REG - Dolphin Capital Inv - Half Yearly Report <Origin Href="QuoteRef">DOLC.L</Origin> - Part 3
24/09/2015 07:01
- Part 3: For the preceding part double click ID:nRSX0308Ab
value of the Venus Rock project was reduced to
reflect the purchase price agreed with CGIG whereas, in 2014, following the termination of the agreement, the property of
Venus Rock was revalued based on a valuation by independent professional valuers.
During the period, the Company disposed of its participation in Progressive Business Advisors S.A. Also, DCI H50 acquired a
100% participation in SPV 5, through the enforcement of the pledge over the whole issued share capital of SPV 5 that
existed in relation to a loan facility provided by DCI H50 to SPV 5. As the Company has a 25% participation in DCI H50,
its indirect holding in SPV 5 remains 25% at 30 June 2015.
As of 30 June 2015, Aristo, had a total of E2.4 million (31 December 2014: E2.4 million) contractual capital commitments on
property, plant and equipment and a total of E43 million (31 December 2014: E44 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 the Group's bank loans.
SPV 5 had nil (31 December 2014: E778 thousand) contractual capital commitments on property, plant and equipment.
Summary of financial information for equity accounted investees as at 30 June 2015 and 31 December 2014, not adjusted for
the percentage of ownership held by the Group:
DCI H2 DCI H50 Progressive Business Advisors S.A. SPV 5 Total
E'000 E'000 E'000 E'000 E'000
30 June 2015
Current assets 235,609 6,076 - - 241,685
Non-current assets 746,452 11,808 - - 758,260
Total assets 982,061 17,884 - - 999,945
Current liabilities 228,387 7,347 - - 235,734
Non-current liabilities 299,565 4,058 - - 303,623
Total liabilities 527,952 11,405 - - 539,357
Net assets 454,109 6,479 - - 460,588
Carrying amount of interest in investee 225,919 1,620 - - 227,539
Revenues 10,155 650 - - 10,805
Loss (12,202) (4,026) - - (16,228)
Other comprehensive income 33 - - - 33
Total comprehensive income (12,169) (4,026) - - (16,195)
Group's share of loss and total comprehensive income (6,053) (1,007) - - (7,060)
31 December 2014
Current assets 235,352 6 212 7,340 242,910
Non-current assets 747,722 8,900 2 12,090 768,714
Total assets 983,074 8,906 214 19,430 1,011,624
Current liabilities 210,121 - 96 8,467 218,684
Non-current liabilities 306,678 - - 13,023 319,701
Total liabilities 516,799 - 96 21,490 538,385
Net assets/(liabilities) 466,275 8,906 118 (2,060) 473,239
Carrying amount of interest in investee 231,972 2,227 24 - 234,223
Revenues 175,137 500 - 810 176,447
Profit/(loss) 105,676 500 - (12,194) 93,982
Other comprehensive income (44) - - - (44)
Total comprehensive income 105,632 500 - (12,194) 93,938
Group's share of profit/(loss) and total comprehensive income 52,552 106 - (2,534) 50,124
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 two more banks. 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 materialize, 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.
30 June 2015 31 December 2014
E'000 E'000
Trade receivables 133 283
Amount receivable from Archimedia Holdings Corp. ('Archimedia')(see note 22.3) - 415
VAT receivables 7,589 6,206
Other receivables 10,994 10,807
Total trade and other receivables 18,716 17,711
Prepayments and other assets 482 3,427
Total 19,198 21,138
15. Cash and cash equivalents
30 June 2015 31 December 2014
E'000 E'000
Bank balances 74,767 30,952
Cash in hand 53 26
Total 74,820 30,978
During the period, the Group had no fixed deposits.
As at 30 June 2015 and 31 December 2014, the amount of E6.2 million and E13.08 million (US$14.6 million) and the amount of
E5 million and E18.9 million (US$22.9 million), respectively, received through the Colony Luxembourg S.a.r.l and Melody
Business Finance LLC loan facilities are restricted for use only towards the development of Amanzoe and Playa Grande
projects, respectively. In addition, funds in bank accounts of certain Group companies are pledged as a security for
loans.
16. CAPITAL AND RESERVES
Capital
Authorised share capital
30 June 2015 31 December 2014
'000 of shares E'000 '000 of shares E'000
Common shares of E0.01 each 2,000,000 20,000 2,000,000 20,000
Movement in share capital and premium
Shares in Share capital Share premium
'000 E'000 E'000
Capital at 1 January 2014 and 31 December 2014 642,440 6,424 498,933
Capital at 1 January 2015 642,440 6,424 498,933
Shares issued on 9 June 2015 219,257 2,193 60,527
Placement costs - - (1,390)
Bond conversion shares on 11 June 2015 42,930 429 11,851
Capital at 30 June 2015 904,627 9,046 569,921
On 9 June 2015 and 11 June 2015, the Company issued 219,256,609 new common shares and 42,930,080 bond conversion shares,
respectively, at GBP 0.21 per share, for a total value of E75 million. The new shares rank pari passu with the existing
common shares of the Company.
Warrants
In December 2011, the Company raised E8.5 million through the issue of new shares at GBP 0.27 per share (with warrants
attached to subscribe for additional Company shares equal to 25% of the aggregate value of the new shares at the price of
GBP 0.3105 per share, subject to anti-dilution adjustments pursuant to the warrant's terms and conditions - initial price
of GBP 0.35 per share). The warrant holders can exercise their subscription rights within five years from the admission
date. The number of shares to be issued on exercise of their rights will be determined based on the subscription price on
the exercise date.
Reserves
Translation reserve
Translation reserve comprises all foreign currency differences arising from the translation of the interim financial
statements of foreign operations.
Fair value reserve
Fair value reserve comprises the cumulative net change in fair value of available-for-sale financial assets until the
assets are derecognized or impaired, and the revaluation of property, plant and equipment from both subsidiaries and equity
accounted investees, net of any deferred tax.
17. LOANS AND BORROWINGS
Total Within one year Within two to five years More than five years
30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December
2015 2014 2015 2014 2015 2014 2015 2014
E'000 E'000 E'000 E'000 E'000 E'000 E'000 E'000
Loans in euro 111,654 111,562 14,253 20,943 32,151 23,986 65,250 66,633
Loans in United States dollars 52,480 43,128 2,662 2,984 21,219 10,009 28,599 30,135
Bank overdrafts in euro 2,287 2,239 2,287 2,239 - - - -
Convertible bonds payable 73,095 83,160 14,899 - 58,196 83,160 - -
Total 239,516 240,089 34,101 26,166 111,566 117,155 93,849 96,768
As of 30 June 2015, there were no significant changes in terms and conditions of the outstanding loans, compared to 31
December 2014.
1 January 2015 New issues Capital repayments Interest paid Other movements 30 June 2015
E'000 E'000 E'000 E'000 E'000 E'000
Loans in euro 111,562 - (2,098) (2,333) 4,523 111,654
Loans in United States dollars 43,128 4,663 - (994) 5,683 52,480
Bank overdrafts in euro 2,239 - - (51) 99 2,287
Convertible bonds in euro 50,000 - - (1,375) 1,375 50,000
Convertible bonds in United States dollars 33,160 - (12,759) (1,207) 3,901 23,095
Total 240,089 4,663 (14,857) (5,960) 15,581 239,516
The Group, as at 30 June 2015 and 31 December 2014 had a secured bank loan with a carrying amount of E3,903 thousand which
was due to be repaid in full in the year through a government grant that would have been received from Greek authorities.
As of 30 June 2015, the loan matured but was not repaid and the Company is currently under negotiations with the bank for
an extension to the maturity date of the loan. In September 2015, the government grant was received, however, the loan has
not yet been settled due to the capital controls in place. The settlement of the loan is expected within the next few
months.
Convertible bonds payable
On 5 April 2013, the Company issued 5,000 bonds (the 'Euro Bonds') at E10 thousand each, bearing interest of 5.5% per
annum, payable semi-annually, and maturing on 5 April 2018.
On 23 April 2013, the Company issued 917 bonds (the 'US$ Bonds') at US$10 thousand each, bearing interest of 7% per annum,
payable semi-annually, and maturing on 23 April 2018.
The Euro Bonds and the US$ Bonds may be converted prior to maturity (unless earlier redeemed or repurchased) at the option
of the holder into common shares of E0.01 each. The conversion price is E0.5623, equivalent of GBP 0.49 (initial conversion
price GBP 0.50) and US$0.6583, equivalent of GPB 0.4410 (initial conversion price GBP 0.45) per share for the Euro Bonds
and the US$ Bonds, respectively.
The Euro Bonds and the US$ Bonds are not publicly traded.
Part of the bonds, amounting to E41,004 thousand, was subscribed by Third Point LLC, a significant shareholder of the
Company.
On 29 March 2011, DCI H7 issued 4,000 bonds at US$10 thousand each, bearing interest of 7% per annum, payable
semi-annually, and maturing on 29 March 2016. The bonds are trading on the Open Market of the Frankfurt Stock Exchange (the
freiverkehr market) under the symbol 12DD. On 23 April 2013, the Company purchased 891 bonds at a consideration of US$10
thousand each (representing their par value) plus corresponding accrued interest of approximately US$200 thousand using the
funds received from the issue of the US$ Bonds. On 10 June 2015, select bondholders, including the Investment Manager,
opted to convert bonds of total value US$14,420 thousand into 42,930,080 shares that were admitted on AIM on 11 June 2015.
The Investment Manager converted bonds of total value US$420 thousand into 1,250,390 shares.
Bonds may be converted prior to maturity (unless earlier redeemed or repurchased) at the option of the holder into
Company's common shares of E0.01 each for a conversion price of US$0.7095, equivalent of GBP 0.4436, subject to
anti-dilution adjustments pursuant to the bond's terms and conditions (initial conversion price GBP 0.50). The number of
shares to be issued on exercise of a conversion right shall be determined by dividing the principal amount of the bonds to
be converted by the conversion price in effect on the relevant conversion date.
At the option of bondholders:
(i) some or all of the principal amount of the bonds held by a bondholder may be repurchased by the issuer; and
(ii) the consideration for such repurchase shall be the transfer by the Company to the bondholder of land plot(s) at the
issuer's Playa Grande Aman development in the Dominican Republic.
18. Finance lease obligationS
30 June 2015 31 December 2014
Future minimum lease payments Interest Present value of minimum lease payments Future minimum lease payments Interest Present value of minimum lease payments
E'000 E'000 E'000 E'000 E'000 E'000
Less than one year 493 62 431 529 62 467
Between two and five years 1,734 226 1,508 1,738 227 1,511
More than five years 8,920 3,020 5,900 9,168 3,051 6,117
Total 11,147 3,308 7,839 11,435 3,340 8,095
The major finance lease obligations comprise leases in Greece with 99-year lease terms.
19. Deferred tax assets and liabilities
30 June 2015 31 December 2014
Deferred Deferred Deferred Deferred
tax assets tax liabilities tax assets tax liabilities
E'000 E'000 E'000 E'000
Balance at beginning of period/year 2,557 (55,180) 4,230 (56,610)
From disposal of subsidiary (see note 23) - - (1,162) -
Recognised in profit or loss (64) 73 (510) 2,218
Recognised in other comprehensive income - - - (555)
Exchange difference and other (88) (217) (1) (233)
Balance at end of period/year 2,405 (55,324) 2,557 (55,180)
Deferred tax assets and liabilities are attributable to the following:
30 June 2015 31 December 2014
Deferred Deferred Deferred Deferred
tax assets tax liabilities tax assets tax liabilities
E'000 E'000 E'000 E'000
Revaluation of investment property - (46,563) - (45,160)
Revaluation of trading properties - (5,524) - (2,394)
Revaluation of property, plant and equipment - (3,110) - (8,374)
Other temporary differences - (127) - 748
Tax losses 2,405 - 2,557 -
Total 2,405 (55,324) 2,557 (55,180)
20. Trade and other payables
30 June 2015 31 December 2014
E'000 E'000
Trade payables 498 349
Land creditors 25,346 24,989
Prepayments from clients 32,867 17,893
Investment Manager fees payable (see note 22.2) 467 467
Payable to the former controlling shareholder of PGH project (see note 22.3) - 565
Other payables and accrued expenses 25,387 17,796
Total 84,565 62,059
21. NAV per share
30 June 2015 31 December 2014
'000 '000
Total equity attributable to owners of the Company (E) 604,295 557,448
Number of common shares outstanding at end of period/year 904,627 642,440
NAV per share (E) 0.67 0.87
22. Related party transactions
22.1 Directors' interest and remuneration
Miltos Kambourides is the founder and managing partner of the Investment Manager.
The interests of the Directors, all of which are beneficial, in the issued share capital of the Company as at 30 June 2015
were as follows:
Shares
'000
Miltos Kambourides (indirect holding) 66,019
Mark Townsend 132
Roger Lane-Smith 60
Save as disclosed, none of the Directors had any interest during the period in any material contract for the provision of
services which was significant to the business of the Group.
On 30 May 2013, David B. Heller acquired convertible Euro Bonds of E2,050 thousand par value that may be converted prior to
maturity into 3,573,296 common Company shares of E0.01 each.
The Directors' remuneration for the six-month periods ended 30 June 2015 and 30 June 2014 were as follows:
From 1 January 2015 From 1 January 2014
to 30 June 2015 to 30 June 2014
E'000 E'000
Laurence Geller 97.0 -
Robert Heller 72.8 -
Graham Warner 72.8 -
Mark Townsend 6.7 -
Justin Rimel 6.7 -
David B. Heller 10.4 9.1
Roger Lane-Smith 22.5 22.5
Andreas Papageorghiou 2.3 7.5
Cem Duna 2.3 7.5
Antonios Achilleoudis 2.3 7.5
Christopher Pissarides 7.7 25.0
Total 303.5 79.1
Mr. Miltos Kambourides has waived his fees.
On 25 February 2015, the Company announced the following Directorate changes: five new members joined the Board, Mr.
Laurence Geller who will also serve as Chairman, Mr. Robert Heller, Mr. Graham Warner, Mr. Mark Townsend and Mr. Justin
Rimel. Mr. Miltos Kambourides, Mr. David Heller and Mr. Roger Lane Smith remain on the new Board, which now comprises of
eight members. Mr. Andreas Papageorghiou, Mr. Cem Duna, Mr. Antonios Achilleoudis and Mr. Christopher Pissarides stepped
down from the Board. The previous Chairman, Mr. David Heller, will continue to act as non-executive director.
On 9 June 2015, Mr. Laurence Geller, Mr. Robert Heller and Mr. Graham Warner were granted a nil-cost share option award
under a Stock Incentive Plan. This award will performance vest in four equal tranches dependent upon the average closing
price of the shares trading at or above certain relevant target share prices for a continuous period of 30 Trading Days.
The relevant target share prices for the purposes of these awards are 35p, 40p, 45p, and 50p. Awards remain exercisable up
until the day before the fifth anniversary of the date of grant of the award.
22.2 Investment Manager fees
Annual fees
The Investment Manager is entitled to an annual management fee of 2% of the equity funds, defined as follows:
• E890 million; plus
• The gross proceeds of further equity issues, other than the funds raised in respect of the proceeds of the equity
issues as at 25 October 2012 and 30 December 2011; plus
• Realised net profits less any amounts distributed to shareholders.
The equity funds as at 30 June 2015 comprised of E681 million.
In addition, the Company shall reimburse the Investment Manager for any professional fees or other costs incurred on behalf
of the Company for the provision of services or advice.
Management fees for the six-month periods ended 30 June 2015 and 30 June 2014 amounted to E6,814 thousand and E6,858
thousand, respectively.
In June 2015, the Company and the Investment Manager entered into an Amended and Restated Investment Management Agreement
effective from 1 July 2015 and according to which the annual management fee will be calculated as follows:
• for the period from 1 July 2015 to and including 31 December 2015, the annual management fee shall be E1 million per
calendar month payable quarterly in advance; and
• with effect from and including 1 January 2016, the annual management fee shall be E8.5 million payable quarterly in
advance.
• commencing on and with effect from 1 January 2017, the annual management fee payable for the following annual period
will be permanently reduced on 1 January in each year to an amount equal to the lower of:
(i) 1.25% of the gross asset value of the Company calculated as at the last preceding 31 December calculation date;
and
(ii) E8.5 million.
Performance fees
The Investment Manager is entitled to a performance fee based on the net profits made by the Company, subject to the
Company receiving the 'Relevant Investment Amount', which is defined as an amount equal to:
i The total cost of the investment reduced on a pro rated basis by an amount of E160.1 million*; plus
ii A hurdle amount equal to an annualised percentage return equal to the average one-month Euribor rate applicable in
the period commencing from the month when the relevant cost is incurred compounded for each year or fraction of a year
during which such investment is held (the 'Hurdle'); plus
iii A sum equal to the amount of any realised losses and/or write-downs in respect of any other investment which hasnot
already been taken into account in determining the Investment Manager's entitlement to a performance fee.
In the event that the Company has received distributions from an investment equal to the Relevant Investment Amount, any
subsequent net profits arising shall be distributed in the following order or priority:
i 60% to the Investment Manager and 40% to the Company until the Investment Manager shall have received an amount equal
to 20% of such profits; and
ii 80% to the Company and 20% to the Investment Manager, such that the Investment Manager shall receive a total
performance fee equivalent to 20% of the net profits.
* The total cost of investment was reduced in April 2014 by E7.6 million, as compared to the base reduction of E167.7
million, to reflect the loss incurred by the Company through the Pasakoy Yapi ve Turizm A.S. ('Pasakoy') sale transaction,
as calculated in accordance with the Investment Management Agreement provisions and definitions.
The performance fee payment is subject to the following escrow and clawback provisions:
Escrow
The following table displays the current escrow arrangements:
Escrow Terms
Up to E109 million returned 50% of overall performance fee held in escrow
Up to E109 million plus the cumulative hurdle returned 25% of any performance fee held in escrow
After the return of E409 million post-hurdle, plus the return of E225 million post-hurdle All performance fees released from escrow
Clawback
If on the earlier of (i) disposal of the Company's interest in a relevant investment or (ii) 1 August 2020, the proceeds
realised from that investment are less than the Relevant Investment Amount, the Investment Manager shall pay to the Company
an amount equivalent to the difference between the proceeds realised and the Relevant Investment Amount. The payment of the
clawback is subject to the maximum amount payable by the Investment Manager not exceeding the aggregate performance fees
(net of tax) previously received by the Investment Manager in relation to other investments.
No performance fees were charged to the Company for the six-month periods ended 30 June 2015 and 30 June 2014. As at 30
June 2015 and 31 December 2014, funds held in escrow, including accrued interest, amounted to E467 thousand.
In line with the Amended and Restated Investment Management Agreement, signed in June 2015 and effective from 1 July 2015,
the revised performance fees payable to the Investment Manager after 1 July 2015 will comprise three elements:
Core asset incentive fee
The Investment Manager will be entitled to the core asset incentive fee based on the net profits received by the Company
from the core assets or the disposal thereof.
Core assets comprise of the following projects: Amanzoe, Kilada Hills, Kea, Pearl Island and Playa Grande. All other
assets of the company are characterized as non-core for the purpose of incentive fee calculations.
The net proceeds will be divided between the Investment Manager and the Company on the following basis:
· first, 100% to the Company until the Company has received an amount equal to E169.6 million (the 'Aggregate Core
Asset Base Value');
· second, 100% to the Company until the Company shall have received an amount equal to the core asset capital and
costs;
· third, 100% to the Company until the Company shall have received an amount equal to the base cost compounded
quarterly at the average 1-month Euribor rate plus 500 basis points (but capped at a maximum interest rate of 6% per
annum);
· fourth, 60% to the Investment Manager and 40% to the Company until the Investment Manager shall have received an
amount equal to 20% of the Net Profits then distributed; and
· thereafter, 20% to the Investment Manager and 80% to the Company such that the Investment Manager shall receive a
total core asset incentive fee equivalent to 20% of the net profits.
On the disposal of a core asset, the Investment Manager shall be entitled to receive an advance of the core asset incentive
fee on the following basis:
· where the disposal takes place prior to the date on which the Company shall have first received an amount of net
profits from the disposal of core assets equal to, or in excess of, E113,055,360 (the 'Trigger Date'), an amount equal to
6.666% of the net profits received by the Company on the disposal of such core asset; or
· where the disposal takes place after the Trigger Date, an amount equal to 10% of the net profits received by the
Company on the disposal of such core asset, (in each case a 'Core Asset Incentive Fee Advance Payment').
The aggregate value of any Core Asset Incentive Fee Advance Payments will at any time be set off against, and thereby
reduce to not less than zero, any liability of the Company to pay core asset incentive fees.
Non-core asset incentive fee
The Investment Manager will be entitled to the non-core asset incentive fee based on the net profits received by the
Company from the disposal of any non-core asset. No non-core asset incentive fee will be payable in respect of a non-core
asset unless the aggregate disposal proceeds actually received by the Company in respect of such non-core asset exceeds the
base value (the 'Payment Condition'). The base value is defined as the 65% of the non-core asset value. Subject to
satisfaction of the Payment Condition in respect of any non-core asset, the net proceeds actually received by the Company
from the disposal of such non-core asset will be divided between the Investment Manager and the Company on the following
basis:
· first, 100% to the Company until the Company has received an amount equal to the base value;
· second, 12.5% to the Investment Manager and 87.5% to the Company until the net proceeds equal 80% of the base
value;
· third, 17.5% to the Investment Manager and 82.5% to the Company until the net proceeds equal 100% of the base value;
and
· thereafter, 25% to the Investment Manager and 75% to the Company.
50% of each non-core asset incentive fee will be placed in an interest bearing escrow account to be operated by the
Company's administrator. Any funds held in this escrow account will be dealt with as follows; commencing on 31 December
2015, in the event that, as at 31 December in each year, the aggregate net proceeds received by the Company in relation to
all non-core assets disposed of during the previous 12 month period (the 'Look-back Period'):
· does not equal or exceed the aggregate of the base values of any non-core assets disposed of during an applicable
Look-back Period (the 'Aggregate Base Value') then the Company's administrator will be authorised to repay any escrowed
funds to the Company until such time as the Company has received an amount equal to the Aggregate Base Value and thereafter
any remaining escrowed funds (if any) will be paid to the Investment Manager; or
· equals or exceeds the Aggregate Base Value then the Company's administrator will be authorised to pay to the
Investment Manager the escrowed funds.
Incentive shares
Under the Share Incentive Plan, the Company has granted two nil-cost share option awards to the Investment Manager (the
'DCP Awards') as follows:
Number of Shares to which the DCP Award relates:
· DCP Award 1: such number of Shares as equals 3.5% of the Shares in issue following Admission; and
· DCP Award 2: such number of Shares as equals 2.5% of the Shares in issue following Admission.
The full vesting of the DCP Awards are subject to the satisfaction of both performance vesting targets (ranging from share
prices of 35p to 80p) and time vesting conditions.
Clawback
Following the Amended and Restated Investment Management Agreement if on the clawback assessment date, the Company has not
received an amount from the disposal of the core assets equal or in excess of the Aggregate Core Asset Base Value, the
Investment Manager will pay to the Company an amount to cover the difference, not to exceed the aggregate amount of any
Core Asset Incentive Fee Advance Payments received by the Investment Manager. The clawback assessment date is the earlier
of, (i) disposal of the Company's interest in the last core asset concerned; or (ii) 1 August 2020. In the event that a
fees clawback applies the Company shall be entitled to set off at any time the amount of any fees clawback payment due
against, (i) any liability of the Company to pay non-core asset incentive fees and/or (ii) any other fees due and payable
by the Company to the Investment Manager, but excluding the annual management fee. In addition, the Company will have a
security interest over any unvested shares awarded to the Investment Manager under the Share Incentive Plan.
22.3 Shareholder and development agreements
Shareholder agreements
DolphinCI Twenty Two Limited, a subsidiary of the Group, had signed a shareholder agreement with the non-controlling
shareholder of Eastern Crete Development Company S.A., under which it had acquired 60% of the shares of Plaka Bay project
by paying the former majority shareholder a sum upon closing and a conditional amount in the event the non-controlling
shareholder was successful in, among others, acquiring additional specific plots and obtaining construction permits. On 23
August 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 from 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 30 June 2015 no receivable amount was outstanding (31 December 2014: E415 thousand,
included in receivables and other assets - see note 14). 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. On 17 September 2014, the conversion of
6.43% of Archimedia's 14.29% stake into one of the designated Conversion Villas was completed while the finalisation of the
relevant documentation for the conversion of the remaining 7.86% is expected shortly. Following these conversions,
Archimedia will 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 30 June 2015 (31
December 2014: US$12,553 thousand).
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 30 June 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 (31 December 2014:
US$0.7 million or E565 thousand, included in trade and other payables - see note 20).
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.
22.4 Other related parties
During the periods ended 30 June 2015 and 30 June 2014, the Group incurred the following related party transactions with
the following parties:
30 June 2015 Related party name E'000 Nature of transaction
Progressive Business Advisors S.A. 254 Accounting fees
John Heah, non-controlling shareholder of SPV 10 408 Design fees in relation to Playa Grande project
Iktinos Hellas S.A. 20 Project management services in relation to Sitia project and rent payment
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
30 June 2014Related party name E'000 Nature of transaction
Progressive Business Advisors S.A. 165 Accounting fees
John Heah, non-controlling shareholder of SPV 10 201 Design fees in relation to Playa Grande project
Iktinos Hellas S.A. 24 Project management services in relation to Sitia project and rent payment
Portoheli Ksenodoxio Kai Marina S.A. 6,714 Construction cost and project management services in relation to Nikki Beach project
Third Point LLC, shareholder of the Company 1,158 Bond interest for the period
23. Business combinations
During the period ended 30 June 2014, the Group increased its ownership interest without any change in control in Bourne
Holdings (Cyprus) Limited (holding company of Eastern Crete Development Company S.A.) by 9.09% to 100% as follows:
Eastern Crete
Development
Company S.A.
E'000
Non-controlling interests acquired 1,535
Consideration transferred (1,000)
Acquisition effect recognised in equity 535
During the period ended 30 June 2014, the Group disposed of its entire stake in Pasakoy as follows:
Pasakoy
E'000
Deferred tax assets (see note 19) (1,162)
Non-current assets (955)
Trading properties (see note 11) (7,252)
Receivables and other assets (394)
Cash and cash equivalents (1)
Loans and borrowings 1,423
Trade and other payables 52
Net assets disposed of (8,289)
Proceeds on disposal 8,289
Translation reserve 2,709
Gain on disposal recognised in profit or loss 2,709
Cash effect on disposal:
Proceeds on disposal 8,289
Cash and cash equivalents (1)
Net cash inflow on disposal 8,288
24. 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 2014.
Fair values
The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the statement of
financial position date.
25. Commitments
As of 30 June 2015, the Group had a total of E13,450 thousand contractual capital commitments on property, plant and
equipment (31 December 2014: E19,446 thousand).
Non-cancellable operating lease rentals are payable as follows:
30 June 2015 31 December 2014
E'000 E'000
Less than one year 19 19
Between two and five years 21 29
Total 40 48
26. 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 advice from 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 this matter which are considered
necessary have been recorded in these condensed consolidated interim financial statements.
If investment properties, trading properties and property, plant and equipment were sold at their fair market value, this
would have given rise to a payable performance fee to the Investment Manager, based on the Amended and Restated Investment
Management Agreement effective from 1 July 2015, of approximately E44 million, subject always to the escrow and clawback
provisions mentioned in note 22.2 (31 December 2014: E63 million, based on the Investment Management Agreement effective
until 30 June 2015).
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.
27. EVENTS AFTER THE REPORtING PERIOD
According to a new tax legislation in Greece, voted in July as a consequence of the new bail out agreement signed between
the Greek Government and the funding institutions, the current income tax rate changed from 26% to 29% for the fiscal year
2015 and onwards. This change is expected to increase deferred tax liability of the Group by, approximately, the amount of
E4.5 million, should all other values remain the same as of 30 June 2015.
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 2015.
This information is provided by RNS
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