Secure Property Development & Invest : - Annual Report and Accounts 2016

ANNUAL REPORT‌ 2016 Table of Contents

SECTION A- Annual Report

1. Letter to the Shareholders 4

2. Management Report 6

3. Corporate Overview & Financial Performance 6

4. Property Holdings 9

5. Financial and Risk Management 12

6. 2017 and beyond 13

7. Regional Economic Developments 14

8. Real Estate Market Developments 17

   • 4.1 Romania 17

   • 4.2 Bulgaria 19

   • 4.3 Greece 19

   • 4.4 Ukraine 20

9. Property Assets 21

10. GED Logistics center, Athens Greece 21

11. EOS Business Park - Danone headquarters, Romania 21

12. Praktiker Retail Center, Romania 22

13. Delenco office building, Romania 22

14. Innovations Logistics Park, Romania 22

15. Terminal Brovary Logistic Park, Ukraine 23

16. Residential portfolio 24

    • Romfelt Plaza (Doamna Ghica), Bucharest, Romania 24

    • Monaco Towers, Bucharest, Romania 24

    • Blooming House, Bucharest, Romania 25

    • Green Lake, Bucharest, Romania 25

    • Boyana Residence, Sofia, Bulgaria 25

17. Land Assets 26

    • Aisi Bela - Bela Logistic Center, Odessa, Ukraine 26

    • Kiyanovskiy Lane - Kiev, Ukraine 26

    • Tsymlyanskiy Lane - Kiev, Ukraine 26

    • Balabino- Zaporozhye, Ukraine 26

    • Rozny Lane - Kiev Oblast, Kiev, Ukraine 27

    • Delia Lebada, Romania 27

18. SECTION B- Financial Statements

    SECURE PROPERTY DEVELOPMENT AND INVESTMENT PLC KIRIAKOU MATSI 16, AG. OMOLOGITES,1082, NICOSIA,CYPRUS

    SECURE PROPERTY DEVELOPMENT & INVESTMENT PLC

    Key Figures	31 Dec 2016	31 Dec 2015	Change
    Total Assets (€million):	116	125	-7%
    Number of income producing commercial Properties:	6	7	-14%
    Average occupancy rate of income producing assets:	88%	90%	-3%
    Operational Gearing:	46%	52%	-12%
    Average borrowing cost:	5.32%	5.00%	6%
    Operating Income*(€million):	6.4	5.9	8%
    EBITDA*(€million):	2.5	2.5	0%
    Net Equity**(€million):	38.9	42.5	-9%
    Issued Shares:	90,014,723	90,014,723	0%
    NAV per share (€):	0.43	0.47	-9%

    * Table 1- Excluding fair value related impact.

    ** Attributable to the shareholders.

    This report may contain forward-looking statements about the Company. Such statements are predictive in nature and depend upon or refer to future events or conditions and may include such words as ''expects'', ''plans'', ''anticipates'', ''believes'', ''estimates'' or other similar expressions. In addition, any statement regarding future performances, strategies, prospects, actions or plans is also a forward-looking statement. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, events, activities and achievements to differ materially from those expressed or implied by such statements. Such factors include general economic, political and market conditions, interest and foreign exchange rates, regulatory or judicial proceedings, technological change and catastrophic events. You should consider these and other factors carefully before making any investment decisions and before relying on forward-looking statements.

    1. Letter to the Shareholders

    27 June 2017

    Dear Shareholders,

    2016 has been a year of active portfolio management, as we continue with our strategy to transform SPDI into a leading London listed property company focused on selected South East European countries. In early 2017, our Company secured both a profitable exit from its main Ukraine income producing asset (Terminal Brovary) and a cash generating agreement based on the departure of the main tenant in its Romanian logistics terminal (the Innovations Park). The result of the two deals was to generate substantial cash and profits, albeit with a reduction of the income producing capacity of the Company at the same time. Finalising these deals took up most of 2016 and, as a result, the Company not only had to wait both for the cash inflow to be realised, but, more importantly, to roll out the next steps of our growth strategy that were to follow completion of the two deals. With the two deals completed, we are now ready for 2017 and beyond and look forward to the remainder of the year with optimism.

    Underpinning our confidence is the continuing progress being made by the markets in which the Company is active. In 2016, Romania maintained its position as the fastest growing economy of the European Union and saw property prices rise across all sectors. While property development picked up for the first time since the crisis that hit Europe in 2008/9, the Company managed to sell an increased number of non-core residential assets as the South Eastern European property market improved markedly.

    Greece experienced a normalisation of its economic indices along with its relations with its lenders (the EU, the ECB and the IMF) hinting to a possible pick up of the economic cycle that has been lacking in recent years. Meanwhile, Ukraine's economy proved resilient despite relations with Russia remaining tense. The local residential market in particular saw a substantial pick-up in development activity.

    In addition to an increased pace of sales of non-core residential units in both Romania and Bulgaria, the Company fully let the Brovary terminal, the occupancy of which had been impacted by the war and the resulting 70% + depreciation of the local currency (UAH) in Ukraine, and eventually succeeded in selling it for a substantial profit. On the other hand, it was unable to market the space vacated by Nestle in the Terminal Innovations Logistics Park in Bucharest due to complications with the lease termination deal linked with the lending bank. Ultimately, the Company agreed with Nestle to effect their departure in August 2016, at a fee equal to eighteen months' rent. However, the extended period it took for the lending bank to sign off on the deal meant marketing the Innovation's empty space was not possible during the year. In parallel, a bigger deal with Blue House, the property private equity group from whom SPDI acquired two buildings in 2015, was shelved. Although SPDI had also secured an option to buy the remaining stake of the property