Appendix: Bases of Valuation
Basis of Valuation & General Assumptions NAI Hellas/AVENT S.A., in order to provide valuation/ consultancy services, is governed by the following assumptions, limitative requirements and specifications: Our report has been prepared in accordance with the standards of the Royal Institution of Chartered Surveyors (The RICS Appraisal and Valuation Standards, 7 th Edition), the European Valuation Standards of TEGοVA (Τhe European Group of Valuers Associations - EVS 2012, 7 th edition) and the International Valuation Standards of the IVSC (International Valuation Standards Committee International Valuation Standards, 2011). These standards also comply with the International Financial and Reporting Standards (IFRS). Basis of Valuation Market Value is the estimated amount for which the asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. (European Valuation Standards 1, EVS 2012) Market Value should be considered as the appreciated value of a fixed asset, without taking into consideration the costs of sale or purchase, or any related taxes and extra expenses. Fair Value (General Definition) is defined as: the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants possessing full knowledge of all relevant facts, making their decision in accordance with their respective objectives. (European Valuation Standards 2, EVS 2012) Fair Value (for Accounting Purposes) Up to 31/12/2012 The amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm s length transaction. (EVS 2, 2009, IASB, IAS 16, par. 6) According to the International Accounting Standard 16 (IAS 16) the fair value of land and buildings usually coincides with their market value. After 1/1/2013 the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants at the measurement date (International Accounting Standards Board (IASB), International Financial Reporting Standards (IFRS) 13, Par.1) Special Value is defined as an opinion of value that incorporates consideration of characteristics that have a particular value to a Special Purchaser. A Special Purchaser is a purchaser who can optimize the usefulness of an asset compared to other market participants and whose opinion of price equates to a Special Value. Synergistic Value or Marriage Value is defined as an additional element of value created by the combination of two or more assets or interests where the combined value is more than the sum of the separate values (IVSC, 2011,p. 12) Investment Value or Worth is The value of an asset to the owner or a prospective owner for individual investment or operational objectives (IVSC, 2011, p. 12) Mortgage Lending Value is The value of the property as determined by a prudent assessment of the future marketability of the property taking into account long-term sustainable aspects of the property, the normal and local market conditions, the current use and alternative appropriate uses of the
property. Speculative elements shall not be taken into account in the assessment of the mortgage lending value. (European Valuation Standard 2, EVS 2012) Insurable Value is The sum stated in the insurance contract applying to that property as the liability of the insurer where damage and financial loss is caused to the insured by a risk specified in the insurance contract occurring to that property. When instructed to provide an insurable value, the valuer is to determine the figure that will provide appropriate insurance cover for the property. (European Valuation Standard 2, EVS 2012) Depreciated Replacement Cost (DRC) is recognised as a method to address Market Value in the absence of better evidence. It is defined as the current cost of replacing an existing asset with a notional modern equivalent asset, making appropriate adjustments for physical, function and technical obsolescence. (European Valuation Standard 2, EVS 2012) Properties Condition It is noted that during the inspection we did not take into account that the subject property or the nearby properties are affected or have been affected by any causes, such as pollution, natural or chemical, (such as asbestos, insulating formaldehyde foam, other chemical or toxic wastes, or any other known or unknown dangerous materials) which could affect its/their value. If it is concluded, ex post facto, that there is some kind of pollution on the subject property or on any nearby land, or that the buildings have been used or are used with means that could cause pollution problems, we reserve the right to change the values accordingly. It is also noted that during our inspection we did not investigate hidden elements of the subject property. For these elements we are unable to give an opinion regarding their condition, and for the valuation report, it is considered that they are in good condition and that no repairs need to be made. This report must not be construed as affirmation of the integrity of the architectural and static construction or the building s legality, taking into account the building s compliance to government regulations, fire regulations, safety regulations, seismicity s regulations, environmental protection or energy efficiency regulations etc unless otherwise stated in the report. It is also recommended that the client is consulted by the respective specialist engineer and/or ecologist, in order to appraise any possible construction or environmental problems concerning the property, the existence of which could substantially affect the subject property s value. Furthermore, it is mentioned that we were not asked and did not carry out any ground analysis or geological report, nor investigate the subsoil, so as to find any water, oil, gas, precious metal existence, or any other mineral as well as right of extraction or usage, the existence of which could affect the property s value. Data Used In order for the valuation report to be completed, the data mentioned in the relevant paragraph was taken into account. NAI Hellas/AVENT SA did not apply accounting procedures on any of the elements received, due to the fact that this would be out of its range of work and therefore, in order for the report to be compiled, it is assumed that the data received is precise and correct. As far as the legal status of the properties is concerned, we did not make any kind of examination of the document of title. It is assumed that the owner s declarations are accurate, the rights on the fixed assets are strong and tradable and that there are no legal difficulties that cannot be overcome by means of normal legal procedures, within a fair period of time, except if it is mentioned specifically in the report.
The properties measurement data (surface, dimensions, etc.) that are quoted in the report have not been verified, except if mentioned specifically, and for this reason should not be taken as precise. In order for the report to be completed, it is assumed that the fixed assets under consideration comply with the applicable town planning regulations, as well as the use of land, and that there is no issue of encroachment, except if it is mentioned specifically in the report. The International Valuation Standards Council (IVSC) publishes the International Valuation Standards (IVS) that set out internationally accepted valuation principles, procedures and definitions. RICS has adopted these standards. For the purpose of this report, the Market Value In-Situ equates to Fair Value as defined in the IVS. Bases on Plant & Equipment Definition of Fair Value Our valuation has been prepared in accordance with International Financial Reporting Standards (IFRS) and the Royal Institution of Chartered Surveyors Valuation Standards (7th Edition). IFRS 3 Business Combinations, para. 18, states: The acquirer shall measure the identifiable assets acquired and the liabilities assumed at their acquisition-date fair values. IFRS prescribe either a cost or revaluation model for the recognition of assets. The revaluation model requires assets to be accounted for in financial statements on the basis of Fair Value, defined in International Accounting Standard 16 (IAS 16) Property, Plant and Equipment, para.6 as: The amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties in an arm s length transaction. Our valuation has been prepared in accordance with additional guidance contained in International Valuation Application 1 (IVA 1). IVA 1 states that valuations should be reported at Market Value which, in the context of our valuation, is consistent with Fair Value. Market Value is defined in the RICS Valuation Standards as: The estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion Market Value of the assets as a whole in their working place In-situ further assumes: That the plant and machinery has been valued as a whole in its working place That any purchaser of the assets will enjoy continued quiet occupation of the premises That the Plant and Equipment will continue in its present use in the business Adequate potential profitability of the business, or continuing viability of the undertaking, both having due regard to the value of the total assets employed and the nature of the operation That all assets will be retained in-situ and with the benefit of all necessary power supplies and any other services. IAS 16 further prescribes that where there is no market based evidence of Fair Value because of the specialist nature of the item of property, plant and equipment and the item is rarely sold, except as part of a continuing business, an entity may need to estimate Fair Value using an income or a Depreciated Replacement Cost approach to valuation.
Where market comparison or an income/profits test cannot be applied, depreciated replacement cost is recognised as an acceptable approach of estimating Fair Value. Useful life, according to IAS 16, is defined as: a) The period over which an asset is expected to be available for use by an entity; or b) The number of production or similar units expected to be obtained from the asset by an entity. Life expectancy is the estimated number of years that a new property will actually be used before it is retired from service. A property s normal useful life relates to how long similar properties actually tend to be used, as opposed to the more theoretical economic life calculation of how long a property can profitably be used. The best evidence of normal useful life is statistical or actuarial data derived from the study of properties that are similar to the subject under actual operating conditions. An asset s useful life may be longer than its economic life because the owner may elect not to retire the asset from service upon expiration of the asset s theoretical economic life. Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life (IAS 16). Valuation considerations This valuation is not suitable for loan security purposes. Our opinion of the Fair Value in-situ is intended to reflect the amount which would be achieved if all assets were offered at a single, properly promoted and well-attended piecemeal sale. In the event of any of the principal assets being withdrawn or otherwise being unavailable for sale, the overall attraction of the sale would be diminished and the price achieved for the remaining items reduced. The valuation figures have been prepared on a total basis and on the understanding that the assets in the plant register appended to this report remain complete. Please note that any sales of individual assets may have an adverse effect on the values of those remaining. No specific deductions have been made in respect of any statutory grants whether available or received. In preparing our valuation findings we have relied not only on the evidence of our own inspections, but also upon information provided by officers/employees of the Company. We have proceeded on the basis that where such information has been provided it is accurate and that there has been full disclosure of all material facts, which could affect the outcome.
Appendix: Map
The property is located at 22 Karterou Str. In the area of New Halicarnassus, in the Municipality of Heraklion, Prefecture of Crete.
Appendix: Photos
The property is located at 22 Karterou Str. In the area of New Halicarnassus, in the Municipality of Heraklion, Prefecture of Crete.