TIDMDCI
RNS Number : 5941E
DCI Advisors Limited
30 June 2023
DCI Advisors Ltd
("DCI") or the ("Company") and together with its subsidiaries
the ("Group")
Final Results and Publica tion of Annual Report for the year
ended 31 December 2022
The Company is pleased to announce its final results for the
year ended 31 December 2022.
Copies of the Annual Report and Accounts will be posted to
shareholders today and made available on the Company's website at:
www.dciadvisorsltd.com
Enquiries
DCI Advisors Ltd
Nicolai Huls / Nick Paris, Managing Directors nickparis@btinternet.com
+44 (0) 7738 470550
finnCap (Nominated Adviser & Broker)
William Marle / Jonny Franklin-Adams / Edward Whiley / Milesh Hindocha
(Corporate Finance)
Mark Whitfeld / Pauline Tribe (Sales) +44 (0) 20 7220 0500
FIM Capital Limited (Administrator) llennon@fim.co.im / gdevlin@fim.co.im
Lesley Lennon / Grainne Devlin (Corporate Governance)
CHAIRMAN'S STATEMENT
For the year ended 31 December 2022
Dear Shareholders,
I joined the board of DCI Advisors (the "Company" or "DCI") as
Chairman in February 2023.
The previous Chairman, Martin Adams, resigned at the same time
to focus on other projects. The Board would like to thank Martin
for his guidance and support of DCI since June 2021 during what
continued to be a challenging period for the Company. The focus
remains on improving the Company's corporate governance and
implementing its new investment policy and realisation strategy
aimed at selling the remaining investments, repaying debt and
distributing the net proceeds to shareholders.
In 2022, since the Interim Report was released, there have been
two significant events:
-- The Company completed the disposal of its entire interest in
the One & Only at Kea Island project ("OOKI") Prior to the
sale, Dolphin was the owner of 66.67% of Single Purpose Vehicle Ten
Ltd ("SPV10") which, in turn, indirectly owned 50% of OOKI, thereby
providing the Company with an effective equity interest of 33.33%
in OOKI. Pursuant to the sale, the Company received a net
consideration, in aggregate, of EUR17.92 million, of which EUR0.90
million was paid as an advance to DCI on 5 December and the
remaining EUR17.02 million balance was received on completion.
Following the completion of the disposal of our interest in SPV10,
the guarantees provided by Dolphin under the OOKI construction
loan, including the existing share pledge and mortgage over
Dolphin's Scorpio Bay asset to secure the guarantees, are expected
to be released by the end of Q2 2023.
-- From these disposal proceeds, an amount of EUR13.01 million
was applied towards the repayment in full by 31 December 2022 of
the existing loan facility that Dolphin drew down on 7 June and 16
July 2021. Following this repayment, all debt at the Company level
was fully repaid. All remaining proceeds from the sale of our
interest in OOKI were retained by Dolphin to meet its accrued and
current liabilities and working capital requirements.
In 2023, in addition to the change of Chairman, there have been
a number of further significant events which would be prudent to
highlight in this FY2022 statement:
-- On 20 March 2023 the Board announced that the Investment
Management Agreement ("IMA") between the Company and Dolphin
Capital Partners Ltd ("DCP") had been terminated with immediate
effect on the basis of a repudiatory breach of that contract by
DCP
-- It had come to the Company's attention that DCP entered into
an undisclosed share option agreement with the purchaser of the
Amanzoe resort in Porto Heli, Greece at the same time that the
Company sold its interest in the resort, as originally announced on
2 August 2018 (the "Undisclosed Option Agreement"). The Undisclosed
Option Agreement entitled DCP to acquire up to 30% of the share
capital of DolphinCI Fourteen Ltd (the special purpose vehicle
holding the Amanzoe resort). A separate agreement for DCP to
acquire 15% of the share capital of DolphinCI Fourteen Limited had
been disclosed and authorised by the Company at the time.
-- The Undisclosed Option Agreement had not been disclosed to
the Company by DCP at the time of the sale of DolphinCI Fourteen
Limited. The failure by DCP, as agent of the Company under the
terms of the IMA, to disclose the existence of the Undisclosed
Option Agreement, and to fulfil its other duties as agent,
constitutes a repudiatory breach of the IMA that has resulted in
the termination of the IMA by the Company. DCP has filed a legal
claim against the Company in the commercial Courts in England
seeking to recover various sums including termination notice of six
months but the Directors believe that this claim has no merit and
have filed a counter claim.
-- The Company is seeking to pursue all legal options to recover
the value arising from the Undisclosed Option Agreement that is the
Company's property. The Directors believe that this value could be
material in the context of the size of the Company, but at this
time do not have enough information to put a precise quantum on
this and therefore no account of it has yet been taken in our
NAV.
-- The independent Directors of the Company also removed Miltos
Kambourides, who is the Co-Founder and Managing Partner of DCP, as
a Director of the Company with immediate effect.
-- The Directors have put in place additional resources since
the termination of DCP, including loan funding (from certain
shareholders in the Company), in order to enable the Company to
self-manage its assets and to enable the continued construction of
the Kilada Hills Golf & Country Resort and to facilitate the
various asset sales processes currently underway.
-- Nicolai Huls and Nick Paris were appointed as Executive
Directors of the Company and also appointed as co-Managing
Directors. The Company will now be self-managed and has no current
intention of appointing a new investment manager. The Directors
remain committed to the objectives for the Company that were
approved by Shareholders at the Company's Extraordinary General
Meeting held on 22 December 2021 which were to make no further
investments, pay off Group level debts, aim to realise all
investments by 31 December 2024 and return all surplus capital to
shareholders after retaining sufficient funds for liabilities and
working capital requirements.
On 7 June 2023, Dolphin Capital Investors Ltd changed its name
to DCI Advisors Ltd as part of the termination terms contained in
the IMA. The stock price ticker on the London Stock Exchange
remained unchanged as DCI LN.
Summary of Financial Performance
At the 31 December 2022 financial year end, the NAV of the
Company was EUR120.5 million (2021: EUR128.0 million) representing
a decrease of 5.86% compared to 31 December 2021.. The NAV reflects
a reduction of 8.7% in the value of investment property by EUR4.5
million (2021: EUR24.2 million) to EUR47.8 million (2021: EUR52.2
million) and 2022 operating expenses of EUR3.8 million (2021:
EUR7.3 million). The net loss after tax attributable to the owners
of the company was EUR5.5 million (2021: EUR21.3 million).
As at 31 December 2022, the DCI group had two principle
liabilities:
-- EUR10.4 million owed under the redeemable preference share
agreement signed at the Kilada investment level; and
-- EUR4.6 million owed to PBZ, the Croatian lender to the Livka Bay investment.
In sterling terms, DCI's NAV per share remained at 11p on 31
December 2022 (31 December 2021: 11p)
Additional Director
It is our intention to appoint a new independent Director in the
coming months in order to enhance the corporate governance within
the Company. We will update shareholders as soon as the process has
been completed.
I would like to thank shareholders and our numerous service
providers for the support and confidence that they have given the
Board in proceeding with the changes outlined above. I look forward
to meeting with shareholders in person over the coming months.
Sean Hurst
Chairman
DCI Advisors Ltd 30 June 2023
MANAGING DIRECTORS' REPORT
Termination of DCI's Investment Manager
The Company was founded by Miltos Kambourides/Dolphin Capital
Partners Ltd ("DCP") in 2004. Since that time the Company raised
close to EUR950 million in equity of which currently just EUR121
million in NAV is left. Over this period shareholders received no
dividends. No value creation was achieved while DCP as Investment
Manager received close to EUR190 million in Investment Management
fees.
Given this background we were very disappointed when it came to
the Company's attention that DCP had entered into an undisclosed
option agreement with the purchaser of the Amanzoe resort in Porto
Heli, Greece at the time that the Company sold its interest in the
resort, as originally announced on 2 August 2018 (the "Undisclosed
Option Agreement"). The Undisclosed Option Agreement entitled DCP
to acquire up to 30% of the share capital of DolphinCI Fourteen
Limited (the special purpose vehicle holding the Amanzoe resort). A
separate agreement for DCP to acquire 15% of the share capital of
DolphinCI Fourteen Limited had been disclosed and authorised by the
Company.
The failure by DCP, as agent of the Company under the terms of
the Investment Management Agreement dated 1 December 2021 (the
"IMA"), to disclose the existence of the Undisclosed Option
Agreement, and to fulfil its other duties as agent, constituted a
repudiatory breach of the IMA that resulted in the immediate
termination of the IMA by the Company which was announced 20 March
2023. The independent Directors of the Company also removed Miltos
Kambourides, who is the Co-Founder and Managing Partner of DCP, as
a Director of the Company on 18 March 2023 with immediate
effect.
Since then, the Company has received notification that DCP filed
a claim against the Company in the English High Court alleging a
repudiatory breach of contract by the Company in relation to the
termination by the Company of the IMA (the "Claim").
The Company considers the Claim to be opportunistic, speculative
and without merit and will be defending the Claim vigorously. The
Company has filed its own counterclaim. The Company will pursue all
legal options to recover the value arising from the Undisclosed
Option Agreement as the Directors believe that value is the
Company's property. The Directors believe that this value could be
material in the context of the size of the Company, but at this
time do not have enough information to put a precise quantum on
this. The Company has since found more potential issues relating to
DCP and its management of the company which are currently under
review.
Business Overview
Due to DCP's termination as Investment Manager and the removal
of Miltos Kambourides as a Director, the remaining Directors have
put in place additional resources, including funding, to enable the
Company to self-manage its assets and to enable the continued
construction of the Kilada Hills Golf & Country Resort
("Kilada") and the various asset sales processes currently
underway.
The Company has no current intention of appointing a new
investment manager. Nicolai Huls and Nick Paris became Executive
Directors of the Company with immediate effect after DCP's
termination and were also appointed as Managing Directors. The
Company is managing this transition phase together with its service
providers who are all still in place.
During 2022, the Directors focused on implementing the Investing
Policy & Realisation Strategy which had been approved by
shareholders in December 2021. Also, after the removal of Miltos
Kambourides as Director and the termination of the IMA, this
Investing Policy & Realisation Strategy continues to be in
place with the aim of paying surplus capital back to
Shareholders.
DCP was paid EUR2.4 million of advances against future incentive
fees in 2022, and it was due to be paid EUR2.31 million in 2023 and
EUR1.3 million in 2024, but these payments ended on 20 March 2023.
Additional costs have been incurred to replace DCP, but the
Directors believe they will be significantly lower than those
levels leading to a net gain to Shareholders.
In December 2022, the Company sold its stake in One & Only
Kea ("OOKI") for a net consideration, in aggregate, of EUR17.92
million which represented a premium of 17% to the valuation of the
Dolphin's investment in OOKI as disclosed in the Company's
financial statements as at 31 December 2021. From these disposal
proceeds, an amount of EUR13.01 million was applied towards the
repayment in full by 31 December 2022 of the existing loan facility
owed by DCI after which all debt at the Company level was fully
repaid. While the original plan was to maximise its realisation
value by holding and developing OOKI until fully operational, the
offer received during the summer of 2022 in combination with the
obligation to repay the existing loan facility by the year end led
the Board of Directors to decide to exit OOKI earlier than
planned.
During the year, we also focused on enhancing the value of
Kilada, an asset which we have indicated that we will hold and
develop until the first phase of construction, involving
constructing the golf course and the Country Club, is finalised.
During 2022 and 2023, DCI made some follow-on investments to Kilada
in order to enhance its value and to continue construction.
As part of our Investing Policy & Realisation Strategy, in
2022 we also made steps to implement the sales of some of our other
assets, although most progress was achieved after DCP's termination
as Investment Manager.
Bridge Financing
During 2022, the Company was able to repay its loan facility in
full after which all debt at the Company level was fully repaid. It
is the Director's view that it is not in shareholders' interests to
have another very expensive credit facility in place going
forwards.
Despite this view, due to regular operating expenses,
commitments to Kilada and Investment Management fees paid to DCP
(both advances as well as outstanding investment management fees)
it was decided by the Board of Directors to borrow some money from
shareholders in the form of modest shareholder loans. These loans
pay 12% pa interest which is much more attractive to the Company
than the other credit facilities which were offered to the Company
during 2022/2023. By the end of June 2023, the number of committed
shareholder loans was 4 with a total capital amount of EUR1.4m. We
expect more shareholder loans going forwards until we raise funds
from asset sales later this year.
Major Asset Review
Kilada Country Club, Golf & Residences
(www.mykilada.com)
The Kilada Country Club, Golf & Residences is our main
asset. Finalising the 18-hole golf course plus the Country Club is
our highest priority and we believe we should be able to reach that
target during 2024. This will be supported by the new financing
agreement put in place during May 2023 with our joint venture
("JV") partner which will help to fund these development costs. By
finalising the golf course plus the Country Club we believe we will
de-risk the project which then should support a higher valuation of
this asset.
During 2022, our 15% JV partner completed their financial
commitment to the project and contributed EUR3 million of capital
to the project bringing their total commitment to EUR12 million. In
May 2023, the Company announced a new agreement between DCI and its
JV Partner to secure funding for the finalisation of the Golf
Course and the Country Club on an 85%:15% split which reflects our
respective equity shareholdings. As part of this agreement our JV
partner has committed to lend a further EUR2.5 million with
immediate effect. Thanks to this agreement, the Company will be in
the position to apply for the payment of the first EUR1.5 million
of EUR6 million of approved Greek government grants very shortly.
These grants are drawn down in stages dependent on spending on the
project concerned.
On the development side, construction of the centrepiece Jack
Nicklaus Signature Golf Course at Kilada continues to progress.
After the archaeologists finalised their work on the site on which
the Country Club is to be built we started excavations and
construction of the retaining wall and started work on the Country
Club's access road. Archaeologists continue to work on the site,
but we do not expect that these activities will create any major
delays for the project at this stage. We also focused on the
construction of the pipe network connecting the water desalination
system with the lake and completion of the pump station and the
corresponding infrastructure.
Lavender Bay
The situation at Lavender Bay has been complicated by a
challenge in Q1 2022 by the Greek state in relation to DCI's
ownership title, which needs to be addressed in tandem with the
original vendor of the land, the Archdiocese of Dimitriada. As a
conservative measure, the now disputed ownership of Lavender Bay
has led the Company to write down the value of the asset. However,
the liability to pay further instalments of EUR20.8 million to the
Church for the land purchase has been retained in the 2022
financial statements although the Company has no intention to make
any further payments until the ownership dispute has been
resolved.
In view of these developments, we have been in negotiations with
the original vendor with a view to ensuring that no additional
funds will be paid to them under our sale and purchase contracts
until the resolution of this legal dispute with the Greek State
and, to potentially reduce the overall quantum of our deferred
liabilities to them, by capitalizing such deferred payments against
a minority equity position in the project. In parallel, we have
been working with their legal counsel to prepare our legal recourse
against the Greek State to the competent courts so that the matter
can be finally judicially resolved.
Since the current liabilities at the project level are higher
than the asset value, Lavender Bay's valuation within the Company's
NAV is negative EUR22.9m. Due to accounting rules the Company has
been obliged to use this negative valuation in its books. Given the
fact that the liabilities are at project level and non-recourse it
is the Board of Director's view that it is highly unlikely that
this negative valuation will ever be realised. So, while the
published Company's NAV is EUR120.5m, the Board of Directors
believes that the Company's real NAV is closer to EUR143.4m. The
Board of Directors believe a zero valuation for this asset is the
worst-case scenario. However, we would like to emphasise that our
focus will be to achieve a positive exit value for this asset going
forward.
Plaka Bay and Scorpio Bay
There have been no new developments at these two projects.
Livka Bay, Croatia
In October 2022, it was decided to appoint a local real estate
adviser to lead the process to find potential investors for this
asset. In 2023 the agent approached potential investors, and
several have expressed interest in the project and due diligence is
currently underway. While a 100% exit is our preferred option, we
are open to staying involved in the project together with a new
JV-partner if there is a clear path for the Company to exit from
this asset over the next couple of years.
Apollo Heights, Cyprus
In 2022, the Company had been approached by several potential
buyers for this asset, but none of these resulted in any serious
discussions. The Company is therefore currently reworking all sales
and due diligence materials relating to the site with a view to
re-marketing it.
Aristo Developers, Cyprus (a 47.9% affiliate)
In 2022, Aristo Developers benefited from a more favourable real
estate market in Cyprus. Total sales increased by close to 26%
compared to the year before. Due to this strong performance, Aristo
Developers has been able to continue to deleverage by paying down
bank debt. Sales started well in 2023and this year further revenue
growth, profits and positive cash flows are expected.
In late 2022, the Company together with the majority shareholder
signed a mandate with AXIA Ventures, a Greek and Cypriot investment
bank to sell Aristo Developers to international investors. A
marketing exercise took place in early 2023 and it is still ongoing
as we work to develop interest with those investors.
One&Only at Kea Island
The Company sold its stake in OOKI in December 2022. The project
is still under development and a precise opening date has yet to be
announced.
Market Dynamics
The Greek economy is performing strongly and has been
outperforming the EU-average growth rate. This is expected to also
be the case for the next couple of years. The recent Greek
government elections indicate another four years of a business
friendly environment in the country. The strong performance of the
Greek economy has been supported by stable politics, increasing
Foreign Direct Investment, pent-up domestic demand after many years
of underperformance and a very strong hospitality sector. Given
these positive developments it is expected that Greece will soon
again achieve investment grade status for its government bonds.
This all bodes well for DCI's Greek assets. We also expect the
availability of credit for Greek companies and real estate
developments to improve strongly over the next couple of years and
we hope to also benefit from that.
Croatia entered the Schengen passport zone and joined the EURO
currency zone on 1 January 2023. This will support the Croatian
economy as it will be easier for tourists and second homeowners to
visit the country and for foreign investors to invest in the
country while at the same time minimising their currency risk. The
tourism sector continues to perform well, and more tourists are
again expected this year.
The Cypriot economy is also performing well. While real estate
prices are still 15% below their peak they have stabilised and are
slowly picking up. The banking sector is still very conservative,
and the banks are still cautious in providing credit to companies,
but this is slowly improving. Tourism has already picked up
strongly and is supporting the economy.
Future Objectives
The Company's main objectives for 2023 are to:
1. Execute further portfolio asset disposals;
2. Progress construction at Kilada and generate plot and villa sales momentum at the project;
3. Secure adequate working capital liquidity for DCI
4. Defend our claim against DCP and pursue all legal options to
recover the value arising from the Undisclosed Option
Agreement.
Nicolai Huls, Managing Director
Nick Paris, Managing Director
DCI Advisors Ltd 30 June 2023
DIRECTORS' REPORT
The Directors present their report together with the audited
financial statements of the Company and its subsidiary undertakings
(together the "Group") for the twelve months ended 31 December
2022.
Principal Activities
The principal activity of the Group is the development of
beachfront properties in the Eastern Mediterranean - Greece, Cyprus
and Croatia.
Change of Company Name
On 1 June 2023, the Company changed its name from Dolphin
Capital Investors Ltd to DCI Advisors Ltd.
Business Review for the period and Future Developments
The consolidated statement of comprehensive income for the
twelve month period and the statement of net assets as at 31
December 2022 are set out on pages 20 and 21 of the printed report.
The assets of the Group are principally development properties and
these are valued once a year by the Directors based on
recommendations from the Managing Directors. In addition, external
valuers are contracted in each relevant country at the financial
year end to assess the current value of those properties.
A review of the development and performance of the Group and of
expected future developments has been set out in the Chairman's
Statement.
No dividends were declared or paid during 2022.
Principal Risks and Uncertainties
The Group's business is property development in the Eastern
Mediterranean. Its principal risks are therefore related to the
property market in these countries in general, and also the
particular circumstances of the property development projects that
it is undertaking.
The Directors seek to mitigate and manage these risks through
continual review, policy setting and enforcement of contractual
rights and obligations. They also regularly monitor the economic
and investment environment in countries that the Group operates in
and the management of the Group's property development
portfolio.
Directors
The Directors of the Company who held office throughout the
financial period and up to the date of this report were as
follows:
-- Martin Adams - Resigned 10 February 2023
-- Sean Hurst - Appointed 13 February 2023
-- Nicolai Huls
-- Nick Paris
-- Miltos Kambourides - Removed 18 March 2023
On 10 February 2023, Martin Adams resigned as Chairman of the
Board of Directors and Sean Hurst was subsequently elected
appointed to that role on 13 February 2023.
As of 31 December 2022 all Directors were independent
non-executive Directors, except Miltos Kambourides, who was
considered to be non-independent because of his role as the founder
and majority owner of Dolphin Capital Partners Ltd, the Company's
Investment Manager. In addition, Nicolai Huls and Nick Paris became
executive directors when they became Managing Directors on 20 March
2023.
Directors' remuneration during the twelve months ended 31
December 2022
The Directors remuneration details during the period of this
report were as follows:
Director Director's Total
fees (EUR)
(EUR)
---------------------- ----------- ---------
Martin Adams 75,000 75,000
---------------------- ----------- ---------
Nicolai Huls 6 5 ,000 6 5 ,000
---------------------- ----------- ---------
Nick Paris 65,000 65,000
---------------------- ----------- ---------
Miltos Kambourides * -- --
*Miltos Kambourides continued to waive his right to collect a
Director's fee from the Company in light of his involvement as the
founder and majority owner of the Company's Investment Manager.
The Directors intend to propose changes at the Company's AGM in
2023 to the Company's incentive fee scheme which was payable to
Dolphin Capital Partners Ltd until their Investment Management
Agreement was terminated on 20 March 2023. No incentive fees have
been paid or are due to the former Investment Manager from that
date. The proposed changes will create an incentive fee pool for
key members of the Company's employees including the Directors.
Further details will be contained in the Notice of the AGM.
Directors' interests
The interests of the Directors in the Company's shares as at 31
December 2022 were as follows:
Director Numbers of Common Shares of
Euros 0.01 each held
-------------------------------------------- ----------------------------
Nicolai Huls
- direct shareholding
- director of Discover Investment Company 775,000
which owns 30,026,849 shares
Miltos Kambourides 66,019,006
- indirect shareholding*
Nick Paris
- direct shareholding 1,634,487
* Miltos Kambourides is 75% shareholder of Dolphin Capital
Partners that held 88,025,342 shares. Following the year end
Dolphin Capital Partners disposed of all their shares in the
Company.
Substantial Shareholders
The Directors are aware of the following direct and indirect
interests comprising more than 3% of the issued share capital of
the Company as at 1 June 2023, which is the latest practicable date
before the publication of this report:
Number of Percentage of
Common Shares issued Share Capital
held (%)
------------------------------- --------------- ----------------------
Almitas Capital LLC 100,297,481 11.10
------------------------------- --------------- ----------------------
J O Hambro Capital Management
Ltd1 93,386,413 10.32
------------------------------- --------------- ----------------------
Fortress Investment Group 89,922,801 9.94
------------------------------- --------------- ----------------------
Mr. Lars Ernest Bader 82,925,600 9.17
------------------------------- --------------- ----------------------
Peter Gyllenhammar AB
The Union Discount Company
of London Ltd 70,000,000 7.74
------------------------------- --------------- ----------------------
Forager Funds Management
Pty Ltd 64,100,000 7.09
------------------------------- --------------- ----------------------
Progressive Capital Partners
Ltd 53,787,814 5.95
------------------------------- --------------- ----------------------
Terra Partners Asset Mgt
Ltd 53,736,687 5.94
------------------------------- --------------- ----------------------
Discover Investment Company
* 30,026,849 3.32
------------------------------- --------------- ----------------------
Alina Holdings Plc 28,983,930 3.20
------------------------------- --------------- ----------------------
Weiss Asset Management 27,400,000 3.03
------------------------------- --------------- ----------------------
*Nicolai Huls is a Director of Discover Investment Company
CORPORATE GOVERNANCE STATEMENT
Statement of compliance with the Quoted Companies Alliance
Corporate Governance Code (the "QCA statement")
Introduction from the Chairman
The Board of DCI (the Board or the Directors) fully endorses the
importance of good corporate governance and applies the QCA
Corporate Governance Code, published in April 2018 by the Quoted
Companies Alliance (the "QCA Code"), which the Board believes to be
the most appropriate recognised governance code for a company of
the Company's size with shares admitted to trading on the AIM
market of the London Stock Exchange. This is a practical,
outcome-oriented approach to corporate governance that is tailored
for small and mid-size quoted companies in the UK and which
provides the Company with the framework to help ensure that a
strong level of governance is maintained.
As Chairman, I am responsible for leading an effective board,
fostering a good corporate governance culture, maintaining open
communications with the major shareholders and ensuring appropriate
strategic focus and direction for the Company. The Board is also
supported by a Nomination and Corporate Governance Committee which
comprised the Board's independent Directors throughout to help us
to do that.
Notwithstanding the Board's commitment to applying the QCA Code,
we will not seek to comply with the QCA Code where strict
compliance in the future would be contrary to the primary objective
of delivering long-term value for our shareholders. However, we do
consider that following the QCA Code, and a framework of sound
corporate governance and an ethical culture, is conducive to
long-term value creation for shareholders.
All members of the Board believe strongly in the importance of
good corporate governance to assist in achieving objectives and in
accountability to our shareholders. In the statements that follow,
the Company explains its approach to governance in more detail.
The QCA Code identifies 10 principles that are considered
appropriate arrangements and asks companies to disclose how the
companies apply each principle. Our compliance with these 10
principles is set out below.
Principle 1: Establish a strategy and business model which
promote long-term value for shareholders
The Company's investment policy is to realize all its portfolio
assets in a controlled, orderly and timely manner. The strategy of
the Group, which was approved by the Company's shareholders in an
Extraordinary General Meeting held on 22 December 2021 (the "EGM"),
is set out in detail in the EGM circular dated 2 December 2021 (the
"Circular"), specifically the investing policy and realisation
strategy is defined in paragraph 4 of Part 1 and the investment
management agreement is defined in paragraph 5 in the Circular.
The Circular is available to view at: www.dciadvisorsltd.com
The Company strategy is shaped and formulated by the Board in
regular discussions with the Managing Director. The Company's
assets were managed by Dolphin Capital Partners Limited ("DCP"), an
investment management company incorporated in February 2005, until
their IMA was terminated on 20 March 2023. Full details of the
Investment Manager's remuneration arrangements and the terms and
conditions of service are set out in the Circular.
The Board is the Company's decision-making body, approving or
disapproving each investment and divestment proposed by the
Investment Manager. The Board is responsible for acquisitions and
divestments, major capital expenditures and focuses upon the
Company's long-term objectives, strategic direction, and
distributions policy. The Managing Directors are responsible for
implementing this strategy and for generally managing and
developing the business. Changes in strategy require approval from
the Board.
The key challenges and risks that the Group strategy presents
relate to the fact that most of the Company's investments are
illiquid, and there can be no assurance that the Company will be
able to realise financial returns on such investments in a timely
manner. Other risks include those associated with general economic
climate, local real estate conditions, changes in supply of, or
demand for, competing properties in an area, energy and supply
shortages, various uninsured or uninsurable risks. As a result, a
downturn in the real estate sector or the materialisation of any
one or a combination of the aforementioned risks could materially
adversely affect the Company and the implementation of the
investment policy.
In order to mitigate the above risks, the Board and the Managing
Directors, working with the Company's advisers, will continue to
explore the best manner in which the divestment of the Company's
portfolio can be achieved on an asset by asset basis, in the light
of prevailing market conditions and circumstances, in order to
maximise returns to shareholders. Moreover, in order to preserve
the financial resources of the Company, the allocation of any
additional capital investment into any of the Company's projects
will be substantially sourced from joint venture agreements with
third party capital providers and project level debt and with the
sole objective of enhancing the respective asset's realisation
potential and value.
Principle 2: Seek to understand and meet shareholder needs and
expectations
The Company is committed to engaging and communicating openly
with its shareholders to ensure that its strategy, business model
and performance are clearly understood. All Board members have
responsibility for shareholder liaison but queries are primarily
delegated to the Company's advisors or Managing Directors in the
first instance or to the Company's Chairman.
Contact details for the Company's advisors are contained on the
Company's website www.dciadvisorsltd.com
Additionally, shareholders can get in touch by sending an e-mail
to the Company's administrator, FIM Capital Limited ("FIM") at
corporate.governance@fim.co.im
The Board, together with the Managing Directors, are responsible
for implementing the strategy that was approved by the shareholders
at the EGM.
Throughout the year, the Board has regular dialogue with
institutional investors, providing them with such information on
the Company's progress as is permitted within the guidelines of the
AIM Rules, MAR and requirements of the relevant legislation. Twice
a year, at the time of announcing the Group's half and full-year
results, the Company schedules a round of investor calls with its
shareholders to update them on developments and to receive feedback
and suggestions from them.
Commencing in 2022, the Company has held an Annual General
Meeting each year ("AGM"). This provides investors the opportunity
to enter into dialogue with the Board and for the Board to receive
feedback and take action if and when necessary. The results of the
AGM are subsequently announced via RNS and published on the
Company's website. Feedback from, and engagement with, substantial
shareholders has historically been successful in ensuring, for
example, material transactions are suitably structured with
shareholder considerations in mind.
Principle 3: Take into account wider stakeholder and social
responsibilities and their implications for long-term success
Corporate social responsibility ("CSR") is a cornerstone of the
Company's culture. The Board is responsible for the social and
ethical frameworks at DCI and the Company is committed to
transparency with its approach and business and welcomes
interaction with all stakeholders and the local communities.
The Board is aware that engaging with its stakeholders
strengthens relationships, assists the Board in making better
business decisions and ultimately promotes the long-term success of
the Company. The Group's stakeholders include shareholders, members
of staff of underlying companies and of Advisors and other service
providers, suppliers, auditors, lenders, regulators, industry
bodies and the communities surrounding the locations of its
investments. DCI is an internally managed company.
The Board as a whole is responsible for reviewing and monitoring
the parties contracted to the Company, including their service
terms and conditions. The Audit Committee supports Board decisions
by considering and monitoring the risks of the Company.
The Board is regularly updated on wider stakeholder views and
issues concerning its projects, both formally at Board meetings and
informally through ad hoc updates. Advisers involved with the
investment portfolio are invited to join Board meetings and provide
a report to the Board. Engagement in this manner enables the Board
to receive feedback and better equips them to make decisions
affecting the business.
The goal is to deliver value for our stakeholders while in
parallel to contribute in meaningful ways to the local economies,
societies, and environments where DCI invests.
The Company's Corporate Social Responsibility statement can be
viewed on it's website at: www.dciadvisorsltd.com
Principle 4: Embed effective risk management, considering both
opportunities and threats, throughout the organisation
Ultimate responsibility for the process by which risk in the
business is managed rests with the Board. The Managing Directors
are required to enforce the risk management framework adopted by
the Company and report its effectiveness to the Board. The
respective risks and processes to implement risk management are
reviewed bi-annually.
The principal risks and uncertainties facing the Group, as well
as mitigating actions, are set out in this Report. These risks are
reviewed by the Audit Committee, whose role is to provide oversight
of the financial reporting process, the audit process, the system
of internal controls, overall compliance with laws and regulations
and review the budgetary process. The Audit Committee is currently
chaired by Nick Paris and its other member is Nicolai Huls.
The Company's Directors and its former Investment Manager comply
with Rule 21 of the AIM Rules relating to directors' and applicable
employees' dealings in the DCI's securities. Accordingly, DCI has
adopted an appropriate Share Dealing Code for Directors and
applicable employees of the Investment Manager and the Investment
Manager had also adopted a conflicts of interest policy.
The Company does not have an Investment Committee as, in
accordance with its investment strategy, it is not proceeding into
any investments into new projects or the acquisition of additional
assets.
Principle 5: Maintain the Board as a well-functioning, balanced
team led by the Chair
The Board had four members throughout 2022, comprising an
independent non-executive Chairman and three non- executive
directors of which 2 were independent. The Company has restrictions
on the maximum length of service
for Directors. At every annual general meeting any director:
- who has been appointed by the board since the previous annual
general meeting;
- who held office at the time of the two preceding annual
general meetings and who did not retire at either of them; or
- who has held office with the Company, other than employment or
executive office, for a continuous period of nine years or more at
the date of the meeting,
shall retire from office and may offer himself for
re-appointment by the members
The Directors biographies are published on the Company's website
at www.dciadvisorsltd.com
The Board will continue to review its structure in order to
provide what it considers to be an appropriate balance of
experience and skills. Board meetings are held on a frequent basis,
in person where possible, with additional meetings held as
required.
All Directors receive regular and timely information regarding
the operational and financial performance of the Company. Relevant
information is circulated to the Directors in advance of the Board
meetings. All Directors have direct access to the advice and
services of the Company's advisors and are able to receive
independent professional advice in the furtherance of their duties,
if necessary, at DCI's expense.
14 formal Board meetings (including Board calls) were held in
the period during 2022. A summary of Board and Committee meetings
attended in the 12 months to 10 February 2023 is set out below:
Board Meetings Audit Committee Nomination & Corporate
Governance Committee
Director Attended Eligible Attended Eligible Attended Eligible
Mr M Adams 14 14 1 1 - 1
Mr N Huls 14 14 1 1 1 1
Mr N Paris 14 14 1 1 1 1
Mr M Kambourides 14 14 - - - -
Principle 6: Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities
The biographical details of all the Directors can be viewed on
the Company website: www.dciadvisorsltd.com
The Directors skills are kept up to date by attending seminars,
conferences and specialized courses from advisers as well as
personal reading into the subjects of real estate management and
development and corporate finance. The Directors also receive ad
hoc guidance on certain matters, for example, the AIM Rules for
Companies from the Company's Nominated Adviser as well as receiving
updates on the regulatory environment from FIM, who provide
specialist fund administration services to a variety of closed
ended funds and collective investment schemes. The role and
responsibilities of the Directors are set out in a Statement of
Directors' Responsibilities and the Terms of Reference of the Audit
Committee are summarised at the end of this document.
All Directors are able to take independent professional advice
in the furtherance of their duties, if necessary, at the Company's
expense.
Principle 7: Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
Board meetings are held on a frequent basis at key geographical
locations.
To date, no independent Board evaluation process has been
conducted by the Company as the Chairman believes that the Board
performs effectively. Key strategic issues and risks are discussed
in an open and forthright manner, with decisions being made based
on the factual data available.
In future, Board evaluations will take place periodically,
whereby Board members will be asked to complete and return an
effectiveness questionnaire across a variety of criteria, then
return these to FIM, who, where necessary, will seek clarification
on any responses given. Responses will then be recorded anonymously
to enable the Board to hold open follow-up discussions on the
aggregated evaluation data.
The Board's periodic self-evaluations of performance will be
based on externally determined guidelines appropriate to the
composition of the Board and the Company's operation, including
Board committees. The scope of the self-evaluation exercise will be
re-assessed in each instance to ensure appropriate depth and
coverage of the Board's activities consistent with corporate best
practice.
The effectiveness questionnaire underlying the Board evaluation
process assesses the composition, processes, behaviours and
activities of the Board through a range of criteria, including the
size and independence, mix of skills (for example corporate
governance, financial, real estate industry and regulatory) and
experience, and general corporate governance considerations in line
with the QCA code.
All Board appointments have been made after consultation with
advisers and, when appropriate, with major shareholders. Detailed
due diligence is carried out on all new potential Board candidates.
The Board will consider using external advisers to review and
evaluate the effectiveness of the Board and Directors in future to
supplement internal evaluation processes. Additionally, the Board
will undertake formal and periodic succession planning.
The independent Directors have remained independent throughout
their term of office except for Nicolai Huls and Nick Paris who
became executive directors and therefore non-independent on 20
March 2023.
When the Board undertakes a periodic evaluation process, the
relevant materials and guidance in respect of this process,
following current best practice at the time of the evaluation, is
available from FIM.
Principle 8: Promote a corporate culture that is based on
ethical values and behaviours
Throughout DCI, culture has significant impact on behaviours,
risk management and ultimately performance. The Board is
responsible for defining the desired culture, delegating the
embedding of culture in operations in the Company and then
overseeing and monitoring the result. The Board seeks to maintain
the highest standards of integrity and probity in the conduct of
the Company's operations. An open culture is encouraged within the
Company, with regular communications among shareholders.
The Board believes that if an organization wants to create a
culture of ethical conduct, they must be sure that members have the
tools that they need to do so. These include adequate and
appropriate training, consultation, modeling and supervision. These
tools also include being able to bring internal and external
experts to the organization in to engage staff at all levels of
training and problem solving as well.
The Company has made investments in projects that seek to make a
contribution to the development of communities in which they are
located. In planning its activities, the Board will give
consideration to evaluating the social impact of proposed
developments with a view to promoting where possible local
employment and the delivery of other local benefits; and mitigating
negative impacts to the extent possible.
The Company promotes and supports the rights and opportunities
of all people to seek, obtain and hold employment without
discrimination.
The Company is also committed to being honest and fair in all
its dealings with partners, contractors and suppliers. Procedures
are in place to ensure that any form of bribery or improper
behaviour is prevented from being conducted on the Company's behalf
by investee companies, contractors and suppliers. Robust systems
are in place to safeguard the Company's information entrusted to it
by investee companies, contractors and suppliers, and seeks to
ensure that it is never used improperly.
In order to comply with legislation or regulations aimed at the
prevention of money laundering, the Company has adopted anti-money
laundering and anti-bribery procedures.
Principle 9: Maintain governance structures and processes that
are fit for purpose and support good decision-making by the
Board
A description of each board member and their experience is
available on the website at www.dciadvisorsltd.com, and the role of
the Company's committees are also available on the Company website
at: www.dciadvisorsltd.com
Responsibilities of the Board
The Board is responsible for the implementation of the
investment policy of the Company and for its overall supervision.
The Board is also responsible for the Company's day-to-day
operations. In order to fulfil these obligations, the Board has
delegated certain operational responsibilities to the Managing
Directors, to FIM and to other service providers.
The Company has not established a remuneration committee as it
is satisfied that any pertinent issues can be considered by the
Board as a whole.
The Chairman is responsible for leading an effective Board,
focusing the Directors' discussions on the key levers for value
creation and risk management as well as the effective running of
the Company, fostering a good corporate governance culture,
maintaining open communications with the major shareholders and
ensuring appropriate strategic focus and direction.
In addition to this, the Chairman is responsible for ensuring
that all Directors are fully informed and qualified to take the
required decisions.
For this purpose, non-executive directors spend time with the
Managing Directors between Board meetings, covering certain aspects
of the business where they have special expertise.
The Board receives formal investment reports from the Managing
Directors at frequent Board meetings, and receives management
accounts, and compliance reports from FIM. The Board maintains
regular contact with all its service providers and is kept fully
informed of investment and financial controls and any other matters
that should be brought to the attention of the Directors. The
Directors also have access where necessary to independent
professional advice at the expense of the Company.
In addition to these, the Directors review and approve the
following matters:
-- Strategy and management
-- Policies and procedures
-- Financial reporting and controls
-- Capital structure
-- Contracts
-- Shareholder documents / Press announcements
-- Adherence to Corporate Governance and best practice procedures
The Board has established the following Committees:
Audit Committee: The Audit Committee is chaired by Nick Paris
and its other member is Nicolai Huls and it aims to meet at least
three times a year.
The Audit Committee provides oversight and review of the
financial reporting process, the audit process, the system of
internal controls, the accounting policies, principles and
practices underlying them, liaising with the external auditors and
reviewing the effectiveness of internal controls, and overall
compliance with laws and regulations and review the budgetary
process.
Nomination & Corporate Governance Committee: The Corporate
Governance Committee is chaired by Nicolai Huls and its other
members are Martin Adams and Nick Paris. The Committee aims to meet
at least twice annually.
The role of the Nomination & Corporate Governance Committee
is to evaluate the Company's corporate governance policies and
principles and recommend changes to the Board as necessary, and
identify, evaluate and recommend to the Board qualified nominees
for Board election.
The Directors have access to the advice and services of FIM, the
Nominated Adviser, legal counsel, regulatory consultants and other
experts where it is deemed appropriate. They can also seek
independent external professional advice and any relevant training,
as necessary.
Principle 10: Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders
The Board is committed to maintaining an open dialogue with
shareholders. Direct communication with shareholders is coordinated
by the Chairman in consultation with the Company's advisers, as
appropriate.
Throughout the year, the Board maintains a regular dialogue with
institutional investors, providing them with such information on
the Company's progress as is permitted within the guidelines of the
AIM Rules, MAR and requirements of the relevant legislation.
The Company communicates with shareholders through the yearly
Annual Report and Financial Statements, Interim Report, the Annual
General Meeting, and other AIM announcements. Investors are also
able to contact the Directors and Company's advisors directly at
any time.
The Board believes that the Annual Report and the Interim Report
play an important part in presenting all shareholders with an
assessment of the Group's position and prospects. All reports and
press releases are published on the Company's website
www.dciadvisorsltd.com
If a significant proportion of independent votes were to be cast
against a resolution at any general meeting, the Board's policy
would be to engage with the shareholders concerned to understand
the reasons behind the voting results. Following this process, the
Board would make an appropriate public statement regarding any
different action it has taken, or will take, as a result of the
vote.
Details of the Directors' remuneration can be found on page 8 of
the printed report .
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF DCI ADVISORS LTD
Report on the audit of the consolidated financial statements
Qualified Opinion
We have audited the accompanying consolidated financial
statements of DCI Advisors Ltd (formerly Dolphin Capital Investors
Ltd) (the 'Company'), and its subsidiaries (together with the
Company, the 'Group'), which are presented on pages 20 to 62 of the
printed report and comprise the consolidated statement of financial
position as at 31 December 2022, and the consolidated statements of
profit or loss and other comprehensive income, changes in equity
and cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of
significant accounting policies.
In our opinion, except for the possible effects of the matter
described in the Basis for Qualified Opinion section of our report,
the accompanying consolidated financial statements give a true and
fair view of the consolidated financial position of the Group as at
31 December 2022, and of its consolidated financial performance and
its consolidated cash flows for the year then ended in accordance
with International Financial Reporting Standards as adopted by the
European Union ('IFRS-EU').
Basis for Qualified Opinion
As described in Note 16, an amount of EUR3.6 million (2021:
EUR5.1 million) is included in Investment Property as of 31
December 2022 relating to land acquired or leased by the Group's
subsidiary company Golfing Development S.A. in prior years, at Nies
(Sourpi, Thessaly), for which a fair value adjustment of EUR1.5
million was recorded as loss in 2022 in profit or loss (2021:
EUR13.2 million). The respective land is disputed by the Greek
State as to its private character and actions were taken to
register it in its name at the local Land Registries. Various
actions are in progress by the Group's component, Golfing
Development S.A. to claim its ownership and legal rights. We were
not provided with an independent legal expert opinion regarding the
outcome of these actions, hence the outcome cannot be reliably
determined at this stage. This matter existed in the preceding
financial year and caused us to qualify our audit opinion on the
consolidated financial statements relating to that year.
Based on the above, we were unable to obtain sufficient and
appropriate audit evidence in relation to the ownership and fair
value of the Investment Property of total amount of EUR3.6 million
representing approximately 2% of the total assets of the Group.
Consequently, we were unable to determine whether and to what
extent any adjustments to the fair value of this property were
necessary.
We conducted our audit in accordance with International
Standards on Auditing ('ISAs'). Our responsibilities under those
standards are further described in the 'Auditors' responsibilities
for the audit of the consolidated financial statements' section of
our report. We are independent of the Group in accordance with the
International Code of Ethics (Including International Independence
Standards) for Professional Accountants of the International Ethics
Standards Board for Accountants ("IESBA Code") together with the
ethical requirements in Cyprus that are relevant to our audit of
the consolidated financial statements, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis
for our qualified opinion
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period. This
matter was addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on this
matter.
Valuation of immovable property
(Refer to notes 15 to 16, and 19 to the consolidated financial
statements)
The risk Our response
-------------------------------------- -------------------------------------------------------------------
The Group has a significant Our audit procedures in relation
portfolio of immovable properties to the valuation of immovable
which is classified, depending properties included among others:
on the case, as investment
property, property, plant and * evaluating the competence, capabilities and
equipment and trading properties. objectivity of the external valuation specialists
The total carrying amount of engaged by the Company.
the aforementioned immovable
properties as at 31 December
2022 was EUR107 million, not * challenging the appropriateness of the valuation
including the amount of EUR3.6 methodology and assumptions used. Assumptions, such
million for which reference as those relating to the discount rates used and the
is made in the Basis for Qualified amounts and timing of forecasted cash inflows and
Opinion paragraph above. outflows, as well as the comparables used and
adjustments made in valuations were challenged based
Investment properties are measured on industry norms and external data. Internal
at fair value, property, plant valuation specialists were used within this process.
and equipment at revalued amounts, Explanations were sought for significant movements in
which are based on fair value value.
and trading properties at the
lower of cost and net realisable
value. In determining fair * reperforming specialists' calculations.
values the Group utilises in
most cases independent professional
valuers. * assessing the sensitivity of the forecasts used in
valuations.
There are significant judgements
and estimates inherent in estimating
fair value and net realisable * assessing the adequacy of the disclosures around the
value (which is based on the valuation of property assets.
intended development and future
selling price of these properties).
The existence of significant
estimation uncertainty coupled
with the fact that only a small
percentage change in the assumptions
can have a significant impact
on the valuation is why we
have given specific audit focus
and attention to this area.
-------------------------------------- -------------------------------------------------------------------
Other information
The Board of Directors is responsible for the other information.
The other information comprises the information included in the
Chairman's Statement, Managing Directors' report, Director's report
and Corporate Governance statement, but does not include the
consolidated financial statements and our auditors' report
thereon.
Our opinion on the consolidated financial statements does not
cover the other information and we will not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged
with governance for the consolidated financial statements
The Board of Directors is responsible for the preparation of
consolidated financial statements that give a true and fair view in
accordance with IFRS-EU, and for such internal control as the Board
of Directors determines is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of
Directors is responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting, unless there is an intention to either liquidate the
Company or to cease Group's operations, or there is no realistic
alternative but to do so.
The Board of Directors is responsible for overseeing the Group's
financial reporting process.
Auditors' responsibilities for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditors' report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional skepticism throughout the
audit. We also:
* Identify and assess the risks of material
misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform
audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.
* Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Group's internal control.
* Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the Board of
Directors.
* Conclude on the appropriateness of the Board of
Directors' use of the going concern basis of
accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant doubt
on the Group's ability to continue as a going
concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our
auditors' report to the related disclosures in the
consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditors' report.
However, future events or conditions may cause the
Group to cease to continue as a going concern.
* Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the
consolidated financial statements represent the
underlying transactions and events in a manner that
achieves a true and fair view.
* Obtain sufficient appropriate audit evidence
regarding the financial information of the entities
or business activities within the Group to express an
opinion on the consolidated financial statements. We
are responsible for the direction, supervision and
performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with those charged with Governance regarding, among
other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with Governance with a statement
that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with those charged with Governance,
we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current
period and are therefore the key audit matters. We describe these
matters in our auditors' report.
Other matter
This report, including the opinion, has been prepared for and
only for the Company's members as a body and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility
for any other purpose or to any other person to whose knowledge
this report may come to. These financial statements have not been
prepared for the purpose of complying with the legal requirements
of the British Virgin Islands Law.
The engagement partner on the audit resulting in this
independent auditors' report is Demetris S. Vakis.
Demetris S. Vakis, FCA
Certified Public Accountant and Registered Auditor
for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087 Nicosia
Cyprus
30 June 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 31 December 2022
31 December 31 December
2022 2021
Note EUR'000 EUR'000
Revenue 6 318 4,703
Cost of sales 7 - (2,786)
----------------------------------------------- ----- ------------ ------------
Gross profit 318 1,917
Gain on disposal of equity-accounted
investees 18 5,421 -
Gain on disposal of subsidiary 30 - 5,898
Change in valuations 8 (2,984) (24,648)
Investment Manager remuneration 28.2 - (3,600)
28
Directors' remuneration .1 (205) (323)
Professional fees 10 (1,987) (2,149)
(1,2 69
Administrative and other expenses 11 (1,614) )
Depreciation charge 15 (48) (48)
----------------------------------------------- ----- ------------ ------------
Total operating and other expenses (1,417) (26,139)
----------------------------------------------- ----- ------------ ------------
Results from operating activities (1,099) (24,222)
----------------------------------------------- ----- ------------ ------------
Finance income 73 16
Finance costs (2,997) (3,010)
----------------------------------------------- ----- ------------ ------------
Net finance costs 12 (2,924) (2,994)
----------------------------------------------- ----- ------------ ------------
Share of (losses)/profits on equity-accounted
investees, net of tax 18 (1,785) 5,973
----------------------------------------------- ----- ------------ ------------
Loss before taxation (5,808) (21,243)
----------------------------------------------- ----- ------------ ------------
Taxation 13 12 1,270
----------------------------------------------- ----- ------------ ------------
Loss (5,796) (19,973)
----------------------------------------------- ----- ------------ ------------
Other comprehensive Loss
Foreign currency translation differences 12 (56) (2,245)
Reclassification of foreign currency
translation differences on loss of
control 30 - (5,784)
Share of revaluation on equity-accounted
investees 18 - (278)
----------------------------------------------- ----- ------------ ------------
Other comprehensive loss, net of tax (56) (8,307)
----------------------------------------------- ----- ------------ ------------
Total comprehensive loss (5,852) (28,280)
----------------------------------------------- ----- ------------ ------------
Loss attributable to:
Owners of the Company (6,924) (21,343)
Non-controlling interests 1,128 1,370
----------------------------------------------- ----- ------------ ------------
(5,796) (19,973)
=============================================== ===== ============ ============
Total comprehensive loss attributable
to:
Owners of the Company (6,980) (29,561)
Non-controlling interests 1,128 1,281
----------------------------------------------- ----- ------------ ------------
(5,852) (28,280)
----------------------------------------------- ----- ------------ ------------
Loss per share
Basic and diluted loss per share (EUR) 14 (0.01) (0.02)
The notes on pages 23 to 62 of the printed report are an
integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
31 December 31 December
2022 2021
Note EUR'000 EUR'000
Assets
Property, plant and equipment 15 15,226 9,069
Investment property 16 45,943 52,188
Equity-accounted investees 18 42,694 65,555
Non-current assets 103,863 126,812
----------------------------------- ----- ------------ ------------
Other investments 17 - 99
Trading properties 19 56,516 56,516
Receivables and other assets 20 10,083 1,092
Cash and cash equivalents 21 2,226 4,575
----------------------------------- ----- ------------ ------------
Current assets 68,825 62,282
----------------------------------- ----- ------------ ------------
Total assets 172,688 189,094
----------------------------------- ----- ------------ ------------
Equity
Share capital 22 9,046 9,046
Share premium 22 569,847 569,847
Retained deficit (467,314) (460,390)
Other reserves 528 584
----------------------------------- ----- ------------ ------------
Equity attributable to owners
of the Company 112,107 119,087
Non-controlling interests 8,440 8,942
----------------------------------- ----- ------------ ------------
Total equity 120,547 128,029
----------------------------------- ----- ------------ ------------
Liabilities
Loans and borrowings 23 10,434 20,125
Lease liabilities 25 3,347 3,331
Deferred tax liabilities 24 6,577 6,609
Trade and other payables 26 19,795 20,089
Non-current liabilities 40,153 50,154
----------------------------------- ----- ------------ ------------
Loans and borrowings 23 4,611 4,743
Lease liabilities 2 5 88 89
Trade and other payables 2 6 7,289 6,079
----------------------------------- ----- ------------ ------------
Current liabilities 11,988 10,911
----------------------------------- ----- ------------ ------------
Total liabilities 52,141 61,065
----------------------------------- ----- ------------ ------------
Total equity and liabilities 172,688 189,094
----------------------------------- ----- ------------ ------------
Net asset value ('NAV') per share
(EUR) 27 0.12 0.13
The consolidated financial statements were authorised for issue
by the Board of Directors on 30 June 2023.
Nick Paris Nicolai Huls
Managing Director Managing Director
The notes on pages 23 to 62 of the printed report are an
integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Attributable to owners of the Company
---------------------------------------------------------------------
Share Share Translation Revaluation Retained Non-controlling Total
capital premium reserve reserve deficit Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Balance at 1
January
2021 9,046 569,847 8,337 465 (439,047) 148,648 6,523 155,171
Comprehensive
income
(Loss)/profit - - - - (21,343) (21,343) 1,370 (19,973)
Other
comprehensive
income
Share of
revaluation
on
equity-accounted
investees - - - (186) - (186) (92) (278)
Foreign currency
translation
differences - - (2,248) - - (2,248) 3 (2,245)
Translation
differences
to profit or
loss
due to disposal
of subsidiary - - (5,784) - - (5,784) - (5,784)
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Total other
comprehensive
income - - (8,032) (186) - (8,218) (89) (8,307)
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Total
comprehensive
income - - (8,032) (186) (21,343) (29,561) 1,281 (28,280)
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
TRANSACTIONS WITH
OWNERS OF THE
COMPANY
Changes in
ownership
interests in
subsidiaries
Disposal of
interests
without a change
in control - - - - - - 1,138 1,138
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Total transactions
with owners of
the
Company - - - - - - 1,138 1,138
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Balance at 31
December
2021 9,046 569,847 305 279 (460,390) 119,087 8,942 128,029
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Balance at 1
January
2022 9,046 569,847 305 279 (460,390) 119,087 8,942 128,029
Comprehensive
income
(Loss)/profit - - - - (6,924) (6,924) 1,128 (5,796)
Other
comprehensive
income
Share of - - - - - - - -
revaluation
on
equity-accounted
investees
Foreign currency
translation
differences - - (56) - - (56) - (56)
Total other
comprehensive
income - - (56) - - (56) - (56)
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Total
comprehensive
income - - (56) - (6,924) (6,980) 1,128 (5,852)
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
TRANSACTIONS WITH
OWNERS OF THE
COMPANY
Changes in
ownership
interests in
subsidiaries
Dividends paid to
Non Controlling
Interest - - - - - - (2,250) (2,250)
Disposal of
interests
without a change
in control - - - - - - 620 620
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Total transactions
with owners of
the
Company - - - - - - (1,630) (1,630)
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
Balance at 31
December
2022 9,046 569,847 249 279 (467,314) 112,107 8,440 120,547
------------------- -------- -------- ------------ ------------ ---------- --------- ---------------- ---------
The notes on pages 23 to 62 of the printed report are an
integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
31 December 31 December
2022 2021
Note EUR'000 EUR'000
Cash flows from operating activities
Loss (5,796) (19,973)
Adjustments for:
Loss in fair value of investment property 8 6,316 24,240
Impairment loss on other investments 8 - 209
Gain on disposal of investment in associates/subsidiaries 18,30 (5,411) (5,898)
Reversal of impairment loss on property,
plant and equipment 15 (2,944) (615)
(Reversal of)/impairment loss on equity-accounted
investees 8 (388) 814
Depreciation charge 15 48 48
Interest expense 12 2,891 1,812
Interest income 12 (4) (16)
Exchange difference (76) (2,175)
Share of losses/(profits) on equity-accounted
investees, net of tax 18 1,785 (5,973)
Taxation 13 (12) (1,270)
------------------------------------------------------------ ------ -------------- --------------
(3,591) (8,797)
Changes in:
Receivables (8,974) (618)
Payables 568 (2,212)
Trading properties - 3,253
Deferred revenue - (109)
------------------------------------------------------------ ------ -------------- --------------
Cash used in operating activities (11,997) (8,483)
Tax paid - (193)
Net cash used in operating activities (11,997) (8,676)
------------------------------------------------------------ ------ -------------- --------------
Cash flows from investing activities
P roceeds from disposal of subsidiaries,
net of cash disposed of 30 - (208)
P roceeds from disposal of associate 18 26,875 -
Acquisitions of investment property 16 (75) (21)
Acquisitions of property, plant and equipment 15 (3,264) (3,651)
Proceeds from other investments 17 99 326
Interest received 4 16
------------------------------------------------------------ ------ -------------- --------------
Net cash from/(used in) investing activities 23,639 (3,538)
------------------------------------------------------------ ------ -------------- --------------
Cash flows from financing activities
Repayment of loans and borrowings (12,370) (3,611)
New loans - 14,063
Proceeds from issue of redeemable preference
shares 3,000 5,500
Transaction costs related to loans and
borrowings - (90)
Payment of lease liabilities (8) (8)
Interest paid (2,363) (726)
Dividend paid to non-controlling interests (2,250) -
------------------------------------------------------------ ------ -------------- --------------
Net cash (used in)/from financing activities 23 (13,991) 15,128
------------------------------------------------------------ ------ -------------- --------------
Net (decrease)/increase in cash and
cash equivalents (2,349) 2,914
Cash and cash equivalents at 1 January 4,575 1,661
------------------------------------------------------------ ------ -------------- --------------
Cash and cash equivalents at 31 December 2,226 4,575
------------------------------------------------------------ ------ -------------- --------------
For the purpose of the consolidated statement
of cash flows, cash and cash equivalents
consist of the following:
Cash in hand and at bank (see note 21) 2,226 4,575
------------------------------------------------------------ ------ -------------- --------------
Cash and cash equivalents at the end
of the year 2,226 4,575
------------------------------------------------------------ ------ -------------- --------------
The notes on pages 23 to 62 of the printed report are an
integral part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2022
1. REPORTING ENTITY
DCI Advisors Ltd (Formerly: Dolphin Capital Investors Ltd) (the
'Company') was incorporated and registered in the British Virgin
Islands ('BVI') on 7 June 2005. The Company is a real estate
investment company focused on the early-stage, large-scale
leisure-integrated residential resorts in the Eastern
Mediterranean, and managed, until 20 March 2023, by Dolphin Capital
Partners Ltd (the 'Investment Manager'), an independent private
equity management firm that specialises in real estate investments,
primarily in south-east Europe, and thereafter self-managed. The
shares of the Company were admitted to trading on the AIM market of
the London Stock Exchange ('AIM') on 8 December 2005.
With effect from 01 June 2023, the name of the Company was
changed from Dolphin Capital Investors Ltd to DCI Advisors Ltd.
The consolidated financial statements of the Company as at 31
December 2022 comprise the financial statements of the Company and
its subsidiaries (together referred to as the 'Group') and the
Group's interests in equity-accounted investees.
The consolidated financial statements of the Group as at and for
the year ended 31 December 2022 are available at
www.dciadvisorsltd.com.
2. basis of preparation
a. Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
('IFRS') as adopted by the European Union ('EU').
The consolidated financial statements were authorised for issue
by the Board of Directors on 30 June 2023 .
b. Basis of preparation
The consolidated financial statements have been prepared on a
going concern basis, which assumes that the Group will be able to
discharge its liabilities in the normal course of business.
On 22 December 2021, an Extraordinary General Meeting was held
and the Shareholders approved a continuation of the Company without
setting a termination date or a date for a further continuation
vote in order to provide time to optimise for Shareholders the
value that can be realised from the Company's investments by
removing potentially commercially prejudicial deadlines from
negotiations with potential buyers. Notwithstanding the absence of
a formal date for Shareholders to consider a continuation of the
Company, the Board may, at any time, propose a further continuation
vote to Shareholders.
The Group's cash flow forecasts for the foreseeable future
involve uncertainties related primarily to the exact disposal
proceeds and timing of disposals of the assets expected to be
disposed of. Management believes that the proceeds from forecast
asset sales will be sufficient to maintain the Group's cash flow at
a positive level. Should the need arise, management will take
actions to reduce costs and is confident that it can secure
additional loan facilities and/or obtain repayment extension on
existing ones, until planned asset sales are realised and proceeds
received.
If for any reason the Group is unable to continue as a going
concern, then this could have an impact on the Group's ability to
realise assets at their recognised values and to extinguish
liabilities in the normal course of business at the amounts stated
in the consolidated financial statements.
Based on these factors, management has a reasonable expectation
that the Group has and will have adequate resources to continue in
operational existence for the foreseeable future.
c. Basis of measurement
The consolidated financial statements have been prepared under
the historical cost convention, with the exception of property
(investment property and property, plant and equipment), which are
stated at their fair values.
d. Adoption of new and revised standards and interpretations
As from 1 January 2022, the Group adopted all changes to IFRS
which are relevant to its operations. This adoption did not have a
material effect on the consolidated financial statements of the
Group .
The following standards, amendments to standards and
interpretations have been issued but are not yet effective for
annual periods beginning on 1 January 2022. Those which may be
relevant to the Group are set out below. The Group does not plan to
adopt these standards early. The Group continues to assess the
potential impact on its consolidated financial statements resulting
from the application of the following standards.
(i) Standards and interpretations adopted by the EU
Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2: Disclosure of Accounting Policies
(applicable for annual periods beginning on or after 1 January
2023)
The amendments to IAS 1 and the update to IFRS Practice
Statement 2 aim to help companies on the application of materiality
to the disclosure of accounting policies. The key amendments to IAS
1 include: (1) requiring companies to disclose their material
accounting policies rather than their significant accounting
policies, (2) clarifying that accounting policies related to
immaterial transactions, other events or conditions are themselves
immaterial and as such need not be disclosed, and (3) clarifying
that not all accounting policies that relate to material
transactions, other events or conditions are themselves material to
a company's financial statements. The amendments to IFRS Practice
Statement 2 are to include guidance and two additional examples on
the application of materiality to accounting policy disclosures.
The amendments are consistent with the refined definition of
material i.e. "Accounting policy information is material if, when
considered together with other information included in an entity's
financial statements, it can reasonably be expected to influence
decisions that the primary users of general-purpose financial
statements make on the basis of those financial statements". The
Group is currently evaluating the expected impact of adopting the
amendments on its financial statements. As such, the expected
impact of the amendments is not yet known or reasonably
estimable.
Amendments to IAS 8 Accounting policies, Changes in Accounting
Estimates and Errors: Definition of Accounting Estimates
(applicable for annual periods beginning on or after 1 January
2023)
The amendments to IAS 8 are issued to clarify how companies
should distinguish changes in accounting policies from changes in
accounting estimates, with a primary focus on the definition of and
clarifications on accounting estimates. The amendments introduce a
new definition for accounting estimates: clarifying that they are
monetary amounts in the financial statements that are subject to
measurement uncertainty. The amendments also clarify the
relationship between accounting policies and accounting estimates
by specifying that a company develops an accounting estimate to
achieve the objective set out by an accounting policy. Developing
an accounting estimate includes both: (1) selecting a measurement
technique (estimation or valuation technique), and (2) choosing the
inputs to be used when applying the chosen measurement technique.
The effects of changes in such inputs or measurement techniques are
changes in accounting estimates. The definition of accounting
policies remains unchanged. The Group is currently evaluating the
expected impact of adopting the amendments on its financial
statements. As such, the expected impact of the amendments is not
yet known or reasonably estimable.
Amendments to IAS 12 Income Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
(applicable for annual periods beginning on or after 1 January
2023)
Targeted amendments to IAS 12 clarify how companies should
account for deferred tax on certain transactions (e.g. leases and
decommissioning provisions). The amendments narrow the scope of the
initial recognition exemption (IRE) so that it does not apply to
transactions that give rise to equal and offsetting temporary
differences. As a result, companies will need to recognise a
deferred tax asset and a deferred tax liability for temporary
differences arising on initial recognition of a lease and a
decommissioning provision. The Group is currently evaluating the
expected impact of adopting the amendments on its financial
statements. As such, the expected impact of the amendments is not
yet known or reasonably estimable.
(ii) Standards and interpretations not adopted by the EU
Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants (applicable for annual
periods beginning on or after 1 January 2024)
In 2020, the IASB has amended IAS 1 to promote consistency in
application and clarify the requirements on determining if a
liability is current or non-current. Under existing IAS 1
requirements, companies classify a liability as current when they
do not have an unconditional right to defer settlement of the
liability for at least twelve months after the end of the reporting
period. As part of its amendments, the IASB has removed the
requirement for a right to be unconditional and instead, now
requires that a right to defer settlement must have substance and
exist at the end of the reporting period. Similar to existing
requirements in IAS 1, the classification of liabilities is
unaffected by management's intentions or expectations about whether
the company will exercise its right to defer settlement or will
choose to settle early.
(ii) Standards and interpretations not adopted by the EU continued
On 31 October 2022 the IASB issued further amendments to IAS 1
i.e. Non-current liabilities with covenants. The new amendments aim
to improve the information an entity provides when its right to
defer settlement of a liability is subject to compliance with
covenants within twelve months after the reporting period. The
amendments clarify that only covenants with which a company must
comply on or before the reporting date affect the classification of
a liability as current or non-current. Covenants with which the
company must comply after the reporting date (i.e. future
covenants) do not affect a liability's classification at that date.
However, when non-current liabilities are subject to future
covenants, companies will now need to disclose information to help
users understand the risk that those liabilities could become
repayable within 12 months after the reporting date.
The amendments also clarify how a company classifies a liability
that can be settled in its own shares (e.g. convertible debt). When
a liability includes a counterparty conversion option that involves
a transfer of the company's own equity instruments, the conversion
option is recognised as either equity or a liability separately
from the host liability under IAS 32 Financial Instruments:
Presentation. The IASB has now clarified that when a company
classifies the host liability as current or non-current, it can
ignore only those conversion options that are recognised as equity.
Companies may have interpreted the existing IAS 1 requirements
differently when classifying convertible debt. Therefore,
convertible debt may become current.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and
Leaseback (applicable for annual periods beginning on or after 1
January 2024)
The IASB has issued amendments to IFRS 16 Leases, which add to
requirements explaining how a company accounts for a sale and
leaseback after the date of the transaction. A sale and leaseback
is a transaction for which a company sells an asset and leases that
same asset back for a period of time from the new owner. IFRS 16
includes requirements on how to account for a sale and leaseback at
the date the transaction takes place. However, IFRS 16 had not
specified how to measure the transaction when reporting after that
date. The amendments issued in September 2022 impact how a
seller-lessee accounts for variable lease payments that arise in a
sale and leaseback transaction. The amendments introduce a new
accounting model for variable payments and will require
seller-lessees to reassess and potentially restate sale and
leaseback transactions entered into since 2019.
The amendments confirm the following: (1) On initial
recognition, the seller-lessee includes variable lease payments
when it measures a lease liability arising from a sale and
leaseback transaction. (2) After initial recognition, the
seller-lessee applies the general requirements for subsequent
accounting of the lease liability such that it recognises no gain
or loss relating to the right of use it retains.
e. Use of estimates and judgements
In preparing these consolidated financial statements, management
has made judgements, estimates and assumptions that affect the
application of accounting principles and the related amounts of
assets and liabilities, income and expenses. The estimates and
underlying assumptions are based on historical experience and
various other factors that are deemed to be reasonable based on
knowledge available at that time. Actual results may deviate from
such estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to estimates are recognised
prospectively.
Impairment of investment in equity-accounted investees
The Company follows the requirements of IAS 36 to determine
whether the investments in equity-accounted investees are impaired
and calculates the amount of the impairment. An impairment loss is
recognised for the difference between the carrying amount and the
recoverable amount of the asset. The recoverable amount is the
greater of the fair value less costs to sell and value in use. As
at 31 December 2022, the Group assessed whether the carrying amount
of equity-accounted investees is impaired, by comparing it with its
fair value less cost to sell.
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.
The Group has an established control framework with respect to
the measurement of fair values. This includes the Managing
Directors who have overall responsibility for overseeing all
significant fair value measurements, including Level 3 fair
values.
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Significant
unobservable inputs and valuation adjustments are regularly
reviewed and changes in fair value measurements from period to
period are analysed.
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.
When applicable, further information about the assumptions made
in measuring fair values is included in the notes specific to that
asset or liability. Further information about the assumptions made
in measuring fair values is included in the following notes:
- Note 3 and 15: property, plant and equipment;
- Note 3 and 16: investment property.
f. Functional and presentation currency
These consolidated financial statements are presented in Euro
(EUR), which is the Company's functional currency. All amounts have
been rounded to the nearest thousand, unless otherwise
indicated.
3. MEASUREMENT of fair values
Properties
The fair value of investment property and land and buildings
classified as property, plant and equipment is determined at the
end of each reporting period. External, independent valuation
companies, having appropriate recognised professional
qualifications and recent experience in the location and category
of the properties being valued, value the Group's properties at the
end of each year and where necessary, semi-annually.
The Directors have appointed American Appraisal and Colliers In
t ernational, two internationally recognised valuation firms, to
conduct valuations of the Group's acquired properties to determine
their fair value. These valuations are prepared in accordance with
generally accepted appraisal standards, as set out by the Royal
Institute of Chartered Surveyors ('RICS'). Furthermore, the
valuations are conducted on an 'as is condition' and on an open
market comparative basis.
The valuation analysis of properties is based on all the
pertinent market factors that relate both to the real estate market
and, more specifically, to the subject properties. The valuation
analysis of a property typically uses four approaches: the cost
approach, the direct sales comparison approach, the income approach
and the residual value approach. The cost approach measures value
by estimating the Replacement Cost New or the Reproduction Cost New
of property and then determining the deductions for accrued
depreciation that should be made to reflect the age, condition and
situation of the asset during its past and proposed future economic
working life. The direct sales comparison approach is based on the
premise that persons in the marketplace buy by comparison. It
involves acquiring market sales/offerings data on properties
similar to the subject property. The prices of the comparables are
then adjusted for any dissimilar characteristics as compared to the
subject's characteristics. Once the sales prices are adjusted, they
can be reconciled to estimate the fair value for the subject
property. Based on the income approach, an estimate is made of
prospective economic benefits of ownership. These amounts are
discounted and/or capitalised at appropriate rates of return in
order to provide an indication of value. The residual value
approach is used for the valuation of the land and depends on two
basic factors: the location and the total value of the buildings
developed on a site. Under this approach, the residual value of the
land is calculated by subtracting the development cost from the
estimated sales value of the completed development.
Each of the above-mentioned valuation techniques results in a
separate valuation indication for the subject property. A
reconciliation process is then performed to weigh the merits and
limiting conditions of each approach. Once this is accomplished, a
value conclusion is reached by placing primary weight on the
technique, or techniques, that are considered to be the most
reliable, given all factors.
4. PRINCIPAL subsidiaries
The Group's most significant subsidiaries we re the
following:
Country Shareholding
of interest
Name Project incorporation 2022 2021
---------------------------------- -------------------- --------------- ------- ------
Scorpio Bay Holdings Limited Scorpio Bay Resort Cyprus 100% 100%
================================== ==================== =============== ======= ======
Scorpio Bay Resorts S.A. Scorpio Bay Resort Greece 100% 100%
================================== ==================== =============== ======= ======
Lavender Bay
Xscape Limited Resort Cyprus 100% 100%
================================== ==================== =============== ======= ======
Lavender Bay
Golfing Developments S.A. Resort Greece 100% 100%
================================== ==================== =============== ======= ======
MindCompass Overseas One Kilada Hills
Limited Golf Resort Cyprus 85% 88%
================================== ==================== =============== ======= ======
Kilada Hills
MindCompass Overseas S.A. Golf Resort Greece 85% 88%
================================== ==================== =============== ======= ======
MindCompass Overseas Two Kilada Hills
S.A. Golf Resort Greece 100% 100%
================================== ==================== =============== ======= ======
Kilada Hills
MindCompass Parks S.A. Golf Resort Greece 100% 100%
================================== ==================== =============== ======= ======
Dolphin Capital Greek Collection Kilada Hills
Limited Golf Resort Cyprus 100% 100%
================================== ==================== =============== ======= ======
DCI Holdings One Limited
* Aristo Developers BVIs 100% 100%
================================== ==================== =============== ======= ======
D.C. Apollo Heights Polo Apollo Heights
and Country Resort Limited Resort Cyprus 100% 100%
================================== ==================== =============== ======= ======
Apollo Heights
Symboula Estates Limited Resort Cyprus 100% 100%
================================== ==================== =============== ======= ======
Azurna Uvala D.o.o. Livka Bay Resort Croatia 100% 100%
================================== ==================== =============== ======= ======
Eastern Crete Development
Company S.A. Plaka Bay Resort Greece 100% 100%
================================== ==================== =============== ======= ======
Single Purpose Vehicle One&Only Kea
Ten Limited ** Resort Cyprus 67% 67%
================================== ==================== =============== ======= ======
The above shareholding interest percentages are rounded to the
nearest integer.
*This entity holds a 48% shareholding interest in DCI Holdings
Two Ltd ("DCI H2") which is the owner of Aristo Developers Ltd.
** During the year the entity disposed of the 50% shareholding
interest in Single Purpose Vehicle Fourteen Limited (owner of
One&Only Kea Resort)
5. Significant accounting policies
The principal accounting policies adopted in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all periods presented in
these consolidated financial statements unless otherwise
stated.
5.1 Subsidiaries
Subsidiaries are the 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 on which control
commences until the date on which control ceases.
5.2 Non-controlling interests ('NCI')
NCI are measured initially at their proportionate share of the
acquiree's identifiable net assets at the date of acquisition.
Changes in the Group's interest in a subsidiary that do not result
in a loss of control are accounted for as equity transactions.
5.3 Loss of control
When the Group loses control over a subsidiary, it derecognises
the assets and liabilities of the subsidiary, and any related
Non-controlling Interest ("NCI") and other components of equity.
Any resulting gain or loss is recognised in profit or loss. Any
interest retained in the former subsidiary is measured at fair
value when control is lost.
5.4 Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses arising
from intra-group transactions are eliminated in preparing the
consolidated financial statements. Unrealised gains arising from
transactions with equity-accounted investees are eliminated to the
extent of the Group's interest in the entity. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
5.5 Business combinations
The Group accounts for business combinations using the
acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to
the Group (see Note 5.1). In determining whether a particular set
of activities and assets is a business, the Group assesses whether
the set of assets and activities acquired includes, at a minimum,
an input and substantive process and whether the acquired set has
the ability to produce outputs.
The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in profit
or loss immediately. Transaction costs are expensed as incurred,
except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts are
generally recognised in profit or loss.
Any contingent consideration is measured at fair value at the
date of acquisition. If an obligation to pay contingent
consideration that meets the definition of a financial instrument
is classified as equity, then it is not re-measured and settlement
is accounted for within equity. Otherwise, other contingent
consideration is remeasured at fair value at each reporting date
and subsequent changes in the fair value of the contingent
consideration are recognised in profit or loss.
5.6 Interest in equity-accounted investees
The Group's interests in equity-accounted investees comprise
interests in associates and a joint venture. Associates are those
entities in which the Group has significant influence, but not
control, over the financial and operating policies. A joint venture
is an arrangement in which the Group has joint control, whereby the
Group has rights to the net assets of the arrangement, rather than
rights to its assets and obligations for its liabilities. Interests
in associates and the joint venture are accounted for using the
equity method and are initially recognised at cost, which includes
transaction costs. The Group's investment includes goodwill
identified on acquisition, net of any accumulated impairment
losses. Subsequent to initial recognition, the consolidated
financial statements include the Group's share of the income and
expenses and equity movements of equity-accounted investees, after
adjustments to align the accounting policies with those of the
Group, until the date that significant influence or joint control
ceases. When the Group's share of losses exceeds its interest in an
equity-accounted investee, the carrying amount of that interest
(including any long-term investments) is reduced to nil and the
recognition of further losses is discontinued except to the extent
that the Group has an obligation or has made payments on behalf of
the investee.
After application of the equity method, the Group assess the
recoverable amount for each associate or joint venture, unless the
associate or joint venture does not generate cash inflows from
continuing use that are largely independent of those from other
assets of the entity. An impairment loss is recognised for the
difference between the carrying amount and the recoverable amount
of the equity-accounted investees. The recoverable amount is the
greater of the fair value less costs to sell and value in use.
5.7 Investment property
Investment property is property held either to earn rental
income or for capital appreciation or for both, but not for sale in
the ordinary course of the business, use in the production or
supply of goods or services or for administration purposes.
Investment property is initially measured at cost and subsequently
at fair value with any change therein recognised in profit or
loss.
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.
Any gain or loss on disposal of an investment property
(calculated as the difference between the net proceeds from
disposal and the carrying amount of the item) is recognised in
profit or loss. When an investment property that was previously
classified as property, plant and equipment is sold, any related
amount included in the revaluation reserve is transferred to
retained earnings.
When the use of 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.
5.8 Property, plant and equipment
Land and buildings are carried at fair value, based on
valuations by external independent valuers, less subsequent
accumulated depreciation for buildings and the subsequent
accumulated impairment losses. Revaluations are carried out at the
end of each year and where necessary, semi-annually. Properties
under construction are stated at cost less any accumulated
impairment losses. All other property, plant and equipment are
stated at cost less accumulated depreciation and any accumulated
impairment losses. Any gain or loss on disposal of an item of
property, plant and equipment is recognised in profit or loss.
Increases in the carrying amount arising on revaluation of
property, plant and equipment are credited to fair value reserve in
shareholders' equity. Decreases that offset previous increases of
the same asset are charged against that reserve; all other
decreases are recognised in profit or loss. Increase is recognised
to the profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognised in profit or
loss.
The cost of self-constructed assets includes the cost of
materials and direct labour, any other costs directly attributable
to bringing the asset to a working condition for their intended
use.
Depreciation charge is recognised in profit or loss on a
straight-line basis over the estimated useful lives of items of
property, plant and equipment. Freehold land is not
depreciated.
The annual rates of depreciation are as follows:
Buildings 3%
Machinery and equipment 10% - 33.33%
Motor vehicles and other 10% - 20%
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
The Group recognises in the carrying amount of an item of
property, plant and equipment the cost of replacing part of such an
item when that cost is incurred if it is probable that the future
economic benefits embodied with the item will flow to the Group and
the cost of the item can be measured reliably. All other costs are
recognised in profit or loss as incurred.
5.9 Trading properties
Trading properties (inventory) are shown at the lower of cost
and net realisable value. Net realisable value is the estimated
selling price in the ordinary course of the business less the
estimated costs of completion and the estimated costs necessary to
make the sale. Cost of trading properties is determined on the
basis of specific identification of their individual costs and
represents the fair value paid at the date that the land was
acquired by the Group.
5.10 Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration.
At commencement or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of its relative
stand-alone prices. However, for the leases of property the Group
has elected not to separate non-lease components and account for
the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate. Generally, the Group uses its incremental borrowing
rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining
interest rates from various external financing sources and makes
certain adjustments to reflect the terms of the lease and type of
the asset leased.
Lease payments included in the measurement of the lease
liability comprise the following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement
date;
- amounts expected to be payable under a residual value guarantee; and
- the exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional
renewal period if the Group is reasonably certain to exercise an
extension option, and penalties for early termination of a lease
unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the
effective interest method. It is re-measured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is re-measured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
The Group presents right-of-use assets that do not meet the
definition of investment property in 'property, plant and
equipment' and lease liabilities in 'loans and borrowings' in the
statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases of low-value assets and short-term
leases, including IT equipment. The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
5.11 Financial instruments
Recognition and initial measurement
Trade receivables and debt securities issued are initially
recognised when they are originated. All other financial assets and
financial liabilities are initially recognised when the Group
becomes a party to the contractual provisions of the
instrument.
A financial asset (unless it is a trade receivable without a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant financing
component is initially measured at the transaction price.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as
measured at: amortised cost; FVOCI - debt investment; FVOCI -
equity investment; or FVTPL. Financial assets are not reclassified
subsequent to their initial recognition unless the Group changes
its business model for managing financial assets, in which case all
affected financial assets are reclassified on the first day of the
first reporting period following the change in the business
model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the
following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment -- by -- investment basis.
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition,
the Group may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost
or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks and
bank overdrafts repayable on demand. Cash equivalents are
short-term, highly-liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant
risk of changes in value. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are
included as a component of cash and cash equivalents for the
purpose of the consolidated statement of cash flows.
Financial assets - Business model assessment
The Group makes an assessment of the objective of the business
model in which a financial asset is held at a portfolio level
because this best reflects the way the business is managed and
information is provided to management. The information considered
includes:
- the stated policies and objectives for the portfolio and the
operation of those policies in practice. These include whether
management's strategy focuses on earning contractual interest
income, maintaining a particular interest rate profile, matching
the duration of the financial assets to the duration of any related
liabilities or expected cash outflows or realising cash flows
through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to the Group's management;
- the risks that affect the performance of the business model
(and the financial assets held within that business model) and how
those risks are managed;
- how managers of the business are compensated - e.g. whether
compensation is based on the fair value of the assets managed or
the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets
in prior periods, the reasons for such sales and expectations about
future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the Group's continuing recognition of
the assets.
Financial assets that are held for trading or are managed and
whose performance is evaluated on a fair value basis are measured
at FVTPL.
Financial assets - Assessment whether contractual cash flows are
solely payments of principal and interest
For the purposes of this assessment, 'principal' is defined as
the fair value of the financial asset on initial recognition.
'Interest' is defined as consideration for the time value of money
and for the credit risk associated with the principal amount
outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative
costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely
payments of principal and interest, the Group considers the
contractual terms of the instrument. This includes assessing
whether the financial asset contains a contractual term that could
change the timing or amount of contractual cash flows such that it
would not meet this condition. In making this assessment, the Group
considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including
variable -- rate features;
- prepayment and extension features; and
- terms that limit the Group's claim to cash flows from
specified assets (e.g. non -- recourse features).
A prepayment feature is consistent with the solely payments of
principal and interest criterion if the prepayment amount
substantially represents unpaid amounts of principal and interest
on the principal amount outstanding, which may include reasonable
additional compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or
requires prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional compensation
for early termination) is treated as consistent with this criterion
if the fair value of the prepayment feature is insignificant at
initial recognition.
-- Financial assets at FVTPL: These assets are subsequently
measured at fair value. Net gains and losses, including any
interest or dividend income, are recognised in profit or loss.
-- Financial assets at amortised cost: These assets are
subsequently measured at amortised cost using the effective
interest method. The amortised cost is reduced by impairment
losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on
derecognition is recognised in profit or loss.
-- Debt investments at FVOCI: These assets are subsequently
measured at fair value. Interest income calculated using the
effective interest method, foreign exchange gains and losses and
impairment are recognised in profit or loss. Other net gains and
losses are recognised in OCI. On derecognition, gains and losses
accumulated in Other Comprehensive Income ("OCI") are reclassified
to profit or loss.
-- Equity investments at FVOCI: These assets are subsequently
measured at fair value. Dividends are recognised as income in
profit or loss unless the dividend clearly represents a recovery of
part of the cost of the investment. Other net gains and losses are
recognised in OCI and are never reclassified to profit or loss.
Financial liabilities - Classification, subsequent measurement
and gains and losses
Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at FVTPL if
it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at
FVTPL are measured at fair value and net gains and losses,
including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised
cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognised in profit or loss.
Any gain or loss on derecognition is also recognised in profit or
loss.
The financial liabilities of the Group are measured as
follows:
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value, less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost with any difference between cost and redemption value being
recognised in profit or loss over the period of the borrowings on
an effective interest basis.
Trade payables
Trade payables are initially recognised at fair value and are
subsequently measured at amortised cost, using the effective
interest rate method.
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it
transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of
ownership of the financial asset are transferred or in which the
Group neither transfers nor retains substantially all of the risks
and rewards of ownership and it does not retain control of the
financial asset.
The Group enters into transactions whereby it transfers assets
recognised in its statement of financial position, but retains
either all or substantially all of the risks and rewards of the
transferred assets. In these cases, the transferred assets are not
derecognised.
Financial liabilities
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled, or expire. The
Group also derecognises a financial liability when its terms are
modified and the cash flows of the modified liability are
substantially different, in which case a new financial liability
based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed)
is recognised in profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the
net amount presented in the statement of financial position when,
and only when, the Group currently has a legally enforceable right
to set off the amounts and it intends either to settle them on a
net basis or to realise the asset and settle the liability
simultaneously.
5.12 Share capital and premium
Share capital represents the issued amount of shares outstanding
at their par value. Any excess amount of capital raised is included
in share premium. External costs directly attributable to the issue
of new shares, other than on a business combination, are shown as a
deduction, net of tax, in share premium from the proceeds. Share
issue costs incurred directly in connection with a business
combination are included in the cost of acquisition.
5.13 Dividends
Dividends are recognised as a liability in the period in which
they are declared and approved and are subtracted directly from
retained earnings.
5.14 Contract liabilities
Payments received in advance on development contracts for which
no revenue has been recognised yet are recorded as contract
liabilities as at the statement of financial position date.
5.15 Provisions
A provision is recognised in the consolidated statement of
financial position when the Group has a legal or constructive
obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the
obligation. If the effect is material, 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,
where appropriate, the risks specific to the liability.
5.16 Expenses
Investment Manager remuneration, Directors' remuneration,
operational expenses, professional fees, administrative and other
expenses are accounted for on an accrual basis. Expenses are
charged to profit or loss, except for expenses incurred on the
acquisition of an investment property, which are included within
the cost of that investment. Expenses arising on the disposal of an
investment property are deducted from the disposal proceeds.
5.17 Impairment
Financial instruments and contract assets
The Group recognises loss allowances for expected credit losses
('ECLs') on:
- financial assets measured at amortised cost;
- debt investments measured at FVOCI; and
- contract assets.
The Group measures loss allowances at an amount equal to
lifetime ECLs, except for the following, which are measured at 12
-- month ECLs:
- debt securities that are determined to have low credit risk at the reporting date; and
- other debt securities and bank balances for which credit risk
(i.e. the risk of default occurring over the expected life of the
financial instrument) has not increased significantly since initial
recognition.
Loss allowances for trade receivables and contract assets are
always measured at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset
has increased significantly since initial recognition and when
estimating ECLs, the Group considers reasonable and supportable
information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information
and analysis, based on the Group's historical experience and
informed credit assessment and including forward -- looking
information.
The Group assumes that the credit risk on a financial asset has
increased significantly if it is more than 30 days past due.
The Group considers a financial asset to be in default when:
- the borrower is unlikely to pay its credit obligations to the
Group in full, without recourse by the Group to actions such as
realising security (if any is held); or
- the financial asset is more than 90 days past due.
Non-financial assets
At each reporting date, the Group reviews the carrying amounts
of its non-financial assets (other than investment property and
trading properties) to determine whether there is any indication of
impairment. If any such indication exists, then the asset's
recoverable amount is estimated. Goodwill is tested annually for
impairment.
For impairment testing, assets 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 CGUs. Goodwill arising from a business combination
is allocated to CGUs or groups of CGUs that are expected to benefit
from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less costs of disposal. Value in
use is based on the estimated future cash flows, 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 CGU exceeds its recoverable amount. Impairment losses are
recognised in profit or loss. They are allocated first to reduce
the carrying amount of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other assets in the CGU on a
pro rata basis.
An impairment loss in respect of goodwill is not reversed. For
other assets, 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.
The Group considers a debt security to have low credit risk when
its credit risk rating is equivalent to the globally understood
definition of 'investment grade'.
Lifetime ECLs are the ECLs that result from all possible default
events over the expected life of a financial instrument. 12 --
month ECLs are the portion of ECLs that result from default events
that are possible within the 12 months after the reporting date (or
a shorter period if the expected life of the instrument is less
than 12 months). The maximum period considered when estimating ECLs
is the maximum contractual period over which the Group is exposed
to credit risk.
Measurement of ECLs
ECLs are a probability -- weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the
Group expects to receive).
ECLs are discounted at the effective interest rate of the
financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost and debt securities at FVOCI are
credit -- impaired. A financial asset is 'credit -- impaired' when
one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit -- impaired includes
the following observable data:
-- significant financial difficulty of the borrower or issuer;
-- a breach of contract such as a default or being more than 90 days past due;
-- the restructuring of a loan or advance by the Group on terms
that the Group would not consider otherwise;
-- it is probable that the borrower will enter bankruptcy or
other financial reorganisation; or
-- the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECL in the statement of financial
position
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets. For debt
securities at FVOCI, the loss allowance is charged to profit or
loss and is recognised in OCI.
Write-off
The gross carrying amount of a financial asset is written off
when the Group has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof. For
individual customers, the Group has a policy of writing off the
gross carrying amount when the financial asset is 180 days past due
based on historical experience of recoveries of similar assets. For
corporate customers, the Group individually makes an assessment
with respect to the timing and amount of write -- off based on
whether there is a reasonable expectation of recovery. The Group
expects no significant recovery from the amount written off.
However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the
Group's procedures for recovery of amounts due.
5.18 Revenue recognition
Revenue is measured based on the consideration specified in a
contract with a customer. The Group recognises revenue at a point
in time, which is when it transfers control over the property to
the buyer. The buyer obtains control when the sale consideration is
fully settled, and the ownership of the property is then
transferred to the buyer.
5.19 Finance income and costs
The Group's finance income and finance costs include:
- interest income;
- interest expense;
- dividend income.
Interest income or expense is recognised using the effective
interest method. Dividend income is recognised in profit or loss on
the date on which the Group's right to receive payment is
established.
The 'effective interest rate' is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortised cost of the financial liabilit y.
In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of the asset
(when the asset is not credit-impaired) or to the amortised cost of
the liability. However, for financial assets that have become
credit-impaired subsequent to initial recognition, interest income
is calculated by applying the effective interest rate to the
amortised cost of the financial asset. If the asset is no longer
credit-impaired, then the calculation of interest income reverts to
the gross basis.
5.20 Foreign currency translation
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 are translated into
the functional currency at the exchange rate at the reporting date.
Non-monetary assets and liabilities that are measured at fair value
in a foreign currency are translated into the functional currency
at the exchange rate when the fair value was determined.
Non-monetary items that are measured based on historical cost in a
foreign currency are translated at the exchange rate at the date of
the transaction. Foreign currency differences are generally
recognised in profit or loss and presented within finance
costs.
5.21 Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are
translated to Euro at exchange rates at the reporting date. The
income and expenses of foreign operations are translated to Euro at
exchange rates at the dates of the transactions.
Foreign currency differences are recognised in OCI and
accumulated in the translation reserve, except to the extent that
the translation difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or
partially 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. If the Group disposes of part of
its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to NCI. When
the Group disposes of only part of an associate or joint venture
while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to
profit or loss.
5.22 Segment reporting
A segment is a distinguishable component of the Group that is
engaged either in providing products or services (operating
segment), or in providing products or services within a particular
economic environment (geographical segment), which is subject to
risks and rewards that are different from those of other segments.
Segment results that are reported to the Group's chief operating
decision maker include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
5.23 Earnings per share
The Group presents basic and diluted (if applicable) earnings
per share ('EPS') data for its shares. Basic EPS is calculated by
dividing the profit or loss attributable to shareholders of the
Company by the weighted average number of shares outstanding during
the period. Diluted EPS is determined by adjusting the profit or
loss attributable to shareholders and the weighted average number
of shares outstanding for the effects of all dilutive potential
shares.
5.24 NAV per share
The Group presents NAV per share by dividing the total equity
attributable to owners of the Company by the number of shares
outstanding as at the statement of financial position date.
5.25 Taxation
Income tax
Taxation comprises current and deferred tax. Taxation is
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
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantially enacted at the statement of financial position date,
and any adjustment to tax payable or receivable in respect of
previous years. Current tax also includes any tax arising from
dividends.
Deferred tax
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,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
- taxable temporary differences arising on the initial
recognition of goodwill.
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 the temporary difference 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.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, 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 assets and liabilities are offset only if certain
criteria are met.
5.26 Fair value measurement
'Fair value' is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the
principal or, in its absence, the most advantageous market to which
the Group has access at that date. The fair value of a liability
reflects its non-performance risk.
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 (Note 2e).
When one is available, the Group measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as 'active' if transactions for
the asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group
uses valuation techniques that maximise the use of relevant
observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that
market participants would take into account in pricing a
transaction.
If an asset or a liability measured at fair value has a bid
price and an ask price, then the Group measures assets and long
positions at a bid price and liabilities and short positions at an
ask price.
The best evidence of the fair value of a financial instrument on
initial recognition is normally the transaction price - i.e. the
fair value of the consideration given or received. If the Group
determines that the fair value on initial recognition differs from
the transaction price and the fair value is evidenced neither by a
quoted price in an active market for an identical asset or
liability nor based on a valuation technique for which any
unobservable inputs are judged to be insignificant in relation to
the measurement, then the financial instrument is initially
measured at fair value, adjusted to defer the difference between
the fair value on initial recognition and the transaction price.
Subsequently, that difference is recognised in profit or loss on an
appropriate basis over the life of the instrument but no later than
when the valuation is wholly supported by observable market data or
the transaction is closed out.
5.27 Comparatives
Where necessary, comparative figures have been adjusted to
conform to changes in presentation in the current year.
6. revenue
2022 2021
EUR'000 EUR'000
---------------------------------------- --------- ---------
Revenue from contracts with customers:
---------------------------------------- --------- ---------
Sale of trading properties - 3,845
Other revenue
---------------------------------------- --------- ---------
Other income 318 858
---------------------------------------- --------- ---------
Total 318 4,703
---------------------------------------- --------- ---------
7. COST OF SALES
2022 2021
EUR'000 EUR'000
Sales of trading properties - 2,786
Total - 2,786
----------------------------- --------- ---------
8. Change in valuation
2022 2021
Note EUR'000 EUR'000
Loss in fair value of investment property 16 (6,316) (24,240)
(Reversal of)/impairment loss on equity-accounted
investees 18 388 (814)
Reversal of impairment loss of property,
plant and equipment 15 2,944 615
Impairment of other investments - (209)
--------------------------------------------------- ----- --------- ---------
Total (2,984) (24,648)
--------------------------------------------------- ----- --------- ---------
9. SEGMENT REPORTING
As at 31 December 2022 and 31 December 2021, the Group is not
considered to have reportable operating segments that require
disclosure. The Group has one business segment focusing on
achieving capital growth through investing in residential resort
developments primarily in south-east Europe.
The geographic information analyses the Group's non-current
assets by the Company's country of domicile. In presenting the
geographic information, segment assets were based on the geographic
location of the assets.
Non-current assets
2022 2021
EUR'000 EUR'000
Greece 36,469 55,935
Croatia 19,180 18,482
Cyprus 48,214 52,395
At end of year 103,863 126,812
---------------- --------- ---------
Country risk developments
Greece
According to the OECD, the GDP of Greece was projected to
increase by 5.6% in 2022, 1.8% in 2023 and 2.3% in 2024. As COVID
containment measures eased in April 2021, economic activity
rebounded, supported by a stronger-than-expected summer tourist
season.
According to the Bank of Greece, in 2022, the balance of travel
services showed a surplus of EUR15.7bn vs surplus of EUR9.4bn in
2021 and EUR15.4bn in 2019.
The government's recovery and resilience plan has boosted
activity and productivity through investments in green transition,
upgrading digital infrastructure and skills, and supporting private
firms' investments. However, further to the unfolding developments
with the Ukraine-Russia current situation, inflation in Greece is
now estimated to have peaked at 9.3% in 2022 and to be 4.0% in 2023
according to the IMF. Besides the inflationary pressure, a very
strong tourism season is expected. According to the President of
the Greek Tourism Confederation (SETE), the revenues from Greek
tourism this season may exceed 2019 levels.
Cyprus
Even though Cyprus' economy was negatively affected by rising
Covid infection rates at the end of 2020, a strong recovery of the
economy was recorded by the end of 2021 and this has continued.
According to IMF forecasts, a 6.6% increase in GDP was expected
during 2022, reaching almost pre-crisis levels and it is forecast
to be 2.5% for 2023.
Despite the disruption caused by the pandemic and the
termination of the Cyprus Investment Program (CIP), the Real Estate
& Construction sector maintained its position as one of the
fastest growing sectors of the economy, highlighting its resilience
and importance to the overall economy according to the PWC Real
Estate Market Report.
However, the current situation in Ukraine has had an impact on
Russian demand, which has been drastically reduced. This also
results in a reduction of tourism, which is a lead-in for interest
in real estate. In addition, the rising inflation and petrol
prices, which resulted to the increase of the cost in travel and
materials by c.10%, as well as a VAT charge, affected the Cyprus
market.
Croatia
2022 was defined by a return to normality in Croatia, after the
dual crises of the Covid pandemic and an earthquake in the previous
year. According to the European Commission the economic
developments in 2022 point to a full V-shaped recovery of the
Croatian economy. After a drop of 8.1% in 2020, real GDP grew by
10.4% in 2021 and by 6.2% in 2022. Economic activity and tourism
arrival numbers are expected to benefit strongly from the adoption
of the Euro currency and the admission of Croatia into the Schengen
passport zone on 1.1.23.
10. PROFESSIONAL FEES
2022 2021
EUR'000 EUR'000
Legal fees 383 398
Auditors' remuneration (see below) 261 328
Accounting expenses 241 200
Appraisers' fees 9 24
Project design and development fees 133 607
Consultancy fees 338 218
Administrator fees 270 136
Other professional fees 352 238
-------------------------------------- --------- ---------
Total 1,987 2,149
-------------------------------------- --------- ---------
2022 2021
EUR'000 EUR'000
Auditors' remuneration comprises the
following fees:
Audit and other audit related services 261 328
----------------------------------------- -------- --------
Total 261 328
----------------------------------------- -------- --------
11. ADMINISTRATIVE AND OTHER EXPENSES
2022 2021
EUR'000 EUR'000
Travelling and accommodation 132 102
Insurance 75 58
Marketing and advertising expenses 66 50
Personnel expenses (see below) 568 633
Immovable property and other taxes 243 205
Rents 120 91
Other 410 13 0
------------------------------------- -------- --------
Total 1,614 1,2 69
------------------------------------- -------- --------
Personnel expenses
2022 2021
EUR'000 EUR'000
Wages and salaries 423 476
Compulsory social security contributions 50 51
Other personnel costs 95 106
------------------------------------------ -------- --------
Total 568 633
========================================== ======== ========
The average number of employees employed
by the Group 27* 27*
========================================== ======== ========
*The vast majority consists of workers/archaeologists at
Kilada
12. Finance cost S
2022 2021
Recognised in profit or loss EUR'000 EUR'000
Interest income 4 16
Exchange difference 69 -
------------------------------------------------ -------- --------
Finance income 73 16
------------------------------------------------ -------- --------
Interest expense (2,891) (1,812)
Transaction costs and other financing expenses (43) (1,139)
Bank charges (63) (43)
Exchange difference - (16)
================================================ ======== ========
Finance costs (2,997) (3,010)
------------------------------------------------ -------- --------
Net finance costs recognised in profit
or loss (2,924) (2,994)
------------------------------------------------ -------- --------
2022 2021
EUR'000 EUR'000
Recognised in other comprehensive income
Foreign currency translation differences (56) (2,245)
------------------------------------------------- -------- --------
Finance costs recognised in other comprehensive
income (56) (2,245)
------------------------------------------------- -------- --------
13. Taxation
2022 2021
EUR'000 EUR'000
RECOGNISED IN PROFIT OR LOSS
Income tax expense
Current year 1 10
Other 6 119
-------------------------------------------- -------- --------
7 129
-------------------------------------------- -------- --------
Deferred tax expense
On valuation loss of investment properties
(see note 24) (19) (1,399)
-------------------------------------------- -------- --------
(19) (1,399)
-------------------------------------------- -------- --------
Taxation recognised in profit or loss (12) (1,270)
-------------------------------------------- -------- --------
Reconciliation of taxation based on taxable loss and taxation
based on accounting loss:
2022 2021
EUR'000 EUR'000
L oss before taxation (5,808) (21,243)
Taxation using domestic tax rates (808) (3,442)
Effect of valuation loss on properties (19) (1,379)
Non-deductible expenses 654 3,186
Tax-exempt income (562) -
Current year losses for which no deferred
tax is recognised 716 240
Other 7 125
------------------------------------------------- -------- ---------
Total (12) (1,270)
------------------------------------------------- -------- ---------
As a company incorporated under the BVI International Business
Companies Act (Cap. 291), the Company is exempt from taxes on
profits, income or dividends. Each company incorporated in BVI is
required to pay an annual government fee, which is determined by
reference to the amount of the company's authorised share
capital.
In Greece, the corporation tax rate applicable to profits is 22%
( 22% in 2021) . Tax losses of Greek companies are carried forward
to reduce future profits for a period of five years.
The profits of the Cypriot companies of the Group are subject to
a corporation tax rate of 12 . 50 % on their total taxable profits.
Tax losses of Cypriot companies are carried forward to reduce
future profits for a period of five years . In addition, the
Cypriot companies of the Group are subject to a 3% special
contribution tax on rental income. Under certain conditions,
interest income may be subject to a special contribution tax at the
rate of 30%. In such cases, this interest is exempt from
corporation tax.
In Croatia, the corporation tax rate is 18%. Tax losses of
Croatian companies are carried forward to reduce future profits for
a period of five years.
14. LOSS per share
Basic loss per share
Basic loss per share is calculated by dividing the loss
attributable to owners of the Company by the weighted average
number of common shares outstanding during the year.
2022 2021
'000 '000
Loss attributable to owners of the Company
(EUR) (6,924) (21,343)
Number of weighted average common shares
outstanding 904,627 904,627
============================================= ======== =========
Basic loss per share (EUR) (0.01) (0.02)
--------------------------------------------- -------- ---------
Loss attributable to owners of the Company
2022 2021
EUR'000 EUR'000
Loss attributable to owners of the Company (6,924) (21,343)
Profit attributable to non-controlling
interests 1,128 1,370
============================================= ======== =========
Total (5,796) (19,973)
--------------------------------------------- -------- ---------
Weighted average number of common shares
outstanding 2022 2021
'000 '000
-------------------------------------------- -------- --------
Outstanding common shares at the beginning
and end of the year 904,627 904,627
-------------------------------------------- -------- --------
Diluted loss per share
As at 31 December 2022 and 2021, the diluted loss per share is
the same as the basic loss per share, as there were no outstanding
dilutive potential ordinary shares (a financial instrument or other
contract that, when converted to ordinary shares, would decrease
earnings per share or increase loss per share) during these
years.
15. Property, plant and equipment
Property under construction Land &
EUR'000 buildings Machinery & equipment Other Total
EUR'000 EUR'000 EUR'000 EUR'000
2022
Cost or revalued amount
At beginning of year 5,683 20,445 366 45 26,539
Direct acquisitions 3,241 12 11 - 3,264
At end of year 8,924 20,457 377 45 29,803
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
Depreciation and
impairment
At beginning of year - 17,080 357 33 17,470
Depreciation charge for
the year - 38 9 1 48
Reversal of impairment
loss (note 8) - (2,944) - - (2,944)
Exchange difference - - (1) 4 3
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
At end of year - 14,174 365 38 14,577
=========================== ============================ =========== ====================== ========== ==========
Carrying amounts 8,924 6,283 12 7 15,226
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
2021
Cost or revalued amount
At beginning of year 2,054 20,445 361 39 22,899
Direct acquisitions 3,629 6 10 6 3,651
Disposals through
subsidiary disposal - (6) (5) - (11)
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
At end of year 5,683 20,445 366 45 26,539
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
Depreciation and impairment
At beginning of year - 17,665 349 30 18,044
Depreciation charge for
the year - 36 11 1 48
Disposals through
subsidiary disposal - (6) (3) - (9)
Reversal of impairment
loss (note 8) - (615) - - (615)
Exchange difference - - - 2 2
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
At end of year - 17,080 357 33 17,470
=========================== ============================ =========== ====================== ========== ==========
Carrying amounts 5,683 3,365 9 12 9,069
--------------------------- ---------------------------- ----------- ---------------------- ---------- ----------
The carrying amount at year end of land and buildings, if the
cost model was used, would have been EUR6.3 million (2021: EUR3.3
million). Land and buildings include right-of-use assets of EUR442
thousand (2021: EUR442 thousand) related to leased properties that
do not meet the definition of investment property.
Fair value hierarchy
The fair value of land and buildings, amounting to EUR6,283
thousand (2021: EUR3,365 thousand), has been categorised as a Level
3 fair value based on the inputs to the valuation techniques
used.
The following table shows a reconciliation from opening to
closing balances of Level 3 fair value.
2022 2021
EUR'000 EUR'000
At beginning of year 3,365 2,780
Acquisitions 12 6
Gains/(losses) recognised in profit or loss
Reversal of impairment loss and write offs
in 'Change in valuations' 2,944 615
Depreciation in 'Depreciation charge' (38) (36)
At end of year 6,283 3,365
------------------------------------------------ -------- --------
Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in
measuring land and buildings, as well as the significant
unobservable inputs used.
Property Valuation Significant unobservable Inter-relationship
location technique inputs between key unobservable
(note inputs and fair value
3) measurement
Property Income Room occupancy 2022: 32% The estimated fair
in Greece approach rate (annual): to 44% value would increase/(decrease)
- Hotel if:
complexes
-----------
(weighted
average: 42%)
-----------
2021: 45% Room occupancy rate
to 52% was higher/(lower);
(weighted Average daily rate
average: 51%) per occupied room was
higher/(lower);
Average daily 2022: EUR950 Gross operating margin
rate per occupied to EUR1,186 was higher/(lower);
room:
(weighted Terminal capitalisation
average: EUR1,064) rate was lower/(higher);
2021: EUR546 Risk-adjusted discount
to EUR738 rate was lower/(higher).
(weighted
average: EUR673)
Gross operating 2022: 20%
margin rate: to 35%
(weighted
average: 33%)
2021: 24%
to 38%
(weighted
average: 36%)
Terminal capitalisation 2022: 8% (2021:
rate: 8%)
Risk-adjusted 2022: 12%
discount rate: (2021: 11%)
-----------
Combined Income approach The estimated fair
approach (for land components) value would increase/(decrease)
(Income if:
and Cost)
-----------
Net operating 2022 : EUR53
income per m(2) to EUR328
:
-----------
2021 : EUR53 Net operating income
to EUR328 per m2 was higher/(lower);
Cash flow velocity 2022: 10 (2021: Cash flow velocity
(years): 11) was shorter/(longer);
Terminal capitalisation 2022: 11% Terminal capitalisation
rate: (2021: 9%) rate was lower/(higher);
Risk-adjusted 2022: 12% Risk-adjusted discount
discount rate: (2021: 11%) rate was lower/(higher);
Cost approach Replacement cost (new)
(for building per m2 was higher/(lower);
components)
Replacement cost 2022: EUR600 Entrepreneurial profit
(new) per m(2) - EUR1,500 rate was higher/(lower);
:
2021: EUR500 Depreciation rate was
- EUR1,100 lower/(higher).
Ent r epreneurial 2022: 20%
profit rate: (2021: 20%)
Depreciation rate: 2022: 40%
(2021: 38%)
Useful life (years): 2022: 60 (2021:
60)
----------- ------------------------ -------------------- ---------------------------------
Sensitivity of fair value measurement to change in unobservable
inputs
Given the uncertainties in the market, any changes in
unobservable inputs may lead to measurement with significantly
higher or lower fair value. A variation of the discount rate would
affect the fair value of property in Greece - Hotel Complexes as
follows:
Change Impact on fair
in value
------------------------
Assumption 202 2
Increase (Decrease)
Discount Rate % EUR'000 EUR'000
* Hotel Complexes in Greece 1.00% 2,672 (2,232)
16. Investment property
2022 2021
Note EUR'000 EUR'000
At beginning of year 52,188 76,303
Capital subsequent expenditure 75 21
Fair value adjustment 8 (6,316) (24,240)
Exchange differences (4) 104
-------------------------------- ----- -------- ---------
At end of year 45,943 52,188
-------------------------------- ----- -------- ---------
As at 31 December 2022 and 31 December 2021 , part of the
Group's immovable property is held as security for bank loans (see
note 23).
Changes in fair value are recognised as gain/(losses) in profit
or loss and included in "Change in Valuation" (see note 8). All
such gains/(losses) are unrealised.
Part of investment property includes land acquired by Golfing
Developments S.A. ("Golfing"), a subsidiary company and owner of
the Lavender Bay Resort, from third parties and also right-of-use
assets on land leased by third parties. It should be noted that in
2010, the Greek State Real Estate Service disputed part of this
land owned by Golfing as belonging to the Greek State. In 2011, the
vendor of the land lodged an objection (administrative appeal) to
the Directorate of Public Property of the Ministry of Finance,
requesting the review of the conclusion of the Real Estate Service
report, as well as the Final report of the inspector of the
Ministry of Finance. Golfing proceeded to various legal actions in
order to indicate its ownership of the land at that time. As part
of these legal proceedings, the Courts had issued a decision in
2019 as part of a criminal law procedure, indicating that there
were no grounds indicating the public nature of Golfing's land.
In September 2021, the Greek Council for Public Properties
issued an Opinion claiming that a part of the overall land
comprising 843,114m(2) , amounting to EUR2.4 million as at 31
December 2022 (2021: EUR3.2 million) and included in Investment
Property as of 31 December 2022 and 2021 respectively, that was
sold from the Archdiocese of Dimitriada ('Vendor') to Golfing in
2006 and 2007, belonged to the Greek State disputing the private
character of the land. This Opinion was adopted by the Ministry of
Finance in January 2022, who took steps to register the property in
the name of the Greek State at the local land registries in April
and May 2022. This adoption constitutes a unilateral administrative
act and if it is found to be incorrect or illegal, it can be
revoked. The Company intends to proceed to an appeal to the Greek
courts claiming its ownership of the disputed land, based on
Golfing's and the Company's relevant Board of Directors decision
that was taken at its meetings on 15 June 2022 and 22 June 2022,
respectively.
In addition, the Greek Council for Public Properties disputed
the ownership rights of the Vendor on the land leased to Golfing in
2006 and 2007 of 2,097,443 m(2) , from which 1,746,334 m(2) are
activated leased contracts, of an amount of EUR1.2 million included
in Investment Property as of 31 December 2022 (2021: EUR1.9
million), for which, though, no final opinion was issued by this
Council. Golfing and the Vendor proceeded to legal actions relating
to this dispute as well in January 2022.
The Group believes, based on legal assessments, that the
unilateral registration of the property in the name of the Greek
State, does not establish and does nor constitute a title deed or a
court decision and, therefore does not lead to the loss of property
rights of Golfing but the Greek State disputes the private
character of the above land of 843,114m(2) of Golfing, indicating
its public character.
Although the dispute is considered as a significant obstacle to
the continuation of the investment in the project, Golfing
continues to recognize the respective land under its assets as
investment property of Golfing, on the basis of legal evidence of
ownership of the land as described above.
Golfing, based on third party valuation experts, proceeded to
the assessment of fair value of the respective land included in
investment property and recorded a negative adjustment of EUR1.5
million as at 31 December 2022 (2021: EUR13.2 million) in 'Loss in
fair value of investment property' in profit or loss in 2022 and
2021 including a significant downward adjustment to account for the
estimated uncertainty relating to the above case.
Fair value hierarchy
The fair value of investment property, amounting to EUR45.9
million and (2021: EUR52.2 million), has been categorised as a
Level 3 fair value based on the inputs to the valuation techniques
used.
Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in
measuring the fair value of investment property, as well as the
significant unobservable inputs used.
Property Valuation Significant unobservable Inter-relationship between
location technique inputs key unobservable inputs
(see and fair value measurement
note
3)
Market approach The estimated fair value
- 60% weight would increase/(decrease)
if:
-------------
Asking prices 2022: EUR13 Asking prices per m(2)
per m(2) : to EUR29 were higher/(lower);
2021: EUR8 Premiums were higher/(lower);
to EUR26
Premiums/(discounts) D iscounts were lower/(higher)
on the following: ;
Location: 2022: 0% Weights on comparables
with premiums were higher/(lower);
2021: -10% Weights on comparables
to 0% with discounts were lower/(higher);
Site size: 2022: 0% Quantity of villas was
higher/(lower);
2021: 0% Selling price per m(2)
was higher/(lower);
Asking vs transaction: 2022: -30% Expected annual growth
to -20% in selling price was higher/(lower);
2021: -30% Cash flow velocity was
to -20% shorter/(longer);
Frontage sea view: 2022: 0% Risk-adjusted discount
rate was lower/(higher).
2021: 0%
Maturity/development 2022: 0%
potential: to +30%
2021: +10%
to +30%
Weight allocation: 2022: +15%
to +20%
2021: +5%
to +25%
Discount on market
approach value:
Legal status: 2022: -85%
(2021: -80%)
Income approach
- 40% weight
Quantity of villas: 2022: 447
(2021: 447)
Selling price 2022: EUR2,900
per m(2) :
2021: EUR2,800
Expected annual 2022: from
growth in selling year 3: 3%
price:
2021: from
year 3: 3%
Cash flow velocity 2022:14 (2021:
(years): 13)
Risk-adjusted 2022: 18%
discount rate: (2021: 14%)
Discount on combined
approach value:
Combined Legal status: 2022: -85%
Property approach (2021: -80%)
in (Market
Greece and Income)
------------- ----------------------- ----------------- --------------------------------------
Asking prices per 2022: EUR1 The estimated fair value
m(2) : to EUR88 would increase/(decrease)
if:
-------------
2021: EUR1 Asking prices per m(2)
to EUR94 were higher/(lower);
Premiums/(discounts) P remiums were higher/(lower)
on the following: ;
Location: 2022: -40% D iscounts were lower/(higher)
to +30% ;
2021: -40% Weights on comparables
to +10% with premiums were higher/(lower);
Site size: 2022: -50% Weights on comparables
to +20% with discounts were lower/(higher).
2021: -50%
to +10%
Asking vs transaction: 2022: -30%
to 0%
2021: -30%
to 0%
Frontage sea view: 2022: -30%
to +30%
2021: 0%
to +30%
Maturity/development 2022: -50%
potential: to +30%
2021: -20%
to +50%
Zoning: 2022: -30%
2021: -30%
Other: 2022: -30%
to +50%
2021: -20%
to +30%
Strategic investment 2022: 20%
approval:
2021: 20%
Weight allocation: 2022: +10%
to +40%
2021: +5%
to +60%
Discount on market
approach value:
Property Legal status: 2022: -85%
in Market (2021: -80%)
Greece approach
------------- ------------------------- --------------- --------------------------------------
Asking prices per 2022: EUR1 The estimated fair value
m(2) : to EUR349 would increase/(decrease)
if:
Property 2021: EUR1 Asking prices per m(2)
in Market to EUR349 were higher/(lower);
Cyprus approach
Premiums/(discounts) Premiums were higher/(lower);
on the following:
Location: 2022: -10% Discounts were lower/(higher);
to +20%
2021: -10% Weights on comparables
to +20% with premiums were higher/(lower);
Site size: 2022: -40% Weights on comparables
to 0% with discounts were lower/(higher).
2021: -40%
to 0%
Asking vs transaction: 2022: -20%
to +20%
2021: -15%
to +20%
Frontage sea view: 2022: -10%
to +30%
2021: -10%
to +30%
Maturity/development 2022: -20%
potential: to 0%
2021: -20%
to +50%
Weight allocation: 2022: +5%
to +30%
2021: +5%
to +30%
------------- ------------------------- --------------- --------------------------------------
Property Market Asking prices per 2022: EUR3 The estimated fair value
m(2) : to EUR96 would increase/(decrease)
if:
in approach 2021: EUR3 Asking prices per m(2)
Croatia to EUR96 were higher/(lower);
Premiums/(discounts) Premiums were higher/(lower);
on the following:
Location: 2022: -5% Discounts were lower/(higher);
to 0%
2021: -5% Weights on comparables
to 0% with premiums were higher/(lower);
Site size: 2022: -20% Weights on comparables
to -15% with discounts were lower/(higher).
2021: -15%
to -10%
Asking vs transaction: 2022: 0%
2021: 0%
Quality factor: 2022: -5%
to +15%
2021: -5%
to +15%
Capacity: 2022: -5%
to +10%
2021: -5%
to +10%
Weight allocation: 2022: +10%
to +33%
2021: +25%
to +33%
------------- ------------------------- --------------- --------------------------------------
Sensitivity of fair value measurement to change in unobservable
inputs
Given the uncertainties in the market, any changes in
unobservable inputs may lead to measurement with significantly
higher or lower fair value. A variation of the annual estimated
fair value per square meter would affect the fair value of
investment properties per square meter as follows:
Change Impact on fair value
in
------------------------------------------------------
Assumption 2022 2021
Annual estimated Increase (Decrease) Increase (Decrease)
fair value
per square meter % EUR'000 EUR'000 EUR'000 EUR'000
* Property in Greece 10% 2,023 (2,023) 2,248 (2,248)
* Property in Croatia 10% 1,770 (1,770) 1,700 (1,700)
* Property in Cyprus 10% 552 (552) 970 (970)
17 . OTHER INVESTMENTS
Other investments consisted of the Company's previous holding in
Itacare Capital Investments Limited. Following the decision by
Itacare's shareholders to dispose of all its assets and after a
series of asset sales/swaps, the investment was classified as a
current asset. In 2021, Itacare paid an interim dividend of
EUR326,000 to the Company, the investment was then subsequently
impaired to the expected value of the final distribution,
EUR99,000. During the year the Company received the final
distribution and the investment was fully disposed.
18. equity-accounted investees
DCI H2 SPV14 Total
Note EUR'000 EUR'000 EUR'000
2022
At beginning of year 42,694 22,861 65,555
Share of loss , net of tax (388) (1,397) (1,785)
Disposal of Associate - (21,464) (21,464)
Reversal of impairment loss 8 388 - 388
------------------------------ ----- -------- --------- ------------------
At end of year 42,694 - 42,694
------------------------------ ----- -------- --------- ------------------
2021
At beginning of year 42,694 17,980 60,674
Share of profits , net of tax 814 5,159 5,973
Share of revaluation surplus - (278) (278)
Impairment loss 8 (814) - (814)
------------------------------ ----- -------- --------- ------------------
At end of year 42,694 22,861 65,555
------------------------------ ----- -------- --------- ------------------
Single Purpose Vehicle Fourteen Limited ('SPV 14')
On 23 December 2022 it was announced that the Company had
completed the disposal of its entire interest in the One&Only
at Kea Island ('OOKI') Project. Prior to the sale, the Company was
the owner of 66.67% of Single Purpose Vehicle Ten Ltd ('SPV10')
which, in turn, indirectly owned 50% of SPV 14, thereby providing
the Company with an effective equity interest of 33.33% in SPV 14
and the OOKI project.
Under the share purchase agreement ("SPA") singed on 13 October
2022 SPV10 received EUR26.9 million for the 50% ownership of SPV14.
At the time of the disposal the value of the associate was EUR21.5
million, following a EUR1.4 million share of losses recognised, as
a result the gain on the disposal was EUR5.4 million.
Pursuant to the sale, the Company received a net consideration,
in aggregate of EUR17.9 million. From these disposal proceeds, an
amount of EUR13 million was applied towards the repayment in full
by 31 December 2022 of the existing loan facility that Company drew
down on 7 June and 16 July 2021. All remaining proceeds from the
sale of SPV10 was retained by Company for use as working
capital.
DCI Holdings Two Limited ("DCI H2")
Since 31 December 2020, the Company's holding of 47.9% in DCI H2
(owner of Aristo Developers Ltd, 'Aristo'), has been classified as
an associate. An impairment loss was recognised in 2016, based on
an agreement to dispose of the entire 49.75% shareholding in DCI H2
then owned, for the amount of EUR45 million. The Group subsequently
disposed of 1.82% and as a result the Company's investment in DCI
H2 reduced to 47.9% at a value of EUR42.7 million, which the Group
estimates to be the recoverable amount as at the end of the
reporting period. The recoverable amount is calculated based on the
NAV of DCI H2 group at the reporting date adjusted by approximately
34% discount on the DCI H2 group's real estate properties. The fair
value of the investment in DCI H2 has been categorised as a Level 3
fair value based on the inputs to the valuation techniques
used.
The details of the above investments are as follows:
Country Shareholding interest
of
Name incorporation Principal activities 2022 2021
-------- --------------- ----------------------------- ----------- -----------
Development of OOKI
SPV 14 Cyprus Resort - 33%
-------- --------------- ----------------------------- ----------- -----------
Acquisition and holding
of real estate investments
DCI H2 BVIs in Cyprus 48% 48%
-------- --------------- ----------------------------- ----------- -----------
The above shareholding interest percentages are rounded to the
nearest integer.
As at 31 December 2021, SPV 14 had EUR23.4 million contractual
capital commitments on property, plant and equipment. Also, as at
31 December 2022, DCI H2 had EUR3.5 million (2021; EUR3.5 million)
contractual capital commitments on investment property.
The following table summarises the financial information of DCI
H2 and SPV 14 as included in their own financial statements, the
table also reconciles the summarised financial information to the
carrying amount of the Group's interest in equity-accounted
investees:
DCI SPV Total
H2 14
EUR'000 EUR'000 EUR'000
----------------------------------------- --------- -------- ---------
Percentage ownership interest 48% -% 48%
----------------------------------------- --------- -------- ---------
31 December 2022
Current assets 105,293 - 105,293
Non-current assets 208,873 - 208,873
----------------------------------------- --------- -------- ---------
Total assets 314,166 - 314,166
----------------------------------------- --------- -------- ---------
Current liabilities 69,943 - 69,943
Non-current liabilities 57,367 - 57,367
----------------------------------------- --------- -------- ---------
Total liabilities 127,310 - 127,310
----------------------------------------- --------- -------- ---------
Net assets 186,856 - 186,856
----------------------------------------- --------- -------- ---------
Group's share of net assets 89,560 - 89,560
Impairment (46,866) - (46,866)
----------------------------------------- --------- -------- ---------
Carrying amount of interest in investee 42,694 - 42,694
========================================= ========= ======== =========
Revenues 46,986 - 46,986
Profit (810) (2,793) (3,603)
Other comprehensive income - - -
========================================= ========= ======== =========
Total comprehensive income (810) (2,793) (3,603)
========================================= ========= ======== =========
Group's share of total comprehensive
income (388) (1,397) (1,785)
========================================= ========= ======== =========
DCI H2 SPV 14 Total
EUR'000 EUR'000 EUR'000
-------------------------------------- --------- -------- ---------
Percentage ownership interest 48% 50%
--------------------------------------- --------- -------- ---------
31 December 2021
Current assets (1) 123,989 40,658 164,647
Non-current assets 204,403 32,305 236,708
--------------------------------------- --------- -------- ---------
Total assets 328,392 72,963 401,355
--------------------------------------- --------- -------- ---------
Current liabilities (2) 84,357 13,832 98,189
Non-current liabilities (3) 56,368 13,409 69,777
--------------------------------------- --------- -------- ---------
Total liabilities 140,725 27,241 167,966
--------------------------------------- --------- -------- ---------
Net assets 187,667 45,722 233,389
--------------------------------------- --------- -------- ---------
Group's share of net assets 90,080 22,861 112,941
Impairment (47,386) - (47,386)
--------------------------------------- --------- -------- ---------
Carrying amount of interest in
investee 42,694 22,861 65,555
======================================= ========= ======== =========
Revenues 37,917 - 37,917
Profit (4) 1,699 10,317 12,016
Other comprehensive income - (555) (555)
======================================= ========= ======== =========
Total comprehensive income 1,699 9,762 11,461
======================================= ========= ======== =========
Group's share of total comprehensive
income 814 4,881 5,695
======================================= ========= ======== =========
The financial information of SPV 14, includes the following:
(1) Cash and cash equivalents - 2021: EUR6,020 thousand
(2) Non-current financial liabilities excluding trade and other
payables and provisions - 2021: EUR8,578 thousand
(3) Current financial liabilities excluding trade and other
payables and provisions - 2021: EUR769 thousand
(4) Depreciation - 2021: EUR29 thousand, Finance expense - 2021:
EUR16 thousand, and Income tax expense - 2021: EUR20 thousand
19. Trading properties
2022 2021
EUR'000 EUR'000
At beginning of year 56,516 59,769
Disposals - (3,253)
At end of year 56,516 56,516
----------------------- -------- --------
Trading properties comprise land to be sold and to be developed
into villas and holiday houses.
20. RECEIVABLES AND OTHER ASSETS
2022 2021
Note EUR'000 EUR'000
Trade receivables 90 45
Other receivables 939 176
Loan Receivable 28.3.1 6,637 -
Amounts Receivable from Investment
Manager 28.2 1,898 -
VAT receivables 509 859
------------------------------------ ------- -------- --------
Total Trade and other receivables
(see note 31) 8,175 1,080
==================================== ======= ======== ========
Amounts Receivable from Investment
Manager 28.2 1,898 -
Prepayments and other assets 10 12
==================================== ======= ======== ========
Total 10,083 1,092
------------------------------------ ------- -------- --------
The amount receivable from Investment Manager relates to EUR3.0
million of advance payments made (2021: EURNil) net of variable
management fee payable of EUR1.1 million (2021: EUR1.3 million).
See note 28.2 for further information.
21. Cash and cash equivalents
2022 2021
EUR'000 EUR'000
Bank balances (see note 31) 2,226 4,565
Cash in hand - 10
----------------------------- -------- --------
Total 2,226 4,575
----------------------------- -------- --------
22. capital and reserves
Capital
Authorised share capital
2022 2021
'000 of '000 of
shares EUR'000 shares EUR'000
Common shares of EUR0.01
each 2,000,000 20,000 2,000,000 20,000
-------------------------- ---------- -------- ---------- --------
Movement in share capital and premium
Shares in Share capital Share premium
issue
'000 EUR'000 EUR'000
---------- -------------- --------------
Capital at 1 January 2022 and
to 31 December 2022 904,627 9,046 569,847
------------------------------- ---------- -------------- --------------
Reserves
Translation reserve: Translation reserve comprises all foreign
currency differences arising from the translation of the financial
statements of foreign operations.
Revaluation reserve: Revaluation reserve relates to the
revaluation of property, plant and equipment from both subsidiaries
and equity-accounted investees, net of any deferred tax.
23. loans AND BORROWINGS
Within one Two to five
Total year years
------------------ ------------------ ------------------
2022 2021 2022 2021 2022 2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------------- -------- -------- -------- -------- -------- --------
Loans in Euro 4,611 17,391 4,611 4,743 - 12,648
----------------------- -------- -------- -------- -------- -------- --------
Redeemable preference
shares 10,434 7,477 - - 10,434 7,477
----------------------- -------- -------- -------- -------- -------- --------
Total 15,045 24,868 4,611 4,743 10,434 20,125
----------------------- -------- -------- -------- -------- -------- --------
Loans denominated in Euros
On 3 June 2021 the Company entered into a EUR15 million senior
secured term loan facility agreement with two institutional private
credit providers acting on behalf of their managed and advised
funds. The nominal interest rate is 12.5% p.a. and the initial
maturity date fell 18 months from the loan draw-down and was
subject to a six-month extension was at the Company's option with a
2% p.a. interest step-up. The facility agreement included mandatory
prepayment clauses with regard to revenues realised by the Company
from the disposal of its assets as well as standard event of
default provisions including, inter alia, borrower change of
control, termination of investment management agreement and
cancelation of existing borrower securities listing. Following the
sale of SPV10, the completion of OOKI disposal (as mentioned in
note 18) part of the disposal proceeds were applied towards the
repayment in full of this loan. As at 31 December 2022 the
outstanding balance of this loan was EURNil (2021: EUR12.6
million).
In the prior year, the maturity date of the outstanding loan of
Azurna (the owner of "Livka Bay") was extended to 31 December 2022.
This maturity date was further extended to 31 December 2023. During
the year an amount of EUR353 thousand was paid in regard to the
Azurna loan including principal and interest (2021: EUR1,891
thousand).
Redeemable preference shares
On 18 December 2019, the Company signed an agreement with an
international investor for a EUR12 million investment in the Kilada
Hills Project. The investor agreed to subscribe for both common and
preferred shares. The total
EUR12 million investment was payable in 24 monthly instalments
of EUR500,000 each. Under the terms of the agreement, the investor
is entitled to a priority return of the total investment amount
from the net disposal proceeds realised from the project and
retains a 15% shareholding stake in Kilada. As of 31 December 2022,
15.00% ( 2021: 11.58%) of the ordinary shares have been transferred
to the investor.
As of 31 December 2022, 12,000 redeemable preference shares (
2021: 9, 000) were issued as fully paid with value of EUR1,000 per
share. The redeemable preference shares were issued with a
zero-coupon rate and are discounted with a 0.66% effective monthly
interest rate, do not carry the right to vote and are redeemable
when net disposal proceeds are realised from the Kilada Project. As
at 31 December 2022, the fair value of the redeemable preference
shares was EUR10.4 million (2021: EUR7.3 million).
Terms and conditions of the loans
The terms and conditions of outstanding loan were as
follows:
Secured Maturity 2022 2021
loa n Currency Interest rate dates EUR'000 EUR'000
Livka Bay Euro Euribor plus 4.25% p.a. 2023 4,611 4,743
Fixed rate of 12.5% p.a.
with a 2% p.a. additional
Kilada Euro interest if extended 2023 - 12,64 8
=========== ========== ============================ ========== ========= =========
17,39
Total interest-bearing liabilities 4,611 1
===================================================== ========== ========= =========
Security given to lenders
As at 31 December 2022, the Group's loans were secured as
follows:
-- Regarding the senior term loan facility which was paid in
December 2022, a fixed and floating charges remains over all of the
Company's assets including all of the shares in DCI Holdings One
Ltd, fixed charge over the interest reserve account, pledges over
the shares of DolphinCI Twenty-Four Ltd and the subsidiaries in
Kilada Hills and Apollo Project and assignments and charges over
intercompany loans. This charge is expected to be released in
coming months.
-- Regarding the Kilada preference shares, upon transfer of the
entire amount of EUR12 million from the investor in accordance with
the terms of the agreement, a mortgage is set against the immovable
property of the Kilada Hills Project, in the amount of EUR15
million (2021: EUR15 million).
-- Regarding the Livka Bay loan, a mortgage against the
immovable property of the Croatian subsidiary, Azurna (the owner of
"Livka Bay"), with a carrying value of EUR17.7 million (2021:
EUR17.0 million), two promissory notes, a debenture note and a
letter of support from its parent company Single Purpose Vehicle
Four Limited.
-- In addition, the development at OOKI was partly funded by a
construction loan which was secured over its assets and those of
Scorpio Bay asset. Steps are being taken to remove the security
over Scorpio Bay now that we have sold our interest in OOKI.
Reconciliation of movements of liabilities to cash flows arising
from financing activities
Loans and borrowings Lease Non-controlling interests
EUR'000 liabilities EUR'000 Total
EUR'000 EUR'000
2022
Balance at the beginning of the year 24,868 3,420 8,942 37,230
----------------------------------------- --------------------- ------------- -------------------------- ---------
Changes from financing cash flows:
Issue of redeemable preference shares 3,000 - - 3,000
New loans - - - -
Transaction costs related to loans and - - - -
borrowings
Repayment of loans and borrowings (12,370) - - (12,370)
Payment of lease liability - (8) - (8)
Dividends Paid - - (2,250) (2,250)
Interest paid (2,363) - - (2,363)
Other movements (620) - 620 -
----------------------------------------- --------------------- ------------- -------------------------- ---------
Total changes from financing cash flows (12,353) (8) (1,630) (13,991)
----------------------------------------- --------------------- ------------- -------------------------- ---------
Other changes- Liability-related
Interest expense 2,535 23 - 2,558
Other movements (5) - 1,128 1,123
----------------------------------------- --------------------- ------------- -------------------------- ---------
Total liability-related other changes 2,530 23 1,128 3,681
----------------------------------------- --------------------- ------------- -------------------------- ---------
Balance at the end of the year 15,045 3,435 8,440 26,920
----------------------------------------- --------------------- ------------- -------------------------- ---------
Loans and borrowings Lease Non-controlling interests
EUR'000 liabilities EUR'000 Total
EUR'000 EUR'000
2021
Balance at the beginning of the year 9,046 3,405 6,523 18,974
----------------------------------------- --------------------- ------------- -------------------------- ---------
Changes from financing cash flows:
Issue of redeemable preference shares 5,500 - - 5,500
New loans 14,063 - - 14,063
Transaction costs related to loans and
borrowings (90) - - (90)
Repayment of loans and borrowings (3,611) - - (3,611)
Payment of lease liability - (8) - (8)
Interest paid (726) - - (726)
Other movements (1,138) - 1,138 -
----------------------------------------- --------------------- ------------- -------------------------- ---------
Total changes from financing cash flows 13,998 (8) 1,138 15,128
----------------------------------------- --------------------- ------------- -------------------------- ---------
Other changes- Liability-related
Interest expense 1,682 23 - 1,705
Other movements 142 - 1,281 1,423
----------------------------------------- --------------------- ------------- -------------------------- ---------
Total liability-related other changes 1,824 23 1,281 3,128
----------------------------------------- --------------------- ------------- -------------------------- ---------
Balance at the end of the year 24,868 3,420 8,942 37,230
----------------------------------------- --------------------- ------------- -------------------------- ---------
24. Deferred tax liabilities
2022 2021
EUR'000 EUR'000
Balance at the beginning of the year 6,609 8,000
Recognised in profit or loss (see note 13) (19) (1,399)
Exchange differences (13) 8
============================================ ======== ========
Balance at the end of the year 6,577 6,609
-------------------------------------------- -------- --------
Deferred tax liabilities are attributable to the following:
2022 2021
EUR'000 EUR'000
Investment properties 2,215 2,247
Trading properties 4,299 4,299
Property, plant and equipment 63 63
=============================== ======== ========
Total 6,577 6,609
------------------------------- -------- --------
25 Lease liabilities
The major lease obligations comprise leases in Greece with
99-year lease terms, for which, as mentioned in note 16, the Greek
State disputed the ownership rights of the lessor.
2022 2021
EUR'000 EUR'000
Non-current 3,347 3,331
Current 88 89
============= ======== ========
Total 3,435 3,420
------------- -------- --------
26. Trade and other payables
2022 2021
EUR'000 EUR'000
Land creditor 20,752 20,752
Investment Management fees (see note 28.2) - 1,301
Other payables and accrued expenses 6,332 4,115
-------------------------------------------- -------- --------
Total 27,084 26,168
-------------------------------------------- -------- --------
2022 2021
EUR'000 EUR'000
Non-current 19,795 20,089
Current 7,289 6,079
------------- -------- --------
Total 27,084 26,168
------------- -------- --------
Land creditors relate to contracts in connection with the
purchase of land at Lavender Bay from the Church. The above
outstanding amount bears an annual interest rate equal to the
inflation rate, which cannot exceed 2% p.a.. Full settlement is due
on 31 December 2025. As mentioned in note 16, the Group is in
negotiations with the land creditor with a view to ensuring that no
additional funds are paid to them under the sale and purchase
contracts until the resolution of the legal dispute with the Greek
State and, also to reduce the overall quantum of the Group's
deferred liabilities to them, potentially swapping all or part of
the deferred payments against equity in the project.
27. NAV per share
2022 2021
'000 '000
Total equity attributable to owners of the
Company (EUR) 112,107 119,087
Number of common shares outstanding at end
of year 904,627 904,627
-------------------------------------------- -------- --------
NAV per share (EUR) 0.12 0.13
-------------------------------------------- -------- --------
28. Related party transactions
28.1 Directors' interest and remuneration
Directors' interests
Miltos Kambourides is the founder and managing partner of the
Investment Manager whose IMA was terminated on 20 March 2023.
Martin Adams, Nick Paris and Nicolai Huls were non-executive
Directors throughout 2022, with Mr. Martin Adams serving as
Chairman of the Board of Directors. On 10 February 2023, Martin
Adams resigned as a Director and Sean Hurst was appointed as a
non-executive Director and Chairman.
The interests of the Directors as at 31 December 2022, all of
which are beneficial, in the issued share capital of the Company as
at this date were as follows:
Shares
'000
---------------------------------------- -------
Miltos Kambourides (indirect holding)* 66,019
---------------------------------------- -------
Nicolai Huls 775
---------------------------------------- -------
Nick Paris 1,634
---------------------------------------- -------
* Miltos Kambourides is 75% shareholder of Dolphin Capital
Partners that held 88,025,342 shares. Following the year end
Dolphin Capital Partners disposed of all their shares in the
Company.
Save as disclosed in this Note, none of the Directors had any
interest during the year in any material contract for the provision
of services which was significant to the business of the Group.
Although the Directors believe that DCP with whom Miltos
Kambourides is connected acquired an undisclosed option after the
call of Amanzoe by the Company in August 2018.
Directors' remuneration
2022 2021
EUR '000 EUR '000
Remuneration 200 323
-------------------- --------- ---------
Total remuneration 200 323
-------------------- --------- ---------
The Directors' remuneration details for the years ended 31
December 2022 and 31 December 2021 were as follows:
2022 2021
EUR '000 EUR '000
Martin Adams 75 37
Nick Paris 65 33
Nicolai Huls 65 30
Andrew Coppel (stepped down on 30 June 2021) - 118
Graham Warner (stepped down on 30 June 2021) - 72
Mark Townsend (stepped down on 30 June 2021) - 33
---------------------------------------------- --------- ---------
Total 205 323
---------------------------------------------- --------- ---------
Miltos Kambourides waived his fees for both 2022 and 2021.
28.2 Investment Manager remuneration
2022 2021
EUR
'000 EUR '000
Fixed management fee - 3,600
------------------------------------------------- -------- ---------
Total remuneration - 3,600
------------------------------------------------- -------- ---------
Variable management fee payable (1,075) (1,300)
Project Fees (2) (1)
Incentive fee advance payments 2,975 -
------------------------------------------------- -------- ---------
Amount Receivable from /(Payable to) Investment
Manager 1,898 (1,301)
------------------------------------------------- -------- ---------
On 9 April 2019, the Company signed an Amended and Restated
Investment Management Agreement ('IMA'), which was effective from 1
January 2019. The details of it were as follows:
i. Fixed investment management fee
No fixed management fee was due after 31 December 2021.The
annual investment management fees for 2021 was previously EUR3.6
million per annum.
ii. Variable investment management fee
The variable investment management fee for the period from 1
January 2020 to 31 December 2021 was equal to a percentage of the
actual distribution made by the Company to its shareholders, as
shown below:
Aggregate Shareholder Distributions % applied
on Distributions
Up to but excluding EUR30 million Nil
------------------------------------------- ------------------
EUR30 million up to but excluding EUR50
million 2.0%
-------------------------------------------- ------------------
EUR50 million up to but excluding EUR75
million 3.0%
-------------------------------------------- ------------------
EUR75 million up to but excluding EUR100
million 4.0%
-------------------------------------------- ------------------
EUR100 million up to but excluding EUR125
million 5.0%
-------------------------------------------- ------------------
EUR125 million or more 6.0%
-------------------------------------------- ------------------
The Investment Manager was entitled to a performance fee payable
subject to certain conditions, under the terms of the IMA. However,
any performance fees earned under this arrangement would have been
fully deducted from any future annual investment management fees
and variable management fees payable over the term of the IMA. No
performance fee was payable to the Investment Manager for the year
ended 31 December 2021.
On 22 December 2021, a new IMA was approved by the Shareholders
at the Extraordinary General Meeting, which is effective from 1
January 2022, which was terminated on 20 March 2023. The details
were as follows:
A. INCENTIVE FEES AND BONUS
I. The Investment Manager shall be entitled to be paid Incentive
Fees which shall be calculated as follows based on the aggregate
Distributions made by the Company to its Shareholders:
Aggregate Distributions(1) Incentive Fees (as a percentage
of Aggregate Distributions)
Up to an including EUR40 million 0%
--------------------------------
In excess of EUR40 million 15%
--------------------------------
(1) For the avoidance of doubt, the different percentages set
out below shall be applied incrementally and not as against the
total aggregate Distributions.
II. In addition to the fees payable pursuant to paragraph A.I
above, and subject to paragraphs B and C once aggregate
Distributions of EUR80 million have been made, the Investment
Manager shall be entitled to be paid a further bonus (the "Bonus")
on the following basis:
Aggregate Distributions Bonus payment
EUR80 million EUR1 million
--------------
For each amount of EUR5 million
of Distributions paid in excess
of EUR80 million up to and including
EUR100 million(1) EUR1 million
--------------
(1) For the avoidance of doubt, the total aggregate Bonus
payments which may be paid to the Investment Manager shall not
exceed a maximum of EUR5 million.
III. Any Incentive Fees and/or Bonus payable by the Company to
the Investment Manager shall be set off against and shall be
reduced (to not less than zero) by the amount of any fees
(including but not limited to asset management fees and villa sales
fees) collected in cash by the Investment Manager under the terms
of the Kea Asset Management Agreement accruing from 1 January 2022
onwards (to the extent that these have not already been off set
against the Incentive Fee Advance Payments pursuant to paragraph
B.II. below).
B. INCENTIVE FEE ADVANCE PAYMENTS
I. As an advance against future Incentive Fees, the Investment
Manager shall be entitled to receive the following annual advances,
which shall be payable in equal quarterly instalments in
advance:
Year Incentive Fee Advance Payment
2022 EUR2.4 million
------------------------------
2023 EUR2.3 million
------------------------------
2024 EUR1.3 million
------------------------------
II. The Incentive Fee Advance Payments payable by the Company to
the Investment Manager shall, (i) be set off against and shall
reduce (to not less than zero) the entitlement of the Investment
Manager to any Incentive Fees and/or Bonus payable pursuant to
paragraphs A.I and A.II above, and (ii) be set off against and
shall be reduced (to not less than zero) by the amount of any fees
(including but not limited to asset management fees and villa sales
fees) collected in cash by the Investment Manager under the terms
of the Kea Asset Management Agreement accruing from 1 January 2022
onwards.
III. For the avoidance of doubt, the Company shall not be
obliged to take active steps to generate funding to pay any
Incentive Fee Advance Payments and, consequently, the payment of
any Incentive Fee Advance Payments shall be deferred, partly or
wholly as required, by the Company in the case where:
(i) the Company does not have freely transferable funds
available to pay such Incentive Fee Advance Payments due, or
(ii) the Company's readily accessible consolidated cash balance
(excluding (a) cash that is not readily available to the Company,
(b) cash held at Kilada and the One&Only at Kea, and (c) any
cash deposited in the interest retention account in connection with
the CastleLake Loan Agreement or any subsequent lender to the
Company) after the payment of any Incentive Fee Advance Payments
due would be less than EUR1 million.
C ESCROW ACCOUNT
I. An amount equal to 25 per cent of the aggregate of any
Incentive Fees and/or Bonus in excess of the aggregate Incentive
Fee Advance Payments to which the Investment Manager may become
entitled shall be placed in the Escrow Account.
II. The amount held in the Escrow Account from time to time
shall become payable to the Investment Manager on the earlier to
occur of:
(i) the date of completion of the disposal of the last Relevant
Investment;
(ii) the date of commencement of the formal liquidation of the
Company under BVI law; and
(iii) the date of effective termination of this Agreement by the
Company.
III. If the Investment Manager serves notice to terminate this
Agreement, any amounts held in the Escrow Account shall be
forfeited and shall become due and payable to the Company.
28.3 Other related party transactions
28.3.1 Exactarea Holdings Limited
On 15th December 2022 SPV10 entered into a bridge loan facility
with its 33% shareholder Exacterea Holding Limited, making
available of a principle amount up to EUR6.6 million. The loan is
interest-free and repayable at the latest six months from the date
of the agreement.
This loan was in connection with the sale of our interest in
OOKI, agreed to be deemed to be fully repaid when the courts in
Cyprus approved an application to reduce the share premium reserve
account of SPV10.
As at the 31 December 2022 the full EUR6.6 million was
outstanding and as the application above was approved on 16th of
January 2023, since then it is deemed fully repaid.
28.3.2 OOKI resort
The Investment Manager owned an effective 5% equity interest in
SPV14 (an equity-accounted investee and the holding company of the
OOKI project) at the time that the Company sold its interest in
SPV14. Under the relevant shareholders agreement dated 27 May 2019,
the Investment Manager, One&Only and Exactarea have priority
returns for an amount equal to 75% of their equity investment,
following the payment of which the Company becomes entitled to a
priority catch-up for the same amount. The Investment Manager also
had an asset management agreement dated 1 November 2017 with OOKI
and provided management services.
28.3.3 Amanzoe resort
The Investment Manager retained a 4.9% equity interest in AZOE
Holdings Ltd, the company that owns Amanzoe resort ('AZOE') and it
also had an asset management agreement dated 3 October 2018 for the
resort. However, the Directors believe that DCP also retained an
option over a further 15% of the equity in AZOE. Amanzoe Resort
S.A. entered on 2 August 2021 into a contract to buy 24 founder
plots in the Company's Kilada project for a price of EUR10 million
payable in instalments subject to the achievement of certain
construction milestones but this contract was unwound by both
parties in February 2023. The Directors believe that DCP sold all
of its interests in AZOE Holdings Ltd during March 2023.
28.3.3 AXIA
AXIA Ventures Group Limited ('Axia'), an investment banking
operation with offices in Cyprus and Athens was 20% owned by an
affiliate of the Investment Manager and Miltos Kambourides served
on its Board of Directors. However, the affiliate sold its interest
during 2022. Axia was appointed by the Company to undertake a
process for the sale of it's equity interest in OOKI dated 29
September 2020. No transaction was concluded and therefore no fee
was due or paid. Axia was also appointed by the Company in December
2022 to undertake a process for the sale of its equity interest in
Aristo Developers Limited. This process is ongoing and no fees have
yet been paid but they are believed by the Directors to be under
normal commercial terms.
28.3.4 Discover Investment Company
Nicolai Huls is a Director of Discover Investment Company which
provided a shareholder loan of EUR350 thousand to the Company in
May 2023. The terms of this loan are the same as loans provided by
other shareholders who are not Related Parties and the loans are
for a 12 month term bearing an interest rate of 12% p.a. with no
fees payable on disbursement or repayment. If the loans have not
been repaid within 6 months from initiation, collateral in the form
of security over certain Company assets will be put in place which
exceed the aggregate value of the loans.
29. Non-CONTROLLING INTERESTs
The following tables summarises the information relating to each
of the Group's subsidiaries that has material non-controlling
interests, before any intra-group eliminations.
2022 MCO 1 SPV 10
EUR'000 EUR'000
=============================================== ========= ========
Non-controlling interests' percentage 15.00% 33.33%
================================================ ========= ========
Non-current assets 18,293 -
Current assets 57,509 19,921
Non-current liabilities (57,443) -
Current liabilities (6,343) (8)
------------------------------------------------ --------- --------
Net assets 12,016 19,913
------------------------------------------------ --------- --------
Carrying amount of non-controlling interests 1,803 6,637
================================================ ========= ========
Revenue 37 -
(Loss)/profit (588) 4,001
Other comprehensive income - -
----------------------------------------------- --------- --------
Total comprehensive income (588) 4,001
------------------------------------------------ --------- --------
Dividends Paid - 6,750
------------------------------------------------ --------- --------
(Loss)/profit allocated to non-controlling
interests (206) 1,334
================================================ ========= ========
Other comprehensive income allocated to - -
non-controlling interests
----------------------------------------------- --------- --------
Dividends paid to non-controlling interest - 2,250
------------------------------------------------ --------- --------
Cash flow from/( used in) operating activities 2,329 (8)
Cash flow ( used in)/from investing activities (6,285) 3,195
Cash flow from/(used in) financing activities 3,885 (3,183)
------------------------------------------------ --------- --------
Net (decrease)/increase in cash and cash
equivalents (71) 4
------------------------------------------------ --------- --------
2021 MCO 1 SPV 10
EUR'000 EUR'000
============================================= ========= ========
Non-controlling interests' percentage 11.58% 33.33%
============================================== ========= ========
Non-current assets 12,008 22,861
Current assets 57,382 -
Non-current liabilities (52,930) -
Current liabilities (4,477) (199)
---------------------------------------------- --------- --------
Net assets 11,983 22,662
---------------------------------------------- --------- --------
Carrying amount of non-controlling interests 1,389 7,553
============================================== ========= ========
Revenue - -
(Loss)/profit (2,832) 5,156
Other comprehensive income - (278)
Total comprehensive income (2,832) 4,878
---------------------------------------------- --------- --------
(Loss)/profit allocated to non-controlling
interests (348) 1,718
============================================== ========= ========
Other comprehensive income allocated to
non-controlling interests - (92)
---------------------------------------------- --------- --------
Cash flow used in operating activities (1,298) (1)
Cash flow used in investing activities (3,629) -
Cash flow from financing activities 4,316 -
--------------------------------------------- --------- --------
Net decrease in cash and cash equivalents (611) (1)
---------------------------------------------- --------- --------
30 . business combindation
During the year ended 31 December 2021, the Group disposed of
its entire stake in Kalkan Yapi ve Turism A.S ('Kalkan', the owner
of LaVanta project), as follows:
Kalkan
EUR'000
Property, plant and equipment (2)
Other receivables (856)
Cash and cash equivalents (243)
Trade and other payables 1,180
---------------------------------------------- --------
Net liabilities 79
---------------------------------------------- --------
Net assets disposed of - 100% 79
Net proceeds on disposal 35
Reclassification of translation reserve
from other comprehensive income to profit
or loss 5,784
---------------------------------------------- --------
Gain on disposal recognised in profit
or loss 5,898
---------------------------------------------- --------
Cash effect on disposal:
Net proceeds on disposal 35
Cash and cash equivalents (243)
---------------------------------------------- --------
Net cash outflow on disposal (208)
---------------------------------------------- --------
31 . FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group is exposed to credit risk, liquidity risk and market
risk from its use of financial instruments . The Board of Directors
has overall responsibility for the establishment and oversight of
the Group's risk management framework. The Group's risk management
policies are established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls, and monitor
risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and
the Group's activities. The Group's overall strategy remains
unchanged from last year.
(i) Credit risk
Credit risk arises when a failure by counterparties to discharge
their obligations could reduce the amount of future cash inflows
from financial assets on hand at the statement of financial
position date. The Group has policies in place to ensure that sales
are made to customers with an appropriate credit history and
monitors on a continuous basis the ageing profile of its
receivables. The Group's trade receivables are secured with the
property sold. Cash balances are mainly held with high credit
quality financial institutions and the Group has policies to limit
the amount of credit exposure to any financial institution.
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the end of
the reporting year was as follows:
2022 2021
EUR'000 EUR'000
Trade and other receivables (see note
20) 8,175 1,080
Cash and cash equivalents (see note 21) 2,226 4,565
------------------------------------------ -------- --------
Total 10,401 5,645
------------------------------------------ -------- --------
Trade and other receivables
Credit quality of trade and other receivables
The Group's trade and other receivables are unimpaired.
Cash and cash equivalents
Exposure to credit risk
The table below shows an analysis of the Group's bank deposits
by the credit rating of the bank in which they are held:
2022 2021
No. No.
of Banks EUR'000 of Banks EUR'000
Bank group based on credit ratings
by Moody's
Rating Aaa to A - - 2 4,104
Rating Baa to B 3 1,966 4 461
Rating Caa to C - - - -
Not rated 1 259
------------------------------------ ---------- -------- ---------- --------
Total bank balances 2,225 4,565
------------------------------------ ---------- -------- ---------- --------
(ii) Liquidity risk
Liquidity risk is the risk that arises when the maturity of
assets and liabilities do not match. An unmatched position
potentially enhances profitability but can also increase the risk
of losses. The Group has procedures with the objective of
minimising such losses such as maintaining sufficient cash and
other highly liquid current assets and by having available an
adequate amount of committed credit facilities.
The following tables present the contractual maturities of
financial liabilities. The tables have been prepared based on
contractual undiscounted cash flows of financial liabilities, and
on the basis of the earliest date on which the Group might be
forced to pay.
2022 Carrying Contractual Within One to Three Over
amounts cash flows one year two years to five five
years years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Loans and borrowings 15,045 (16,611) (7,611) (3,000) (6,000) -
Lease obligations 3,435 (4,705) (91) (91) (193) (4,330)
Land creditors 20,752 (23,661) (1,280) (1,265) (21,116) -
Trade and other
payables 4,982 (4,982) (4,982) - - -
---------------------- --------- ------------ ---------- ----------- ---------- ---------
44,214 (49,959) (13,964) (4,356) (27,309) (4,330)
---------------------- --------- ------------ ---------- ----------- ---------- ---------
Carrying Contractual Within One to Three Over
2021 amounts cash flows one year two years to five five
years years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Loans and borrowings 24,868 (27,895) (7,849) (15,846) (4,200) -
Lease obligations 3,420 (4,653) (91) (71) (213) (4,278)
Land creditors 20,752 (23,661) (1,280) (1,265) (21,116) -
Trade and other
payables 4,413 (4,413) (4,413) - - -
---------------------- --------- ------------ ---------- ----------- --------- --------
53,453 (60,622) (13,633) (17,182) (25,529) (4,278)
---------------------- --------- ------------ ---------- ----------- --------- --------
(iii) Market risk
Market risk is the risk that changes in market prices, such as
interest rates, equity prices and foreign exchange rates, will
affect the Group's income or the value of its holdings of financial
instruments.
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Group's income and operating cash flows are substantially
independent of changes in market interest rates as the Group has no
significant interest-bearing assets. Borrowings issued at variable
rates expose the Group to cash flow interest rate risk. Borrowings
issued at fixed rates expose the Group to fair value interest rate
risk. The Group's management monitors the interest rate
fluctuations on a continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest-
bearing financial instruments was:
2022 2021
EUR'000 EUR'000
Fixed rate instruments
Financial liabilities - 20,125
Variable rate instruments
Financial liabilities 4,611 4,743
--------------------------- -------- --------
4,611 24,868
--------------------------- -------- --------
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December
would have decreased equity and profit or loss by EUR46 thousand
(2021: EUR47 thousand). This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
For a decrease of 100 basis points there would be an equal and
opposite impact on the profit or loss and other equity.
Currency risk
Currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. Currency risk arises when future commercial transactions and
recognised assets and liabilities are denominated in a currency
that is not the Group's measurement currency. The Group is exposed
to foreign exchange risk arising from various currency exposures
primarily with respect to the United States dollar. The Group's
management monitors the exchange rate fluctuations on a continuous
basis and acts accordingly.
Capital management
The Group manages its capital to ensure that it will be able to
continue as a going concern while improving the return to
shareholders. The Board of Directors is committed to implementing a
package of measures that is expected to focus on the achievement of
the Group's investment objectives, achieve cost efficiencies and
strengthen its liquidity. Notably, these measures include the
completion of certain Group asset divestment transactions, as well
as the conclusion of additional working capital facilities at the
Group and/or Company level.
32. Commitments
As of 31 December 2022, the Group had a total of EUR16.5 million
contractual capital commitments on property, plant and equipment
(2021: EUR18.0 million).
33. Contingent liabilities
Companies of the Group are involved in pending litigation. This
principally relates to day-to-day operations as a developer of
second-home residences and largely derives from certain clients and
suppliers. Based on advice from the Group's legal advisers, the
Investment Manager believes that there is sufficient defence
against any claim and does not expect that the Group will suffer
any material loss. All provisions in relation to these matters
which are considered necessary have been recorded in these
consolidated financial statements.
In addition to the tax liabilities that have already been
provided for in the consolidated financial statements based on
existing evidence, there is a possibility that additional tax
liabilities may arise after the examination of the tax and other
matters of the companies of the Group in the relevant tax
jurisdictions.
The Group, under its normal course of business, guaranteed the
development of properties in line with agreed specifications and
time limits in favour of other parties.
34. SUBSEQUENT EVENTS
On 20 March 2023 it was announced that the Investment Management
Agreement dated 1 December 2021 (the "IMA") between the Company and
Dolphin Capital Partners Ltd ("DCP") was terminated with immediate
effect on the basis of a repudiatory breach of contract by DCP.
It had come to the Directors' attention that DCP entered into an
undisclosed option agreement with the purchaser of the Amanzoe
resort in Porto Heli, Greece at the same time that the Company sold
its interest in the resort, as originally announced on 2 August
2018 (the "Undisclosed Option Agreement"). The Undisclosed Option
Agreement entitled DCP to acquire an additional 15% of the share
capital of DolphinCI Fourteen Limited (the special purpose vehicle
holding the Amanzoe resort). A separate agreement for DCP to
acquire 15% of the share capital of DolphinCI Fourteen Limited had
been disclosed and authorised by the Company.
The Undisclosed Option Agreement had not been disclosed to the
Company by DCP at the time of the sale of DolphinCI Fourteen
Limited. The failure by DCP, as agent of the Company under the
terms of the IMA, to disclose the existence of the Undisclosed
Option Agreement, and to fulfil its other duties as agent,
constitutes a repudiatory breach of the IMA that has resulted in
the termination of the IMA by the Company.
The Company is seeking to pursue all legal options to recover
the value arising from the Undisclosed Option Agreement that is the
Company's property. The Directors believe that this value could be
material in the context of the size of the Company, but at this
time do not have enough information to put a precise quantum on
this.
The independent Directors of the Company have also removed
Miltos Kambourides, who is the Co-Founder and Managing Partner of
DCP, as a Director of the Company with immediate effect.
Following the termination, and as announced on 11 April 2023,
the Company received a notification that DCP had filed a claim
against the Company in the English High Court alleging repudiatory
breach of contract in relation to the termination of the IMA. At
this time an accurate estimate of the financial effect cannot be
made.
The Company considers this Claim to be opportunistic,
speculative and without merit and will be defending the Claim
vigorously. The Company filed its own counterclaim. The Company
will pursue all legal options to recover the value arising from the
Undisclosed Option Agreement as the Directors believe that value is
the Company's property. The Directors believe that this value could
be material in the context of the size of the Company, but at this
time do not have enough information to put a precise quantum on
this. The Company has since found more potential issues relating to
DCP which are currently under review.
There were no other material events after the reporting period
except the one described above and in note 28.3, which have a
bearing on the understanding of the consolidated financial
statements as at 31 December 2022.
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END
ACSEAAKEDAFDEFA
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June 30, 2023 08:25 ET (12:25 GMT)
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