ARO.L Regulatory News (ARO)

26 April 2016

Arricano Real Estate plc

("Arricano" or the "Company" or, together with its subsidiaries, the "Group")

Final Results for the 12 months ended 31 December 2015

Arricano is one of the leading real estate developers and operators of shopping centres in Ukraine. Today, Arricano owns and operates five completed shopping centres comprising 147,800 sqm of gross leasable area, a 49.9% shareholding in Assofit and land for a further three sites under development.

Highlights

· Recurring revenues were USD20.4 million (2014: USD22.8 million)

· Operating profit increased to USD18.9 million (2014: USD10.5 million), both figures including revaluation gains and adjustments to operating expenses explained below

· Total fair valuation of the Company's portfolio was USD160.3 million as at 31 December 2015 (2014: USD205.6 million)

· Overall occupancy rates for 2015 increased to 96.2% against 89.3% in 2014

· As at 31 December 2015, the Company's borrowings at project level remain conservative with a loan to investment property value ratio of 37.44%, compared to 2014 number of 29.6%

· Net asset value USD3.1 million (2014: USD61.7 million)

Rupert Cottrell, Chairman of Arricano, commented: "Arricano is operating in a challenging market environment, but we continue to attract a strong tenant base and have increased occupancy across the entire portfolio. 2015 saw a record number of visitors to our malls, driven by our innovative approach to the design and management of the spaces."

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Chairman's Statement

The market environment is still challenging and this was reflected in the total revenues in the period which decreased by 11% from the prior year to USD20.4 million, while retail sales in Ukraine fell by 55% in USD terms. Occupancy across the entire portfolio increased, however, to 96.2%, up from 89.3% at 31 December 2015, demonstrating that the Company continues to have a stable tenant base and the ability to attract new tenants.

Performance in the period has again been adversely affected by the continued volatility of the market environment in Ukraine. The Ukrainian Hryvnia fell by around 52% against the USD, and inflation in the country reached 43% at the end of the year. Fortunately, Arricano remains in a stable financial position, although we do not expect to see any immediate economic recovery. However, Ukraine is set to receive around USD9bn in funding in 2016, from key bodies such as the International Monetary Fund, and the European Union.

As at 31 December 2015, Arricano has 147,800sqm of completed assets spread across five completed shopping centres ("SECs"). In addition, the Company also owns title rights for 14 ha. of development land divided into three specific sites which are at varying stages of development. These are in Lukianivka and Petrivka (both Kyiv), as well as Rozumovska (Odesa).

Reflecting the long-term confidence of the business, the Company confirmed plans to invest approximately USD80 million into the construction of a new SEC in Rozumovska, Odessa. The Odessa Mall is intended to be a three-level SEC and will include a major hypermarket, shops and shopping galleries, leisure and entertainment areas, with a gross leasable area of 39,200 sqm. The development is expected to create 1100 new jobs.

During the period under review, Arricano concluded 187 new lease contracts in its shopping mall network. This equated to letting 19,900 sqm of retail space, including 7,667 sqm in the course of rotation. 2015 also saw a record 39.3 million people visited Arricano SECs, reflecting well upon the image of the Company as a leading in developer and operator of shopping centres in Ukraine.

It has certainly been another challenging year for Arricano and I would like to take this opportunity to thank all employees of the Group for their commitment and continued loyalty to the business. The management team has undergone a number of changes, including the appointment of Tetyana Kolesnyk as the Company's Chief Financial Officer and Mykhailo Merkulov, Chief Executive Officer of the Company, as an Executive Director on the Board of Directors.

Ukraine represents the last sizeable real estate market in Europe that is still severely underdeveloped in terms of retail space. When the country returns to stability, this will again be a key driver of value and appeal to internal and external investors. For the time being, our focus remains on managing and improving our existing portfolio whilst also continuing to progress with development projects. The Board believes that the Company remains in a strong position to endure any current challenges and will continue to be a leading owner and developer of shopping centres in Ukraine.

Rupert Cottrell

Chairman

25 April 2016

Chief Executive Officer's Report

Introduction

2015 has seen the prolongation of a difficult and volatile political environment in Ukraine. However, Arricano continues to make good progress, attracting new tenants, increasing occupancy alongside pro-active marketing campaigns and pursuing the development of new projects.

· Despite the challenging environment Arricano managed to significantly outperform the market level which became possible due to several factors: new professionals from the market joined the company in key business areas, team was reunited and motivated to reach stretch goals, internal processes have been revised and efficiency improved, significant innovations in every business area have been implemented. "Innovation" was a company motto for 2015, the internal innovation campaign generated over 120 ideas, half of which have been implemented in 2015.

Results

Revenues for the period were USD20.4 million (2014:USD22.8 million). As a result, the Net Operating Income ("NOI") from the operating properties was USD20.2 million compared to USD 20.8 million in 2014. Decrease of NOI was driven by the reduction in revenues.

The loss before tax decreased to USD16.3million (2014: loss of USD69.6 million). This decrease was primarily by a reduction in the foreign currency translation loss which, in 2015, was USD 19.2 million compared to USD 49.8 million in 2014 and there was also a significant impairment charge accrued in 2014 of USD 20.7 million.

The portfolio of assets was externally and independently valued as at 31 December 2015 by Expandia LLC, part of the CBRE Affiliate Network. The portfolio was valued at USD160.3 million (31 December 2014: USD205.6 million), the reduction in the value of the portfolio was due to the fall in the value of the Hryvnia and the lower income base of the portfolio.

Bank debt at the year-end was USD60.1 million, with the majority of borrowings at the project level at an average interest rate of 9.8%. Loans mature between 2016 and 2020 and the Company's loan to investment property value ratio is 37.4%. In addition, there was USD4.2 million of cash, cash equivalents, and restricted deposits, as at 31 December 2015.

The Market

The market environment has been tough over the last 12 months, yet the Group's five shopping and entertainment centres have continued to operate as normal every day with a record 39.3 million people visiting the malls over the year. This is a great achievement by the Company and reflects the success of our strategy to focus on enhancing the customer experience of visiting the shopping centres.

The Company has been particularly active during the period in marketing both the SECs and the tenants that occupy them. There has also been a program initiated to redesign a number of the SECs and modernise the layout and accessibility to on-site facilities such as food courts and comfort zones. This, coupled with an increased operational efficiency has improved the customer experience for consumers, and has led to the increase in footfall numbers across the portfolio.

Tenants continue to be impacted by the economic environment and as a result churn levels remain higher than in a normal market. The Company's ability to find new tenants has been critical and during 2015, the Company signed 187 new lease contracts, including a number of significant tenants. Among these is NAMES'UA, the first ever multi-branded department store that offers Ukrainian-only brands, which opened a 2,140 sqm store within SEC Prospect in October 2015. Other significant tenants included Poisk Home and LC Waikiki.

In terms of the new developments, the Company is progressing projects in Odessa and Lukyanivka, Kyiv. In Odessa, plans were announced in October 2015 to invest USD80 million in the development of this site, the next stage is to complete the financing process. In Lukyanivka, development is underway and completion is expected at the end of 2017. The third development site in Petrivka (Kyiv), remains on hold currently while the management decide on the optimal strategy for development.

On 5 November 2015, the Company announced that the High Court of Justice in London had dismissed the claim filed by Stockman Interhold SA ("Stockman") seeking to overturn the declaration made in August 2014 by the London Court of International Arbitration ("LCIA") that Arricano had validly exercised the call option whereby it sought to acquire a shareholding of 50.03 per cent. in Assofit Holdings Limited, previously the holding company of the Sky Mall shopping centre in Kyiv (the Company owns the other 49.97 per cent.). The Group is now expecting an award of the sole arbitrator in respeсt of Arricano's damages claim.

While the dispute is not yet fully settled, the Company is pleased with progress so far and believes that increasing transparency and public awareness within the Ukrainian business environment is an important agenda to follow.

Outlook

Arricano continues to perform well in the context of the wider environment. To increase occupancy to 96.2% during 2015 is an excellent achievement. The asset and tenant base of the business is strong and we continue to work hard to further strengthen it with focus on servicing our tenants and all visitors to our centres.

Following the "Innovation" year of 2015, Arricano is declaring 2016 to be a "Service" year. The company management believes that increasing its service level to B2C and B2B customers will allow to significantly increase the loyalty and therefore the revenues. Service improvement to B2B customers will involve support to tenants in increasing their turnover, while B2C client will see changes in the product and service offers in the malls which will make them increase frequency of visits and lengths of stay in Arricano malls.

We know in time Ukraine will recover and at that point Arricano will be able to reap the reward of its continued investment in the existing and future portfolio.

Mykhailo Merkulov

Chief Executive Officer

25 April 2016

Operating Portfolio

In the following section we have provided an overview of each asset in the completed portfolio.

Sun Gallery (Kryvyi Rih)

Sun Gallery, opened in 2008, is one of the largest shopping malls in Kryvyi Rih. It is located at 30-richchia Peremohy Square, in the Saksahanskyi district in the northeastern part of Kryvyi Rih. It has easy access by car and has good public transport links. The primary shopping centre catchment area includes almost the whole territory of the Saksahanskyi district and part of the Zhovtnevyi district. The secondary area covers the Dovhyntsivskyi district.

The shopping centre is on two levels, spanning a total GLA of approximately 34,740 sq. m. There are approximately 80 gallery tenants, a children's entertainment zone, a food court with restaurants and cafes, a bowling alley, and anchor tenants electronics store Comfy and hypermarket Auchan.

Key statistics

• GLA - c. 34,740 sqm

• Vacancy rate as at 31 December 2015 - 2.3 per cent.

• Average monthly rental rate - USD6.70 /sqm as at 31 December 2015

• Average Monthly Visitors (2015) - 0.4 million

• Bank debt at 31 December 2015 - USD6.22 million

• Valuation at 31 December 2015 - USD15.3 million

City Mall (Zaporizhzhia)

City Mall is one of the largest shopping centres in Zaporizhzhia with a total GLA of approximately 21,480 sq. m. on a single level. The shopping centre is located on the Dnipro river approximately 3 km from Zaporizhzhia city centre, between two densely populated areas of Zaporizhzhia in the Zhovtnevyi administrative district (1b Zaporizska street), with convenient accessibility by public and private transport.

The second phase of City Mall was opened in April 2011 and comprises a gallery with approximately 80 international and local tenants, a food court with 10 restaurants, a children's entertainment zone and parking which is shared with DIY superstore Epicenter. City Mall's anchor tenants are the hypermarket Auchan, which is the largest in the city, and the electronics store Comfy.

Key statistics

• GLA - c. 21,480 sqm

• Vacancy rate as at 31 December 2015 - 0.0 per cent.

• Average monthly rental rate - USD10.60 /sqm as at 31 December 2015

• Average Monthly Visitors (2015) - 0.5 million

• Bank debt at 31 December 2015 - USD10.4 million

• Valuation at 31 December 2015 - USD19.8 million

South Gallery (Simferopol)

The site is located in the north of Simferopol, about five minutes' driving distance from one of the city's major crossroads, Moskovska Square. The site is linked to the city centre and residential areas east of the city by one of the main thoroughfares of Simferopol. The primary shopping centre catchment area includes northern parts of the Kyivskyi and Zaliznychnyi districts. The secondary area covers almost the whole city, except for its very southern parts.

South Gallery shopping centre (Phases I and II) is situated on a land plot with a total area of 10.2 ha. Phase I of the shopping centre tenants include Auchan (international hypermarket chain) and a Comfy electronics store, with a small gallery. With the completion of Phase II in February 2014 the mall is now a regional destination shopping centre with a total GLA of 36,690 sq. m.

Key statistics

• GLA - 36,690 sqm

• Vacancy rate as at 31 December 2015 - 5.6 per cent.

• Average monthly rental rate - USD11.70 /sqm as at 31 December 2015

• Average Monthly Visitors (2015) - 0.6 million

• Bank debt at 31 December 2015 - USD4.99 million

• Valuation at 31 December 2015 - USD28.5 million

RayON (Kyiv)

The RayON shopping centre was opened to the public in August 2012. The shopping centre is located in the north east of Kyiv along the left bank of the Dnipro river, with satisfactory transportation links.

The shopping centre has a GLA of approximately 24,250 sq. m. on two levels, with approximately 860 parking spaces. The concept for RayON is a district shopping centre, which focuses on food, clothing and convenience products. The shopping centre is anchored by a Silpo foods supermarket, one of the biggest supermarket chains in Ukraine and a member of the Fozzy group. Electronics supermarket Comfy also operates within the shopping centre.

RayON has several restaurants and a children's entertainment zone to complement the retail facilities. RayON is located in the middle of the Desnjanski district, one of the most densely populated areas in Kyiv, with an estimated catchment area of approximately 170,000.

Key statistics

• GLA - c. 24,250 sqm

• Vacancy rate as at 31 December 2015 - 3.53 per cent.

• Average monthly rental rate - USD12.70 /sqm as at 31 December 2015

• Average Monthly Visitors (2015) - 0.5 million

• Bank debt at 31 December 2015 - USD20.2 million

• Valuation at 31 December 2015 - USD24.5 million

Prospect (Kyiv)

SEC Prospect is located directly on the inner ring road of Kyiv on the left bank of the Dnipro river in the Desnianskyi administrative district, with good automobile accessibility and public transport links. The area is already recognised as a popular shopping destination, located close to a large open-air market and a bazaar-style shopping centre (SC Darinok).

The SEC consists of a two-storey retail and leisure complex with a total gross building area of approximately 41,650 sqm (excluding roof and surface parking and excluding the hypermarket building referred to below) and a GLA of approximately 30,650 sq. m. and parking. The centre opened at the end of 2014.

Key statistics

• GLA - c. 30,650 sqm

• Vacancy rate as at 31 December 2015 - 7 per cent.

• Average monthly rental rate - USD8.50 /sqm as at 31 December 2015

• Average Monthly Visitors (2015) - 1.1 million

• Bank debt at 31 December 2015 - USD18.26 million

• Valuation at 31 December 2015 - USD26.0 million

Development Properties

Lukianivka (Kyiv)

The Lukianivka development property is located on the right bank of Kyiv in the Shevchenkivskyi administrative district. The land plot has a total area of 4.14 hectares. The Group is planning to construct its flagship shopping centre in the central business district of Kyiv, with a more upmarket vision in terms of the concept and tenant mix. The Lukianivka development property allows for the construction of a multi-use complex, consisting of a shopping and leisure centre including, inter alia, a hypermarket, shops and shopping galleries, a leisure and entertainment area, a food court restaurants and a service area. The property would also have two underground parking levels and one seven-storey residential building, construction of which will continue after completion of the shopping centre. It is expected that the GLA of the shopping and entertainment centre would be approximately 47,000 sq. m. The Group obtained the relevant construction permit in June 2013.

Land plot: 4.14 hectares

Title: leasehold title plus title to several buildings (historical landmarks) on the site

Development: retail, leisure and entertainment centre

Gross construction area (GBA): c.69,300 sqm for the shopping centre (plus c.45,500 sqm GBA for parking)

Gross leasable area (GLA): c.47,000 sqm

Parking spaces: to include roof parking and underground parking

Type: city shopping centre (pocket hypermarket anchored) with residential

Actual construction start date: Q4 2013

Forecast opening date: Q4 2017

Rozumovska (Odesa)

The Black Sea port of Odesa is Ukraine's fourth largest city, with over one million inhabitants, and is a popular leisure destination. The Rozumovska development property is located partly on the façade of Rozumovska Street close to its intersection with Balkovska Street, in the Malynovskyi administrative district of Odesa, in close proximity to public transportation links.

The site is located opposite the city's main bus station. Rozumovska Street connects directly to the highway to Kyiv.

The Group has signed a lease agreement for the land plot with a total area of 4.5 hectares. The Rozumovska development property is expected to be a three-storey shopping and entertainment centre with a sufficient number of parking spaces to accommodate customer demand. The target GLA is approximately 39,200 sq. m., including a hypermarket, shops and shopping galleries, a leisure and entertainment area, a food court restaurants and a service area. The preliminary design concept of the project has been completed and the developer is currently applying for the relevant consents and permits, given current market conditions.

Petrivka (Kyiv)

The Petrivka development property is located on the right bank of the Dnipro river in Kyiv, in the Obolonskyi administrative district. The site has an area of 5.4 ha. The Group is currently considering the best use of the site, which could include both residential and retail use. If the site is to be developed as a shopping centre, the management expects the GLA to be approximately 31,450 sq. m.

Investment

Sky Mall (Kyiv)

Sky Mall is one of the largest shopping centres in Kyiv, built to an award-winning design by the international architectural firm Chapman Taylor. It is home to top-quality brands, which include TopShop and Marks & Spencer, and anchored by the hypermarket Auchan, Comfy and stores of the Inditex Group. The first phase of the shopping centre (hypermarket) opened in 2007 and the second phase of the development opened in August 2010. It is located in the Dniprovskyi district of Kyiv on Vatutina Avenue, on the left bank of the Dnipro River. The shopping centre has good motor vehicle access and public transport links.

The GLA of the current operating centre (Phases I and II) is approximately 68,000 sq. m, with approximately 1,880 parking spaces. The shopping centre spans three levels with a cinema, children's and entertainment zone, food court, hypermarket and gallery shops.

The Company currently owns only 49.97 per cent. of Assofit Holding Limited, which earlier acted as the holding company of the Sky Mall Shopping and Entertainment Centre. Taking into consideration that the holding was stripped down of its main asset in 2014, Arricano is taking all possible legal measures to return the property and acquiring the remaining interests from the other party.

Key statistics

• Arricano ownership - 49.97 per cent in Assofit.

• GLA - c. 68,000 sqm

Finance Report

The Company's revenue mainly consists of rental income from the portfolio of the completed properties. During the year ended 31 December 2015 the Company's rental income amounted toUSD20.4 million (2014: USD22.8 million).

In 2015, the total fair valuation of the Company's portfolio was USD160.3 million as at 31 December 2015 (2014: USD205.6 million). The change once again reflected the decrease in USD revenue forecasts due to discounts provided to tenants and the increased yields applied at valuation that have changed with the market conditions and perceived security risks.

The Company continues to work to reduce the cost base to help offset the reduction in revenues and operating expenses during the period were USD15.6 million, compared to USD50.9 million in the previous year.

As a result of the above, profit from operating activities has increased by 80% to USD18.9 million (2014: USD10.5 million).

Despite the devaluation of the Hryvnia, foreign exchange losses on monetary items that form part of the net investment in the foreign operation, net of tax effect were USD80.8 million (2014: USD146.5 million) due to devaluation Ukrainian national currency.

Net finance expenses in 2015 decreased by USD44.9 million as a result of the reduction in foreign exchange losses in the period, as well as there being no further impairment of available-for-sale financial assets.

The Company's net loss for the year ended 31 December 2015, was USD20.4 million (2014: USD78.6 million). There was a decrease in foreign exchange losses from the prior year and also a reduction in employee and operational costs which contributed to this improved figure.

Net Asset Value as at 31 December 2015 was USD3.1 million (2014: USD61.7 million), resulting in an Adjusted Net Asset Value per Share of USD0.03 (2014: USD0.59). The decrease in NAV was driven primarily by the impact of the foreign exchange losses, as well as an increase in the accumulative deficit accrued from losses in prior years.

Total assets, as at 31 December 2015, amounted to USD173.2 million (2014: USD239.9 million), a decrease of 27.8% from the previous year. This mainly related the decrease in investment property value, as well as the selling of land in the portfolio.

Cash balances as at 31 December 2015 including cash equivalents and both current and long term deposits amounted to USD4.2 million (2014: USD3.1 million).

In July 2015, the Group signed a new loan agreement with PJSC "Raiffeisen Bank Aval" ("PJSC") for the total amount of UAH255.1 million, equivalent to USD11.8 million as at the date of the agreement. This was used to refinance the existing loan with PJSC, which was negotiated at less favourable terms in 2014.

In December 2014, the Group concluded a new loan agreement with the EBRD for the facility of USD 25 million to refinance an existing loan due to Oshchadbank and to repay amounts due to constructors. In March 2015, the Group obtained the first tranche of USD 10 million. In April 2015, the Group obtained the second tranche of USD 9 million.

As at 31 December 2015, the Company had USD105 million of outstanding borrowings.

Tetyana Kolesnyk

Chief Financial Officer

25 April 2016

Consolidated statement of financial position as at 31 December 2015

Non-cash movements

During the year ended 31 December 2015, acquisition of investment property of USD 1,925 thousand was financed through finance leases (2014: USD 3,334 thousand).

Consolidated statement of changes in equity as at and for the year ended 31 December 2015

1 Background

(a) Organization and operations

Arricano Real Estate PLC ("Arricano", the "Company" or the "Parent Company") is a public company that was incorporated in Cyprus and is listed on the London Alternative Investment Market (London AIM). The Parent Company's registered address is office 1002, 10th floor, Nicolaou Pentadromos Centre, Thessalonikis Street, 3025 Limassol, Cyprus. Arricano and its subsidiaries are referred to as the "Group", and their principal place of business is in Ukraine.

The main activities of the Group are investing in the development of new properties in Ukraine and leasing them out. As at 31 December 2015, the Group operates five shopping centres in Kyiv, Simferopol, Zaporizhzhya and Kryvyi Rig with a total leasable area of over 147,800 square meters and is in the process of development of two new investment projects in Kyiv and Odesa, with one more project to be consequently developed.

(b) Ukrainian business environment

Ukraine's political and economic situation has deteriorated significantly since 2014. Following political and social unrest, which started in November 2013, in March 2014 various events in Crimea led to the annexation of the Republic of Crimea by the Russian Federation, which was not recognised by Ukraine and many other countries. This event resulted in a significant deterioration of the relationship between Ukraine and the Russian Federation. Following the instability in Crimea, regional tensions have spread to the Eastern regions of Ukraine, primarily Donetsk and Lugansk regions. In May 2014, protests in those regions escalated into military clashes and armed conflict between supporters of the self-declared republics of the Donetsk and Lugansk regions and the Ukrainian forces, which continued through the date of these consolidated financial statements. As a result of this conflict, part of the Donetsk and Lugansk regions remains under control of the self-proclaimed republics, and Ukrainian authorities are not currently able to fully enforce Ukrainian laws on this territory.

Unrest in Donetsk and Lugansk does not affect the flow of current business of the Group.

Political and social unrest combined with the military conflict in the Donetsk and Lugansk regions has deepened the ongoing economic crisis, caused a fall in the country's gross domestic product and foreign trade and a deterioration in state finances. Following the devaluation of the national currency, the National Bank of Ukraine introduced certain administrative restrictions on currency conversion transactions, which among others included restrictions on purchases of foreign currency by individuals and companies, the requirement to convert 75% of foreign currency proceeds to local currency, a ban on payment of dividends abroad, a ban on early repayment of foreign loans and restrictions on cash withdrawals from banks. These events had a negative effect on Ukrainian companies and banks, significantly limiting their ability to obtain financing on domestic and international markets.

From 2015 and onwards there was a strong bias towards fighting corruption in Ukraine driven by activists and new ministers-reformers, which was strongly supported by international partners and donors.

Ukraine has been receiving international financial aid helping to fund reforms in the most problematic areas of the economy. This international aid allowed the National Bank of Ukraine to increase its foreign currency reserves and improve its sovereign credit rating in 2015.

The final resolution and the effects of the political and economic crisis are difficult to predict but may have further severe effects on the Ukrainian economy.

As at 31 December 2015, the carrying value of the Group's investment property located in Simferopol, the administrative centre of the Republic of Crimea, amounted to USD 28,500 thousand (2014: USD 27,800 thousand). The ultimate effect of these developments in the Republic of Crimea on the Group's ability to continue operations in this region, to realise its related assets and to maintain and secure its ownership rights cannot yet be determined.

Whilst management believes it is taking appropriate measures to support the sustainability of the Group's business in the current circumstances, a continuation of the current unstable business environment could further negatively affect the Group's results and financial position in a manner not currently determinable. These consolidated financial statements reflect management's current assessment of the impact of the Ukrainian business environment on the operations and the financial position of the Group. The future business environment may differ from management's assessment.

(c) Cyprus business environment

The Cyprus economy has been adversely affected from the crisis in the Cyprus banking system in conjunction with the inability of the Republic of Cyprus to borrow from international markets. As a result, the Republic of Cyprus entered into negotiations with the European Commission, the European Central Bank and the International Monetary Fund (the "Troika"), for financial support, which resulted in an agreement and the Eurogroup decision of 25 March 2013.

The current economic environment of Cyprus is not expected to have a significant impact on the operations of the Group as the Group does not hold significant funds in Cypriot financial institutions.

On the basis of the evaluation performed, the Group's management has concluded that no additional provisions or impairment charges are necessary. The Group's management believes that it is taking all the necessary measures to maintain the viability of the Group and the development of its business in the current business and economic environment.

2 Basis of preparation

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU).

(b) Basis of measurement

The consolidated financial statements have been prepared under the historical cost basis except for investment property, which is carried at fair value.

(c) Functional and presentation currency

The functional currency of Arricano Real Estate PLC is the US dollar (USD). The majority of Group entities are located in Ukraine and have the Ukrainian Hryvnia (UAH) as their functional currency, except for Voyazh-Krym LLC, which has the Russian Rouble (RUB) as its functional currency starting from 1 May 2014, following the changes in the Ukrainian business environment described in note 1(b). The Group entities located in Cyprus and Isle of Man have the US dollar as their functional currency, since substantially all transactions and balances of these entities are denominated in US dollar.

For the benefits of principal users, the management chose to present the consolidated financial statements in USD, rounded to the nearest thousand.

In translating the consolidated financial statements into USD the Group follows a translation policy in accordance with International Financial Reporting Standard IAS 21, The Effects of Changes in Foreign Exchange Rates and the following procedures are performed:

- Historical rates: for the equity accounts except for net profit or loss and other comprehensive income (loss) for the year.

- Year-end rate: for all assets and liabilities.

- Rates at the dates of the transactions: for the statement of profit or loss and other comprehensive income and for capital transactions.

UAH and RUB are not freely convertible currencies outside Ukraine and the Russian Federation, and, accordingly, any conversion of UAH and RUB amounts into USD should not be construed as a representation that UAH and RUB amounts have been, could be, or will be in the future, convertible into USD at the exchange rate shown, or any other exchange rate.

The principal USD exchange rates used in the preparation of these consolidated financial statements are as follows.

Year-end USD exchange rates as at 31 December are as follows:

Average USD exchange rates for the years ended 31 December are as follows:

As at the date of these consolidated financial statements are authorised for issue, 25 April 2016, the exchange rate is UAH 25.34 to USD 1.00 and RUB 66.22 to USD 1.00.

(d) Use of judgments, estimates and assumptions

The preparation of the consolidated financial statements in conformity with IFRSs as adopted by the EU requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent assets and liabilities. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements and have significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

• note 2(c) - determination of functional currency,

• note 4 - valuation of investment property,

• note 5 - valuation of loans receivable,

• note 7 - valuation of trade and other receivables,

• note 8(a) - classification of assets held for sale,

• note 23(d)(i) - legal case in respect of Assofit Holdings Limited and valuation of related available-for-sale

financial asset.

(e) Going concern

The Group incurred a net loss of USD 20,379 thousand in 2015 and, as at 31 December 2015, the Group's current liabilities exceed current assets by USD 105,026 thousand. In addition, the Group has not complied with the several loan covenants under the existing loan agreements (refer to note 12), which gives the lender a right to demand immediate repayment of the loans amounting to USD 20,193 thousand as at 31 December 2015. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Group's ability to continue as a going concern.

At the same time, the Group has positive equity of USD 3,050 thousand as at 31 December 2015 and positive cash flows from operating activities amounting to USD 7,352 thousand for the year then ended.

Management is undertaking the following measures in order to ensure the Group's continued operation on a going concern basis:

· The Group has financial support from the ultimate controlling party. Based on representations received in writing from entities under common control, management believes that the Group will not be required to settle the outstanding loans, accrued interest and other payables to related parties in the amount of USD 24,522 thousand plus any accruing interest thereon at least until 31 December 2016.

· The Group will be able to draw on existing facilities granted from entities under common control amounting to USD 9,395 thousand, should this be required for operational and other needs of the Group.

· In February 2016, the Group signed an amendment to the share exchange agreement in order to postpone the payment of deferred consideration of USD 20,000 thousand from 30 April 2016 to 30 June 2017 (refer to note 25(a)).

· In February 2016, the Group signed an amendment to the loan agreement with Bytenem Co Limited in order to postpone the settlement of outstanding balance of USD 16,143 thousand from 14 March 2016 to 30 June 2017 (refer to note 25(a)).

· In April 2016, management obtained letter from PJSC "Bank "St.Petersburg" waiving the breaches of covenants. Accordingly, management believes that PJSC "Bank "St.Petersburg" will not demand early repayment of the loans amounting to USD 20,193 thousand with contractual maturity in 2016-2020 presented as a short-term liability as at 31 December 2015.

· The management has taken steps to restructure the organization of the Group in order to increase the operating efficiency and reduce the costs of the Group.

· During the year ended 31 December 2015, management was able to conclude a number of new tenancy agreements for unoccupied property and substantially increase occupancy rate for its shopping centre in Kyiv.

Management believes that the measures that it undertakes, as described above, will allow the Group to maintain the positive working capital and operate on a going concern basis in the foreseeable future.

These consolidated financial statements are prepared on a going concern basis, which contemplates the realisation of assets and the settlement of liabilities in the normal course of business.

(f) Measurement of fair values

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

· Note 4 - investment property; and

· Note 22(e)(iii) - fair values.

3 Significant accounting policies

The accounting policies set out below are applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

During the year ended 31 December 2015 certain comparative amounts in the income tax expense note have been reclassified to conform to the current year presentation.

(a) Basis of consolidation

(i) Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

The Group measures goodwill at the acquisition date as:

· The fair value of the consideration transferred; plus

· The recognised amount of any non-controlling interests in the acquiree; plus

· If the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

· The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities that the Group incurs in connection with a business combination, are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

When the acquisition of subsidiaries does not represent a business, it is accounted for as an acquisition of a group of assets and liabilities. The cost of the acquisition is allocated to the assets and liabilities acquired based on their relative fair values, and no goodwill or deferred tax is recognised.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Consolidated entities as at 31 December are as follows:

On 6 March 2014, the Group established Budkholinvest LLC, a new subsidiary of Wayfield Limited with incorporation in Ukraine. This subsidiary was established to act as the financing or investment company for one of the Group's investment projects in Kyiv. As at 31 December 2015, the charter capital of Budkholinvest LLC amounting to USD 103 was unpaid.

On 24 July 2014, the Group established Crimsonville Investments Limited, a new subsidiary of U.A. Terra Property Management Limited with incorporation in Cyprus. This subsidiary was established for the purpose of facilitating operations, management and maintenance of the investment property located in the Republic of Crimea. As at 31 December 2015, this subsidiary is still dormant and has no assets or liabilities, due to sanctions imposed by the United States of America and the EU on individuals and businesses from Russia and Ukraine. As at 31 December 2015, the charter capital of Crimsonville Investments Limited amounting to USD 1,347 was unpaid. On 28 April 2015, the Group approved to liquidate Crimsonville Investments Limited. As at 31 December 2015, this subsidiary is not yet liquidated.

(iii) Transactions with entities under common control

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for using book value accounting. Any result from the acquisition is recognised directly in equity.

Disposals of interests in subsidiaries to entities that are under the control of the shareholder that controls the Group are accounted for using book value accounting. Any result from the disposal is recognised directly in equity.

(iv) Loss of control

Upon the loss of control, the Group derecognises the carrying amounts of the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(v) Transactions eliminated on consolidation

Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing these consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency transactions and operations

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rates as at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the reporting period.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments which are recognised in other comprehensive income.

Foreign currency transactions of Group entities located in Ukraine

In preparation of these consolidated financial statements for the retranslation of the operations and balances of Group entities located in Ukraine denominated in foreign currencies, management applied the National Bank of Ukraine's (NBU) official rates. Management believes that application of these rates substantially serves comparability purposes.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of, such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the foreign currency translation difference reserve in equity.

(c) Financial instruments

The Group classifies non-derivative financial assets into the following categories: loans and receivables and available-for-sale financial assets.

The Group classifies non-derivative financial liabilities into the other financial liabilities category.

(i) Non-derivative financial assets and financial liabilities - recognition and derecognition

The Group initially recognises loans and receivables on the date that they are originated. All other financial assets and financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. The Group currently has a legally enforceable right to set off if that right is not contingent on a future event and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the Group and all counterparties.

(ii) Non-derivative financial assets - measurement

Loans and receivables

Loans and receivables are a category of financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise the following classes of financial assets: trade and other receivables as presented in note 7, loans receivable as presented in note 5, restricted deposits and cash and cash equivalents as presented in note 9.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits and highly liquid investments with maturities of three months or less from the acquisition date that are subject to insignificant risk of changes in their fair value.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the other categories of financial assets. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (refer to note 3(i)(i)), are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised or impaired, the cumulative gain or loss in equity is reclassified to profit or loss. Unquoted equity instruments whose fair value cannot reliably be measured are carried at cost.

Available-for-sale financial assets comprise equity securities.

(iii) Non-derivative financial liabilities - measurement

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings as presented in note 12, finance lease liability as presented in note 13, trade and other payables as presented in note 14 and other liabilities as presented in note 16.

(iv) Capital and reserves

Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

Share premium

Share premium reserves include amounts that were created due to the issue of share capital at a value price greater than the nominal.

Non-reciprocal shareholders contribution

Non-reciprocal shareholders contribution reserve includes contributions made by the shareholders directly in the reserves. The shareholders do not have any rights to these contributions which are distributable at the discretion of the Board of Directors, subject to the shareholders' approval. In prior years' consolidated financial statements this reserve was presented under the heading "Additional paid-in capital".

Retained earnings (accumulated deficit)

Retained earnings (accumulated deficit) include accumulated profits and losses incurred by the Group.

Other reserves comprise the effect of acquisition and disposal of subsidiaries under common control, change in non-controlling interest in these subsidiaries, and the effect of forfeiture of shares.

Foreign currency translation differences comprise foreign currency differences arising from the translation of the financial statements of foreign operations and foreign exchange gains and losses from monetary items that form part of the net investment in the foreign operation.

(d) Investment properties

Investment properties are those that are held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in production or supply of goods or services or for administrative purposes.

Investment properties principally comprise freehold land, leasehold land and investment properties held for rental income earning or future redevelopment.

Leasehold of land under operating lease is classified and accounted for as an investment property when the definition of investment property is met. Under investment property accounting, the right to use the land is measured at fair value and the obligation to pay rentals is accounted for as a finance lease.

(i) Initial measurement and recognition

Investment properties are measured initially at cost, including related acquisition costs. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

If the Group uses part of the property for its own use, and part to earn rentals or for capital appreciation, and the portions can be sold or leased out separately, they are accounted for separately. Therefore the part that is rented out is investment property. If the portions cannot be sold or leased out separately, the property is investment property only if the company-occupied portion is insignificant.

(ii) Subsequent measurement

Subsequent to initial recognition investment properties are stated at fair value. Any gain or loss arising from a change in fair value is included in profit or loss in the period in which it arises.

When the Group begins to redevelop an existing investment property for continued future use as investment property, the property remains an investment property, which is measured at fair value, and is not reclassified to property and equipment during the redevelopment.

When the use of a property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

Investment properties are derecognised on disposal or when they are permanently withdrawn from use and no future economic benefits are expected from their disposal. The gain or loss on disposal is calculated as the difference between the net disposal proceeds and the carrying amount of the asset and is recognised as gain or loss in profit or loss.

It is the Group's policy that an external, independent valuation company, having an appropriate recognised professional qualification and recent experience in the location and category of property being appraised, values the portfolio as at each reporting date. The fair value is the amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction. The valuation is prepared in accordance with International Valuation Standards published by the International Valuation Standards Council.

(iii) Property under development (construction)

Property that is being constructed or developed for future use as an investment property and for which it is not possible to reliably determine fair value is accounted for as an investment property that is stated at cost until construction or development is complete, or until it becomes possible to reliably determine its fair value. When construction is performed on land previously classified as an investment property and measured at fair value, such land continues to be accounted at fair value throughout the construction phase.

(e) Property and equipment

(i) Recognition and measurement

Items of property and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

The gain or loss on disposal of an item of property and equipment is determined by comparing the proceeds from disposal with the carrying amount of property and equipment, and is recognised net within other income/other expenses in profit or loss.

(ii) Reclassification to investment property

When the use of a property changes from owner-occupied to investment property, the property is re-measured to fair value and reclassified to investment property. Any gain arising on re-measurement is recognised in profit or loss to the extent that it reverses a previous impairment loss on the specific property, with any remaining gain recognised in other comprehensive income and presented in the revaluation reserve in equity. Any loss is recognised immediately in profit or loss.

(iii) Subsequent costs

The cost of replacing part of an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in profit or loss as incurred.

(iv) Depreciation

Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use. Depreciation is based on the cost of an asset less its residual value.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

• vehicles and equipment 5 years

• fixture and fittings 2.5 - 5 years

Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

(f) Intangible assets

(i) Recognition and measurement

Intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(iii) Amortisation

Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use since this most closely reflects the expected pattern of consumption of future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods are as follows:

• Software 3-5 years

Amortisation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Assets classified as held for sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale.

Such assets, or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets or investment property, which continue to be measured in accordance with the Group's other accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated.

(i) Impairment

(i) Non-derivative financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults, the disappearance of an active market for a security or observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Financial assets measured at amortised cost

The Group considers evidence of impairment for financial assets measured at amortised cost at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.

In assessing collective impairment the Group uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss is calculated as the difference between an asset's carrying amount, and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group believes that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease and the decrease can be related objectively to an event occurring after the impairment was recognised, the decrease in impairment loss is reversed through profit or loss.

Available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

(ii) Non-financial assets

The carrying amounts of non-financial assets, other than investment property and inventories, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating unit (CGU). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

The Group's corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(j) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(k) Revenue

(i) Rental income from investment property

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease.

(ii) Sale of services

Revenue from services rendered is recognised in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

(l) Leases

(i) Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. This will be the case if the fulfilment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset.

At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group's incremental borrowing rate.

(ii) Leased assets

Assets held by the Group under leases that transfer to the Group substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognised in the statement of financial position.

(iii) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance cost and the reduction of the outstanding liability. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the contingency no longer exists and the lease adjustment is known.

(m) Finance income and costs

Finance income comprises interest income on funds invested, foreign currency gains, income from derecognition of finance lease liabilities and gains on initial recognition of financial liabilities at fair value. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings and on deferred consideration, foreign exchange losses and impairment of available-for-sale financial assets.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses arising on loans receivable and borrowings are reported on a net basis as either finance income or finance cost. Foreign currency gains and losses arising on accounts receivable and payable are recognised as other income or expense.

(n) Income tax expense

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

· temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

· temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and

· taxable temporary differences arising on the initial recognition of goodwill.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes, penalties and late-payment interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Group to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the tax expense in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(o) Earnings per share

The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

As at 31 December 2015 and 2014, there were no potential dilutive ordinary shares.

(p) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. Management believes that during the current year and prior year, the Group operated in and was managed as one operating segment, being property investment, with investment properties located in Ukraine and the Republic of Crimea.

The Board of Directors, which is considered to be the chief operating decision maker of the Group for IFRS 8 Operating Segments purposes, receives semi-annually management accounts that are prepared in accordance with IFRSs as adopted by the EU and which present aggregated performance of all the Group's investment properties.

(q) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not yet effective as at 31 December 2015, and have not been applied in preparing these consolidated financial statements. Of these pronouncements, potentially the following will have an impact on the Group's operations. The Group plans to adopt these standards and interpretations when they become effective.

· International Financial Reporting Standard 9 Financial Instruments (IFRS 9), published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Group has not yet analysed the likely impact of the new Standard on its financial position or performance.

· International Financial Reporting Standard 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. The core principle of the new standard is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard results in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively and improves guidance for multiple-element arrangements. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Group has not yet analysed the likely impact of the new Standard on its financial position or performance.

· International Financial Reporting Standard 16 Leases replaces the existing lease accounting guidance in IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. It eliminates the current dual accounting model for lessees, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases. Instead, there is a single, on-balance sheet accounting model that is similar to current finance lease accounting. Lessor accounting remains similar to current practice - i.e. lessors continue to classify leases as finance and operating leases. IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, early adoption is permitted if IFRS 15 Revenue from Contracts with Customers is also adopted. The Group has not yet analysed the likely impact of the new Standard on its financial position or performance.

· Various Improvements to IFRSs have been dealt with on a standard-by-standard basis. All amendments, which result in accounting changes for presentation, recognition or measurement purposes, will come into effect not earlier than 1 January 2016. The Group has not yet analysed the likely impact of the improvements on its financial position or performance.

4 Investment property

(a) Movements in investment property

Movements in investment properties for the years ended 31 December are as follows:

* As at 31 December 2014, the Group had not obtained the title documents for the shopping centre "Prospekt" in Kyiv with a total gross leasable area (GLA) of nearly 30,400 square meters and a carrying value of USD 29,100 thousand. In September 2014, this shopping centre started its operations. On 5 March 2015, the Group has obtained title documents for the shopping center "Prospect".

** As at 31 December 2015, included into land held on leasehold is the land plot, including the finance lease asset, owned by Mezokred Holding LLC. As at 31 December 2014, this land plot was presented within assets classified as held for sale (refer to note 8). As at 31 December 2015, the Group is involved as a defendant in a lawsuit alleging invalidation of a resolution of the Kyiv City Council, according to which the latter has approved an allocation of this land plot for construction of the hypermarket to Mezokred Holding LLC and entitled Mezokred Holding LLC to lease this land plot for a period of 25 years (refer to note 23(d)(ii)).

During the year ended 31 December 2015, acquisition of a land plot held on leasehold of USD 1,925 thousand was financed through finance lease (2014: USD 3,334 thousand) (refer to note 13).

During the year ended 31 December 2015, there were no capitalised borrowing costs related to the construction of any shopping centres (2014: USD 476 thousand and were related to the construction of the new shopping centre in Kyiv, with a capitalisation rate of 11.5%).

As at 31 December 2015, in connection with loans and borrowings, the Group pledged as security investment property with a carrying value of USD 91,630 thousand (2014: USD 143,878 thousand) (refer to note 23(a)).

During the year ended 31 December 2015, 42% of total construction services were purchased from one counterparty (2014: 79% of total construction services).

(b) Determination of fair value

The fair value measurement, developed for determination of fair value of the Group's investment property, is categorised within Level 3 category due to significance of unobservable inputs to the entire measurement, except for certain land held on the leasehold which is not associated with completed property and is therefore categorised within Level 2 category. As at 31 December 2015, the fair value of investment property categorized within the Level 2 category is USD 27,100 thousand (2014: USD 25,800 thousand). To assist with the estimation of the fair value of the Group's investment property as at 31 December 2015, which is represented by the shopping centres, management engaged registered independent appraiser Expandia LLC, part of the CBRE Affiliate network, having a recognised professional qualification and recent experience in the location and categories of the projects being valued.

The fair values are based on the estimated rental value of property. A market yield is applied to the estimated rental value to arrive at the gross property valuation. When actual rents differ materially from the estimated rental value, adjustments are made to reflect actual rents. The valuation is prepared in accordance with the practice standards contained in the Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors ("RICS") or in accordance with International Valuation Standards published by the International Valuation Standards Council.

Valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation, the allocation of maintenance and insurance responsibilities between the Company and the lessee, and the remaining economic life of the property. When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices and, when appropriate, counter-notices, have been served validly and within the appropriate time.

Land parcels are valued based on market prices for similar properties.

As at 31 December 2015, the estimation of fair value is made using a net present value calculation based on certain assumptions, the most important of which are as follows:

· monthly rental rates, ranging from USD 3.00 to USD 56.00 per sq.m., which are based on contractual and market rental rates, adjusted for discounts or fixation of rental rates in Ukrainian hryvnia at a pre-agreed exchange rate, occupancy rates ranging from 91% to 100%, and discount rates ranging from 15.00% to 19.00% p.a., which represent key unobservable inputs for determination of fair value;

· all relevant licenses and permits, to the extent not yet received, will be obtained, in accordance with the timetables as set out in the investment project plans.

As at 31 December 2014, the estimation of fair value is made using a net present value calculation based on certain assumptions, the most important of which are as follows:

· monthly rental rates, ranging from USD 3.00 to USD 35.00 per sq.m., which are based on contractual and market rental rates, adjusted for discounts or fixation of rental rates in Ukrainian Hryvnia at a pre-agreed exchange rate, occupancy rates ranging from 71% to 99% and discount rates ranging from 12.50% to 19.00% p.a, which represent key unobservable inputs for determination of fair value;

· all relevant licenses and permits, to the extent not yet received, will be obtained, in accordance with the timetables as set out in the investment project plans.

The reconciliation from the opening balances to the closing balances for Level 3 fair value measurements is presented in note 4(a).

As at 31 December 2015, the fair value of investment property denominated in functional currency amounted to UAH 3,381,091 thousand and RUB 1,416,111 thousand (31 December 2014: UAH 2,950,175 thousand and RUB 1,035,233 thousand). The increase in fair value of investment property results from increased rental rates invoiced in Ukrainian hryvnia due to the increase in the exchange rates applied to the USD equivalent of rental rates fixed in the rental contracts.

The valuation model used to assess the fair value of investment property as at 31 December 2015 is particularly sensitive to unobservable inputs in the following areas:

· If rental rates are 1% less than those used in valuation models, the fair value of investment properties would be USD 1,135 thousand (2014: USD 1,603 thousand) lower. If rental rates are 1% higher, then the fair value of investment properties would be USD 1,135 thousand (2014: USD 1,603 thousand) higher.

· If the discount rate applied is 1% higher than that used in the valuation models, the fair value of investment properties would be USD 7,270 thousand (2014: USD 10,362 thousand) lower. If the discount rate is 1% less, then the fair value of investment properties would be USD 8,343 thousand (2014: USD 11,908 thousand) higher.

· If the occupancy rates are 1% higher than those used in the valuation models or are assumed to be 100% for shopping centres in Kyiv and for the first stage of the shopping centre in Simferopol, the fair value of investment properties would be USD 608 thousand higher (2014: USD 1,351 thousand higher). If the occupancy rates are 1% less, then the fair value of investment properties would be USD 1,115 thousand (2014: USD 1,430 thousand) lower.

5 Loans receivable

Loans receivable as at 31 December are as follows:

Loans receivable from third parties

As at 31 December 2014, the long-term loans receivable from third party have their maturity date on 31 December 2018, are unsecured and bear a 3.2% interest rate per annum that is fully capitalised and to be repayable together with the principal. Also, as at 31 December 2014, short-term loans receivable due from the same third party in the amount of USD 8,199 thousand are represented by a loan, which bears a 3.2% interest rate per annum and is overdue. During the year ended 31 December 2015, this third party has been transferred under common control of the Group's ultimate controlling party. Consequently, these loans receivable are presented as due from related parties as at 31 December 2015.

As at 31 December 2015, management considers these loans to be non-recoverable. Consequently, management has proceeded with the full impairment of these loans receivable in total amount of USD 10,029 thousand as at 31 December 2015.

Loans receivable from related parties

In July 2011 the Parent Company granted a loan to Weather Empire Limited with the purpose of buying 1,077 shares in the Parent Company's share capital from Retail Real Estate S.A. As at 31 December 2015 and 2014, the resulting loan receivable of USD 39,761 thousand, including accrued interest of USD 9,761 thousand, is unsecured, bears a 3% fixed interest rate that is fully capitalised and repayable together with the principal and is overdue.

In July 2013 the shares of Weather Empire Limited were transferred to the Parent Company's major shareholders pro-rata to their ownership rights due to non-exercising of its conversion rights by ELQ Investors II Ltd and later on or about 12 August 2013 were transferred in full to Retail Real Estate S.A. Subsequent to this transfer, settlement of the loan by Weather Empire Limited depends on the intention and ability of the Company's ultimate controlling party to repay this loan.

As at 31 December 2015 and 2014, this loan is overdue and management considers it to be non-recoverable. In this respect management has proceeded with the full impairment of that loan receivable of USD 39,761 thousand, including accrued interest of USD 9,761 thousand, as at 31 December 2015 and 2014.

Included in short-term loans receivable as at 31 December 2015 is also a loan due from PrJSC Dniprovska Prystan, a subsidiary of Assofit Holdings Limited, amounting to USD 221 thousand (2014: USD 336 thousand) which is overdue. Full amount of this loan receivable was impaired as at 31 December 2015 and 2014.

Included in short-term loans receivable as at 31 December 2015 is also a loan due from Assofit Holdings Limited amounting to USD 54 thousand (2014: USD 54 thousand), which is overdue. Full amount of this loan receivable was impaired as at 31 December 2015.

As at 31 December 2015, the remaining short-term loans receivable granted to related parties and third parties of USD 347 thousand (2014: USD 591 thousand) are due within one year, unsecured and interest-free.

6 VAT recoverable

Management presents VAT recoverable within non-current and current assets based on the expected timing of VAT liabilities being available against which VAT recoverable can be utilised.

Management expects that long-term VAT recoverable will be recovered in full by 2019.

7 Trade and other receivables

Trade and other receivables as at 31 December are as follows:

Trade receivables from related parties are mainly comprised of accounts receivable from related party, OKey Ukraine, under the common control of the ultimate controlling party. The Group ceased working with OKey Ukraine in August 2009. As the result of financial difficulties faced by this tenant, an allowance for impairment is recognised.

As at 31 December 2015, included in other receivables from related parties are receivables from Dniprovska Prystan PrJSC amounting to USD 8,704 thousand (2014: USD 9,029 thousand), which are overdue. In 2012, the court ruled to initiate bankruptcy proceedings against the mentioned related party and, as at 31 December 2015, the decision which would declare Dniprovska Prystan PrJSC insolvent has not yet been made. Full amount of receivable was impaired as at 31 December 2015 and 2014.

8 Assets classified as held for sale

(a) Movements in assets classified as held for sale

Movements in assets classified as held for sale for the years ended 31 December are as follows:

On 3 April 2014, the Board of Directors of the Company committed to a plan to sell Gelida Holding Limited and its subsidiary Mezokred Holding LLC to the ultimate controlling party of the Group. Accordingly, the assets and liabilities of the abovementioned subsidiaries were classified as held for sale as at 31 December 2014. As at 31 December 2014 assets of these subsidiaries were represented by investment property, which is a land plot, including the finance lease asset, measured at fair value of USD 5,996 thousand, prepayments for investment property in the amount of USD 24 thousand, property under construction in the amount of USD 654 thousand and other assets in the amount of USD 71 thousand.

During the year ended 31 December 2015, the Group terminated held-for-sale classification of assets and liabilities of Gelida Holding Limited and its subsidiary Mezokred Holding LLC due to change in expected pattern of realization of these assets. As at 31 December 2015, the assets and liabilities of the above subsidiaries were reclassified as follows:

Included in other assets classified as held for sale as at 31 December 2015, is a land plot with a carrying amount of USD 1,804 thousand (31 December 2014: USD 2,742 thousand), land lease rights for which were intended to be amended by one of the Group's subsidiaries, Comfort Market Luks LLC, in respect of allocation of part of such land plot to a third party in accordance with an investment agreement concluded between the parties. Based on this investment agreement, Comfort Market Luks LLC acts as an intermediary in construction of a hypermarket with the total estimated area of 11,769 square meters and a parking lot with a total estimated area of 20,650 square meters. As at 31 December 2015 and 2014, the construction of the hypermarket and a parking lot is finalised and, except for the lease rights for the abovementioned land plot to be allocated to a third party, the owner of the hypermarket, the investment agreement is considered to be fulfilled. Management expects that the lease rights for the land plot under the hypermarket will be given to the third party in 2016 subject to completion of formal legal procedures. As at 31 December 2015, advance payment received under this agreement (refer to note 15) amounts to USD 1,917 thousand (31 December 2014: USD 2,917 thousand) and will be settled upon transfer of the lease rights for the land plot.

9 Cash and cash equivalents

Cash and cash equivalents as at 31 December are as follows:

Excluded from cash and cash equivalents as at 31 December 2015 is restricted deposit in amount of USD 800 thousand with maturity in 2016 (2014: restricted deposits in amounts of USD 1,385 thousand and USD 897 thousand, with a maturity in 2015 and 2020, respectively). These deposits serve as pledge under loan facilities (refer note 23(a)).

As at 31 December 2015, in connection with loans and borrowings, the Group also pledged as security bank balances and call deposits with a carrying value of USD 34 thousand and USD 1,255 thousand, respectively (2014: nil) (refer to note 23(a)).

As at 31 December 2015, cash and cash equivalents placed with two bank institutions amounted to USD 2,683 thousand, or 80% of the total balance of cash and cash equivalents (2014: USD 612 thousand, or 74%). In accordance with Moody's rating, these banks are rated as Caa2 and Ba2 as at 31 December 2015 (2014: Caa2 and A2, respectively).

10 Share capital

Share capital as at 31 December is as follows:

All shares rank equally with regard to the Parent Company's residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Parent Company.

During the years ended 31 December 2015 and 2014 the Parent Company did not declare any dividends.

11 Loss per share

The calculation of basic loss per share for the year ended 31 December 2015 was based on the loss for the year ended 31 December 2015 attributable to ordinary shareholders of USD 20,379 thousand (2014: USD 78,596 thousand), and a weighted average number of ordinary shares outstanding as at 31 December 2015 of 103,270,637 (2014: 103,270,637).

The Group has no potential dilutive ordinary shares.

12 Loans and borrowings

This note provides information about the contractual terms of loans. For more information about the Group's exposure to interest rate and foreign currency risk, refer to note 22.

Terms and debt repayment schedule

As at 31 December 2015, the terms and debt repayment schedule of loans and borrowings are as follows:

As at 31 December 2014, the terms and debt repayment schedule of loans and borrowings are as follows:

As at 31 December LIBOR for USD is as follows:

For a description of assets pledged by the Group in connection with loans and borrowings refer to note 23(a).

In April 2013, the Group concluded two loan agreements with PJSC "Bank "St. Petersburg" to settle the debts due to constructors in respect of the shopping centre "RayON" located in Kyiv and to finance the construction of the shopping centre "South Gallery" located in Simferopol for the amounts of USD 14,000 thousand and USD 11,000 thousand, respectively.

During the year ended 31 December 2015, the Group signed amendments to the loan agreements with PJSC "Bank "St.Petersburg" stipulating a decrease in the amount of loan principal payable in 2015 by USD 2,397 thousand, a decrease in the amount of the deposit pledged as a collateral from USD 1,385 thousand to USD 1,200 thousand and an obligation to replace the existing pledge of investment property by other investment properties acceptable to PJSC "Bank "St.Petersburg" until 31 December 2015.

As at 31 December 2015, the Group has not fulfilled an obligation to replace the existing pledge, which is considered to be the event of default under the loan agreements concluded with the bank. This breach gives PJSC "Bank "St.Petersburg" a right to demand immediate repayment of the loans amounting to USD 20,193 thousand as at 31 December 2015, which are therefore presented as short-term in these consolidated financial statements. In addition, in January 2016, the Group has not replenished the deposit pledged as a collateral for the additional amount of USD 400 thousand up to USD 1,200 thousand within the period required under the loan agreement. As at the date of these consolidated financial statements, these breaches are not remedied. In April 2016, management obtained the letter from the bank waving the breaches of these covenants. Accordingly, management believes that despite the breaches of loan covenants the bank will not demand early repayment of the loans.

In June 2013, the Group concluded a loan agreement with PJSC "Raiffeisen Bank Aval" for an irrevocable credit line with a limit of USD 15,000 thousand to refinance existing borrowings. The credit line bore 10.75% interest rate per annum and matured in July 2020. The loan was provided to Prizma Alfa LLC, the entity owning shopping centre "City Mall". In July 2015, the Group signed a new loan agreement with PJSC "Raiffeisen Bank Aval" for the total amount of UAH 255,053 thousand (equivalent of USD 11,826 thousand as at the date of the agreement) in order to refinance the existing loan due to PJSC "Raiffeisen Bank Aval" denominated in USD. The pledge remained unchanged.

In October 2013, the Group concluded a loan agreement with PJSC "State Savings Bank of Ukraine" (Oshchadbank) for an irrevocable credit line with a limit of USD 30,000 thousand to finance construction of the shopping centre "Prospect" that is developed by the Group's subsidiary LLC Comfort Market Luks. The credit line bore 11.5% interest rate p.a. and matured in September 2020. As at 31 December 2014, the undrawn credit facilities from Oshchadbank amounted to USD 20,000 thousand. In March 2015, the Group settled the outstanding amount of loan payable to Oshchadbank using the funds received from the EBRD. The related loan agreement with Oshchadbank was terminated.

In January 2014, the Group signed an amended loan agreement with the EBRD, stipulating an increase in annual interest rate to 3M LIBOR+6.5% effective from 17 March 2014 and an increase in the amount of loan principal payable in 2014 by USD 1,711 thousand.

In December 2014, the Group concluded a new loan agreement with the EBRD for the facility of USD 25,000 thousand to refinance an existing loan due to Oshchadbank and to repay amounts due to constructors. The new loan agreement concluded with the EBRD bears interest rate of 1M LIBOR+7.5% and matures on 20 December 2020. In March 2015, the Group obtained the first tranche of USD 10,000 thousand. In April 2015, the Group obtained the second tranche of USD 9,000 thousand.

In May 2014, the Group signed a loan agreement with Bytenem Co Limited for a total amount of USD 13,051 thousand. The loan bears an annual interest rate of 12% and matures in March 2015. In July 2014, the Group signed an amended loan agreement with Bytenem Co Limited and the amount of the loan facility was increased up to USD 16,051 thousand. In March 2015, the Group signed an amended loan agreement with Bytenem Co Limited stipulating a prolongation of the maturity date until March 2016.

During the year ended 31 December 2014, the Group repaid USD 13,500 thousand of loan principal to International Baltic Investments Limited, using the funds of USD 10,043 thousand obtained from Bytenem Co Limited and own funds of USD 3,457 thousand. During the year ended 31 December 2014, the Group signed an amended loan agreement with International Baltic Investments Limited, stipulating an increase in the interest rate to 10.55% per annum, a prolongation of the final repayment date until 13 August 2017 and a decrease of the principal amount to USD 15,300 thousand. Despite the fact that the final repayment date was prolonged, the loan remains payable on demand in accordance with the contractual terms of the loan agreement.

During the year ended 31 December 2015, the loan payable to International Baltic Investments Limited was assigned to Barleypark Limited. The Group has consented to the assignment of the loan, which remained a liability of the Group with its terms unaffected by the assignment.

In September 2014, the Group concluded a loan agreement with a related party for an irrevocable credit line with a limit of USD 10,000 thousand to finance working capital replenishment. The loan bears 10.5% interest per annum and matures in September 2019. As at 31 December 2015, the undrawn credit facilities from this related party amount to USD 2,558 thousand (2014: USD 7,339 thousand).

13 Finance lease liability

Finance lease liabilities as at 31 December are payable as follows: