of ordinary shares assumed outstanding at period end. As there are no dilutive instruments outstanding, pro forma basic and diluted NAV per share are identical.

The following reflects the pro forma net asset and share data used in the pro forma basic and diluted NAV per share computations:

DESCRIPTION			Group 31 December 2013 €
Net assets as per the pro forma consolidated statement of financial position			226,068,597
Less:
Non-controlling interests			(588,231)
NAV attributable to ordinary equity holders of the parent			225,480,366
Shares in issue at period end			28,300,207
Pro forma NAV per share			7.97

PRO FORMA EPRA NAV PER SHARE

DESCRIPTION			Group 31 December 2013 €
Pro forma NAV attributable to ordinary equity holders of the parent			225,480,366
Exclude:
Deferred tax liability			39,898,416
Goodwill as a result of deferred tax			(5,965,217)
Pro forma EPRA NAV attributable to ordinary equity holders of the parent			259,413,565
Shares in issue at period end			28,300,207
Pro forma EPRA NAV per share			9.17

Globalworth real estate investments limited

unaudited PRO FORMA CONSOLIDATeD Statement OF Financial information

for the period from 14 February to 31 December 2013

Globalworth real estate investments limited

Unaudited pro forma Consolidated statement of financial position

as at 31 December 2013

		Unaudited
	Notes	31 December 2013
		€
ASSETS
Investment property	7	487,869,900
Goodwill	11.1	13,091,439
Advance for investment property	8	2,750,000
Other long term assets		1,035,220
Trade and other receivables		8,714,539
Cash and cash equivalents		13,491,519
Investment property held for sale	9	1,875,800
Total assets		528,828,417
EQUITY AND LIABILITIES
Total equity
Issued share capital		147,478,535
Share based payment reserve	13	43,807
Retained earnings		77,958,024
Equity attributable to ordinary equity holders of the parent		225,480,366
Non-controlling interests (NCI)		588,231
		226,068,597
Total liabilities
Interest bearing loans and borrowings	10	249,880,117
Deferred tax liability		39,898,416
Trade and other payables		12,981,287
		302,759,820
Total equity and liabilities		528,828,417

GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

unaudited pro forma consolidated Statement of changes in equity

For the period from 14 February to 31 December 2013

	Attributable to equity holders of the parent				Non-Controlling  Interests	Total Equity
	Issued share capital	Share based payment reserve	Retained earnings	Total
	€	€	€	€	€	€
As at 14 February 2013	-	-	-	-	-	-
Issue of shares on incorporation by founder	1	-	-	1	-	1
Shares of the founder redeemed	(1)	-	-	(1)	-	(1)
Shares issued for cash	53,593,515	-	-	53,593,515	-	53,593,515
Issue cost recognised to equity	(4,941,622)	-	-	(4,941,622)	-	(4,941,622)
Shares issued for acquisition of subsidiary (Note 11.1)	41,878,761	-	-	41,878,761	-	41,878,761
Acquisition of subsidiary	-	-	-	-	549,203	549,203
Fair value of option warrants issued for executive share scheme	-	43,807	-	43,807	-	43,807
Shares issued for acquisition of subsidiary  Note (11.2)	21,848,398	-	-	21,848,398	-	21,848,398
Profit of the period	-	-	77,958,024	77,958,024	39,028	77,997,052
Shares issued for acquisition of subsidiary  Note (12.1)	14,978,046	-	-	14,978,046	-	14,978,046
Shares issued for acquisition of subsidiary  Note (12.2)	5,873,437	-	-	5,873,437	-	5,873,437
Shares issued for acquisition of subsidiary  Note (12.3)	14,248,000	-	-	14,248,000	-	14,248,000
As at 31 December 2013	147,478,535	43,807	77,958,024	225,480,366	588,231	226,068,597

GLOBALWORTH REAL ESTATE INVESTMENTS LIMITED

Notes to THE unaudited pro forma CONSOLIDATED financial information

For the period from 14 February to 31 December 2013

1.   CORPORATE INFORMATION

Globalworth Real Estate Investments Limited (the Company) was incorporated in Guernsey as a non-cellular company with liability limited by shares on 14 February 2013, with registered number 56250. The Company is domiciled in Guernsey. The registered office and principal place of business of the Company is PO Box 156, Frances House, Sir William Place, St Peter Port, GY1 4EU, Guernsey.

The Company has been formed to take advantage of investment opportunities in real estate assets situated in the SEE and CEE region, with primary focus on properties located in Romania.

2.   BACKGROUND

On 25 July 2013, the Company raised EUR 53,593,515 (gross) through the issue of Ordinary Shares in the context of an Initial Public Offering in the AIM market of the United Kingdom.

Upon completion of the initial public offering, the Group set up the following subsidiaries to deal with the investments, financing and holding of the Group's activities:

·     Globalworth Real Estate Investments Limited, Parent of the Group

·     Globalworth Investment Advisers Limited (the ″Investment Adviser″), incorporated on 14 February 2013 in Guernsey (100% owned by the Parent)

·     Globalworth Finance Guernsey Limited, incorporated in Guernsey on 6 September 2013 (100% owned by the Parent)

·     GWI Finance BV, incorporated in the Netherlands on 23 September 2013 (100% owned by the Parent)

·     Globalworth Holdings Cyprus Limited, (″GHCL″) incorporated in Cyprus on 14 August 2013; (100% owned by the Parent)

·     Zaggatti Holdings Limited, incorporated in Cyprus on 4 December 2013 (100% owned by GHCL)

·     Tisarra Holdings Limited, incorporated in Cyprus on 11 November 2013 (100% owned by GHCL)

·     Ramoro Limited, incorporated in Cyprus on 11 November 2013 (100% owned by GHCL).

Prior to the completion of the initial public offering, the Company signed Share Sale and Purchase Agreements for the acquisition of 100% of the shares of the following entities incorporated in Romania:

·     Globalworth Asset Managers S.R.L ("Asset Manager", owner of City Office and Herastrau One property, 31 apartments in Upground Towers, and 60% shareholder of Victoria Ventures S.A which in turn owns Floreasca 1 property);

·     Corinthian Five S.R.L (the owner of Bucharest One property);

·     Upground Estates S.R.L (the owner of Upground Towers property);

·     Tower Center International S.R.L (the owner of TCI property).

On 13 December 2013, the Company signed Share Sale and Purchase Agreements (together with the aforementioned Share Sale and Purchase Agreements, the "Acquisition Agreements") for the acquisition of 100% of the shares of Oystermouth Holding Limited and Dunvant Holding Limited, holding companies of BOB Development S.R.L (owner of BOB property) and BOC Real Property S.R.L (the owner of BOC property).

Subsequent to the signing of the above mentioned Share Sale and Purchase Agreements "SPA":

On 27 September 2013, the Group acquired Pieranu Enterprises Limited, the holding company of Globalworth Asset Managers S.R.L (99.991%), which further is parent of Victoria Ventures S.A with ownership of 60%.

On 24 December 2013, the Group acquired Corinthian Five S.R.L (the owner of Bucharest One property and holding company of Floreasca Office Building S.A).

On 29 January 2014, the Group obtained the approval from the Romanian Competition Council for the acquisition of BOB Development S.R.L and BOC Real Property S.R.L.

On 18 February 2014, the Group acquired Tower Center International S.R.L (the owner of TCI property).

On 20 March 2014, the Group acquired Upground Estates S.R.L. (the owner of Upground Towers property)

On 21 March 2014, the Group acquired Oystermouth Holding Limited and Dunvant Holding Limited (holding companies of BOB Development S.R.L and BOC Real Property S.R.L, owners of BOB and BOC property, respectively)

3.   PURPOSE OF PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

This unaudited pro forma consolidated financial information has been prepared to illustrate the effect of acquiring Upground Estates S.R.L, Tower Center International S.R.L, and Oystermouth Holding Limited and Dunvant Holding Limited (holding companies of BOB Development S.R.L and BOC Real Property S.R.L), under the assumption that these acquisitions were completed and the short term debt facility obtained from UBS Limited ("UBS") was fully drawn on 31 December 2013.

The pro forma consolidated financial information describes a hypothetical situation and has been prepared solely for informational purpose only. The information is neither intended to present the net assets and income statement that the business would actually achieve, nor is it intended to indicate the future profit or loss of the Group at any future point in time. No other synergies or integration costs have been taken into consideration.

The unaudited pro forma consolidated financial information only consists of the consolidated statement of financial position, the consolidated statement of changes in equity and notes to the pro forma consolidated financial information.

4.   BASIS OF PREPARATION FOR THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The Group's audited consolidated condensed financial information for the period ended 31 December 2013 has been adjusted into unaudited pro forma consolidated financial information so as to give effect to pro forma events that are the:

1)   acquisition of Oystermouth Holding Limited and Dunvant Holding Limited (holding companies of BOB Development S.R.L and BOC Real Property S.R.L), Tower Center International S.R.L and Upground Estates S.R.L. The acquisition of these companies was not completed and the Group did not have the legal control, as of 31 December 2013 (Note 12),

2)   issuance of 6,405,015 ordinary shares at fair value of EUR 5.48 per share for consideration of purchase price (Note 14),

3)   drawn down of short term bank loan from UBS and recognition of related financial costs (Note 10).

The added financial information of Oystermouth Holding Limited and Dunvant Holding Limited (holding companies of BOB Development S.R.L and BOC Real Property S.R.L), Tower Center International S.R.L and Upground Estates S.R.L. as of 31 December 2013 are not audited and are based on management financial reporting. The financial information of these companies is prepared using consistent accounting policies which were used by the Group and its other subsidiaries as of and during the period ended 31 December 2013. 

The unaudited pro forma consolidated financial information was prepared in accordance with the acquisition method of accounting under International Financial Reporting Standards ("IFRS") and the accounting policies applied in the Group's first complete set of IFRS financial statements with the adjustments disclosed below and is not necessarily indicative of the financial position or results of operations that would have occurred if the acquisitions had been completed on 31 December 2013, nor is it indicative of the consolidated future operating results or financial position of the Group.

Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in connection with the unaudited pro forma consolidated financial information.

Pro forma adjustments

The following descriptions present an overview of the adjustments accounted to give effect to pro forma events and further details are described in the notes to the financial information.

Adjustment of fair value of acquired assets

In accordance with IFRS, the fair values of acquired identified assets and liabilities are measured on the acquisitions date (commonly referred to as purchase price allocation). The accounting for the acquisitions is dependent upon certain valuations on the effective acquisition date and other conditions that have to be met in order to enforce the Group's control over the entities acquired. Though, as of 31 December 2013 for Oystermouth Holding Limited and Dunvant Holding Limited, Tower Center International S.R.L and Upground Estates S.R.L these conditions were not met, for the purpose of preparation of this pro forma consolidated financial information these conditions were assumed to be met as of 31 December 2013.

Due to the fact that the purchase price calculation of Oystermouth Holding Limited and Dunvant Holding Limited, Tower Center International S.R.L and Upground Estates S.R.L. for the unaudited pro forma consolidated financial information have been prepared based upon preliminary estimates, the final amounts recorded for the acquisitions of subsidiaries may differ materially from the information presented. These estimates are subject to change pending further review of the assets acquired and liabilities assumed.

Adjustment for ordinary shares issues

In connection with the acquisition of Oystermouth Holding Limited and Dunvant Holding Limited, Tower Center International S.R.L and Upground Estates S.R.L the Group has assumed 6,405,015 ordinary shares issued as consideration paid for the acquisition of these companies as of 31 December 2013. In accordance with IFRS, the shares assigned as consideration for the net assets acquired as business acquisition should be valued at market price on the date when control of the net assets transferred occurs, therefore, the shares assigned for the acquisitions of the above mentioned companies were valued at the share price of EUR 5.48 per share, the market price on the assumed acquisition date of 31 December 2013. The fair value is subject to change on the actual date of taking over the control of the assets acquired and liabilities assumed.

Further, in connection with the acquisition of Pieranu Enterprises Limited (note 11.2), the Group has assumed 989,555 ordinary shares issued as final settlement for the outstanding purchase price balance payable as of 31 December 2013 of EUR 4,947,774, valued at the share price as of the assumed acquisition date of 31 December 2013 of EUR 5.48 per share, and recorded a corresponding decrease in trade and other payables for the outstanding liability to the seller and an increase in goodwill of EUR 474,987 for the difference in the carrying value of the consideration payable and the fair value of shares assumed on 31 December 2013.

Adjustment for internal transaction

During the period ended 31 December 2013, the Group and its subsidiaries provided and received certain services to and from Oystermouth Holding Limited, Dunvant Holding Limited, BOB Development S.R.L, BOC Real Property S.R.L, Tower Center International S.R.L and Upground Estates S.R.L. Therefore related balances due to or from each company in pro forma consolidated financial information have been eliminated.

Adjustment due to refinancing

On 14 February 2014, Globalworth Holdings Cyprus Limited signed a short term debt facility with UBS Bank for an amount of 65 million euro out of which approximately 32 million euro was borrowed by Tower Center International S.R.L when it acceded to the loan agreement on 18 February 2014, in order to refinance the existing bank loan and repay certain other liabilities. The remaining facility of EUR 33 million was raised to fund the remaining cash element of the Tower Center International S.R.L. acquisition, the acquisition of Oystermouth Holding Limited and Dunvant Holding Limited, the payment of related fees and expenses and for general corporate purposes. In the unaudited pro forma consolidated financial information it has been assumed that the debt was fully drawn on 31 December 2013 and the related finance costs and legal charges were paid in cash from the cash inflows resulting from this loan.

The finance costs and legal costs related to Globalworth Holdings Cyprus Limited's loan balance of EUR 33 million was capitalised in the loan outstanding balance as of 31 December 2013 in the unaudited pro forma consolidated financial position and the costs related to Tower Center International S.R.L's share of the loan facility, which were paid by Globalworth Holdings Cyprus Limited GHCL, were expensed as costs of the acquisition of a subsidiary under the business acquisition guidelines of IFRS.

In the pro forma consolidated financial information, it has been assumed that all acquisition related considerations, whether in cash or shares, were paid in full on 31 December 2013.

The main accounting rules representing the basis of preparation for the unaudited pro forma consolidated financial information, are disclosed below:

The unaudited pro forma consolidated financial information has been prepared on a historical cost basis, except for Investment Property, which has been measured at fair value. The financial information is presented in EUR. The financial year of the Group ends at 31 December.  This financial information is prepared for a period less than a full year, starting from the date incorporation of Globalworth Real Estate Investments Limited ("the Company") of 14 February 2013.

Going concern basis

The unaudited pro forma consolidated financial information has been prepared assuming that the Group and all the companies assumed to have been acquired as of 31 December 2013 for the purpose of this pro forma consolidated financial information, will continue as a going concern.

Consolidation principles

For the purposes of preparation of the unaudited pro forma consolidated financial information, the Group has assumed control of following companies "the pro forma subsidiaries" as of 31 December 2013, and further details are disclosed in the Note 12:

·     BOB Development S.R.L,

·     BOC Real Property S.R.L,

·     Oystermouth Holding Limited,

·     Dunvant Holding Limited,

·     Tower Center International S.R.L and

·     Upground Estates S.R.L.

The business acquisitions are reflected in the unaudited pro forma consolidated financial information as being accounted for under the acquisition method in accordance with IFRS guidance on accounting for business combinations. Under the acquisition method, the total purchase price is calculated as described in Note 11 and Note 12 to the unaudited pro forma condensed consolidated financial information. In accordance with IFRS guidance on accounting for business combinations, the assets acquired and the liabilities assumed have been measured at fair value based on various preliminary estimates. These estimates are based on key assumptions of the acquisitions, including the fair values of the net asset assets acquired and consideration given.

For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed, as reflected in the unaudited pro forma consolidated financial information, the Group has applied IFRS guidance on fair value measurements, which establishes a framework for measuring fair value.  In accordance with IFRS guidance on fair value measurements, fair value is an exit price and is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

In addition, for recognition and measurement of the fair value of shares assigned as consideration given, in the final purchase price computation, the share price will be based on the actual market value of the shares on acquisition date.

The historical financial information of the Group and its subsidiaries and Oystermouth Holding Limited, Dunvant Holding Limited, BOB Development S.R.L, BOC Real Property S.R.L, Tower Center International S.R.L and Upground Estates S.R.L, consolidated in the unaudited pro forma consolidated financial position, are prepared under similar accounting policies applicable throughout the accounting period and have similar financial year end.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full.

5.   SELECTED CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of unaudited pro forma consolidated financial information requires the management to make certain critical accounting estimates, judgements and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any, at the date of the Group financial information, and the reported amounts of revenues and expenses during the reporting period. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Estimates and judgments are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual results could differ from management's estimates. Revisions to accounting estimates are reviewed periodically and, as adjustments become necessary, they are recognised in the period in which the estimate is revised and in any future periods affected.

JUDGEMENTS

In the process of applying the Group's accounting policies, the management makes the following judgements and estimates which have a significant effect on the classification and measurement of the financial information elements:

Selection of functional currency

The financial information included in the unaudited pro forma consolidated financial information of each of the entities is measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The pro forma consolidated financial information is presented in Euro ("EUR"), which is the Company's functional currency and the Group's presentation currency.

Classification of investment property

On acquisition the Group is required to determine whether a property qualifies as investment property or inventory property.

In the pro forma consolidated financial information investment property comprises land and buildings (principally offices, residential property and retail property) which are not occupied substantially for use by, or in the operations of, the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income and capital appreciation. For the purpose of the pro forma consolidated financial information, the Group considered when the property is in a condition which will allow the generation of cash flows from its rental that the property is no longer a property under development but an investment property.

Operating lease contracts - the Group as lessor

The entities in the pro forma consolidated financial information have entered into commercial property leases on their investment property. It has been determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that the entity retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

Business combinations

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 is acquired in addition to the property. More specifically, consideration is made of the extent to which significant processes are acquired.

When the acquisition of subsidiaries does not represent a business, 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.

For the purposes of preparation of this pro forma consolidated financial information the acquisitions of all entities are assessed as business acquisitions under IFRS guidance.

ESTIMATES AND ASSUMPTIONS

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters and information available when the unaudited pro forma consolidated financial information was prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Valuation of property

The fair value of investment property as of 31 December 2013 has been determined by Coldwell Banker, independent real estate valuation expert, using recognised valuation techniques and the principles of IFRS. These techniques comprise the sales comparison approach and the income capitalisation approach.

Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective company's domicile.

6.   SUMMARY OFSELECTED SIGNIFICANT ACCOUNTING POLICIES

Business combinations and goodwill

Business combinations are accounted for using the acquisition method as per IFRS guidance. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For a business combination, the non-controlling interests in the acquiree is measured at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in the income statement or as a change to other comprehensive income. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

Functional currency and presentation currency

The financial information is presented in Euro, which is the functional and presentation currency of each entity in the unaudited pro forma consolidated financial information. The unaudited pro forma consolidated financial information is based on the statutory accounting records, with adjustments and reclassifications recorded for the purpose of fair presentation in accordance with IFRS principles, as applicable to this financial information.

Investment property

Property that is held for long term rental yields or for capital appreciation or both, and that is not occupied by the Group, is classified as investment property and accounted for under International Accounting Standard 40 "Investment Property".

Investment property is initially measured at cost, including transaction costs. Such costs include the cost of replacing part of the investment property, if the recognition criteria are met. When a major inspection is performed, its cost is recognised in the carrying amount of the investment property as a replacement, if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Investment property is subsequently remeasured at fair value, which is the amount for which the property could be exchanged in an orderly transaction between market participants at the measurement date. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the year in which they arise. For the purposes of preparation of the unaudited pro forma consolidated financial information, in order to avoid double counting, the assessed fair value is:

·    Reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives and/or minimum lease payments

·    Increased by the carrying amount of any liability to the superior leaseholder or freeholder that has been recognised in the balance sheet as a finance lease obligation

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset would result in either gains or losses at the retirement or disposal of investment property.

Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use.

Fair value measurement 

The financial instruments, such as, derivatives, and non-financial assets, such as investment properties, are measured at fair value in the pro forma consolidated financial information.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

·    In the principal market for the asset or liability, or

·    In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the entity.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole.

All assets and liabilities for which fair value is measured or disclosed in the financial information are categorised within the fair value hierarchy.

Transaction costs of equity transactions

The costs of issuing or acquiring equity are recognised in equity (net of any related income tax benefit), as a reduction of equity on the condition that these are incremental costs directly attributable to the equity transaction that otherwise would have been avoided. The costs of an equity transaction that is abandoned are recognised as an expense. Those costs might include registration and other regulatory fees, amounts paid to legal, accounting and other professional advisers, printing costs and stamp duties.

7.   INVESTMENT PROPERTY

DESCRIPTION		31 December 2013 €
Completed investment property		7,724,700
Investment property under refurbishment		55,900,000
Investment property under development		57,710,000
Completed investment property acquired from pro forma subsidiaries		366,535,200
Carrying value at end of period		487,869,900

The fair value of investment property and investment property under development for the purposes of preparation of the pro forma consolidated financial information as of 31 December 2013 has been determined by CBAR Research & Valuation Advisors S.R.L (Coldwell Banker Valuation), an independent valuation expert, using recognised valuation techniques. The fair value of investment properties as of 31 December 2013 is based on the period end appraisal reports and their current use equates to the highest and best use.

The completed investment property and completed investment property acquired from the pro forma subsidiaries include residential apartments for an amount of EUR 7,724,700 and EUR 101,035,200, respectively, which the Group considers that the property is in a condition which will allow the generation of cash flows from its rental.

7.1 Movement in fair value of investment property

Company Name	Globalworth Asset Managers S.R.L			Victoria Ventures S.A	Corinthian Five S.R.L	BOB Development S.R.L	BOC Real Property S.R.L	Upground Estates S.R.L	Tower Center International S.R.L	TOTAL
Property Asset	Upground apartments	City Office	Herastrau One	Floreasca One	Bucharest One	BOB	BOC Building	Upground Complex	TCI Tower
	€	€	€	€	€	€	€	€	€	€
Carrying value at the beginning of the period	-	-	-	-	-	-	-	-	-	-
Additions from business acquisitions ( Note 11,12)	7,830,700	52,400,000	6,237,096	3,460,000	48,070,000	50,500,000	139,000,000	101,035,200	76,000,000	484,532,996
Capital costs	-	1,817,986	-	156,342	-					1,974,328
Disposals	-	-	-	-						-
Fair value adjustment	(106,000)	1,682,014	(137,096)	(76,342)	-	-	-	-	-	1,362,576
Carrying value at the end of the period	7,724,700	55,900,000	6,100,000	3,540,000	48,070,000	50,500,000	139,000,000	101,035,200	76,000,000	487,869,900
Expected value on finalization	7,724,700	62,400,000	28,800,000	8,660,000	141,300,000	50,500,000	139,000,000	101,035,200	76,000,000	615,419,900

8.   ADVANCES FOR INVESTMENT PROPERTY

The Group also paid advances for the acquisition of TAP property for an amount of EUR 750,000 and a land plot in Bucharest for an amount of EUR 2,000,000.

9.   INVESTMENT PROPERTY HELD FOR SALE

Investment property classified as held for sale are Victor Brauner, Voluntari and Chesarie land plots and buildings that were acquired under the Asset Manager portfolio as held for sale. The properties are valued at the price contracted for sale. The notarial deeds for these properties have been signed and the agreed sales price was also received by Globalworth Asset Managers S.R.L. The transfer of legal title is pending the approval of the lender bank.

10.  INTEREST BEARING LOANS AND BORROWINGS

Description		31 December 2013€
Bank loans		247,807,466
Other short term loans		2,072,651
TOTAL		249,880,117

The table below summarises the key features of the Group's bank debt facilities

Company Name	Lender	Principal €	Amortisation cost €	Carrying value €	Accrued Interest €	TOTAL €	Undrawn amount €	Maturity Date
Globalworth Asset	Marfin Bank	2,963,000	-	2,963,000	-	2,963,000	-	May 2014
Managers S.R.L	Unicredit Tiriac Bank	3,205,000	-	3,205,000	-	3,205,000	-	November 2014
	Bancpost (Eurobank) A	13,823,685	*684,020	13,139,665	-	13,139,665	2,676,315	March 2019
	Bancpost (Eurobank) B	-	-	-	-	-	8,000,000	March 2019
	Bancpost (Eurobank) C	220,661	-	220,661	-	220,661	779,339	November 2014
Victoria Ventures S.A	Piraeus Bank	133,756	-	133,756	-	133,756	2,866,244	December 2015
	Piraeus Bank	31,673	-	31,673	-	31,673	368,327	June 2015
BOB Development	National Bank of Greece	19,594,638	-	19,594,638	113,855	19,708,493	-	July 2015
S.R.L	Bank of Cyprus	19,594,638	-	19,594,638	113,817	19,708,455	-	July 2015
BOC Real Property	National Bank of Greece	42,886,935	-	42,886,935	249,111	43,136,046	-	July 2015
S.R.L	Bank of Cyprus	42,886,934	-	42,886,934	249,111	43,136,045	-	July 2015
Upground Estates S.R.L	National Bank of Greece, London	38,000,000	-	38,000,000	431,496	38,431,496	-	December 2015
TOTAL		183,340,920	684,020	182,656,900	1,157,390	183,814,290	14,690,225
GHCL	UBS Limited	32,927,507	**1,006,824	31,920,683	-	31,920,683		August 2014
TCI	UBS Limited	32,072,493	-	32,072,493	-	32,072,493		August 2014
UBS Facility sub-total		65,000,000	1,006,824	63,993,176	-	63,993,176	-
TOTAL (pro forma)		248,340,920	1,690,844	246,650,076	1,157,390	247,807,466	14,690,225

*It also includes EUR 400,148 cash deposit with Bancpost as security for interest payments. The loan fair value was reduced by this deposit, in addition to the amortisation cost of the arrangement fee of EUR 283,872 per IFRS guidance.

** It represent bank arrangement fee and legal charges paid for the UBS loan facility, which was capitalised in the loan outstanding balance and will be amortised over the term of the loan per IFRS guidance.

Bancpost facilities A and C were used to finance the City Office refurbishment cost and related VAT receivable balance. The Bancpost facility B will be used for the acquisition of investment property ″TAP″ once the seller has received the consent of existing tenants. Piraeus Bank loan has been used to finance the Floreasca One development cost and related VAT receivable balance.

Post-acquisition of Global Asset Managers S.R.L, the Group withdrew EUR 4,153,223 from the Bancpost facility, out of which EUR 2,500,000 was paid for the founder's loan to the company and EUR 1,323,685 for the construction cost of the City Office building, while the remaining amount funds VAT receivable.

On 14 February 2014 the Group signed a short-term bank loan facility for an amount of Euro 65 million with UBS Limited. Out of the total facility, approximately Euro 32 million was borrowed by Tower Center International S.R.L, when it acceded the loan agreement on 18 February 2014, in order to refinance the existing bank loan and repay certain other liabilities. The purpose of the remaining facility of Euro 33 million, borrowed by Globalworth Holdings Cyprus Limited, was to fund the remaining cash element of the Tower Center International S.R.L. acquisition, the acquisition of Oystermouth Holding Limited and Dunvant Holding Limited, the payment of related fees and expenses, and for general corporate purposes.

For the purposes of preparation of this unaudited pro forma consolidated financial information, the Group recognised the loan facility received and outstanding as of 31 December 2013 at EUR 65,000,000 and as repayable in the short term.

The bank arrangement fee for an amount of EUR 1,462,500 and related legal fees for an amount of EUR 525,004 were assumed as paid on loan receipt date. Out of this, an amount of EUR 1,006,824 was capitalised in the loan outstanding balance of Globalworth Holdings Cyprus Limited in the unaudited pro forma consolidated statement of financial position as of 31 December 2013, and the remaining balance of EUR 980,680, which was paid by GHCL for the Tower Center International S.R.L loan balance, was expensed in the unaudited pro forma consolidated income statement as business acquisition costs.

As of 31 December 2013, in the unaudited pro forma consolidated statement of financial position, the UBS loan balance was outstanding for an amount of EUR 63,993,176, stated at amortised cost, and the cash at bank balance from this loan was increased by EUR 619,511.

11.  BUSINESS COMBINATION

11.1            Acquisition of Pieranu Enterprises Limited

On 27 September 2013 Globalworth Holding Cyprus Limited (fully owned by Globalworth Real Estate Investments Limited) acquired 100% of the shares of Pieranu Enterprises Limited, an unlisted holding company based in Cyprus. 

As of the acquisition date, Pieranu had investments of 99.991% in Globalworth Asset Managers S.R.L, an unlisted company based in Romania, which in its turn, had an investment of 60% in Victoria Ventures S.A (also based in Romania).

Globalworth Asset Managers S.R.L and Victoria Ventures S.A operate in the real estate investment, management and development business. 

The effective acquisition was 27 September 2013 but because between 27 and 30 September only immaterial transactions took place, the assets and liabilities of the Asset Manager portfolio used for goodwill calculation were those as of 30 September 2013.

The fair values of the identifiable assets and liabilities of the Asset Manager portfolio formed of Pieranu Enterprises Limited, Globalworth Asset Managers S.R.L and Victoria Ventures S.A as at the date of acquisition were:

	Fair value recognised on acquisition €
ASSETS	78,689,249
LIABILITIES	33,100,588
Total identifiable net assets at fair value	45,588,661
Non-controlling interest	(549,204)
Goodwill arising on acquisition	13,091,439
Purchase consideration transferred	58,130,896

Purchase consideration transferred
Shares issued, at fair value	41,878,761
Cash paid	4,532,632
Cash paid for assignable loans	11,719,503
TOTAL	58,130,896

At acquisition date the Group recognised a deferred tax liability of EUR 5,965,217 which comprises the tax effect of the difference between tax base and the fair value of the property at acquisition date.

The goodwill of EUR 13,091,439 comprises, besides the effect of deferred tax liabilities of EUR 5,965,217, the value of expected synergies arising from the acquisition.

For the purposes of preparation of this pro forma consolidated financial information, the Group has assumed that the purchase price adjustment balance payable as of 31 December 2013, of an amount of EUR 4,947,774, representing mainly the effect of disposal fees of EUR 4,950,000 that Globalworth Asset Managers S.R.L expected to receive as a disposal fee from the shareholders of BOB Development S.R.L, BOC Real Property S.R.L, Corinthian Five S.R.L and Upground Estates S.R.L at the date of their acquisition by the Group, has been settled through the issuance of further 989,555 shares on 31 December 2013, at which date the shares had a market value of EUR 5.48 per share. Therefore, the goodwill balance as of 31 December 2013 has been adjusted to recognise the difference between the market value of the shares at period end and the share price used to calculate the number of shares issued.

Cash flow on acquisition	€
Cash paid for the acquisition of subsidiaries		(16,252,135)
Cash acquired under the acquisition of subsidiaries		1,622,821
Net cash outflow on acquisition	(14,629,314)

Fair value of shares issued

The Group issued in total 7,189,555 ordinary shares as consideration for the 100% interest in Pieranu Enterprises Limited, 6,200,000 on the date of acquisition of 27 September 2013, based on the preliminary purchase price calculation, and for the remaining 989,555 shares it is assumed, for the purposes of preparation of this unaudited pro forma consolidated financial information, that they were issued on 31 December 2013, based on the final purchase price calculation. The fair value of the shares is calculated with reference to the market price of the shares of the Company at the date of acquisition and issuance of the 6,200,000 shares of 27 September 2013, based on the preliminary purchase price calculation, which was EUR 5.88 each, and by reference to the market price of shares at 31 December 2013 for the remaining 989,555 shares issued, which was EUR 5.48 each. The fair value of the consideration given in the form of shares is, therefore, EUR 41,878,761.

Contingent consideration

As part of the Asset Manager Acquisition Agreement, the following contingent considerations have been agreed.

There will be additional cash payments to the previous owner of Pieranu Enterprises Limited, of EUR 600,000, if the Floreasca One Property will have in place a valid building permit for offices use within six months from the transfer date. As of the balance sheet date, the probability to have a valid building permit for the office building within six months from the transfer date is remote, therefore, no consideration payable has been recognised in this respect.

11.2            Acquisition of Corinthian Five S.R.L

On 24 December 2013, Tisarra Holdings Limited and Globalworth Holding Cyprus Limited (fully owned by Globalworth Real Estate Investments Limited) acquired 100% of the shares of Corinthian Five S.R.L, an unlisted holding company based in Romania.

As of the acquisition date, Corinthian Five S.R.L had an investment of 100% in Floreasca Office Building S.A, an unlisted company based in Romania.

Corinthian Five S.R.L and Floreasca Office Building S.A operate in the real estate development business.

The effective date of acquisition was 24 December 2013 but because between 24 and 31 December 2013 only immaterial transactions took place, the assets and liabilities of the Corinthian Five portfolio, formed of Corinthian Five S.R.L and Floreasca Office Building S.A used for goodwill calculation purposes are those as of 31 December 2013.

The fair values of the identifiable assets and liabilities of the Corinthian Five portfolio as at the date of acquisition were:

	Fair value recognised on acquisition €
ASSETS	50,490,638
LIABILITIES	7,331,051
Total identifiable net assets at fair value	43,159,587
Bargain purchase gain arising on acquisition	(9,377,342)
Purchase consideration transferred	33,782,245

Purchase consideration transferred
Shares issued, at fair value	21,848,398
Cash paid	12,070,000
Purchase price adjustment receivable	(136,153)
TOTAL	33,782,245

At acquisition date, the Group recognised a deferred tax liability of EUR 6,255,541, which comprises the tax effect of the difference between the tax base and the fair value of the property at acquisition date.

The bargain purchase gain of EUR 9,377,342 comprises the purchase price discount agreed between the Group and the seller related to both the assignment of existing shareholder loans and the valuation of investment property on acquisition date.

	€
Cash flows on acquisition:
Cash paid for the acquisition of subsidiaries	(10,000,000)
Cash paid for VAT receivable balance	(2,070,000)
Cash acquired under the acquisition of subsidiaries	150,865
Net cash outflow on acquisition	(11,919,135)

Fair value of shares issued

The Group issued 3,986,934 ordinary shares as consideration for the 100% interest in Corinthian Five S.R.L and assignable loans. The fair value of the shares is calculated with reference to the market price of the shares of the Company at the date of acquisition, which was EUR 5.48 each. The fair value of the consideration given in the form of shares is therefore EUR 21,848,398.

12.  BUSINESS COMBINATION  (the pro forma subsidiaries)

12.1            Acquisition of Tower Center International S.R.L

On 18 February 2014, Ramoro Limited (fully owned by Globalworth Real Estate Investments Limited) acquired 100% of the shares of Tower Center International S.R.L, an unlisted holding company based in Romania. 

Tower Center International S.R.L operates in the real estate management and development business and currently owns an office building "Bucharest Tower Center" in Bucharest. 

The actual acquisition date of 18 February 2014 was the day when the Group acquired control over the entity, however, for the purposes of preparation of this unaudited pro forma consolidated financial information, the assets and liabilities of the company used for goodwill calculation purposes were those as of 31 December 2013, as it has been assumed that this acquisition had been completed on 31 December 2013.

The provisional fair values of the identifiable assets and liabilities of Tower Center International S.R.L as at the date of acquisition were:

	Fair value recognised on acquisition €
ASSETS	77,268,251
LIABILITIES	42,087,333
Total identifiable net assets at fair value	35,180,918
Bargain purchase gain arising on acquisition	(8,536,780)
Purchase consideration transferred	26,644,138

Purchase consideration transferred
Shares issued, at fair value	14,978,046
Cash paid	11,666,092
TOTAL	26,644,138

The net assets recognised in the unaudited pro forma consolidated financial information are based on a provisional assessment of their values as of 31 December 2013 and will be reassessed as per the related acquisition agreement on acquisition date (i.e. 18 February 2014) when the Group has acquired control.

The final amounts recorded for the acquisitions of the entity may differ materially from the information presented. These estimates are subject to change pending further review of the assets acquired and liabilities assumed on the actual acquisition date. Subsequent change in the provisional purchase price calculation will be settled, between the parties, in cash.

At 31 December 2013, in the pro forma consolidated financial information a deferred tax liability of EUR 6,675,746 has been recognised, which comprises the tax effect of the difference between the tax base and the fair value of the property at acquisition date.

The bargain purchase gain of EUR 8,536,780 represents, as adjusted for the effect of deferred tax liabilities of EUR 6,675,746, the purchase price discount on the value of the property acquired in accordance with the TCI Share Purchase Agreement and expected synergies arising from the acquisition. The bargain purchase gain is a provisional amount and will be re-measured based on the fair value assessment of the consideration given and the net assets acquired on the actual acquisition date.

Cash flow on acquisition:	€
Cash paid for the acquisition of subsidiaries		(11,666,092)
Cash acquired under the acquisition of subsidiaries		265,531
Net cash outflow on acquisition	(11,400,561)

Fair value of shares issued

The Group issued 2,733,220 ordinary shares as consideration for the 100% interest in Tower Center International S.R.L as of 18 February 2014. In accordance with IFRS, the shares assigned as consideration for net assets acquired as business should be valued at market price on that date when control of net assets transferred, therefore, for the purposes of preparation of the pro forma consolidated financial information the shares assigned under this acquisition are valued at the share price of EUR 5.48 per share at 31 December 2013, the market price on the assumed acquisition date of 31 December 2013. The fair value of the consideration in the form of shares was, therefore, assessed at EUR 14,978,046.

The fair value of the consideration is illustrative and will be revalued based on the market price of the shares assigned on acquisition date i.e. 18 February 2014. There will be no change in the number of shares allocated as purchase price consideration on 31 December 2013. The fair value is also subject to change pending the final purchase price computation on date of control when the assets were acquired and liabilities assumed.

12.2            Acquisition of Oystermouth Holding Limited and Dunvant Holding Limited

For the purposes of preparation of this unaudited pro forma consolidated financial information, Globalworth Holding Cyprus Limited (fully owned by Globalworth Real Estate Investments Limited) acquired 100% of the shares of Oystermouth Holding Limited and Dunvant Holding Limited, both unlisted holding companies based in Cyprus. 

As of 31 December 2013, Oystermouth Holding Limited and Dunvant Holding Limited had investments of 78% and 22%, respectively, in BOB Development S.R.L and BOC Real Property S.R.L, both unlisted companies based in Romania.

BOB Development S.R.L and BOC Real Property S.R.L operate in the real estate management and development business and currently own fully completed and partially rented office buildings in Bucharest. 

The acquisition date of 21 March 2014 was the day when the Group acquired control over the entities, however, for the purposes of preparation of this unaudited consolidated financial information, the assets and liabilities of these companies used for goodwill calculation purposes were those as of 31 December 2013, as it has been assumed that their acquisition had been completed on 31 December 2013.

The fair values of the identifiable assets and liabilities of Oystermouth Holding Limited, Dunvant Holding Limited, BOB Development S.R.L and BOC Real Property S.R.L as at 31 December 2013 were:

	Fair value recognised on acquisition €
ASSETS	197,973,562
LIABILITIES	150,629,064
Total identifiable net assets at fair value	47,344,498
Bargain purchase gain arising on acquisition	(16,816,661)
Purchase consideration transferred	30,527,837

Purchase consideration transferred
Shares issued, at fair value	5,873,437
Cash paid	24,654,400
TOTAL	30,527,837

At 31 December 2013, the Group recognised a deferred tax liability of EUR 15,838,089, which comprises the tax effect of the difference between the tax base and the fair value of the property at acquisition date.

The bargain purchase gain of EUR 16,816,661 comprises, adjusted by the effect of deferred tax liabilities of EUR 15,838,089, the discount received from the sellers on the property value agreed in the respective Sale-Purchase agreement. The bargain purchase gain is a provisional amount and will be re-measured based on the fair value of the consideration given and the net assets acquired on the actual acquisition date.

Cash flow on acquisition:	€
Cash paid for the acquisition of subsidiaries		(24,654,400)
Cash acquired under the acquisition of subsidiaries		4,324,239
Net cash outflow on acquisition	(20,330,161)

Fair value of shares issued

The Group assigned 1,071,795 ordinary shares as consideration for the 100% interest in Oystermouth Holding Limited and Dunvant Holding Limited. In accordance with IFRS, the shares assigned as consideration for net assets acquired as business should be valued at market price on that date when control of net assets transferred occurs, therefore, the shares assigned under this acquisition is valued at the share price of EUR 5.48 per share, the market price on the assumed acquisition date of 31 December 2013. The fair value is subject to change on the actual date when control over the assets acquired and liabilities assumed occurred. The fair value of the consideration given in the form of shares is, therefore, EUR 5,873,437.

The fair value of the consideration is provisional and will be measured based on the market price on the actual acquisition date, however, there will be no change in the number of shares allocated for the purchase price consideration.

12.3            Acquisition of Upground Estates S.R.L

For the purpose of this unaudited pro forma consolidated financial information, Zaggatti Holdings Limited (fully owned by Globalworth Real Estate Investments Limited) acquired 100% of the shares Upground Estates S.R.L, an unlisted holding company based in Romania. 

Upground Estates S.R.L operates in the real estate management and development business and currently owns a fully completed and partially rented residential and retail complex in Bucharest. 

The acquisition date of 20 March 2014 was the day when the Group acquired control over the entity, however, for the purposes of preparation of this pro forma consolidated financial information, the assets and liabilities of the company used for goodwill calculation purposes were those as of 31 December 2013.

The fair values of the identifiable assets and liabilities of Upground Estates S.R.L as at 31 December 2013 were:

	Fair value recognised on acquisition €
ASSETS	103,483,643
LIABILITIES	47,113,930
Total identifiable net assets at fair value	56,369,713
Bargain purchase gain arising on acquisition	(40,611,713)
Purchase consideration transferred	15,758,000

Purchase consideration transferred
Shares issued, at fair value	14,248,000
Cash paid	1,000,000
Cash paid for assignable loans	510,000
TOTAL	15,758,000

At 31 December 2013, the Group recognised a deferred tax liability of EUR 4,952,271, which comprises the tax effect of the difference between the tax base and the fair value of the property at acquisition date.

The bargain purchase gain of EUR 40,611,713 comprises, adjusted by the effect of deferred tax liabilities of EUR 4,952,271, the discount received from the sellers on the property value agreed in the respective Sale-Purchase agreement. The bargain purchase gain is a provisional amount and will be re-measured based on the fair value of the consideration given and net assets acquired on acquisition date.

Cash flow on acquisition:	€
Cash paid for the acquisition of subsidiaries		(1,510,000)
Cash acquired under the acquisition of subsidiaries		286,387
Net cash outflow on acquisition	(1,223,613)

Fair value of shares issued

The Group assigned 2,600,000 ordinary shares as consideration for the 100% interest in Upground Estates S.R.L. In accordance with IFRS, the shares assigned as consideration for the net assets acquired as a business should be valued at market price on that date when control over the net assets transferred occurred, therefore, the shares assigned under this acquisition are valued at the share price of EUR 5.48 per share, the market price on assumed acquisition date of 31 December 2013. The fair value is subject to change as of the actual date when the control over the assets acquired and liabilities assumed occurred. The fair value of the consideration given in the form of shares is, therefore, EUR 14,248,000.

The fair value of the consideration is provisional and will be revalued based on the market price of the shares assigned on acquisition date when the Group will have control however there will be no change in number of shares allocated for purchase price consideration as of 31 December 2013.

13.  EXECUTIVE SHARE SCHEME

The Group has granted a number of warrants to the Founder and the Directors. Pursuant to the warrant agreements, the warrants confer the right to subscribe, at the Placing Price, for a specific number of ordinary shares. The warrants will vest and become exercisable when the market price of an ordinary share, on a weighted average basis over 60 consecutive days, exceeds a specific target price. The Founder warrants are not transferable prior to the earlier of the second anniversary of Admission and vesting, save that they may be transferred to any other member of the Management Team (or any company owned, directly or indirectly, by that member) after the first anniversary of Admission. Subject to vesting, the warrants are exercisable in whole or in part during the period commencing on Admission and ending on the date falling ten years from the date of Admission.

The fair value of warrants as of 31 December 2013 is EUR 258,509, out of which EUR 43,807 was recorded as expense for the period with corresponding credit to equity as share based payment reserve.

14.  SHARES ISSUED DURING THE PERIOD

The following shares were issued during the period ended 31 December 2013:

Date	Event	Number of shares issued
14 February 2013	Incorporation of the Company	1
25 July 2013	Share issued for cash at Initial Public Offer	10,718,702
27 September 2013	Acquisition of Pieranu Enterprises Limited	6,200,000
24 December 2013	Acquisition of Corinthian Five S.R.L	3,986,934
31 December 2013	Shares in issue at period end (audited)	20,905,637
31 December 2013	Acquisition of Pieranu Enterprises Limited	989,555
31 December 2013	Acquisition of Tower Center International S.R.L	2,733,220
31 December 2013	Acquisition of Upground Estates S.R.L	2,600,000
31 December 2013	Acquisition of Oystermouth Holding Limited and Dunvant Holding Limited	1,071,795
31 December 2013	Shares in issue at period end (pro forma)	28,300,207

 

END

 

 

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