REG - DCI Advisors Ltd - Final Results
16/01/2025 09:15
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RNS Number : 5960T DCI Advisors Limited 16 January 2025
DCI Advisors Ltd
("DCI") or the ("Company")
Final Results and Publication of the audited Annual Report for the year ended
31 December 2023
The Company is pleased to announce its final audited results for the year
ended 31 December 2023.
Copies of the Annual Report and Accounts will be posted to shareholders today
and made available on the Company's website at: www.dciadvisorsltd.com
(http://www.dciadvisorsltd.com/)
Please note that trading in the Company's Ordinary Shares will remain
suspended until interim results for the six months ended 30 June 2024 are
published, which the Company continue to work towards completing shortly. A
further announcement will be made as soon as possible.
Enquiries
DCI Advisors Ltd
Nicolai Huls / Nick Paris, Managing Directors nick.paris@dciadvisorsltd.com (mailto:nick.paris@dciadvisorsltd.com)
+44 (0) 7738 470550
Cavendish Capital Markets Limited (Nominated Adviser & Broker)
Jonny Franklin-Adams / Edward Whiley (Corporate Finance)
Pauline Tribe (Sales) +44 (0) 20 7220 0500
FIM Capital Limited (Administrator) llennon@fim.co.im (mailto:llennon@fim.co.im) / noxley@fim.co.im
(mailto:noxley@fim.co.im)
Lesley Lennon / Nick Oxley (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") annual results for the financial
year ending 31 December 2023.
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. 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. The
Board expects DCI's shares to be relisted shortly after the publication of
both the Annual and Interim results.
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 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) and the
unaudited reults for the year to 31 December 2023 released in July, 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 3 December 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.
● On 8(th) November 2024 a circular was issued convening an
Extraordinary General Meeting on 19(th) December 2024 proposing redomiciling
of DCI from BVI to Guernsey, the ability to repurchase shares and the
introduction of an Employee Stock Ownership scheme. The redomiciliation was
approved on 19 December and implemented on 23 December 2024.
Summary of Financial Performance
At the 31 December 2023 financial year end, the NAV of the Company measured as
the equity attributable to owners of the Company was € 126.4 million (2022:
€112.1 million) representing an increase of 12.7% compared to 31 December
2022. The net gain, after tax attributable to the owners of the company, was
€14.3 million (2022: loss €7.0 million).
As at 31 December 2023, the DCI group had three principle liabilities:
● €11.3 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 increased from 10p to 12p over the year since 31
December 2022. At the 31 December 2023, DCI had a market capitalisation of
approximately £43.4 million, compared with the Company's NAV of £109.8
million after DTL representing a discount to NAV of 60.5%.
Additional Director
It is still the Board's intention to appoint at least one new independent
Director in order to enhance the corporate governance within the Company. The
Board is considering appointing a 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 has appointed Gerasimos Efthimiatos 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.The Company has received
an EGM requisition notice to consider the reappointment of Martin Adams to the
Board as a non-executive director.
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
15 January 2025
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 then 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 ongoing
development at Kilada and operational 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. 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 fifteen short term loans
from our shareholders taken out since April 2023. We intend to repay the first
nine of these from the proceeds of our next asset sale and the remaining loans
which are not pre-payable early when each of them reaches their respective 12
month anniversary.
Legal actions
The Company is currently involved in litigation in the, 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 has since been released. 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 €50 million in
damages.
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. DCI was successful in the applications to set aside the two
demands. In the judgement the judge upheld our argument that there was a
substantial dispute that would need to be resolved before a statutory demand
could be issued. He has also ordered Zoniro to pay 75% of the costs incurred.
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 has continued
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 which 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 2023. 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 were ready this summer,
facilitating marketing events to attract potential land buyers and speeding up
land lot sales. Unfortunately in April 2024 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 2023, 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.
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 of 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 country club sre finalised.
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 gave the potential buyer an
initial exclusivity period of 90 days to complete further due diligence in
order to present an offer. While the MOU has since expired discussions are
still ongoing with this potential buyer. At the same time other interested
parties have indicated interest for the project. In the meantime preparations
for an official sales process are ongoing in case no agreement can be reached
with one of the current interested parties.
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 €126.4 million, the Board of Directors
believes that the Company's real NAV is closer to €145.7 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 during 2023 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 46% on 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, certain properties were reduced in value as the company
took a more conservative approach to their carrying value but DCI retained its
valuation of Aristo unchanged as it had previously recognised a valuation
impairment which anticipated this.
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 result of these should have been released by the SBA
Administration before the end of 2024 and we will be analysing them carefully
when they are published.
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 land buyers 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 €19.2 million to €24.3 million reflecting the expected
net proceeds from the sale accordingly however the buyer has been slower at
completing this transaction than we expected whilst they secure full funding
to buy and develop the project. We expected this to happen during 2024 and
as it did not, we will review our options to seek another buyer.
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 our shareholder loans. We expect to be able to commence the payment
of surplus capital back to shareholders in 2025.
Thank you for your continued support.
Nicolai Huls & Nick Paris, Joint Managing Directors
15 January 2025
DIRECTORS' REPORT
The Directors present their report together with the 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 consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2023 and the statement of financial position as
at 31 December 2023 are set out on pages 21 and 22 of the annual report. The
assets of the Group are principally development properties and these are
valued once a year. The Directors are responsible for the valuations and
assisted in their assessment by external valuers in each relevant country at
the financial year end to arrive at a 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 year and
up to the date of the report were as follows:
· Martin Adams - Resigned 10 February 2023
· Sean Hurst - Appointed 13 February 2023
· Nicolai Huls
· Nick Paris
· Gerasimos Efthimiatos Appointed 15 November 2024
· 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 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 management
agreement with the previous Investment Manager was terminated.
As of 31 December 2023, Sean Hurst was considered to be an independent
non-executive Director and following his appointment Gerasimos Efthimiatos is
considered to be a non-independent non-executive Director.
Directors' remuneration during the twelve months ended 31 December 2023
The Directors remuneration details during the period of the annual 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
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 (director of Discover Investments Company) 775,000
Nick Paris
- direct shareholding 1,634,487
- shareholder loan €100,000
Nicolai Huls is also a director of Discover Investment Company which owns
30,026,849 shares and has provided a shareholder loan of €350,000.
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 23
December 2024, which is the latest practicable date before the publication of
the annual 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
*Nicolai Huls is a Director of Discover Investment Company
CORPORATE GOVERNANCE STATEMENT
Statement of compliance with the Quoted Companies Alliance Corporate
Governance Code (the "QCA statement")
Introduction from the Chairman
The Board of DCI (the Board or the Directors) fully endorses the importance of
good corporate governance and applies the QCA Corporate Governance Code,
published in April 2018 by the Quoted Companies Alliance (the "QCA Code"),
which the Board believes to be the most appropriate recognised governance code
for a company of the Company's size with shares admitted to trading on the AIM
market of the London Stock Exchange. This is a practical, outcome-oriented
approach to corporate governance that is tailored for small and mid-size
quoted companies in the UK and which provides the Company with the framework
to help ensure that a strong level of governance is maintained.
As Chairman, I am responsible for leading an effective board, fostering a good
corporate governance culture, maintaining open communications with the major
shareholders and ensuring appropriate strategic focus and direction for the
Company. The Board is also supported by a Nomination and Corporate Governance
Committee.
Notwithstanding the Board's commitment to applying the QCA Code, we will not
seek to comply with the QCA Code where strict compliance in the future would
be contrary to the primary objective of delivering long-term value for our
shareholders. However, we do consider that following the QCA Code, and a
framework of sound corporate governance and an ethical culture, is conducive
to long-term value creation for shareholders.
All members of the Board believe strongly in the importance of good corporate
governance to assist in achieving objectives and in accountability to our
shareholders. In the statements that follow, the Company explains its approach
to governance in more detail.
The QCA Code identifies 10 principles that are considered appropriate
arrangements and asks companies to disclose how the companies apply each
principle. Our compliance with these 10 principles is set out below.
Principle 1: Establish a strategy and business model which promote long-term
value for shareholders
The Company's investment policy is to realize all its portfolio assets in a
controlled, orderly and timely manner. The strategy of the Group, which was
approved by the Company's shareholders in an Extraordinary General Meeting
held on 22 December 2021 (the "EGM"), is set out in detail in the EGM circular
dated 2 December 2021 (the "Circular"), specifically the investing policy and
realisation strategy is defined in paragraph 4 of Part 1 and the investment
management agreement is defined in paragraph 5 in the Circular.
The Circular is available to view at: www.dciadvisorsltd.com
The Company strategy is shaped and formulated by the Board in regular
discussions with the Managing Directors. The Company's assets were managed by
Dolphin Capital Partners Limited ("DCP"), an investment management company
incorporated in February 2005, until their IMA was terminated on 20 March
2023. Nick Paris and Nicolai Huls have taken on this responsibility since the
termination of DCP.
The Board is the Company's decision-making body, approving or disapproving
each investment and divestment proposed by the Managing Directors. The Board
is responsible for acquisitions and divestments, major capital expenditures
and focuses upon the Company's long-term objectives, strategic direction, and
distributions policy. The Managing Directors are responsible for implementing
this strategy and for generally managing and developing the business. Changes
in strategy require approval from the Board.
The key challenges and risks that the Group strategy presents relate to the
fact that most of the Company's investments are illiquid, and there can be no
assurance that the Company will be able to realise financial returns on such
investments in a timely manner. Other risks include those associated with
general economic climate, local real estate conditions, changes in supply of,
or demand for, competing properties in an area, energy and supply shortages,
various uninsured or uninsurable risks. As a result, a downturn in the real
estate sector or the materialisation of any one or a combination of the
aforementioned risks could materially adversely affect the Company and the
implementation of the investment policy.
In order to mitigate the above risks, the Board and the Managing Directors,
working with the Company's advisers, will continue to explore the best manner
in which the divestment of the Company's portfolio can be achieved on an asset
by asset basis, in the light of prevailing market conditions and
circumstances, in order to maximise returns to shareholders. Moreover, in
order to preserve the financial resources of the Company, the allocation of
any additional capital investment into any of the Company's projects will be
substantially sourced from joint venture agreements with third party capital
providers and project level debt and with the sole objective of enhancing the
respective asset's realisation potential and value.
Principle 2: Seek to understand and meet shareholder needs and expectations
The Company is committed to engaging and communicating openly with its
shareholders to ensure that its strategy, business model and performance are
clearly understood. All Board members have responsibility for shareholder
liaison but queries are primarily delegated to the Company's advisors or
Managing Directors in the first instance or to the Company's Chairman.
Contact details for the Company's advisors are contained on the Company's
website www.dciadvisorsltd.com
Additionally, shareholders can get in touch by sending an e-mail to the
Company's administrator, FIM Capital Limited ("FIM") at
corporate.governance@fim.co.im
The Board, together with the Managing Directors, are responsible for
implementing the strategy that was approved by the shareholders at the EGM in
December 2021.
Throughout the year, the Board has regular dialogue with institutional
investors, providing them with such information on the Company's progress as
is permitted within the guidelines of the AIM Rules, MAR and requirements of
the relevant legislation. Twice a year, at the time of announcing the Group's
half and full-year results, the Company schedules a round of investor calls
with its shareholders to update them on developments and to receive feedback
and suggestions from them.
Commencing in 2022, the Company has held an Annual General Meeting each year
("AGM"). This provides investors the opportunity to enter into dialogue with
the Board and for the Board to receive feedback and take action if and when
necessary. The results of the AGM are subsequently announced via RNS and
published on the Company's website. Feedback from, and engagement with,
substantial shareholders has historically been successful in ensuring, for
example, material transactions are suitably structured with shareholder
considerations in mind.
Principle 3: Take into account wider stakeholder and social responsibilities
and their implications for long-term success
Corporate social responsibility ("CSR") is a cornerstone of the Company's
culture. The Board is responsible for the social and ethical frameworks at DCI
and the Company is committed to transparency with its approach and business
and welcomes interaction with all stakeholders and the local communities.
The Board is aware that engaging with its stakeholders strengthens
relationships, assists the Board in making better business decisions and
ultimately promotes the long-term success of the Company. The Group's
stakeholders include shareholders, members of staff of underlying companies
and of Advisors and other service providers, suppliers, auditors, lenders,
regulators, industry bodies and the communities surrounding the locations of
its investments. DCI is an internally managed company.
The Board as a whole is responsible for reviewing and monitoring the parties
contracted to the Company, including their service terms and conditions. The
Audit Committee supports Board decisions by considering and monitoring the
risks of the Company.
The Board is regularly updated on wider stakeholder views and issues
concerning its projects, both formally at Board meetings and informally
through ad hoc updates. Advisers involved with the investment portfolio are
invited to join Board meetings and provide a report to the Board. Engagement
in this manner enables the Board to receive feedback and better equips them to
make decisions affecting the business.
The goal is to deliver value for our stakeholders while in parallel to
contribute in meaningful ways to the local economies, societies, and
environments where DCI invests.
The Company's Corporate Social Responsibility statement can be viewed on its
website at: www.dciadvisorsltd.com
Principle 4: Embed effective risk management, considering both opportunities
and threats, throughout the organisation
Ultimate responsibility for the process by which risk in the business is
managed rests with the Board. The Managing Directors are required to enforce
the risk management framework adopted by the Company and report its
effectiveness to the Board. The respective risks and processes to implement
risk management are reviewed bi-annually.
Principle 4: Embed effective risk management, considering both opportunities
and threats, throughout the organisation continued
The principal risks and uncertainties facing the Group, as well as mitigating
actions, are set out in the annual Report. These risks are reviewed by the
Audit Committee, whose role is to provide oversight of the financial reporting
process, the audit process, the system of internal controls, overall
compliance with laws and regulations and review the budgetary process. The
Audit Committee is currently chaired by Nick Paris and its other member is
Nicolai Huls.
The Company's Directors and its former Investment Manager comply with Rule 21
of the AIM Rules relating to directors' and applicable employees' dealings in
the DCI's securities. Accordingly, DCI has adopted an appropriate Share
Dealing Code for Directors and applicable employees of the Investment Manager
and the Investment Manager had also adopted a conflicts of interest policy.
The Company does not have an Investment Committee as, in accordance with its
investment strategy, it is not proceeding to make investments into new
projects or the acquisition of additional assets.
Principle 5: Maintain the Board as a well-functioning, balanced team led by
the Chair
The Board had three members throughout the majority of 2023, comprising an
independent non-executive Chairman and two executive directors. The Company
has restrictions on the maximum length of service for Directors. At every
annual general meeting any director:
- who has been appointed by the board since the previous annual general
meeting;
- who held office at the time of the two preceding annual general meetings
and who did not retire at either of them; or
- who has held office with the Company, other than employment or executive
office, for a continuous period of nine years or more at the date of the
meeting,
shall retire from office and may offer himself for re-appointment by the
members.
The Directors biographies are published on the Company's website at
www.dciadvisorsltd.com
In order to maintain stability following the removal of DCP, two of the
non-executive Directors took on the role of the Investment Manager, therefore
becoming executive Directors. The Board continues to review its structure and
are in the process of recruiting a further non-executive Director in order to
provide what it considers to be an appropriate balance of experience and
skills. Board meetings are held on a frequent basis, in person where possible,
with additional meetings held as required.
All Directors receive regular and timely information regarding the operational
and financial performance of the Company. Relevant information is circulated
to the Directors in advance of the Board meetings. All Directors have direct
access to the advice and services of the Company's advisors and are able to
receive independent professional advice in the furtherance of their duties, if
necessary, at DCI's expense.
9 formal Board meetings (including Board calls) were held in the period during
2023. A summary of Board and Committee meetings attended in the 12 months to
31 December 2023 is set out below:
Board Meetings Audit Committee Nomination & Corporate Governance Committee
Director Attended Eligible Attended Eligible Attended Eligible
Mr S Hurst* 7 7 - - - -
Mr M Adams** 2 2 - - - -
Mr N Huls 9 9 2 2 - -
Mr N Paris 9 9 2 2 - -
Mr M Kambourides*** 2 2 - - - -
* Appointed 13 February 2023
** Resigned 10 February 2023
*** Removed 18 March 2023
Principle 6: Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
The biographical details of all the Directors can be viewed on the Company
website: www.dciadvisorsltd.com
The Directors skills are kept up to date by attending seminars, conferences
and specialized courses from advisers as well as personal reading into the
subjects of real estate management and development and corporate finance. The
Directors also receive ad hoc guidance on certain matters, for example, the
AIM Rules for Companies from the Company's Nominated Adviser as well as
receiving updates on the regulatory environment from FIM, who provide
specialist fund administration services to a variety of closed ended funds and
collective investment schemes. The role and responsibilities of the Directors
are set out in a Statement of Directors' Responsibilities and the Terms of
Reference of the Audit Committee are summarised at the end of the annual
report.
All Directors are able to take independent professional advice in the
furtherance of their duties, if necessary, at the Company's expense.
Principle 7: Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement
Board meetings are held on a frequent basis at key geographical locations.
To date, no independent Board evaluation process has been conducted by the
Company as the Chairman believes that the Board performs effectively. Key
strategic issues and risks are discussed in an open and forthright manner,
with decisions being made based on the factual data available.
In future, Board evaluations will take place periodically, whereby Board
members will be asked to complete and return an effectiveness questionnaire
across a variety of criteria, then return these to FIM, who, where necessary,
will seek clarification on any responses given. Responses will then be
recorded anonymously to enable the Board to hold open follow-up discussions on
the aggregated evaluation data.
The Board's periodic self-evaluations of performance will be based on
externally determined guidelines appropriate to the composition of the Board
and the Company's operation, including Board committees. The scope of the
self-evaluation exercise will be re-assessed in each instance to ensure
appropriate depth and coverage of the Board's activities consistent with
corporate best practice.
The effectiveness questionnaire underlying the Board evaluation process
assesses the composition, processes, behaviours and activities of the Board
through a range of criteria, including the size and independence, mix of
skills (for example corporate governance, financial, real estate industry and
regulatory) and experience, and general corporate governance considerations in
line with the QCA code.
All Board appointments are made after consultation with advisers and, when
appropriate, with major shareholders. Detailed due diligence is carried out on
all new potential Board candidates. The Board will consider using external
advisers to review and evaluate the effectiveness of the Board and Directors
in future to supplement internal evaluation processes. Additionally, the Board
will undertake formal and periodic succession planning.
The independent Directors have remained independent throughout their term of
office except for Nicolai Huls and Nick Paris who became executive directors
and therefore non-independent on 20 March 2023.
When the Board undertakes a periodic evaluation process, the relevant
materials and guidance in respect of this process, following current best
practice at the time of the evaluation, is available from FIM.
Principle 8: Promote a corporate culture that is based on ethical values and
behaviours
Throughout DCI, culture has significant impact on behaviours, risk management
and ultimately performance. The Board is responsible for defining the desired
culture, delegating the embedding of culture in operations in the Company and
then overseeing and monitoring the result. The Board seeks to maintain the
highest standards of integrity and probity in the conduct of the Company's
operations. An open culture is encouraged within the Company, with regular
communications among shareholders.
The Board believes that if an organization wants to create a culture of
ethical conduct, they must be sure that members have the tools that they need
to do so. These include adequate and appropriate training, consultation,
modelling and supervision. These tools also include being able to bring
internal and external experts to the organization to engage staff at all
levels of training and problem solving as well.
The Company has made investments in projects that seek to make a contribution
to the development of communities in which they are located. In planning its
activities, the Board will give consideration to evaluating the social impact
of proposed developments with a view to promoting where possible local
employment and the delivery of other local benefits; and mitigating negative
impacts to the extent possible.
The Company promotes and supports the rights and opportunities of all people
to seek, obtain and hold employment without discrimination.
The Company is also committed to being honest and fair in all its dealings
with partners, contractors and suppliers. Procedures are in place to ensure
that any form of bribery or improper behaviour is prevented from being
conducted on the Company's behalf by investee companies, contractors and
suppliers. Robust systems are in place to safeguard the Company's information
entrusted to it by investee companies, contractors and suppliers, and seeks to
ensure that it is never used improperly.
In order to comply with legislation or regulations aimed at the prevention of
money laundering, the Company has adopted anti-money laundering and
anti-bribery procedures.
Principle 9: Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
A description of each board member and their experience is available on the
Company website at www.dciadvisorsltd.com, and the role of the Company's
committees are also available on the Company website.
Responsibilities of the Board
The Board is responsible for the implementation of the investment policy of
the Company and for its overall supervision. The Board is also responsible for
the Company's day-to-day operations. In order to fulfil these obligations, the
Board has delegated certain operational responsibilities to the Managing
Directors, to FIM and to other service providers.
The Company has not established a remuneration committee as it is satisfied
that any pertinent issues can be considered by the Board as a whole.
The Chairman is responsible for leading an effective Board, focusing the
Directors' discussions on the key levers for value creation and risk
management as well as the effective running of the Company, fostering a good
corporate governance culture, maintaining open communications with the major
shareholders and ensuring appropriate strategic focus and direction.
In addition to this, the Chairman is responsible for ensuring that all
Directors are fully informed and qualified to take the required decisions.
For this purpose, non-executive directors spend time with the Managing
Directors between Board meetings, covering certain aspects of the business
where they have special expertise.
The Board receives formal investment reports from the Managing Directors at
frequent Board meetings, and receives management accounts, and compliance
reports from FIM. The Board maintains regular contact with all its service
providers and is kept fully informed of investment and financial controls and
any other matters that should be brought to the attention of the Directors.
The Directors also have access where necessary to independent professional
advice at the expense of the Company.
In addition to these, the Directors review and approve the following matters:
• Strategy and management
• Policies and procedures
• Financial reporting and controls
• Capital structure
• Contracts
• Shareholder documents / Press announcements
• Adherence to Corporate Governance and best
practice procedures
The Board has established the following Committees:
Audit Committee: The Audit Committee is chaired by Nick Paris and its other
member is Nicolai Huls and it aims to meet at least three times a year.
The Audit Committee provides oversight and review of the financial reporting
process, the audit process, the system of internal controls, the accounting
policies, principles and practices underlying them, liaising with the external
auditors and reviewing the effectiveness of internal controls, and overall
compliance with laws and regulations and review the budgetary process.
Nomination & Corporate Governance Committee: The Corporate Governance
Committee is chaired by Nicolai Huls and its other members are Sean Hurst and
Nick Paris. The Committee aims to meet at least twice annually.
The role of the Nomination & Corporate Governance Committee is to evaluate
the Company's corporate governance policies and principles and recommend
changes to the Board as necessary, and identify, evaluate and recommend to the
Board qualified nominees for Board election.
The Directors have access to the advice and services of FIM, the Nominated
Adviser (NOMAD), legal counsel, regulatory consultants and other experts where
it is deemed appropriate. They can also seek independent external professional
advice and any relevant training, as necessary.
Principle 10: Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders
The Board is committed to maintaining an open dialogue with shareholders.
Direct communication with shareholders is coordinated by the Chairman in
consultation with the Company's advisers, as appropriate.
Throughout the year, the Board maintains a regular dialogue with institutional
investors, providing them with such information on the Company's progress as
is permitted within the guidelines of the AIM Rules, MAR and requirements of
the relevant legislation.
The Company communicates with shareholders through the yearly Annual Report
and Financial Statements, Interim Report, the Annual General Meeting, and
other AIM announcements. Investors are also able to contact the Directors and
Company's advisors directly at any time.
The Board believes that the Annual Report and the Interim Report play an
important part in presenting all shareholders with an assessment of the
Group's position and prospects. All reports and press releases are published
on the Company's website www.dciadvisorsltd.com
If a significant proportion of independent votes were to be cast against a
resolution at any general meeting, the Board's policy would be to engage with
the shareholders concerned to understand the reasons behind the voting
results. Following this process, the Board would make an appropriate public
statement regarding any different action it has taken, or will take, as a
result of the vote.
Details of the Directors' remuneration can be found on page 9 of the annual
report.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DCI ADVISORS LTD
Report on the audit of the consolidated financial statements
Qualified opinion
We have audited the accompanying consolidated financial statements of DCI
Advisors Ltd (the ''Company''), and its subsidiaries (together with the
Company, the "Group") which are presented on pages 21 to 67 of the annual
report and comprise the consolidated statement of financial position as at 31
December 2023, and the consolidated statements of profit or loss and other
comprehensive income, changes in equity and cash flows for the year then
ended, and notes to the consolidated financial statements, including material
accounting policy information.
In our opinion, except for the effects and the possible effects of the matters
described in the Basis for qualified opinion section of our report, the
accompanying consolidated financial statements give a true and fair view of
the consolidated financial position of the Group as at 31 December 2023, and
of its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union (''IFRS-EU'') .
Basis for qualified opinion
As described in note 15 to the consolidated financial statements, the Group
applies the discounted cash-flow method in arriving at the fair value of a
hotel complex included in land and buildings at EUR 29.6 million as at 31
December 2023. We were unable to obtain sufficient appropriate audit evidence
about the fair value of the hotel complex as certain assumptions used in the
valuation were not adequately supported. Based on the information and
explanations provided by management, it was impracticable for us to quantify
the financial effects of the adjustments to property, plant and equipment,
deferred tax liability, revaluation reserve and retained deficit as at 31
December 2023, and to the change in fair value of property, plant and
equipment presented within change in valuation (note 8), taxation and profit
for the year then ended, which would have resulted had the Group used
supportable assumptions in estimating the fair value of the hotel complex.
As described in note 17 to the consolidated financial statements, the carrying
amount of the investment in associate DCI Holdings Two Limited ("DCI H2") is
€42.7 million, which the Group estimated to be the recoverable amount as at
31 December 2023. The methodology applied by the Group for estimating the
recoverable amount is not in accordance with the principles of International
Financial Reporting Standard 13: "Fair value measurement". Our challenger
model used resulted in a range of values, based on which the recoverable
amount as presented in the consolidated financial statements should increase
by €3.8 million. Had management applied an appropriate valuation
methodology, the recoverable amount of the investment in DCI H2 as at 31
December 2023 would be €46.5 million, retained deficit as at 31 December
2023 would decrease by €3.8 million, the reversal of impairment loss on
equity accounted investees would increase by €3.8 million (note 8) and
profit for the year then ended would increase by €3.8 million.
As described in note 19 to the consolidated financial statements, the Company
has recognized an amount receivable of €3.0 million from its former
Investment Manager. The said amount relates to advance payments made during
the year 2022, as part of a now terminated Investment Management agreement,
and its settlement depends on the outcome of litigation in progress. As a
result, the realization of income as at 31 December 2023 was not virtually
certain. This constitutes a departure from International Accounting Standard
37 "Provisions, Contingent Liabilities and Contingent Assets" ("IAS 37"),
which prohibits the recognition of contingent assets. Had the Company
management correctly applied IAS 37 requirements for the 'virtually certain'
requirement, the amount receivable of €3.0 million would not have been
recognized as a financial asset as at 31 December 2023. Accordingly, the
receivables and other assets would have been decreased by €1.9 million, the
trade and other payables would have increased by €1.1 million, profit for
the year would have resulted in a loss for the year of €1.0 million and
retained deficit would have increased by €3.0 million.
We conducted our audit in accordance with International Standards on Auditing
(''ISAs''). Our responsibilities under those standards are further described
in the ''Auditors' responsibilities for the audit of the consolidated
financial statements''' section of our report. We are independent of the Group
in accordance with the International Code of Ethics (including International
Independence Standards) for Professional Accountants of the International
Ethics Standards Board for Accountants (''IESBA Code'') together with the
ethical requirements in Cyprus that are relevant to our audit of the
consolidated financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our qualified opinion.
Material Uncertainty Relating to Going Concern
We draw attention to Note 2b to the consolidated financial statements, which
indicates that the Group's ability to meet its operating and financial
commitments relies heavily on the ability of the Group to dispose its
immovable properties and enter future funding arrangements. These events,
along with other matters as set forth in Note 2b indicate that a material
uncertainty exists that may cast significant doubt on the Group's ability to
continue as a going concern. Our opinion is not modified in respect of this
matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the consolidated financial statements of
the current period. This matter was addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on this matter.
Valuation of immovable property
(Refer to notes 15, 16, 18 and 30 to the consolidated financial statements)
Key audit matter
How the matter was addressed in our audit
The Group has a significant portfolio of immovable properties which is Our audit procedures in relation to the valuation of immovable properties
classified, depending on the case, as investment property, property, plant and included among others:
equipment, trading properties and investment property included in assets held
for sale. The total carrying amount of the aforementioned immovable properties
as at 31 December 2023 was €121.4 million, not including the amount of
€29.6 million for which reference is made in the Basis for Qualified Opinion · evaluating the competence, capabilities and objectivity of independent
paragraph above. professional valuers engaged by the Group.
Investment properties are measured at fair value, property, plant and · involving our internal valuation specialists in challenging the
equipment at revalued amounts, which are based on fair value, trading appropriateness of the valuation methodology and assumptions used.
properties at the lower of cost and net realisable value and investment Assumptions, such as those relating to the discount rates used and the amounts
property included in assets held for sale at the lower of its carrying amount and timing of forecasted cash inflows and outflows, as well as the comparables
and fair value less cost to sell. In determining fair values, the Group used and adjustments made in valuations were challenged based on industry
utilizes independent professional valuers. norms and external data. Explanations were sought for significant movements in
value.
There are significant judgements and estimates inherent in estimating fair
value and net realisable value (which is based on the intended development and · reperforming the calculations prepared by the independent professional
future selling price of these properties). valuers engaged by the Group.
The existence of significant estimation uncertainty coupled with the fact that · assessing the sensitivity of the forecasts used in valuations.
only a small percentage change in the assumptions (such as discount rate and
asking price per square meter) can have a significant impact on the valuation
is why we have given specific audit focus and attention to this area.
· assessing the adequacy of the disclosures around the valuation of property
assets.
Other information
The Board of Directors is responsible for the other information. The other
information comprises the information included in the Chairman's Statement,
Managing Directors' report, Directors' report and Corporate Governance
Statement.
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information identified above and, in doing
so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in
this regard.
Responsibilities of the Board of Directors for the consolidated financial
statements
The Board of Directors is responsible for the preparation of consolidated
financial statements that give a true and fair view in accordance with
IFRS-EU, and for such internal control as the Board of Directors determines is
necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless there is an intention to either
liquidate the Company or to cease Group's operations, or there is no realistic
alternative but to do so.
The Board of Directors is responsible for overseeing the Group's financial
reporting process.
Auditors' responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors' report
that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Board of Directors.
· Conclude on the appropriateness of the Board of Directors' use of the
going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors' report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditors' report. However, future events or conditions
may cause the Group cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves a true and fair view.
· Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
Auditors' responsibilities for the audit of the consolidated financial
statements (continued)
We communicate with those charged with Governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with Governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with Governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors' report.
Other matter
The annual report, including the opinion, has been prepared for and only for
the Company's members as a body and for no other purpose. We do not, in giving
this opinion, accept or assume responsibility for any other purpose or to any
other person to whose knowledge the annual report may come to. These
consolidated financial statements have not been prepared for the purpose of
complying with the legal requirements of the British Virgin Islands Law.
The engagement partner on the audit resulting in this independent auditors'
report is Antonis I. Shiammoutis.
Antonis. I. Shiammoutis, FCA
Certified Public Accountant and Registered Auditor
for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087 Nicosia
Cyprus
15 January 2025
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2023
31 December 2023 31 December 2022
Continuing operations Note €'000 €'000
Revenue 6 162 318
Cost of sales 7 - -
Gross profit 162 318
Gain on disposal of equity-accounted investments 17 - 5,421
Change in valuations 8 19,487 (3,684)
Directors' remuneration 27.1 (374) (205)
Professional fees 10 (3,699) (1,923)
Administrative and other expenses 11 (2,057) (1,563)
Depreciation charge 15 (50) (48)
Total operating and other expenses 13,307 (2,002)
Results from operating activities 13,469 (1,684)
Finance income - 73
Finance costs (1,069) (2,832)
Net finance costs 12 (1,069) (2,759)
Share of losses on equity-accounted investments, net of tax 17 (12,923) (1,785)
Loss before taxation (523) (6,228)
Taxation 13 (1,427) 157
Loss from continuing operations (1,950) (6,071)
Discontinued operation
Profit from discontinued operation net of tax 30 3,941 275
Profit/(loss) for the year 1,991 (5,796)
Other comprehensive income/(loss)
Items that will not be reclassified to profit and loss
Revaluation of property, plant and equipment 15 19,094 -
Related tax 23 (4,201) -
Foreign currency translation differences 12 (69) (56)
Other comprehensive income/(loss), net of tax 14,824 (56)
Total comprehensive income/(loss) 16,815 (5,852)
Profit/(loss) attributable to:
Owners of the Company 1,747 (6,924)
Non-controlling interests 244 1,128
1,991 (5,796)
Total comprehensive income/(loss) attributable to:
Owners of the Company 14,337 (6,980)
Non-controlling interests 2,478 1,128
16,815 (5,852)
Earnings/(loss) per share
Basic and diluted earnings/(loss) per share (€) 14 0.002 (0.008)
Basic and diluted loss per share - continuing operations (€) 14 (0.002) (0.008)
The notes on pages 25 to 67 of the annual report are an integral part of these
consolidated financial statements.
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 42,240 15,226
Investment property 16 27,903 45,943
Equity-accounted investments 17 42,694 42,694
Non-current assets 112,837 103,863
Trading properties 18 56,516 56,516
Receivables and other assets 19 4,530 10,083
Cash and cash equivalents 20 471 2,226
Assets held for sale 30 24,388 -
Current assets 85,905 68,825
Total assets 198,742 172,688
Equity
Share capital 21 9,046 9,046
Share premium 21 569,847 569,847
Retained deficit (465,567) (467,314)
Other reserves 13,118 528
Equity attributable to owners of the Company` 126,444 112,107
Non-controlling interests 4,281 8,440
Total equity 130,725 120,547
Liabilities
Loans and borrowings 22 11,298 10,434
Lease liabilities 24 3,322 3,347
Deferred tax liabilities 23 10,998 6,577
Trade and other payables 25 21,004 19,795
Non-current liabilities 46,622 40,153
Loans and borrowings 22 2,893 4,611
Lease liabilities 24 88 88
Trade and other payables 25 11,236 7,289
Liabilities directly associated with the assets held for sale 30 7,178 -
Current liabilities 21,395 11,988
Total liabilities 68,017 52,141
Total equity and liabilities 198,742 172,688
Net asset value ('NAV') per share (€) 26 0.14 0.12
The consolidated financial statements were authorised for issue by the Board
of Directors on 15 January 2025.
Nick Paris
Nicolai Huls
Managing
Director
Managing Director
The notes on pages 25 to 67 of the annual report are an integral part of these
consolidated financial statements.
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 investments - - - - - - - -
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 - - - - 1,747 1,747 244 1,991
Other comprehensive income
Revaluation of property, plant and equipment, net of tax - - - 12,659 - 12,659 2,234 14,893
Foreign currency translation differences - - (69) - - (69) - (69)
Total other comprehensive income - - (69) 12,659 - 12,590 2,234 14,824
Total comprehensive income - - (69) 12,659 1,747 14,337 2,478 16,815
TRANSACTIONS WITH OWNERS OF THE COMPANY
Changes in ownership interests in subsidiaries
Capital reduction and settlement of non-controlling interest (6,637) (6,637)
Disposal of interests without a change in control - - - - - - - -
Total transactions with owners of the Company - - - - - - (6,637) (6,637)
Balance at 31 December 2023 9,046 569,847 180 12,938 (465,567) 126,444 4,281 130,725
The notes on pages 25 to 67 of the annual report are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023 31 December 2023 31 December 2022
Note €'000 €'000
Cash flows from operating activities
Profit/(loss) 1,991 (5,796)
Adjustments for:
(Gain)/Loss in fair value of investment property 16 (6,252) 6,316
Gain on disposal of investment in associates/subsidiaries 17 - (5,411)
Reversal of impairment loss on property, plant and equipment 15 (5,502) (2,944)
Reversal of impairment loss on equity-accounted investments 8 (12,923) (388)
Depreciation charge 15 50 48
Interest expense 22 1,327 2,891
Interest income - (4)
Exchange difference (68) (76)
Share of losses on equity-accounted investments, net of tax 17 12,923 1,785
Taxation 2,292 (12)
(6,162) (3,591)
Changes in:
Receivables (1,102) (8,974)
Payables 6,106 568
Cash used in operating activities (1,158) (11,997)
Tax paid - -
Net cash used in operating activities (1,158) (11,997)
Cash flows from investing activities
Proceeds from disposal of associate 17 - 26,875
Acquisitions of investment property 16 (77) (75)
Acquisitions of property, plant and equipment 15 (2,469) (3,264)
Proceeds from other investments - 99
Interest received - 4
Net cash (used in)/from investing activities (2,546) 23,639
Cash flows from financing activities
Repayment of loans and borrowings (500) (12,370)
New loans 2,760 -
Proceeds from issue of redeemable preference shares - 3,000
Payment of lease liabilities (50) (8)
Interest paid (261) (2,363)
Dividend paid to non-controlling interests - (2,250)
Net cash from/(used in) financing activities 22 1,949 (13,991)
Net (decrease)/increase in cash and cash equivalents (1,755) (2,349)
Cash and cash equivalents at 1 January 2,226 4,575
Cash and cash equivalents at 31 December 471 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) 471 2,226
Cash and cash equivalents at the end of the year 471 2,226
NOTES TO THE 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 1 June 2023, the name of the Company was changed from Dolphin
Capital Investors Ltd to DCI Advisors Ltd.
The consolidated financial statements of the Group 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 investments.
The 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 consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by the
European Union ('EU').
The consolidated financial statements were authorised for issue by the Board
of Directors on 15 January 2025.
b. Basis of preparation
The consolidated financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to discharge its liabilities
in the normal course of business.
On 22 December 2021, an Extraordinary General Meeting was held and the
Shareholders approved a continuation of the Company without setting a
termination date or a date for a further continuation vote in order to provide
time to optimise for Shareholders the value that can be realised from the
Company's investments by removing potentially commercially prejudicial
deadlines from negotiations with potential buyers. Notwithstanding the absence
of a formal date for Shareholders to consider a continuation of the Company,
the Board may, at any time, propose a further continuation vote to
Shareholders.
The Group faced liquidity issues during 2023 and 2024 and resolved to finance
its operations during those years largely through shareholder loans. This is a
temporary measure as the Group is currently negotiating the sale of its
immovable properties to improve its liquidity. More specifically, the Group
is close in finalizing the sale of the immovable property of its Croatian
subsidiary ('Livka Bay Resort'). The sale is expected to generate €22m to
the Group. The Group is also in negotiations for the sale of other
immovable properties included in its property portfolio although none of these
negotiations has yet resulted in signed sale documents.
In order to meet its short-term commitments and be in a position to cover
the operating expenses for 2025, the Group will need more than €10m in sales
proceeds. Current discussions for the disposal of investments are expected to
generate more than the amount needed, referred to above, however as of this
date no legally binding agreement has been executed. In the scenario where the
Group will experience further delays in completing the respective sales of its
property portfolio, the directors will have to take additional measures to
secure financing for the business. The Group is also in negotiations to obtain
a €15m loan from a financial institution.
These liquidity issues indicate the existence of material uncertainty that may
cast doubt on the ability of the Group to continue as a going concern.
Continuation as a going concern is greatly dependent on the successful outcome
from the sale of the Group's assets and the ability of the Group to secure
additional financing. The financial statements do not include any
adjustments to the amount and classification of assets and liabilities that
may be necessary should the Company not continue as a going concern.
c. Basis of measurement
The consolidated financial statements have been prepared under the historical
cost convention, with the exception of property (investment property and
property, plant and equipment), which are stated at their fair values.
d. New and amended International Financial Reporting Standards
("IFRSs") and Interpretations
As from 1 January 2023, the Group adopted all changes to IFRSs as adopted by
the European Union ("EU") which are relevant to its operations. This adoption
did not have a material effect on the financial statements of the Group.
The following New IFRSs, Amendments to IFRSs and Interpretations have been
issued by International Accounting Standards Board ("IASB") 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 New IFRSs, Amendments to IFRSs and Interpretations early.
(i) Standards and interpretations adopted by the EU
IAS 1 Presentation of Financial Statements (Amendments): Classification of
Liabilities as Current or Non-current and Non-current Liabilities with
covenants (effective 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.
IFRS 16 Leases (Amendments): Lease Liability in Sale and Leaseback (effective
for annual 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.
d. Adoption of new and revised standards and interpretations
continued
(ii) Standards and interpretations not adopted by the EU
IAS 7 Statement of Cash Flows (Amendments) and IFRS 7 Financial Instruments:
Disclosures (Amendments) - Supplier Finance Arrangements (effective for annual
periods beginning on or after 1 January 2024)
The amendments introduce two new disclosure objectives - one in IAS 7 and
another in IFRS 7 - to enable the users of the financial statements in
understanding and assessing the effects of supplier finance arrangements on an
entity's liabilities, cash flows and exposure to liquidity risk as well as the
impact to the entity if supplier finance arrangements were no longer
available.
The amendments do not define the supplier finance arrangements. Instead, the
amendments describe the characteristics of an arrangement for which an entity
is required to provide the information. Specifically, all the following
characteristics should apply:
- a finance provider pays amounts that the entity owes to its
suppliers;
- the entity agrees to pay under the terms and conditions of the
arrangements on the same date or at a later date than its suppliers are paid;
and
- the entity is provided with extended payment terms or suppliers
benefit from early payment terms, compared with the related invoice payment
due date.
IAS 21 The Effects of Changes in Foreign Exchange Rates (Amendments): Lack
of Exchangeability (effective for annual periods beginning on or after 1
January 2025)
The amendments, as issued in August 2023, aim to clarify when a currency is
exchangeable into another currency and how a company estimates a spot rate
when a currency lacks exchangeability. According to the amendments, a currency
is exchangeable into another currency when a company is able to exchange that
currency for the other currency at the measurement date and for a specified
purpose. When a currency is not exchangeable at the measurement date, the
company will be required to estimate a spot rate as the rate that would have
been applied to an orderly exchange transaction between market participants
under prevailing economic conditions. The amendments contain no specific
requirements for estimating a spot rate, but they set out a framework under
which an entity can determine the spot rate at the measurement date using an
observable exchange rate without adjustment or another estimation technique.
Companies will be required to provide also new disclosures to help users
assess the impact of a currency not being exchangeable to the entity's
financial performance, financial position, and cash flows. To achieve this
objective, entities will disclose information about the nature and financial
impacts of a lack of exchangeability, the spot exchange rate(s) used, the
estimation process and risks to the company because the currency is not
exchangeable.
IFRS 10 Consolidated Financial Statements (Amendments) and IAS 28 Investments
in Associates and Joint Ventures (Amendments): Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture (effective date
postponed indefinitely; early adoption continues to be permitted)
The amendments address an acknowledged inconsistency between the requirements
in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of
assets between an investor and its associate or joint venture. The main
consequence of the amendments is that a full gain or loss is recognised when a
transaction involves a business (as defined in IFRS 3). A partial gain or loss
is recognised when a transaction involves assets that do not constitute a
business. In December 2015, the IASB postponed the effective date of this
amendment indefinitely pending the outcome of its research project on the
equity method of accounting.
e. Use of estimates and judgements
In preparing these consolidated financial statements, management has made
judgements, estimates and assumptions that affect the application of
accounting principles and the related amounts of assets and liabilities,
income and expenses. The estimates and underlying assumptions are based on
historical experience and various other factors that are deemed to be
reasonable based on knowledge available at that time. Actual results may
deviate from such estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
2. basis of preparation CONTINUED
e. Use of estimates and judgements continued
Impairment of investment in equity-accounted investments
The Company follows the requirements of IAS 36 to determine whether the
investments in equity-accounted investments 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 investments is impaired, by comparing it with its
fair value less cost to sell.
Measurement of fair values
A number of the Group's accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets and
liabilities.
The Group has an established control framework with respect to the measurement
of fair values. This includes the Managing Directors who have overall
responsibility for overseeing all significant fair value measurements,
including Level 3 fair values.
When measuring the fair value of an asset or a liability, the Group uses
observable market data as far as possible. Significant unobservable inputs
and valuation adjustments are regularly reviewed and changes in fair value
measurements from period to period are analysed.
Fair values are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might
be categorised in different levels of the fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of the fair
value hierarchy as the lowest level input that is significant to the entire
measurement.
The Group recognises transfers between levels of the fair value hierarchy at
the end of the reporting period during which the change has occurred.
When applicable, further information about the assumptions made in measuring
fair values is included in the notes specific to that asset or liability.
Further information about the assumptions made in measuring fair values is
included in the following notes:
- Note 3 and 15: Property, plant and equipment;
- Note 3 and 16: Investment property.
f. Functional and presentation currency
These consolidated financial statements are presented in Euro (€), 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.
3. MEASUREMENT of fair values CONTINUED
Properties continued
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 BVI 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 and this was successful so the loan has been
eliminated.
5. MATERIAL accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all periods presented in these consolidated financial
statements unless otherwise stated.
5.1 Subsidiaries
Subsidiaries are the entities controlled by the Group. The Group 'controls' an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
5.2 Non-controlling interests ('NCI')
NCI are measured initially at their proportionate share of the acquiree's
identifiable net assets at the date of acquisition. Changes in the Group's
interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions.
5.3 Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and
liabilities of the subsidiary, and any related Non-controlling Interest
("NCI") and other components of equity. Any resulting gain or loss is
recognised in profit or loss. Any interest retained in the former subsidiary
is measured at fair value when control is lost.
5.4 Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses arising from
intra-group transactions are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with
equity-accounted investments 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 investments
The Group's interests in equity-accounted investments comprise interests in
associates and a joint venture. Associates are those entities in which the
Group has significant influence, but not control, over the financial and
operating policies. A joint venture is an arrangement in which the Group has
joint control, whereby the Group has rights to the net assets of the
arrangement, rather than rights to its assets and obligations for its
liabilities. Interests in associates and the joint venture are accounted for
using the equity method and are initially recognised at cost, which includes
transaction costs. The Group's investment includes goodwill identified on
acquisition, net of any accumulated impairment losses. Subsequent to initial
recognition, the consolidated financial statements include the Group's share
of the income and expenses and equity movements of equity-accounted
investments, 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.
5. MATERIAL accounting policies CONTINUED
5.6 Interest in equity-accounted investments continued
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 investments. 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 revaluation 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.
5. MATERIAL accounting policies CONTINUED
5.9 Property, plant and equipment continued
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.
5. MATERIAL accounting policies CONTINUED
5.11 Leases continued
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 consolidated statement of cash flows.
5. MATERIAL accounting policies CONTINUED
5.12 Financial instruments continued
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.
5. MATERIAL accounting policies CONTINUED
5.12 Financial instruments continued
Financial assets - Assessment whether contractual cash flows are solely
payments of principal and interest continued
· Equity investments at FVOCI: These assets are subsequently measured
at fair value. Dividends are recognised as income in profit or loss unless the
dividend clearly represents a recovery of part of the cost of the investment.
Other net gains and losses are recognised in OCI and are never reclassified to
profit or loss.
Financial liabilities - Classification, subsequent measurement and gains and
losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL if it is classified as
held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or
loss. Other financial liabilities are subsequently measured at amortised cost
using the effective
interest method. Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
The financial liabilities of the Group are measured as follows:
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value, less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in profit or loss over the
period of the borrowings on an effective interest basis.
Trade payables
Trade payables are initially recognised at fair value and are subsequently
measured at amortised cost, using the effective interest rate method.
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the
cash flows from the financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction in which substantially all
of the risks and rewards of ownership of the financial asset are transferred
or in which the Group neither transfers nor retains substantially all of the
risks and rewards of ownership and it does not retain control of the financial
asset.
The Group enters into transactions whereby it transfers assets recognised in
its statement of financial position but retains either all or substantially
all of the risks and rewards of the transferred assets. In these cases, the
transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations
are discharged or cancelled, or expire. The Group also derecognises a
financial liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new financial
liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying
amount extinguished and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount
presented in the statement of financial position when, and only when, the
Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
5.13 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. MATERIAL accounting policies CONTINUED
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 and contingent assets
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
Contingent assets
Contingent assets are not recognised in the statement of financial position
because doing so may result in the recognition of income that may never be
realised. When realisation of a contingent asset is virtually certain, it is
no longer considered contingent and is recognised as an asset. The asset is
recognised in the period in which this change from contingent asset to asset
occurs.
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.
5. MATERIAL accounting policies CONTINUED
5.18 Impairment continued
Non-financial assets continued
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. MATERIAL accounting policies CONTINUED
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. MATERIAL accounting policies CONTINUED
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 and Note 3).
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.
5. MATERIAL accounting policies CONTINUED
5.27 Fair value measurement continued
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 Discontinued operation
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
- represent a separate major line of business or geographic area of
operations;
- is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations;
- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier of disposal
or when the operation meets the criteria to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative
statement of profit or loss and other comprehensive income is re-presented as
if the operation had been discontinued from the start of the comparative year.
5.29 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 162 318
Total 162 318
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 1,062 (7,016)
Reversal of impairment loss on equity-accounted investments 17 12,923 388
Reversal of impairment loss of property, plant and equipment 15 5,502 2,944
Total 19,487 (3,684)
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 64,623 36,469
Croatia - 19,180
Cyprus 48,214 48,214
At end of year 112,837 103,863
Assets held for sale
2023 2022
€'000 €'000
Croatia 24,370 -
At end of year 24,370 -
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 2025.
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 1,728 383
Auditors' remuneration (see below) 267 261
Accounting expenses 642 241
Appraisers' fees 83 9
Project design and development fees 259 133
Consultancy fees 112 338
Administrator fees 310 270
Other professional fees 298 288
Total 3,699 1,923
2023 2022
€'000 €'000
Auditors' remuneration comprises the following fees:
Audit and other audit related services 267 261
Total 267 261
The total for auditors' remuneration all relate to continuing operations.
11. ADMINISTRATIVE AND OTHER EXPENSES
2023 2022
€'000 €'000
Travelling and accommodation 94 132
Insurance 63 75
Marketing and advertising expenses 37 66
Personnel expenses including social security and other costs 528 568
Immovable property and other taxes 123 243
Third party expenses 124 -
Prior year expenses underprovided 21 -
Irrecoverable VAT 9 -
Rents 97 120
Other 961 359
Total 2,057 1,563
Personnel expenses
2023 2022
€'000 €'000
Wages and salaries 394 423
Compulsory social security contributions 60 50
Other personnel costs 74 95
Total 528 568
The average number of employees employed by the Group 18* 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 (999) (2,641)
Transaction costs and other financing expenses (24) (43)
Bank charges (26) (63)
Exchange difference (20) (85)
Finance costs (1,069) (2,832)
Net finance costs recognised in profit or loss (1,069) (2,759)
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) 1,359 (164)
1,359 (164)
Taxation recognised in profit or loss 1,427 (157)
Reconciliation of taxation based on taxable loss and taxation based on
accounting loss:
2023 2022
€'000 €'000
Loss before taxation (523) (6,228)
Taxation using domestic tax rates 2,160 (892)
Effect of valuation gain/(loss) on properties 1,359 (164)
Non-deductible expenses (3,336) 738
Tax-exempt income - (562)
Current year losses for which no deferred tax is recognised 1,176 716
Other 68 7
Total 1,427 (157)
13. Taxation CONTINUED
As a company incorporated under the BVI International Business Companies Act
(Cap. 291), the Company is exempt from taxes on profits, income or dividends.
Each company incorporated in the BVI is required to pay an annual government
fee, which is determined by reference to the amount of the company's
authorised share capital.
In Greece, the corporation tax rate applicable to profits is 22% (22% in
2022). Tax losses of Greek companies are carried forward to reduce future
profits for a period of five years.
The profits of the Cypriot companies of the Group are subject to a corporation
tax rate of 12.50% on their total taxable profits. Tax losses of Cypriot
companies are carried forward to reduce future profits for a period of five
years. In addition, the Cypriot companies of the Group are subject to a 3%
special contribution tax on rental income. Under certain conditions, interest
income may be subject to a special contribution tax at the rate of 30%. In
such cases, this interest is exempt from corporation tax.
In Croatia, the corporation tax rate is 18%. Tax losses of Croatian companies
are carried forward to reduce future profits for a period of five years.
14. earnings/(loss) per share
Basic earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to owners of the Company by the weighted average number of common shares
outstanding during the year
.
2023 2022
'000 '000
Loss attributable to owners of the Company from continuing operations (2,194) (7,199)
Profit attributable to owners of the Company from discontinued operation 3,941 275
Total profit/(loss) attributable to owners of the Company (€) 1,747 (6,924)
Number of weighted average common shares outstanding 904,627 904,627
Basic loss per share - continuing operations (€) (0.002) (0.008)
Basic earnings per share - discontinued operation (€) 0.004 0.000
Basic earnings/(loss) per share - total (€) 0.002 (0.008)
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 earnings/(loss) per share
As at 31 December 2023 and 2022, the diluted earnings per share is the same as
the basic earnings 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) 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
Property under construction Land & Machinery & equipment
€'000 buildings €'000 Other Total
€'000 €'000 €'000
2023
Cost or revalued amount
At beginning of year 8,924 20,457 377 45 29,803
Revaluation - 19,093 - - 19,093
Direct acquisitions 2,468 1 - - 2,469
At end of year 11,392 39,551 377 45 51,365
Depreciation and impairment
At beginning of year - 14,174 365 38 14,577
Depreciation charge for the year - 47 2 1 50
Reversal of impairment loss (note 8) - (5,502) - - (5,502)
Exchange difference - - - - -
At end of year - 8,719 367 39 9,125
Carrying amounts 11,392 30,833 10 6 42,240
The carrying amount at year end of land and buildings, if the cost model was
used, would have been €6.3 million (2022: €6.3 million). Land and
buildings include right-of-use assets of €442 thousand (2022: €442
thousand) related to leased properties that do not meet the definition of
investment property.
Fair value hierarchy
The fair value of land and buildings, amounting to €30,833 thousand (2022:
€6,283 thousand), has been categorised as a Level 3 fair value based on the
inputs to the valuation techniques used.
15. Property, plant and equipment - continued
The following table shows a reconciliation from opening to closing balances of
Level 3 fair value.
2023 2022
€'000 €'000
At beginning of year 6,283 3,365
Acquisitions 1 12
Gains/(losses) recognised in profit or loss
Reversal of impairment loss and write offs in 'Change in valuations' 5,502 2,944
Revaluation in excess of amounts previously impaired 19,094 -
Depreciation in 'Depreciation charge' (47) (38)
At end of year 30,833 6,283
The effect of the valuation change was an increase of € 24.6 million of
which €19.1 million has been recognised on other comprehensive income and
€5.5 million has been recognised in profit or loss as a reversal of a
previous impairment on this property.
The increase of € 24.6 million relates to the hotel complex at Kilada Hills.
This increase in valuation was mainly the result of strong interest from top
luxury hotel operators in the project. This increased the feasibility of
adding 36 privately owned suites to the hotel complex as well as adding the
development 42 branded villas. In addition, a number of branded villas were
included in the rental pool of the hotel operation with the related owner
share expenses.
As at 31 December 2023 and 31 December 2022, part of the Group's property,
plant and equipment is held as security for bank loans (see note 22).
Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring land and
buildings, as well as the significant unobservable inputs used.
Property Location Valuation methodology (note 3) Significant unobservable inputs Inter-relationship between key valuation inputs and Fair Value measurement
Property in Greece - "Kilada Hills Golf Resort" The estimated Fair Value of the Hotel component of the project would
increase/(decrease) if:
Discounted Cash Flow (DCF) Method
Room occupancy rate was higher/(lower);
Room occupancy rate (annual): 2023: 31% to 40% (avg.: 37%)
Average daily rate per occupied room was higher/lower;
2022: 32% to 44% (avg.: 42%)
(Development Perimeter - Hotel component)
Average Daily Rate per occupied room: 2023: €1,190 to €1,486 (avg.: €1,333)
Gross operating margin was higher/(lower);
2022: €950 to €1,186 (avg.: €1,064)
Terminal capitalisation rate was lower/(higher);
Gross operating margin rate: 2023: 36% to 50% (avg.: 48%)
2022: 20% to 35% (avg.: 33%)
Risk-adjusted discount rate was lower/(higher).
Terminal capitalisation rate: 2023: 8.34% [12x multiple]
2022: 8.34% [12x multiple]
Risk-adjusted discount rate (WACC):
2023: 12%
2022: 12%
The estimated Fair Value of the Residential component of the project would
increase/(decrease) if:
Combined Discounted Cash Flow (DCF) Method & Residual
Selling prices increase (decrease);
Residence selling price (€/m2): 2023: €2,900 to €7,500 (wavg.: €4,472)
Construction cost decrease (increase);
(Development Perimeter - Residential component) 2022: €2,600 to €5,000 (wavg.: €3,875)
Residence construction cost (€/m2): 2023: €2,400 to €5,000 (wavg.: €2,943)
Cash flow velocity was shorter/(longer);
2022: €2,200 to €3,500 (wavg.: €2,604)
Cash flow velocity (years):
Selling curves
2023: 2 to 9 years
2022: 2 to 9 years
Selling curve (% p.a.) of total available stock:
2023: 0% to 40%
2022: 5% to 20%
15. Property, plant and equipment - continued
Valuation techniques and significant unobservable inputs -continued
Property Location Valuation methodology (note 3) Significant unobservable inputs Inter-relationship between key valuation inputs and Fair Value measurement
Property in Greece - "Kilada Hills Golf Resort" Combined Discounted Cash Flow (DCF) Method & Residual The estimated Fair Value of the Hotel component of the project would
increase/(decrease) if:
Entrepreneurial profit rate was higher/(lower);
Entrepreneurial Profit (% construction cost as new): 2023: 20.0%
Depreciation rate was lower/(higher)
(Development Perimeter - Hotel component) 2022: 20.0%
Depreciation rate (%):
2023: 42%
2022: 40%
Useful life (years):
Net operating income per m2 was higher/(lower);
2023: 60 years
2022: 60 years
Net operating Income (NOI) (€ thousands p.a.):
Terminal capitalisation rate was lower/(higher).
2023: €53k to €328k
2022: €53k to €328k
Replacement cost per m2 was higher/(lower);
Terminal capitalisation rate:
2023: 9.34% [10.7x multiple]
Risk-adjusted discount rate was lower/(higher))
2022: 11% [9.1X multiple]
Replacement cost missing
2023: €700 to €1,800
Risk-adjusted discount rate (WACC): 2022: €600 to €1,500
2023: 12.%
2022: 12%
Sensitivity of fair value measurement to change in unobservable inputs
Given the uncertainties in the market, any changes in unobservable inputs may
lead to measurement with significantly higher or lower fair value. A variation
of the discount rate would affect the fair value of property in Greece - Hotel
complex as follows:
Change in Impact on fair value
Assumption 2023
Increase (Decrease)
Discount Rate % €'000 €'000
- Hotel Complex in Greece 1.00% (5,050) 5,780
Change in Impact on fair value
Assumption 2022
Increase (Decrease)
Discount Rate % €'000 €'000
- Hotel Complex in Greece 1.00% (2,232) 2,672
16. Investment property
2023 2022
Note €'000 €'000
At beginning of year 45,943 52,188
Capital subsequent expenditure 77 75
Fair value adjustment 30 6,252 (6,316)
Transfer to Assets held for sale (24,371) -
Exchange differences 2 (4)
At end of year 27,903 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
16. Investment property cONTINUED
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
€3.2 million as at 31 December 2023 (2022: €2.4 million) and included in
Investment Property as of 31 December 2023 and 2022 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 €1.3 million included in Investment Property as of 31 December
2023 (2022: €1.2 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.
he 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.
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.
During 2023, the Company appointed an agent to actively seek buyers for Azurna
Uvala d.o.o. which owns the property at Livka Bay. Heads of terms for the sale
were signed in February 2024 and a Sale & Purchase Agreement was signed in
June 2024. As a consequence, the disposal group has been accounted for in
accordance with IFRS 5 whereby the disposal group's asset and liabilities have
been categorised as Assets held for sale and Liabilities held for sale in the
consolidated statement of financial position. In accordance with IFRS 5 the
operation has been shown as discontinued.
Fair value hierarchy
The fair value of investment property, amounting to €27.9 million and (2022:
€45.9 million), has been categorised as a Level 3 fair value based on the
inputs to the valuation techniques used.
16. Investment property continued
Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring the fair
value of investment property, as well as the significant unobservable inputs
used.
Property location Valuation technique (see note 3) Significant unobservable inputs Inter-relationship between key valuation inputs and fair value measurement
Property in Greece Combined approach (Market and Income) Market approach - 60% weight The estimated fair value would increase/(decrease) if:
Asking prices per m(2): 2023: €13 to €29 Asking prices per m(2) were higher/(lower);
2022: €13 to €29
Premiums/(discounts) on the following: Premiums were higher/(lower);
Location: 2023: 0% Discounts were lower/(higher);
2022: 0%
Site size: 2023: 0%
2022: 0%
Asking vs transaction: 2023: -30% to -20%
2022: -30% to -20%
Frontage sea view: 2023: 0%
2022: 0%
Maturity/development potential: 2023: 0% to +20%
2022: 0% to +30%
Weight allocation: 2023: 15% to +20% Weights on comparables with premiums were higher/(lower);
2022: +15% to +20% Weights on comparables with discounts were lower/(higher);
Discount on market approach value:
Legal status: 2023: -85% (2022: -85%)
Income approach - 40% weight
Quantity of villas: 2023: 447 (2022: 447) Quantity of villas was higher/(lower);
Selling price per m(2): 2023: €3,500 Selling price per m(2) was higher/(lower);
2022: €2,900
Expected annual growth in selling price: 2023: from year 3: 3% Expected annual growth in selling price was higher/(lower);
2022: from year 3: 3%
Cash flow velocity (years): 2023:14 (2022: 14) Cash flow velocity was shorter/(longer);
Risk-adjusted discount rate: 2023: 18% (2022: 18%) Risk-adjusted discount rate was lower/(higher).
Discount on combined approach value:
Legal status: 2023: -80% (2022: -85%)
Property in Greece Market approach Asking prices per m(2): 2023: €7 to €88 The estimated fair value would increase/(decrease) if:
2022: €1 to €88 Asking prices per m(2) were higher/(lower);
Premiums/(discounts) on the following:
Location: 2023: -30% to +20% Premiums were higher/(lower);
2022: -40% to +30% Discounts were lower/(higher);
Site size: 2023: -50% to +20%
2022: -50% to +20%
Asking vs transaction: 2023: -35% to 0%
2022: -30% to 0%
Frontage sea view: 2023: -20% to +30%
2022: -30% to +30%
Maturity/development potential: 2023: -50% to +40%
2022: -50% to +30%
Weight allocation: 2023: +10% to +40% Weights on comparables with premiums were higher/(lower);
2022: +10% to +40% Weights on comparables with discounts were lower/(higher).
Zoning: 2023: -30%
2022: -30%
Property Location Valuation methodology (note 3) Significant unobservable inputs Inter-relationship between key valuation inputs and Fair Value measurement
Property in Cyprus - "Apollo Heights" Comparative Method (Market Approach) Market comparables range (zone Z1) (€/ buildable m2): 2023: €22.25 to €44.72 The estimated Fair Value of the Apollo Heights asset would increase/(decrease)
if:
2022: €24.91 to €52.55
Market comparables range (zones Z2 & Z3) (€/ buildable m2):
Asking prices per m2 were higher/(lower);
2023: €8.23 to €114.56
Premiums were higher/(lower);
Market comparables range (zone Γ-Τ4α) (€/ buildable m2): 2022: €8.50 to €114.56
Discount were (lower)/higher
Market comparables range (zone Γ3-Τ4α) (€/ buildable m2)
Adjustment Premium factors were higher/(lower);
2023: €162.87 to €238.90
For all land-use Zones 2022: €162.54 to €238.90
Adjustment Discount factors were lower/(higher);
Premium/(discounts) on the following
Adjustment factor for "Location":
2023: €163.00 to €492.00
Adjustment factor for "site size": 2022: €204.00 to €658.00
Adjustment factor for "asking price": 2023: -10% to +20%
2022: -10% to +20%
Adjustment factor for "frontage/view":
2023: -40% to 0%
Adjustment factor for "Maturity/potential for development": 2022: -40% to 0%
2023: -15% to 0%
2022: -20% to 20%
2023: -10% to +30%
2022: -10% to +30%
2023: -20% to +10%
2022: -20% to 0%
Property Market The estimated fair value would increase/(decrease) if:
in Croatia approach Asking prices per m2: 2023: €13 to €348 Asking prices per m2 were higher/(lower);
Premiums/(discounts) on the following: 2022: €3 to €96 Premiums were higher/(lower);
Location: Discount were (lower)/higher
Site size:
Asking vs transaction:
Quality factor 2023: 0%
Capacity 2022: -5% to 0%
Weight allocation Three comparable properties were smaller than the subject
2023: -25% to 0%
2022: -20% to -15% No asking used
2023: 0%
2022: 0% All comparables had slightly better infrastructure
2023: -5%
2022: -5% to +15% Three comparables had less bed density hence the premium
2023: 0% to 40% All comparables had equal weight
2022: -5% to +10%
2023: 25%
2022: +10% to +33%
16. Investment property continued
Valuation techniques and significant unobservable inputs continued
Sensitivity of fair value measurement to change in unobservable inputs
Given the uncertainties in the market, any changes in unobservable inputs may
lead to measurement with significantly higher or lower fair value. A variation
of the annual estimated fair value per square meter would affect the fair
value of investment properties per square meter as follows:
Change in Impact on fair value
Assumption 2023 2022
Annual estimated asking price Increase Decrease Increase (Decrease)
per square meter % €'000 €'000 €'000 €'000
- Property in Greece 10% 2,238 (2,238) 2,023 (2,023)
- Property in Croatia 10% 2,289 (2,289) 1,770 (1,770)
- Property in Cyprus 10% 552 (552) 552 (552)
17. equity-accounted investMENTs
DCI H2 SPV14 Total
Note €'000 €'000 €'000
2023
At beginning of year 42,694 - 42.694
Share of loss, net of tax (12,923) - (12,923)
Disposal of Associate - - -
Reversal of impairment loss 8 12,923 - 12,923
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 an 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 asset based on the inputs
to the valuation techniques used.
Pursuant to the terms of a transaction executed in August 2019, for the sale
of 37 hectares in the area referred to as 'Atlantis', in the north of the
Venus Rock project which was formerly owned by Aristo, to Aristo Ktimatiki (an
entity controlled by Mr. Theodoros Aristodemou, chairman of Aristo). The
remaining €3.5 million that was due by 30 June 2020 is now expected to be
received during 2025. The corresponding preferred shares have been transferred
by the Company to Aristo Ktimatiki on a prorated basis in line with the
receipt of the commensurate instalments but the underlying land has not yet
been transferred pending the receipt of full payment.
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.
17. equity-accounted investments continued
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 investments:
DCI H2 SPV 14 Total
€'000 €'000 €'000
Percentage ownership interest 48% -% 48%
31 December 2023
Current assets 105,253 - 105,253
Non-current assets 182,494 - 182,494
Total assets 287,747 - 287,747
Current liabilities 90,202 - 90,202
Non-current liabilities 37,819 - 37,819
Total liabilities 128,021 - 128,021
Net assets 159,726 - 159,726
Group's share of net assets 76,557 - 76,557
Impairment (33,863) - (33,863)
Carrying amount of interest in investee 42,694 - 42,694
Revenues 25,468 - 25,468
Loss (27,130) - (27,130)
Other comprehensive income 168 - 168
Total comprehensive income (26,962) - (26,962)
Group's share of total comprehensive income (12,923) - (12,923)
DCI H2 SPV 14 Total
€'000 €'000 €'000
Percentage ownership interest 48% 50% 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
Loss (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
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 - 90
Other receivables 1,717 939
Loan Receivable 27.3.1 - 6,637
VAT receivables 915 509
Total Trade and other receivables 2.632 8,175
Amounts Receivable from Investment Manager 27.2 1,898 1,898
Prepayments and other assets - 10
Total 4,530 10,083
The amount receivable from the Investment Manager relates to €3.0 million of
advance payments made during 2022. As mentioned in note 32 as part of its
counterclaim DCI is seeking repayment from DCP of advance payments totaling
€3.0 million made to DCP pursuant to the Investment Management Agreement
dated 1 December 2021. Management considers that the recovery of this amount
is virtually certain and therefore, the amount is recognized in full as an
amount receivable and it is presented net of variable management fees payable
of €1.1 million relating to previous years.
20. Cash and cash equivalents
2023 2022
€'000 €'000
Bank balances (see note 29) 471 2,226
Total 471 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
All shares are fully paid.
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
investments, 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 2,893 4,611 2,893 4,611 - -
Redeemable preference shares 11,298 10,434 - - 11,298 10,434
Total 14,191 15,045 2,893 4,611 11,298 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 (2022: 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 €11.3 million (2022: €10.4 million).
Terms and conditions of the loans
The terms and conditions of outstanding loans were as follows:
Secured loan Currency Interest rate Maturity dates 2023 2022
€'000 €'000
Livka Bay* Euro Euribor plus 4.25% p.a. 2023 4,155 4,611
Shareholder loans ** Euro/USD 12% per annum 2024 2,893 -
Total interest-bearing liabilities 7,048 4,611
*The loan on Livka Bay has been categorised within liabilities held for sale.
The Loan from PBZ was due to be paid on 31 December 2023. The bank has agreed
to extend the repayment date until the date on which the sale of Livka Bay
completes and this arrangement remains ongoing.
** When any of the shareholder loans reached the 12-month maturity date, the
lender has agreed to extend tits maturity via a loan extension agreement
pending the completion of the sale of one of the Company's assets.
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 (2022: €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 €24.4 million (2022: €19.2 million), two promissory
notes, a debenture note and a letter of support from its parent company
Single Purpose Vehicle Four Limited.
22. loans AND BORROWINGs continued
Security given to lenders - continued
· 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 are being secured against the issued share
capital of the wholly owned subsidiary Eastern Crete Development Company
Limited.
Reconciliation of movements of liabilities to cash flows arising from
financing activities
Loans and borrowings Lease Non-controlling interests Total
€'000 liabilities €'000 €'000
€'000
2023
Balance at the beginning of the year 15,045 3,435 8,440 26,920
Changes from financing cash flows:
New loans from shareholders 2,760 - - 2,760
Repayment of loans and borrowings (500) - - (500)
Payment of lease liability - (50) - (50)
Interest paid (261) - - (261)
Other movements - - - -
Total changes from financing cash flows 1,999 (50) - 1,949
Other changes- Liability-related
Interest expense 1,302 25 - 1,327
Other movements - 2,478 2,478
Transfer to liabilities held for sale (4,155) - - (4,155)
Capital reduction and settlement of non-controlling interest - - (6,637) (6,637)
Total liability-related other changes (2,853) 25 (4,159) (6,987)
Balance at the end of the year 14,191 3,410 4,281 21,882
Loans and borrowings Lease Non-controlling interests Total
€'000 liabilities €'000 €'000
€'000
2022
Balance at the beginning of the year 24,868 3,420 8,942 37,230
Changes from financing cash flows:
Issue of redeemable preference shares 3,000 - - 3,000
New loans - - - -
Transaction costs related to loans and borrowings - - - -
Repayment of loans and borrowings (12,370) - - (12,370)
Payment of lease liability - (8) - (8)
Dividends Paid - - (2,250) (2,250)
Interest paid (2,363) - - (2,363)
Other movements (620) - 620 -
Total changes from financing cash flows (12,353) (8) (1,630) (13,991)
22. loans AND BORROWINGs continued
Reconciliation of movements of liabilities to cash flows arising from
financing activities continued
Loans and borrowings Lease Non-controlling interests Total
€'000 liabilities €'000 €'000
€'000
Other changes- Liability-related
Interest expense 2,535 23 - 2,558
Other movements (5) - 1,128 1,123
Total liability-related other changes 2,530 23 1,128 3,681
Balance at the end of the year 15,045 3,435 8,440 26,920
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) 1,359 (19)
Recognised in discontinued operations (see note 30) 933
Recognised in OCI 4,201
Transferred to held for sale assets (2,071) -
Exchange differences (1) (13)
Balance at the end of the year 10,998 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 5,578 63
Total 10,998 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 11,488 6,332
Total 32,240 27,084
25. Trade and other payables - CONTINUED
2023 2022
€'000 €'000
Non-current 21,004 19,795
Current 11,236 7,289
Total 32,240 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.
Included with other payables is an amount of €1.93m due to the holder of the
15% non-controlling interest in Mindcompass Overseas One Limited. This
consists of payments to the subsidiaries Mindcompass Overseas SA and
Mindcompass Overseas Two SA. This funding provided is interest free and
repayable on demand to the extent that the subsidiary has sufficient means to
repay the borrowing.
26. NAV per share
2023 2022
'000 '000
Total equity attributable to owners of the Company (€) 126,444 112,107
Number of common shares outstanding at end of year 904,627 904,627
NAV per share (€) 0.14 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 18 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 on 13
February 2023 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 sale of Amanzoe by the Company in August 2018.
27. Related party transactions continued
27.1 Directors' interest and remuneration continued
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.
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 is entitled to be paid Incentive Fees which are
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 and 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.
27. Related party transactions CONTINUED
27.2 Investment Manager remuneration (in place until March 2023)
continued
II. In addition to the fees payable to the paragraph 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.
27. Related party transactions CONTINUED
27.2 Investment Manager remuneration (in place until March 2023)
continued
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 Discover Investment Company
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. The shareholders loans have been
secured against the issued share capital of the wholly owned subsidiary
Eastern Crete Development Company Limited. Nicolai Huls is a director of
Discover Investment Company.
28. Non-Controlling interests
The following tables summarise the information relating to each of the Group's
subsidiaries that have 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 46,129 -
Current assets 58,940 -
Non-current liabilities (66,270) -
Current liabilities (10,259) -
Net assets 28,540 -
Carrying amount of non-controlling interests 4,281 -
Revenue 125 -
Profit 1,632 -
Other comprehensive income 14,893 -
Total comprehensive income 16,650 -
Dividends Paid - -
Profit allocated to non-controlling interests 244 -
Other comprehensive income allocated to non-controlling interests 2,234 -
Dividends paid to non-controlling interest - -
Cash flow from/(used in) operating activities 972 -
Cash flow (used in)/from investing activities (2,470) -
Cash flow from/(used in) financing activities 1,750 -
Net increase in cash and cash equivalents 252 -
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. FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group is exposed to credit risk, liquidity risk and market risk from its
use of financial instruments. The Board of Directors has overall
responsibility for the establishment and oversight of the Group's risk
management framework. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group's activities. The Group's overall strategy
remains unchanged from last year.
(i) Credit risk
Credit risk arises when a failure by counterparties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets on hand at the statement of financial position date. The Group has
policies in place to ensure that sales are made to customers with an
appropriate credit history and monitors on a continuous basis the ageing
profile of its receivables. The Group's trade receivables are secured with the
property sold. Cash balances are mainly held with high credit quality
financial institutions and the Group has policies to limit the amount of
credit exposure to any financial institution.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the end of the reporting year
was as follows:
2023 2022
€'000 €'000
Trade and other receivables (see note 19) 2,632 8,175
Cash and cash equivalents (see note 20) 471 2,226
Total 3,103 10,401
Trade and other receivables
Credit quality of trade and other receivables
The Group's trade and other receivables are unimpaired.
Cash and cash equivalents
Exposure to credit risk
The table below shows an analysis of the Group's bank deposits by the credit
rating of the bank in which they are held:
2023 2022
No. of Banks €'000 No. of Banks €'000
Bank group based on credit ratings by Moody's
Rating Aaa to A 1 67 - -
Rating Baa to B 3 404 3 1,967
Rating Caa to C - - - -
Not rated - - 1 259
Total bank balances 471 2,226
There is a further deposit of €537,000 within a restricted account at a bank
with the rating of Baa2. The restrictions were released on this balance during
2024. This balance has been included within other receivables.
(ii) Liquidity risk
Liquidity risk is the risk that arises when the maturity of assets and
liabilities do not match. An unmatched position potentially enhances
profitability but can also increase the risk of losses. The Group has
procedures with the objective of minimising such losses such as maintaining
sufficient cash and other highly liquid current assets and by having available
an adequate amount of committed credit facilities.
The following tables present the contractual maturities of financial
liabilities. The tables have been prepared based on contractual undiscounted
cash flows of financial liabilities, and on the basis of the earliest date on
which the Group might be forced to pay.
29. FINANCIAL RISK MANAGEMENT CONTINUED
Financial risk factors continued
(ii) Liquidity risk continued
2023 Carrying Contractual Within Two to three years Three to five years Over
amounts cash flows one year five years
€'000 €'000 €'000 €'000 €'000 €'000
Loans and borrowings 14,191 (15,091) (3,091) - (12,000) -
Loan included in disposal group 4,155 (4,155) (4,155) - - -
Lease obligations 3,410 (4,692) (89) (89) (184) (4,330)
Land creditors 20,752 (26,977) (7,112) (19,865) - -
Trade and other payables 11,488 (11,488) (9,890) (1,598) - -
Trade and other payables included in disposal group 952 (952) (952)
54,948 (63,355) (25,289) (21,552) (12,184) (4,330)
Carrying Contractual Within Two to three years Three to five years Over
2022 amounts cash flows one year five years
€'000 €'000 €'000 €'000 €'000 €'000
Loans and borrowings 15,045 (16,611) (7,611) (3,000) (6,000) -
Lease obligations 3,435 (4,705) (91) (91) (193) (4,330)
Land creditors 20,752 (23,661) (1,280) (1,265) (21,116) -
Trade and other payables 6,332 (6,332) (6,332) - - -
45,564 (51,309) (15,314) (4,356) (27,309) (4,330)
(iii) Market risk
Market risk is the risk that changes in market prices, such as interest rates,
equity prices and foreign exchange rates, will affect the Group's income or
the value of its holdings of financial instruments.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Group's income and
operating cash flows are substantially independent of changes in market
interest rates as the Group has no significant interest-bearing assets.
Borrowings issued at variable rates expose the Group to cash flow interest
rate risk. Borrowings issued at fixed rates expose the Group to fair value
interest rate risk. The Group's management monitors the interest rate
fluctuations on a continuous basis and acts accordingly.
At the reporting date the interest rate profile of interest- bearing financial
instruments was:
2023 2022
€'000 €'000
Fixed rate instruments
Financial liabilities 2,760 -
Variable rate instruments
Financial liabilities 4,155 4,611
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December would have
decreased equity and profit or loss by €42 thousand (2022: €46 thousand).
This analysis assumes that all other variables, in particular foreign currency
rates, remain constant. For a decrease of 100 basis points there would be an
equal and opposite impact on the profit or loss and other equity.
29. FINANCIAL RISK MANAGEMENT CONTINUED
Financial risk factors continued
Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates. Currency risk arises when
future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the Group's measurement currency. The
Group has minimal exposure to foreign exchange risk as the majority of the
assets and liabilities are now within the Euro zone.
Capital management
The Group manages its capital to ensure that it will be able to continue as a
going concern while improving the return to shareholders. The Board of
Directors is committed to implementing a package of measures that is expected
to focus on the achievement of the Group's investment objectives, achieve cost
efficiencies and strengthen its liquidity. Notably, these measures include
the completion of certain Group asset divestment transactions, as well as the
conclusion of additional working capital facilities at the Group and/or
Company level.
30. discontinued operation and DISPOSAL GROUP HELD FOR SALE
As of 31 December 2023, the disposal group comprised the following assets and
liabilities all of which relate to the land at Livka Bay held by the
subsidiary Azurna Uvala d.o.o. This has been regarded as meeting the criteria
for the results to be regarded as a discontinued operation. All of the
profits arising on the disposal group during the year are attributable to the
owners of the parent.
This subsidiary was not previously classified as a discontinued operation and
disposal group held for sale. The comparative consolidated statement of profit
or loss and other comprehensive income has been re-presented to show the
discontinued operation separately from continued operations.
2023 2022
€'000 €'000
Investment property 24,371 -
Other assets 8 -
Cash and cash equivalents (see note 20) 9 -
Assets held for sale 24,388 -
2023 2022
€'000 €'000
Interest bearing loans with third parties 4,155 -
Deferred tax 2,071 -
Trade and other payables 952 -
Liabilities directly associated with the assets held for sale 7,178 -
Results of discontinued operations
2023 2022
€'000 €'000
Net change in fair value of investment property 5,190 700
Professional fees (55) (64)
Administration and other expenses (51) (51)
Total operating and other expenses 5,084 585
Results from operating activities (5,084) (585)
Interest expense (278) (250)
Realised foreign exchange gain 68 85
Net finance costs (210) (165)
Loss before taxation 4,874 420
Taxation (933) (145)
Profit from discontinued operations net of tax 3,941 275
Basic earnings per share - discontinued operation (€) 0.004 0.000
30. discontinued operation and DISPOSAL GROUP HELD FOR SALE
- continued
Results of discontinued operations - continued
2023 2022
€'000 €'000
Cash flow used in operating activities (80) (62)
Cash flow used in investing activities - -
Cash flow from financing activities (170) 315
Net decrease in cash and cash equivalents (250) 253
31. CoMMITMENTS
As of 31 December 2023, the Group had a total of €15.2 million contractual
capital commitments on property, plant and equipment (2022: €16.5 million).
32. Contingent liabilities
Legal actions related to the former investment manager
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.
On 20 March 2023 it was announced that the Investment Management Agreement
("IMA") dated 1 December 2021 between the Company and Dolphin Capital Partners
Ltd ("DCP") was terminated with immediate effect based on repudiatory breach
of the contract by DCP further coming into Directors' attention that DCP
entered into an undisclosed option agreement with the purchaser of the Amanzoe
resort in Porto Helli, Greece. The said option agreement had not been
disclosed to the Company by DCP at the time of the sale of DolphinCI Fourteen
Limited (the special purpose vehicle holding Amazoe resort). The failure by
DCP, as agent of the Company under the terms of the IMA, to disclose the
existence of the undisclosed option agreement, and to fulfil its other duties
as an agent, constitutes a repudiatory breach of the IMA that has resulted in
the termination of the IMA by the Company.
UK: In April 2023, following the above-mentioned termination, DCP filed a
claim in the High Court of Justice of England and Wales against DCI for
alleged breach of contract and unpaid fees for €10.245.000. The Company
filed its defence and counterclaim in June 2023. As part of its counterclaim,
DCI is seeking repayment from DCP of advanced payments totaling €2.975.000,
made to DCP pursuant to the investment management agreement dated 1 December
2021 between DCI and DCP (see note 19). A reverse summary judgement hearing on
21 March 2024 determined that a full trial is needed. The hearing is expected
late 2025 or early 2026.
Greece: On 12 December 2023 DCI filed criminal charges in Greece against
Miltos Kambourides, Michael Tsirikos, and some members of staff of DCP and
DCP's close business partner Zoniro SA in Greece. These criminal charges
involve allegations of money laundering, and the abuse of corporate
governance. In total 9 individual cases were filed as part of these criminal
charges.
In March 2024 DCI also filed civil claims against 10 individuals/companies in
order to seek to recover approximately €50.0 million in damages and the
cancellation of a transaction against one company in Cyprus. DCI's
investigations into potential wrongdoing are continuing.
In September 2023, Zoniro SA issued a payment order against one of Kilada's
Greek companies and blocked its bank account. A judgment in September 2024
ruled in favour of DCI, and the bank account was released since.
In June 2024 the Board of the Company received notification that Miltos
Kambourides and Michael Tsirikos have filed a counterclaim against the Company
in the Greek Court for €12.0 million. The Company believes the Counterclaim
to be a response to the Company's criminal and civil claims against these and
seven other people. They claim that the accusations made against them are
false and were known to be false by the complainants (DCI) when they made
their complaint. In July 2024 the Board of the Company has been informed that
Miltos Kambourides, Michael Tsirikos and some other people who worked for or
were associated with Dolphin Capital Partners ("DCP"), they have filed a
criminal lawsuit against Nicolai Huls, Nick Paris and certain other
individuals connected to the current management of DCI. DCP also claims that
the accusations made against them are false and were known to be false by the
complainants (DCI) when they made their complaint. DCI is fully convinced
these actions are an attempt by DCP to intimidate DCI and to distract from the
fact that DCP was terminated for serious reasons in March 2023.
32. Contingent liabilities - continued
Legal actions related to the former investment manager -continued
BVI: In August 2023, Zoniro Ltd issued a statutory demand for payment from DCI
and another DCI group company. DCI initiated proceedings to set aside these
demands, citing collusion between DCP and Zoniro. A hearing took place on May
3, 2024. The Company was successful in the applications to set aside the two
demands. In the judgement the judge upheld our argument that there was a
substantial dispute that would need to be resolved before a statutory demand
could be issued. He has also ordered Zoniro to pay 75% of the costs incurred.
Each of the above cases are in the early stages within the legal process and
as such it is difficult to predict the outcomes of any of the cases with any
degree of certainty nor is it possible to add any expected outflow form these
while the legal process is in progress. Management believes that the defence
against each of the actions will be in their favour. As a consequence, there
is no provision within the financial statements for any liability which may
arise in the event of an unfavourable judgment on any of the cases.
other matters
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 Directors believe that there is sufficient defence
against any claim and does not expect that the Group will suffer any material
loss. All provisions in relation to these matters which are considered
necessary have been recorded in these consolidated financial statements.
In addition to the tax liabilities that have already been provided for in the
consolidated financial statements based on existing evidence, there is a
possibility that additional tax liabilities may arise after the examination of
the tax and other matters of the companies of the Group in the relevant tax
jurisdictions.
The Group, under its normal course of business, guaranteed the development of
properties in line with agreed specifications and time limits in favour of
other parties.
33. SUBSEQUENT EVENTS
Since 31 December 2023, the Company has borrowed a total of €1.565 million
from a further seven shareholders on the same terms as the 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.
The intention is to repay them from asset sales proceeds.
Subsequent events in regards to litigations relating to the former Investment
Manager or DCP's close business partner Zoniro are disclosed in Note 32.
In April 2024, the Company announced that an agreement had been reached with a
Family Office investor for additional funding for the Kilada Hills resort for
up to €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.
On 1 July 2024, the Company announced that the publication of these audited
Annual Accounts to 31 December 2023 had been delayed and as a result the
listing of the Company's shares was temporarily suspended from trading on the
AIM market.
33. SUBSEQUENT EVENTS - continued
On 8 November 2024, the Company announced the proposed migration of the
Company from the British Virgin Islands to Guernsey. This should be seen a
continuation of the Company. There will be no change to the investment
strategy following the migration. At the same time the Directors announced the
adoption of a new management incentive plan through the creation of an
Employee Stock Option Plan ("ESOP"). The Directors have also announced the
intention to create B shares in the Guernsey entity which allow a more
favourable mechanism for the return of Capital. This change was subject to the
approval of the shareholders at an extraordinary general meeting held on 19
December 2024. At the meeting, the migration and B share creation were
approved but the ESOP was not. The migration took place on 23 December 2024.
On 9 December, the Company announced that it was changing its accounting
reference date from 31 December to 30 June and as a result the next set of
audited financial statements will be published for the eighteen-month period
ending 30 June 2025.
There were no other material events after the end of the reporting period
which have a bearing on the understanding of the consolidated financial
statements as at 31 December 2023.
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