GLOBE TRADE CENTRE S.A.
IFRS CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2020
WITH THE INDEPENDENT AUDITOR’S REPORT
Globe Trade Centre S.A.
Consolidated Statement of Financial Position
as of 31 December 2020
(in thousands of Euro)
2
Note
31 December
2020
31 December
2019
ASSETS
Non-current assets
Investment property
17
2,125,128
2,247,030
Residential landbank
18
10,094
13,388
Property, plant and equipment
16
7,785
8,159
Blocked deposits
21
10,979
11,137
Deferred tax asset
15
616
-
Derivatives
-
265
Other non-current assets
159
109
2,154,761
2,280,088
Loan granted to non-controlling interest
partner
27
11,252
10,976
Total non-current assets
2,166,013
2,291,064
Assets held for sale
17,18
1,580
-
Current assets
Accounts receivables
5,873
10,269
Accrued income
878
2,180
VAT receivable
26
2,343
3,296
Income tax receivable
1,036
1,079
Prepayments and deferred expenses
3,604
2,187
Short-term blocked deposits
21
27,434
33,031
Cash and cash equivalents
22
271,996
179,636
313,164
231,678
TOTAL ASSETS
2,480,757
2,522,742
Globe Trade Centre S.A.
Consolidated Statement of Financial Position
as of 31 December 2020
(in thousands of Euro)
3
Note
31 December
2020
31 December
2019
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
Company
Share capital
30
11,007
11,007
Share premium
550,522
550,522
Capital reserve
30,27
(49,489)
(43,098)
Hedge reserve
(11,930)
(4,994)
Foreign currency translation
(2,553)
943
Accumulated profit
460,053
530,242
957,610
1,044,622
Non-controlling interest
27
16,538
14,040
Total Equity
974,148
1,058,662
Non-current liabilities
Long-term portion of long-term borrowing
28
1,067,867
980,872
Deposits from tenants
24
10,979
11,137
Long term payable
25
2,524
2,648
Provision for share based payment
31
977
1,446
Lease liability
29
42,891
46,222
Derivatives
19
15,895
2,611
Provision for deferred tax liability
15
133,230
147,232
1,274,363
1,192,168
Current liabilities
Investment and trade payables and
provisions
20
27,299
37,290
Deposits from tenants
24
1,790
1,605
Current portion of long-term borrowing
28
193,425
225,350
VAT and other taxes payable
1,551
1,817
Income tax payable
4,220
1,542
Derivatives
19
3,365
3,739
Current portion of lease liabilities
29
163
208
Advances received
433
361
232,246
271,912
TOTAL EQUITY AND LIABILITIES
2,480,757
2,522,742
Globe Trade Centre S.A.
Consolidated Income Statement
for the year ended 31 December 2020
(in thousands of Euro)
4
Note
Year ended
31 December 2020
Year ended
31 December 2019
Rental revenue
10,14
120,652
127,811
Service charge revenue
10,14
39,469
41,951
Service charge costs
14
(41,527)
(41,876)
Gross margin from operations
118,594
127,886
Selling expenses
11
(1,307)
(2,017)
Administration expenses
12
(11,712)
(14,410)
Profit from revaluation / impairment of
assets
17
(142,721)
16,190
Other income
776
1,160
Other expenses
23
(1,622)
(1,932)
Profit/(loss) from continuing operations
before tax and finance income / expense
(37,992)
126,877
Foreign exchange differences gain / (loss),
net
(2,951)
(437)
Finance income
13
331
380
Finance cost
13
(35,244)
(34,634)
Profit/(loss) before tax
(75,856)
92,186
Taxation
15
4,995
(16,765)
Profit/(loss) for the year
(70,861)
75,421
Attributable to:
Equity holders of the Company
(70,189)
74,825
Non-controlling interest
27
(672)
596
Basic earnings per share (in Euro)
32
(0.14)
0.15
Globe Trade Centre S.A.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
(In thousands of Euro)
5
Year ended
31 December 2020
Year ended
31 December 2019
Profit/(loss) for the period
(70,861)
74,825
Net other comprehensive income for the period, net
of tax not to be reclassified to profit or loss in
subsequent periods
Gain (loss) on hedge transactions
(7,748)
(462)
Income tax
812
10
Net gain on hedge transactions
(6,936)
(452)
Foreign currency translation
(3,496)
(737)
Net other comprehensive income for the period,
net of tax to be reclassified to profit or loss in
subsequent periods
(10,432)
(1,189)
Total comprehensive income/(loss) for the
period, net of tax
(81,293)
73,636
Attributable to:
Equity holders of the Company
(80,621)
73,040
Non-controlling interest
(672)
596
Globe Trade Centre S.A.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
(In thousands of Euro)
6
Share Capital
Share premium
Capital reserve
Hedge reserve
Foreign currency
translation
reserve
Accumulated
profit
Total
Non-controlling
interest
Total
Balance as of 1 January
2020
11,007
550,522
(43,098)
(4,994)
943
530,242
1,044,622
14,040
1,058,662
Other comprehensive income
-
-
-
(6,936)
(3,496)
-
(10,432)
-
(10,432)
Profit / (loss) for the year
ended 31 December 2020
-
-
-
-
-
(70,189)
(70,189)
(672)
(70,861)
Total comprehensive
income / (loss) for the
period
-
-
-
(6,936)
(3,496)
(70,189)
(80,621)
(672)
(81,293)
Acquisition of non-controlling
interest
-
-
(6,391)
-
-
-
(6,391)
3,590
(2,801)
Dividend distribution of non-
controlling interest
-
-
-
-
-
-
-
(420)
(420)
Balance as of 31 December
2020
11,007
550,522
(49,489)
(11,930)
(2,553)
460,053
957,610
16,538
974,148
11,007
550,522
(49,489)
(11,930)
(2,553)
460,053
957,610
16,538
974,148
Share Capital
Share premium
Capital reserve
Hedge reserve
Foreign currency
translation
reserve
Accumulated
profit
Total
Non-controlling
interest
Total
Balance as of
1 January 2019
10,960
546,711
(36,054)
(4,542)
1,680
496,996
1,015,751
5,044
1,020,795
Other comprehensive income
-
-
-
(452)
(737)
(1,189)
(1,189)
Profit / (loss) for the year
ended 31 December 2019
-
-
-
-
-
74,825
74,825
596
75,421
Total comprehensive
income / (loss) for the
period
-
-
-
(452)
(737)
74,825
73,636
596
74,232
Acquisition of non-controlling
interest
-
-
(7,044)
-
-
-
(7,044)
8,829
1,785
Dividend distribution of non-
controlling interest
-
-
-
-
-
-
-
(429)
(429)
Distribution of dividend
47
3,811
(41,579)
(37,721)
(37,721)
Balance as of 31 December
2019
11,007
550,522
(43,098)
(4,994)
943
530,242
1,044,622
14,040
1,058,662
Globe Trade Centre S.A.
Consolidated Statement of Cash Flow
for the year ended 31 December 2020
(In thousands of Euro)
7
Year ended
31 December
2020
Year ended
31 December
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit/(loss) before tax
(75,856)
92,186
Adjustments for:
Loss/(profit) from revaluation/impairment of assets and
residential projects
142,721
(16,190)
Foreign exchange differences loss/(gain), net
2,951
437
Finance income
13
(331)
(380)
Finance cost
13
35,244
34,634
Provision for share based payment loss/(profit)
12
(469)
(3,087)
Depreciation
16
654
660
Operating cash before working capital changes
104,914
108,260
Decrease (increase) in accounts receivables and
prepayments and other current assets
2,469
(3,364)
Decrease (increase) in advances received
72
(910)
Increase (decrease) in deposits from tenants
27
2,812
Increase (decrease) in trade payables
(800)
842
Cash generated from operations
106,682
107,640
Tax paid in the period
(6,357)
(6,233)
Net cash from operating activities
100,325
101,407
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditure on investment property and property, plant
and equipment
17
(78,528)
(144,688)
Purchase of completed assets and land
(21,468)
-
Decrease in short term deposits designated for
investment
5,923
5,579
Sale of investment property
64,569
80,504
Proceeds related to expropriation of land
-
4,917
VAT/tax on purchase/sale of investment property
953
857
Sale of subsidiary
-
42,834
Purchase of minority
(1,802)
-
Interest received
55
115
Net cash used in investing activities
(30,298)
(9,882)
CASH FLOWS FROM FINANCING ACTIVITIES
Distribution of dividend
-
(37,992)
Proceeds from long-term borrowings
28
286,807
292,962
Repayment of long-term borrowings
28
(224,293)
(200,918)
Interest paid
(32,068)
(30,430)
Repayment of lease liability
(162)
(1,739)
Loans origination payment
(1,983)
(2,390)
Dividend granted to non-controlling interest
(420)
(429)
Loans granted to non-controlling interest
-
(429)
Decrease/(Increase) in short term deposits
(168)
(11,086)
Net cash from /(used) in financing activities
27,713
7,549
Net foreign exchange difference
(5,380)
106
Net increase/ (Decrease) in cash and cash
equivalents
92,360
99,180
Cash and cash equivalents at the beginning of
the period
179,636
80,456
Cash and cash equivalents at the end of the period
271,996
179,636
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(In thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
8
1. Principal activities
Globe Trade Centre S.A. (the “Company” or “GTC”) with its subsidiaries (“GTC Group” or
“the Group”) is an international real estate developer and investor. The Company was
registered in Warsaw on 19 December 1996. The Company’s registered office is in
Warsaw, Poland at Komitetu Obrony Robotników 45a Street. The Company owns, through
its subsidiaries, commercial and residential real estate companies with a focus on Poland,
Budapest, Bucharest, Belgrade, Zagreb and Sofia.
The Group’s main business activities are development and rental of office and retail space.
As of 31 December 2020 and 2019, the number of full time equivalent working employees
in the Group companies was 209 and 197, respectively.
There is no seasonality in the business of the Group companies.
GTC is primarily listed on the Warsaw Stock Exchange and inward listed on Johannesburg
Stock Exchange.
As of 31 December 2020, the majority shareholder of the Company is GTC Holding Zrt.,
which holds directly and indirectly 320,466,380 shares of GTC S.A., entitling to
320,466,380 votes in the Company, representing 66% of the share capital of GTC S.A.
and carrying the right to 66% of the total number of votes in GTC S.A.. GTC Holding Zrt.
holds directly 21,891,289 shares of the Company, entitling to 21,891,289 votes in GTC
S.A., representing 4.51% of the share capital of the Issuer and carrying the right to 4.51%
of the total number of votes in GTC S.A. and indirectly (i.e. through GTC Dutch Holdings
B.V.) holds 298,575,091 shares in the Company, entitling to 298,575,091 votes GTC S.A.,
representing 61.49% of the share capital of the Company and carrying the right to 61.49%
of the total number of votes in the Company.
2. Functional and presentation currencies
The functional currency of GTC S.A. and most of its subsidiaries is Euro. The functional
currency of some of GTC’s subsidiaries is other than Euro (Europort/Ukraine/USD).
The financial statements of those companies prepared in their functional currencies are
included in the consolidated financial statements by a translation into Euro using
appropriate exchange rates outlined in IAS 21 The Effects of Changes in Foreign Exchange
Rates. Assets and liabilities are translated at the period end exchange rate, while income
and expenses are translated at average exchange rates for the period. All resulting
exchange differences are classified in equity as “Foreign currency translation” without
affecting earnings for the period.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
9
3. Basis of preparation and statement of compliance
The Company maintains its books of account in accordance with accounting principles and
practices employed by enterprises in Poland as required by the Polish accounting
regulations. The companies outside Poland maintain their books of account in accordance
with local GAAP. The consolidated financial statements include a number of adjustments
not included in the books of account of the Group entities, which were made in order to
bring the financial statements of those entities to conformity with IFRS.
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS”) as adopted by the EU („EU IFRS"). At
the date of authorisation of these consolidated financial statements, taking into account the
EU IFRS's ongoing process of IFRS endorsement and the nature of the Group's activities,
there is no relevant difference between IFRS applying to these consolidated financial
statements and IFRS endorsed by the European Union.
4. Going concern
The Group’s policies and processes are aimed at managing the Group’s capital, financial
and liquidity risks on a sound basis. The Group meets its day to day working capital
requirements through the generation of operating cash-flows from rental income. Further
details of liquidity risks and capital management processes are described in note 35.
As of 31 December 2020, the Group’s net working capital (defined as current assets less
current liabilities) was positive and amounted to Euro 80,918.
The management has analysed the timing, nature and scale of potential financing needs
of particular subsidiaries and believes that there are not risks for paying current financial
liabilities and cash on hand, as well as, expected operating cash-flows will be sufficient to
fund the Group’s anticipated cash requirements for working capital purposes, for at least
the next twelve months from the balance sheet date. Consequently, the consolidated
financial statements have been prepared on the assumption that the Group companies will
continue as a going concern in the foreseeable future, for at least 12 months from the
balance sheet date.
With reference to the Covid-19 outbreak, the management has prepared and analysed the
cash flow budget based on certain hypothetical defensive assumptions to assess the
reasonableness of the going concern assumption in view of the current developments on
the market. This analysis assumed certain loans repayment acceleration, negative impact
on net operating income (“NOI”) as well as other offsetting measures, which the
management may take to mitigate the risks, including deferring the development activity
and retention of profit by the Company and allocate it to the reserve/supplementary capital.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
10
Based on management’s analysis, the current cash liquidity of the Company and prepared
cash flow budget assumptions, the management concluded that there is no material
uncertainty as to the Company’s ability to continue as a going concern in the foreseeable
future i.e. at least in the next 12 months.
Please refer to note 36 for further information on Covid-19 effects and the management’s
considerations and judgements.
5. Accounting policies
The accounting policies adopted in the preparation of the attached consolidated financial
statements are consistent with those followed in the preparation of the Group’s annual
consolidated financial statements for the year ended 31 December 2019 except for the new
standards, which are effective as at 1 January 2020 (see note 6).
6. New standards and interpretations that have been issued
STANDARDS ISSUED AND EFFECTIVE FOR FINANCIAL YEARS BEGINNING ON OR
AFTER 1 JANUARY 2020:
• Amendments to IAS 1 and IAS8: Disclosure Initiative – Definition of Material (issued on
31 October 2018) – effective for the financial years beginning on or after 1 January
2020;
• Amendments to IFRS 3: Definition of Business (issued on 22 October 2018) - effective
for financial years beginning on or after 1 January 2020;
• Amendments to References to the Conceptual Framework for Financial Reporting
(issued on 29 March 2018) – effective for financial years beginning on or after 1 January
2020;
• Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform – IBOR
‘phase 1’ (issued on 26 September 2019) - effective for financial years beginning on or
after 1 January 2020;
• Amendments to IFRS 16, COVID-19-Related Rent Concessions (issued on 28 May
2020). Effective 1 June 2020, IFRS 16 was amended to provide a practical expedient
for lessees accounting for rent concessions that arise as a direct consequence of the
COVID-19 pandemic and satisfy the following criteria:
(a) The change in lease payments results in revised consideration for the lease
that is substantially the same as, or less than, the consideration for the lease
immediately preceding the change;
(b) The reduction is lease payments affects only payments originally due on or
before 30 June 2021; and
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
11
6. New standards and interpretations that have been issued (continued)
(c) There are is no substantive change to other terms and conditions of the
lease.
Rent concessions that satisfy these criteria may be accounted for in accordance with the
practical expedient, which means the lessee does not assess whether the rent concession
meets the definition of a lease modification. Lessees apply other requirements in IFRS 16
in accounting for the concession.
The Company’s assessment is that the above changes (new standards/amendments) have
no material impact.
STANDARDS ISSUED BUT NOT YET EFFECTIVE:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark
Reform – IBOR ‘phase 2’ (issued on 27 August 2020) - effective for financial years
beginning on or after 1 January 2021;
• Amendments to IAS 37: Onerous contracts – Cost of fulfilling a Contract (issued on 14
May 2020) –– effective for financial years beginning on or after 1 January 2022;
• Amendments to IAS 16: Property, Plant and Equipment – Proceeds before intended Use
(issued on 14 May 2020) – effective for financial years beginning on or after 1 January
2022;
• Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41: Annual improvements to IFRS
Standards 2018-2020 ((issued on 14 May 2020) –– effective for financial years beginning
on or after 1 January 2022;
• Amendments to IFRS 3: Business Combinations (issued on 14 May 2020) –– effective
for financial years beginning on or after 1 January 2022;
• IFRS 17 Insurance Contracts (issued on 18 May 2017) – the IASB issued amendments
to IFRS 17 - effective (after deferral) for financial years beginning on or after 1 January
2023;
• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities
as Current or Non-current (issued on 23 January 2020 and amended 15 July 2020) –
effective for financial years beginning on or after 1 January 2023;
• The amendments specify that the conditions which exist at the end of the reporting
period are those which will be used to determine if a right to defer settlement of
liability exists;
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
12
6. New standards and interpretations that have been issued (continued)
• Management expectations about events after the balance sheet date, for example
on whether a covenant will be breached, or whether early settlement will take
place, are not relevant;
• The amendments clarify the situations that are considered the settlement of
liability.
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement
2 Making Materiality Judgements: Disclosure of Accounting Policies and amendments to
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (issued on 12 February 2021) – effective for financial years
beginning on or after 1 January 2023;
The new guidance is not yet endorsed by EU at the date of approval of these financial
statements.
The effective dates are dates provided by the International Accounting Standards Board.
Effective dates in the European Union may differ from the effective dates provided in
standards and are published when the standards are endorsed by the European Union.
The Group plans to adopt all new standards on the required effective date and will not
restate comparative information. The Group does not expect a significant impact on its
statement of financial position and equity.
7. Summary of significant accounting policies
(a) BASIS OF ACCOUNTING
The consolidated financial statements have been prepared on a historical cost basis, except
for completed investment properties, investment property under construction (“IPUC”) if the
certain condition described in note 7(c) ii are met, share based payments, and derivative
financial instruments that have been measured at fair value.
(b) PROPERTY, PLANT AND EQUIPMENT
Plant and equipment consist of vehicles and equipment. Plant and equipment are recorded
at cost less accumulated depreciation and impairment. Depreciation is provided using the
straight-line method over the estimated useful life of the asset. Reassessment of the useful
life and indications for impairment is done each quarter.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
13
7. Summary of significant accounting policies (continued)
The following depreciation rates have been applied:
Depreciation rates
Equipment
7-20 %
Buildings
2 %
Vehicles
20 %
Assets under construction other than investment property are shown at cost. The direct
costs paid to subcontractors for the improvement of the property are capitalised into
construction in progress. Capitalised costs also include borrowing costs, planning, and
design costs, construction overheads, and other related costs. Assets under construction
are not depreciated.
(c) INVESTMENT PROPERTIES
Investment property comprises a land plot or a building or a part of a building held to earn
rental income and/or for capital appreciation and property that is being constructed
or developed for future use as an investment property (investment property under
construction).
Investment properties are initially measured at cost, including transaction costs. The
carrying amount includes the cost of replacing part of an existing investment property at the
time the cost is incurred if the recognition criteria are met and excludes the costs of day-to-
day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated at fair value. Any gain or
loss arising from a change in the fair value of investment property is recognized in the profit
or loss for the year in which it arose, after accounting for the related impact on deferred tax.
(i) Completed Investment properties
Investment properties are stated at fair value according to the fair value model, which
reflects market conditions at the reporting date
Completed investment properties were externally valued by independent appraisers as of
31 December 2020 and 2019 based on open market values (RICS Standards). Completed
properties are either valued on the basis of discounted cash flow (DCF) or - as deemed
appropriate – on the basis of the Income capitalisation or yield method. The applied method
is defined by the valuer.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
14
7. Summary of significant accounting policies (continued)
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. Any gains or losses on the retirement or disposal of an
investment property are recognised in the income statement in the year of retirement or
disposal.
Transfers are made to investment property when, and only when, there is a change in use,
evidenced by the end of owner occupation or commencement of an operating lease.
Transfers are made from investment property when, and only when, there is a change in
use, evidenced by commencement of owner occupation or commencement of development
with a view to sale.
(ii) Investment property under construction (“IPUC”)
The Group revalues IPUC based on its fair value, once a substantial part of the development
risks have been eliminated. IPUC, for which this is not the case, is presented at the lower of
cost or recoverable amount. Recoverable amount is a fair value, externally valued by
independent appraisers.
The land is reclassified to IPUC at the moment, at which active development of this land
begins (i.e. when construction works start)
The Group has adopted the following criteria to assess whether the substantial risks are
eliminated with regard to particular IPUC:
• agreement with a general contractor is signed;
• a building permit is obtained;
• at least 20% of the rentable area is leased to tenants (based on the signed lease
agreements and letters of intent);
• external financing is secured.
The fair values of IPUC were determined as at their development stage at the end of the
reporting period. Valuations were performed in accordance with RICS and IVSC Valuation
Standards using the residual method approach.
The future assets’ value is estimated based on the expected future income from the project,
using yields that are higher than the current yields of the similar completed property.
The remaining expected costs to completion are deducted from the estimated future assets
value.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
15
7. Summary of significant accounting policies (continued)
For projects where the completion is expected in the future, also a developer profit margin
of unexecuted works was deducted from the value. The profit margin deducted is reduced
when the construction is closer to completion.
(d) HIERARCHY OF INVESTMENT PROPERTY
Fair value hierarchy is based on the sourced of input used to estimate the fair value:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities,
Level 2: other techniques for which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly,
Level 3: techniques that use inputs that have a significant effect on the recorded fair value
that are not based on observable market data.
All investment properties are categorized in Level 2 or Level 3 of the fair value hierarchy.
The Group considered all investment value under construction carried at fair value as
properties categorized in Level 3.
The Group considered completed investment properties as properties categorize in Level 2
or Level 3, based on the liquidity in the market it operates.
The Group applied the simplified classification rules of the IP fair value hierarchy based on
the two main criteria: the type of investment property (retail/office) and, mainly, its location.
The fair value measurement of completed investment property is based on the market
assumptions made by the independent appraisers. Those assumptions depend on the
observable market transactions. For more mature and active markets – like e.g. Poland,
Hungary, and Romania, with a relevant number of comparative transactions, we classify the
properties to level 2. The other markets provide few observable data, and the relevant
properties are classified to level 3.
(e) INVESTMENT IN ASSOCIATES
Investment in associates is accounted for under the equity method. The investment is
carried in the statement of financial position at cost plus post acquisition changes in the
Group share of net assets of the associate.
(f) INVESTMENT IN JOINT VENTURES
Investment in joint ventures is accounted for under the equity method. The investment is
carried in the statement of financial position at cost plus post acquisition changes in the
Group share of net assets of the joint ventures.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
16
7. Summary of significant accounting policies (continued)
(g) LEASE ORIGINATION COSTS
The costs incurred to originate a lease (mainly brokers’ fees) for available rental space are
added to the carrying value of investment property until the date of revaluation of the related
investment property to its fair value. If as of the date of revaluation, the carrying value is
higher than the fair value, the costs are recognized in the profit or loss.
(h) NON-CURRENT ASSETS HELD FOR SALE
Non-current assets and their disposal groups are classified as held for sale if their carrying
amount will be recovered principally through a sale transaction rather than through
continuing use. This requirement can be fulfilled only if the occurrence of a sale transaction
is highly probable and the item of assets is available for immediate sale in its present
condition. The classification of an asset as held for sale assumes the intent of the entity’s
management to realise the transaction of sale within one year from the moment of asset
classification to the held for sale category. Non-current assets held for sale are measured
at the lower of their carrying amount and fair value, less costs to sell.
(i) ADVANCES RECEIVED
Advances received (related to pre-sales of residential units) are deferred to the extent that
they are not reflected as revenue as described below in note 7(j).
(j) RENTAL REVENUE
Rental revenues result from operating leases and are recognised as income over the lease
term on a straight-line basis.
(k) INTEREST AND DIVIDEND INCOME
Interest income is recognised on an accrual basis using the effective interest method that
is the rate that exactly discounts estimated future cash flows through the expected life
of financial instruments to the net carrying amount of the underlying financial asset or
liability.
Dividend income is recognised when the shareholders’ right to receive payments is
established.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
17
7. Summary of significant accounting policies (continued)
(l) CONTRACT REVENUE AND COSTS RECOGNITION
Group has the following revenue streams:
• Rental income. The main source of income of the Group, which is charged to tenants
on a monthly basis, based on rent fee rate agreed in the contract.
• Service charge represents fees paid by the tenants of the Group’s investment
properties to cover the costs of the services provided by the Group in relation to their
leases. Service charge is billed on a monthly basis, based on service fee rate agreed in
the contract, which represents the best estimate for a particular project. Allocation of
service charge to tenants is done based on the leased area.
Heating, water, and sewage are billed separately on a monthly basis, based on leased
area and rates agreed in the contract.
Rental income revenue under IFRS 15.
Rental income revenue is recognised under IFRS 15 when control of the goods or services
are transferred to the customer at an amount that reflects the consideration to which the
Group expects to be entitled in exchange for those goods or services.
• Acting as a principal. The Group bills the tenants on a monthly basis, based on
rent fee rate agreed in the contract.
Service charge revenue under IFRS 15.
Service charge revenue is recognised under IFRS 15 when control of the goods or services
are transferred to the customer at an amount that reflects the consideration to which the
Group expects to be entitled in exchange for those goods or services.
Group recognizes two kinds of performance obligations in the Group:
• Acting as an agent. Some tenants install counters for electricity. In this case, the
invoices for electricity are billed through GTC entities and addressed to the tenants
directly. The Group recognizes cost and corresponding income at the same amount.
For financial statement purposes such income and expenses are disclosed on a net
basis, as GTC acts as an agent.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
18
7. Summary of significant accounting policies (continued)
• Acting as a principal. In the other cases, all service charges are billed to GTC
entities on a monthly basis. The Group bills the tenants based on the rates in the
contract on a monthly basis. By the end of the year, the Group does reconciliation
of actual service charges costs vs. billed one, and then bill for deficit or return the
overpayment to the tenant if it is required. For financial statement purposes such
expenses are disclosed on a gross basis, as GTC acts as a principal.
(m) BORROWING COSTS
Borrowing costs directly attributable to the acquisition or construction of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalised as part of the cost of the asset. All other borrowing costs are expensed in the
period in which they occur. Borrowing costs consist of interest and other costs that an entity
incurs in connection with the borrowing of funds.
The interest capitalised is calculated using the Group’s weighted average cost of
borrowings after adjusting for borrowings associated with specific developments. Where
borrowings are associated with specific developments, the amount capitalised is the gross
interest incurred on those borrowings less any investment income arising on their
temporary investment. Interest is capitalised from the commencement of the development
work until the date of practical completion, i.e., when substantially all of the development
work is completed. The capitalisation of finance costs is suspended if there are prolonged
periods when development activity is interrupted. Interest is also capitalised on the
purchase cost of a site of property acquired specifically for redevelopment, but only
where activities necessary to prepare the asset for redevelopment are in progress.
(n) SHARE ISSUANCE EXPENSES
Share issuance costs are deducted from equity (share premium), net of any related income
tax benefits.
(o) INCOME TAXES & OTHER TAXES
The current provision for corporate income tax for the Group companies is calculated in
accordance with tax regulations ruling in particular country of operations and is based on
the profit or loss reported under relevant tax regulations.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
19
7. Summary of significant accounting policies (continued)
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• where the deferred tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss,
• in respect of taxable temporary differences associated with investments in subsidiaries,
associates, and interests in joint ventures, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward
of unused tax credits and unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can be utilised, except:
• where the deferred tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss.
• in respect of deductible temporary differences associated with investments in
subsidiaries, associates, and interests in joint ventures, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
Deferred tax assets and liabilities are measured using the tax rates enacted to taxable
income in the years in which these temporary differences are expected to be recovered or
settled.
The measurement of deferred tax liabilities and deferred tax assets reflects the tax
consequences that would follow from the manner in which each company of the Group
expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
At each reporting date, the Group companies re-assess unrecognised deferred tax assets
and the carrying amount of deferred tax assets. The companies recognise a previously
unrecognised deferred tax asset to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
20
7. Summary of significant accounting policies (continued)
The companies conversely reduce the carrying amount of a deferred tax asset to the extent
that it is no longer probable that sufficient taxable profit will be available to allow the benefit
of part or all of the deferred tax asset that might be utilised.
Deferred tax relating to items recognised outside profit and loss is also recognized outside
profit and loss: under other comprehensive income if relates to items recognised under
other comprehensive income, or under equity – if relates to items recognized in equity.
Deferred tax assets and deferred tax liabilities are offset if, and only if, a legally enforceable
right exists to set off current tax assets against current tax liabilities, and the deferred tax
assets and deferred tax liabilities relate to income taxes that are levied by the same taxation
authority.
Revenues, expenses, and assets are recognized net of the amount of value added tax
except:
• where the value added tax incurred on a purchase of assets or services is not
recoverable from the taxation authority, in which case value added tax is recognized as
part of the cost of acquisition of the asset or as part of the expense item, as applicable;
and
• receivables and payables, which are stated with the amount of value added tax
included.
The net amount of value added tax recoverable from, or payable to, the taxation authority
is included as part of receivables or payables in the statement of financial position.
If, according to the Group’s assessment, it is probable that the tax authorities will accept an
uncertain tax treatment or a group of uncertain tax treatments, the Group determines
taxable income (tax loss), tax base, unused tax losses and unused tax credits and tax rates,
after considering in its tax return the applied or planned approach to taxation.
If the Group ascertains that it is not probable that the tax authorities will accept an uncertain
tax treatment or a group of uncertain tax treatments, the Group reflects the impact of this
uncertainty in determining taxable income (tax loss), unused tax losses, unused tax credits
or tax rates. The Group accounts for this effect using the following methods:
• determining the most probable amount – it is a single amount from among possible
results; or
• providing the expected amount – it is the sum of the amounts weighted by probability
from among possible results.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
21
7. Summary of significant accounting policies (continued)
(p) FOREIGN EXCHANGE DIFFERENCES
For companies with Euro as a functional currency, transactions denominated in a foreign
currency (including Polish Zloty) are recorded in Euro at the actual exchange rates
prevailing at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are revalued at period-end using period-end exchange rates. Foreign
currency translation differences are charged to the income statement. The following
exchange rates were used for valuation purposes in cases where a certain lease is
denominated in local currency.
31 December 2020 31 December 2019
PLN/EUR 4.6148 4.2585
USD/EUR 1.2279 1.1112
HUF/EUR 365.13 330.50
(q) INTEREST BEARING LOANS AND BORROWINGS AND DEBT SECURITIES
All loans and borrowings and debt securities are initially recognized at fair value, net of
transaction costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings and debt securities are
measured at amortised cost using the effective interest rate method, except for liabilities
designated as hedged items, which are measured in accordance with hedge accounting
policies, as described in Note 7 (w).
Debt issuance expenses are deducted from the amount of debt originally recognised. These
costs are amortised through the income statement over the estimated duration of the loan,
except to the extent that they are directly attributable to construction. Debt issuance
expenses represent an adjustment to effective interest rates.
Amortised cost is calculated by taking into account any transaction costs, and any discount
or premium on settlement.
Gains and losses are recognised in profit or loss when the liabilities are derecognised.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
22
7. Summary of significant accounting policies (continued)
(r) FINANCIAL INSTRUMENTS – INITIAL RECOGNITION AND SUBSEQUENT
MEASUREMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at
amortised cost, fair value through other comprehensive income (OCI), and fair value
through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing them.
With the exception of trade receivables that do not contain a significant financing
component or for which the Group has applied the practical expedient, the Group initially
measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs. Trade receivables that do not contain a
significant financing component or for which the Group has applied the practical expedient
are measured at the transaction price determined under IFRS 15. Refer to the accounting
policies in note 7(l) Contract revenue and costs recognition.
Purchases or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place (regular way trades) are
recognised on the trade date, i.e., the date that the Group commits to purchase or sell the
asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four
categories:
• Financial assets at amortised cost (debt instruments);
• Financial assets at fair value through OCI with the recycling of cumulative gains and
losses (debt instruments);
• Financial assets designated at fair value through OCI with no recycling of cumulative
gains and losses upon derecognition (equity instruments);
• Financial assets at fair value through profit or loss.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
23
7. Summary of significant accounting policies (continued)
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at
amortised cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold
financial assets in order to collect contractual cash flows and
• The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest
rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit
or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include trade receivables, loans to associate
and short-term deposits under current financial assets.
Financial assets at fair value through OCI (debt instruments)
The Group measures debt instruments at fair value through OCI if both of the following
conditions are met:
• The financial asset is held within a business model with the objective of both holding
to collect contractual cash flows and selling;
and
• The contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding.
For debt instruments at fair value through OCI, interest income, foreign exchange
revaluation, and impairment losses or reversals are recognised in the statement of profit or
loss and computed in the same manner as for financial assets measured at amortised cost.
The remaining fair value changes are recognised in OCI. Upon derecognition, the
cumulative fair value change recognised in OCI is recycled to profit or loss.
The Group does not have such debt instruments.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
24
7. Summary of significant accounting policies (continued)
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments
as equity instruments designated at fair value through OCI when they meet the definition of
equity under IAS 32 Financial Instruments: Presentation and are not held for trading.
The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends
are recognised as other income in the statement of profit or loss when the right of payment
has been established, except when the Group benefits from such proceeds as a recovery
of part of the cost of the financial asset, in which case, such gains are recorded in OCI.
Equity instruments designated at fair value through OCI are not subject to impairment
assessment.
The Group does not have such equity instruments.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading,
financial assets designated upon initial recognition at fair value through profit or loss, or
financial assets mandatorily required to be measured at fair value. Financial assets are
classified as held for trading if they are acquired for the purpose of selling or repurchasing
in the near term. Derivatives, including separated embedded derivatives, are also classified
as held for trading unless they are designated as effective hedging instruments.
Financial assets with cash flows that are not solely payments of principal and interest are
classified and measured at fair value through profit or loss, irrespective of the business
model. Notwithstanding the criteria for debt instruments to be classified at amortised cost
or at fair value through OCI, as described above, debt instruments may be designated at
fair value through profit or loss on initial recognition if doing so eliminates or significantly
reduces an accounting mismatch.
Financial assets at fair value through profit or loss are carried in the statement of financial
position at fair value with net changes in fair value recognised in the statement of profit or
loss.
The Group does not have such instruments.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
25
7. Summary of significant accounting policies (continued)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through profit or loss, loans, and borrowings, payables, or as derivatives designated as
hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings,
including bank overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through
profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative financial instruments
entered into by the Group that are not designated as hedging instruments in hedge
relationships as defined by IFRS 9. Separated embedded derivatives are also classified as
held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized in the statement of profit or
loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortized cost using the EIR method.
Gains and losses are recognized in profit or loss when the liabilities are derecognized as
well as through the EIR amortization process.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
26
7. Summary of significant accounting policies (continued)
Amortized cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR. The EIR amortization is included as
finance costs in the statement of profit or loss.
This category applies to interest-bearing loans and borrowings.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the
consolidated statement of financial position if there is a currently enforceable legal right to
offset the recognized amounts and there is an intention to settle on a net basis, to realize
the assets and settle the liabilities simultaneously.
The table below presents the categorisation of financial assets and liabilities: Item,
Category, and Measurement.
Item
Category
Measurement
Financial assets/liabilities
Cash and short-term
deposits
Financial assets at
amortised cost
Amortised cost
Debtors
Financial assets at
amortised cost
Amortised cost
Trade and other payables
Financial liabilities at
amortised cost
Amortised cost
Long and short term
borrowings
Financial liabilities at
amortised cost
Amortised cost
Deposits from tenants
Financial liabilities at
amortised cost
Amortised cost
Long term payables
Financial liabilities at
amortised cost
Amortised cost
Interest Rate Swaps
Hedging (cash flow hedges)
Fair value – adjusted to other
comprehensive income (effective
portion) / adjusted to profit or loss
(ineffective portion)
Cap
Financial liabilities at fair
value through profit or loss
Fair value – adjusted to profit or loss
Cross-currency interest
swap
Financial liabilities at fair
value through other
comprehensive income /
profit or loss
Fair value related to interest –
adjusted to other comprehensive
income;
Fair value related to currency –
adjusted to profit or loss;
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
27
7. Summary of significant accounting policies (continued)
(s) CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and on-call deposits. Cash equivalents are short-term, highly
liquid investments that readily convert to a known amount of cash and which are subject to
an insignificant risk of changes in value.
(t) ACCOUNTS RECEIVABLES
A receivable represents the Group’s right to an amount of consideration that is unconditional
(i.e., only the passage of time is required before payment of the consideration is due). Refer
to accounting policies of financial assets in section r) Financial instruments – initial
recognition and subsequent measurement. The carrying amount of accounts receivables is
equal to their fair value.
(u) IMPAIRMENT OF NON-CURRENT ASSETS
The carrying value of assets not measured at fair value is periodically reviewed by the
Management Board to determine whether impairment may exist. In particular, the
Management Board assessed whether the impairment indicators exist. Based upon its most
recent analysis, management believes that there are no impairment indicators.
(v) PURCHASE OF SHARES OF NON-CONTROLLING INTEREST
If the Group increases its share in the net assets of its controlled subsidiaries, the difference
between the consideration paid/payable and the carrying amount of non-controlling interest
is recognised in equity attributable to equity holders of the parent.
(w) DERIVATIVES FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as interest rate swaps and cap, to
hedge its interest rate risks. Such derivative financial instruments are initially recognised at
fair value on the date on which a derivative contract is entered into and are subsequently
premeasured at fair value. Derivatives are carried as financial assets when the fair value is
positive and as financial liabilities when the fair value is negative.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when
hedging the exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction or
the foreign currency risk in an unrecognised firm commitment.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
28
7. Summary of significant accounting policies (continued)
At the inception of a hedge relationship, the Group formally designates and documents the
hedge relationship to which it wishes to apply hedge accounting and the risk management
objective and strategy for undertaking the hedge.
Before 1 January 2018, the documentation included identification of the hedging instrument,
the hedged item or transaction, the nature of the risk being hedged and how the Group will
assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the
exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged
risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair
value or cash flows and are assessed on an ongoing basis to determine that they actually
have been highly effective throughout the financial reporting periods for which they were
designated.
Since 1 January 2018, the documentation includes identification of the hedging instrument,
the hedged item, the nature of the risk being hedged and how the Group will assess whether
the hedging relationship meets the hedge effectiveness requirements (including the analysis
of sources of hedge ineffectiveness and how the hedge ratio is determined).
A hedging relationship qualifies for hedge accounting if it meets all of the following
effectiveness requirements:
There is ‘an economic relationship’ between the hedged item and the hedging instrument.
• The effect of credit risk does not ‘dominate the value changes’ that result from that
economic relationship.
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity
of the hedged item that the Group actually hedges and the quantity of the hedging
instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as
described below.
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised in Other
Comprehensive Income in the cash flow hedge reserve, while any ineffective portion is
recognised immediately in the statement of profit or loss. The cash flow hedge reserve is
adjusted to the lower of the cumulative gain or loss on the hedging instrument and the
cumulative change in fair value of the hedged item.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
29
7. Summary of significant accounting policies (continued)
Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated or exercised, or no longer qualifies for hedge accounting. At that point of time,
any cumulative gain or loss recognised in equity is transferred to net profit or loss for the
year.
For derivatives that do not qualify for hedge accounting, any gain or losses arising from
changes in fair value are recorded directly to net profit and loss of the year.
The fair value of cross-currency interest swap, interest rate swaps and caps contracts is
determined by reference to market values for similar instruments (fair value level
hierarchy 2).
(x) ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with International Financial Reporting
Standards requires Management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and contingent assets and liabilities at the balance
date. The actual results may differ from these estimates.
Investment property represents property held for long-term rental yields. Investment
property is carried at fair value, which is established at least annually by an independent
registered valuer based on discounted projected cash flows from the investment property
using the discounts rates applicable for the local real estate market and updated by the
Management judgment or - as deemed appropriate – on basis of the Income capitalisation
or yield method. The applied method and main assumptions as defined in note 17 are
defined by the valuer.
The changes in the fair value of investment property are included in the profit or loss for the
period in which it arises (note 17).
The Group uses estimates in determining the amortization rates used (note 29).
The fair value of financial instruments for which no active market exists is assessed by
means of appropriate valuation methods. In selecting the appropriate methods and
assumptions, the Group applies professional judgment (note 19).
The Group recognises deferred tax asset based on the assumption that taxable profits will
be available in the future against which the deferred tax asset can be utilised. Deterioration
of future taxable profits might render this assumption unreasonable (note 15).
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
30
7. Summary of significant accounting policies (continued)
(y) SIGNIFICANT ACCOUNTING JUDGEMENTS
In the process of applying the Group's accounting policies, management has made the
following judgments:
The Group has entered into commercial property leases on its investment property portfolio.
The Group has determined that it retains all the significant risks and rewards of ownership
of these properties which are leased out on operating leases.
Significant accounting judgements related to investment property are presented in note 7
(c).
Significant accounting judgements related to market liquidity of investment property are
presented in note 7 (d).
The Group classifies its residential inventory to current or non-current assets, based on their
development stage within the business operating cycle. The normal operating cycle most
cases falls within a period of 1-5 years. Residential projects, which are active, are classified
as current inventory. Residential projects which are planned to be completed in a period
longer than the operating cycle are classified as residential landbank under non-current
assets.
On the basis of the assessment made, the Group has reclassified part of inventory from
current assets to residential landbank in non–current assets.
The Group determines whether a transaction or other event is a business combination by
applying the definition of a business in IFRS 3.
Deferred tax with respect to outside temporary differences relating to subsidiaries was
calculated based on an estimated probability that these temporary differences will be
realized in the foreseeable future.
The Group also makes an assessment of the probability of realization of deferred tax asset.
If necessary, the Group decreases deferred tax asset to the realizable value.
The Group uses judgements in determining the settlement of share based payment in cash.
(z) BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of GTC and the
financial statements of its subsidiaries for the year ended 31 December 2020.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
31
7. Summary of significant accounting policies (continued)
The financial statements of the subsidiaries are prepared for the same reporting period as
those of the parent company, using consistent accounting policies, and based on the same
accounting policies applied to similar business transactions and events. Adjustments are
made to bring into line any dissimilar accounting policies that may exist.
The Group, regardless of the nature of its involvement with an entity (the investee), shall
determine whether it is a parent by assessing whether it controls the investee.
The Group controls an investee when it is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns through its power
over the investee.
Thus, the Group controls an investee if and only if it has all the following:
• power over the investee;
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to use its power over the investee to affect the amount of the investor's returns.
Subsidiaries are consolidated from the date on which control is transferred to the Group and
cease to be consolidated from the date on which control is transferred out of the Group.
All significant intercompany balances and transactions, including unrealised gains arising
from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated
unless they indicate impairment.
(aa) PROVISIONS
Provisions are recognised when the Group has present obligation, (legal or constructive) as
a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation.
(ab) SHARE-BASED PAYMENT TRANSACTIONS
Amongst others, GTC remunerates key personnel by granting them rights for payments
based on GTC’s share price performance in PLN, in exchanges for their services (“Phantom
shares”).
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
32
7. Summary of significant accounting policies (continued)
The cost of the phantom shares is measured initially at fair value at the grant date. The
liability is re-measured to fair value at each reporting date up and including the settlement
date, with changes in fair value recognised in administration expenses. Phantom shares are
vested in annual tranches during the work/service period. Expenses are recognised in a
straight line basis over the vesting period.
(ac) EARNINGS PER SHARE
Earnings per share for each reporting period is calculated as quotient of the profit for the
given reporting period and the weighted average number of shares outstanding in that
period.
(ad) SHORT TERM DEPOSITS
Short-term deposits include deposits related to loan agreements and other contractual
commitments and can be used only for certain operating activities as determined by
underlying agreements. Deposits related to loan agreements can be used anytime (for the
defined purposes upon approval of the lender), as so, they are presented within current
assets.
(ae) DEPOSITS FROM TENANTS
Deposits from tenants include deposits received from tenants to secure the obligation of the
tenants towards the landlord. The deposits are refundable at the end of the lease.
(af) RESIDENTIAL INVENTORY AND RESIDENTIAL LANDBANK
Inventory relates to residential projects under construction is stated at the lower of cost and
net realisable value. The realisable value is determined using the Discounted Cash Flow
method or Comparison method by independent appraisers. Costs relating to the
construction of a residential project are included in the inventory.
Commissions paid to sales or marketing agents on the sale of real estate units, which are
not refundable, are expensed in full when the contract to sell is secured.
The Group classifies its residential inventory to current or non-current assets based on their
development stage within the business operating cycle. The normal operating cycle, in most
cases, falls within a period of 1-5 years. Residential projects, which are active, are classified
as current inventory. Residential projects which are planned to be completed in a period
longer than the operating cycle are classified as residential landbank under non-current
assets.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
33
7. Summary of significant accounting policies (continued)
(ag) LEASES
Leases, where the Group does not transfer substantially all the risk and benefits of
ownership of the asset, are classified as operating leases.
There are two types of leases in GTC Group that are subject to IFRS 16 and affect the
financial statements:
• Leasing property rented to tenants - the primary activity of GTC Group.
For this leasing activity, GTC Group acts as a Lessor. A lessor accounting under IFRS 16 is
substantially unchanged, therefore it has no influence on the Group.
• Leases of lands under perpetual usufruct where the Group acts as Lessee.
Perpetual usage payments are payments, which are done in advance or in arrears on an
annual or monthly basis within a define period (from 33 to 87 years). Perpetual usage
payments are made in Poland, Croatia, Romania, and Serbia.
Due to the fact that perpetual usage payments, by substance, are treated as lease
payments, payments are to be considered under IFRS 16.
In the consolidated financial position statements, the Group recognized a Right-of-Use and
Lease Liabilities:
a) Right of use of lands under perpetual usufruct is presented
• as part of the Investment Property, with separate disclosure in a separate note;
• as part of the residential landbank.
b) Lease Liabilities are presented separately, as part of the Short-term and Long-term
Liabilities, with a separate disclosure.
Under IFRS 16, the Group presents the amortization of Right-of-Use or the change in fair
value of Right-of-Use within the profit (loss) on revaluations. Interest embedded within land
leases is presented as Finance expenses.
The Right of Use of lands under perpetual usufruct is amortized over the lease period
(for cost method) or valued using the fair value approach (for investment properties valued
at fair value).
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
34
7. Summary of significant accounting policies (continued)
The Group entered into several other leases (low value, short term), which are not treated
in accordance with IFRS 16. Additionally, the Group has decided not to apply the new
guidelines to leases whose term will end within twelve months of the date of initial
application. In such cases, the lease is accounted as short-term lease.
• Amendments to IFRS 16, COVID-19-Related Rent Concessions (issued on 28 May
2020). Effective 1 June 2020, IFRS 16 was amended to provide a practical expedient for
lessees accounting for rent concessions that arise as a direct consequence of the COVID-
19 pandemic and satisfy the following criteria:
(a) The change in lease payments results in revised consideration for the lease that
is substantially the same as, or less than, the consideration for the lease
immediately preceding the change;
(b) The reduction is lease payments affects only payments originally due on or
before 30 June 2021; and
(c) There are is no substantive change to other terms and conditions of the lease.
Rent concessions that satisfy these criteria may be accounted for in accordance with the
practical expedient, which means the lessee does not assess whether the rent concession
meets the definition of a lease modification. Lessees apply other requirements in IFRS 16
in accounting for the concession.
The Group’s assessment is that the new amendment has no material impact.
.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
35
8. Investment in Subsidiaries, Associates, and Joint Ventures
The consolidated financial statements include the financial statements of the Company and
its subsidiaries listed below together with direct and indirect ownership of these entities, and
voting rights proportion as at the end of each period (the table presents the effective stake):
Subsidiaries
Name
Holding
Company
Country of
incorporation
31
December
2020
31
December
2019
GTC Konstancja Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Korona S.A.
GTC S.A.
Poland
100%
100%
Globis Poznań Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Aeropark Sp. z o.o.
GTC S.A.
Poland
100%
100%
Globis Wrocław Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Satellite Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Sterlinga Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Karkonoska Sp. z o.o.(1)
GTC S.A.
Poland
100%
100%
GTC Ortal Sp. z o.o.
GTC S.A.
Poland
100%
100%
Diego Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Francuska Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC UBP Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Pixel Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Moderna Sp. z o.o.
GTC S.A.
Poland
100%
100%
Centrum Handlowe Wilanow Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Management Sp. z o.o.
GTC S.A.
Poland
100%
100%
GTC Corius Sp. z o.o.
GTC S.A.
Poland
100%
100%
Centrum Światowida Sp. z o.o.
GTC S.A.
Poland
100%
100%
Glorine investments Sp. z o.o. (1)
GTC S.A.
Poland
100%
100%
Glorine investments Sp. z o.o. s.k.a.
(1)
GTC S.A.
Poland
100%
100%
GTC Galeria CTWA Sp. z o.o.
GTC S.A.
Poland
100%
100%
Artico Sp. z o.o
GTC S.A.
Poland
100%
100%
Julesberg Sp. z o.o. (2)
GTC S.A.
Poland
-
100%
Jowett Sp. z o.o. (2)
GTC S.A.
Poland
-
100%
GTC Hungary Real Estate
Development Company Ltd. (“GTC
Hungary”)
GTC S.A.
Hungary
100%
100%
GTC Duna Kft.
GTC Hungary
Hungary
100%
100%
Vaci Ut 81-85 Kft.
GTC Hungary
Hungary
100%
100%
Riverside Apartmanok Kft.
(“Riverside”) (1)
GTC Hungary
Hungary
100%
100%
Centre Point I. Kft. (“Centre Point I”)
GTC Hungary
Hungary
100%
100%
Centre Point II. Kft.
GTC Hungary
Hungary
100%
100%
Spiral I.Kft.
GTC Hungary
Hungary
100%
100%
SASAD Resort Kft. (“Sasad”) (3)
GTC Hungary
Hungary
-
100%
(1) Under liquidation
(2) Liquidated
(3) Merged to GTC Hungary Ltd. as of 30 September 2020
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
36
8. Investment in Subsidiaries, Associates and Joint Ventures (continued)
Name
Holding
Company
Country of
incorporation
31
December
2020
31
December
2019
Albertfalva Üzletközpont Kft.
GTC Hungary
Hungary
100%
100%
GTC Metro Kft.
GTC Hungary
Hungary
100%
100%
Kompakt Land Kft
GTC Hungary
Hungary
100%
100%
GTC White House Kft.
GTC Hungary
Hungary
100%
100%
VRK Tower Kft
GTC Hungary
Hungary
100%
100%
Amarantan Ltd. (4)
GTC Hungary
Hungary
-
100%
GTC Future Kft (5)
GTC Hungary
Hungary
100%
-
Globe Office Investments Kft (5)
GTC Hungary
Hungary
100%
GTC Nekretnine Zagreb d.o.o.(“GTC
Zagreb”)
GTC S.A.
Croatia
100%
100%
Euro Structor d.o.o.
GTC S.A.
Croatia
70%
70%
Marlera Golf LD d.o.o. (6)
GTC S.A.
Croatia
100%
80%
Nova Istra Idaeus d.o.o. (6)
Marlera Golf
LD d.o.o
Croatia
100%
80%
GTC Matrix d.o.o.
GTC S.A.
Croatia
100%
100%
GTC Seven Gardens d.o.o.
GTC S.A.
Croatia
100%
100%
Towers International Property S.R.L.
GTC S.A.
Romania
100%
100%
Green Dream S.R.L.
GTC S.A.
Romania
100%
100%
Aurora Business Complex S.R.L
GTC S.A.
Romania
100%
100%
Cascade Building S.R.L
GTC S.A.
Romania
100%
100%
City Gate Bucharest S.R.L.
GTC S.A.
Romania
100%
100%
Venus Commercial Center S.R.L.
GTC S.A.
Romania
100%
100%
Beaufort Invest S.R.L.
GTC S.A.
Romania
100%
100%
Fajos S.R.L. (1)
GTC S.A.
Romania
100%
100%
City Gate S.R.L.
GTC S.A.
Romania
100%
100%
City Rose Park SRL
GTC S.A.
Romania
100%
100%
Deco Intermed S.R.L.
GTC S.A.
Romania
66.7%
66.7%
GML American Regency Pipera S.R.L.
GTC S.A.
Romania
66.7%
66.7%
(1) Under liquidation
(2) Liquidated
(3) Merged to GTC Hungary Ltd. as of 30 September 2020
(4) Merged to Center Point I. Kft. as of 30 September 2020
(5) Newly established wholly owned subsidiary
(6) NCI share was aquired
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
37
8. Investment in Subsidiaries, Associates and Joint Ventures (continued)
Name
Holding
Company
Country of
incorporation
31
December
2020
31
December
2019
NRL EAD
GTC S.A.
Bulgaria
100%
100%
Advance Business Center EAD
GTC S.A.
Bulgaria
100%
100%
GTC Yuzhen Park EAD (“GTC Yuzhen”)
GTC S.A.
Bulgaria
100%
100%
Dorado 1 EOOD
GTC S.A.
Bulgaria
100%
100%
GTC Medj Razvoj Nekretnina d.o.o.
Beograd
GTC S.A.
Serbia
100%
100%
GTC Business Park d.o.o. Beograd
GTC S.A.
Serbia
100%
100%
Commercial and Residential Ventures
d.o.o. Beograd
GTC S.A.
Serbia
100%
100%
Demo Invest d.o.o. Novi Beograd
GTC S.A.
Serbia
100%
100%
Atlas Centar d.o.o. Beograd
GTC S.A.
Serbia
100%
100%
Commercial Development d.o.o. Beograd
GTC S.A.
Serbia
100%
100%
Glamp d.o.o. Beograd
GTC S.A.
Serbia
100%
100%
GTC BBC d.o.o
GTC S.A.
Serbia
100%
100%
Europort Investment (Cyprus) 1 Limited
GTC S.A.
Cyprus
100%
100%
Europort Ukraine Holdings 1 LLC
Europort
Investment
(Cyprus) 1
Limited
Ukraine
100%
100%
Europort Ukraine LLC
Europort
Investment
(Cyprus) 1
Limited
Ukraine
100%
100%
Europort Project Ukraine 1 LLC
Europort
Investment
(Cyprus) 1
Limited
Ukraine
100%
100%
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
38
9. Events in the period
OWNERSHIP CHANGES / MANAGEMENT BOARD CHANGES
On 16 April 2020, Mr. Yovav Carmi was appointed as member of the Management Board
of the Company.
On 23 June 2020, GTC HOLDING ZÁRTKÖRŰEN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG
(“GTC Holding Zrt”) registered in Budapest, Hungary, bought 100% of shares of GTC Dutch
Holdings B.V. (the “Majority Shareholder“) from LSREF III GTC INVESTMENTS B.V.
registered in Amsterdam, the Netherlands. GTC Dutch Holdings BV owns 298,575,091
shares of the Company, representing 61.49% of the shares in the share capital of the
Company. After the abovementioned acquisition, GTC Holding Zrt (i.e. through the Majority
Shareholder) holds indirectly 298,575,091 shares of the Company, representing 61.49%
votes in the Company.
On 23 June 2020, Mr. Robert Snow was appointed as member of the Management Board
of the Company.
On 23 June 2020, Mr. Thomas Kurzmann was dismissed from the Management Board of
the Company.
On 1 July 2020, Mr. Gyula Nagy was appointed as member of the Management Board of
the Company.
On 28 July 2020, Mr. Ariel Alejandro Ferstman was appointed as member of the
Management Board of the Company.
On 28 July 2020, the Company and Mr. Erez Boniel have mutually agreed to terminate his
appointment as a member to the Management Board of the Company.
On 18 September 2020, Mr. Yovav Carmi was appointed as the President of the
Management Board of the Company.
On 27 October 2020, GTC Holding Zrt increased the total number of votes in the Company,
as a result of acquisitions conducted on 22 October 2020, by 21,891,289 shares of the
Company, entitling to 21,891,289 votes in the Company, representing 4.51% of the share
capital of the Company and carrying the right to 4.51% of the total number of votes in the
Company. After the abovementioned acquisitions, GTC Holding Zrt holds directly and
indirectly 320,466,380 shares of the Company, representing 66.00% votes in the Company.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
39
9. Events in the period (continued)
COMPLETION OF INVESTMENTS / ACQUISITION
During 2020, GTC Group has completed the construction of the following properties:
o Green Heart N3 in Belgrade - 5 thousand sqm office building (March 2020);
o Matrix B in Zagreb -11 thousand sqm office building (November 2020);
o ABC 2 in Sofia 18 thousand sqm office building (October 2020).
In September 2020, the Group acquired the remaining 20% in Marlera Golf LD d.o.o. for a
consideration of Euro 2.8 million, Euro 1.8 million of which was paid in September 2020 (the
remaining part of Euro 1 million will be paid upon completion of certain conditions). Following
the transaction, GTC remained the sole owner of the subsidiary. As a result of the
transaction, the NCI increased by Euro 3.6 million, and the capital reserve decreased by
Euro 6.4 million. Consequently, the total equity decreased by Euro 2.8 million.
On 13 November 2020 GTC Future Kft, a newly established wholly owned subsidiary
acquired a land plot from a subsidiary related to the majority shareholder with an existing
old office and industrial buildings in Vaci Corridor in Budapest for a total amount of Euro
21.35 million. The buildings have total leasable area of 12,000 sqm (GLA 8,200 sqm).
The Company plans to demolish the buildings and develop office buildings in phases with a
total leasable area of 64,000 sqm.
COMMENCEMENT OF CONSTRUCTION OF NEW PROJECTS
In July 2020, Dorado 1 EOOD, a whole owned subsidiary of the Company, commenced the
construction of a new office Building (Sofia Tower 2) in Sofia. The Project shall consist of
8.3 thousand sqm of leasable area.
DISPOSAL OF ASSETS
On 20 October 2020, Spiral I Kft., an indirect wholly owned subsidiary of the Company,
signed a sale and purchase agreement for the sale of Spiral office building for a
consideration of
Euro 62.7 million. On 5 November 2020, all conditions precedents for the sale were
concluded and the purchase price was paid in full. In parallel with the Closing Spiral I kft
repaid the full outstanding amount of the loan with Erste Bank.
ISSUANCE OF BONDS AND REFINANCE
On 13 February 2020, GTC CTWA signed with Erste Group Bank AG and
Raiffeisenlandesbank Niederosterreich-Wien AG a loan agreement, which refinanced the
existing loan of Galeria Jurajska with a top-up of Euro 46 million, to a total of Euro 130
million.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
40
9. Events in the period (continued)
On 12 November 2020, Scope Ratings assigned a first-time issuer rating of BBB-/Stable
investment grade to the Company and its whole owned subsidiary GTC Real Estate
Development Hungary Zrt. for the purpose of issuing green bonds within the framework of
the Bond Funding for Growth Program in Hungary. The potential unsecured debt has also
been rated BBB-.
On 7 December 2020, GTC Real Estate Development Hungary Zrt. issued 10-year green
bonds with the total nominal value of 110 million euro denominated in HUF to finance real
estate projects and upstream the funds with refinancing purpose. The bonds are fully and
irrevocable guaranteed by the Company and were issued at a yield of 2.33% with an annual
fixed coupon of 2.25%. The bonds are amortized 10% a year starting on the 7
th
year with
the 70% of the value paid at the maturity on 7 December 2030.
On 8 December 2020, GTC Real Estate Development Hungary Zrt. entered into cross-
currency interest swap agreements with three different banks to hedge the total green bonds
liability against foreign exchange fluctuations. The green bonds were fixed to the Euro, and
the fixed annual coupon was swapped for an annual interest fixed rate of 0.99%.
COVID- 19 OUTBREAK
The Covid-19 pandemic has triggered a wave of strong negative effects on the global
economy, which include a pronounced recession. The lockdowns brought a large part of the
world’s economic activity to an unparalleled standstill: consumers stayed home, companies
lost revenue, and terminated employees – which, consequently, led to a rise in
unemployment. Rescue packages by national governments and the EU as well as
supporting monetary policies by the Eurpean Central Bank have been implemented to
moderate the economic impact of the pandemic. However, the scope and duration of the
pandemic and possible future containment measures are still impossible to predict. From
mid-March 2020, it became apparent that the economic disruptions caused by the Covid-19
virus and the increased market uncertainty combined with increased volatility in the financial
markets might lead to a potential decrease in rental revenues, a potential decrease in the
Company assets’ values, as well as impact on the Company’s compliance with financial
covenants. While the exact effect of the coronavirus is still to be determined, it is clear that
it poses substantial risks (for further information, please see note 36).
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
41
10. Revenue from operations
Rental income includes variable rental revenue based on tenants’ turnover for the year
ended 31 December 2020 of Euro 2,657 (2019: Euro 2,450). The remaining revenue is
based on fixed contractual rental fees.
The Group has entered into various operational lease contracts on its property portfolio in
Poland, Romania, Croatia, Serbia, Bulgaria, and Hungary. The commercial property leases
typically include clauses to enable the periodic upward revision of the rental charge
according to European Consumer Price Index (CPI).
Future minimum rental receivables under operating leases from completed projects are, as
follows (in millions of Euro):
31 December 2020
31 December 2019
Within 1 year
121
130
Within 2 year
100
112
Within 3 year
74
79
Within 4 year
52
52
Within 5 year
33
34
Within 6 year
22
17
More than 6 years
37
22
439
446
Most of the revenue from operations is earned predominantly on the basis of amounts
denominated in, directly linked to, or indexed by reference to the Euro.
Service charge revenue includes income from charging maintenance costs to tenants.
Service charge is billed on a monthly basis, based on the agreed rate from the contract.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
42
11. Selling expenses
Selling expenses comprise of the following:
Year ended
31 December 2020
Year ended
31 December 2019
Advertising and marketing
140
606
Payroll and related expenses
1,167
1,411
1,307
2,017
12. Administration expenses
Administration expenses comprise of the following:
Year ended
31 December 2020
Year ended
31 December 2019
Remuneration and fees (*)
8,396
12,701
Audit and valuations
852
819
Legal and tax advisers
905
1,633
Office and insurance expenses
669
731
Travel expenses
285
448
Supervisory board remuneration fees
137
105
Depreciation
654
660
Investors relations and other expenses
283
400
Total before share based payment
12,181
17,497
Share based payment (*)
(469)
(3,087)
Total
11,712
14,410
(*) Phantom shares in an amount of Euro 5,900 were exercised during 2019 year.
13. Financial income and financial expense
Financial income comprises of the following:
Year ended
31 December 2020
Year ended
31 December 2019
Interest on deposits and other
55
115
Interest on loan granted to non-controlling
interest
276
265
331
380
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
43
13. Financial income and financial expense (continued)
Financial expense comprises of the following:
Year ended
31 December 2020
Year ended
31 December 2019
Interest expenses (on financial liabilities that are
not fair valued through profit or loss) and other
charges
(31,321)
(30,541)
Finance costs related to lease liability
(2,010)
(2,100)
Amortization of loan raising costs
(1,913)
(1,993)
(35,244)
(34,634)
The average interest rate (including hedges) on the Group’s loans as of 31 December 2020
was 2.3% p.a. (2.6% p.a. as of 31 December 2019).
14. Segmental analysis
The operating segments are aggregated into reportable segments, taking into
consideration the nature of the business, operating markets, and other factors. GTC
operates in six core markets: Poland, Budapest, Bucharest, Belgrade, Sofia, and Zagreb.
Operating segments are divided into geographical zones, which have common
characteristics and reflect the nature of management reporting structure:
a. Poland
b. Belgrade
c. Budapest
d. Bucharest
e. Zagreb
f. Sofia
g. Other
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
44
14. Segmental analysis (continued)
Segment analysis of rental income and costs for the year ended 31 December 2020 and
31 December 2019 is presented below:
Year ended
31 December 2020
Year ended
31 December 2019
Portfolio
Revenues
Costs
Gross
margin
Revenues
Costs
Gross
margin
Poland
65,227
(19,218)
46,009
75,793
(20,499)
55,294
Belgrade
33,806
(8,485)
25,321
29,542
(6,658)
22,884
Budapest
21,926
(4,900)
17,026
24,195
(5,792)
18,403
Bucharest
17,229
(2,969)
14,260
17,497
(3,103)
14,394
Zagreb
11,004
(3,684)
7,320
11,624
(3,893)
7,731
Sofia
10,929
(2,271)
8,658
11,111
(1,931)
9,180
Total
160,121
(41,527)
118,594
169,762
(41,876)
127,886
Segment analysis of assets and liabilities as of 31 December 2020 is presented below:
Real
estate
Cash
and
deposits
Other
Total
assets
Loans,
bonds and
leases
Deferred
tax
liability
Other
Total
liabilities
Poland
906,313
44,939
3,872
955,124
532,127
59,536
14,005
605,668
Belgrade
370,123
13,316
3,711
387,150
211,497
10,373
8,628
230,498
Budapest
321,704
149,239
4,680
475,623
223,862
12,240
17,617
253,719
Bucharest
197,247
13,527
1,119
211,893
104,974
11,816
3,103
119,893
Zagreb
159,319
5,905
12,305
177,529
67,142
16,728
4,383
88,253
Sofia
179,109
11,609
1,087
191,805
93,212
8,337
6,850
108,399
Other
9,521
17
18
9,556
-
-
1,141
1,141
Non
allocated
71,857
220
72,077
78,370
14,200
6,468
99,038
Total
2,143,336
310,409
27,012
2,480,757
1,311,184
133,230
62,195
1,506,609
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
45
14. Segmental analysis (continued)
Segment analysis of assets and liabilities as of 31 December 2019 is presented below:
Real
estate
Cash
and
deposits
Other
Total
assets
Loans,
bonds and
leases
Deferred
tax
liability
Other
Total
liabilities
Poland
978,398
38,399
5,062
1,021,859
516,539
70,600
10,506
597,645
Belgrade
404,219
18,427
5,625
428,271
216,805
13,570
19,545
249,920
Budapest
326,832
20,364
4,705
351,901
126,524
14,090
5,756
146,370
Bucharest
219,271
10,578
1,941
231,790
110,272
12,844
4,793
127,909
Zagreb
160,366
4,305
12,326
176,997
58,710
17,538
7,161
83,409
Sofia
166,070
8,825
1,733
176,628
79,321
8,940
5,360
93,621
Other
12,029
20
15
12,064
-
-
1,184
1,184
Non
allocated
122,886
346
123,232
151,249
9,650
3,123
164,022
Total
2,267,185
223,804
31,753
2,522,742
1,259,420
147,232
57,428
1,464,080
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
46
15. Taxation
The major components of tax expense are as follows:
Year ended
31 December 2020
Year ended
31 December 2019
Current corporate and capital gain tax expense
8,811
7,132
Deferred tax expense / (income)
(13,806)
9,633
(4,995)
16,765
The Group companies are subject to taxes in the following jurisdictions: Poland, Serbia,
Romania, Hungary, Ukraine, Bulgaria, Cyprus, and Croatia. The Group does not constitute
a tax group under local legislation. Therefore, every company in the Group is a separate
taxpayer.
The reconciliation between tax expense and accounting profit multiplied by the applicable
tax rates is presented below:
Year ended
31 December 2020
Year ended
31 December 2019
Accounting profit / (loss) before tax
(75,856)
92,186
Taxable expenses at the applicable tax rate
in each country of activity
(14,818)
11,778
Tax effect of expenses that are not deductible
in determining taxable profit
772
1,738
Commercial property tax
(416)
764
Tax effect of foreign currency differences
5,975
(1,633)
Withholding tax
604
190
Unrecognised deferred tax asset on losses in
current year
2,888
3,928
Tax expense / (income)
(4,995)
16,765
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(In thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
47
15. Taxation (continued)
The components of the deferred tax balance were calculated at a rate applicable when the Group expects to recover or settle the carrying amount
of the asset or liability. Net deferred tax assets comprise the following:
As of 1 January 2019
Credit / (charge) to
income statement
As of 31 December 2019
Credit / (charge) to
income statement
As of 31 December 2020
Financial instruments (*)
4,302
998
5,300
9,085
14,385
Tax loss carried forwards
13,656
(3,459)
10,197
(3,515)
6,682
Basis differences in non-
current assets
140
884
1,024
(59)
965
Accruals
710
79
789
257
1,046
Netting (**)
(18,756)
1,446
(17,310)
(5,152)
(22,462)
Net deferred tax assets
52
(52)
-
616
616
Net deferred tax liability comprises of the following:
As of 1 January
2019
Disposal of
subsidiary
Credit /
(charge) to
income
statement
Credit /
(charge) to
equity
As of 31
December 2019
Credit /
(charge) to
income
statement
Credit /
(charge) to
equity
As of 31
December
2020
Financial instruments (*)
(9,439)
(416)
(4,930)
10
(14,775)
(5,523)
812
(19,486)
Basis differences in non-
current assets
(148,436)
1,875
(3,187)
-
(149,748)
13,542
-
(136,206)
Other
(1)
-
(18)
-
(19)
19
-
-
Netting (**)
18,756
-
(1,446)
-
17,310
5,152
-
22,462
Net deferred tax liability
(139,120)
1,459
(9,581)
10
(147,232)
13,190
812
(133,230)
(*) Mostly, unrealized interest and foreign exchange differences,
(**) within a particular company, deferred tax asset are accounted separately from deferred tax liabilities as they are independent in their nature. However, as they represent a future settlement
between the same parties, they are netted off for the purpose of the presentation in financial statements.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(In thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
48
15.Taxation (continued)
The enacted tax rates in the various countries were as follows:
Tax rate
Year ended
31 December 2020
Year ended
31 December 2019
Poland
19%
19%
Hungary
9%
9%
Ukraine
18%
18%
Bulgaria
10%
10%
Serbia
15%
15%
Croatia
18%
18%
Romania
16%
16%
Cyprus
12.5%
12.5%
Future benefit for deferred tax assets has been reflected in these consolidated financial
statements only if it is probable that taxable profits will be available when timing differences
that gave rise to such deferred tax asset reverse.
Regulations regarding VAT, corporate income tax, and social security contributions are
subject to frequent changes. These frequent changes result in there being little point of
reference, inconsistent interpretations not consistent, and few established precedents that
may be followed. The binding regulations also contain uncertainties, resulting in differences
in opinion regarding the legal interpretation of tax regulations both between government
bodies and between government bodies and companies. Tax settlements and other areas
of activity (e.g., customs or foreign currency related issues) may be subject to inspection by
administrative bodies authorised to impose high penalties and fines, and any additional
taxation liabilities calculated as a result must be paid together with high interest.
On 15 July 2016, amendments were made to the Polish Tax Ordinance to introduce the
provisions of the General Anti-Avoidance Rule (GAAR). GAAR are targeted to prevent
origination and use of factitious legal structures made to avoid payment of tax in Poland.
GAAR define tax evasion as an activity performed mainly with a view to realizing tax gains,
which is contrary, under given circumstances, to the subject and objective of the tax law. In
accordance with GAAR, an activity does not bring about tax gains if its modus operandi was
false. Any instances of (i) unreasonable division of an operation (ii) involvement of agents
despite lack of economic rationale for such involvement, (iii) mutually exclusive or mutually
compensating elements, as well as (iv) other activities similar to those referred to earlier
may be treated as a hint of artificial activities subject to GAAR. New regulations will require
considerably greater judgment in assessing the tax effects of individual transactions.
The GAAR clause should be applied to the transactions performed after the clause effective
date and to the transactions which were performed prior to GAAR clause effective date, but
for which after the clause effective date tax gains were realized or continue to be realised.
The implementation of the above provisions will enable Polish tax authority to challenge
such arrangements realized by tax remitters as restructuring or reorganization.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
49
15.Taxation (continued)
Tax settlements may be subject to inspections by tax authorities. Accordingly, the amounts
shown in the financial statements may change at a later date as a result of the final decision
of the tax authorities.
The Group companies have tax losses carried forward as of 31 December 2020 available
in the amount of Euro 260 million. The expiry dates of these tax losses as of 31 December
2020 are as follows: within one year - Euro 14 million, between 2-5 years - Euro 142 million,
afterwards – Euro 104 million. As of 31 December 2020, the Group has not recognized
deferred tax assets for tax losses carried forward in amount of Euro 212 million, as the Group
believes that these losses will not be utilized within claim period.
16. Property, Plant, and Equipment
The movement in property, plant, and equipment for the periods ended 31 December 2020
was as follows:
Buildings and
related
improvements
Right of
use
Equipment
and
software
Vehicles
Total
Gross carrying amount
As of 1 January 2020
7,551
286
1,801
934
10,572
Additions
48
-
133
67
248
Foreign exchange differences
-
16
11
16
43
Disposals, impairments and other
decreases
-
-
(36)
(117)
(153)
As of 31 December 2020
7,599
302
1,909
900
10,710
Accumulated Depreciation
As of 1 January 2020
786
37
1,208
382
2,413
Charge for the period
271
60
171
152
654
Foreign exchange differences
-
-
(7)
-
(7)
Disposals, impairments and other
decreases
-
-
(27)
(108)
(135)
As of 31 December 2020
1,057
97
1,345
426
2,925
Net book value as of 31
December 2020
6,542
205
564
474
7,785
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
50
16. Property, Plant, and Equipment
The movement in property, plant, and equipment for the periods ended 31 December 2019
was as follows:
Buildings and
related
improvements
Right of
use
Equipment
and
software
Vehicles
Total
Gross carrying amount
As of 1 January 2019
6,212
-
1,531
976
8,719
Additions
-
286
354
251
891
Transfer from investment property
2,347
-
-
-
2,347
Transfer to investment property
(1,008)
-
-
-
(1,008)
Disposals, impairments, and other
decreases
-
(84)
(293)
(377)
As of 31 December 2019
7,551
286
1,801
934
10,572
Accumulated Depreciation
As of 1 January 2019
555
-
1,091
361
2,007
Charge for the period
274
37
129
220
660
Transfer to investment property
(43)
-
-
-
(43)
Disposals, impairments, and other
decreases
-
(12)
(199)
(211)
As of 31 December 2019
786
37
1,208
382
2,413
Net book value as of 31
December 2019
6,765
249
593
552
8,159
17. Investment Property
Investment properties that are owned by the Group are office and commercial space,
including property under construction:
Investment property can be split up as follows:
31 December 2020
31 December 2019
Completed investment property
1,879,173
2,003,188
Investment property under construction
62,909
84,080
Investment property landbank at cost
140,367
115,277
Right of use of lands under perpetual
usufruct
42,679
44,485
Total
2,125,128
2,247,030
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
51
17. Investment Property (continued)
The movement in investment property for the periods ended 31 December 2020 and
31 December 2019 was as follows:
Right of
Use of land
Level 2
Level 3
at fair value
Level 3
at Cost
Total
Carrying amount as of 1
January 2019
-
1,377,317
616,779
118,972
2,113,068
Capitalised subsequent
expenditure
-
13,745
110,985
2,460
127,190
Recognition of right of use of
lands under perpetual usufruct
45,362
-
-
45,362
Adjustment to fair value /
(impairment)
-
1,246
13,709
850
15,805
Amortization of right of use of
lands under perpetual usufruct
(441)
-
-
-
(441)
Classified to assets for own
use, net
-
(899)
(301)
-
(1,200)
Disposals
(712)
(43,973)
-
(7,050)
(51,735)
Foreign exchange differences
276
(1,339)
-
44
(1,019)
Carrying amount as of 31
December 2019
44,485
1,346,097
741,172
115,276
2,247,030
Reclassification (*)
-
(7,799)
-
7,799
-
Capitalised subsequent
expenditure
-
11,446
48,184
8,065
67,695
Purchase of completed assets
and land
5,600
-
16,502
22,102
Adjustment to fair value /
(impairment)
-
(84,904)
(52,844)
(3,165)
(140,913)
Amortization of right of use of
lands under perpetual usufruct
(440)
-
-
-
(440)
Increase
96
-
-
-
96
Reclassified to assets held for
sale (**)
-
-
-
(900)
(900)
Disposals (***)
-
(62,649)
-
(500)
(63,149)
Foreign exchange differences
(1,462)
(4,830)
-
(101)
(6,393)
Carrying amount as of 31
December 2020
42,679
1,202,961
736,512
142,976
2,125,128
(*) Mainly Center Point 3 building, which was demolished and reclassified to cost of land;
(**) Land in Ukraine (Euro 0.9 million);
(***) Sale of Spiral office building in Hungary (Euro 62.6 million) and sale of Russe land in Bulgaria (Euro 0.5 million).
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
52
17. Investment Property (continued)
Reconciliation between capitalized subsequent expenditure and paid subsequent
expenditure is presented below:
Year ended
31 December
2020
Year ended
31 December
2019
Capitalized subsequent expenditure
67,695
127,190
Change in trade payables and provisions
12,347
14,148
Change in trade receivables
(1,762)
4,555
Purchase of property, plant, and equipment
248
-
Accrued interest on long term loans
-
(1,205)
Paid subsequent expenditure
78,528
144,688
Fair value and impairment adjustment consists of the following:
Year ended
31 December 2020
Year ended
31 December 2019
Adjustment to fair value of completed
investment properties (*)
(144,126)
(1,697)
Adjustment to the fair value of investment
properties under construction
6,378
16,652
Reversal of impairment/(Impairment)
adjustment
(3,165)
850
Total adjustment to fair value /
(impairment) of investment property
(140,913)
15,805
Reversal of impairment/(Impairment) of assets
held for sale
(172)
1,437
Amortization of right of use of lands under
perpetual usufruct (including on residential
landbank)
(478)
(471)
Impairment of residential landbank
(1,158)
(581)
Total recognised in profit or loss
(142,721)
16,190
(*) During the financial year end 31 December 2020, the Covid-19 pandemic has triggered a wave of strong
negative effects on the markets that the Group operates. As a result of this, the valuations prepared by
independent appraisers over the completed investment properties has been negatively affected primarily driven
by the group retail assets. For further information on the COVID-19 pandemic impact over the business of the
Group please see note 36.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
53
17. Investment Property (continued)
Segment analysis of adjustment to fair value of completed investment properties is
presented below:
Year ended
31 December
2020
Year ended
31 December
2019
Poland
(77,153)
(18,326)
Belgrade
(42,818)
(15,368)
Budapest
12,610
19,928
Bucharest
(19,362)
(356)
Zagreb
(6,353)
1,513
Sofia
(11,050)
10,912
Total adjustment to fair value of completed assets
(144,126)
(1,697)
Assumptions used in the fair value valuations of completed assets as of 31 December 2020
are presented below:
Portfolio
Book value
GLA
thousand
Average
Occupancy
Actual
Average
rent
Average
ERV
Fair Value
Hierarchy
Level
Average
Yield
‘000 Euro
sqm
%
Euro/
sqm/m
Euro/
sqm/m
%
Poland retail
443,000
113
93%
20.9
20.8
2
6.2%
Poland office
381,738
196
88%
14.6
14.3
2
8.2%
Belgrade office
264,781
122
93%
16.7
16.2
3
8.6%
Belgrade retail
90,700
35
97%
22.0
19.6
3
8.5%
Budapest office
206,138
97
95%
14.2
13.8
2
7.5%
Bucharest office
172,085
67
93%
20.5
17.7
2
7.7%
Zagreb retail
99,512
35
97%
20.2
20.6
3
7.9%
Zagreb office
44,719
21
76%
14.3
14.6
3
7.6%
Sofia office
75,800
34
79%
14.6
14.6
3
7.8%
Sofia retail
100,700
33
98%
18.8
20.8
3
7.8%
Total
1,879,173
753
91%
17.2
16.7
7.8%
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
54
17. Investment Property (continued)
Assumptions used in the fair value valuations of completed assets as of 31 December 2019
are presented below:
Portfolio
Book value
GLA
thousand
Average
Occupancy
Actual
Average
rent
Average
ERV
Fair Value
Hierarchy
Level
Average
Yield
‘000 Euro
sqm
%
Euro/
sqm/m
Euro/
sqm/m
%
Poland retail
497,370
113
94%
21.7
21.7
2
5.6%
Poland office
398,888
196
92%
14.4
14.1
2
7.4%
Belgrade office
263,081
117
98%
16.9
16.6
3
8.1%
Belgrade retail
119,300
35
97%
20.8
21.5
3
7.1%
Budapest office
259,419
125
97%
12.9
13.9
2
7.3%
Bucharest office
190,418
67
96%
19.0
19.4
2
7.4%
Zagreb retail
104,812
35
99%
20.7
20.1
3
6.7%
Zagreb office
24,500
11
89%
13.3
14.6
3
7.5%
Sofia office
36,800
16
99%
14.0
14.1
3
7.3%
Sofia retail
108,600
33
98%
21.3
20.8
3
7.6%
Total
2,003,188
748
95%
17.0
17.0
7.0%
(*) ERV- Estimated Rent Value (the open market rent value that a property can be reasonably expected to attain
based on characteristics such as a condition of the property, amenities, location, and local market conditions)
Information regarding investment properties under construction as of 31 December 2020
is presented below:
Book value
Estimated area (GLA)
‘000 Euro
thousand sqm
Budapest (Pillar)
60,300
29
Sofia (Sofia Tower 2)
2,609
8
Total
62,909
37
Information regarding investment properties under construction as of 31 December 2019
is presented below:
Book value
Estimated area (GLA)
‘000 Euro
thousand sqm
Belgrade (Green Heart N3)
10,310
5
Sofia (ABC II)
20,670
18
Budapest (Pillar)
36,600
29
Zagreb (Matrix II)
16,500
11
Total
84,080
63
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
55
17. Investment Property (continued)
Information regarding book value of investment property landbank for construction
as of 31 December 2020 and 31 December 2019 is presented below:
31 December 2020
31 December 2019
Poland
37,961
38,148
Serbia
10,164
7,052
Hungary
49,895
25,398
Romania
15,500
15,256
Croatia
14,638
14,097
Total
128,158
99,951
Information regarding book value of investment property landbank (long term pipeline – with
no current plan for construction) as of 31 December 2020 and 31 December 2019 is
presented below:
31 December 2020
31 December 2019
Poland
8,859
7,969
Hungary
3,350
3,400
Bulgaria
-
1,900
Ukraine
-
2,057
Total
12,209
15,326
GRAND TOTAL
140,367
115,277
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
56
18. Residential landbank
The movement in residential landbank and inventory for the period ended 31 December
2020 was as follows:
Residential
landbank
Total
Carrying amount as of 1 January 2019
12,698
12,698
Recognition of right of use
1,219
1,219
Amortization of right of use of lands under
perpetual usufruct
(29)
(29)
Capitalised subsequent expenditure
81
81
Impairment of residential landbank
(581)
(581)
Carrying amount as of 31 December 2019
13,388
13,388
Amortization of right of use of lands under
perpetual usufruct
(36)
(36)
Disposal
(1,420)
(1,420)
Reclassified to assets held for sale
(680)
(680)
Impairment of residential landbank
(1,158)
(1,158)
Carrying amount as of 31 December 2020
10,094
10,094
The carrying amount of residential landbank as of 31 December 2020 refers to two non-core
land plots designated for residential development, in Marlera (Croatia) and Bucharest
(Romania).
19. Derivatives
The Group holds instruments (IRS, CAP, currency SWAP and cross-currency interest rate
SWAP) that hedge the risk involved in fluctuations of interest rate and currencies rates. The
instruments hedge interest on loans for a period of 2-5 years
The movement in derivatives for the years ended 31 December 2020 and 31 December
2019 was as follows:
31 December 2020
31 December 2019
Fair value as of the beginning of the year
(6,085)
(5,623)
Charged to other comprehensive income (*)
(7,748)
(462)
Charged to income statements (**)
(5,427)
-
Fair value as of the end of the year
(19,260)
(6,085)
(*) Increase is mainly attributable to the new cross-currency swap established as per note 9.
(**) This loss offset a foreign exchange differences profit in an amount of Euro 5,427 on bonds nominated in PLN
and HUF.
For more information regarding derivatives, see note 35.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
57
20. Trade and other payables
The balance of trade and other payables decreased from Euro 37,290 to Euro 27,299 in the
year ended 31 December 2020.
The majority of the payables relate to development activity payables in Green Heart, ABC,
and Pillar. The amount is planned to be financed mostly by long term loans.
21. Blocked deposits
Blocked deposits include deposits related to loan agreements and other contractual
commitments and can be used only for certain operating activities as determined by
underlying agreements.
Blocked deposits related to contractual commitments include mostly tenants’ deposit
account, security account, capex accounts, and deposits in order to settle contractual
commitments related to the construction of this project.
22. Cash and cash equivalents
Cash balance consists of cash in banks. Cash at banks earns interest at floating rates based
on periodical bank deposit rates. Except for minor amounts, all cash is deposited in banks.
All cash and cash equivalents are available for use by the Group.
23. Other expenses
Other expenses relate mainly to one-off expenses as well as unrecoverable VAT and
maintenance costs related to undeveloped land.
24. Deposits from tenants
Deposits from tenants represent amounts deposited by tenants to guarantee their
performance of their obligations under tenancy agreements. Deposits from tenants that shall
be returned within a year are presented within current liabilities.
25. Long term payables
Long term payables consist long term commitments related to the purchase of land and
development of infrastructure.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
58
26. VAT and other tax receivable
VAT and other tax receivable represent VAT receivable on the purchase of assets and due
to development activity.
27. Non-controlling interest
Summarised financial information of the material non-controlling interest as of 31 December
2020 is presented below:
Avenue Mall
Non-core projects
Total
Non-current assets
138,366
2,153
140,519
Current assets
3,338
721
4,059
Total assets
141,704
2,874
144,578
Equity
79,347
(21,799)
57,548
Non-current liabilities
58,869
24,670
83,539
Current liabilities
3,488
3
3,491
Total equity and liabilities
141,704
2,874
144,578
Revenue
9,280
-
9,280
Profit /(loss) for the year
(290)
(1,755)
(2,045)
NCI share in equity
23,804
(7,266)
16,538
Loan granted to NCI
(11,252)
-
(11,252)
NCI share in profit / (loss)
(87)
(585)
(672)
In September 2020, the Group acquired the remaining 20% in Marlera Golf LD d.o.o. for a
consideration of Euro 2.8 million.
Summarised financial information of the material non-controlling interest as of 31 December
2019 is presented below:
Avenue Mall
Non-core projects
Total
Non-current assets
142,740
13,388
156,128
Current assets
3,268
92
3,360
Total assets
146,008
13,480
159,488
Equity
81,034
(37,992)
43,042
Non-current liabilities
61,711
51,225
112,936
Current liabilities
3,263
247
3,510
Total equity and liabilities
146,008
13,480
159,488
Revenue
10,953
-
10,953
Profit /(loss) for the year
4,546
(2,934)
1,612
NCI share in equity
24,310
(10,270)
14,040
Loan granted to NCI
(10,976)
-
(10,976)
NCI share in profit / (loss)
1,364
(768)
596
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
59
28. Long-term loans and bonds
31 December 2020
31 December 2019
Bonds mature in 2022-2023 (Poland)
(PLGTC0000318)
48,117
52,140
Green bonds mature in 2027-2030
(HU0000360102GTC)
108,614
-
Bonds 0320 (PLGTC0000235)
-
18,671
Bonds 0620 (PLGTC0000243)
-
40,070
Bonds 1220 (PLGTC0000268)
-
10,117
Bonds 0321 (PLGTC0000276)
20,737
20,737
Bonds 0422 (PLGTC0000292)
9,515
9,515
Loan from Santander (Globis Poznan)
16,951
17,579
Loan from Santander (Korona Business Park)
41,966
43,361
Loan from PKO BP (Pixel)
19,224
19,901
Loan from Santander (Globis Wroclaw)
21,368
22,061
Loan from Berlin Hyp (Corius)
10,036
10,378
Loan from Pekao (Sterlinga)
15,138
15,663
Loan from Pekao (Galeria Polnocna)
175,404
189,904
Loan from PKO BP (Artico)
13,848
14,359
Loan from Erste and Raiffeisen (Galeria Jurajska)
125,125
-
Loan from Pekao (Galeria Jurajska)
-
84,136
Loan from Berlin Hyp (UBP)
42,413
43,283
Loan from ING (Francuska)
18,929
21,577
Loan from OTP (Centre Point)
49,669
51,476
Loan from CIB (Metro)
13,277
14,437
Loan from Erste (Spiral)
-
20,593
Loan from UniCredit Bank (Kompakt)
13,718
-
Loan from OTP (Duna)
38,518
39,919
Loan from Erste (GTC House)
14,820
15,444
Loan from Erste (19 Avenue)
21,510
22,504
Loan from OTP (BBC)
20,985
21,790
Loan from Intesa Bank (Green Heart)
55,907
53,642
Loan from Raiffeisen Bank (Forty one)
36,295
38,148
Loan from Intesa Bank (Ada)
58,256
61,571
Loan from Erste (City Gate)
71,951
75,113
Loan from Banca Transilvania (Cascade)
3,797
4,118
Loan from Alpha Bank (Premium)
14,486
15,873
Loan from OTP (Mall of Sofia)
54,668
57,125
Loan from UniCredit (ABC I)
18,816
19,800
Loan from UniCredit (ABC II)
19,622
2,217
Loan from Erste (Matrix)
21,921
11,485
Loan from Zagrabecka Banka (Avenue Mall Zagreb)
44,000
46,000
Loans from NCI
8,529
8,283
Deferred issuance debt expenses
(6,838)
(6,768)
1,261,292
1,206,222
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
60
28. Long-term loans and bonds (continued)
Long-term loans and bonds have been separated into the current portion and the long-term
portion as disclosed below:
31 December 2020
31 December 2019
Current portion of long term loans and bonds:
Bonds mature in 2022-2023 (Poland)
(PLGTC0000318)
442
479
Bonds 0320 (PLGTC0000235)
-
18,671
Bonds 0620 (PLGTC0000243)
-
40,070
Bonds 1220 (PLGTC0000268)
-
10,117
Bonds 0321 (PLGTC0000276)
20,737
243
Bonds 0422 (PLGTC0000292)
75
75
Loan from Santander (Globis Poznan)
629
449
Loan from Santander (Korona Business Park)
1,395
1,395
Loan from PKO BP (Pixel)
19,224
677
Loan from Berlin Hyp (UBP)
870
870
Loan from Erste and Raiffeisen (Galeria Jurajska)
4,875
Loan from Pekao (Galeria Jurajska)
-
84,136
Loan from Santander (Globis Wroclaw)
693
693
Loan from Berlin Hyp (Corius)
10,036
342
Loan from Pekao (Sterlinga)
15,138
525
Loan from PKO BP (Artico)
510
510
Loan from Pekao (Galeria Polnocna)
5,000
5,000
Loan from ING (Francuska)
18,929
21,577
Loan from OTP (Centre Point)
1,807
1,807
Loan from OTP (Duna)
1,401
1,401
Loan from CIB (Metro)
1,172
14,437
Loan from Erste (Spiral)
-
1,446
Loan from Erste (GTC House)
624
624
Loan from Erste (19 Avenue)
994
994
Loan from Intesa Bank (Green Heart)
2,873
2,367
Loan from OTP (BBC)
805
805
Loan from Raiffeisen Bank (Forty one)
1,853
1,853
Loan from Intesa Bank (Ada)
3,473
3,315
Loan from OTP (Mall of Sofia)
2,457
2,457
Loan from UniCredit (ABC I)
816
1,000
Loan from UniCredit (ABC II)
801
58
Loan from Zagrabecka Banka (Avenue Mall Zagreb)
2,000
2,000
Loan from Erste (Matrix)
580
524
Loan from Alpha Bank (Premium)
1,025
1,025
Loan from Banca Transilvania (Cascade)
240
240
Loan from Erste (City Gate)
71,951
3,168
193,425
225,350
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
61
28. Long-term loans and bonds (continued)
31 December 2020
31 December 2019
Long term portion of long term loans and bonds:
Bonds mature in 2022-2023 (Poland)
(PLGTC0000318)
47,675
51,661
Bonds 0422 (PLGTC0000292)
9,440
9,440
Green bonds mature in 2027-2030
(HU0000360102GTC)
108,614
-
Bonds 0321 (PLGTC0000276)
-
20,494
Loan from Santander (Globis Poznan)
16,322
17,130
Loan from Santander (Korona Business Park)
40,571
41,966
Loan from PKO BP (Pixel)
-
19,224
Loan from Santander (Globis Wroclaw)
20,675
21,368
Loan from Berlin Hyp (Corius)
-
10,036
Loan from Pekao (Sterlinga)
-
15,138
Loan from Pekao (Galeria Polnocna)
170,404
184,904
Loan from PKO BP (Artico)
13,338
13,849
Loan from Erste and Raiffeisen (Galeria Jurajska)
120,250
-
Loan from Berlin Hyp (UBP)
41,543
42,413
Loan from OTP (Centre Point)
47,862
49,669
Loan from CIB (Metro)
12,105
-
Loan from OTP (Duna)
37,117
38,518
Loan from Erste (Spiral)
-
19,147
Loan from UniCredit Bank (Kompakt)
13,718
-
Loan from Erste (GTC House)
14,196
14,820
Loan from Erste (19 Avenue)
20,516
21,510
Loan from Intesa Bank (Green Heart)
53,034
51,275
Loan from Intesa Bank (Ada)
54,783
58,256
Loan from OTP (BBC)
20,180
20,985
Loan from Raiffeisen Bank (Forty one)
34,442
36,295
Loan from Erste (City Gate)
-
71,945
Loan from Banca Transilvania (Cascade)
3,557
3,878
Loan from Alpha Bank (Premium)
13,461
14,848
Loan from OTP (Mall of Sofia)
52,211
54,668
Loan from UniCredit (ABC I)
18,000
18,800
Loan from UniCredit (ABC II)
18,821
2,159
Loan from Zagrabecka Banka (Avenue Mall Zagreb)
42,000
44,000
Loan from Erste (Matrix)
21,341
10,961
Loans from NCI
8,529
8,283
Deferred issuance debt expenses
(6,838)
(6,768)
1,067,867
980,872
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
62
28. Long-term loans and bonds (continued)
As securities for the bank loans, the banks have mortgage over the assets and security
deposits together with assignment of the associated receivables and insurance rights.
In its financing agreements with banks, the Group undertakes to comply with certain financial
covenants that are listed in those agreements. The main covenants are: maintaining a Loan-
to-Value and Debt Service Coverage ratios in the company that holds the project.
In addition, substantially, all investment properties and IPUC that were financed by a lender
have been pledged to secure the long-term loans from banks. Unless otherwise stated, fair
value of the pledged assets exceeds the carrying value of the related loans.
Bonds (series matures in 2022-2023) are nominated in PLN. Green Bonds (series matures
in 2027-2030) are denominated in HUF. All other bank loans and bonds are denominated in
Euro.
In its financing agreements with banks, the Company undertakes to comply with certain
financial covenants that are listed in those agreement. The main covenants are: maintaining
a Loan-to-Value and Debt Service Coverage ratios in the company that holds the project.
With respect to a Euro 175,404 loan from Bank Pekao SA on 17 September 2020, a whole
owned subsidiary of the Company, operating the Galeria Północna project, entered into an
annex to a loan agreement with the bank in order to relax the DSCR (debt service coverage
ratio) covenant and to cure the LTV (loan-to-value) covenant breach. According to the
annex, the subsidiary repaid in advance a part of outstanding loan in the amount of EUR
9,500 and agreed to repay additionally up to €3,000 within 12 months of the date of the
Annex. As of the date of these financial statements the financial covenants are cured.
With respect to a Euro 58.2 million loan from Banka Intesa ad Beograd, Vseobecna Uverova
Banka a.s. and Privredna Banka Zagreb d.d. granted to a whole owned subsidiary of the
Company, operating the Ada Shopping Mall, the DSCR covenant was waived by the banks
until the end of June 2021.In addition the LTV (loan-to-value) covenant was waived by the
banks until the end of December 2021.
With respect to a Euro 125.1 million loan from Erste Group Bank AG and
Raiffeisenlandesbank Niederosterreich-Wien AG granted to a whole owned subsidiary of
the Company, operating Galeria Jurajska Shopping Mall, the DSCR covenant was waived
until the end of June 2021.
As at 31 December 2020, the Group continue to comply with the financial covenants set out
in their loan agreements.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
63
28. Long-term loans and bonds (continued)
The movement in long term loans and bonds for the years ended 31 December 2020
and 31 December 2019 was as follows:
31 December 2020
31 December 2019
Balance as of the beginning of the year
(excluding deferred debt expenses)
1,212,990
1,121,718
Drawdowns
286,807
264,520
Repayments
(224,293)
(152,561)
Transactions with of non-controlling
interest
-
(1,785)
Change in accrued interest
(73)
394
Deconsolidation of Neptune
-
(19,915)
Capitalization of interest
-
1,205
Foreign exchange differences
(7,301)
(586)
Balance as of end of the year
(excluding deferred debt expenses)
1,268,130
1,212,990
29. Lease liability and Right of Use of land
Lease liabilities include mostly lease payments for land subject to perpetual usufruct
payments and classified as land under investment property (completed, under construction,
and landbank) and residential landbank.
The balance of Right of Use as of 31 December 2020 was as follows:
Country
Completed
investment
property
Investment
property
landbank
at cost
Residential
landbank
Property,
plant and
equipment
Total
Poland
10,722
22,021
-
-
32,743
Romania
6,211
-
-
-
6,211
Serbia
3,725
-
-
-
3,725
Croatia
-
-
1,140
-
1,140
Bulgaria
-
-
-
131
131
Hungary
-
-
-
74
74
Balance as of
31 Dec. 2020
20,658
22,021
1,140
205
44,024
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
64
29. Lease liability and Right of Use of land (continued)
The balance of Right of Use as of 31 December 2019 was as follows:
Country
Completed
investment
property
Investment
property
under
construction
Investment
property
landbank
at cost
Residential
landbank
Property,
plant and
equipment
Total
Poland
11,648
-
22,247
-
-
33,895
Romania
6,884
-
-
-
-
6,884
Serbia
3,606
100
-
-
-
3,706
Croatia
-
-
-
1,197
-
1,197
Bulgaria
-
-
-
-
179
179
Hungary
-
-
-
-
70
70
Balance as of
31 Dec. 2019
22,138
100
22,247
1,197
249
45,931
The balance of lease liability as of 31 December 2020 was as follows:
Country
Completed
investment
property
Investment
property
landbank at
cost
Residential
landbank
Property,
plant and
equipment
Total
Discount
rate
Poland
10,722
21,003
-
-
31,725
4.2%
Romania
6,211
-
-
-
6,211
5.7%
Serbia
3,724
-
-
-
3,724
7.6%
Croatia
-
-
1,222
-
1,222
4.4%
Bulgaria
106
106
4.5%
Hungary
-
-
-
66
66
3.9%
Balance as of
31 Dec. 2020
20,657
21,003
1,222
172
43,054
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
65
29. Lease liability and Right of Use of land (continued)
The balance of lease liability as of 31 December 2019 was as follows:
Country
Completed
investment
property
Investment
property
under
construction
Investment
property
landbank at
cost
Residential
landbank
Property,
plant and
equipmen
t
Total
Discount
rate
Poland
11,648
-
22,726
-
-
34,374
4.2%
Romania
6,884
-
-
-
-
6,884
5.7%
Serbia
3,606
100
-
-
-
3,706
7.6%
Croatia
-
-
-
1,225
-
1,225
4.4%
Bulgaria
179
179
4.5%
Hungary
-
-
-
-
62
62
3.9%
Balance as of
31 Dec. 2019
22,138
100
22,726
1,225
241
46,430
The lease liabilities were discounted using discount rates applicable to long term
borrowing in local currencies in the countries of where the assets are located.
The movement in Right of Use of land for the year ended 31 December 2020
and 31 December 2019 was as follows:
2020
2019
Balance as of 1 January
45,931
-
Recognition of Right of Use asset for lands under perpetual usufruct
96
46,580
Recognition of Right of Use for property plant and equipment during
the year
-
273
Amortization of right of use
(556)
(498)
Disposals
-
(712)
Foreign exchange differences
(1,447)
288
Balance as of 31 December
44,024
45,931
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
66
29. Lease liability and Right of Use of land (continued)
The movement in lease liability for the year ended 31 December 2020 and 31 December
2019 was as follows:
2020
2019
Balance as of 1 January
46,430
-
Recognition of lease liability for lands
under perpetual usufruct
96
46,580
Recognition of Right of Use for property
plant and equipment during the year
-
273
Payments of leases
(162)
(1,739)
Change in provision for disputable
amounts of perpetual usufruct
(1,350)
(352)
Change in accrued interest
1,336
1,817
Disposals
-
(712)
Foreign exchange differences
(3,296)
563
Balance as of 31 December
43,054
46,430
The group pays an annual amount of EUR 2,300 as lease payment (principal and interest)
for lands under perpetual usufruct.
30. Capital and Reserves
SHARE CAPITAL
As at 31 December 2020, the shares structure was as follows:
Number of Shares
Share series
Total value
Total value
in PLN
in Euro
139,286,210
A
13,928,621
3,153,995
1,152,240
B
115,224
20,253
235,440
B1
23,544
4,443
8,356,540
C
835,654
139,648
9,961,620
D
996,162
187,998
39,689,150
E
3,968,915
749,022
3,571,790
F
357,179
86,949
17,120,000
G
1,712,000
398,742
100,000,000
I
10,000,000
2,341,372
31,937,298
J
3,193,729
766,525
108,906,190
K
10,890,619
2,561,293
10,087,026
L
1,008,703
240,855
13,233,492
M
1,323,349
309,049
2,018,126
N
201,813
47,329
485,555,122
48,555,512
11,007,473
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
67
30. Capital and Reserves (continued)
All shares are entitled to the same rights.
Shareholders who as at 31 December 2020, held above 5% of the Company shares were
as follows:
• GTC Dutch Holdings B.V
• OFE PZU Zlota Jesien
• OFE AVIVA Santander
CAPITAL RESERVE
Capital reserve represents a loss attributed to non-controlling partners of the Group, which
crystalized once the Group acquired the non-controlling interest in the subsidiaries of the
Group.
RETAINED EARNING
On 27 August 2020, the Company held an ordinary shareholders meeting. It was decided
that the profit for the year 2019 presented in the financial statements of Globe Trade Centre
S.A. prepared in accordance with the International Financial Reporting Standards in the
amount of PLN 321.8 million will remain within retained earnings.
31. Provision for share based payments
PHANTOM SHARES
Certain key management personnel of the Group is entitled to specific cash payments
resulting from phantom shares in the Group (the “Phantom Shares”). The company uses
binomial model to evaluate the fair value of the phantom shares. The input data includes
date of valuation, strike price, and expiry date.
The Phantom shares (as presented in below mentioned table) have been accounted for
based on future cash settlement.
Strike (PLN)
Blocked
Vested
Total
6.11
100,000
751,200
851,200
6.31
4,275,000
20,000
4,295,000
Total
4,375,000
771,200
5,146,200
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
68
31. Provision for share based payments (continued)
As at 31 December 2020, phantom shares issued were as follows:
Last year of exercise date
Number of phantom shares
2021
500,000
2022
220,000
2023
4,426,200
Total
5,146,200
As at 31 December 2019, phantom shares issued were as follows:
Last year of exercise date
Number of phantom shares
2020
50,000
2021
1,837,400
2022
330,000
Total
2,217,400
The number of phantom shares were changed as follows:
Number of phantom shares as of 1 January 2020
2,217,400
Granted during the period
4,275,000
Exercised during the year
(1,346,200)
Number of phantom shares as of 31 December 2020
5,146,200
32. Earnings per share
Basic earnings per share were calculated as follows:
Year ended
31 December 2020
Year ended
31 December 2019
Profit/(loss) for the period attributable to
equity holders (Euro)
(70,189,000)
74,825,000
Weighted average number of shares for
calculating basic earnings per share
485,555,122
484,659,406
Basic earnings per share (Euro)
(0.14)
0.15
There have been no potentially dilutive instruments as at 31 December 2020
and 31 December 2019.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
69
33. Related party transactions
Transactions with the related parties are arm’s length transactions.
The transactions and balances with related parties are presented below:
Year ended
31 December 2020
Year ended
31 December 2019
Transaction
Asset management services
-
21
Financial arrangement fee
88
-
Management and Supervisory Board GTC S.A. remuneration for the year ended
31 December 2020 amounted to EUR 2.2 million, and 1,100,000 phantom shares were
vested.
Management and Supervisory Board GTC S.A. remuneration for the year ended
31 December 2019 amounted to EUR 1.3 million, and 800,000 phantom shares were vested.
On 13 November 2020, GTC Future Kft, a newly established wholly owned subsidiary
acquired a land plot from a subsidiary owned by the Company’s majority shareholder with
an existing old office and industrial buildings in Vaci Corridor in Budapest for
a total amount of Euro 21.35 million. The buildings have a leasable area of 12,000 sqm. The
Company plans to demolish the buildings and develop office buildings in phases with a total
leasable area of 64,000 sqm.
34. Commitments, contingent liabilities and Guarantees
COMMITMENTS
As of 31 December 2020 (and as at 31 December 2019), the Group had commitments
contracted for in relation to future building construction without specified date, amounting to
Euro 40 million (Euro 77 million). These commitments are expected to be financed from
available cash and current financing facilities, other external financing, or future instalments
under already contracted sale agreements and yet to be contracted sale agreements.
GUARANTEES
GTC gave guarantees to third parties. As of 31 December 2020 and as at 31 December
2019, the guarantees granted amounted to 0.
Additionally, the Company gave typical warranties in connection with the sale of its assets
under the sale agreements and construction completion and cost-overruns guarantee to
secure construction loans. The risk involved in the above warranties and guarantees is very
low.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
70
34. Commitments, contingent liabilities and Guarantees (continued)
CROATIA
In relation to the Marlera Golf project in Croatia, part of the land is held on a lease basis
from the State. There is furthermore a Consortium agreement with the Ministry of Tourism
of Croatia (Ministry) which includes a deadline for the completion of a golf course that has
expired in 2014. If the deadline is not met, then the Ministry has the right to terminate the
Consortium agreement which might automatically trigger the termination of the Land
Acquisition Agreements, as well as collateral activation and damages claims. Prior to 2014,
the Company has taken active steps to achieve an extension of the period for completing
the project. In February 2014, the Company received a draft amendment from the Ministry
expressing its good faith and intentions to prolong the abovementioned timeline however,
the amendment was not formalized since then. Since formalization of the amendment is not
at the sole discretion of the Group, the Management has decided to revalue the freehold
asset in assuming no development of the golf course project. Furthermore, as a prudential
measure, the Management has also written off the related collateral in the amount of Euro
1 million provided to the Ministry as a guarantee for completing the golf course. As of
31 December 2020 the book value of the investment in Marlera Golf project was assessed
by an independent valuer at €6.8 million.
35. Financial instruments and risk management
The Group’s principal financial instruments comprise bank and shareholders’ loans, bonds,
hedging instruments, trade payables, and other long-term financial liabilities. The main
purpose of these financial instruments is to finance the Group’s operations. The Group has
various financial assets such as trade receivables, loans granted, derivatives, and cash and
short-term deposits.
The main risks arising from the Group’s financial instruments are cash flow interest risk,
liquidity risk, foreign currency risk, and credit risk.
INTEREST RATE RISK
The Group exposure to changes in interest rates that are not offset by hedge relates
primarily to the Group's long-term debt obligations and loans granted.
The Group’s policy is to obtain finance bearing variable interest rates. To manage the
interest rate risk in a cost-efficient manner, the Group enters into interest rate swaps, swap
currency, or cap transactions.
The majority of the Group’s loans are nominated or swapped into Euro.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
71
35. Financial instruments and risk management (continued)
As at 31 December 2020, 95% of the Group’s borrowings are hedged (As at 31 December
2019 – 95%).
A 50bp increase in EURIBOR rate would lead to Euro 2,022 change in loss before tax.
FOREIGN CURRENCY RISK
The Group enters into transactions in currencies other than the Group's functional currency.
Therefore, it hedges the currency risk by either matching the currency of the inflow, outflow
and cash and cash equivalent with that of the expenditures.
Exchange rates as of 31 December 2020 and 2019 were as following:
31 December 2020 31 December 2019
PLN/EURO 4.6148 4.2585
The table below presents the sensitivity of profit (loss) before tax due to change in foreign
exchange:
2020
2019
PLN/Euro
PLN/Euro
Rate/Percentage
of change
5.0763
(+10%)
4.8455
(+5%)
4.3841
(-5%)
4.1533
(-10%)
4.6844
(+10%)
4.4714
(+5%)
4.0456
(-5%)
3.8327
(-10%)
Cash and blocked
deposits
(4,303)
(2,151)
2,151
4,303
(8,105)
(4,053)
4,053
8,105
Trade and other
receivables
(353)
(176)
176
353
(519)
(259)
259
519
Trade and other
payables
1,052
526
(526)
(1,052)
818
409
(409)
(818)
Land leases
3,172
1,586
(1,586)
(3,172)
3,486
1,743
(1,743)
(3,486)
The Group does not see any credit risk related to bond denominated in PLN and HUF.
Exposure to other currencies and other positions in the statement of financial position are
not material.
CREDIT RISK
Credit risk is the risk that a party to a financial instrument will fail to discharge an obligation.
To manage this risk, the Group periodically assesses the financial viability of its customers.
The Group does not expect any counter parties to fail in meeting their obligations. The Group
has no significant concentration of credit risk with any single counterparty or Group
counterparties.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
72
35. Financial instruments and risk management (continued)
With respect to trade receivables and other receivables that are neither impaired nor past
due, there are no indications as of the reporting date that those will not meet their payment
obligations.
With respect to credit risk arising from the other financial assets of the Group, which
comprise cash and cash equivalents and blocked deposits, the Group’s exposure to credit
risk equals the carrying amount of these instruments.
The maximum exposure to credit risk as of the reporting date is the full amount presented.
There are no material financial assets as of the reporting dates, which are overdue and not
impaired. There are no significant financial assets impaired.
LIQUIDITY RISK
As at 31 December 2020, the Group holds Cash and Cash Equivalent (as defined in IFRS)
in the amount of approximately EUR 272 million. As described above, the Group attempts
to efficiently manage all its liabilities and is currently reviewing its funding plans related to:
(i) debt servicing of its existing assets portfolio; (ii) capex; and (iii) development of
commercial properties. Such funding will be sourced through available cash, operating
income, sales of assets, and refinancing. The Management Board believes that based on
its current assumptions, the Group will be able to settle all its liabilities for at least the next
twelve months.
Repayments of long-term debt and interest are scheduled as follows (Euro million)
(the amounts are not discounted):
31 December
2020
31 December
2019
First year
218
251
Second year
211
189
Third year
204
199
Fourth year
272
198
Fifth year
155
270
Thereafter
292
196
1,352
1,303
The above table does not contain payments relating to the market value of derivative
instruments. The Group hedges significant parts of the interest risk related to floating
interests rate with derivative instruments. Management plans to refinance some of the
repayment amounts.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
73
35. Financial instruments and risk management (continued)
All derivative instruments mature within 1-5 years from the balance sheet date.
Maturity dates of current financial liabilities as of 31 December 2020 were as following:
Total
Overdue
Up to a
month
From a
month to
three
months
From three
months to
one year
Investment and trade
payables and
provisions
27,299
6,289
5,905
15,105
Current portion of long-
term borrowing
193,425
19,284
49,874
124,267
VAT and other taxes
payable
1,551
1,551
-
-
Deposits from tenants
1,790
149
448
1,193
Lease liabilities
163
41
122
Income tax payable
4,220
76
11
4,133
Derivatives
3,365
841
2,524
231,813
-
27,349
57,120
147,344
Some of loans, classified as current liabilities, were refinanced post balance sheet date (for
details please refer to note 37).
Maturity dates of current financial liabilities as of 31 December 2019 were as following:
Total
Overdue
Up to a
month
From a
month to
three
months
From three
months to one
year
Investment and trade
payables and
provisions
37,289
6,674
14,374
16,241
Current portion of long-
term borrowing
225,350
1,965
111,172
112,213
VAT and other taxes
payable
1,817
1,817
-
-
Deposits from tenants
1,605
117
433
1,055
Lease liabilities
208
-
52
156
Income tax payable
1,542
410
-
1,132
Derivatives
3,739
66
868
2,805
271,550
-
11,049
126,899
133,602
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
74
35. Financial instruments and risk management (continued)
FAIR VALUE
As of 31 December 2020 and 2019, all bank loans bear floating interest rate (however, as
of 31 December 2020 and 2019, 95% of loans are hedged). The fair value of the loans which
is related to the floating component of the interest equals to the market rate.
Fair value of all other financial assets/liabilities is close to carrying value.
For the fair value of investment property, please refer to note 17.
FAIR VALUE HIERARCHY
As at 31 December 2020 and 2019, the Group held several hedge instruments carried at
fair value on the statement of financial position.
The Group uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities,
Level 2: other techniques for which all inputs which have a significant effect on the recorded
fair value are observable, either directly or indirectly,
Level 3: techniques that use inputs that have a significant effect on the recorded fair value
that are not based on observable market data.
Valuations of hedges are considered as level 2 fair value measurements. During the year
ended 31 December 2020 and 31 December 2019, there were no transfers among Level 1
and Level 3 fair value measurements.
PRICE RISK
The Group is exposed to fluctuations of in the real estate markets in which it operates. These
can have an effect on the Group’s results (due to changes in the market rent rates and in
occupancy of the leased properties). Further risks are detailed in the Management Report
as of 31 December 2020.
CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to provide for operational and
value growth while prudently managing the capital and maintaining healthy capital ratios in
order to support its business and maximise shareholder value.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
75
35. Financial instruments and risk management (continued)
The Group manages its capital structure and adjusts it to dynamic economic conditions.
While observing the capital structure, the Group decides on leverage policy, loans raising
and repayments, investment or divestment of assets, dividend policy, and capital raise, if
needed.
No changes were made in the objectives, policies, or processes during the years ended
31 December 2020 and 31 December 2019.
The Group monitors its gearing ratio, which is Gross Project and Corporate Debt less Cash
& Deposits, (as defined in IFRS) divided by its real estate investment value. The Group’s
policy is to maintain the loan-to-value (“LTV”) ratio at the level not higher than 50%.
31 December 2020
31 December 2019
(1) Loans, net of cash and deposits (*)
949,192
980,903
(2) Investment properties (exc. land leases),
residential landbank, assets held for sale and
building for own use
2,099,300
2,220,994
LTV [(1)/(2)]
45.2%
44.2%
(*) Excluding loans from non-controlling interest and deferred issuance debt expenses.
36. COVID-19
The COVID-19 pandemic has triggered a wave of strong negative effects on the global
economy. The lockdowns brought a large part of the world’s economic activity to an
unparalleled standstill: consumers stayed home, companies lost revenue, and terminated
employees – which, consequently, led to a rise in unemployment. Rescue packages by
national governments and the EU, as well as supporting monetary policies by the European
Central Bank have been implemented to moderate the economic impact of the pandemic.
However, the scope and duration of the pandemic and possible future containment
measures are still impossible to predict. From mid-March 2020, it became apparent that the
economic disruptions caused by the Covid-19 virus and the increased market uncertainty
combined with increased volatility in the financial markets might lead to a potential decrease
in rental revenues, a potential decrease in the Company assets’ values, as well as impact
on the Company’s compliance with financial covenants. While the exact effect of the
coronavirus is still to be determined, it is clear that it poses substantial risks.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
76
36. COVID-19 (continued)
CLOSING AND REOPENING OF THE GROUP’S SHOPPING CENTRES
The COVID-19 pandemic has significantly impacted the Company’s business. Following the
outbreak of the COVID-19 pandemic, the authorities in many of the markets the Group
operates in imposed restrictions on the opening of its shopping centres. Except for select
“essential” retailers, or those able to offer curb side pickup or fulfill delivery orders from the
store. The tenants in the Group’s centres were unable to trade for a period beginning mid-
March and ending between beginning-May and end-May depending on the country, and
later in the period between beginning-November and ending end-December and end-
January. In addition, even in those regions in which there were no mandatory shutdowns,
or when shopping centres were allowed to reopen, not all retailers continued or restarted
operations. As at 31 December 2020, shopping centres in Poland and Bulgaria were closed.
These centres contributed 69% of total retail rental revenue for 2020.
RENT DISCOUNTS AND COLLECTION
In several countries of our operations, governments adopted tenant support packages, such
as a rental payments holiday in Poland for the period of lockdown or rent support through
subsidizing part of any rental discounts. Upon the re-opening of its shopping centres, the
Group engaged tenants in discussions about collecting rent and service charges as well as
the terms of any support by the Group. The Group implemented multi-pronged measures to
support tenants and encourage consumer spendings, such as reducing rent, allowing rent
payment in instalments, waiving late payment interest and service charges. The financial
impact of this in terms of loss of rent and service income related to the COVID-19 amounted
to Euro 14,700. Overall, we have collected 99% of the rent originally due for the year ended
31 December 2020 (99% for offices and 97% for retail).
VALUATION OF INVESTMENT PROPERTIES
As for each year end, investment properties have been valued by external independent
appraisers as described in the Note 17 Investment properties. Those appraisals have been
performed in a context of the current COVID-19 pandemic characterised by lack of
transactions since the outbreak of the pandemic and difficulties to estimate future market
prospects.
The increased uncertainty and increased volatility in the financial markets have negatively
affected the investment properties of the Group and might have an effect in the future asset
valuations, as well as impact on the Company’s compliance with financial covenants. While
the exact effect of the coronavirus is unknown and unknowable, it is clear that it poses
substantial risks of reduction of income, increasing yields, increasing collection costs, and
FX volatility.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
77
36. COVID-19 (continued)
During the financial year end 31 December 2020, the valuation of the investment properties
decreased by EUR 142,721 (for details please refer to note 17).
LIQUIDITY POSITION
During the COVID-19 pandemic, the Group took immediate steps to preserve its strong
liquidity position in light of the uncertain impact of the pandemic. These steps included cost
and CAPEX measures, as well as the decision to retain profit for the year ended 31
December 2019 in the Company. As of 31 December 2020, the Group holds cash in the
amount of EUR 271,996.
The Group runs stress tests, which indicated that the going concern assumption remains
valid for at least 12 months from the financial statement publication date.
The Group is continuously assessing the situation and undertakes mitigating steps to reduce
the impact that may be caused by the adverse market situation.
37. Subsequent events
On 8 January 2021, GTC Pixel and GTC Francuska signed a loan agreement with
Santander Bank Polska, which refinanced the existing loans. GTC Pixel repaid the loan in
PKO BP in amount of EUR 19.2 million and obtained the new loan in Santander Bank Polska
in amount of Euro 19.7 million. GTC Francuska repaid the loan in ING in amount of
EUR 18.9 million and obtained the new loan in Santander Bank Polska in amount of
Euro 19.3 million.
On 5 March 2021 Globe Office Investments Ltd an indirect wholly-owned subsidiary of the
company signed a sale and purchase agreement with a company related to the majority
shareholder of the Company for the purpose of acquisition of a Class A office building on
Váci corridor, Budapest for a consideration of EUR 51 million. Subsequently
on 19 March 2021 a loan agreement in the amount of EUR 25 million with Erste Group Bank
AG was signed for the purpose of financing the acquisition. The transaction is expected to
be close during Q2 2021 upon certain conditions precedents are fulfilled.
On 5 March 2021, GTC SA repaid all bonds issued under ISIN code PLGTC0000276 (full
redemption). The original nominal value was EUR 20,494.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
78
37. Subsequent events (continued)
On 11 March 2021 GTC Real Estate Development Hungary Zrt, a wholly-owned subsidiary
of the Company and Groton Global Corp signed a sale and purchase agreement for the
purpose of acquisition of the Napred company from Belgrade holding a land plot of 19,537
sqm for a consideration of EUR 33.8 million. The site has potential office development of
cca 79,000 sqm. The transaction is expected to be finalized during Q2 2021 upon certain
conditions precedents are fulfilled.
On 17 March 2021, GTC Real Estate Development Hungary Zrt. , a wholly-owned subsidiary
of the Company issued 10-year green bonds with the total nominal value of 53.8 million euro
denominated in HUF to finance real estate acquistions , redevelopment and constructions
of projects. . The bonds are fully and irrevocable guaranteed by the Company and were
issued at a yield of 2.68% with an annual fixed coupon of 2.6%. The bonds are amortized
10% a year starting on the 7th year with the 70% of the value paid at the maturity
on 17 March 2031.
On 17 March 2021, GTC Real Estate Development Hungary Zrt. a wholly-owned subsidiary
of the Company entered into cross-currency interest swap agreements with two different
banks to hedge the total green bonds liability against foreign exchange fluctuations. The
green bonds were fixed to the Euro, and the fixed annual coupon was swapped for an
average annual interest fixed rate of 0.93%.
As of 17 March 2021, the Polish government has announced a lockdown from 20 March
2021 till 9 April 2021 and implemented rigorous measures to contain the spread of COVID-
19, including, among others, the closure of shops in shopping malls, except those selling
essential goods (such as groceries, other food stores and pharmacies). Measures taken by
the government will affect our business. The currently known impact is a decline in revenues
of shopping malls. The magnitude of the impact is not yet fully known and will depend
between the others, on the length of the closure.
On 18 March 2021 Erste Group Bank AG, Raiffeisenlandesbank Niederosterreich-Wien AG
and GTC CTWA Sp. z o.o., a wholly-owned subsidiary of the Company, operating Galeria
Jurajska Shopping Mall, signed a waiver letter, according to which the DSCR covenant was
waived until the end of September 2022 and a prepayment of EUR 5 million will be done by
the end of March 2021.
On 19 March 2021 City Gate SRL and City Gate Bucharest SRL wholly-owned subsidiaries
of the Company signed on loan agreement prolongation with Erste Group Bank AG, for
additional 5 years.
Globe Trade Centre S.A.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
(in thousands of Euro)
The accompanying notes are an integral part of this Consolidated Financial Statements
79
37. Subsequent events (continued)
On 19 March 2021, Commercial Development d.o.o. Beograd, a wholly-owned subsidiary of
the Company, operating Ada Mall, and Intesa Bank signed a restated loan agreement
whereby the existing loan in the amount of EUR 58.3 million shall be early prepaid
by 31 March 2021 in the amount of EUR 29 million and margin reduced from 3.15% to
2.9%. Following the prepayment, the outstanding loan amount shall be payable in full at
maturity in 2029.
38. Approval of the financial statements
The financial statements were authorised for issue by the Management Board on 22 March
2021.