REG - Dolphin Capital Inv - Final Results <Origin Href="QuoteRef">DOLC.L</Origin> - Part 4
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5. Weight allocation: 2014: from +10% to +50%
2013: from +13% to +33%
Property location Valuation technique (see note 3) Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement
Property in Americas Market approach Premiums/(discounts) on the following: The estimated fair value would increase/(decrease) if:
1. Location: 2014: from -35% to +45% 1. Premiums were higher/(lower);
(2013: from -35% to +45%) 2. Discounts were lower/(higher);
2. Site size: 2014: from -60% to +60% 3. Weights on comparables with premiums were higher/(lower);
(2013: from -60% to +75%) 4. Weights on comparables with discounts were lower/(higher).
3. Asking vs transaction: 2014: from -75% to +10%
(2013: from -75% to +25%)
4. Frontage sea view: 2014: from -35% to +55%
(2013: from -30% to +35%)
5. Development potential: 2014: from -95% to +65%
(2013: from -95% to +60%)
6. Condition quality: 2014: from -20% to +45%
(2013: from -20% to +45%)
7. Weight allocation: 2014: from +5% to +90%
(2013: from +10% to +70%)
Combined approach (Market and Income) Market approach (50% weight)Premiums/(discounts) on the following: The estimated fair value would increase/(decrease) if:
1. Location: 2014: from -35% to +10% (2013: nil) 1. Premiums were higher/(lower);
2. Site size: 2014: from -30% to -10% (2013: nil) 2. Discounts were lower/(higher);
3. Asking vs transaction: 2014: from -65% to -10% (2013: nil) 3. Weights on comparables with premiums were higher/(lower);
4. Frontage sea view: 2014: from -30% to +35% (2013: nil) 4. Weights on comparables with discounts were lower/(higher);
5. Development potential: 2014: from +25% to +45% (2013: nil) 5. Room occupancy rate was higher/(lower);
6. Condition quality: 2014: from 0% to +5% (2013: nil) 6. Average daily rate per occupied room was higher/(lower);
7. Weight allocation: 2014: from +40% to +60% (2013: nil) 7. Gross operating margin was higher/(lower);
Income approach (50% weight) 8. Terminal capitalisation rate was higher/(lower);
Room occupancy rate: 2014: from +40% to +55% 9. Quantity of villas was higher/ (lower);
(weighted average: 52%) (2013: nil) 10. Selling price per m2 was higher/(lower);
Average daily rate per occupied room: 2014: from US$1,200 to US$1,890 11. Expected annual growth in selling price was higher/(lower);
(weighted average: US$1,570) 12. Cash flow velocity was shorter/(longer);
(2013: nil) 13. Risk-adjusted discount rate was lower/(higher).
Gross operating margin rate: 2014: from 36% to 52%
(weighted average: 49%) (2013: nil)
Terminal capitalisation rate: 2014: 9% (2013: nil)
Quantity of villas: 2014: 36 (2013: nil)
Selling price per m2: 2014: from US$5,000 to US$9,000
(2013: nil)
Expected annual growth in selling price: 2014: 0% (2013: nil)
Cash flow velocity (years): 2014: 7 (2013: nil)
Risk-adjusted discount rate: 2014: 15% (2013: nil)
13. Property, plant and equipment
Under constructionE'000 Land & buildingsE'000 Machinery &equipmentE'000 OtherE'000 TotalE'000
2014
Cost or revalued amount
At beginning of year 8,180 147,340 6,626 2,148 164,294
Direct acquisitions of property, plant and equipment 19,232 3,458 673 99 23,462
Capitalised depreciation 133 - - - 133
Direct disposal of property, plant and equipment - - (8) (105) (113)
Transfer from/(to) other assets 2,303 (14,140) 5,404 191 (6,242)
Revaluation adjustment - 6,322 - - 6,322
Exchange difference 1,425 3,846 992 173 6,436
At end of year 31,273 146,826 13,687 2,506 194,292
Depreciation and impairment losses
At beginning of year - 17,221 2,452 1,017 20,690
Direct disposal of property, plant and equipment - - (9) (54) (63)
Transfer from/(to) other assets - (6,676) 438 (4) (6,242)
Depreciation charge for the year - 2,084 904 251 3,239
Capitalised depreciation - 56 - 77 133
Impairment loss - 13 - - 13
Reversal of impairment loss - (670) - - (670)
Exchange difference - 74 256 97 427
At end of year - 12,102 4,041 1,384 17,527
Carrying amounts 31,273 134,724 9,646 1,122 176,765
Under construction E'000 Land & buildings E'000 Machinery Other E'000 Total E'000
& equipment E'000
2013
Cost or revalued amount
At beginning of year 389 131,175 5,604 2,015 139,183
Direct acquisitions of property, plant and equipment 7,808 16,508 1,089 200 25,605
Transfers from investment property (see note 12) - 7,232 - - 7,232
Capitalised depreciation - 258 - - 258
Direct disposal of property, plant and equipment - (7) - - (7)
Revaluation adjustment - (6,911) - - (6,911)
Exchange difference (17) (915) (67) (67) (1,066)
At end of year 8,180 147,340 6,626 2,148 164,294
Depreciation and impairment losses
At beginning of year - 18,085 1,699 727 20,511
Revaluation adjustment - (2,628) - - (2,628)
Depreciation charge for the year - 1,591 729 127 2,447
Capitalised depreciation - - 70 188 258
Impairment loss - 342 - - 342
Reversal of impairment loss - (117) - - (117)
Exchange difference - (52) (46) (25) (123)
At end of year - 17,221 2,452 1,017 20,690
Carrying amounts 8,180 130,119 4,174 1,131 143,604
The carrying amount at year end of land and buildings, if the cost model was used, would have been E108 million (2013: E104
million).
As at 31 December 2014 and 31 December 2013, part of the Group's immovable property is held as security for bank loans (see
note 20).
Fair value hierarchy
The fair value of land and buildings, amounted to E134,724 thousand (2013: E130,119 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 2014 31 December 2013
E'000 E'000
At beginning of year 130,119 113,090
Direct acquisitions, including capitalised depreciation 3,402 16,766
Direct disposals - (7)
Transfers (to)/from other assets (7,464) 7,232
Losses recognised in profit or loss
Impairment loss in 'Impairment loss on property, plant and equipment' (13) (342)
Reversal of impairment loss in 'Reversal of impairment loss on property, plant and equipment' 670 117
Depreciation in 'Depreciation charge' (2,084) (1,591)
Losses recognised in comprehensive income
Revaluation adjustment in 'Revaluation on property, plant and equipment' 6,322 (4,283)
Unrealised exchange difference in 'Foreign currency translation differences' 3,772 (863)
At end of year 134,724 130,119
The following table shows the valuation techniques used in measuring the fair value of property, plant and equipment, 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 - Commercial Buildings Income approach Risk-adjusted discount rate: 2014: 8% (2013: 8%) The estimated fair value would increase/(decrease) if:
Expected market rental growth: 2014: 1.5% (2013: 1.5%) 1. Risk-adjusted discount rate was lower/(higher);
2. Expected market rental growth was higher/(lower).
Property in Greece Income approach Room occupancy rate: 2014: from 26% to 57% The estimated fair value would increase/(decrease) if:
(weighted average: 38%-56%) 1. Room occupancy rate was higher/(lower);
(2013: from 31% to 57% 2. Average daily rate per occupied room was higher/(lower);
(weighted average: 40%-56%) 3. Gross operating margin was higher/(lower);
Average daily rate per occupied room: 2014: from E397 to E1,750 4. Risk-adjusted discount rate was lower/(higher);
(weighted average: E470-E1,500) 5. Terminal capitalisation rate was higher/(lower).
(2013: from E397 to E1,826
(weighted average: E474-E1,663)
Gross operating margin rate: 2014: from 25% to 47%
(weighted average: 35%-44%)
(2013: from 26% to 47%
(weighted average: 30%-44%)
Risk-adjusted discount rate: 2014: from 11% to 13%
(2013: from 11% to 14%)
Terminal capitalisation rate: 2014: from 8% to 9%(2013: from 9% to 10%)
Combined approach (Market and Cost) Market approach (for land components) The estimated fair value would increase/(decrease) if:
Premiums/(discounts) on the following: 1. Premiums were higher/(lower);
1. Location: 2014: from -20% to +30% 2. Discounts were lower/(higher);
(2013:from -20% to +30%) 3. Weights on comparables with premiums were higher/(lower);
2. Site size: 2014: from -20% to +20% 4. Weights on comparables with discounts were lower/(higher);
(2013: from -20% to +20%) 5. Replacement cost (new) per m2 was higher/(lower);
3. Asking vs transaction: 2014: from -20% to0% 6. Enterpreneurial profit rate was higher/(lower);
(2013: from -20% to 0%) 7. Depreciation rate was lower/(higher).
4. Frontage sea view: 2014: from -20% to +20%
(2013: from -20% to +20%)
5. Maturity/development potential: 2014: from -40% to +25%
(2013: from -50% to +25%)
6. Strategic investment approval: 2014:15% (2013:15%)
7. Weight allocation: 2014: from +10% to +25%
(2013: from +10% to +25%)
Cost approach (for building components)
Replacement cost (new) per m2: 2014: E500 - E1,710
(2013: E500 - E2,023)
Enterpreneurial profit rate: 2014: 20% (2013: 20%)
Depreciation rate: 2014: 2.5%-28% (2013: 2.5%-27%)
Useful life (years): 2014: 40-60 (2013: 40-60)
Property location Valuation technique (see note 3) Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement
Property in Americas Market approach Premiums/(discounts) on the following: The estimated fair value would increase/(decrease) if:
1. Location: 2014: from -35% to +10% 1. Premiums were higher/(lower);
(2013: from -35% to +10%) 2. Discounts were lower/(higher);
2. Site size: 2014: from -30% to +60% 3. Weights on comparables with premiums were higher/(lower);
(2013: from -30% to +60%) 4. Weights on comparables with discounts were lower/(higher).
3. Asking vs transaction: 2014: from -65% to -10%
(2013: from -65% to -10%)
4. Frontage sea view: 2014: from -30% to +55%
(2013: from -30% to +55%)
5.Development potential: 2014: from -70% to +35%
(2013: from -75% to +30%)
6. Condition quality: 2014: from 0% to +10%
(2013: from 0% to +10%)
7. Weight allocation: 2014: from +15% to +65%
(2013: from +15% to +65%)
Combined approach (Market and Income) Market approach (50% weight) Premiums/(discounts) on the following: The estimated fair value would increase/(decrease) if:
1. Location: 2014: from -35% to +10% (2013: nil) 1. Premiums were higher/(lower);
2. Site size: 2014: from -30% to -10% (2013: nil) 2. Discounts were lower/(higher);
3. Asking vs transaction: 2014: from -65% to -10% (2013: nil) 3. Weights on comparables with premiums were higher/(lower);
4. Frontage sea view: 2014: from -30% to +35% (2013: nil) 4. Weights on comparables with discounts were lower/(higher);
5. Development potential: 2014:from +25% to +45% (2013: nil) 5. R occupancy rate was higher/(lower);
6. Condition quality: 2014: from 0% to +5% (2013: nil) 6. Average daily rate per occupied room was higher/(lower);
7. Weight allocation: 2014: from +40% to +60% (2013: nil) 7. Gross operating margin was higher/(lower);
Income approach (50% weight) 8. Terminal capitalisation rate was higher/(lower);
Room occupancy rate: 2014: from 40% to 55% (weighted average: 52%) 9. Quantity of villas was higher/ (lower);
(2013: nil) 10. Selling price per m2 was higher/(lower);
Average daily rate per occupied room: 2014: from US$1,200 to US$1,890 11. Expected annual growth in selling price was higher/(lower);
(weighted average US$1.570) (2013: nil) 12. Cash flow velocity was shorter/(longer);
Gross operating margin rate: 2014: from 36% to 52% (weighted average 49%) 13. Risk-adjusted discount rate was lower/(higher).
(2013: nil)
Terminal capitalisation rate: 2014: 9% (2013: nil)
Quantity of villas: 2014: 36 (2013: nil)
Selling price per m2: 2014: from US$5,000 to US$9,000 (2013: nil)
Expected annual growth in selling price: 2014: 0% (2013: nil)
Cash flow velocity (years): 2014: 7 (2013: nil)
Risk-adjusted discount rate: 2014: 15% (2013: nil)
14. Trading properties
31 December 2014 31 December 2013
E'000 E'000
At beginning of year 64,524 38,732
Net direct (disposals)/additions (4,510) 16,869
Net transfers from investment property (see note 12) 5,568 9,115
Disposals through disposal of subsidiary company (see note 26) (7,252) -
Impairment loss (6,216) (970)
Reversal of impairment loss - 778
Exchange difference 209 -
At end of year 52,323 64,524
As at 31 December 2014 and 31 December 2013, part of the Group's immovable property is held as security for bank loans (see
note 20).
15. AVAILABLE-FOR-SALE FINANCIAL ASSETS
On 15 July 2013, the Company acquired 9.6 million shares, equivalent to 10% of Itacare's share capital, for the amount of
E1.9 million. Itacare is a real estate investment company that was listed on AIM until 16 May 2014, when the admission of
its ordinary shares to trading on AIM was cancelled following a decision of its shareholders at the Extraordinary General
Meeting that took place on 6 May 2014.
31 December 2014 31 December 2013
E'000 E'000
At beginning of year 2,265 -
Additions - 1,944
Net change in fair value (64) 321
At end of year 2,201 2,265
Fair value hierarchy
The fair value of available-for-sale financial assets, on Itacare's de-listing date, was transferred from Level 1 to Level
3 at the fair value hierarchy.
16. equity accounted investees
DCI Holdings Two Limited ('DCI H2') Single Purpose Vehicle Five Limited ('SPV5') Progressive Business Advisors S.A. DCI Holdings Fifty Limited ('DCI H50') Total
E'000 E'000 E'000 E'000 E'000
Balance as at 1 January 2014 179,420 1,418 24 - 180,862
Initial cost of investment (see note 26) - - - 1,972 1,972
Additions - 1,116 - - 1,116
Profit on dilution - - - 149 149
Share of profits/(losses), net of tax 52,574 (2,534) - 106 50,146
Share of revaluation deficit (22) - - - (22)
Balance as at 31 December 2014 231,972 - 24 2,227 234,223
Balance as at 1 January 2013 256,150 1,722 24 - 257,896
Share of losses, net of tax (76,935) (304) - - (77,239)
Share of revaluation surplus 205 - - - 205
Balance as at 31 December 2013 179,420 1,418 24 - 180,862
The details of the above investments are as follows:
Principal place of business/Country Shareholding interest
Name of incorporation Principal activities 2014 2013
DCI H2 BVIs Acquisition and holding of investments in Cyprus 50% 50%
SPV5 Cyprus Acquisition and holding of investments in Greece 25% 25%
Progressive Business Advisors S.A. Greece Provision of professional services to Group companies 20% 20%
DCI H50 BVIs Provision of loan to Group's associate 25% -
The above shareholding interest percentages are rounded to the nearest integer.
During the year, the Company's investment in its equity accounted investee, DCI H2, increased by E52,552 thousand, compared
to the decrease of E76,730 thousand during the year 2013. DCI H2's equity fluctuations for both periods relate to
revaluation gains and losses on its property land bank. The decrease recognised in 2013 was principally driven by the
reduction in value of the Venus Rock project, whose fair value had been adjusted to reflect the purchase price agreed with
China Glory Investment Group ('CGIG'). Considering the fact that the agreement with CGIG was eventually terminated on 10
June 2014, the property of Venus Rock was revalued during the year based on a valuation by independent professional valuers
carried out with an effective date 31 December 2014.
The valuation techniques and significant unobservable inputs used are shown below:
Property Valuation Inter-relationship between key unobservable inputs and fair
description technique Significant unobservable inputs value measurement
Golf courses and development land, Paphos, Cyprus Income approach Selling price per m2: from E2,800 to E3,500 The estimated fair value would increase/(decrease) if:
Expected annual growth in selling price: 1% to 3% · Selling price per m2 was higher/(lower);
Cash flow velocity (years): 12 and 13 · Expected annual growth in selling price was higher/(lower);
Risk-adjusted discount rate: 12.5% to 12.9% · Cash flow velocity was shorter/(longer);
· Risk-adjusted discount rate was lower/(higher).
Beachfront land, Paphos, Cyprus MarketApproach Premiums/(discounts) on the following: The estimated fair value would increase/(decrease) if:
· Location: from -30% to 0% · Premiums were higher/(lower);
· Site size: from -20% to 0% · Discounts were lower/(higher);
· Asking vs transaction: from -15% to 0% · Weights on comparables with premiums were higher/(lower);
· Frontage sea view: from -30% to 0% · Weights on comparables with discounts were lower/(higher).
· Maturity/development potential: from 0% to +30%
· Building permit: from 0% to +30%
· Weight allocation: from +20% to +30%
Agricultural land, Paphos, Cyprus MarketApproach Premiums/(discounts) on the following: The estimated fair value would increase/(decrease) if:
· Location: from 0% to +20% · Premiums were higher/(lower);
· Site size: -50% · Discounts were lower/(higher);
· Asking vs transaction: from -25% to -10% · Weights on comparables with premiums were higher/(lower);
· Frontage sea view: from 0% to +20% · Weights on comparables with discounts were lower/(higher).
· Maturity/development potential: from -20% to 0%
· Weight allocation: from +25% to +40%
Residential land, Paphos, Cyprus Combinedapproach(Market and Income) Market approach (50% weight) The estimated fair value would increase/(decrease) if:
Premiums/(discounts) on the following: · Premiums were higher/(lower);
· Long availability in the market: -5% · Discounts were lower/(higher);
Income approach (50% weight) · Selling price per m2 was higher/(lower);
Selling price per m2: E3,000 · Expected annual growth in selling price was higher/(lower);
Expected annual growth in selling price: 0% and 3% · Cash flow velocity was shorter/(longer);
Cash flow velocity (years): 8 · Risk-adjusted discount rate was lower/(higher).
Risk-adjusted discount rate: 12.1%
Premiums/(discounts) on combined approach value:
· Location, maturity, size: from -50% to -10%
Other Venus Rock land, Paphos, Cyprus Combined approach (Market and Income) Market approach (50% weight) The estimated fair value would increase/(decrease) if:
Premiums/(discounts) on the following: · Discounts were lower/(higher);
· Long availability in the market: -5% · Selling price per m2 was higher/(lower);
Income approach (50% weight) · Expected annual growth in selling price was higher/(lower);
· Selling price per m2: E3,000 · Cash flow velocity was shorter/(longer);
· Expected annual growth in selling price: 0% to 3% · Risk-adjusted discount rate was lower/(higher).
· Cash flow velocity (years): 8
· Risk-adjusted discount rate: 12.1%
The extended recession in Cyprus and the CGIC agreement terms not allowing the company to market its Venus Rock property
have necessitated the restructuring of DCI H2 bank loans. Namely, DCI H2, has recently completed some bank loan
restructurings, rescheduling its loan repayments over a longer period and reducing its debt service obligations for 2015
and 2016, whereas it is under negotiations with three more banks. Also it is in final stage discussions aiming to reach an
agreement to restructure its respective loan facilities with its major bank lender. DCI H2's bank loans are fully secured,
primarily with mortgages against immovable property of its subsidiaries. There are no floating charges relating to these
bank loans.
Following the termination of the agreement with CGIC, DCI H2 continues taking actions for the disposal of Venus Rock
project. If the plans of divestiture of the Venus Rock project do not materialise, and DCI H2 does not secure funds from
its subsidiaries or other sources to service its banking debt, the lending institutions would be entitled to exercise the
securities they hold against the relevant properties. In such situation, the timing of these disposals and the eventual
disposal proceeds cannot be forecasted and could have a significant impact on the Company's investment in DCI H2. However,
such a situation is considered remote by DCI H2 and the Company's management.
As of 31 December 2014, Aristo, DCI H2's largest subsidiary, had a total of E2.4 million (2013: E2.4 million) contractual
capital commitments on property, plant and equipment and a total of E44 million (2013: E45 million) bank guarantees arising
in the ordinary course of its business. Aristo's management does not anticipate any material liability to arise from these
contingent liabilities. In addition, 1,500 shares out of 4,975 shares that the Company holds in DCI H2 are pledged as a
security against Group's bank loans (see note 20).
SPV5 had a total of E778 thousand (2013: E5.1 million) contractual capital commitments on property, plant and equipment. In
addition, all 2,500 shares hold by the Company in SPV5 are pledged as a security against a loan of SPV5 (see note 20).
Summary of financial information for equity accounted investees as at and for the years ended 31 December 2014 and 31
December 2013, not adjusted for the percentage ownership held by the Group:
DCI H2 SPV5 Progressive Business Advisors S.A. DCI H50 Total
E'000 E'000 E'000 E'000 E'000
2014
Current assets 235,352 7,340 212 6 242,910
Non-current assets 747,722 12,090 2 8,900 768,714
Total assets 983,074 19,430 214 8,906 1,011,624
Current liabilities 210,121 8,467 96 - 218,684
Non-current liabilities 306,678 13,023 - - 319,701
Total liabilities 516,799 21,490 96 - 538,385
Net assets/(liabilities) 466,275 (2,060) 118 8,906 473,239
Carrying amount of interest in associate 231,972 - 24 2,227 234,223
Revenues 175,137 810 - 500 176,447
Profit/(loss) 105,676 (12,194) - 500 93,982
Other comprehensive income (44) - - - (44)
Total comprehensive income 105,632 (12,194) - 500 93,938
Group's share of profit/(loss) and total comprehensive income 52,552 (2,534) - 106 50,124
2013
Current assets 221,469 10,099 212 - 231,780
Non-current assets 630,273 11,400 2 - 641,675
Total assets 851,742 21,499 214 - 873,455
Current liabilities 186,022 10,571 96 - 196,689
Non-current liabilities 305,076 5,258 - - 310,334
Total liabilities 491,098 15,829 96 - 507,023
Net assets 360,644 5,670 118 - 366,432
Carrying amount of interest in associate 179,420 1,418 24 - 180,862
Revenues 29,786 - 455 - 30,241
(Loss)/profit (154,643) (1,217) 1 - (155,859)
Other comprehensive income 411 - - - 411
Total comprehensive income (154,232) (1,217) 1 - (155,448)
Group's share of loss and total comprehensive income (76,730) (304) - - (77,034)
17. RECEIVABLES AND OTHER ASSETS
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