Secure Property Development & Invest : - 2019 Half Year Report & Financial Statements

HALF YEAR REPORT

30 JUNE 2019

Table of Contents

SECTION A- Half Year Report

1.	Management Report	2
1.1	Corporate Overview	2
2.	Regional Economic Developments	3
3. Real Estate Market Developments	5
	3.1 Romania	5
	3.2 Bulgaria	6
	3.3 Greece	7
	3.4 Ukraine	7
4.	Property Assets	9
4.1	Victini Logistics (ex GED), Athens Greece	9
4.2	EOS Business Park - Danone headquarters, Romania	9
4.3	Delenco office building, Romania	10
4.4	Innovations Logistics Park, Romania	10
4.5	Kindergarten, Romania	11
4.6	Residential portfolio	11
	· Romfelt Plaza (Doamna Ghica), Bucharest, Romania	11
	· Monaco Towers, Bucharest, Romania	11
	· Blooming House, Bucharest, Romania	12
	· GreenLake, Bucharest, Romania	12
	· Boyana Residence, Sofia, Bulgaria	12
4.7	Land Assets	13
	· Aisi Bela - Bela Logistic Park, Odessa, Ukraine	13
	· Kiyanovskiy Residence - Kiev, Ukraine	13
	· Tsymlyanskiy Residence - Kiev, Ukraine	13
	· Balabino Project - Zaporozhye, Ukraine	13
	· Rozny Lane - Kiev Oblast, Kiev, Ukraine	13

SECTION B- Financial Statements

SECURE PROPERTY DEVELOPMENT AND INVESTMENT PLC

KIRIAKOU MATSI 16, AG. OMOLOGITES,1082, NICOSIA,CYPRUS

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1. Management Report

1.1 Corporate Overview

SPDI's core property asset portfolio currently consists of South Eastern European prime commercial and industrial real estate, the majority of which is let to blue chip tenants on long leases.

In 2018 the Company, in line with its strategy to maximise value for shareholders, entered into a conditional implementation agreement for the sale of its property portfolio, excluding its Greek logistics property, in an all-share transaction to Arcona Property Fund N.V, an Amsterdam and Prague listed company that invests in commercial property in Central Europe. Arcona currently holds high yielding real estate investments in Czech Republic, Poland and Slovakia.

Such a sale of the Company's non-Greek portfolio, together with existing debt, is to be settled through the issuance of new Arcona Property Fund N.V. shares and warrants which will be distributed to existing SPDI shareholders pro-rata to their shareholding in the Company's shares.

The combination of the two complimentary asset portfolios is expected to create a significant European Property company, benefiting both the Company's and the buyer's respective shareholders.

During H1 2019, and thereafter, management engaged together with the Company's consultants in the implementation of the aforementioned transaction, which among others, included structuring of each asset transaction individually, conducting due diligence on Arcona's assets, drafting relevant framework and sale and purchase agreements, and negotiating with Banks for relevant consents and approvals.

During the same period, the Company enjoyed strong interest from potential buyers of its Greek logistics property, and management engaged in evaluating relevant offers and discussions for the best utilization of the property. Finally, the property sold during early H2 2019 at a valuation of €12,5m. This excludes a receivable of €0,6m due to be received by the Company within the next 18 months from the property's previous owner.

Summary

Corporate developments

Regarding the economic environment in which the Company operates, the Romanian economy continued to grow strongly with a 5,1% increase. Whilst maintaining record low unemployment. Bucharest is bustling with property development and it is expected that this year will set new records especially in Logistics and Office markets, backed by international and domestic investor interest.

Romanian economic developments

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Greece, which exited the financing and stabilisation programme, experiences economic growth for the third consecutive year and, following recent elections, has a strong new government in place. The country maintains a strong primary surplus, and with considerably lower spreads, entered the markets for debt re-financing in 2019. As a result, Greece is now back on the radar for a number of property investors.

Greek political and economic developments

The table below presents the operating performance for H1 2019 compared to H1 2018.

EBITDA reached €0,47m compared to €0,31m in H1 2018, net finance costs reduced by

P&L

3% to €0,54m, and operating result after finance and tax expenses increased by 61% to -€0,09m from -€0,29m in H1 2018.

2. Regional Economic Developments 1

Following annual growth of 4,1% in 2018, real GDP growth in Romania accelerated in	Romania
the first quarter of 2019 to 5,1% year-on-year. Private consumption remained the main
driver, increasing 7,0% year on-year thanks to still double-digit wage growth.
Investment picked up, mainly due to the recovery in construction, and by recent fiscal
stimulus.
The strong real GDP growth in the first months of the year led to an upward revision of
growth for the whole year. Annual real GDP growth is forecast to reach 4% in 2019 and
3,7% in 2020. However, it is important that the composition of growth is now expected
to be more balanced as a pick-up in private investment will strengthen total investment.

1 Sources: World Bank Group, Eurostat, EBRD, National Bank of Greece, Elstat, Eurobank Research, and Economic Research Division, National Institute of Statistics- Romania, National Statistical Institute -Republic of Bulgaria, National Institute of Statistics - Ukraine, SigmaBleyzer, IMF, European Commission, Oxford Economics.

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In 2018, HICP inflation stood at 4,1%, one of the the highest in the EU. Inflation remained strong in the first quarter of 2019, at 3,8%, and is expected to have exceeded 4% in the second quarter, before decelerating again during the next period. Rising food prices led to upward price dynamics coupled by a depreciation of the currency at the beginning of the year and strong consumption and wage growth. As a result, annual inflation is expected to average 4,2% in 2019, before decreasing to 3,7% in 2020. The decrease in 2020 is expected to follow moderate wage pressures and softer domestic demand.

Real GDP growth strengthened from 3,1% in 2018 to 3,5% year-on-year in the first quarter of 2019. The recovery in exports that had begun in the second half of 2018 continued in the first months of 2019 and contributed strongly to the economic expansion. Private consumption continued to exhibit strong growth, underpinned by favourable labour market outcomes and strong lending activity.

Investment increased only slightly but positive expectations about future economic activity and high capacity utilisation in industry, imply increases in private investment. As a result, real GDP growth is forecast to recover to 3,3% in 2019 and 3,4% in 2020.

Inflation dropped at the end of 2018 as the effects of high energy prices dissipated closing at 2,6% at a year-on-year basis. In the first five months of 2019, however, inflation gathered pace again due to higher fuel prices and the continued rise of food prices. In the second half of the year, the effects from energy and services price increases will gradually disappear, and inflation is expected to ease to 2,4% in 2019 and 1,7% in 2020.

The Greek economy experienced 1,9% growth in terms of Real GDP in 2018 for the second consecutive year (2017: 1,5%), primarily due to a rise in exports, but also due to an increase in domestic demand. In the first quarter of 2019 the growth rate weakened to 1,3% (year-on-year), down from 1,5% in the previous quarter. This slowdown highlights the fragile nature of Greece's recovery. Growth in the first quarter was mainly driven by a rebound in investment, particularly in non-residential construction and equipment investment, while the external sector was a considerable drag on growth, and public consumption declined as well.

Private consumption is expected to pick up in the rest of the year and thus compensate for some of the unfavourable developments in the external sector. In addition to the positive effect of the minimum wage increase to household disposable income, which may be more pronounced in the second quarter, fiscal measures legislated in May 2019 should provide further support to private consumption. Overall, real GDP growth is forecast to reach 2,1% in 2019 and accelerate slightly to 2,2% in 2020 as private

Bulgaria

Greece

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