REG - Dolphin Capital Inv - Annual Financial Report
30/06/2022 09:45
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RNS Number : 8084Q Dolphin Capital Investors Limited 30 June 2022
30 June 2022
DOLPHIN CAPITAL INVESTORS LIMITED
("DCI" or "Dolphin" or the "Company"
and together with its subsidiaries the "Group")
Annual Financial Results for
the year ended 31 December 2021
and Trading Update
Dolphin, an investor in high-end resort developments in the eastern
Mediterranean, announces results for the year ended 31 December 2021 and a
trading update.
Financial Highlights:
- Gross Assets of €189.1 million (31 December 2020: €205.2 million).
- Total Group Net Asset Value ("NAV") of €125.7 million and €119.1
million before and after Deferred Tax Liabilities ("DTL") respectively. This
represents a decrease of €31.0 million and €29.6 million (19.8% and 19.9%)
respectively, against the 2020 year-end figures.
- NAV reduction is principally due to a €24.2 million reduction in
valuations as well as other operational, corporate, finance and management
expenses as detailed in section F below. The reduction in valuations includes
a €13.2 million downward adjustment of Lavender Bay's investment property so
as to account for the valuation uncertainty resulting from an ownership
dispute with the Greek State as further detailed in Note 34 of the
consolidated financial statements for the year ended 31 December 2021.
- Sterling NAV per share as at 31 December 2021 stood at 12p before DTL
and 11p after DTL, versus 16p and 15p, a 25.5% and 25.7% decrease before and
after DTL respectively, compared to 31 December 2020. The Sterling NAV per
share reduction mainly reflects the factors mentioned above and further
decreased by a 7% appreciation of Sterling versus the Euro during the period.
- Total debt of €17.4 million with a Group total debt to gross asset
ratio of 9.2%.
Operations, Finance and Divestments Highlights:
- It was jointly decided by the One&Only Kea Island ("OOKI")
shareholders that it is for the best interest of the resort to open for the
2023 season. This decision reflects the delays in construction attributed
mainly to global supply chain issues, but also enables us to redesign and
improve the offering of certain key project components such as the Spa and
Beach Club. Construction works continue with the guest rooms and main building
having significantly advanced and in the final stages of internal works
completion. Construction of villas is also progressing. In parallel, we have
been able to source significant demand for the One&Only Kea Island Private
Homes ("OOKI PHs") available at the project through real estate agents, DCP's
sales network, as well as dedicated social media campaigns and related PR
activities in cooperation with One&Only. We have already signed
reservation agreements and/ or sales contracts and received deposits for ten
properties, all of which were sold on an off-plan basis.
- At our Kilada Country Club, Golf and Residences development
("Kilada"), construction works continued with all key contractors having been
appointed. Earthworks and rough shaping in approximately 70% of the project
area have been completed, while the specialized golf contractor is progressing
with irrigation and drainage works. Most of the first phase roads have also
been opened and key infrastructure works have been installed. In addition, the
final notarial Deed for the acquisition of 24 founder plots in Kilada by
Amanzoe for a €10.0 million consideration payable in instalments was
concluded on 2 August 2021. We are working with the buyer to register
mortgages over the respective lots so that they can start releasing the sales
instalments and we expect that this will be concluded within Q3 2022. These
founder lot sales, together with the preferred equity investment agreement
entered into on 19 December 2019 and the €6.0 million Greek state subsidy
which was awarded to the project on 2 November 2021, are estimated to fully
cover the Kilada first phase development costs. During the period, two new
reservation agreements and one pre-contract for the sale of residential plots
have been concluded. New product offerings, including apartments and family
units, have been designed and are being introduced to the market through a
series of promotional efforts, including targeted social media and real estate
agent campaigns, advertising and participation in international real estate
fairs. New sales material has been prepared and a dedicated Kilada sales
office will open during the season in close proximity to the site.
- Gross property sales by Aristo Developers Ltd ("Aristo"), a 47.9% DCI
affiliate, during the 12 months to December 2021 were €25.5 million, an
increase of 64% compared to the 2020 corresponding period, primarily due to
Aristo's efforts in repositioning its product portfolio following the
termination of the Cypriot citizenship incentive schemes and its targeted
sales efforts to attract clients from new markets given the significant
reduction of Chinese and Russian buyer inflow.
- On 16 May 2022 the official zoning and the relevant declaration of
public policy were formally announced and published regulating the development
in the non-military Sovereign Base Areas in Cyprus where the largest part of
our 447-hectare Apollo project is located. Prior to the finalization of the
zoning entitlements, there is a four-month period during which objections can
be filed. Although, the zoning announced is in line with the provisional
zoning, the Company is examining the option of filing an objection with a view
to improving the official zoning for Apollo.
- Dolphin has now fully exited from the LaVanta project and Itacare
investment.
- As announced with the Company's annual results for the year ended on 7
June 2021, Dolphin entered into a loan facility of €15.0 million with two
institutional private credit providers. The first tranche of €1.75 million
was drawn down on 4 June 2021, the second tranche of €12.31 million was
drawn down on 16 July 2021 and a final amount of €0.81 million for the
loan's interest reserve account was drawn down on 4 March 2022
An amount of c. €2.1 million of the loan has been already repaid through the
proceeds generated from the sale of the Company's interests in the LaVanta
project. The total outstanding loan facility currently amounts to c. €12.8
million. The Board is investigating the refinancing of this facility before it
is due to mature in July 2023, in case asset sale proceeds have not repaid the
loan in full.
- Following the Extraordinary General Meeting ("EGM") that was held on
22 December 2021, shareholders approved:
o the continuation of the Company without setting a termination date or a
date for a further continuation vote in order to enable the Company to
optimise the value that can be realised from its investments by removing
commercially prejudicial deadlines from negotiations with potential buyers.
o the New Investing Policy and Realisation Strategy and the new Investment
Manager's Agreement ("IMA") - please refer to:
https://www.dolphinci.com/wp-content/uploads/211202_rns.pdf
(https://www.dolphinci.com/wp-content/uploads/211202_rns.pdf) for further
details.
o Amendments on the Memorandum and Articles of Association of the Company -
please refer to:
https://www.dolphinci.com/wp-content/uploads/211202_DCI-memorandum-and-articles.pdf
(https://www.dolphinci.com/wp-content/uploads/211202_DCI-memorandum-and-articles.pdf)
for further details.
For further information, please contact:
Dolphin Capital Investors
Martin Adams Via FIM Capital Limited
llennon@fim.co.im (mailto:llennon@fim.co.im) / gdevlin@fim.co.im
(mailto:gdevlin@fim.co.im)
Dolphin Capital Partners
Miltos E Kambourides miltos@dolphincp.com
finnCap (Nominated Adviser & Broker)
William Marle / Jonny Franklin-Adams / Edward Whiley / Milesh Hindocha
(Corporate Finance)
+44 (0) 20 7220 0500
Mark Whitfeld / Pauline Tribe (Sales)
FIM Capital Limited (Administrator)
Lesley Lennon / Grainne Devlin (Corporate Governance) llennon@fim.co.im / gdevlin@fim.co.im
A. Chairman's Statement
Dear Shareholder
Overview
Since its launch in 2005, Dolphin Capital Investors Ltd (the "Company" or
"DCI") has experienced a somewhat turbulent history. During its 17-year life,
DCI's main development markets, Greece and Cyprus, have endured the severest
of economic crises, requiring financial bailout programmes led by the European
Central Bank and the International Monetary Fund, as well as the impact of the
Covid-19 pandemic. Unfortunately, from a financial perspective, Shareholders
have had little to cheer and, in 2015, they first voted for DCI to cease
making new investments and commence the gradual sale of the remaining
portfolio and return of capital to investors. At 31 December 2021, DCI had a
market capitalisation of approximately £39.3 million, while the Company's NAV
was €119.1 million, equivalent to £100 million, after DTL.
Over the years, there have been a number of attempts to reduce the Company's
operating costs, renegotiate contracts and align economic interests between
Dolphin Capital Partners ("DCP"), the investment manager, DCI and its
Shareholders, but, to date, none has resulted in a distribution to
Shareholders. The current Board is focused on maximising the potential
proceeds for shareholders while winding down the Company's investments.
The current three non-executive independent Directors were appointed to DCI's
four-person Board on 30 June 2021. Immediately following our appointment, we
started work with DCP to prepare a detailed strategic review focused on the
investment portfolio and realisation processes, the investment management
arrangements, corporate governance, operating costs and cash flows. This
provided a framework to adopt a new Investing Policy and Realisation Strategy,
negotiate a new investment management agreement and improve corporate
governance arrangements, which were approved by Shareholders at an EGM held on
22 December 2021. Since then, the focus of both DCI and DCP has been on
progressing the disposals of investments in order to generate cash to repay
the outstanding debt and, in due course, commence distributions to
Shareholders.
Summary of Financial Performance
At the 31 December 2021 financial year end, the Company's consolidated Net
Asset Value ("NAV") after DTL was €119.1 million (2020: €148.6 million),
representing a decrease of 19.9% compared to 31 December 2020. The NAV
reflects a reduction of 17.6% in the value of investments by €24.2 million
(2020: €19.6 million) to €113.5 million (2020: €137.7 million) and 2021
operating expenses of €7.3 million (2020: €7.5 million). The net loss
after tax attributable to the owners of the Company was €21.3 million (2020:
€21.1 million).
As at 31 December 2021, the DCI group had three principal liabilities:
· €12.8 million owed under a term loan facility, repayable no later
than 30 June 2023, unless extended by a further 6 months at the option of the
Company; €4.7 million owed to PBZ, the Croatian lender to the Livka Bay
investment; and,
· €1.3 million owed to DCP in the form of accrued but unpaid
investment management fees during 2021.
In sterling terms, DCI's NAV per Share declined to 11p on 31 December 2021 (31
December 2020: 15p).
The current Audit Committee has spent considerable time both with the valuers
of each investment and with the auditors in Cyprus and Greece. The carrying
values reflect a mix of the independently determined specific valuations of
each of the properties held by American Appraisal, HVS and Colliers and the
requirements of international financial reporting standards in respect of
minority equity interests. As such, although these values are fair, they do
not necessarily reflect the prices which the Board and DCP believe could be
achieved in, for example, an accelerated sale process.
Investment Portfolio
The new Investing Policy and Realisation Strategy approved by Shareholders at
the EGM provides clarity as to the strategic framework and direction for the
Company during its remaining life.
All the investments remaining in DCI's portfolio were acquired in 2006 and
2007. The 15-year gestation periods to develop and/or sell each of these
investments is a reflection of both macroeconomic factors and the substantial
challenges inherent in obtaining the numerous licences and planning consents,
constructing adequate infrastructure, raising finance from investors and
selling the properties.
The Investment Manager's Report in section B provides details of the status,
strategy and challenges facing each of the investments. From a portfolio
standpoint, most of DCI's value remains principally in three equity interests:
OOKI, Kilada and Aristo Developers.
OOKI and Kilada are each under development with noticeable monthly
on-the-ground development progress and an increasing number of sales
commitments and enquiries. It is the Board's and DCP's belief that, in the
absence of any immediate liquidity requirements at the DCI level, the optimum
time to sell each of these holdings will be following completion and opening
of the first phase of each of the developments. By that time, construction
costs will have been largely determined and a significant number of individual
property sales will have been completed to evidence rising achievable disposal
prices. However, in view of existing liquidity constraints all asset disposal
opportunities, including OOKI and Kilada, at prices exceeding their NAV will
be considered together with other funding alternatives.
Although construction at OOKI is progressing well and is broadly in line with
the overall budget, labour shortages and logistical challenges relating to the
timely procurement and pricing of building materials have caused some delays.
Rather than partially open the resort for a few months half-way through the
2022 season, the joint venture board has decided to delay the opening until Q2
2023. One&Only's appointed General Manager for OOKI has now relocated to
Greece and is currently planning the pre-opening process, staff recruitment
and training.
Construction of the centrepiece Jack Niklaus Signature Golf Course at Kilada
continues to progress well, despite delays caused by archaeological findings.
The first villa plots have been sold and Kilada will soon commence a sales
campaign for multi-family town houses and apartments. As Greece's first
project to receive 'Strategic Investment' status, Kilada's application for
€6.0 million of state subsidies was awarded to the project in Q4 2021, but
this can only be drawn in stages, subject to construction milestones. The
seeding of the greens and completion of the golf course, scheduled for late
2023, will be a key attraction for individual property buyers.
Although it is not currently envisaged that DCI will be required to invest
further monies into OOKI or the first phase of Kilada, as the development
activities underway are, on paper, self-financed from existing project
resources, the board cannot rule out the possibility of having to support the
projects with some short-term working capital funding.
We plan to defer until 2023 a decision on selling one or both of the OOKI and
Kilada investments, to the extent that there are no pressing liquidity needs
at the DCI level or an opportunity to generate value for our Shareholders from
these investments in the interim. The improving macro-economic situation in
Greece and promising forecasts for tourist arrivals in 2022, which will
include real estate buying interest from individuals, support our decision to
be patient. The conflict in Ukraine is accelerating a general slowdown in the
EU economy, with higher prices of energy and construction materials; and
increasing inflation. Although we are aiming to pass on higher development
costs to customers, profit margins are likely to be squeezed.
Besides OOKI and Kilada, our principal focus in 2022 is to try to realise the
47.9% equity holding in Aristo Developers in Cyprus and/or dispose of the
Livka Bay project in Croatia.
Aristo is one of Cyprus' principal residential property developers,
headquartered in Paphos. The slump in foreign purchases of property in Cyprus
following the suspension in 2020 of its citizenship scheme, seems to have
bottomed, but prices have yet to recover. Despite the high level of ownership
of properties in Cyprus by Russian investors, the conflict in Ukraine has not
attracted significant new flight capital from Russia, due, in large part, to
the imposition of capital controls by Moscow and sanctions by the EU. The
Board, DCP and Aristo Developers' controlling shareholder, Mr. Theodoros
Aristodemou, meet regularly with a view to aligning the interests of the two
shareholders. DCI and Aristo Developers are working with an investment bank in
an attempt to accelerate a sale. Settlement of Mr. Aristodemou's defaulted
final payment to DCI of €3.5 million in respect of the sale of an equity
interest in Venus Rock is expected to form part of an eventual sale package.
A potential buyer of the Livka Bay project in Croatia has been identified and,
although there is no assurance that a sale will complete, due diligence is
underway. A sale will encompass settlement of the remaining loan from PBZ.
DCI's undeveloped land holdings at Scorpio Bay, Lavender Bay, Plaka Bay and
Apollo Heights each faces resort permitting challenges and complications,
described in more detail in the Investment Manager's Report. There has been a
lack of credible investment interest from resort developers in any of these
plots for over 15 years. The situation at Lavender Bay has been complicated by
a challenge in Q1 2022 by the Greek state in relation to DCI's ownership
title, which needs to be addressed in tandem with the original vendor of the
land, the Archdiocese of Dimitriada. As a conservative measure, the now
disputed ownership of Lavender Bay has led the Company to write down the value
of the asset to €5.1 million (2020: €18.3 million). The liability to pay
further instalments of €20.8 million to the Church for the land purchase has
been retained in the 2021 financial statements although the Company has no
intention to make any further payments until the ownership dispute has been
resolved. The Church and DCP are negotiating a skeleton compromise to jointly
pursue the establishment of our legal rights over the property through the
Greek courts as well as to write off the Company's remaining liability.
Further announcements to Shareholders will be made in due course.
As an alternative strategy to simply posting for sale the land plots at
Scorpio Bay, Plaka Bay and Apollo Heights, early-stage discussions have
recently commenced with renewable energy developers interested to build solar
or wind farms. The development of renewable energy in Greece and Cyprus and
the subsequent consolidation of operators has trailed the industry trend in
other southern European countries. The increased recent significant
development interest in renewable energy is supported by the availability of
sector-specific finance under the EU-funded €31 billion Recovery and
Resilience Plan for Greece and €1.2 billion for Cyprus. Each site in DCI's
undeveloped land bank is large, with potential for the installation of
significant renewable energy developments, and the coastline locations provide
the potential for either wind or solar energy. DCI is open to selling, leasing
or perhaps even exchanging the land in return for renewable project equity.
It remains the intention of the Board and the Investment Manager to dispose of
all the Company's remaining investments by the end of 2024 consistent with the
new Investing Policy and Realisation Strategy.
Investment Management Agreement
In order to reduce the loss of value to Shareholders from operating costs as
the Company implements its new Investing Policy and Realisation Strategy, the
new Investment Management Agreement ("IMA") better aligns DCP's interests with
those of Shareholders.
The IMA has been effective since 1 January 2022. Its key terms eliminate an
annual fixed investment management fee and has been replaced by the
introduction of an incentive fee arrangement payable to DCP on the following
basis:
· An incentive fee will only accrue when Shareholders receive a
distribution from the Company.
· No incentive fee will accrue or be payable to DCP until Shareholders
have first received aggregate distributions of at least €40.0 million, which
approximates to the current market capitalisation of the Company.
· Thereafter, an incentive fee of 15% will be payable to DCP on all
distributions paid to Shareholders.
· Once €80.0 million has been distributed to Shareholders, a bonus of
€1.0 million for every additional €5.0 million of distributions will be
payable to DCP until a total of €100.0 million has been distributed to
Shareholders.
· In order to permit DCP to meet its working capital commitments,
quarterly advances will be paid by DCI in the amounts of €2.4 million in
total for 2022, €2.3 million for 2023 and €1.3 million for 2024. These
advances will be repaid by DCP to the Company by way of set off against
accrued incentive fee entitlements.
· All fees accrued and paid in cash to DCP with effect from 1 January
2022 under the terms of an asset management agreement entered into between DCP
and the project company for the OOKI investment will also be set off against
the accrued incentive fee entitlements.
· In order to discourage 'cherry picking' through the priority sale of
DCI's more attractive investments, 25% of any incentive fee entitlements
payable will be held in escrow and released with the last distribution to
Shareholders after the last remaining investment has been sold.
The IMA has an initial term of twelve months and, thereafter, may be
terminated on six months' notice by either party.
The Financial Statements for the financial year ended 31 December 2021
contained in this report disclose an investment management fee of €3.6
million (2020: €3.6 million), which reflects the previous investment
management arrangements, as detailed in Note 28.2 of the consolidated
financial statements.
Operations of the Company
The strategic review undertaken by the Board in consultation with DCP
identified a number of potential improvements and cost savings to the
operation of the Company and reduction of cash outflows. Other than
introducing a new IMA, these included:
· reducing the independent Directors' remuneration from an annualised
rate of €367,000 to a current annualised rate of €200,000;
· negotiating new service agreements and fee terms with all of the
Company's major service providers;
· appointing FIM Capital Limited ("FIM") to replace the Company's
former Jersey based administrator;
· terminating the appointment of the Company's former custodian;
· terminating the appointment of the Company's former public relations
adviser;
· appointing finnCap as the Company's combined Nominated Adviser and
Broker to replace the split roles previously undertaken by Grant Thornton and
Panmure Gordon; and
· closing subsidiary companies which are either dormant or have no
further use to DCI.
These changes have been made to improve and streamline operations to
significantly reduce the operating costs and cash outflows of the Company.
The principal immediate financial challenge that will continue to face DCI is
meeting the Company's cash flow obligations towards creditors while maximising
the equity value upon realisation of the individual assets. The €15.0
million term loan facility signed on 3 June 2021 is expensive and has a
relatively short maturity. Although €2.1 million has already been repaid,
the Company is in discussions with potential lenders to refinance the existing
facility with a new increased loan that would enable the Company to replenish
its cash balance and extend the loan maturity. DCP remains optimistic that a
balance can be struck between early realisations of investments to raise funds
to meet liabilities and disposals at attractive prices. Detailed updated cash
flow forecasts are reviewed by the Board, DCP and the Administrator at least
twice a month.
The Board intends to use substantially all net proceeds from the sale of the
Company's investments to repay the outstanding balance of the term loan
facility. After repaying the loan and other accrued liabilities, all remaining
cash held by the Company will be distributed to Shareholders, subject to
retaining sufficient funds to meet the Company's obligations and to cover its
reasonable working capital requirements. Given the unpredictable timing of
disposals of investments and of the economic recovery in Greece, Cyprus and
Croatia, the timing and quantum of distributions to Shareholders cannot be
determined with any certainty.
Shareholders should be aware that delays in realising the Livka Bay and/ or
Aristo investments will require the Board to reconsider its current strategy.
For example, the Company may be forced to accelerate the sale of part or all
of either the OOKI or Kilada holdings or to raise further capital to bridge
the period until investments are sold.
Corporate Governance
FIM, which is regulated by the Isle of Man Financial Services Authority,
provides the full range of services associated with a closed end fund, listed
on the AIM segment of the London Stock Exchange, being company secretarial,
accounting and administration services to DCI and its subsidiary companies.
FIM has embedded improved professional governance standards, systems and
policies and the control environment within the group is now more robust. FIM
is also responsible for preparing the accounts of the Company. To ensure that
DCI's decisions are promptly executed and monitored, FIM is in the process of
assuming representation on the boards of most of the group holding companies.
Relinquishing the administration and accounting services to FIM, has allowed
the Board and DCP to focus on the commercial issues of project development,
realisations of investments and contingency planning for potential cash flow
shortfalls. Board meetings are held once a month, usually in person, with
bi-weekly Videoconference calls to review interim commercial and financial
developments. The Directors make regular site visits to the key assets and
engage directly, in co-operation with DCP, with all of the key stakeholders.
The Company's new Memorandum and Articles of Association (the "Articles")
approved and adopted at the 2021 EGM improve the Company's corporate
governance and the accountability of the Board to Shareholders.
Additionally, Shareholders have improved rights that are more closely aligned
to the constitution of a company incorporated under the UK Companies Act 2006.
The Articles contain inter alia a requirement for the Company to hold annual
general meetings ("AGM") to approve the annual report and accounts; the
re-election of Directors by rotation on a three year cycle; and the ability of
Shareholders owning 10 per cent. or more of Common Shares to requisition an
EGM at any time.
The Company's first AGM will be held in Q4 2022, at which Shareholders will be
requested to approve the Annual Report & Accounts for 2021.
Prospects
There has been much activity since we joined the Board on 30 June 2021 aimed
at stabilising DCI, reducing cash outflows, aligning DCP's interests with
those of Shareholders and improving corporate governance. We have no doubt
that there may be surprises and disappointments as we endeavour to dispose of
investments to repay debt and then commence distributions to Shareholders. As
the implementation of the Investing Policy and Realisation Strategy
progresses, however, the Board and DCP will remain closely engaged with
Shareholders and other stakeholders in order to communicate, as best we
reasonably can, the continuing challenges the Company faces.
We are most appreciative of your patience and support.
Martin M. Adams
Chairman
Dolphin Capital Investors Ltd
30 June 2022
B. Investment Manager's Report
B.1. Business Overview
During the period we focused on enhancing the value of our portfolio assets,
while addressing the day-to-day challenges presented by COVID-19 and,
recently, by the conflict in Ukraine:
- progressing construction works at OOKI and Kilada;
- adjusting our retail and project sales and marketing strategies to
meet the post Covid era challenges;
- securing liquidity at the DCI level to meet all our operational
expenses in the medium-term;
- making permitting advances across our asset portfolio; and,
- monitoring our operational budgets and reducing overhead costs.
B.2. Bridge Financing
On 3 June 2021, Dolphin entered into a bridge loan facility of €15.0 million
with two institutional private credit providers acting on behalf of their
managed and advised funds which has been fully drawn down and partially
repaid. The current outstanding balance of this facility is c. €12.8
million.
B.3. Major Assets Review
- One&Only at Kea Island, Greece -
www.oneandonlyresorts.com/kea-island
(http://www.oneandonlyresorts.com/kea-island)
o It was jointly decided by the OOKI shareholders that it is for the best
interest of the resort to open for the 2023 season. This decision reflects the
delays in construction attributed mainly to global supply chain issues, but
also enables us to redesign and improve the offering of certain key project
components such as the Spa and Beach Club.
o Construction works progressed throughout all project areas. More
specifically, all guest room structures were completed and internal works have
advanced, while, most furniture and equipment for the guest rooms have been
ordered and are ready to be installed. The Main Building structure is complete
with internal architectural finishes underway, and the main back of house
area, which is located in the basement of the Main building, is complete.
Internal roadway paving commenced in areas where infrastructure works has been
completed and landscaping works have also commenced. Despite the global
increase in prices, effects from Covid-19 and other factors actions have been
taken to contain the level of impact to the hotel budget by proactive measures
which included: redesign of certain project elements, direct procurement, and
negotiations with suppliers, for both financial and timing matters.
Nevertheless, there will be an impact on the cost of future construction, such
as the private residences, however we expect that such cost overruns would be
matched by higher sales proceeds thus not having a material effect on our
development margins.
o Five one-bedroom One&Only Kea Island Private Homes ("OOKI PHs"), and six
larger OOKI PHs are currently under construction.
o The Spa and Beach Club is under re-design and works are expected to begin
within Q2 2022.
o The raising of the profile of the project and more specifically of the OOKI
PHs continues, in close co-operation with the One&Only sales and marketing
teams and through several marketing activities. The website that has been
created within the general One&Only website
(www.oneandonlyresorts.com/kea-island), including online enquiries, alongside
a series of marketing collateral (printed and digital) showcasing the OOKI PHs
available for sale as well as the destination, is constantly being updated.
Photoshoots have been conducted and all available marketing material produced
will be updated in summer 2022. Most activities are currently online targeted
promotional sales actions, via social media, newsletters, electronic direct
mails, webinars, presentations to journalists and digital presentations to
potential clients. Several site visits by prospective buyers have been
conducted until November 2021, and more are planned in the coming months. The
international PR campaign is underway with ongoing extensive publicity in high
profile publications and all sales and marketing activities have resumed in
spring 2022 in collaboration with One & Only and other One & Only
resorts.
o A total of 10 sales of OOKI PHs have been concluded to date, including all
five one-bedroom units out of the eight with a guaranteed yield. Most buyers
originate from Western European countries and the USA and are very familiar
with the One&Only brand. Sales officially launched in June 2020 and a
number of promotional activities to showcase the OOKI PHs have been undertaken
with One & Only, agents and via connectors. An additional three OOKI PHs
are expected to be signed by the end of July which should bring total
aggregate sales value to over €48.0 million.
- Kilada Country Club, Golf & Residences, Greece - www.mykilada.com
(http://www.mykilada.com)
o Works continue with the construction of the golf course. Approximately 70%
of the surface area of the golf course is excavated and shaped, with
irrigation and drainage works progressing in those areas. The golf irrigation
lake is complete and the main irrigation pump station is installed. All Phase
One internal roads within the residential areas of the project have been
constructed to rough grade, and sewerage and water networks are complete.
Archaeological findings within the excavation areas of the project have led to
material continuing delays on progress, which in coordination with the local
antiquities department are investigated before works can continue.
o The preferred equity co-investor, has contributed to date €11.5 million
into the project, out of his €12.0 million commitment.
o The notarial Deed for the acquisition of 24 founder plots in Kilada by
Amanzoe for a consideration of €10.0 million was concluded on 2 August 2021.
We are working with the buyer to register mortgages over the respective lots
so that they can start releasing the sales instalments. We expect that this
will be concluded within Q3 2022. We had also applied for a Greek state
subsidy for Kilada on 31 July 2021 so that the project can make use of the
development incentives offered to large scale touristic infrastructure
developments and, due to the project status as a Strategic Investment for
Greece, we were able to obtain a €6.0 million subsidy awarded to the project
on 2 November 2021.
o During the period, two new reservation agreements and one pre-contract for
the sale of residential plots have been concluded. New family style units have
been designed and new sales material has been prepared while a dedicated
Kilada sales office will open during the season in close proximity to the
site. The project's PR, sales and marketing activities have resumed after a
short break in the winter, and those include targeted social media campaigns,
PR activities, advertising campaigns in international media, participation in
international real estate affairs, and actions in collaboration with PGA,
Arcis and select real estate agents.
- Lavender Bay
o The Greek Council for Public Properties issued an Opinion on 29 September
2021 claiming that the land that was sold to Golfing Developments S.A. (our
wholly owned subsidiary that owns the Lavender investment) belonged to the
Greek State and not the Archdiocese of Dimitriada which had sold the property
to us in 2006 and 2007. This Opinion was adopted by the Ministry of Finance in
Q1 2022, who has since taken steps to register the property in the name of the
Greek State at the local land registries.
o In view of these developments we are in negotiations with the original
vendor with a view to ensuring that no additional funds are paid to them under
our sale and purchase contracts until the resolution of this legal dispute
with the Greek State and, to potentially reduce the overall quantum of our
deferred liabilities to them, by capitalizing such deferred payments against a
minority equity position in the project. In parallel, we are working with
their legal counsels to prepare our legal recourse against the Greek State to
the competent courts so that the matter can be finally judicially resolved.
- Livka Bay
o We remain in discussions with local estate agents and potential investors,
relating to the divestment of the project.
- Apollo Heights
o The official zoning and the relevant declaration of public policy were
formally announced and published on 16 May 2022, regulating the development in
the non-military Sovereign Base Areas in Cyprus where the largest part of
Apollo Heights is located.
o Prior to the finalization of the zoning entitlements, there is a four-month
period during which objections can be filed.
o Although, the zoning announced is in line with the provisional zoning, the
Company is examining the option of filing an objection with a view to
improving the official zoning for Apollo.
- Aristo (a 47.9% affiliate) - www.aristodevelopers.com
o Operating Performance
§ The termination of the Cyprus citizenship investment programme and the
travel restrictions imposed in both China and Cyprus in the aftermath of the
COVID-19 breakout continue to create a major obstacle to Aristo's sales
efforts especially in Asia, while the sanctions against Russia, imposed by EU,
following the conflict in Ukraine are also expected to worsen the situation.
§ Notwithstanding these headwinds, 62 homes and plots were sold during 2021,
representing total sales of €26.0 million, up 68% compared to €15.5
million in Covid-hit 2020.
§ 21 homes and plots were sold in total up to the end of April 2022,
representing total sales of €8.9 million, up 49% compared to €5.9 million
for the same period in 2021.
§ The main source of clients was Cypriots during 2021, representing c. 40% of
sales.
ARISTO RETAIL SALES
Twelve months Twelve months
to 31 December 2021 to 31 December 2020
New sales booked €25.5m €15.5m
% change (64%)
Units sold 97 48
% change (101%)
CLIENT ORIGIN
Cyprus 40% --
Russia & Ukraine 24% 2%
China & Other Asia 16% 81%
MENA 14% 17%
Other 6% --
C. Group Assets
A summary of Dolphin's current investments is presented below.
PROJECT Land site DCI's Debt Real estate value Loan to real estate Net Asset Value
(hectares) stake (€m) * (€m) asset value (%) (% of total)
GREECE
1 OOKI 65 33% --
2 Kilada 224 88% --
3 Scorpio Bay 172 100% --
4 Lavender Bay 310 100% --
5 Plaka Bay 442 100% --
TOTAL GREECE 1,213 -- 112** -- 52%
OTHER
6 Apollo Heights (CY) 447 100% --
7 Livka Bay (CR) 63 100% 4.7
Aristo (CY) 472 47.9% --
TOTAL OTHER 982 -- 71** 7% 48%
GRAND TOTAL 2,195 4.7 183** 3% 100%
* Further details on debt maturities are set out under note 23 of the
financial statements.
**Total real estate value includes equity investments in OOKI and Aristo.
A breakdown of Dolphin's portfolio, as at 31 December 2021, with certain key
metrics is provided below:
COUNTRY Land size (hectares) Debt Real Estate Value % Loan to real estate asset value Net Asset Value
(€ million)
(€ million)
1 Greece 1,213 - 112 -- 52%
2 Other *** 982 4.7 71 7% 48%
Grand Total 2,195 4.7 183 3% 100%
***DCI's portfolio in Cyprus includes its equity investment in Aristo
Developers Ltd, which owns assets in Cyprus that are subject to Aristo's debt
and other obligations.
D. Market Dynamics
Greece
The OECD projects that Greece's GDP will grow by 2.8% in 2022 and 2.5% in
2023.
Greece's economy recovered strongly following the progressive lifting of
Covid-19 containment measures since April 2021. By September 2021, business
confidence had recovered to post-financial crisis levels as businesses
re-opened. International air arrivals during July-August reached more than 60%
of the 2019 peak.
According to the Bank of Greece, in 2021, the balance of travel services
showed a surplus of €9.5bn vs surplus of €3.5bn in 2020 and €15.4bn in
2019. Travel receipts rose by €6.3bn or 146.7% y-o-y to €10.7bn, reaching
59% of the 2019 results, while travel payments also increased by €326.4m or
41.2% y-o-y to €1.1bn, reaching 41% of the 2019 level. The rise in travel
receipts was due to a 99.4% y-o-y increase in inbound traveller flows which
reached 14.7m visitors, (47% of the 2019 level), as well as to a rise of 22.1%
y-o-y in average expenditure per trip which came to €713 versus €564 in
2019.
The government's recovery and resilience plan is expected to boost activity
and productivity through investments in the green transition, upgrading
digital infrastructure and skills, and supporting private firms' investments.
Realising the projected acceleration in investment will require resolving
banks' remaining non-performing loans and tax credits and improving the
investment climate and the public sector's performance.
However, the price inflation in Greece is forecasted at 6.1% in 2022 and at
1.2% in 2023 according to IMF. In addition, according to Eurostat flash
estimates, in May 2022, the Greek Harmonized Index of Consumer Prices (HICP)
recorded a 10.7% increase y-o-y and a 1.2% increase m-o-m.
Besides the inflationary pressure, a very strong tourism season is in
progress. According to the President of the Greek Tourism Confederation
(SETE), the revenues from Greek tourism this season may reach or even exceed
2019 levels.
Cyprus
Even though Cyprus' economy was negatively affected by the rising Covid-19
infection rates at the end of 2020, a strong recovery of the economy was
recorded by the end of 2021. According to IMF forecasts, a 4.8% increase in
GDP was expected during 2021, reaching almost pre-crisis levels. This increase
is mainly driven by domestic demand (aided by Government measures to combat
the pandemic), as well as the relatively good performance of the tourism
sector prompted by the accelerating pace of the Covid-19 vaccinations and the
improved epidemiological situation on the island.
Despite the disruption caused by the pandemic and the termination of the
Cyprus Investment Program (CIP), the Real Estate & Construction sector
maintained its position as one of the fastest growing sectors of the economy,
highlighting its resilience and importance to the overall economy according to
the PWC Real Estate Market Report.
During 2021, a total of 3,691 properties in Cyprus were acquired by
foreigners, compared to 2,985 properties during 2020, representing an overall
24% increase. From August 2021 onwards, monthly transactions from foreigners
appear to be consistently surpassing pre-pandemic levels (i.e. compared to
2019), demonstrating the overall momentum in the Cyprus real estate market.
However, the current situation in Ukraine has had an impact on Russian demand
for properties in Cyprus, which has been drastically reduced, together with
the reduction of the incoming tourism in general, which is also a lead-in for
interest in real estate. In addition, rising price inflation which leads to
increased travel costs and cost of construction materials, is evident in the
Cyprus market. According to the property price index published by the Central
Bank of Cyprus for the fourth quarter of 2021, residential property prices
rose by 1% year-on-year for houses and 6.3% year-on-year for apartments. At
the same time, construction costs rose by 17.3% year-on-year during the fourth
quarter of the previous quarter, something which will inevitably be reflected
in how property prices are calculated.
Residential property in Cyprus continued to be in high demand in April 2022,
with 938 successful transactions completed on the island - a 13% increase from
April 2021. According to the country's Land Registry, this is the greatest
figure since 2008. The most stable sales are in Limassol, following by Nicosia
and the resort cities of Paphos and Larnaca.
Croatia
2021 was defined by a gradual return to normality, after the dual crises of
the Covid-19 pandemic and an earthquake in the previous year. According to the
European Commission the economic developments in 2021 point to a V-shaped
recovery of the Croatian economy. After a drop of 8.1% in 2020, the country
recorded an annual GDP growth of 10.4 percent in 2021, reaching the pre-crisis
level of economic activity.
The recovery in 2021 was supported by exports of goods and services, with
tourism playing a key role as well as private consumption. Resilience and a
quick recovery of Croatian tourism was also reflected in high demand for
hotels, as mentioned in the Colliers CRE Investment Market report. The total
transaction volume of commercial real estate was around €700 million in
2021, representing a 40% increase year-on-year.
GDP growth in 2022 is expected to remain dynamic, at 3.4% but lower than the
initial projection for a 4.8% growth. mainly driven from a positive
contribution from domestic demand, the expected acceleration of
post-earthquake reconstruction in the Banovina region and Zagreb and the
implementation of the EU backed National Recovery and Resilience Plan.
E. Future Objectives
The Company's main objectives for 2022 are to:
1. secure adequate working capital liquidity for DCI;
2. execute further portfolio asset disposals;
3. complete construction at OOKI and achieve more residential sales;
4. progress construction at Kilada and generate plot/villa sales; and,
5. progress planning and permitting selectively for the remaining
portfolio.
Miltos Kambourides
Managing Partner
Dolphin Capital Partners Ltd
30 June 2022
F. Financial Position for the year ended 31 December 2021
F.1. Consolidated statement of profit or loss for the year ended 31 December
2021
Financial Results
Loss after tax for the period ended 31 December 2021 attributable to owners of
the Company amounted to €21.3 million (2020: €21.1 million). Loss per
share was €0.02 and €0.02 in 2021 and 2020 respectively.
The principal factors affecting the 2021 result were €24.2 million year-end
valuation reduction as well as the Company's other operational, corporate,
finance and management expenses counterbalanced by €6.0 million share of
profits on equity-accounted investees as further explained below.
Consolidated statement of profit or loss and other comprehensive income for
the year ended
31 December 2021
31 December 2021 31 December 2020
€'000 €'000
Revenue 4,703 3,570
Cost of sales (2,786) (2,170)
Gross profit 1,917 1,400
Gain on disposal of investments in subsidiaries 5,898 336
Change in valuations (24,648) (10,229)
Other gains - 1,654
Investment Manager remuneration (3,600) (3,600)
Directors' remuneration (323) (379)
Professional fees (2,149) (2,199)
Administrative and other expenses (1,269) (1,303)
Depreciation charge (48) (44)
Total operating and other expenses (26,139) (15,764)
Results from operating activities (24,222) (14,364)
Net finance costs (2,994) (822)
Share of profits/(losses) on equity-accounted investees, net of tax 5,973 (8,892)
Loss before taxation (21,243) (24,078)
Taxation 1,270 2,985
Loss (19,973) (21,093)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences (2,245) 104
Reclassification of foreign currency translation differences on loss of
control
(5,784) -
Share of revaluation on equity-accounted investees (278) 208
Other comprehensive income, net of tax (8,307) 312
Total comprehensive income (28,280) (20,781)
Loss attributable to:
Owners of the Company (21,343) (21,142)
Non-controlling interests 1,370 49
(19,973) (21,093)
Total comprehensive income attributable to:
Owners of the Company (29,561) (20,899)
Non-controlling interests 1,281 118
(28,280) (20,781)
Loss per share
Basic and diluted loss per share (€) (0.02) (0.02)
Further analysis of individual revenue and expense items is provided below.
Revenue
Revenues of €4.7 million (31 December 2020: €3.6 million), were derived
from the following sources:
31 December 2021 31 December 2020
€ million € million
Sale of trading & investment properties 3.9 3.0
Other income 0.8 0.6
TOTAL 4.7 3.6
Sale of trading & investment properties in 2021 is attributable to LaVanta
sales while in 2020 €1.5 million was attributable to a sale of a land plot
situated outside the Kilada development perimeter and the remainder to LaVanta
sales .
Cost of sales
Cost of sales comprises the following:
31 December 2021 € million 31 December 2020 € million
Cost of sales related to:
Sales of trading and investment properties 2.8 2.2
TOTAL 2.8 2.2
Professional Fees
The charge for the period was €2.1 million (31 December 2020: €2.2
million) and comprises the following:
31 December 2021 31 December 2020
€ million € million
Legal and Administrator fees 0.5 0.5
Auditors' remuneration 0.3 0.4
Accounting expenses 0.2 0.2
Project design and development fees 0.6 0.7
Consultancy fees 0.2 0.1
Other professional fees 0.3 0.3
TOTAL 2.1 2.2
Administrative and other expenses
The administrative and other expenses amounted to €1.3million (31 December
2020: €1.3 million) and are analysed as follows:
31 December 2021 31 December 2020
€ million € million
Travelling and accommodation 0.1 0.1
Marketing and advertising expenses 0.1 0.1
Personnel expenses 0.6 0.5
Immovable property and other taxes 0.2 0.2
Rents 0.1 0.1
Other 0.2 0.3
TOTAL 1.3 1.3
Change in valuations
Change in valuations amounted to €24.6 million (31 December 2020: €10.2
million) and are analysed as follows:
31 December 2021 31 December 2020
€ million € million
Loss in fair value of investment property (24.2) (18.3)
Impairment loss on trading properties -- (1.2)
Impairment loss/(reversal of) impairment loss on equity-accounted investees (0.8) 9.4
Impairment of other investments (0.2) -
Reversal of /(impairment loss) of property, plant and equipment 0.6 (0.1)
TOTAL (24.6) (10.2)
F.2. Consolidated statement of financial position as at 31 December 2021
31 December 2021 31 December 2020
€'000 €'000
Assets
Property, plant and equipment 9,069 4,855
Investment property 52,188 76,303
Equity-accounted investees 65,555 60,674
Other investments - 655
Non-current assets 126,812 142,487
Trading properties 56,516 59,769
Receivables and other assets 1,092 1,330
Other investments 99 -
Cash and cash equivalents 4,575 1,661
Current assets 62,282 62,760
Total assets 189,094 205,247
Equity
Share capital 9,046 9,046
Share premium 569,847 569,847
Retained deficit (460,390) (439,047)
Other reserves 584 8,802
Equity attributable to owners of the Company 119,087 148,648
Non-controlling interests 8,942 6,523
Total equity 128,029 155,171
Liabilities
Loans and borrowings 20,125 2,802
Lease liabilities 3,331 3,376
Deferred tax liabilities 6,609 8,000
Trade and other payables 20,089 20,366
Contract liabilities - 109
Non-current liabilities 50,154 34,653
Loans and borrowings 4,743 6,244
Lease liabilities 89 29
Trade and other payables 6,079 9,150
Current liabilities 10,911 15,423
Total liabilities 61,065 50,076
Total equity and liabilities 189,094 205,247
Net asset value ('NAV') per share (€) 0.13 0.16
The reported NAV as at 31 December 2021 is presented below:
As at As at Variation since
31 December 2021 31 December 2020 31 December 2020
€ £ € £ € % £ %
Total NAV before DTL (million) 126 106 157 142 (19.8) (25.5)
Total NAV after DTL (million) 119 100 149 134 (19.9) (25.7)
NAV per share before DTL 0.14 0.12 0.17 0.16 (19.8) (25.5)
NAV per share after DTL 0.13 0.11 0.16 0.15 (19.9) (25.7)
___________
Notes:
1. Euro/GBP rate 0.83939 as at 31 December 2021 and 0.90453 as at 31
December 2020.
2. NAV per share has been calculated on the basis of 904,626,856 issued
shares as at 31 December 2021 and as at 31 December 2020.
Total Group NAV as at 31 December 2021 was €125.7 million and €119.1
million before and after DTL respectively. This represents a decrease of
€31.0 million (19.8%) and €29.6 million (19.9%), respectively, from the 31
December 2020 figures.
Sterling NAV per share as at 31 December 2021 was 12p before DTL and 11p after
DTL and decreased by 25.5% and 25.7%, before and after DTL respectively
compared to the 31 December 2020 figures. NAV reduction was primarily due to
the appreciation of Sterling versus the Euro during the period of
approximately 7%, the valuation reduction on certain portfolio assets and to
other operational, corporate, finance and management expenses of the Group.
The reduction in valuations includes a €13.2 million downward adjustment of
Lavender' s Bay investment property so as to account for the valuation
uncertainty resulting from the ongoing ownership dispute in Lavender with the
Greek State as detailed in Note 34 of the consolidated financial statements
for the year ended 31 December 2021.
The Company's consolidated assets of €189.1 million include €117.8 million
of real estate assets, €65.6 million of equity- accounting investees (which
represents the 33% investment in Kea Resort as well as the Company's 47.9%
interest in Aristo), €1.1 million of other assets (trade and other
receivables), and €4.6 million in cash.
The figure of €117.8 million of real estate assets (property, plant and
equipment, trading properties and investment property) represents the
independent property valuations conducted as at 31 December 2021 by American
Appraisal (for the Greek and Cypriot projects) for both freehold and long
leasehold interests of Kilada, Scorpio Bay, Lavender Bay, Apollo Heights and
Plaka Bay projects as well as the appraised value of Livka Bay (Colliers
International conducted the independent property valuation for Croatia).
The Company's consolidated liabilities (excluding DTL) total €54.5 million
and mainly comprise €28.3 million of interest bearing loans and finance
lease obligations. The €26.2 million of trade and other payables comprise
mainly €20.8 million of option contracts to acquire land in the Company's
Lavender Bay project. The Company is in negotiations with the original vendor
with a view to ensuring that both no additional deferred payments are made to
them under the relevant sale and purchase contracts until the resolution of
this legal dispute with the Greek State and also to reducing the overall
quantum of subsidiary's deferred liabilities to them, potentially swapping all
or part of the deferred payments against equity in the project as detailed in
Note 34 of the consolidated financial statements.
The consolidated financial statements have been audited by KPMG.
The accounts will be available on www.dolphinci.com (http://www.dolphinci.com)
and will also be posted.
G. Directors' report
The Directors present their report together with the audited financial
statements of the Company and its subsidiary undertakings (together the
"Group") for the months ended 31 December 2021.
Principal Activities
The principal activity of the Group is the development of beachfront
properties in the Eastern Mediterranean - Greece, Cyprus and Croatia.
Business Review for the period and Future Developments
The consolidated statement of comprehensive income for the twelve month period
and the statement of net assets as at 31 December 2021 are set out on pages 10
and 11 of this report. The assets of the Group are principally development
properties and these are valued twice a year by the Directors based on
recommendations from the Investment Manager. In addition, external valuers are
contracted in each relevant country at the financial year end to assess the
current value of those properties.
A review of the development and performance of the Group and of expected
future developments has been set out in the Chairman's Statement.
No dividends were declared or paid during the financial period under review.
Principal Risks and Uncertainties
The Group's business is property development in the Eastern Mediterranean. Its
principal risks are therefore related to the property market in these
countries in general, and also the particular circumstances of the property
development projects that it is undertaking.
The Directors seek to mitigate and manage these risks through continual
review, policy setting and enforcement of contractual rights and obligations.
They also regularly monitor the economic and investment environment in
countries that the Group operates in and the management of the Group's
property development portfolio.
Directors
The Directors of the Company who held office throughout the financial period
and up to the date of this report were as follows:
· Andrew Coppel - appointed 5 October 2015, resigned 30 June 2021
· Miltos Kambourides
· Mark Townsend - appointed 24 February 2015, resigned 30 June 2021
· Graham Warner - appointed 24 February 2015, resigned 30 June 2021
· Martin Adams - appointed 30 June 2021
· Nicolai Huls - appointed 30 June 2021
· Nicholas Paris - appointed 30 June 2021
On 30 June 2021, Andrew Coppel resigned as Chairman of the Board of Directors
and Martin Adams was elected to that role.
All Directors are or were independent non-executive Directors except Miltos
Kambourides, who is considered to be non-independent because of his role as
the founder and majority owner of Dolphin Capital Partners Limited, the
Company's Investment Manager.
Directors' remuneration during the twelve months ended 31 December 2021
The Directors remuneration details during the period of this report were as
follows:
Director Director's fees Termination payment (€) Total
(€) (€)
Martin Adams 37,500 n/a 37,500
Andrew Coppel * 85,746 32,155 117,901
Nicolai Huls 30,000 n/a 30,000
Miltos Kambourides ** -- -- --
Nick Paris 32,500 n/a 32,500
Mark Townsend * 30,011 2,540 32,551
Graham Warner * 64,310 8,039 72,349
*Andrew Coppel, Mark Townsend and Graham Warner resigned as Directors on 30
June 2021 and the Board on which they served awarded them termination payments
in exchange for each of them waiving any rights that they had to make claims
against the Company.
**Miltos Kambourides continued to waive his right to collect a Director's fee
from the Company in light of his involvement as the founder and majority owner
of the Company's Investment Manager.
*** Martin Adams, Nicolai Huls and Nicholas Paris were appointed as Directors
by the outgoing Directors on 30 June 2021. On 1 July 2021, the new Directors
announced that the aggregate remuneration henceforth of all Directors would be
limited to Euros 200,000 compared to remuneration paid of Euros 379,000 in the
year ended 31 December 2020 and Euros 496,000 in the year ended 31 December
2019.
Directors' interests
The interests of the Directors in the Company's shares as at 27 June 2022 were
as follows:
Director Numbers of Common Shares of
Euros 0.01 each held
Nicolai Huls
- direct shareholding 775,000
- Director of Discover Investment Company which owns 30,026,849 shares
Miltos Kambourides 66,019,006
- indirect shareholding*
*75% shareholder of Dolphin Capital Partners that owns 88,025,342 shares
Board committees
The Directors have appointed an Audit Committee to oversee the financial
reporting of the Group and ensure that adequate internal controls are in place
to manage the risks associated with the business. Until their resignation as
Directors on 30 June 2021, Graham Warner and Mark Townsend served on the Audit
Committee with Graham Warner being the Chair of it. Since 1 July 2021,
Nicholas Paris and Nicolai Huls have served on the Audit Committee with
Nicholas Paris being its Chair.
In addition, the Directors have appointed a Nomination & Corporate
Governance Committee to review the effectiveness of the Board and recommend
any changes to it and oversee the corporate governance policies of the
Company. Until their resignations as Directors, Mark Townsend and Andrew
Coppel served on the Committee with Mark Townsend being the Chairman. Since 1
July 2021, Nicolai Huls, Martin Adams and Nicholas Paris have served on the
Committee with Nicolai Huls being the Chairman.
Management of the Group
The Directors delegated the investment management of the Group to Dolphin
Capital Partners Limited in accordance with an agreement dated 1 January 2022.
Details of the terms of this agreement are set out in Note 28.2 of these
accounts.
Board of Directors
The Board of Dolphin Capital Investors Ltd 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.
Responsibilities of the Board
The Board is responsible for the determination of the investment policy of the
Company and for its overall supervision via the investment policy and
objectives that it has been set out. The Board is also responsible for the
Company's day-to-day operations. In order to fulfil these obligations, the
Board has delegated operations through arrangements with the Investment
Manager, Dolphin Capital Partners and the Administrator FIM Capital Limited.
MARTIN ADAMS
Independent Non-Executive Chairman
Martin has served for over 30 years in executive and non-executive capacities,
both as chairman and director of over 20 closed-end funds and fund-invested
operating companies listed on European stock exchanges; and on the boards of
fund management companies. His investment experience encompasses private
equity, property, infrastructure and renewables assets, predominantly in Asia
and Europe. In his capacity as chairman of various fund boards, he has both
renegotiated management contracts and implemented strategies to realise
illiquid assets over time in order to return capital to shareholders.
Martin is currently the Chairman of Eastern European Property Fund Limited,
senior independent director of Marwyn Value Investors Limited and a
non-executive director of National Investment and Infrastructure Fund Limited
in India, Metage Funds Limited, Vietnam Phoenix Fund Limited, VFMC Service
Company Limited, Armadillo Investments Limited and BRX Research and
Development Company Limited,. He started his career with the Lloyds Bank
group, where he was based in the UK, Hong Kong, Portugal and the Netherlands.
He is resident in Portugal.
NICHOLAS PARIS
Independent Non-executive Director and chairman of the Audit Committee
Nick is a Fellow of the Institute of Chartered Accountants in England and
Wales, a Member of the Chartered Alternative Investment Analysts Association
and a Fellow of the Chartered Institute for Securities & Investment. He
has more than 30 years' experience in closed end funds. In his career, he has
developed significant expertise in analysing, launching and investing in such
funds and he has acted as an independent non-executive Director of a number of
stock exchange listed funds.
Nick is a very experienced shareholder in, and director of, funds holding
illiquid assets in challenging markets. He was a portfolio manager within the
LIM Advisors Group until September 2020 where he was responsible for their
investments in closed end funds. He is also the Managing Director of Myanmar
Investments International Limited, a London listed closed end fund,
Non-Executive Chairman of ASEANA Properties Limited and is a member of the
Board of Nominees of Fondul Proprietatea S.A. which is listed in both Romania
and London. He was formerly a director of Global Resources Investment Trust
plc, RDL Realisation PLC and TAU Capital PLC which were all listed in London.
He is resident in the UK.
NICOLAI HULS
Independent Non-executive Director and chairman of the Nomination &
Corporate Governance Committee
Nicolai is an experienced investment analyst and fund manager with more than
20 years' experience and a particular focus on researching investment funds
having worked for a number of leading private banks in Europe including Bank
Insinger de Beaufort, Schretlen & Co, Rabobank Private Banking and LCF
Edmond de Rothschild. Currently he is a director and sits on the investment
committee of Discover Investment Company Betsy Innovations B.V and PBB Holding
B.V.
Nicolai has worked for more than 10 years supporting shareholders and
investors in the analysis of international listed funds' holdings of
alternative assets and subsequently monitoring and advising boards and
management teams on the monetisation of their investment portfolios. He is
resident in The Netherlands.
MILTOS KAMBOURIDES
Non-executive Director, Founder and Managing Partner of the Investment Manager
and its subsidiaries. Dolphin Capital Ventures Limited, Dolphin Capital
Finance Limited and other non-real estate related private investment
companies.
Miltos was previously a founding partner of Soros Real Estate Partners (SREP),
a global real estate private equity business formed in 1999 by George Soros,
which executed a number of complex real estate transactions in Western Europe
and Japan.
While at SREP, he was primarily responsible for investments relating to
property outsourcing in the UK and for the SREP investment strategy in
Southeast Europe. He was the deal leader and founder of Mapeley Ltd, which
went on to become the second largest real estate outsourcing company in the UK
after winning two major 20-year multi-billion-GBP contracts: one with the
Inland Revenue and Custom & Excise Departments of the UK and one with the
Abbey National Bank.
Prior to joining Soros, Miltos spent two years at Goldman Sachs working on
real estate private equity transactions in the UK, France and Spain. In 1998,
he received a Goldman Sachs Global Innovation Award for his work at Trillium,
the largest real estate outsourcing company in the UK.
He graduated from the Massachusetts Institute of Technology with a BS and MS
in Mechanical Engineering and a BS in Mathematics. He has received several
academic honours and participated twice in the International Math Olympiad
(Beijing 1990, Moscow 1992) and once in the Balkan Math Olympiad (Sofia 1990)
where he received a bronze medal.
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 as well as 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 Statement of
Directors' Responsibilities and the Terms of Reference of the Audit Committee
are summarised at the foot of this document.
All Directors are able to take independent professional advice in the
furtherance of their duties, if necessary, at the Company's expense.
Six formal Board meetings (including Board calls) were held in the year since
1 of July 2021 to 22 December 2021. A summary of Board and Committee meetings
attended in the 6 months to 22 December 2021 is set out below:
Board Meetings Audit Committee Nomination & Corporate Governance Committee
Director Attended Eligible Attended Eligible Attended Eligible
Mr M. Adams 6 6 - - 1 1
Mr N Huls 6 6 2 2 1 1
Mr N Paris 6 6 2 2 1 1
Mr M Kambourides 6 6 - - - -
Audit Committee:
The Audit Committee is chaired by Nick Paris and its other member is Nicolai
Huls and aims to meet at least three times a year.
The 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.
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 27
June 2022, which is the latest practicable date before the publication of this
report:
Number of Percentage of
Common Shares held issued Share Capital
(%)
JO Hambro Capital Mgt Ltd 93,386,413 10.32
Fortress Investment Group 89,922,801 9.94
Dolphin Capital Holdings* 88,025,342 9.73
683 Capital Mgt LLC 83,210,181 9.20
Peter Gyllenhammar 70,000,000 7.74
Forager Funds Mgt 64,100,000 7.09
Progressive Capital Partners Ltd 53,787,814 5.95
Lars Bader 50,480,600 5.58
Oak Hill Advisors 39,924,828 4.41
Discover Investment Company** 30,026,849 3.32
Alina Holdings PLC 28,983,930 3.20
*Miltos indirectly holds 66,019,006 shares
**Nicolai Huls is a Director of Discover Investment Company
Continuation of the Company
At an Extraordinary General Meeting ("EGM") of Shareholders held on 11
December 2021, Shareholders approved the continuation of the Company with no
set end date in order that the Company could pursue the New Investment Policy
and Realisation Strategy. In addition, they approved a revised Investment
Management Agreement ("IMA") eliminating the fixed management fees of €3.6
million per annum and introducing quarterly advances of incentive fees whose
level would be tied to distributions made to Shareholders.
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF
DOLPHIN CAPITAL INVESTORS LIMITED
Report on the audit of the consolidated financial statements
Qualified Opinion
We have audited the accompanying consolidated financial statements of Dolphin
Capital Investors Limited (the 'Company'), and its subsidiaries (together with
the Company, the 'Group'), which are presented on pages 9 to 58 and comprise
the consolidated statement of financial position as at 31 December 2021, and
the consolidated statements of profit or loss and other comprehensive income,
changes in equity and cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant
accounting policies.
In our opinion, except for the possible effects of the matter described in the
Basis for Qualified Opinion section of our report, the accompanying
consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2021, 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 34, an amount of €5.1 million is included in Investment
Property as of 31 December 2021 relating to land acquired or leased by its
subsidiary company Golfing Development S.A. In prior years at Nies (Sourpi,
Thessaly), for which a fair value adjustment of €13.2 million was recorded
as loss in 2021 in profit or loss. The respective land is disputed by the
Greek State as to its private character, for which various legal actions are
in progress by the Group's component, Golfing Development S.A., claiming its
ownership and legal rights. The outcome of these legal actions cannot be
reliably determined at this stage.
Based on the above, we were unable to obtain sufficient and appropriate audit
evidence in relation to the ownership and fair value of the Investment
Property of total amount of €5.1 million representing approximately 2.7% of
the total assets of the Group. Consequently, we were unable to determine
whether and to what extent any adjustments to the fair value of this property
were necessary.
We conducted our audit in accordance with International Standards on Auditing
('ISAs'). Our responsibilities under those standards are further described in
the 'Auditors' responsibilities for the audit of the consolidated financial
statements' section of our report. We are independent of the Group in
accordance with the International Code of Ethics (Including International
Independence Standards) for Professional Accountants of the International
Ethics Standards Board for Accountants (''IESBA Code'') together with the
ethical requirements in Cyprus that are relevant to our audit of the
consolidated financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our qualified opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the consolidated financial statements of
the current period. This matter was addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on this matter.
Valuation of immovable property
(Refer to notes 15 to 16, and 19 to the consolidated financial statements)
The risk Our response
The Group has a significant 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 and trading properties. The total carrying amount of the
aforementioned immovable properties as at 31 December 2021 was €107 million,
not including the amount of €5.1 million for which reference is made in the
Basis for Qualified Opinion paragraph above. - evaluating the competence, capabilities and objectivity of the
external valuation specialists engaged by the Company.
- challenging the appropriateness of the valuation methodology and
Investment properties are measured at fair value, property, plant and assumptions used. Assumptions, such as those relating to the discount
equipment at revalued amounts, which are based on fair value and trading rates used and the amounts and timing of forecasted cash inflows and outflows,
properties at the lower of cost and net realisable value. In determining fair as well as the comparables used and adjustments made in valuations were
values the Group utilises in most cases independent professional valuers. challenged based on industry norms and external data. Internal valuation
specialists were used within this process. Explanations were sought for
significant movements in value.
There are significant judgements and estimates inherent in estimating fair - reperforming specialists' calculations.
value and net realisable value (which is based on the intended development and
future selling price of these properties). - assessing the adequacy of the disclosures around the valuation of
property assets.
The existence of significant estimation uncertainty coupled with the fact that
only a small percentage change in the assumptions can have a significant
impact on the valuation is why we have given specific audit focus and
attention to this area.
Other information
The Board of Directors is responsible for the other information. The other
information comprises the information included in the Group's annual report
but does not include the consolidated financial statements and our auditors'
report thereon (which is expected to be made available to us after the date of
this auditor's report) and the Directors' report (which we obtained prior to
the date of this auditor's report).
Our opinion on the consolidated financial statements does not cover the other
information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information identified above when it
becomes available 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. When we read the annual report, or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information that we
obtained prior to the date of this auditor's report, 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.
When we read the annual report, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to those
charged with governance.
Responsibilities of the Board of Directors and those charged with governance
for the consolidated financial statements
The Board of Directors is responsible for the preparation of consolidated
financial statements that give a true and fair view in accordance with
IFRS-EU, and for such internal control as the Board of Directors determines is
necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless there is an intention to either
liquidate the Company or to cease Group's operations, or there is no realistic
alternative but to do so.
The Board of Directors is responsible for overseeing the Group's financial
reporting process.
Auditors' responsibilities for the audit of the consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors' report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional
judgement and maintain professional skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Board of Directors.
· Conclude on the appropriateness of the Board of Directors' use of the
going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors' report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditors' report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves a true and fair view.
· Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to express
an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with Governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with Governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with Governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors' report.
Other matter
( )
This report, including the opinion, has been prepared for and only for the
Company's members as a body and for no other purpose. We do not, in giving
this opinion, accept or assume responsibility for any other purpose or to any
other person to whose knowledge this report may come to. These financial
statements have not been prepared for the purpose of complying with the legal
requirements of the British Virgin Islands Law.
The engagement partner on the audit resulting in this independent auditors'
report is Demetris S. Vakis.
Demetris S. Vakis, FCA
Certified Public Accountant and Registered Auditor
for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087 Nicosia
Cyprus
28 June 2022
____________________
NOTE: the pages referenced in the "INDEPENDENT AUDITORS' REPORT TO THE MEMBERS
OF DOLPHIN CAPITAL INVESTORS LIMITED" are included in section H of the report
that follows.
________________
H. Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December
2021
31 December 2021 31 December 2020
Note €'000 €'000
Revenue 6 4,703 3,570
Cost of sales 7 (2,786) (2,170)
Gross profit 1,917 1,400
Gain on disposal of investment in subsidiaries 29 5,898 336
Change in valuations 8a (24,648) (10,229)
Other gains 8b - 1,654
Investment Manager remuneration 28.2 (3,600) (3,600)
Directors' remuneration 28.1 (323) (379)
Professional fees 10 (2,149) (2,199)
Administrative and other expenses 11 (1,269) (1,303)
Depreciation charge 15 (48) (44)
Total operating and other expenses (26,139) (15,764)
Results from operating activities (24,222) (14,364)
Finance income 16 -
Finance costs (3,010) (822)
Net finance costs 12 (2,994) (822)
Share of profits/(losses) on equity-accounted investees, net of tax 18 5,973 (8,892)
Loss before taxation (21,243) (24,078)
Taxation 13 1,270 2,985
Loss (19,973) (21,093)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences 12 (2,245) 104
Reclassification of foreign currency translation differences on loss of 29
control
(5,784) -
Share of revaluation on equity-accounted investees 18 (278) 208
Other comprehensive income, net of tax (8,307) 312
Total comprehensive income (28,280) (20,781)
Loss attributable to:
Owners of the Company (21,343) (21,142)
Non-controlling interests 1,370 49
(19,973) (21,093)
Total comprehensive income attributable to:
Owners of the Company (29,561) (20,899)
Non-controlling interests 1,281 118
(28,280) (20,781)
Loss per share
Basic and diluted loss per share (€) 14 (0.02) (0.02)
Consolidated statement of financial position
As at 31 December 2021
31 December 2021 31 December 2020
Note €'000 €'000
Assets
Property, plant and equipment 15 9,069 4,855
Investment property 16 52,188 76,303
Equity-accounted investees 18 65,555 60,674
Other investments 17 - 655
Non-current assets 126,812 142,487
Trading properties 19 56,516 59,769
Receivables and other assets 20 1,092 1,330
Other investments 17 99 -
Cash and cash equivalents 21 4,575 1,661
Current assets 62,282 62,760
Total assets 189,094 205,247
Equity
Share capital 22 9,046 9,046
Share premium 22 569,847 569,847
Retained deficit (460,390) (439,047)
Other reserves 584 8,802
Equity attributable to owners of the Company 119,087 148,648
Non-controlling interests 8,942 6,523
Total equity 128,029 155,171
Liabilities
Loans and borrowings 20,125 2,802
23
Lease liabilities 25 3,331 3,376
Deferred tax liabilities 24 6,609 8,000
Trade and other payables 26 20,089 20,366
Contract liabilities 6 - 109
Non-current liabilities 50,154 34,653
Loans and borrowings 4,743 6,244
23
Lease liabilities 25 89 29
Trade and other payables 26 6,079 9,150
Current liabilities 10,911 15,423
Total liabilities 61,065 50,076
Total equity and liabilities 189,094 205,247
Net asset value ('NAV') per share (€) 0.13 0.16
27
Consolidated statement of changes in equity
For the year ended 31 December 2021
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 2020 9,046 569,847 8,233 326 (417,905) 169,547 5,681 175,228
Total comprehensive income
(Loss)/profit - - - - (21,142) (21,142) 49 (21,093)
Other comprehensive income
Share of revaluation on equity-accounted investees - - - 139 - 139 69 208
Foreign currency translation differences - - 104 - - 104 - 104
Total other comprehensive income - - 104 139 - 243 69 312
Total comprehensive income - - 104 139 (21,142) (20,899) 118 (20,781)
TRANSACTIONS WITH OWNERS OF THE COMPANY
Changes in ownership interests in subsidiaries
Disposal of interests without a change in control - - - - - - 724 724
Total transactions with owners of the Company - - - - - - 724 724
Balance at 31 December 2020 9,046 569,847 8,337 465 (439,047) 148,648 6,523 155,171
Balance at 1 January 2021 9,046 569,847 8,337 465 (439,047) 148,648 6,523 155,171
Total comprehensive income
(Loss)/profit - - - - (21,343) (21,343) 1,370 (19,973)
Other comprehensive income
Share of revaluation on equity-accounted investees - - - (186) - (186) (92) (278)
Foreign currency translation differences - - (2,248) - - (2,248) 3 (2,245)
Translation differences to profit or loss due to disposal of subsidiary - - (5,784) - - (5,784) - (5,784)
Total other comprehensive income - - (8,032) (186) - (8,218) (89) (8,307)
Total comprehensive income - - (8,032) (186) (21,343) (29,561) 1,281 (28,280)
TRANSACTIONS WITH OWNERS OF THE COMPANY
Changes in ownership interests in subsidiaries
Disposal of interests without a change in control - - - - - - 1,138 1,138
Total transactions with owners of the Company - - - - - - 1,138 1,138
Balance at 31 December 2021 9,046 569,847 305 279 (460,390) 119,087 8,942 128,029
Consolidated statement of cash flows
For the year ended 31 December 2021
31 December 2021 31 December 2020
Note €'000 €'000
Cash flows from operating activities
Loss (19,973) (21,093)
Adjustments for:
Loss in fair value of investment property 8a 24,240 18,295
Impairment loss on trading properties 8a - 1,269
Impairment loss on other investments 8a 209 -
Gain on disposal of investment in subsidiaries 29 (5,898) (336)
(Reversal of)/impairment loss on property, plant and equipment 15 (615) 80
Impairment loss/(reversal of) on equity-accounted investees 8a 814 (9,415)
Depreciation charge 15 48 44
Interest expense 12 1,812 649
Interest income 12 (16) -
Exchange difference (2,175) 352
Share of (profits)/losses on equity-accounted investees, net of tax 18 (5,973) 8,892
Taxation 13 (1,270) (2,985)
(8,797) (4,248)
Changes in:
Receivables (618) 122
Payables (2,212) 1,027
Trading properties 3,253 (212)
Deferred revenue (109) (324)
Cash used in operating activities (8,483) (3,635)
Tax (paid)/received (193) 15
Interest paid - (217)
Net cash used in operating activities (8,676) (3,837)
Cash flows from investing activities
Proceeds from disposal of subsidiaries, net of cash disposed of 29 (208) (1)
Acquisitions of investment property 16 (21) 92
Disposals of investment property 16 - 1,697
Acquisitions of property, plant and equipment (3,651) (1,979)
Proceeds from other investments 326 160
Interest received 16 -
Net cash used in investing activities (3,538) (215)
Cash flows from financing activities
Repayment of loans and borrowings (3,611) (250)
New loans 14,063 -
Proceeds from issue of redeemable preference shares 5,500 3,500
Transaction costs related to loans and borrowings (90) (105)
Payment of lease liabilities (8) (8)
Interest paid (726) (278)
Net cash from financing activities 23 15,128 2,859
Net increase/(decrease) in cash and cash equivalents 2,914 (1,193)
Cash and cash equivalents at 1 January 1,661 2,854
Cash and cash equivalents at 31 December 4,575 1,661
For the purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of the following:
Cash in hand and at bank (see note 21) 4,575 1,661
Cash and cash equivalents at the end of the year 4,575 1,661
Notes to the consolidated financial statements
For the year ended 31 December 2021
1. REPORTING ENTITY
Dolphin Capital Investors Limited (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 south-east Europe, and managed by
Dolphin Capital Partners Limited (the 'Investment Manager'), an independent
private equity management firm that specialises in real estate investments,
primarily in south-east Europe. The shares of the Company were admitted to
trading on the AIM market of the London Stock Exchange ('AIM') on 8 December
2005.
The consolidated financial statements of the Company as at 31 December 2021
comprise the financial statements of the Company and its subsidiaries
(together referred to as the 'Group') and the Group's interests in
equity-accounted investees.
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 28 June 2022.
b. Basis of preparation
The consolidated financial statements have been prepared on a going concern
basis, which assumes that the Group will be able to discharge its liabilities
in the normal course of business.
On 22 December 2021, an Extraordinary General Meeting was held and the
Shareholders approved a continuation of the Company without setting a
termination date or a date for a further continuation vote in order to provide
time to optimise for Shareholders the value that can be realised from the
Company's investments by removing potentially commercially prejudicial
deadlines from negotiations with potential buyers. Notwithstanding the absence
of a formal date for Shareholders to consider a continuation of the Company,
the Board may, at any time, propose a further continuation vote to
Shareholders.
The Group's cash flow forecasts for the foreseeable future involve
uncertainties related primarily to the exact disposal proceeds and timing of
disposals of the assets expected to be disposed of. Management believes that
the proceeds from forecast asset sales will be sufficient to maintain the
Group's cash flow at a positive level. Should the need arise, management will
take actions to reduce costs and is confident that it can secure additional
loan facilities and/or obtain repayment extension on existing ones, until
planned asset sales are realised and proceeds received.
If for any reason the Group is unable to continue as a going concern, then
this could have an impact on the Group's ability to realise assets at their
recognised values and to extinguish liabilities in the normal course of
business at the amounts stated in the consolidated financial statements.
Based on these factors, management has a reasonable expectation that the Group
has and will have adequate resources to continue in operational existence for
the foreseeable future.
c. Basis of measurement
The consolidated financial statements have been prepared under the historical
cost convention, with the exception of property (investment property and
property, plant and equipment), which are stated at their fair values.
d. Adoption of new and revised standards and interpretations
As from 1 January 2021, the Group adopted all changes to IFRS which are
relevant to its operations. This adoption did not have a material effect on
the consolidated financial statements of the Group.
The following standards, amendments to standards and interpretations have been
issued but are not yet effective for annual periods beginning on 1 January
2021. Those which may be relevant to the Group are set out below. The Group
does not plan to adopt these standards early. The Group continues to assess
the potential impact on its consolidated financial statements resulting from
the application of the following standards.
(i) Standards and interpretations adopted by the EU
IFRS 3 Business Combinations (Amendments) (effective for annual periods
beginning on or after 1 January 2022)
The amendments to IFRS 3 relate to an update of a reference to the Conceptual
Framework of Financial Reporting without changing the accounting requirements
for business combinations.
IAS 16 Property, Plant and Equipment (Amendments) (effective for annual
periods beginning on or after 1 January 2022)
The amendments to IAS 16 prohibit a company from deducting, from the cost of
property, plant and equipment, amounts received from selling items produced
while the company is preparing the asset for its intended use. Instead, a
company will recognise such sales proceeds together with the costs of
producing those items in profit or loss. The Group is currently evaluating the
expected impact of adopting the amendments on its financial statements. As
such, the expected impact of the amendments is not yet known or reasonably
estimable.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments)
(effective for annual periods beginning on or after 1 January 2022)
The amendments to IAS 37 specify what is included in the costs to fulfil a
contract when assessing whether a contract is onerous. The Group is currently
evaluating the expected impact of adopting the amendments on its financial
statements. As such, the expected impact of the amendments is not yet known or
reasonably estimable.
IAS 1 Presentation of Financial Statements (Amendments) and IFRS Practice
Statement 2 Making Materiality Judgements: Disclosure of Accounting Policies
(effective for annual periods beginning on or after 1 January 2023)
The amendments to IAS 1 and the update to IFRS Practice Statement 2 aim to
help companies on the application of materiality to the disclosure of
accounting policies. The key amendments to IAS 1 include: (1) requiring
companies to disclose their material accounting policies rather than their
significant accounting policies, (2) clarifying that accounting policies
related to immaterial transactions, other events or conditions are themselves
immaterial and as such need not be disclosed, and (3) clarifying that not all
accounting policies that relate to material transactions, other events or
conditions are themselves material to a company's financial statements. The
amendments to IFRS Practice Statement 2 are to include guidance and two
additional examples on the application of materiality to accounting policy
disclosures. The amendments are consistent with the refined definition of
material i.e. 'Accounting policy information is material if, when considered
together with other information included in an entity's financial statements,
it can reasonably be expected to influence decisions that the primary users of
general-purpose financial statements make on the basis of those financial
statements'. The Group is currently evaluating the expected impact of adopting
the amendments on its financial statements. As such, the expected impact of
the amendments is not yet known or reasonably estimable.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Amendments): Definition of Accounting Estimates (effective for annual periods
beginning on or after 1 January 2023)
The amendments to IAS 8 are issued to clarify how companies should distinguish
changes in accounting policies from changes in accounting estimates, with a
primary focus on the definition of and clarifications on accounting estimates.
The amendments introduce a new definition for accounting estimates: clarifying
that they are monetary amounts in the financial statements that are subject to
measurement uncertainty. The amendments also clarify the relationship between
accounting policies and accounting estimates by specifying that a company
develops an accounting estimate to achieve the objective set out by an
accounting policy. Developing an accounting estimate includes both: (1)
selecting a measurement technique (estimation or valuation technique), and (2)
choosing the inputs to be used when applying the chosen measurement technique.
The effects of changes in such inputs or measurement techniques are changes in
accounting estimates. The definition of accounting policies remains unchanged.
The Group is currently evaluating the expected impact of adopting the
amendments on its financial statements. As such, the expected impact of the
amendments is not yet known or reasonably estimable.
(ii) Standards and interpretations not adopted by the EU
IAS 1 Presentation of Financial Statements (Amendments): Classification of
Liabilities as Current or Non-current (effective for annual periods beginning
on or after 1 January 2023)
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.
IAS 12 Income Taxes (Amendments): Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (effective for annual periods
beginning on or after 1 January 2023)
Targeted amendments to IAS 12 clarify how companies should account for
deferred tax on certain transactions (e.g. leases and decommissioning
provisions). The amendments narrow the scope of the initial recognition
exemption (IRE) so that it does not apply to transactions that give rise to
equal and offsetting temporary differences. As a result, companies will need
to recognise a deferred tax asset and a deferred tax liability for temporary
differences arising on initial recognition of a lease and a decommissioning
provision.
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.
Material valuation uncertainty
Due to market conditions as formed by the COVID-19 pandemic, management's
estimates of the fair value of the assets valued at fair value have increased
valuation uncertainty compared to previous years.
Impairment of investment in equity-accounted investees
The Company follows the requirements of IAS 36 to determine whether the
investments in equity-accounted investees are impaired and calculates the
amount of the impairment. An impairment loss is recognised for the difference
between the carrying amount and the recoverable amount of the asset. The
recoverable amount is the greater of the fair value less costs to sell and
value in use. As at 31 December 2021, the Group assessed whether the carrying
amount of equity-accounted investees is impaired, by comparing it with its
fair value less cost to sell.
Measurement of fair values
A number of the Group's accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets and
liabilities.
The Group has an established control framework with respect to the measurement
of fair values. This includes a valuation team that has 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, Colliers International and
HVS (for One&Only Kea Resort), three internationally recognised firms of
surveyors, to conduct valuations of the Group's acquired properties to
determine their fair value. These valuations are prepared in accordance with
generally accepted appraisal standards, as set out by the Royal Institute of
Chartered Surveyors ('RICS'). Furthermore, the valuations are conducted on
an 'as is condition' and on an open market comparative basis.
The valuation analysis of properties is based on all the pertinent market
factors that relate both to the real estate market and, more specifically, to
the subject properties. The valuation analysis of a property typically uses
four approaches: the cost approach, the direct sales comparison approach, the
income approach and the residual value approach. The cost approach measures
value by estimating the Replacement Cost New or the Reproduction Cost New of
property and then determining the deductions for accrued depreciation that
should be made to reflect the age, condition and situation of the asset during
its past and proposed future economic working life. The direct sales
comparison approach is based on the premise that persons in the marketplace
buy by comparison. It involves acquiring market sales/offerings data on
properties similar to the subject property. The prices of the comparables are
then adjusted for any dissimilar characteristics as compared to the subject's
characteristics. Once the sales prices are adjusted, they can be reconciled to
estimate the fair value for the subject property. Based on the income
approach, an estimate is made of prospective economic benefits of
ownership. These amounts are discounted and/or capitalised at appropriate
rates of return in order to provide an indication of value. The residual
value approach is used for the valuation of the land and depends on two basic
factors: the location and the total value of the buildings developed on a
site. Under this approach, the residual value of the land is calculated by
subtracting the development cost from the estimated sales value of the
completed development.
Each of the above-mentioned valuation techniques results in a separate
valuation indication for the subject property. A reconciliation process is
then performed to weigh the merits and limiting conditions of each approach.
Once this is accomplished, a value conclusion is reached by placing primary
weight on the technique, or techniques, that are considered to be the most
reliable, given all factors.
4. PRINCIPAL subsidiaries
The Group's most significant subsidiaries were the following:
Country of Shareholding interest
Name Project incorporation 2021 2020
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 ('MCO 1') Kilada Hills Golf Resort Cyprus 88% 96%
MindCompass Overseas S.A. Kilada Hills Golf Resort Greece 88% 96%
MindCompass Overseas Two S.A. Kilada Hills Golf Resort Greece 100% 100%
MindCompass Parks S.A. Kilada Hills Golf Resort Greece 100% 100%
Dolphin Capital Greek Collection Limited Kilada Hills Golf Resort Cyprus 100% 100%
DCI Holdings One Limited * Aristo Developers BVIs 100% 100%
D.C. Apollo Heights Polo and Country Resort Limited Apollo Heights Resort Cyprus 100% 100%
Symboula Estates Limited ('Symboula') Apollo Heights Resort Cyprus 100% 100%
Azurna Uvala D.o.o. ('Azurna') Livka Bay Resort Croatia 100% 100%
Eastern Crete Development Company S.A. Plaka Bay Resort Greece 100% 100%
Single Purpose Vehicle Ten Limited ('SPV 10')** One&Only Kea Resort Cyprus 67% 67%
DolphinLux 2 S.a.r.l. La Vanta- Mediterra Resorts Luxembourg - 100%
Kalkan Yapi ve Turizm A.S. ('Kalkan')*** La Vanta- Mediterra Resorts Turkey - 100%
The above shareholding interest percentages are rounded to the nearest
integer.
*This entity holds 48% shareholding interest in DCI Holdings Two Ltd ('DCI H
2' owner of Aristo Developers Ltd)
** This entity holds 50% shareholding interest in Single Purpose Vehicle
Fourteen Limited (owner of 'One&Only Kea Resort')
*** Disposed in 2021
5. Significant accounting policies
The principal accounting policies adopted in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all periods presented in these consolidated financial
statements unless otherwise stated.
5.1 Subsidiaries
Subsidiaries are the entities controlled by the Group. The Group 'controls' an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date on which
control commences until the date on which control ceases.
5.2 Non-controlling interests ('NCI')
NCI are measured initially at their proportionate share of the acquiree's
identifiable net assets at the date of acquisition. Changes in the Group's
interest in a subsidiary that do not result in a loss of control are accounted
for as equity transactions.
5.3 Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and
liabilities of the subsidiary, and any related NCI and other components of
equity. Any resulting gain or loss is recognised in profit or loss. Any
interest retained in the former subsidiary is measured at fair value when
control is lost.
5.4 Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses arising from
intra-group transactions are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with
equity-accounted investees are eliminated to the extent of the Group's
interest in the entity. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of
impairment.
5.5 Business combinations
The Group accounts for business combinations using the acquisition method when
the acquired set of activities and assets meets the definition of a business
and control is transferred to the Group (see Note 5.1). In determining whether
a particular set of activities and assets is a business, the Group assesses
whether the set of assets and activities acquired includes, at a minimum, an
input and substantive process and whether the acquired set has the ability to
produce outputs.
The consideration transferred in the acquisition is generally measured at fair
value, as are the identifiable net assets acquired. Any goodwill that arises
is tested annually for impairment. Any gain on a bargain purchase is
recognised in profit or loss immediately. Transaction costs are expensed as
incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the
settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Any contingent consideration is measured at fair value at the date of
acquisition. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not
re-measured and settlement is accounted for within equity. Otherwise, other
contingent consideration is remeasured at fair value at each reporting date
and subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss.
5.6 Interest in equity-accounted investees
The Group's interests in equity-accounted investees comprise interests in
associates and a joint venture. Associates are those entities in which the
Group has significant influence, but not control, over the financial and
operating policies. A joint venture is an arrangement in which the Group has
joint control, whereby the Group has rights to the net assets of the
arrangement, rather than rights to its assets and obligations for its
liabilities. Interests in associates and the joint venture are accounted for
using the equity method and are initially recognised at cost, which includes
transaction costs. The Group's investment includes goodwill identified on
acquisition, net of any accumulated impairment losses. Subsequent to initial
recognition, the consolidated financial statements include the Group's share
of the income and expenses and equity movements of equity-accounted investees,
after adjustments to align the accounting policies with those of the Group,
until the date that significant influence or joint control ceases. When the
Group's share of losses exceeds its interest in an equity-accounted investee,
the carrying amount of that interest (including any long-term investments) is
reduced to nil and the recognition of further losses is discontinued except to
the extent that the Group has an obligation or has made payments on behalf of
the investee.
After application of the equity method, the Group assess the recoverable
amount for each associate or joint venture, unless the associate or joint
venture does not generate cash inflows from continuing use that are largely
independent of those from other assets of the entity. An impairment loss is
recognised for the difference between the carrying amount and the recoverable
amount of the equity-accounted investees. The recoverable amount is the
greater of the fair value less costs to sell and value in use.
5.7 Investment property
Investment property is property held either to earn rental income or for
capital appreciation or for both, but not for sale in the ordinary course of
the business, use in the production or supply of goods or services or for
administration purposes. Investment property is initially measured at cost
and subsequently at fair value with any change therein recognised in profit or
loss.
Cost includes expenditure that is directly attributable to the acquisition of
the investment property. The cost of self-constructed investment property
includes the cost of materials and direct labour, any other costs directly
attributable to bringing the investment property to a working condition for
their intended use.
Any gain or loss on disposal of an investment property (calculated as the
difference between the net proceeds from disposal and the carrying amount of
the item) is recognised in profit or loss. When an investment property that
was previously classified as property, plant and equipment is sold, any
related amount included in the revaluation reserve is transferred to retained
earnings.
When the use of property changes such that it is reclassified as property,
plant and equipment, its fair value at the date of reclassification becomes
its cost for subsequent accounting.
5.8 Property, plant and equipment
Land and buildings are carried at fair value, based on valuations by external
independent valuers, less subsequent accumulated depreciation for buildings
and the subsequent accumulated impairment losses. Revaluations are carried out
at the end of each year and where necessary, semi-annually. Properties under
construction are stated at cost less any accumulated impairment losses. All
other property, plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairment losses. Any gain or loss on
disposal of an item of property, plant and equipment is recognised in profit
or loss.
Increases in the carrying amount arising on revaluation of property, plant and
equipment are credited to fair value reserve in shareholders' equity.
Decreases that offset previous increases of the same asset are charged against
that reserve; all other decreases are recognised in profit or loss. Increase
is recognised to the profit or loss to the extent that it reverses a
revaluation decrease of the same asset previously recognised in profit or
loss.
The cost of self-constructed assets includes the cost of materials and direct
labour, any other costs directly attributable to bringing the asset to a
working condition for their intended use.
Depreciation charge is recognised in profit or loss on a straight-line basis
over the estimated useful lives of items of property, plant and equipment.
Freehold land is not depreciated.
The annual rates of depreciation are as follows:
Buildings
3%
Machinery and equipment 10% - 33.33%
Motor vehicles and other 10% - 20%
Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
The Group recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when that cost is
incurred if it is probable that the future economic benefits embodied with the
item will flow to the Group and the cost of the item can be measured
reliably. All other costs are recognised in profit or loss as incurred.
5.9 Trading properties
Trading properties (inventory) are shown at the lower of cost and net
realisable value. Net realisable value is the estimated selling price in the
ordinary course of the business less the estimated costs of completion and the
estimated costs necessary to make the sale. Cost of trading properties is
determined on the basis of specific identification of their individual costs
and represents the fair value paid at the date that the land was acquired by
the Group.
5.10 Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration.
At commencement or on modification of a contract that contains a lease
component, the Group allocates the consideration in the contract to each lease
component on the basis of its relative stand-alone prices. However, for the
leases of property the Group has elected not to separate non-lease components
and account for the lease and non-lease components as a single lease
component.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term, unless the
lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group
will exercise a purchase option. In that case the right-of-use asset will be
depreciated over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Generally, the Group uses
its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest
rates from various external financing sources and makes certain adjustments to
reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the
following:
- fixed payments, including in-substance fixed payments;
- variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement date;
- amounts expected to be payable under a residual value guarantee;
and
- the exercise price under a purchase option that the Group is
reasonably certain to exercise, lease payments in an optional renewal period
if the Group is reasonably certain to exercise an extension option, and
penalties for early termination of a lease unless the Group is reasonably
certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest
method. It is re-measured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, if the Group changes its assessment of whether it will exercise a
purchase, extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is re-measured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is
recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of
investment property in 'property, plant and equipment' and lease liabilities
in 'loans and borrowings' in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for leases of low-value assets and short-term leases, including IT
equipment. The Group recognises the lease payments associated with these
leases as an expense on a straight-line basis over the lease term.
5.11 Financial instruments
Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when
they are originated. All other financial assets and financial liabilities are
initially recognised when the Group becomes a party to the contractual
provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant
financing component) or financial liability is initially measured at fair
value plus, for an item not at FVTPL, transaction costs that are directly
attributable to its acquisition or issue. A trade receivable without a
significant financing component is initially measured at the transaction
price.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at:
amortised cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition
unless the Group changes its business model for managing financial assets, in
which case all affected financial assets are reclassified on the first day of
the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold assets
to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
A debt investment is measured at FVOCI if it meets both of the following
conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved by
both collecting contractual cash flows and selling financial assets; and
- its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
On initial recognition of an equity investment that is not held for trading,
the Group may irrevocably elect to present subsequent changes in the
investment's fair value in OCI. This election is made on an
investment‑by‑investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as
described above are measured at FVTPL. This includes all derivative financial
assets. On initial recognition, the Group may irrevocably designate a
financial asset that otherwise meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks and bank
overdrafts repayable on demand. Cash equivalents are short-term, highly-liquid
investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value. Bank overdrafts
that are repayable on demand and form an integral part of the Group's cash
management are included as a component of cash and cash equivalents for the
purpose of the consolidated statement of cash flows.
Financial assets - Business model assessment
The Group makes an assessment of the objective of the business model in which
a financial asset is held at a portfolio level because this best reflects the
way the business is managed and information is provided to management. The
information considered includes:
- the stated policies and objectives for the portfolio and the
operation of those policies in practice. These include whether management's
strategy focuses on earning contractual interest income, maintaining a
particular interest rate profile, matching the duration of the financial
assets to the duration of any related liabilities or expected cash outflows or
realising cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to
the Group's management;
- the risks that affect the performance of the business model (and the
financial assets held within that business model) and how those risks are
managed;
- how managers of the business are compensated - e.g. whether
compensation is based on the fair value of the assets managed or the
contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets in
prior periods, the reasons for such sales and expectations about future sales
activity.
Transfers of financial assets to third parties in transactions that do not
qualify for derecognition are not considered sales for this purpose,
consistent with the Group's continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose
performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets - Assessment whether contractual cash flows are solely
payments of principal and interest
For the purposes of this assessment, 'principal' is defined as the fair value
of the financial asset on initial recognition. 'Interest' is defined as
consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and
for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of
principal and interest, the Group considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a
contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition. In making this assessment,
the Group considers:
- contingent events that would change the amount or
timing of cash flows;
- terms that may adjust the contractual coupon rate,
including variable‑rate features;
- prepayment and extension features; and
- terms that limit the Group's claim to cash flows
from specified assets (e.g. non‑recourse features).
A prepayment feature is consistent with the solely payments of principal and
interest criterion if the prepayment amount substantially represents unpaid
amounts of principal and interest on the principal amount outstanding, which
may include reasonable additional compensation for early termination of the
contract. Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or requires
prepayment at an amount that substantially represents the contractual par
amount plus accrued (but unpaid) contractual interest (which may also include
reasonable additional compensation for early termination) is treated as
consistent with this criterion if the fair value of the prepayment feature is
insignificant at initial recognition.
Financial assets - Subsequent measurement and gains and losses
· 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 OCI are reclassified to profit or loss.
· Equity investments at FVOCI: These assets are subsequently measured
at fair value. Dividends are recognised as income in profit or loss unless the
dividend clearly represents a recovery of part of the cost of the investment.
Other net gains and losses are recognised in OCI and are never reclassified to
profit or loss.
Financial liabilities - Classification, subsequent measurement and gains and
losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL if it is classified as
held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or
loss. Other financial liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on
derecognition is also recognised in profit or loss.
The financial liabilities of the Group are measured as follows:
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value, less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in profit or loss over the
period of the borrowings on an effective interest basis.
Trade payables
Trade payables are initially recognised at fair value and are subsequently
measured at amortised cost, using the effective interest rate method.
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the
cash flows from the financial asset expire, or it transfers the rights to
receive the contractual cash flows in a transaction in which substantially all
of the risks and rewards of ownership of the financial asset are transferred
or in which the Group neither transfers nor retains substantially all of the
risks and rewards of ownership and it does not retain control of the financial
asset.
The Group enters into transactions whereby it transfers assets recognised in
its statement of financial position, but retains either all or substantially
all of the risks and rewards of the transferred assets. In these cases, the
transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations
are discharged or cancelled, or expire. The Group also derecognises a
financial liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new financial
liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying
amount extinguished and the consideration paid (including any non-cash assets
transferred or liabilities assumed) is recognised in profit or loss.
Offsetting
Financial assets and financial liabilities are offset and the net amount
presented in the statement of financial position when, and only when, the
Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and
settle the liability simultaneously.
5.12 Share capital and premium
Share capital represents the issued amount of shares outstanding at their par
value. Any excess amount of capital raised is included in share premium.
External costs directly attributable to the issue of new shares, other than on
a business combination, are shown as a deduction, net of tax, in share premium
from the proceeds. Share issue costs incurred directly in connection with a
business combination are included in the cost of acquisition.
5.13 Dividends
Dividends are recognised as a liability in the period in which they are
declared and approved and are subtracted directly from retained earnings.
5.14 Contract liabilities
Payments received in advance on development contracts for which no revenue has
been recognised yet are recorded as contract liabilities as at the statement
of financial position date.
5.15 Provisions
A provision is recognised in the consolidated statement of financial position
when the Group has a legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
5.16 Expenses
Investment Manager remuneration, Directors' remuneration, operational
expenses, professional fees, administrative and other expenses are accounted
for on an accrual basis. Expenses are charged to profit or loss, except for
expenses incurred on the acquisition of an investment property, which are
included within the cost of that investment. Expenses arising on the
disposal of an investment property are deducted from the disposal proceeds.
5.17 Impairment
Financial instruments and contract assets
The Group recognises loss allowances for expected credit losses ('ECLs') on:
- financial assets measured at amortised cost;
- debt investments measured at FVOCI; and
- contract assets.
The Group measures loss allowances at an amount equal to lifetime ECLs, except
for the following, which are measured at 12‑month ECLs:
- debt securities that are determined to have low credit risk at
the reporting date; and
- other debt securities and bank balances for which credit risk
(i.e. the risk of default occurring over the expected life of the financial
instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables and contract assets are always measured
at an amount equal to lifetime ECLs.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECLs, the Group
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on the Group's historical
experience and informed credit assessment and including forward‑looking
information.
The Group assumes that the credit risk on a financial asset has increased
significantly if it is more than 30 days past due.
The Group considers a financial asset to be in default when:
- the borrower is unlikely to pay its credit obligations to the
Group in full, without recourse by the Group to actions such as realising
security (if any is held); or
- the financial asset is more than 90 days past due.
Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its
non-financial assets (other than investment property and trading properties)
to determine whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount is estimated. Goodwill
is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGUs. Goodwill arising from
a business combination is allocated to CGUs or groups of CGUs that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use
and its fair value less costs of disposal. Value in use is based on the
estimated future cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU
exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated first
to reduce the carrying amount of any goodwill allocated to the CGU, and then
to reduce the carrying amounts of the other assets in the CGU on a pro rata
basis.
An impairment loss in respect of goodwill is not reversed. For other assets,
an impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
The Group considers a debt security to have low credit risk when its credit
risk rating is equivalent to the globally understood definition of 'investment
grade'. The Group considers this to be Baa3 or higher per Moody's rating
agency.
Lifetime ECLs are the ECLs that result from all possible default events over
the expected life of a financial instrument.
12‑month ECLs are the portion of ECLs that result from default events that
are possible within the 12 months after the reporting date (or a shorter
period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual
period over which the Group is exposed to credit risk.
Measurement of ECLs
ECLs are a probability‑weighted estimate of credit losses. Credit losses are
measured as the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and
the cash flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at
amortised cost and debt securities at FVOCI are credit‑impaired. A financial
asset is 'credit‑impaired' when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have
occurred.
Evidence that a financial asset is credit‑impaired includes the following
observable data:
· significant financial difficulty of the borrower or issuer;
· a breach of contract such as a default or being more than 90 days
past due;
· the restructuring of a loan or advance by the Group on terms that
the Group would not consider otherwise;
· it is probable that the borrower will enter bankruptcy or other
financial reorganisation; or
· the disappearance of an active market for a security because of
financial difficulties.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted
from the gross carrying amount of the assets. For debt securities at FVOCI,
the loss allowance is charged to profit or loss and is recognised in OCI.
Write-off
The gross carrying amount of a financial asset is written off when the Group
has no reasonable expectations of recovering a financial asset in its entirety
or a portion thereof. For individual customers, the Group has a policy of
writing off the gross carrying amount when the financial asset is 180 days
past due based on historical experience of recoveries of similar assets. For
corporate customers, the Group individually makes an assessment with respect
to the timing and amount of write‑off based on whether there is a reasonable
expectation of recovery. The Group expects no significant recovery from the
amount written off. However, financial assets that are written off could still
be subject to enforcement activities in order to comply with the Group's
procedures for recovery of amounts due.
5.18 Revenue recognition
Revenue is measured based on the consideration specified in a contract with a
customer. The Group recognises revenue at a point in time, which is when it
transfers control over the property to the buyer. The buyer obtains control
when the sale consideration is fully settled, and the ownership of the
property is then transferred to the buyer.
5.19 Finance income and costs
The Group's finance income and finance costs include:
- interest income;
- interest expense;
- dividend income.
Interest income or expense is recognised using the effective interest method.
Dividend income is recognised in profit or loss on the date on which the
Group's right to receive payment is established.
The 'effective interest rate' is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial
instrument to:
- the gross carrying amount of the financial asset; or
- the amortised cost of the financial 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.
5.20 Foreign currency translation
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the exchange rate at
the reporting date. Non-monetary assets and liabilities that are measured at
fair value in a foreign currency are translated into the functional currency
at the exchange rate when the fair value was determined. Non-monetary items
that are measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction. Foreign
currency differences are generally recognised in profit or loss and presented
within finance costs.
5.21 Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on acquisition, are translated to Euro at exchange
rates at the reporting date. The income and expenses of foreign operations,
excluding foreign operations in hyperinflationary economies, are translated to
Euro at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in OCI and accumulated in the
translation reserve, except to the extent that the translation difference is
allocated to NCI.
When a foreign operation is disposed of in its entirety or partially such that
control, significant influence or joint control is lost, the cumulative amount
in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. If the Group
disposes of part of its interest in a subsidiary but retains control, then the
relevant proportion of the cumulative amount is reattributed to NCI. When the
Group disposes of only part of an associate or joint venture while retaining
significant influence or joint control, the relevant proportion of the
cumulative amount is reclassified to profit or loss.
5.22 Segment reporting
A segment is a distinguishable component of the Group that is engaged either
in providing products or services (operating segment), or in providing
products or services within a particular economic environment (geographical
segment), which is subject to risks and rewards that are different from those
of other segments. Segment results that are reported to the Group's chief
operating decision maker include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis.
5.23 Earnings per share
The Group presents basic and diluted (if applicable) earnings per share
('EPS') data for its shares. Basic EPS is calculated by dividing the profit or
loss attributable to shareholders of the Company by the weighted average
number of shares outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to shareholders and the weighted
average number of shares outstanding for the effects of all dilutive potential
shares.
5.24 NAV per share
The Group presents NAV per share by dividing the total equity attributable to
owners of the Company by the number of shares outstanding as at the statement
of financial position date.
5.25 Taxation
Income tax
Taxation comprises current and deferred tax. Taxation is recognised in profit
or loss, except to the extent that it relates to a business combination, or
items recognised directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantially enacted at the
statement of financial position date, and any adjustment to tax payable or
receivable in respect of previous years. Current tax also includes any tax
arising from dividends.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes.
Deferred tax is not recognised for:
- temporary differences on the initial recognition of assets or liabilities
in a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries, associates and
joint arrangements to the extent that the Group is able to control the timing
of the reversal of the temporary differences and it is probable that they will
not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of
goodwill.
A deferred tax asset is recognised for unused tax losses, tax credits and
deductible temporary differences to the extent that it is probable that future
taxable profits will be available against which the temporary difference can
be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
The measurement of deferred tax reflects the tax consequences that would
follow from the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is
presumed to be recovered through sale, and the Group has not rebutted this
presumption.
Deferred tax assets and liabilities are offset only if certain criteria are
met.
5.26 Fair value measurement
'Fair value' is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The fair value
of a liability reflects its non-performance risk.
A number of the Group's accounting policies and disclosures require the
measurement of fair values, for both financial and non-financial assets and
liabilities (Note 2e).
When one is available, the Group measures the fair value of an instrument
using the quoted price in an active market for that instrument. A market is
regarded as 'active' if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an
ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation
techniques that maximise the use of relevant observable inputs and minimise
the use of unobservable inputs. The chosen valuation technique incorporates
all of the factors that market participants would take into account in pricing
a transaction.
If an asset or a liability measured at fair value has a bid price and an ask
price, then the Group measures assets and long positions at a bid price and
liabilities and short positions at an ask price.
The best evidence of the fair value of a financial instrument on initial
recognition is normally the transaction price - i.e. the fair value of the
consideration given or received. If the Group determines that the fair value
on initial recognition differs from the transaction price and the fair value
is evidenced neither by a quoted price in an active market for an identical
asset or liability nor based on a valuation technique for which any
unobservable inputs are judged to be insignificant in relation to the
measurement, then the financial instrument is initially measured at fair
value, adjusted to defer the difference between the fair value on initial
recognition and the transaction price. Subsequently, that difference is
recognised in profit or loss on an appropriate basis over the life of the
instrument but no later than when the valuation is wholly supported by
observable market data or the transaction is closed out.
5.27 Comparatives
Where necessary, comparative figures have been adjusted to conform to changes
in presentation in the current year.
6. revenue
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Revenue from contracts with customers:
Sale of trading properties 3,845 1,443
Sale of investment properties - 1,500
Other revenue
Income from DCI H2 (see note 18) - 500
Other income 858 127
Total 4,703 3,570
The amount of €109 thousand included in contract liabilities at 31 December
2020 has been recognised as revenue in 2021 (2020: Nil).
7. COST OF SALES
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Sales of trading properties 2,786 473
Sales of investment properties - 1,697
Total 2,786 2,170
8. INCOME AND EXPENSES
a. Change in valuations
Note From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Loss in fair value of investment property 16 (24,240) (18,295)
Impairment loss on trading properties 19 - (1,269)
Impairment loss/(reversal of) on equity-accounted investees 18 (814) 9,415
Reversal of/(impairment loss) of property, plant and equipment 15 615 (80)
Impairment of other investments (209) -
Total (24,648) (10,229)
b. Other gains
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Other gains - 1,654
Total - 1,654
9. SEGMENT REPORTING
As at 31 December 2021 and 31 December 2020, the Group is not considered to
have reportable operating segments that require disclosure. The Group has one
business segment focusing on achieving capital growth through investing in
residential resort developments primarily in south-east Europe.
The geographic information analyses the Group's non-current assets by the
Company's country of domicile. In presenting the geographic information,
segment assets were based on the geographic location of the assets.
Non-current assets
31 December 2021 31 December 2020
€'000 €'000
Greece 55,935 65,460
Croatia 18,482 22,372
Cyprus 52,395 54,655
At end of year 126,812 142,487
Country risk developments
According to OECD, the GDP of Greece was projected to increase by 6.7% in
2021, just under 3% in 2022 and 2.5% in 2023. As containment measures eased
in April 2021, economic activity rebounded, supported by a
stronger-than-expected summer tourist season. By September, business
confidence had recovered to post-financial crisis highs as businesses
re-opened. International air arrivals during July-August reached more than 60%
of the 2019 peak.
According to the Bank of Greece, in 2021, the balance of travel services
showed a surplus of €9.5bn vs surplus of €3.5bn in 2020 and €15.4bn in
2019.
The government's recovery and resilience plan is expected to boost activity
and productivity through investments in green transition, upgrading digital
infrastructure and skills, and supporting private firms' investments. However,
further to the unfolding developments with the Ukraine-Russia current
situation, inflation in Greece is now estimated at 6.1% in 2022 and to 1.2% in
2023 according to the IMF. Besides the inflationary pressure, a very strong
tourism season is expected. According to the President of the Greek Tourism
Confederation (SETE), the revenues from Greek tourism this season may reach or
even exceed 2019 levels
Even though Cyprus' economy was negatively affected by rising Covid infection
rates at the end of 2020, a strong recovery of the economy was recorded by the
end of 2021. According to IMF forecasts, a 4.8% increase in GDP was expected
during 2021, reaching almost pre-crisis levels.
Despite the disruption caused by the pandemic and the termination of the
Cyprus Investment Program (CIP), the Real Estate & Construction sector
maintained its position as one of the fastest growing sectors of the economy,
highlighting its resilience and importance to the overall economy according to
the PWC Real Estate Market Report.
However, the current situation in Ukraine has had an impact on the Russian
demand, which has been drastically reduced. This also results in a reduction
of tourism, which is a lead-in for interest in real estate. In addition, the
rising inflation and petrol prices, which resulted to the increase of the cost
in travel and materials by c. 10%, as well as the pending VAT charge, will
affect the Cyprus market.
2021 was defined by a gradual return to normality in Croatia, after the dual
crises of the Covid-19 pandemic and an earthquake in the previous year.
According to the European Commission the economic developments in 2021 point
to a full V-shaped recovery of the Croatian economy. After a drop of 8.1% in
2020, real GDP is forecast to have grown by 10.4% in 2021, reaching the
pre-crisis level of economic activity.
In any case management continues to closely monitor developments in this
sphere and will adjust its operational processes and divestment strategies
accordingly so that it can successfully navigate the business through the
coming months.
10. PROFESSIONAL FEES
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Legal fees 398 466
Auditors' remuneration (see below) 328 353
Accounting expenses 200 197
Appraisers' fees 24 30
Project design and development fees 607 738
Consultancy fees 218 120
Administrator fees 136 58
Other professional fees 238 237
Total 2,149 2,199
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Auditors' remuneration comprises the following fees:
Audit and other audit related services 328 353
Total 328 353
11. ADMINISTRATIVE AND OTHER EXPENSES
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Travelling and accommodation 102 88
Insurance 58 27
Marketing and advertising expenses 50 104
Personnel expenses (see below) 633 547
Immovable property and other taxes 205 222
Rents 91 71
Other 130 244
Total 1,269 1,303
Personnel expenses
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Wages and salaries 476 398
Compulsory social security contributions 51 51
Other personnel costs 106 98
Total 633 547
The average number of employees employed by the Group during the year was 27* 20
*The vast majority consists of workers/archaeologists at Kilada project
12. Finance costS
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Recognised in profit or loss
Interest income 16 -
Finance income 16 -
Interest expense (1,812) (649)
Transaction costs and other financing expenses (1,139) -
Bank charges (43) (31)
Exchange difference (16) (142)
Finance costs (3,010) (822)
Net finance costs recognised in profit or loss (2,994) (822)
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Recognised in other comprehensive income
Foreign currency translation differences (2,245) 104
Finance costs recognised in other comprehensive income (2,245) 104
13. Taxation
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
RECOGNISED IN PROFIT OR LOSS
Income tax expense
Current year 10 5
Other 119 -
129 5
Deferred tax expense
On valuation loss of investment properties (see note 24) (1,399) (2,990)
(1,399) (2,990)
Taxation recognised in profit or loss (1,270) (2,985)
Reconciliation of taxation based on taxable (loss)/profit and taxation based
on accounting (loss)/profit:
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Loss before taxation (21,243) (24,078)
Taxation using domestic tax rates (3,442) (3,859)
Effect of valuation loss on properties (1,379) (2,990)
Non-deductible expenses 3,186 4,252
Tax-exempt income - (388)
Current year losses for which no deferred tax is recognised 240 5
Other 125 (5)
Total (1,270) (2,985)
As a company incorporated under the BVI International Business Companies Act
(Cap. 291), the Company is exempt from taxes on profits, income or dividends.
Each company incorporated in BVI is required to pay an annual government fee,
which is determined by reference to the amount of the company's authorised
share capital. In Greece, the corporation tax rate applicable to profits is
22% (24% in 2020). 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 on rental income. Under certain conditions, interest
income may be subject to a special contribution at the rate of 30%. In such
cases, this interest is exempt from corporation tax.
In Croatia, the corporation tax rate is 18%. Tax losses of Croatian
companies are carried forward to reduce future profits for a period of five
years.
14. LOSS per share
Basic loss per share
Basic loss per share is calculated by dividing the loss attributable to owners
of the Company by the weighted average number of common shares outstanding
during the year.
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
'000 '000
Loss attributable to owners of the Company (€) (21,343) (21,142)
Number of weighted average common shares outstanding 904,627 904,627
Basic loss per share (€) (0.02) (0.02)
Loss attributable to owners of the Company
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Loss attributable to owners of the Company (21,343) (21,142)
Profit attributable to non-controlling interests 1,370 49
Total (19,973) (21,093)
Weighted average number of common shares outstanding
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
'000 '000
Outstanding common shares at the beginning and end of the year 904,627 904,627
Diluted loss per share
Diluted loss per share is calculated by adjusting the loss attributable to
owners and the number of common shares outstanding to assume conversion of all
dilutive potential shares. As of 31 December 2021 and 31 December 2020, the
diluted loss per share is the same as the basic loss per share, due to the
fact that no dilutive potential ordinary shares were outstanding during these
years.
15. Property, plant and equipment
Machinery & equipment
Under construction Land & €'000
€'000 buildings Other Total
€'000 €'000 €'000
2021
Cost or revalued amount
At beginning of year 2,054 20,445 361 39 22,899
Direct acquisitions 3,629 6 10 6 3,651
Disposals through subsidiary disposal - (6) (5) - (11)
At end of year 5,683 20,445 366 45 26,539
Depreciation and impairment losses
At beginning of year - 17,665 349 30 18,044
Depreciation charge for the year - 36 11 1 48
Disposals through subsidiary disposal - (6) (3) - (9)
Reversal of impairment loss (see note 8a) - (615) - - (615)
Exchange difference - - - 2 2
At end of year - 17,080 357 33 17,470
Carrying amounts 5,683 3,365 9 12 9,069
2020
Cost or revalued amount
At beginning of year 117 20,064 350 36 20,567
Direct acquisitions 1,937 381 11 3 2,332
At end of year 2,054 20,445 361 39 22,899
Depreciation and impairment losses
At beginning of year - 17,550 340 30 17,920
Depreciation charge for the year - 35 9 - 44
Impairment loss (see note 8a) - 80 - - 80
At end of year - 17,665 349 30 18,044
Carrying amounts 2,054 2,780 12 9 4,855
The carrying amount at year end of land and buildings, if the cost model was
used, would have been €3.3 million (2020: €2.8 million).
Land and buildings include right-of-use assets of €442 thousand (2020:
€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 €3,365 thousand (2020:
€2,780 thousand), has been categorised as a Level 3 fair value based on the
inputs to the valuation techniques used.
The following table shows a reconciliation from opening to closing balances of
Level 3 fair value.
31 December 2021 31 December 2020
€'000 €'000
At beginning of year 2,780 2,514
Acquisitions 6 381
Gains/(losses) recognised in profit or loss
Reversal of/(impairment loss and write offs) in 'Change in valuations' 615 (80)
Depreciation in 'Depreciation charge' (36) (35)
At end of year 3,365 2,780
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 technique (see note 3) Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement
Property in Greece - Hotel complexes Income approach Room occupancy rate (annual): 2021: 45% to 52% The estimated fair value would increase/(decrease) if:
(weighted average: 51%)
(2020: 45% to 52% Room occupancy rate was higher/(lower);
(weighted average: 51%)) Average daily rate per occupied room was higher/(lower);
Average daily rate per occupied room: 2021: €546 to €738 Gross operating margin was higher/(lower);
(weighted average: €673) Terminal capitalisation rate was lower/(higher);
(2020: €546 to €738 Risk-adjusted discount rate was lower/(higher).
(weighted average: €673))
Gross operating margin rate: 2021: 24% to 38%
(weighted average: 36%)
(2020: 24% to 38%
(weighted average: 36%))
Terminal capitalisation rate: 2021: 8% (2020: 8%)
Risk-adjusted discount rate: 2021: 11% (2020: 11%)
Combined approach (Income and Cost) Income approach (for land components) The estimated fair value would increase/(decrease) if:
Net operating income per m(2): 2021: €53 to €328
(2020: €33 to €205) Net operating income per m2 was higher/(lower);
Cash flow velocity (years): 2021: 11 (2020: 11) Cash flow velocity was shorter/(longer);
Terminal capitalisation rate: 2021: 9% (2020: 11% Terminal capitalisation rate was lower/(higher);
Risk-adjusted discount rate: 2021: 11% (2020: 11%) Risk-adjusted discount rate was lower/(higher);
Replacement cost (new) per m2 was higher/(lower);
Cost approach (for building components) Entrepreneurial profit rate was higher/(lower);
Replacement cost (new) per m(2): 2021: €500 - €1,100 Depreciation rate was lower/(higher).
(2020: €500 - €1,100)
Entrepreneurial profit rate: 2021: 20% (2020: 20%)
Depreciation rate: 2021: 38% (2020: 37%)
Useful life (years): 2021: 60 (2020: 60)
Property in Greece - Golf course* Income approach Number of members: 2021: 5 to 30 The estimated fair value would increase/(decrease) if:
(weighted average: 25)
(2020: 5 to 30 Number of members was higher/(lower);
(weighted average: 20)) Membership fees per year per member was higher/(lower);
Membership fees per year per member: 2021: €5,000 to €11,046 Number of rounds played by visitors was higher/(lower);
(weighted average: €9,762) Average green fee was higher/(lower);
(2020: €5,000 to €11,046 Gross operating margin was higher/(lower);
(weighted average: €9,086)) Terminal capitalisation rate was lower/(higher);
Number of rounds played by visitors: 2021: 1,762 to 6,793 Risk-adjusted discount rate was lower/(higher).
(weighted average: 5,319)
(2020: 881 to 6,793
(weighted average: 5,319))
Average green fee: 2021: €90 to €199
(average: €176)
(2020: €90 to €199
(average: €170))
Gross operating margin rate: 2021: -2% to 1.4%
weighted average: 0.6%
(2020: -2% to 1.4%
weighted average: 0.6%)
Terminal capitalisation rate: 2021: 11% (2020: 11%)
Risk-adjusted discount rate: 2021: 11% (2020: 11%)
* Relates to property under construction which is measured at cost. The above
table is for information purposes.
16. Investment property
31 December 2021 31 December 2020
Note €'000 €'000
At beginning of year 76,303 96,601
Capital subsequent expenditure 21 92
Disposals - (1,697)
Fair value adjustment 8a (24,240) (18,295)
Exchange differences 104 (398)
At end of year 52,188 76,303
As at 31 December 2021 and 31 December 2020, part of the Group's immovable
property is held as security for bank loans (see note 23).
As mentioned in note 34, investment properties including the land at Lavender
Bay which was acquired from Archdiocese of Dimitriada for which there is a
dispute with the Greek State in relation to its ownership. Its fair value as
at 31 December 2021 is €5.1 million and its fair value loss recognised in
profit or loss in 2021 amounts to €13.2 million.
Changes in fair values are recognised as gains/(losses) in profit or loss and
included in 'Change in valuations' (see note 8a). All such gains/(losses)
are unrealised.
Fair value hierarchy
The fair value of investment property, amounting to €52,188 thousand (2020:
€76,303 thousand), has been categorised as a Level 3 fair value based on the
inputs to the valuation techniques used.
Valuation techniques and significant unobservable inputs
The following table shows the valuation techniques used in measuring the fair
value of investment property, as well as the significant unobservable inputs
used.
Property location Valuation technique (see note 3) Significant unobservable inputs Inter-relationship between key unobservable 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): 2021: €8 to €26 Asking prices per m(2) were higher/(lower);
(2020: €7 to €30) Premiums were higher/(lower);
Premiums/(discounts) on the following: Discounts were lower/(higher);
Location: 2021: -10% to 0% Weights on comparables with premiums were higher/(lower);
(2020: 0%) Weights on comparables with discounts were lower/(higher);
Site size: 2021: -10% to 0% Quantity of villas was higher/(lower);
(2020: -10% to 0%) Selling price per m(2) was higher/(lower);
Asking vs transaction: 2021: -30% to -20% Expected annual growth in selling price was higher/(lower);
(2020: -30% to 0%) Cash flow velocity was shorter/(longer);
Frontage sea view: 2021: 0% Risk-adjusted discount rate was lower/(higher).
(2020: 0% to +20%)
Maturity/development potential: 2021: +10% to +30%
(2020: 0% to +50%)
Weight allocation: 2021: +5% to +25%
(2020: 0% to +20%)
Discount on market approach value:
Legal status: 2021: -80% (2020: -10%)
Income approach - 40% weight
Quantity of villas: 2021: 447 (2020: 447)
Selling price per m(2): 2021: €2,800
(2020: €2,800)
Expected annual growth in selling price: 2021: from year 3: 3%
(2020: from year 3: 3%)
Cash flow velocity (years): 2021:13 (2020: 13)
Risk-adjusted discount rate: 2021: 14% (2020: 14%)
Discount on combined approach value:
Legal status: 2021: -80% (2020: -10%)
Property location Valuation technique (see note 3) Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement
Property in Greece Market approach Asking prices per m(2): 2021: €1 to €94 The estimated fair value would increase/(decrease) if:
(2020: €1 to €69) Asking prices per m(2) were higher/(lower);
Premiums/(discounts) on the following: Premiums were higher/(lower);
Location: 2021: -40% to +10% Discounts were lower/(higher);
(2020: -40% to +10%) Weights on comparables with premiums were higher/(lower);
Site size: 2021: -50% to +10%) Weights on comparables with discounts were lower/(higher).
(2020: -50% to +30%)
Asking vs transaction: 2021: -30% to 0%
(2020: -30% to 0%)
Frontage sea view: 2021: 0% to +30%
(2020: -10% to +30%)
Maturity/development potential: 2021: -20% to +50%
(2020: -35% to +50%)
Zoning: 2021: -30%
(2020: -30% to 0%)
Other: 2021: -20% to +30%
(2020: -10% to +50%)
Strategic investment approval: 2021: 20%
(2020: 0% to +20%)
Weight allocation: 2021: +5% to +60%
(2020: 0% to +40%)
Discount on market approach value:
Legal status: 2021: -80% (2020: -10%)
Property in Cyprus Market approach Asking prices per m(2): 2021: €1 to €349 The estimated fair value would increase/(decrease) if:
(2020: €1 to €349) Asking prices per m(2) were higher/(lower);
Premiums/(discounts) on the following: Premiums were higher/(lower);
Location: 2021: -10% to +20% Discounts were lower/(higher);
(2020: -10% to +20%) Weights on comparables with premiums were higher/(lower);
Site size: 2021: -40% to 0% Weights on comparables with discounts were lower/(higher).
(2020: -40% to 0%)
Asking vs transaction: 2021: -15% to 20%
(2020: -15% to 0%)
Frontage sea view: 2021: -10% to +30%
(2020: -10% to +30%)
Maturity/development potential: 2021: -20% to 50%
(2020: -20% to 50%)
Weight allocation: 2021: +10% to 40%
(2020: +5% to 50%)
Property location Valuation technique (see note 3) Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement
Property in Croatia Market Asking prices per m(2): 2021: €3 to €96 The estimated fair value would increase/(decrease) if:
approach (2020: €3 to €126) Asking prices per m(2) were higher/(lower);
Premiums/(discounts) on the following: Premiums were higher/(lower);
Location: 2021: -5% to 0% Discounts were lower/(higher);
(2020: -5% to 0%) Weights on comparables with premiums were higher/(lower);
Site size: 2021: -15% to -10% Weights on comparables with discounts were lower/(higher).
(2020: -15% to 0%)
Asking vs transaction: 2021: 0%
(2020: 0%)
Quality factor: 2021: -5% to 15%
(2020: -5% to 15%)
Capacity: 2021: -5% to +10%
(2020: -5% to +8%)
Weight allocation: 2021: +25% to +33%
(2020: +15% to +35%)
17. OTHER INVESTMENTS
Other investments consists of the valuation of the Company's holding of 9.6
million shares, equivalent to 13% of Itacare's share capital. Itacare is a
real estate investment company formerly listed on AIM. Itacare's
shareholders have decided to dispose of all its assets and after a series of
asset sales/swaps, Itacare has managed to sell all of its real estate assets.
During the year 2021 Itacare has paid interim dividend of US$0.04 per share of
a total of €326 thousand to the Group.
18. equity-accounted investees
Single Purpose
Vehicle Fourteen
DCI H2 Limited ('SPV 14') Total
Note €'000 €'000 €'000
2021
At beginning of year 42,694 17,980 60,674
Share of profits, net of tax 814 5,159 5,973
Share of revaluation surplus - (278) (278)
Impairment loss 8a (814) - (814)
At end of year 42,694 22,861 65,555
2020
At beginning of year 42,694 17,249 59,943
Share of (losses)/profits, net of tax (9,415) 523 (8,892)
Share of revaluation surplus - 208 208
Reversal of impairment loss 8a 9,415 - 9,415
At end of year 42,694 17,980 60,674
SPV14
In 2019, SPV 10 entered into a joint venture agreement pursuant to which the
Group's shareholding interest in SPV 14 (owner of 'One&Only Kea Resort')
was decreased from 67% to 33%, as a result of dilution. The Group accounted
for the remaining 33% interest as an equity-accounted investee.
DCI H2
As at 31 December 2020, the Company's holding of 47.9% in DCI H2 (owner of
Aristo Developers Ltd, 'Aristo'), has been classified as an associate. An
impairment loss was recognised in 2016, based on an agreement to dispose of
the entire 49.75% shareholding in DCI H2 then owned, for the amount of €45
million. The Group subsequently disposed of 1.82% and as a result the
Company's investment in DCI H2 reduced to 47.9% at a value of €42.7 million,
which the Group estimates to be the recoverable amount as at the end of the
reporting period. The recoverable amount is calculated based on the NAV of DCI
H2 group at the reporting date adjusted by approximately 30% discount on the
DCI H2 group's real estate properties. The fair value of the investment in DCI
H2 has been categorised as a Level 3 fair value based on the inputs to the
valuation techniques used.
Pursuant to the terms of the 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
Company as of 31 December 2021 did not receive any cash consideration from
Aristo Ktimatiki (31 December 2020: €0.5 million). The remaining €3.5
million that was due by 30 June 2020 is expected to be received during 2022.
The corresponding preferred shares are being transferred by the Company to
Aristo Ktimatiki on a prorated basis in line with the receipt of the
commensurate instalment.
The details of the above investments are as follows:
Country of Shareholding interest
Name incorporation Principal activities 31 December 2021 31 December 2020
SPV 14 Cyprus Development of Kea Resort 33%* 33%*
DCI H2 BVIs Acquisition and holding of real estate investments in Cyprus 48% 48%
*This represents the indirect shareholding % in SPV14. The Group has 67%
shareholding interest in its subsidiary SPV 10 which owns 50% shareholding
interest in SPV 14.
The above shareholding interest percentages are rounded to the nearest
integer.
The valuation techniques and significant unobservable inputs used in DCI H2
and Kea property valuation in years 2021 and 2020 are shown below:
Property Valuation technique Significant unobservable inputs
(see note 3)
Kea, Greece Room occupancy rate (annual): 2021: 25% to 41%
Income approach
(weighted average: 34%)
(2020: 32% to 39%
(weighted average: 37%))
Average daily rate per occupied room: 2021: €990 to €1,034
(weighted average €1,018)
(2020: €990 to €1,378
(weighted average €1,237))
Gross operating margin rate: 2021: 16% το 43%)
(weighted average 33%)
(2020: 9% το 35%
(weighted average 27%))
Terminal capitalisation rate: 2021: 8% (2020: 11%)
Quantity of villas: 2021: 37 (2020: 39)
Selling price per m(2): 2021: €8,700 (2020: €7,500)
Expected annual growth in selling price: 2021: 0% to 3%
(2020: 0% to 3%)
Cash flow velocity (years): 2021: 5 (2020: 10)
Risk-adjusted discount rate: 2021: 9% (2020: 10%)
Property in Market approach Asking prices per m2: 2021: €28 to €135 (2020: €24 to €106)
Famagusta, Cyprus (sales comparison Premiums/(discounts) on the following:
approach) Location: 2021: 0% (2020: 0%)
Site size: 2021: 0% to +20% (2020: 0% to +20%)
Asking vs transaction: 2021: -15% to +25% (2020: -20% to +15%)
Frontage view: 2021: -20% to +10% (2020: 0% to +30%)
Maturity/development potential: 2021: -20% to +20% (2020: only 0%)
Weight allocation: 2021: +10% to +25% (2020: +10% to +25%)
Property in Larnaca, Market approach Asking prices per m2: 2021: €138 to €210 (2020: €71 to €281)
Cyprus (sales comparison Premiums/(discounts) on the following:
approach) Location: 2021: 0% (2020: 0%)
Site size: 2021: 0% to +30% (2020: 0% to +30%)
Asking vs transaction: 2021: -15% to +0% (2020: -20% to -15%)
Frontage view: 2021: -10% to +10% (2020: -20% to 0%)
Maturity/development potential: 2021: -10% to +20% (2020: only 0%)
Weight allocation: 2021: +10% to +30% (2020: +15% to +40%)
Property in Limassol, Market approach Asking prices per m2: 2021: €5 to €980 (2020: €1 to €294)
Cyprus (sales comparison Premiums/(discounts) on the following:
approach) Location: 2021: -50% to +30% (2020: -50% to 20%)
Site size: 2021: -10% to +40% (2020: -40% to +40%)
Asking vs transaction: 2021: -15% to +25% (2020: -20% to +25%)
Frontage view: 2021: -30% to +50% (2020: -20% to +50%)
Maturity/development potential: 2021: -20% to +20% (2020: -50% to +30%)
Weight allocation: 2021: 5% to +45% (2020: +5% to +30%)
Property Valuation technique (see note 3) Significant unobservable inputs
Property in Nicosia, Market approach Asking prices per m2: 2021: €7 to €136 (2020: €2 to €54)
Cyprus (sales comparison Premiums/(discounts) on the following:
approach) Location: 2021: -30% to +10% (2020: -30% to +10%)
Site size: 2021: -20% to +0% (2020: -20% to 0%)
Asking vs transaction: 2021: -25% to +25% (2020: 0% to +25%)
Frontage view: 2021: -20% to +50% (2020: -50% to +50%)
Maturity/development potential: 2021: 0% to +50% (2020: 0% to +50%)
Weight allocation: 2021: 10% to +40% (2020: +5% to +50%)
Property in Paphos, Market approach Asking prices per m2: 2021: €6 to €2,331 (2020: €1 to €1.233)
Cyprus (sales comparison Premiums/(discounts) on the following:
approach) Location: 2021: -30% to +30% (2020: -30% to +30%)
Site size: 2021: -50% to +40% (2020: -40% to +40%)
Asking vs transaction: 2021: -20% to +25% (2020: -30% to +25%)
Frontage view: 2021: -50% to +50% (2020: -50% to +50%)
Maturity/development potential: 2021: -40% to +30% (2020: -30% to +50%)
Weight allocation: 2021: 10% to +50% (2020: +5% to +60%)
Golf Resort, Cyprus Income approach Quantity of villas: (174 sq.m each) 2021: 676 (2020: 676)
Quantity of appartments: (100 sq.m each) 2021: 231 (2020: 231)
Expected annual growth in selling price: 2021: 1% and 2% (2020: 1% and 2%)
Cash flow velocity (years): 2021: 12 (2020: 11)
Risk-adjusted discount rate: 2021: 9,10% (2020: 9,10%)
Total NPV of project: 2021: €74.080.000 (2020: €72,700,000)
average rate per sq.m of Villas: 2021: €4.200 (2020: €3,000)
average rate per sq.m of Apartments 2021: €3.600 (2020: €2,100)
As at 31 December 2021, SPV 14 had €23,432 thousand (31 December 2020:
€33,060 thousand) contractual capital commitments on property, plant and
equipment. Also, as at 31 December 2021, DCI H2 had €3,500 thousand (31
December 2020: €3,500 thousand) contractual capital commitments on
investment property.
The following table summarises the financial information of DCI H2 and SPV 14
as included in their own financial statements, the table also reconciles the
summarised financial information to the carrying amount of the Group's
interest in equity-accounted investees:
DCI H2 SPV 14 Total
€'000 €'000 €'000
Percentage ownership interest 48% 50%
31 December 2021
Current assets (1) 123,989 40,658 164,647
Non-current assets 204,403 32,305 236,708
Total assets 328,392 72,963 401,355
Current liabilities (2) 84,357 13,832 98,189
Non-current liabilities (3) 56,368 13,409 69,777
Total liabilities 140,725 27,241 167,966
Net assets 187,667 45,722 233,389
Group's share of net assets 90,080 22,861 112,941
Impairment (47,386) - (47,386)
Carrying amount of interest in investee 42,694 22,861 65,555
Revenues 37,917 - 37,917
Profit (4) 1,699 10,317 12,016
Other comprehensive income - (555) (555)
Total comprehensive income 1,699 9,762 11,461
Group's share of profit and total comprehensive income 814 4,881 5,695
31 December 2020
Current assets (1) 142,254 5,713 147,967
Non-current assets 206,065 33,937 240,002
Total assets 348,319 39,650 387,969
Current liabilities (2) 105,357 1,513 106,840
Non-current liabilities (3) 57,447 2,178 59,625
Total liabilities 162,804 3,691 166,495
Net assets 185,515 35,959 221,474
Group's share of net assets 89,047 17,980 107,027
Impairment (46,353) - (46,353)
Carrying amount of interest in investee 42,694 17,980 60,674
Revenues 13,158 - 13,158
(Loss)/profit (4) (19,643) 1,045 (18,598)
Other comprehensive income - 416 416
Total comprehensive income (19,643) 1,461 (18,182)
Group's share of (loss)/profit and total comprehensive income (9,415) 731 (8,684)
The financial information of SPV 14, includes the following:
(1) Cash and cash equivalents - 2021: €6,020 thousand, 2020:
€1,290 thousand
(2) Non-current financial liabilities excluding trade and other
payables and provisions - 2021: €8,578 thousand, 2020: Nil
(3) Current financial liabilities excluding trade and other payables
and provisions - 2021: €769 thousand, 2020: Nil
(4) Depreciation - 2021: €29 thousand, 2020: €30 thousand,
Finance expense - 2021: €16 thousand, 2020: €11 thousand and Income tax
expense - 2021: €20 thousand, 2020: €20 thousand
19. Trading properties
Note 31 December 2021 31 December 2020
€'000 €'000
At beginning of year 59,769 60,826
Additions - 685
Disposals (3,253) (473)
Impairment loss 8a - (1,269)
At end of year 56,516 59,769
Trading properties mainly comprise of land and construction costs of villas
and holiday homes, in Kilada Hills Golf Resort in Peloponnese, Greece.
20. RECEIVABLES AND OTHER ASSETS
31 December 2021 31 December 2020
€'000 €'000
Trade receivables 45 122
VAT receivables 859 771
Other receivables 176 425
Total trade and other receivables (see note 31) 1,080 1,318
Prepayments and other assets 12 12
Total 1,092 1,330
21. Cash and cash equivalents
31 December 2021 31 December 2020
€'000 €'000
Bank balances (see note 31) 4,565 1,652
Cash in hand 10 9
Total 4,575 1,661
During the year, the Group had no fixed deposits.
22. capital and reserves
Capital
Authorised share capital
31 December 2021 31 December 2020
'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 2020 and up to 31 December 2021 904,627 9,046 569,847
Reserves
Translation reserve
Translation reserve comprises all foreign currency differences arising from
the translation of the financial statements of foreign operations.
Revaluation reserve
Revaluation reserve relates to the revaluation of property, plant and
equipment from both subsidiaries and equity-accounted investees, net of any
deferred tax.
23. loans AND BORROWINGS
Total Within one year Within two to five years
2021 2020 2021 2020 2021 2020
€'000 €'000 €'000 €'000 €'000 €'000
Loans in Euro 17,391 6,244 4,743 6,244 12,648 -
Redeemable preference shares 7,477 2,802 - - 7,477 2,802
Total 24,868 9,046 4,743 6,244 20,125 2,802
Loans in Euro
On 3 June 2021 the Company entered into a €15 million senior secured term
loan facility agreement with two institutional private credit providers acting
on behalf of their managed and advised funds. The nominal interest rate is
12.5% and the initial maturity date falls 18 months from the loan draw-down
and is subject to a six-month extension at Company's option with a 2% interest
step-up. The facility agreement includes mandatory prepayment clauses with
regard to revenues realised by the Company from the disposal of its assets as
well as standard event of default provisions including, inter alia, borrower
change of control, termination of investment management agreement and
cancelation of existing borrower securities listing. As of 31 December 2021,
an amount of €14,063 thousand has been drawn down and arrangement and
commitment fees amounting to €651 thousand have been prepaid. €810
thousand was drawn down on 4 March 2022 and transferred to an interest reserve
account less €16 thousand arrangement fees.
During the year, the maturity date of the outstanding loan of Azurna (the
owner of "LivkaBay") has been extended to 31 December 2022. During the year an
amount of €1,891 thousand was paid in regard to Azurna loan including
principal and interest (2020: €536 thousand).
Redeemable preference shares
On 18 December 2019, the Company signed an agreement with an international
investor for a €12 million investment in the Kilada Hills Project. The
investor has agreed to subscribe for both common and preferred shares. The
total €12 million investment is payable in 24 monthly instalments of €500
thousand each. Under the terms of the agreement, the investor will be entitled
to a priority return of the total investment amount from the net disposal
proceeds realised from the project and will retain a 15% shareholding stake in
Kilada. As of 31 December 2021, 11.58% (2020: 4.38%) of the ordinary shares
have been transferred to the investor.
As of 31 December 2021, 9,000 redeemable preference shares (2020: 3,500) were
issued as fully paid with value of €1,000 per share. The redeemable
preference shares are 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 Project. As at 31
December 2021, the fair value of the redeemable preference shares was €7,477
thousand (2020: €2,802 thousand).
Terms and conditions of the loans
The terms and conditions of outstanding loan were as follows:
Description Currency Interest rate Maturity dates 31 December 2021 31 December 2020
€'000 €'000
Secured loan Euro Euribor plus 4.25% 2022 4,743 6,244
Secured loan Euro Fixed rate of 12.5% with a 2% additional interest if extended 2023 12,648 -
Total interest-bearing liabilities 17,391 6,244
Security given to lenders
As at 31 December 2021, the Group's loans and borrowings were secured as
follows:
· Regarding the senior term loan facility, fixed and floating
charges over all of the Company's assets including all of the shares in DCI
Holdings One Limited, fixed charge over the interest reserve account, pledges
over the shares of DolphinCI Twenty-Four Limited and the subsidiaries in
Kilada Hills and Apollo Project and assignments and charges over intercompany
loans.
· In regard to 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 will be set against the immovable property of the
Kilada Hills Project, in the amount of €15 million (2020: €15 million).
· With respect to Azurna loan, mortgage against the immovable
property of the Croatian subsidiary, Azurna (the owner of "Livka Bay"), with a
carrying value of €17 million (2020: €20.9 million), two promissory notes,
a debenture note and a letter of support from its parent company Single
Purpose Vehicle Four 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
2021
Balance at the beginning of the year 9,046 3,405 6,523 18,974
Changes from financing cash flows:
Proceeds from issue of redeemable preference shares 5,500 - - 5,500
New loans 14,063 - - 14,063
Transaction costs related to loans and borrowings (90) - - (90)
Repayment of loans and borrowings (3,611) - - (3,611)
Payment of lease liability - (8) - (8)
Interest paid (726) - - (726)
Other movements (1,138) - 1,138 -
Total changes from financing cash flows 13,998 (8) 1,138 15,128
Other changes- Liability-related
Interest expense 1,682 23 - 1,705
Other movements 142 - 1,281 1,423
Total liability-related other changes 1,824 23 1,281 3,128
Balance at the end of the year 24,868 3,420 8,942 37,230
2020
Balance at the beginning of the year 6,644 3,036 5,681 15,361
Changes from financing cash flows:
Proceeds from issue of redeemable preference shares 3,500 - - 3,500
Transaction costs related to loans and borrowings (105) - - (105)
Repayment of loans and borrowings (250) - - (250)
Payment of lease liability - (8) - (8)
Interest paid (278) - - (278)
Other movements (724) - 724 -
Total changes from financing cash flows 2,143 (8) 724 2,859
Other changes- Liability-related
New leases - 353 - 353
Interest expense 408 24 - 432
Other movements (149) - 118 (31)
Total liability-related other changes 259 377 118 754
Balance at the end of the year 9,046 3,405 6,523 18,974
24. Deferred tax liabilities
31 December 2021 31 December 2020
€'000 €'000
Balance at the beginning of the year 8,000 11,027
Recognised in profit or loss (see note 13) (1,399) (2,990)
Exchange differences 8 (37)
Balance at the end of the year 6,609 8,000
Deferred tax liabilities are attributable to the following:
31 December 2021 31 December 2020
€'000 €'000
Investment properties 2,247 3,638
Trading properties 4,299 4,299
Property, plant and equipment 63 63
Total 6,609 8,000
Notes to the consolidated financial statements
For the year ended 31 December 2021
25. lease LIABILITIES
31 December 2021 31 December 2020
Future Present value Future Present value
minimum of minimum minimum of minimum
lease lease lease lease
payments Interest payments payments Interest payments
€'000 €'000 €'000 €'000 €'000 €'000
Less than one year 91 2 89 30 1 29
Between two and five years 284 14 270 283 10 273
More than five years 4,278 1,217 3,061 4,302 1,199 3,103
Total 4,653 1,233 3,420 4,615 1,210 3,405
The major lease obligations comprise leases in Greece with 99-year lease
terms, for which, as mentioned in note 34, the Greek State disputed the
ownership rights of the lessor.
26. Trade and other payables
31 December 2021 31 December 2020
€'000 €'000
Land creditors 20,752 20,758
Investment Management fees (see note 28.2) 1,301 3,498
Other payables and accrued expenses 4,115 5,260
Total 26,168 29,516
31 December 2021 31 December 2020
€'000 €'000
Non-current 20,089 20,366
Current 6,079 9,150
Total 26,168 29,516
Land creditors relate to contracts in connection with the purchase of land at
Lavender Bay. The above outstanding amount bears an annual interest rate equal
to the inflation rate, which cannot exceed 2%. Full settlement is due on 31
December 2025. As mentioned in note 34, the Group is in negotiations with land
creditors 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
Group's deferred liabilities to them, potentially swapping all or part of the
deferred payments against equity in the project.
27. NAV per share
31 December 2021 31 December 2020
'000 '000
Total equity attributable to owners of the Company (€) 119,087 148,648
Number of common shares outstanding at end of year 904,627 904,627
NAV per share (€) 0.13 0.16
28. Related party transactions
28.1 Directors' interest and remuneration
Directors' interests
Miltos Kambourides is the founder and managing partner of the Investment
Manager.
On 30 June 2021, Mr. Martin Adams, Mr. Nicholas Paris and Mr. Nicolai Huls
joined the Board as non-executive Directors, with Mr. Martin Adams becoming
Chairman. On the same date, Mr. Andrew Coppel, Mr.Graham Warner and Mr. Mark
Townsend stepped down from the Board as non-executive Directors.
The interests of the Directors as at 31 December 2021, all of which are
beneficial, in the issued share capital of the Company as at this date were as
follows:
Shares
'000
Miltos Kambourides (indirect holding) 66,019
Nicolai Huls 775
Save as disclosed, 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.
Directors' remuneration
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Remuneration 323 379
Total remuneration 323 379
The Directors' remuneration details for the years ended 31 December 2021 and
31 December 2020 were as follows:
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Martin Adams 37 -
Nicholas Paris 33 -
Nicolai Huls 30 -
Andrew Coppel (stepped down on 30 June 2021) 118 179
Graham Warner (stepped down on 30 June 2021) 72 134
Mark Townsend (stepped down on 30 June 2021) 33 66
Total 323 379
Miltos Kambourides has waived his fees.
28.2 Investment Manager remuneration
From 1 January 2021 From 1 January 2020
to 31 December 2021 to 31 December 2020
€'000 €'000
Fixed management fee 3,600 3,600
Total remuneration 3,600 3,600
As at 31 December 2021 and 31 December 2020, the amount payable to the
Investment Manager amounted to €1,301 thousand and €3,498 thousand,
respectively.
On 9 April 2019, the Company signed an Amended and Restated Investment
Management Agreement ('IMA'), which was effective from 1 January 2019, as
follows:
i. Fixed investment management fee
The annual investment management fees for 2020 and 2021 were €3.6 million
per annum.
Additionally, the IMA would have expired at the earlier of 31 December 2021 or
the sale of all of the Company's assets. No fixed management fee was due after
31 December 2021.
ii. Variable investment management fee
The variable investment management fee for the period from 1 January 2020 to
31 December 2021 would have been equal to a percentage of the actual
distribution made by the Company to its shareholders, as shown below:
Aggregate Shareholder Distributions % applied
on Distributions
Up to but excluding €30 million Nil
€30 million up to but excluding €50 million 2.0%
€50 million up to but excluding €75 million 3.0%
€75 million up to but excluding €100 million 4.0%
€100 million up to but excluding €125 million 5.0%
€125 million or more 6.0%
The Investment Manager was entitled to a performance fee payable subject to
certain conditions, under the terms of the IMA. However, any performance
fees earned under this arrangement would have been fully deducted from any
future annual investment management fees and variable management fees payable
over the term of the IMA. No performance fee was payable to the Investment
Manager for the year ended 31 December 2021 (31 December 2020: € Nil).
On 22 December 2021, a new IMA was approved by the Shareholders at the
Extraordinary General Meeting, which is effective from 1 January 2022, as
follows:
A. INCENTIVE FEES AND BONUS
I. The Investment Manager shall be entitled to be paid Incentive Fees which
shall be calculated as follows based on the aggregate Distributions made by
the Company to its Shareholders:
Aggregate Distributions (1) Incentive Fees (as a percentage of Aggregate Distributions)
Up to an including €40 million 0%
In excess of €40 million 15%
(1) For the avoidance of doubt, the different percentages set out below
shall be applied incrementally and not as against the total aggregate
Distributions.
II. In addition to the fees payable pursuant to paragraph A.I above, and
subject to paragraphs B and C once aggregate Distributions of €80 million
have been made, the Investment Manager shall be entitled to be paid a further
bonus (the "Bonus") on the following basis:
Aggregate Distributions Bonus payment
€80 million €1 million
For each amount of €5 million of Distributions paid in excess of €80 €1 million
million up to and including €100 million(1)
(1) For the avoidance of doubt, the total aggregate Bonus payments which may
be paid to the Investment Manager shall not exceed a maximum of €5 million.
III. Any Incentive Fees and/or Bonus payable by the Company to the Investment
Manager shall be set off against and shall be reduced (to not less than zero)
by the amount of any fees (including but not limited to asset management fees
and villa sales fees) collected in cash by the Investment Manager under the
terms of the Kea Asset Management Agreement accruing from 1 January 2022
onwards (to the extent that these have not already been off set against the
Incentive Fee Advance Payments pursuant to paragraph B.II. below).
B. INCENTIVE FEE ADVANCE PAYMENTS
I. As an advance against future Incentive Fees, the Investment Manager shall
be entitled to receive the following annual advances, which shall be payable
in equal quarterly instalments in advance:
Year Incentive Fee Advance Payment
2022 €2.4 million
2023 €2.3 million
2024 €1.3 million
II. The Incentive Fee Advance Payments payable by the Company to the
Investment Manager shall, (i) be set off against and shall reduce (to not less
than zero) the entitlement of the Investment Manager to any Incentive Fees
and/or Bonus payable pursuant to paragraphs A.I and A.II above, and (ii) be
set off against and shall be reduced (to not less than zero) by the amount of
any fees (including but not limited to asset management fees and villa sales
fees) collected in cash by the Investment Manager under the terms of the Kea
Asset Management Agreement accruing from 1 January 2022 onwards.
III. For the avoidance of doubt, the Company shall not be obliged to take
active steps to generate funding to pay any Incentive Fee Advance Payments
and, consequently, the payment of any Incentive Fee Advance Payments shall be
deferred, partly or wholly as required, by the Company in the case where:
(i) the Company does not have freely transferable funds available to pay such
Incentive Fee Advance Payments due, or
(ii) the Company's readily accessible consolidated cash balance (excluding (a)
cash that is not readily available to the Company, (b) cash held at Kilada and
the One&Only at Kea, and (c) any cash deposited in the interest retention
account in connection with the CastleLake Loan Agreement or any subsequent
lender to the Company) after the payment of any Incentive Fee Advance Payments
due would be less than €1 million.
C. ESCROW ACCOUNT
I. An amount equal to 25 per cent of the aggregate of any Incentive Fees
and/or Bonus in excess of the aggregate Incentive Fee Advance Payments to
which the Investment Manager may become entitled shall be placed in the Escrow
Account.
II. The amount held in the Escrow Account from time to time shall become
payable to the Investment Manager on the earlier to occur of:
(i) the date of completion of the disposal of the last Relevant Investment;
(ii) the date of commencement of the formal liquidation of the Company under
BVI law; and
(iii) the date of effective termination of this Agreement by the Company.
III. If the Investment Manager serves notice to terminate this Agreement, any
amounts held in the Escrow Account shall be forfeited and shall become due and
payable to the Company.
28. Related party transactions
28.3 Other related parties
The Investment Manager owns an effective 5% equity interest in SPV14 Ltd (an
equity-accounted investee and the holding company of the OOKI project). Under
the relevant shareholders agreement dated 27 May 2019, the Investment Manager,
One&Only and Exactarea have priority returns for an amount equal to 75% of
their equity investment, following the payment of which the Company becomes
entitled to a priority catch-up for the same amount. The investment Manager
also has an asset management agreement dated 1 November 2017 with OOKI and
provided management services during the year amounting to €240 thousand (31
December 2020: €790 thousand).
The Investment Manager retains a 4.8% equity interest in AZOE Holdings Ltd,
the company that owns Amanzoe resort and it also has an asset management
agreement dated 3 October 2018 for the resort. 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 million payable in instalments subject to the
achievement of certain construction milestones.
AXIA Ventures Group Limited, which is 20% owned by an affiliate of the
Investment Manager and on whose Board of Directors Miltos Kambourides serves,
was appointed by the Company to undertake a process for the sale of Company's
equity interest in OOKI dated 29 September 2020. No transaction was concluded
and therefore no fee was due or paid.
29. Business combinations
During the year ended 31 December 2021, the Group disposed of its entire stake
in Kalkan Yapi ve Turism A.S ('Kalkan', the owner of LaVanta project), as
follows:
Kalkan
€'000
Property, plant and equipment (2)
Other receivables (856)
Cash and cash equivalents (243)
Trade and other payables 1,180
Net liabilities 79
Net assets disposed of - 100% 79
Net proceeds on disposal 35
Reclassification of translation reserve from other comprehensive income to 5,784
profit or loss
Gain on disposal recognised in profit or loss 5,898
Cash effect on disposal:
Net proceeds on disposal 35
Cash and cash equivalents (243)
Net cash outflow on disposal (208)
On 30 January 2020, the Group finalised the sale of the one remaining Seafront
Villa (owned by the Collection Group), creating a net gain on disposal of
€336 thousand.
Collection
€'000
Trading properties (1,124)
Cash and cash equivalents (1)
Trade and other payables 1,461
Net liabilities 336
Net assets disposed of - 100% 336
Net proceeds on disposal -
Gain on disposal recognised in profit or loss 336
Cash effect on disposal:
Net proceeds on disposal -
Cash and cash equivalents (1)
Net cash outflow on disposal (1)
30. Non-CONTROLLING INTERESTs
The following tables summarises the information relating to each of the
Group's subsidiaries that has material non-controlling interests, before any
intra-group eliminations.
31 December 2021 MCO 1 SPV 10
(Kilada) (Kea Resort)
€'000 €'000
Non-controlling interests' percentage 11.58% 33.33%
Non-current assets 12,008 22,861
Current assets 57,382 -
Non-current liabilities (52,930) -
Current liabilities (4,477) (199)
Net assets 11,983 22,662
Carrying amount of non-controlling interests 1,389 7,553
Revenue - -
(Loss)/profit (2,832) 5,156
Other comprehensive income - (278)
Total comprehensive income (2,832) 4,878
(Loss)/profit allocated to non-controlling interests (348) 1,718
Other comprehensive income allocated to non-controlling interests - (92)
Cash flow used in operating activities (1,298) (1)
Cash flow used in investing activities (3,629) -
Cash flow from financing activities 4,316 -
Net decrease in cash and cash equivalents (611) (1)
31 December 2020 MCO 1 SPV 10
(Kilada) (Kea Resort)
€'000 €'000
Non-controlling interests' percentage 4.38% 33.33%
Non-current assets 7,869 17,980
Current assets 57,658 16
Non-current liabilities (47,694) -
Current liabilities (4,157) (212)
Net assets 13,676 17,784
Carrying amount of non-controlling interests 598 5,927
Revenue - -
(Loss)/profit (3,594) 517
Other comprehensive income - 208
Total comprehensive income (3,594) 725
(Loss)/profit allocated to non-controlling interests (126) 172
Other comprehensive income allocated to non-controlling interests - 69
Cash flow from operating activities (295) (1)
Cash flow used in investing activities (2,330) -
Cash flow from financing activities 1,918 -
Net decrease in cash and cash equivalents (707) (1)
31. FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group is exposed to credit risk, liquidity risk and market risk from its
use of financial instruments. The Board of Directors has overall
responsibility for the establishment and oversight of the Group's risk
management framework. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in
market conditions and the Group's activities. The Group's overall strategy
remains unchanged from last year.
(i) Credit risk
Credit risk arises when a failure by counterparties to discharge their
obligations could reduce the amount of future cash inflows from financial
assets on hand at the statement of financial position date. The Group has
policies in place to ensure that sales are made to customers with an
appropriate credit history and monitors on a continuous basis the ageing
profile of its receivables. The Group's trade receivables are secured with the
property sold. Cash balances are mainly held with high credit quality
financial institutions and the Group has policies to limit the amount of
credit exposure to any financial institution.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the end of the reporting year
was as follows:
Carrying amount
31 December 2021 31 December 2020
€'000 €'000
Trade and other receivables (see note 20) 1,080 1,318
Cash and cash equivalents (see note 21) 4,565 1,652
Total 5,645 2,970
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:
31 December 2021 31 December 2020
No. of Banks €'000 No. of Banks €'000
Bank group based on credit ratings by Moody's
Rating Aaa to A 2 4,104 1 267
Rating Baa to B 4 461 3 501
Rating Caa to C - - 3 884
Total bank balances 4,565 1,652
(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.
Carrying Contractual Within One Three Over
amounts cash flows one year to two years to five years five years
€'000 €'000 €'000 €'000 €'000 €'000
31 December 2021
Loans and borrowings 24,868 (27,895) (7,849) (15,846) (4,200) -
Lease obligations 3,420 (4,653) (91) (71) (213) (4,278)
Land creditors 20,752 (23,661) (1,280) (1,265) (21,116) -
Trade and other payables 4,413 (4,413) (4,413) - - -
53,453 (60,622) (13,633) (17,182) (25,529) (4,278)
31 December 2020
Loans and borrowings 9,046 (9,983) (6,483) (2,400) (1,100) -
Lease obligations 3,405 (4,615) (30) (71) (212) (4,302)
Land creditors 20,758 (24,957) (1,295) (1,280) (22,382)
Trade and other payables 7,752 (7,752) (7,752) - - -
40,961 (47,307) (15,560) (3,751) (23,694) (4,302)
(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:
31 December 2021 31 December 2020
€'000 €'000
Fixed rate instruments
Financial liabilities 20,125 2,802
Variable rate instruments
Financial liabilities 4,743 6,244
24,868 9,046
Sensitivity analysis
An increase of 100 basis points in interest rates at 31 December would have
decreased equity and profit or loss by €47 thousand (2020: €62 thousand).
This analysis assumes that all other variables, in particular foreign currency
rates, remain constant. For a decrease of 100 basis points there would be an
equal and opposite impact on the profit or loss and other equity.
Currency risk
Currency risk is the risk that the value of financial instruments will
fluctuate due to changes in foreign exchange rates. Currency risk arises when
future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the Group's measurement currency. The
Group is exposed to foreign exchange risk arising from various currency
exposures primarily with respect to the United States dollar. The Group's
management monitors the exchange rate fluctuations on a continuous basis and
acts accordingly.
Capital management
The Group manages its capital to ensure that it will be able to continue as a
going concern while improving the return to shareholders. The Board of
Directors is committed to implementing a package of measures that is expected
to focus on the achievement of the Group's investment objectives, achieve cost
efficiencies and strengthen its liquidity. Notably, these measures include
the completion of certain Group asset divestment transactions, as well as the
conclusion of additional working capital facilities at the Group and/or
Company level.
32. Commitments
As of 31 December 2021, the Group had a total of €17,972 thousand
contractual capital commitments on property, plant and equipment (2020:
€1,395 thousand).
33. Contingent liabilities
Companies of the Group are involved in pending litigation. This principally
relates to day-to-day operations as a developer of second-home residences and
largely derives from certain clients and suppliers. Based on advice from the
Group's legal advisers, the Investment Manager believes that there is
sufficient defence against any claim and does not expect that the Group will
suffer any material loss. All provisions in relation to these matters which
are considered necessary have been recorded in these consolidated financial
statements.
In addition to the tax liabilities that have already been provided for in the
consolidated financial statements based on existing evidence, there is a
possibility that additional tax liabilities may arise after the examination of
the tax and other matters of the companies of the Group in the relevant tax
jurisdictions.
The Group, under its normal course of business, guaranteed the development of
properties in line with agreed specifications and time limits in favour of
other parties.
34. SUBSEQUENT EVENTS
Part of investment property includes land acquired by Golfing (subsidiary
company, owner of 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 of
Golfing as belonging to the Greek State. In 2011, the vendor of the land
lodged an objection (administrative appeal) to the Directorate of Public
Property of the Ministry of Finance, requesting the review of the conclusion
of the Real Estate Service report, as well as the Final report of the
inspector of the Ministry of Finance. Golfing proceeded to various legal
actions in order to indicate its ownership of the land at that time. As part
of these legal proceedings, the Courts had issued a decision in 2019 as part
of a criminal law procedure, indicating that there were no grounds indicating
the public nature of the Golfings's land.
In September 2021, the Greek Council for Public Properties issued an Opinion
claiming that a part of the overall land comprising 843.114,42 m2, amounting
to EUR 3.2 million and included in Investment Property as of 31 December 2021
that was sold from 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 has
since taken 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
Company's relevant Board of Directors decision that was taken at its 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
2.097.443m2, from which 1.746.334 m2 are activated leased contracts, of an
amount of EUR 1.9 million included in Investment Property as of 31 December
2021, for which, though, no final opinion was issued by this Council. Golfing
and vendor have proceeded to legal actions relating to this dispute as well in
January 2022.
The Group believes, based on legal assessments, that the unilateral
registration of the property in the name of the Greek State, does not
establish and does not constitute a title deed or a court decision and,
therefore does not lead to the loss of property rights of Golfing but the
Greek State disputes the private character of the above land of 843.114,42 m2
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 the assets-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 an adjustment of €13.2 million in 'Loss in fair value of investment
property' in profit or loss in 2021 including a significant downward
adjustment to account for the estimation uncertainty relating to the above
case.
In view of these developments, Golfing is in negotiations with the original
vendor with a view to ensuring that both no additional deferred payments are
made to them under the relevant sale and purchase contracts until the
resolution of this legal dispute with the Greek State and also to reduce the
overall quantum of Golfing's deferred liabilities to them, potentially
swapping all or part of the deferred payments against equity in the project.
There were no other material events after the reporting period except those
described above and in note 28.2, which have a bearing on the understanding of
the consolidated financial statements as at 31 December 2021.
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