REG - DCI Advisors Ltd - Annual Report & Unaudited Fin. Stats. y/e 31.12.23
09/07/2024 07:00
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RNS Number : 5669V DCI Advisors Limited 09 July 2024
DCI Advisors Limited
(the "Company" or "DCI"))
Annual Report and Unaudited Financial Statements for the year ended 31
December 2023
9 July 2024
The Company announces that unaudited financial statements for the year ended
31 December 2023 along with accompanying reports are released today and that
copies will be available on the Company's website at: www.dciadvisorsltd.com
(http://www.dciadvisorsltd.com)
Enquiries
DCI Advisors Ltd
Nicolai Huls / Nick Paris, Managing Directors nickparis@btinternet.com (mailto:nickparis@btinternet.com)
+44 (0) 7738 470550
Cavendish Capital Markets (Nominated Adviser & Broker)
James King / Jonny Franklin‐Adams / Edward Whiley / Oscar Valeur‐Adu
(Corporate Finance)
+44 (0) 20 7220 0500
Pauline Tribe (Sales)
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)
CHAIRMAN'S STATEMENT
For the year ended 31 December 2023
Dear Shareholders,
After joining the Board as Chairman in February 2023, I am pleased to report
the DCI Advisors Ltd (the "Company" or "DCI") unaudited annual results.
Temporary Suspension
The Company is required under Rule 19 of the AIM Rules for Companies to
present its audited Annual Results within 6 months of the financial year end.
There has been a delay in the audit process of the Annual Results for the year
ended 31 December 2023.The Company expects to be able to present the full
audited Annual Results during August 2024. As a result of the delay, trading
in the Company's shares on AIM was suspended with effect from 07.30a.m. on 1
July 2024.
Corporate Governance, Assets Sales & Distributing Surplus Capital
The focus during the financial year, and which continues apace, was to improve
the Company's corporate governance, implement the strategy of selling
remaining assets, repaying debt and distributing surplus capital to
shareholders. We will start to consult with shareholders shortly about the
mechanism for returning capital when a surplus is available.
In addition to the significant events highlighted in the 2022 Final results
(to 31 December 2022) and 2023 Interim results (to 30th June 2023) there have
been a number of events in 2024 which it would be prudent to highlight in this
FY2023 statement.
● The Managing Directors' report will update shareholders on the
Legal Update which was released on 28 March 2024.
● Likewise, following the Shareholder/Trading Update on 15 April
2024, the Managing Directors' report will update shareholders on the current
progress of DCI's major assets.The Managing Directors have been working
tirelessly in order to dispose of the DCI's assets now that the Company has
been stabilised and corporate governance improved.
Summary of Financial Performance
At the 31st December 2023 financial year end, the NAV of the Company measured
as the equity attributable to owners of the Company was € 115.5 million
(2022: €112.1 million) representing an increase of 3.0% compared to 31
December 2022. The net gain, after tax attributable to the owners of the
company, was €3.4 million (2022: loss €7.0 million).
As at 31 December 2023, the DCI group had three principle liabilities:
● €11.1 million owed under the redeemable preference share
agreement signed at the Kilada investment level;
● € 4.1 million owed to PBZ, the Croatian lender to the Livka
Bay investment; and
● € 2.9 million owed to shareholders in respect of working
capital loans received throughout the year.
In sterling terms, DCI's NAV remained at 10p as it was on 31 December 2022
notwithstanding an increase when measured in euro. At the financial year end,
DCI had a market capitalisation of approximately £35.3 million, compared with
the Company's NAV of £105.9 million after DTL representing a discount to NAV
of 67.1%.
Additional Director
It is still the Board's intention to appoint at least one new independent
Directors in order to enhance the corporate governance within the Company. The
Board is considering appointing a fourth Director who can take over from Nick
Paris as Chair of the Audit Committee given that he became an executive
Managing Director in March 2023. At the time of writing this statement, the
process is well under way in conjunction with an independent, external
recruitment consultant. We will update shareholders as soon as the process has
been completed.
In addition, The Board is considering appointing a US based investment
professional with knowledge of Greece at the suggestion of one of the large
shareholders. From a governance perspective this would mean that the majority
of the Board will be non-executive Directors.
I would like to thank again DCI's shareholders and our numerous service
providers for their support and confidence that they have given the Board in
proceeding with the managed wind-down of the Company. The Board continues to
liaise with shareholders and remains confident that significant announcements
will be made in the near future.
Sean Hurst
Chairman
DCI Advisors Ltd 8 July 2024
MANAGING DIRECTORS' REPORT
Business Overview
The economic environment in each of the three countries in which DCI owns
assets continues to improve and we are making progress on selling our assets
and finishing the construction of Phase One at Kilada Hills which will enable
that asset to be sold too hopefully at an increase to its current Net Asset
Value.
Financing
The DCI portfolio of assets generates no income as the assets are either under
development (i.e. Kilada) or under the preconstruction phase. However, the
costs of constructing Phase One at Kilada and the operating costs of the Group
including maintaining its 36 SPV's must be met. We have been trying to avoid
taking out a large Group level secured loan since the CastleLake Loan facility
was repaid from the proceeds of selling our interst in One & Only Kea
Island in December 2022 as a new facility would need to be repaid before we
could return any capital to DCI shareholders. The Board might however consider
additional funding in case the execution of exits takes longer than expected
in order to repay current shareholder loans and to fund development at Kilada
and operation expenses.
In order to continue the development in 2023 of Phase One at Kilada our JV
partner agreed in 2023 to lend the project up to €2.5 million in order to
continue the development. Further funding, as announced in April 2024, for the
project was found for up to a further €2.5 million from an Asian based
family office. These funding flows plus the €1.5 million in government
grants which we have received have resulted in continued development of the
Kilada project, although slower than initially hoped for. More funding is
needed for finalising Phase One at Kilada and the current plan is for DCI to
fund the remaining cash needs.
We have reduced and covered our operating costs via thirteen short term loans
from our shareholders taken out since April 2023. We intend to repay the first
five of these from the proceeds of our next asset sale and the remaining loans
which are not pre-payable early as each of them reaches their respective 12
month anniversary.
Legal actions
The Company is currently involved in litigation in the British Virgin Islands
(BVI), Greece, and the United Kingdom (UK), all relating to the former
Investment Manager or DCP's close business partner Zoniro.
UK: In April 2023, DCP filed a claim in the High Court of Justice of England
and Wales against DCI for alleged breach of contract and unpaid fees. DCI is
defending the claim, considering it opportunistic and without merit. A reverse
summary judgment hearing in March 2024 determined that a full trial is needed.
Greece: In September 2023, Zoniro SA issued a payment order against one of
Kilada's Greek companies and blocked its bank account. A judgment in May 2024
ruled in favor of DCI, and the bank account is expected to be released soon.
In December 2023, DCI filed criminal charges in Greece against key individuals
from DCP and Zoniro SA, alleging money laundering and corporate governance
abuse. Additionally, DCI filed civil claims in 2024 seeking €57.0 million in
damages and transaction cancellation in Cyprus.
BVI: In August 2023, Zoniro Ltd issued a statutory demand for payment from DCI
and another DCI group company. DCI has initiated proceedings to set aside
these demands, citing collusion between DCP and Zoniro. A hearing took place
on May 3, 2024, with no judgment yet rendered.
Market Dynamics
The three countries in which the Company owns assets showed solid GDP growth
throughout 2023 following the high growth experienced in 2022 when the world
rebounded from the Covid related shutdowns and this trend is expected to
continue throughout 2024. Tourist arrival numbers also continued to improve
which is a key metric for the development of luxury beachfront land like ours.
This helped to improve the prospects for selling our assets where we always
target to achieve sales prices above the Net Asset Values at the assets are
carried.
Year 2024 (forecast) 2023 2022
GDP growth (% yoy):
Greece 2.0 1.8 5.6
Cyprus 2.6 2.5 5.1
Croatia 3.3 3.1 7.0
Tourist arrivals (million):
Greece N/a 36 30
Cyprus N/a 3.8 3.2
Croatia N/a 20.6 15.0
In Greece, political stability continued to improve with the re-election of
the existing pro-business government in June 2023 leading to an upgrade of
Greek government debt by the international rating agencies in September and
October. In addition, Greek banks began to finance property development again
provided that the projects are able to produce reliable future cash flows to
service the loans.
In Cyprus, the existing pro-business government was re-elected in February
2023.
In Croatia, the benefits from joining the Euro currency zone and the Schengen
passport area in January 2023 were increasingly apparent throughout the year
as EU citizens benefitted from easier access for themselves as well as the
elimination of cross border exchange rate regimes.
Review of our Major Assets
Greece - Kilada Country Club, Golf and Residences
During 2023/2024, significant progress has been made on the Kilada project.
The archaeological team has released 95% of the golf course's land, minimizing
concerns about archaeological findings. By the end of 2022, two golf holes
were grassed, and in 2023, an additional four holes were completed, totalling
six. Four more holes have been shaped and are ready for grassing. Excavations
for the golf clubhouse and country club are finished, and foundational
reinforcements and columns are in place. Nine holes are expected to be ready
this summer, facilitating marketing events to attract potential land buyers
and speeding up land lot sales. Unfortunately in April of this year we lost
our exceptionally valuable colleague and friend Ioannis Tsaramparis who
strongly supported DCI. He served Kilada as the Construction Manager during a
very challenging period. He welcomed and supported the termination and change
in management and became a member of the boards of the Greek SPVs.
In December, the Greek government approved a €1.5 million grant for the
project, with an additional €4.5 million expected over the next year.
Preliminary discussions are underway to agree with a 5-star hotel operator to
secure hotel development financing. A family office investor is set to invest
up to €2.5 million for a 3% equity stake, aiding in bridging current capital
needs and reducing DCI's funding obligations.
The progress made in 2023 was confirmed by a strong uplift in the valuation
for the project. This valuation increase is, we believe, the result of greater
visibility that the 18-holes golf course and countryclub will be finalised.
This has supported the land value but also the valuation the hotel and branded
villas component where the strongest valuation uplift was visible. While we
support this valuation increase and always were of the opinion that the hotel
component was undervalued we are also aware that DCI still has work to do
before the 18-holes golf course and countryclub is finalised. As a result we
have decided, for now, to apply as 50% haircut to the valuation of the hotel
and branded villas component. As soon as funding for finalising phase one of
the development is 100% guaranteed we will remove the 50% discount to the
valuation. Given the signing of the Livka Bay SPA we believe the funding will
be guaranteed soon.
Investor interest has increased, leading to more inquiries about purchasing
land lots, and the sales team has been restructured to meet this demand. There
have also been several inquiries about purchasing the entire project, which
has resulted in DCI signing a Memorandum of Understanding with a potential
buyer for DCI's stake in the Kilada asset which gives the potential buyer an
initial exclusivity period of 90 days to complete further due diligence in
order to present an offer. In the meantime preparations for an official sales
process are ongoing in case no agreement can be reached with the potential
buyer.
Lavender Bay/Plaka Bay and Scorpio Bay
DCI has identified several potential interested parties for our other three
developments in Greece, being Lavender Bay, Plaka Bay and Scorpio Bay. 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.
For Lavender Bay, DCI is in discussions with the Greek Church to restructure
the original purchase in order to compensate DCI for the money paid and to
restructure the original purchase terms in order to better reflect the current
situation. Both DCI and the Greek Church have showed willingness to get this
restructuring agreed as soon as possible. At the same time we are exploring
permitting options under the current ownership situation.
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. Both the Greek Church as well as
DCI believe their court cases against the Greek State have strong legal
grounds based on facts and recent Greek legislation.
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 €19.3
million. 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 €115.5 million, the Board of Directors
believes that the Company's real NAV is closer to €134.8 million. 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.
Cyprus - Aristo Developers
Aristo Developers continued to benefit from a robust market for residential
property in Cyprus with its home base in Paphos showing particularly strong
demand from new buyers. However sales that have been made are only accounted
for under IFRS rules when the property is finished and handed over to the
buyer. This creates a lag of up to two years which means that the 2023
accounts which are summarised in Note 17 reflect property sales made during
2021 which was a period of significant disruption and weak demand because of
the Covid outbreak. Revenue was therefore down 45% of the prior year. However,
the company coninued to use the majority of the cash flow generated in the
year from sales to pay down bank borrowings and these therefore fell by
approximately 18% in the year.
At the end of 2023, the balance sheet was also strengthened by the decision to
convert a significant number of shareholder loans to the company into equity
which increased total equity by 93%.
Apollo Heights
Apollo Heights comprises 447 hectares of contiguous undeveloped land zoned for
agricultural and forest purposes. 93% of our site is located within the
Sovereign Base Area ("SBA") which surrounds the British military bases in
Southern Cyprus. The SBA is administered jointly by the Cyprus and British
governments and it forms a buffer zone to protect the security of the bases.
Building permissions within the SBA are limited and are governed by five year
plans. The last plan was published in May 2022 and DCI filed an appeal to try
to improve the planning possibilities of Apollo but more than 3,000 appeals
were lodged in total. The results of these should be released by the SBA
Administration at the end of 2024.
Although our previous Investment Manager drew up plans for villas, a hotel,
various polo fields and an 18 hole golf course on Apollo it is clear that our
land will not get planning permission for such a development unless there is a
significant and unexpected relaxation of controls. Whilst this may happen
sometime in the future, DCI needs to sell its assets before then so we have
been exploring a sale to local landowners who have the time to wait for such
relaxation. We are also exploring the potential to instal a Photvoltaic ("PV")
facility on the high ground at Apollo but again this will require planning
permission plus support from the Cyprus government which has been encouraging
the development of PV facilities across the island but has not yet identified
its preferred sites.
In 2022, we reduced the value of Apollo in our NAV to reflect the lack of
planning permissions and their likely impact on the saleability of the land
but we have left it unchanged this year.
Croatia - Livka Bay
Our seafront land on the island of Solta opposite to the Dalmatian City of
Split attracted significant interest during our sale exercise that we started
in April 2023. The land has special development status from the Croatian
government and planning permission to build a 90 room hotel, with villas and
bungalows and a marina. We received three Letters of Intent from interested
parties and have signed a Sale and Purchase Agreement with the preferred
bidder to sell this asset at a price of €22.0 milion which exceeds our
previous Net Asset Value. The value of this asset has been increased as at 31
December 2023 from €18.3 million to €21.0 million reflecting the expected
net proceeds from the sale accordingly.
Future Objectives
During 2023, we spent time stabilising the Company following the termination
of our Investment Manager in March and cutting our operating costs to reduce
our cash burn. We then sought to improve each asset and ready them for sale
which disappointingly had not already been done even though each of the assets
has been for sale since 2016 when the shareholders voted to start to realise
them.
We then designed and implemented disposal processes for each asset except for
the Kilada Country Club, Golf and Residences as our shareholders voted in
December 2021 to continue to build it and complete the golf course and country
club before seeking to sell it ahead of Phase 2 which is the development of
several hundred villas, a hotel and a beach club. We have been seeing interest
from prospective buyers in many of our assets and have multiple sales
discussions underway with Livka Bay announced on the 28 June 2024 as the first
to sell. When assets are sold, the proceeds will be used to refinance the
Company, build up a limited reserve for future operating costs, pay off any
bank debt and repay the shareholder loans. We expect to be able to commence
the payment of surplus capital back to shareholders this year.
Thank you for your continued support.
Nicolai Huls & Nick Paris, Joint Managing Directors
8 July 2024
DIRECTORS REPORT
For the year ended 31 December 2023
The Directors present their report together with the unaudited financial
statements of the Company and its subsidiary undertakings (together the
"Group") for the twelve months ended 31 December 2023.
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 and the website address was changed to
www.dciadvisorsltd.com (http://www.dciadvisorsltd.com)
Business Review for the period and Future Developments
The unaudited consolidated statement of comprehensive income for the year and
the unaudited statement of financial position as at 31 December 2023 are set
out on pages 10 and 11 of this 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 2023.
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.
Nicolai Huls and Nick Paris became executive directors when they became
Managing Directors of the Company on 20 March 2023 when the agreement with the
previous Investment Manager was terminated.
Directors' remuneration during the twelve months ended 31 December 2023
The Directors remuneration details during the period of this report were as
follows:
Director Director's fees Total
(€) (€)
Martin Adams 8,425 8,425
Sean Hurst 66,042 66,042
Nicolai Huls 150,000 150,000
Nick Paris 150,000 150,000
*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 former Investment Manager.
Directors' interests
The interests of the Directors in the Company's shares as at 31 December 2023
were as follows:
Director Numbers of Common Shares of
€ 0.01 each held
Sean Hurst 475,000
Nicolai Huls
- direct shareholding 775,000
- director of Discover Investment Company which owns 30,026,849 shares
Nick Paris
- direct shareholding 1,634,487
- shareholder loan €100,000
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 2024, which is the latest practicable date before the publication of this
report:
Number of Percentage of
Common Shares held issued Share Capital (%)
Almitas Capital LLC 180,443,478 19.95
Mr. Lars Ernest Bader 92,925,600 10.27
Fortress Investment Group 89,922,801 9.94
Peter Gyllenhammar AB The Union Discount Company of London Ltd 70,000,000 7.74
Forager Funds Management Pty Ltd 53,889,519 5.96
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
Weiss Asset Management 27,400,000 3.03
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 31 December 2023
31 December 2023 31 December 2022
Note €'000 €'000
Revenue 6 157 318
Cost of sales 7 - -
Gross profit 157 318
Gain on disposal of equity-accounted investees - 5,421
Change in valuations 8 19,926 (2,984)
Investment Manager remuneration 27.2 - -
Directors' remuneration 27.1 (374) (205)
Professional fees 10 (3,990) (1,987)
Administrative and other expenses 11 (2,026) (1,614)
Depreciation charge 15 (50) (48)
Total operating and other expenses 13,486 (1,417)
Results from operating activities 13,643 (1,099)
Finance income - 73
Finance costs (874) (2,997)
Net finance costs 12 (874) (2,924)
Share of (losses)/profits on equity-accounted investees, net of tax 17 (5,857) (1,785)
Profit/(loss) before taxation 6,912 (5,808)
Taxation 13 (2,365) 12
Profit/(loss) 4,547 (5,796)
DISCONTINUED OPERATIONS (316) -
Other comprehensive Loss
Foreign currency translation differences 12 (69) (56)
Other comprehensive loss, net of tax (69) (56)
Total comprehensive profit/(loss) 4,162 (5,852)
Profit/(loss) attributable to:
Owners of the Company 3,480 (6,924)
Non-controlling interests 751 1,128
4,231 (5,796)
Total comprehensive loss attributable to:
Owners of the Company 3,411 (6,980)
Non-controlling interests 751 1,128
4,162 (5,852)
PROFIT/(Loss) per share
Basic and diluted loss per share (€) 14 0.004 (0.008)
The notes on pages 14 to 44 are an integral part of these consolidated
financial statements.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2023
31 December 2023 31 December 2022
Note €'000 €'000
Assets
Property, plant and equipment 15 27,647 15,226
Investment property 16 27,918 45,943
Equity-accounted investees 17 42,694 42,694
Non-current assets 98,259 103,863
Assets held for sale 16 21,000 -
Trading properties 18 56,516 56,516
Receivables and other assets 19 4,008 10,083
Cash and cash equivalents 20 1,008 2,226
Current assets 82,532 68,825
Total assets 180,791 172,688
Equity
Share capital 21 9,046 9,046
Share premium 21 569,847 569,847
Retained deficit (463,834) (467,314)
Other reserves 459 528
Equity attributable to owners of the Company 115,518 112,107
Non-controlling interests 2,555 8,440
Total equity 118,073 120,547
Liabilities
Loans and borrowings 22 11,103 10,434
Lease liabilities 24 3,322 3,347
Deferred tax liabilities 23 7,736 6,577
Trade and other payables 25 19,509 19,795
Non-current liabilities 41,670 40,153
Loans and borrowings 23 7,049 4,611
Lease liabilities 25 88 88
Trade and other payables 26 13,911 7,289
Current liabilities 21,048 11,988
Total liabilities 62,718 52,141
Total equity and liabilities 180,791 172,688
Net asset value ('NAV') per share (€) 26 0.13 0.12
The unaudited consolidated financial statements were authorised for issue by
the Board of Directors on 8 July 2024.
Nick Paris
Nicolai Huls
Managing
Director
Managing Director
The notes on pages 14 to 44 are an integral part of these consolidated
financial statements.
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023 Attributable to owners of the Company
Share Share Translation Revaluation Retained Non-controlling Total
capital premium reserve reserve deficit Total interests equity
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
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
9,046 569,847 249 279 (467,314) 112,107 8,440 120,547
Balance at 1 January 2023
Comprehensive income
Profit - - - - 3,480 3,480 751 4,231
Other comprehensive income
Share of revaluation on equity-accounted investees - - - - - - - -
Foreign currency translation differences - - (69) - - (69) - (69)
Total other comprehensive income - - (69) - - (69) - (69)
Total comprehensive income - - (69) - 3,480 3,411 751 4,162
TRANSACTIONS WITH OWNERS OF THE COMPANY
Changes in ownership interests in subsidiaries
Capital reduction and settlement of non-controlling interest (6,636) (6,636)
Total transactions with owners of the Company - - - - - - (6,636) (6,636)
Balance at 31 December 2023 9,046 569,847 180 279 (463,834) 115,518 2,555 118,073
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023 31 December 2023 31 December 2022
€'000 €'000
Cash flows from operating activities
Profit/(loss) 4,231 (5,796)
Adjustments for:
(Gain)/Loss in fair value of investment property (3,830) 6,316
Impairment loss on other investments - -
Gain on disposal of investment in associates/subsidiaries - (5,411)
Reversal of impairment loss on property, plant and equipment (10,239) (2,944)
(Reversal of)/impairment loss on equity-accounted investees (5,857) (388)
Depreciation charge 47 48
Interest expense 874 2,891
Interest income - (4)
Exchange difference (69) (76)
Share of losses/(profits) on equity-accounted investees, net of tax 5,857 1,785
Taxation 1,159 (12)
(7,827) (3,591)
Changes in:
Receivables (562) (8,974)
Payables 7,287 568
Trading properties - -
Deferred revenue - -
Cash used in operating activities (1,102) (11,997)
Tax paid - -
Net cash used in operating activities (1,102) (11,997)
Cash flows from investing activities
Proceeds from disposal of associate - 26,875
Acquisitions of investment property (95) (75)
Acquisitions of property, plant and equipment (2,229) (3,264)
Proceeds from other investments - 99
Interest received - 4
Net cash from/(used in) investing activities 2,324 23,639
Cash flows from financing activities
Repayment of loans and borrowings (500) (12,370)
New loans 2,781 -
Proceeds from issue of redeemable preference shares - 3,000
Payment of lease liabilities - (8)
Interest paid (73) (2,363)
Dividend paid to non-controlling interests - (2,250)
Net cash (used in)/from financing activities 2,208 (13,991)
Net (decrease)/increase in cash and cash equivalents (1,218) (2,349)
Cash and cash equivalents at 1 January 2,226 4,575
Cash and cash equivalents at 31 December 1,008 2,226
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 20) 1,008 2,226
Cash and cash equivalents at the end of the year 1,008 2,226
The notes on pages 14 to 44 are an integral part of these consolidated
financial statements.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2023
1. REPORTING ENTITY
DCI Advisors 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 unaudited consolidated financial statements of the Company as at 31
December 2023 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 unaudited consolidated financial statements of the Group as at and for the
year ended 31 December 2023 are available at www.dciadvisorsltd.com.
2. basis of preparation
a. Statement of compliance
The unaudited consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards ('IFRS') as
adopted by the European Union ('EU').
The unaudited consolidated financial statements were authorised for issue by
the Board of Directors on 3 July2024.
b. Basis of preparation
The unaudited 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 unaudited 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 unaudited 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 2023, the Group adopted all changes to IFRS which are
relevant to its operations. This adoption did not have a material effect on
the unaudited 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
2023. 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 unaudited 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.
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 unaudited 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 2023, 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 unaudited consolidated financial statements are presented in Euro (€),
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 Avison Young, 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 were the following:
Country of Shareholding interest
Name Project incorporation 2023 2022
Scorpio Bay Holdings Limited Scorpio Bay Resort Cyprus 100% 100%
Scorpio Bay Resorts S.A. Scorpio Bay Resort Greece 100% 100%
Xscape Limited Lavender Bay Resort Cyprus 100% 100%
Golfing Developments S.A. Lavender Bay Resort Greece 100% 100%
MindCompass Overseas One Limited Kilada Hills Golf Resort Cyprus 85% 85%
MindCompass Overseas S.A. Kilada Hills Golf Resort Greece 85% 85%
MindCompass Overseas Two S.A. Kilada Hills Golf Resort Greece 100% 100%
MindCompass Parks S.A. Kilada Hills Golf Resort Greece 100% 100%
Dolphin Capital Greek Collection Limited Kilada Hills Golf Resort Cyprus 100% 100%
DCI Holdings One Limited * Aristo Developers BVIs 100% 100%
D.C. Apollo Heights Polo and Country Resort Limited Apollo Heights Resort Cyprus 100% 100%
Symboula Estates Limited Apollo Heights 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 Ten Limited ** One&Only Kea Resort Cyprus 100% 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.
** The Company disposed of its interest in the One&Only Kea Resort in
December 2022. During 2023 an application was made to reduce the capital of
SPV 10 in return for settlement of the outstanding loan with the non
controlling interest.
5. Significant accounting policies
The principal accounting policies adopted in the preparation of these
unaudited consolidated financial statements are set out below. These policies
have been consistently applied to all periods presented in these unaudited
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 unaudited 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 unaudited
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 unaudited 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 Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are
classified as held for sale if it is highly probable that they will be
recovered primarily through sale rather than through continuing use. Such
assets, or disposal groups, are generally measured at the lower of their
carrying amount and fair value less costs to sell. Any impairment loss on a
disposal group is allocated first to goodwill, and then to the remaining
assets and liabilities on a pro rata basis. Impairment losses on initial
classification as held for sale and subsequent gains and losses on
re-measurement are recognised in profit or loss. Once classified as held for
sale, property, plant and equipment is no longer depreciated, and any
equity-accounted investee is no longer equity accounted
5.9 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.
5.10 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.
5.11 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.
5.12 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 unaudited 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
nterest 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.
5.13 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.
5.14 Dividends
Dividends are recognised as a liability in the period in which they are
declared and approved and are subtracted directly from retained earnings.
5.15 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.
5.16 Provisions
A provision is recognised in the unaudited 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.
5.17 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.
5.18 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.
5.19 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.
5.20 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 liability.
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.
5.21 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.
5.22 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.
5.23 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.
5.24 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.
5.25 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.
5.26 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.
5.27 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.
5.28 Comparatives
Where necessary, comparative figures have been adjusted to conform to changes
in presentation in the current year.
6. revenue
2023 2022
€'000 €'000
Revenue from contracts with customers:
Sale of trading properties - -
Other revenue
Other income 157 318
Total 157 318
7. COST OF SALES
2023 2022
€'000 €'000
Sales of trading properties - -
Total - -
8. Change in valuation
Note 2023 2022
€'000 €'000
Gain/(loss) in fair value of investment property 16 3,830 (6,316)
Reversal of impairment loss on equity-accounted investees 17 5,857 388
Reversal of impairment loss of property, plant and equipment 15 10,239 2,944
Total 19,926 (2,984)
9. SEGMENT REPORTING
As at 31 December 2023 and 31 December 2022, 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. The Croatian asset was moved from non-current
assets to assets held for sale in 2023. In presenting the geographic
information, segment assets were based on the geographic location of the
assets.
Non-current assets
2023 2022
€'000 €'000
Greece 50,045 36,469
Croatia - 19,180
Cyprus 48,214 48,214
At end of year 98,259 103,863
Country risk developments
Greece
According to the OECD, the GDP of Greece was projected to increase by 1.8% in
2023 and 2.0% in 2024 and 2.5% in 2025 as increased employment, real wage
growth and strong tourist activity bolster consumption.
According to the Bank of Greece, in 2023, the balance of travel services
showed a surplus of €18.0bn in 2023, €15.7bn in 2022 and €9.4bn in 2021.
Inflation in Greece is now estimated to have peaked in 2022 and to have been
4.2% in 2023 according to the European Commission and is forecast to fall to
2.8% in 2024 and 2.1% in 2025.
Cyprus
The IMF praised Cyprus for its robust economic recovery and fiscal discipline
and it forecasts a 2.6% increase in GDP during 2024, 2.8% for 2025 and 3.1%
for 2027.
Inflation in Cyprus is now estimated to have peaked in 2022 and to have been
3.9% in 2023 according to the European Commission and is forecast to fall to
2.4% in 2024 and 2.1% in 2025.
Croatia
According to the European Commission, GDP growth continued to recover strongly
and grew by 3.1% in 2023 and is forecast to grow 3.3% in 2024 and 2.9% in 2025
and inflation peaked at 8.4% in 2023 and is forecast to fall to 3.5% in 2024
and 2.2% in 2022.
Economic activity and tourism arrival numbers continued to benefit strongly
from the adoption of the Euro currency and the admission of Croatia into the
Schengen passport zone at the start of 2023.
10. PROFESSIONAL FEES
2023 2022
€'000 €'000
Legal fees 1,750 383
Auditors' remuneration (see below) 255 261
Accounting expenses 599 241
Appraisers' fees 44 9
Project design and development fees 230 133
Consultancy fees 112 338
Administrator fees 365 270
Other professional fees 635 352
Total 3,990 1,987
2023 2022
€'000 €'000
Auditors' remuneration comprises the following fees:
Audit and other audit related services 255 261
Total 255 261
11. ADMINISTRATIVE AND OTHER EXPENSES
2023 2022
€'000 €'000
Travelling and accommodation 90 132
Insurance 50 75
Marketing and advertising expenses 16 66
Personnel expenses including social security and other costs 549 568
Immovable property and other taxes 449 243
Rents 28 120
Other 844 410
Total 2,026 1,614
The average number of employees employed by the Group 26* 27*
*The vast majority consists of workers/archaeologists at Kilada
12. Finance costS
2023 2022
Recognised in profit or loss €'000 €'000
Interest income - 4
Exchange difference - 69
Finance income - 73
Interest expense (804) (2,891)
Transaction costs and other financing expenses (24) (43)
Bank charges (26) (63)
Exchange difference (20) -
Finance costs (874) (2,997)
Net finance costs recognised in profit or loss (874) (2,924)
2023 2022
€'000 €'000
Recognised in other comprehensive income
Foreign currency translation differences (69) (56)
Finance costs recognised in other comprehensive income (69) (56)
13. Taxation
2023 2022
€'000 €'000
RECOGNISED IN PROFIT OR LOSS
Income tax expense
Current year 68 1
Other - 6
68 7
Deferred tax expense
On valuation gains of investment properties (see note 23) 2,297 (19)
- (19)
Taxation recognised in profit or loss 2,365 (12)
14. PROFIT/(LOSS) per share
Basic profit/(loss) per share
Basic profit/(loss) per share is calculated by dividing the profit/(loss)
attributable to owners of the Company by the weighted average number of common
shares outstanding during the year.
2023 2022
'000 '000
Profit/(loss) attributable to owners of the Company (€) 4,162 (6,924)
Number of weighted average common shares outstanding 904,627 904,627
Basic profit/(loss) per share (€) 0.004 (0.008)
Profit/(loss) attributable to owners of the Company
2023 2022
€'000 €'000
Profit/(loss) attributable to owners of the Company 3,480 (6,924)
Profit attributable to non-controlling interests 751 1,128
Total 4,231 (5,796)
Weighted average number of common shares outstanding
2023 2022
'000 '000
Outstanding common shares at the beginning and end of the year 904,627 904,627
Diluted profit/(loss) per share
As at 31 December 2023 and 2022, the diluted profit/(loss) per share is the
same as the basic profit/(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 & Machinery & equipment
€'000 buildings €'000 Other Total
€'000 €'000 €'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
2023
Cost or revalued amount
At beginning of year 8,924 20,457 377 45 29,803
Direct acquisitions 2,232 - - - 2,232
At end of year 11,156 20,457 377 45 32,035
Depreciation and impairment
At beginning of year - 14,174 365 38 14,577
Depreciation charge for the year - 45 5 - 50
Reversal of impairment loss (note 8) - (10,239)- - - (10,239
Exchange difference - - - - -
At end of year - 3,980 370 38 4,388
Carrying amounts 11,156 16,477 7 7 27,647
16. Investment property
2023 2022
Note €'000 €'000
At beginning of year 45,943 52,188
Capital subsequent expenditure 145 75
Fair value adjustment 8 3,830 (6,316)
Transfer to Assets held for sale (22,000) -
Exchange differences - (4)
At end of year 27,918 45,943
As at 31 December 2023 and 31 December 2022, part of the Group's immovable
property is held as security for bank loans (see note 22).
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
€2.4 million as at 31 December 2022 (2021: €3.2 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 €1.2 million included in Investment Property as of 31 December
2022 (2021: €1.9 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 not 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 positive adjustment of €1.0 million as at 31 December 2023
(2022:negative €1.5 million) in 'Loss in fair value of investment property'
in profit or loss in 2023 and 2022 including a significant downward adjustment
to account for the estimated uncertainty relating to the above case.
Golfing and the Greek Church have started discussions on renegotiating the
current agreements in place in order to replace these with new ones which
better reflect current situation.
17. equity-accounted investees
DCI H2 SPV14 Total
Note €'000 €'000 €'000
2023
At beginning of year 42,694 - 42.964
Share of loss, net of tax (5,857) - (5,857)
Disposal of Associate - - -
Reversal of impairment loss 8 5,857 - 5,857
At end of year 42,694 - 42,694
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
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") signed on 13 October 2022 SPV10
received €26.9 million for the 50% ownership of SPV14. At the time of the
disposal the value of the associate was €21.5 million, following a €1.4
million share of losses recognised, as a result the gain on the disposal was
€5.4 million.
Pursuant to the sale, the Company received a net consideration, in aggregate
of €17.9 million. From these disposal proceeds, an amount of €13 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 the 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 €45
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 €42.7 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 of Shareholding interest
Name incorporation Principal activities 2023 2022
SPV 14 Cyprus Development of OOKI Resort - -
DCI H2 BVIs Acquisition and holding of real estate investments in Cyprus 48% 48%
The above shareholding interest percentages are rounded to the nearest
integer.
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 H2 SPV 14 Total
€'000 €'000 €'000
Percentage ownership interest 48% -% 48%
31 December 2023
Current assets 104,253 - 104,253
Non-current assets 199,940 - 199,940
Total assets 304,193 - 304,193
Current liabilities 88,887 - 88,887
Non-current liabilities 40,561 - 40,561
Total liabilities 129,448 - 129,448
Net assets 174,745 - 174,745
Group's share of net assets 83,703 - 83,703
Impairment (41,009) - (41,009)
Carrying amount of interest in investee 42,694 - 42,694
Revenues 25,467 - 25,467
Profit (12,228) - (12,228)
Other comprehensive income - - -
Total comprehensive income (12,228) - (12,228)
Group's share of total comprehensive income (5,857) - (5,857)
DCI H2 SPV 14 Total
€'000 €'000 €'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)
18. Trading properties
2023 2022
€'000 €'000
At beginning of year 56,516 56,516
Disposals - -
At end of year 56,516 56,516
Trading properties comprise land to be sold and to be developed into villas
and holiday houses.
19. RECEIVABLES AND OTHER ASSETS
2023 2022
Note €'000 €'000
Trade receivables 47 90
Other receivables 936 939
Loan Receivable 27.3.1 - 6,637
VAT receivables 1,127 509
Total Trade and other receivables (see note 31) 2,110 8,175
Amounts Receivable from Investment Manager 27.2 1,898 1,898
Prepayments and other assets - 10
Total 4,008 10,083
The amount receivable from Investment Manager relates to €3.0 million of
advance payments made during 2022 net of variable management fees payable of
€1.1 million relating to previous years. See note 27.2 for further
information.
20. Cash and cash equivalents
2023 2022
€'000 €'000
Bank balances 1,008 2,226
Total 1,008 2,226
21. capital and reserves
Capital
Authorised share capital
2023 2022
'000 of shares €'000 '000 of shares €'000
Common shares of €0.01 each 2,000,000 20,000 2,000,000 20,000
Movement in share capital and premium
Shares in issue Share capital Share premium
'000 €'000 €'000
Capital at 1 January 2023 and to 31 December 2023 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.
22. loans AND BORROWINGS
Total Within one year Two to five years
2023 2022 2023 2022 2023 2022
€'000 €'000 €'000 €'000 €'000 €'000
Loans in Euro 7,049 4,611 7,049 4,611 - -
Redeemable preference shares 11,103 10,434 - - 11,103 10,434
Total 18,152 15,045 7,049 4,611 11,103 10,434
Loans denominated in Euros
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 and since then is tied to being repaid
from the sale of the asset.
During the year, the Company borrowed € 2.76 million from shareholders at a
simple interest rate of 12% per annum. The loans are of a fixed duration being
12 months from receipt of the funds.
Redeemable preference shares
On 18 December 2019, the Company signed an agreement with an international
investor for a €12.0 million investment in the Kilada Hills Project. The
investor agreed to subscribe for both common and preferred shares. The total
€12.0 million investment was payable in 24 monthly instalments of €0.5
million 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 2023, 15.00% (2022: 15.00%) of the ordinary shares have been
transferred to the investor.
As of 31 December 2023, 12,000 redeemable preference shares (20221: 12,000)
were issued as fully paid with value of €1,000 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 2023, the fair value of the redeemable preference
shares was €11.1 million (2022: €10.4 million).
Terms and conditions of the loans
The terms and conditions of outstanding loan were as follows:
Secured loan Currency Interest rate Maturity dates 2023 2022
€'000 €'000
Livka Bay Euro Euribor plus 4.25% p.a. 2023 4,156 4,611
Shareholder loans Euro/USD 12% per annum 2024 2,893 -
Total interest-bearing liabilities 7,049 4,611
Security given to lenders
As at 31 December 2023, the Group's loans were secured as follows:
· Regarding the Kilada preference shares, upon transfer of the
entire amount of €12 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 €15.0 million (2021: €15.0
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 €21.0 million (2022: €17.7 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 One&Only Kea was partly
funded by a construction loan which was secured over its assets and those of
the Scorpio Bay asset. Steps are being taken to remove the security over
Scorpio Bay now that we have sold our interest in One&Only Kea.
· The shareholders loans have been secured against the issued share
capital of the wholly owned subsidiary Eastern Crete Development Company
Limited.
23. Deferred tax liabilities
2023 2022
€'000 €'000
Balance at the beginning of the year 6,577 6,609
Recognised in profit or loss (see note 13) 2,297 (19)
Transferred to held for sale assets (1,138)
Exchange differences - (13)
Balance at the end of the year 7,763 6,577
Deferred tax liabilities are attributable to the following:
2023 2022
€'000 €'000
Investment properties 1,121 2,215
Trading properties 4,299 4,299
Property, plant and equipment 2,316 63
Total 8,874 6,577
24 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.
2023 2022
€'000 €'000
Non-current 3,322 3,347
Current 88 88
Total 3,410 3,435
25. Trade and other payables
2023 2022
€'000 €'000
Land creditor 20,752 20,752
Investment Management fees (see note 27.2) - -
Other payables and accrued expenses 12,668 6,332
Total 33,420 27,084
2023 2022
€'000 €'000
Non-current 19,509 19,795
Current 13,911 7,289
Total 33,420 27,084
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.
26. NAV per share
2023 2022
'000 '000
Total equity attributable to owners of the Company (€) 115,518 112,107
Number of common shares outstanding at end of year 904,627 904,627
NAV per share (€) 0.13 0.12
27. Related party transactions
27.1 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 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 2023, all of which are
beneficial, in the issued share capital of the Company as at this date were as
follows:
Shares
'000
Sean Hurst 475
Nicolai Huls 775
Nick Paris 1,634
Miltos Kambourides is 75% shareholder of Dolphin Capital Partners that
previously held 88,025,342 shares. Dolphin Capital Partners disposed of all
their shares in the Company during April 2023.
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
2023 2022
€'000 €'000
Remuneration 374 205
Total remuneration 374 205
The Directors' remuneration details for the years ended 31 December 2023 and
31 December 2022 were as follows:
2023 2022
€'000 €'000
Martin Adams 8 75
Sean Hurst 66 -
Nick Paris 150 65
Nicolai Huls 150 65
Total 374 205
Miltos Kambourides waived his fees for both 2023 and 2022. The Executive
Directors have been entitled to receive remuneration of €250,000 per annum
in total with effect from 1 March 2024 but they have undertaken in writing not
to draw such additional fees for the time being.
27.2 Investment Manager remuneration (in place until March 2023)
2023 2022
€'000 €'000
Fixed management fee - -
Total remuneration - -
Variable management fee payable (1,075) (1,075)
Project Fees (2) (2)
Incentive fee advance payments 2,975 2,975
Amount Receivable from Investment Manager 1,898 1,898
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 €3.6 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 €30 million Nil
€30 million up to but excluding €50 million 2.0%
€50 million up to but excluding €75 million 3.0%
€75 million up to but excluding €100 million 4.0%
€100 million up to but excluding €125 million 5.0%
€125 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 €40 million 0%
In excess of €40 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 €80 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
€80 million €1 million
For each amount of €5 million of Distributions paid in excess of €80 €1 million
million up to and including €100 million(1)
(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 €5
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 €2.4 million
2023 €2.3 million
2024 €1.3 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 €1.0 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.
27.3 Other related party transactions
27.3.1 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 €6.6 million. The loan was interest-free and repayable at the latest
six months from the date of the agreement.
This loan was in connection with the sale of the interest in One&Only Kea,
and was deemed to be fully repaid when the courts in Cyprus approved an
application to reduce the share premium reserve account of SPV10 on 16 January
2023.
27.3.2 One&Only Kea
The Investment Manager (DCP) owned an effective 5% equity interest in SPV14
(an equity-accounted investee and the holding company of the One&Only Kea
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
Kea and Exactarea had priority returns for an amount equal to 75% of their
equity investment, following the payment of which the Company became entitled
to a priority catch-up for the same amount. The Investment Manager also had an
asset management agreement dated 1 November 2017 with One&Only Kea and
provided management services.
27.3.3 Amanzoe resort
The Investment Manager (DCP) 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 €10.0
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.
27.3.3 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 (DCP) 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 its 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 but no transaction has been concluded. This process is ongoing and no
fees have yet been paid but they are believed by the Directors to be under
normal commercial terms.
27.3.4 The Company has borrowed €2.8 million from 9 shareholders during the
year. The loans are for a 12 month term bearing an interest rate of 12% p.a.
with no fees payable on disbursement or repayment. Collateral in the form of
security over certain Company assets will be put in place which exceed the
aggregate value of the loans.
28. 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.
2023 MCO 1 SPV 10
€'000 €'000
Non-controlling interests' percentage 15.00% 0.00%
Non-current assets 30,961 -
Current assets 59,006 -
Non-current liabilities (61,295) -
Current liabilities (11,635) -
Net assets 17,037 -
Carrying amount of non-controlling interests 2,556 -
Revenue 125 -
(Loss)/profit 5,022 -
Other comprehensive income - -
Total comprehensive income 5,022 -
Dividends Paid - -
Profit allocated to non-controlling interests 753 -
Other comprehensive income allocated to non-controlling interests - -
Dividends paid to non-controlling interest - -
2022 MCO 1 SPV 10
€'000 €'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
29. 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 unaudited consolidated
financial statements.
In addition to the tax liabilities that have already been provided for in the
unaudited 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.
In 2007, the Company purchased a 90% interest in land at Livka Bay in Croatia
and in 2008 it bought the remaining 10%. In that final purchase it undertook
to repay a loan of E883,000 to the former owners of the land plus a further
payment of approximately € 7.0 million if and when the development of Livka
Bay was completed in its entirety. As there is no certainty that the
development will be completed, no provision has been made in the DCI accounts
for these payments.
30. SUBSEQUENT EVENTS
During 2024, the Company has borrowed a total of €0.75 million from a
further four shareholders totalling €750,000 on the same terms as previous
loans. In addition, the first four loans that were borrowed in 2023 reached
their 12 month anniversaries in 2024 and the lenders each agreed to roll them
forward by three months. The intention is to repay them from asset sales
proceeds.
In March 2024, the Company filed civil claims against its former Investment
Manager amounting to €57 million of damages.
In April 2024, we announced that an agreement had been reached with a Family
Office for further funding for the Kilada Hills resort for up to a further
€2.5 million.
In June 2024, the Company signed a Memorandum of Understanding with a
potential buyer of the Company's investment in the Kilada Hills resort giving
them an initial 90 day exclusivity period to undertake due diligence. In
addition, the Company signed a Sale and Purchase Agreement to sell its land at
Livka Bay in Croatia for €22 million which is above the previous NAV of
€19.2 million.
There were no other material events after the reporting period except the
shareholder loans described above and in note 27.3.4, which have a bearing on
the understanding of the unaudited consolidated financial statements as at 31
December 2023.
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