REG - Dolphin Capital Inv - Half-year Report <Origin Href="QuoteRef">DOLC.L</Origin> - Part 4

DCI AdvisorsAnnouncement

30/09/2016 07:08

- Part 4: For the preceding part double click  ID:nRSd2781Lc 

2013, the parties signed a new agreement for the purchase of the remaining 40% stake of the entity.
The base consideration for the purchase was E4.4 million payable in three installments: E2.4 million by 10 September 2013,
E1 million by 30 September 2013 and E1 million by 31 October 2013. The last installment of E1 million was transferred in
February 2014. Consideration might be increased by the transfer of plots of land in the project, to the seller, of total
market value equal to E4 million, subject to the project receiving permits for building 40,000 m2, of freehold residential
properties. The conditional deferred consideration will be adjusted pro rata in case the buildable properties are less than
40,000 m2 but is also subject to a 5% annual increase commencing from the second anniversary from the signing of the
agreement and until implementation by the Company. 
 
On 20 September 2010, the Group signed an agreement with Archimedia, controlled by John Hunt, for the sale of a 14.29%
stake in Amanzoe for a consideration of E11 million. The agreement also granted Archimedia the right to partially or wholly
convert this shareholding stake into up to three predefined Aman Villas (the 'Conversion Villas') for a predetermined value
and percentage per Villa. The first E1 million of the consideration was received at signing, while the completion of the
transaction and the payment of the E10 million balance was subject to customary due diligence on the project and the
issuance of the construction permits for the Conversion Villas prior to a longstop date set at 1 April 2011. On 28 March
2011, the Company reached an agreement with Archimedia to vary the original terms of the sale agreement, which was followed
by the Company and Archimedia entering into an amended sale agreement on 13 March 2012. The Company received US$12,422
thousand and E1,300 thousand, while US$978 thousand and E800 thousand due as at 31 December 2013, plus any additional
consideration that could be due depending on the exact size and features of the Conversion Villas, would be received upon
completion of the Conversion Villas. On 2 July 2014, Archimedia remitted E904 thousand (E263 thousand and US$878 thousand)
to the Company towards this end. As of 31 December 2015 no receivable amount was outstanding. On 3 August 2012, the Company
received a Conversion Notice from Archimedia to convert 6.43% of its shares in Amanzoe in exchange for an Aman Villa and on
27 December 2012 a further Notice for the conversion of the remaining 7.86% of its shares for two other Aman Villas. As of
31 December 2015, all Villas Conversions had been completed and Archimedia did not hold any shareholding interest in
Amanzoe. 
 
On 6 August 2012, the Company signed an agreement for the sale of eight out of the nine remaining Seafront Villas, part of
the Mindcompass Overseas Limited group of entities. The total base net consideration agreed for this sale was E10 million,
with the Company also entitled to 50% profit participation in the sale of five Villas. It was also agreed that the Company
would undertake the construction contract for the completion of the Villas and a E1 million deposit was paid upon signing.
During 2013, the Company received an additional amount of E990 thousand. The construction of the two Villas is currently
underway. 
 
On 5 September 2012, the Company signed a sales agreement with a regional investor group led by Mr. Alberto Vallarino for
the sale of its 60% shareholding in Peninsula Resort Holdings Limited, the entity that indirectly holds the land for Pearl
Island's Founders' phase of the Pearl Island Project. The consideration for the sale was a cash payment of US$6 million
(50% paid at closing on 14 September 2012 and 50% one year from closing, collected on 17 September 2013) and a commitment
to invest an additional circa US$35 million of development capital within a maximum period of two years in order to
complete the aforementioned phase of the project. Out of those funds, approximately US$13 million would be incurred on
development of components owned by Pearl Island Limited S.A., with the entire amount already invested by 31 December 2015. 
 
28.3 Shareholder and development agreements 
 
Development agreements 
 
Pursuant to the original Sale and Purchase Agreement of 10 December 2007, DCI H7 was obliged to make payments for the
construction of infrastructure on the land retained by DR Beachfront Real Estate LLC ('DRB'), the former majority
shareholder of PGH. Pursuant to a restructuring agreement dated 5 November 2012, those obligations have been restructured
with the material provisions of that agreement already fulfilled. As at 31 December 2015, following cash payments of US$7.6
million and transfers of land parcels valued at approximately US$11.7 million, no amount is outstanding. 
 
Pedro Gonzalez Holdings II Limited, a subsidiary of the Group in which the Company holds a 60% stake, has signed a
Development Management agreement with DCI Holdings Twelve Limited ('DCI H12') in which the Group has a stake of 60%. Under
its terms, DCI H12 undertakes, among others, the management of permitting, construction, sale and marketing of the Pearl
Island project. 
 
28.4 Other related parties 
 
During the periods ended 30 June 2016 and 30 June 2015, the Group incurred the following related party transactions with
the following parties: 
 
 30 June 2016                                                                                                                                   
 Related party name                                E'000  Nature of transaction                                                                 
 Iktinos Hellas S.A.                               24     Project management services in relation to Sitia project and rent payment             
 Third Point LLC, shareholder of the Company       1,200  Bond interest for the period                                                          
 30 June 2015                                                                                                                                   
 Related party name                                E'000  Nature of transaction                                                                 
 Iktinos Hellas S.A.                               20     Project management services in relation to Sitia project and rent payment             
 John Heah, non-controlling shareholder of SPV 10  408    Design fees in relation to Playa Grande project                                       
 Progressive Business Advisors S.A.                254    Accounting fees                                                                       
 Portoheli Ksenodoxio Kai Marina S.A.              16     Construction cost and project management services in relation to Nikki Beach project  
 Third Point LLC, shareholder of the Company       1,162  Bond interest for the period                                                          
 
 
29. Business combinations 
 
During the period ended 30 June 2016, the group disposed of its entire holding in DolphinCI Eleven Limited ('DCI 11'), as
follows: 
 
                                                     E'000    
 Trading properties (see note 16)                    (1,599)  
 Other liabilities                                   16       
 Net assets disposed of                              (1,583)  
 Disposal consideration via settlement of liability  2,780    
 Gain on disposal recognised in profit or loss       1,197    
 Net cash inflow on disposal                         -        
 
 
30. FINANCIAL RISK MANAGEMENT 
 
The Group's financial risks and risk management objectives and policies are consistent with those disclosed in the
consolidated financial statements as at and for the year ended 31 December 2015. 
 
Fair values 
 
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the statement of
financial position date. 
 
31. Commitments 
 
As of 30 June 2016, the Group had a total of E2,245 thousand contractual capital commitments on property, plant and
equipment (31 December 2015: E3,229 thousand). 
 
Non-cancellable operating lease rentals are payable as follows: 
 
                             30 June 2016  31 December 2015  
                             E'000         E'000             
 Less than one year          19            19                
 Between two and five years  2             11                
 Total                       21            30                
 
 
32. Contingent liabilities 
 
Companies of the Group are involved in pending litigations. Such litigations principally relate to day-to-day operations as
a developer of second-home residences and largely derive from certain clients and suppliers. Based on the Group's legal
advisers, the Investment Manager believes that there is sufficient defence against any claim and they do 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 condensed consolidated interim financial
statements based on existing evidence, there is a possibility that additional tax liabilities may arise after the
examination of the tax and other matters of the companies of the Group in the relevant tax jurisdictions. 
 
The Group, under its normal course of business, guaranteed the development of properties in line with agreed specifications
and time limits in favour of other parties. 
 
33. EVENTS AFTER THE REPORtING PERIOD 
 
On 29 September 2016, the Company reached a definitive agreement to dispose of its 49.75% shareholding in DCI H2 to
Theodoros Aristodemou ('TA'), DCI H2' s current controlling shareholder. The disposal will be effected by way of a sale to
TA of 49.75% of the shares in DCI H2 held by DCI Holdings One Ltd, a wholly-owned subsidiary of the Company, for a total
cash consideration of E45 million, payable in quarterly instalments over three years and bearing annual interest of 4% in
the first year, increasing to 5% and 6%, respectively, for each of the subsequent years. A E2 million discount to the total
consideration will be granted if the full consideration is settled by 29 December 2016. The Company will also be entitled
to a 25% share of any gross proceeds in excess of an implied company equity valuation of E100 million from the sale of any
shares of DCI H2 (or of its subsidiaries) sold by the acquirer until the earlier of six months from the settlement of the
full consideration (to the extent such settlement occurs by 29 December 2016 and the second anniversary from the
transaction. The acquisition shares will be kept in escrow and transferred to the acquirer in line with the collection of
the consideration by the Company, apart from a percentage which will remain escrowed until the final settlement of the
consideration. In the event that any payment becomes overdue for more than three months either party has the right to
terminate the sales agreement, in which case all the shares kept in escrow together with any corresponding dividend
distributions will be retained by the Company. 
 
There were no other material events after the reporting period which have a bearing on the understanding of the condensed
consolidated interim financial statements as at 30 June 2016. 
 
This information is provided by RNS
The company news service from the London Stock Exchange