REG - DCI Advisors Ltd - Shareholder Update

DCI AdvisorsAnnouncement

15/04/2024 14:30

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RNS Number : 6669K  DCI Advisors Limited  15 April 2024

This announcement has been determined to contain inside information for the
purposes of the UK version of the market abuse regulation (EU) No.596/2014.

 

DCI Advisors Ltd

(the "Company" or "DCI")

Shareholder Update

 

15 April 2024

 

The Directors of the Company wish to provide the following update for
Shareholders.

 

General market conditions

 

Market conditions improved significantly in 2023 in Greece, Cyprus and Croatia
where the Company's assets are located with increased tourist numbers,
improved GDP growth and improved political stability in all three countries.
Notable events were the re-election of the Greek government in June and the
upgrading of Greek government debt ratings by the international rating
agencies in September and October, the re-election of the Cyprus government in
February and the entry of Croatia into the Euro Currency zone and the Schengen
visa free travel zone on 1 January 2023. These improvements boosted demand in
their residential property markets with improved pricing and transaction
volumes. The Directors expect these trends to continue throughout 2024 and
beyond and to increase investor interest in buying our assets.

 

Asset disposal progress

 

General

 

The Directors have now identified robust sale plans for each asset in the
portfolio and stabilised and improved those assets where required since the
former Manager was terminated. None of these assets are easy to sell which is
why they have not already been sold since the Company first went into wind
down in 2016 and therefore a patient but determined approach is being pursued.
 

 

Croatia

 

The sale of the Company's interest in land with planning permission to build a
hotel, villas and a marina at Livka Bay near to Split in Croatia is in process
but the timing of its completion is not yet certain.  The sale proceeds will
be used first to repay the bank loan of €4 million plus interest that is
outstanding and is secured on the land and the use of the remaining proceeds
will be assessed when the sale completes. An announcement will be made when
more information is available.

 

Cyprus

 

Multiple discussions are underway to sell the Company's interest in land at
Apollo Heights, Cyprus with several of these focussing on the opportunity to
create a large Photovoltaic solar power generation park on part of the site
which it is believed will be more likely to gain planning permission from the
Sovereign Base Administration than the Company's original plans to create an
integrated hotel, golf course and residential development.

 

The Company continues to discuss and pursue exit opportunities from its
minority 48% stake in Aristo Developers. We were very pleased to see robust
sales, cash flow generation and debt reduction throughout 2023, which has
continued this year.

 

Greece

 

We have used the last 12 months to maintain and attract new people for our
Greek developments, putting together a support team of 16 people. On top of
that we have 12 archaeological workers on the site at our Kilada development.
All these people have done their utmost to manage our Greek assets. We have
also continued to work together with a well-known golf contractor, one of the
main Greek infrastructure contractors as well as local contractors. The more
the Company's Kilada development matures, the more contractors will be added
as necessary.

Over the last 12 months, we have made good progress in developing the Kilada
project and 95% of the golf course's land has now been released by the
archaeological team. This means we do not expect any issues regarding
archaeological findings for the development of the golf course. In addition,
to the two grassed holes at the end of 2022, in 2023 we have been able to
finish the shaping, construction and grassing of an additional five other
holes, bringing the total to seven. In 2023, we also finalised the shaping of
four further holes which are now ready to be grassed. Regarding the golf
clubhouse and country club, the excavations have now finished, and the
reinforcements for the foundations and the first level of columns have been
put in place. We aim to have nine holes ready to play this summer, which will
enable us to have a soft opening of the golf course so that people can start
to play and live the Kilada experience, a precursor to hopefully joining the
golf course. We believe this will speed up the sales process of land lots
around the course. The progress achieved in 2023 was officially signed off by
the Greek government via the release of €1.5m in government grants in
December. Getting the government grant released was an intense process which
we have been able to close successfully. Another €4.5 million in grants is
expected to be paid to the project over the next 12 months.

At the same time, we have started the process of finding a 5-star hotel
operator, who is interested in operating the hotel, which we believe should
assist in securing the hotel development financing.

To bridge the current capital needs for the development, we have identified a
family office investor that is expected to invest up to €2.5 million in the
Kilada project for an equity stake in the project of up to 3%. This capital
will support the development and help us bridge the period between now and
when other funding is available. It will also reduce DCI's funding obligation
for the project and eventually increase the cash available for distributions
to DCI Shareholders when we realise an exit from one of our other assets.

The progress achieved so far is resulting in increased investor interest for
the development. As a result, enquiries for buying land lots have increased,
and we expect to start recommencing plot sales again shortly. In order to
facilitate the expected increased appetite in the development, we have
restructured the sales team to support this improved momentum in demand.

In addition, we have also received several enquiries to purchase the Company's
interest in the whole project. The timing of the increased interest at this
stage is encouraging, as we had planned to actively start the sales process
for the Kilada project after the golf course soft opening in the summer. We
are still in the process of preparing for this stage but have indicated a
willingness to the potential buyers that we would consider offers for the
whole project before the formal process has started. These discussions are now
underway.

Additionally, during the last 12 months we have identified several potential
interested parties for our other three developments in Greece, being Lavander
Bay, Plaka Bay and Scorpio Bay. This interest is still in early stages, but we
hope to be able to intensify the discussions soon. In the meantime, we have
applied for a special urban planning permit for Plaka Bay (similar to our
Kilada asset) in order to mature it and make it more marketable, and have
started the same process for Scorpio Bay. We are also in the process of
restructuring Lavander Bay by amending the original purchase agreement with
the Greek church, such that the project can begin the development of the
non-disputed land whilst having the option to develop the disputed land when
it is released back to us. We believe this restructuring will add a lot of
value to the project and will make the asset more saleable. The legal opinion
that we and the Greek Church have received is that the land sold to us was
owned by the Church and that the Greek state is not the owner. Unfortunately,
this needs to be confirmed by a Greek court before the matter can be
irrevocably resolved. The Church has already started its legal proceedings
against the Greek State. DCI will do the same for the disputed land banks
already held in the name of DCI's subsidiary, Golfing Developments S.A..

Modest Shareholder borrowings and the desire to avoid taking out large loans

 

The Company has been financed in the past by large secured or convertible
medium-term loans from private credit providers, but the most recent loan from
CastleLake was repaid in December 2022 from part of the proceeds of selling
our interest in the One & Only Kea Island resort. Since then, the current
Directors have preferred to switch to financing operations via shorter term
more modest sized borrowings currently amounting to €3.3 million from some
of its Shareholders at lower interest rates than was available on the private
credit market. At the same time costs have been cut significantly and several
of our service providers have been changed in order to bring down the
operational costs on a structural basis and reduce the cash burn. In this way,
the total funds borrowed via shareholder loans to date is not as large as it
might have otherwise been, and the Directors anticipate can be repaid
relatively easily from the proceeds of asset sales, which will then enable
earlier distributions of capital to Shareholders.

Search for a new independent Non-Executive Director

 

The Company has stated the need for some time to appoint a new independent
Non-Executive Director to join the Board and serve alongside Sean Hurst, the
independent Non-Executive Chairman following the switch of Nicolai Huls and
Nick Paris to Executive Director roles in March 2023. As a result, a formal
process has been started to appoint someone using an experienced independent
recruitment firm. The search is being publicised widely and all applicants
will be considered carefully.

 

Legal cases

 

The Company has three legal cases underway. It is important to realise that in
the cases that are taking place in the UK and the British Virgin Islands, the
Company is defending commercial actions brought against it by its former
Investment Manager and a service provider who we believe is closely connected
with them. The Directors priority is to protect the assets of the Company in
contesting these cases. In connection with the criminal and civil actions that
the Company has filed in Greece against certain individuals, the Directors
wish to highlight that they are Directors of a London quoted company and that
having found instances of apparent wrongdoing they have had no choice but to
investigate them and pursue redress for the harm caused to the Company.
Inaction by the Directors is not possible given their own fiduciary
obligations to the Company and their obligations under criminal law.

 

 

Enquiries

 DCI Advisors Ltd

 Nicolai Huls / Nick Paris, Managing Directors                           nick.paris@dciadvisorsltd.com

                                                                         + 44 7738 470550
 Cavendish Capital Markets (Nominated Adviser & Broker)

 James King / Jonny Franklin-Adams / Edward Whiley (Corporate Finance)

 Pauline Tribe (Sales)                                                   +44 (0) 20 7220 0500
 FIM Capital Limited (Administrator)                                     llennon@fim.co.im (mailto:llennon@fim.co.im) / gdevlin@fim.co.im

                                                                       (mailto:gdevlin@fim.co.im)
 Lesley Lennon / Grainne Devlin (Corporate Governance)

 

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